Exhibit 99.1
PROASSURANCE CORPORATION
DIRECTOR DEFERRED STOCK COMPENSATION PLAN
ARTICLE I
ELIGIBILITY
The Board of Directors of ProAssurance Corporation (the "Company") may from
time to time authorize to participate in the Director Deferred Stock
Compensation Plan (the "Plan") any person ("Eligible Persons") who is elected
and is currently serving as a non-employee member of the Board of Directors of
the Company.
ARTICLE II
STOCK COMPENSATION SUBJECT TO PLAN
At a meeting of the Compensation Committee of the Board of Directors of the
Company held prior to the annual meeting of the stockholders in each year
commencing with the year 2005, and in the same calendar year as such annual
meeting, the Directors may determine that a portion, or all, of their
compensation as non-employee Directors be paid in the form of shares of the
Company's Common Stock (the "Stock"); provided that the Board of Directors may
make such determination at the meeting at which this Plan is adopted, whether
before or after the annual meeting of the stockholders in such year.
Compensation payable in Stock shall be payable only from the shares of Stock
reserved for issuance pursuant to the ProAssurance Corporation 2004 Equity
Incentive Plan or a successor plan which has been approved by the stockholders
of the Company and the shares thereunder approved for listing on the New York
Stock Exchange (the "Incentive Plan"); provided that the granting of the award
under the Incentive Plan shall be subject to the condition that the Company have
sufficient net assets to apply to its capital and surplus in payment for the
Stock an amount equal to the value of the Stock credited to the Account of the
Eligible Person.
ARTICLE III
ELECTION AS TO FORM AND TIME OF PAYMENT
A. Current or Deferred Payment Election. Each Eligible Person may elect to
receive his or her Stock as either:
1. A current payment in accordance with Article IV below ("Current
Compensation"); or
2. A deferred payment in accordance with Article V below ("Deferred
Compensation").
B. Procedure for Making Elections. Subject to the provisions of Section III.C.
below, each Eligible Person may make a written election as to the form and
time of payment of his or her Stock under Section III.A above for each year
that he or she is an Eligible Person. In the case of initial elections
hereunder by persons who are Eligible Persons as of May 18, 2005, the
effective date of the Plan ("Effective Date"), the election must be made
within thirty (30) days after the Effective Date. Thereafter, the election
must be made before December 31 of the calendar year immediately preceding
the calendar year to which the election applies. In the case of a person
who first becomes an Eligible Person during a calendar year and prior to
the date of the annual meeting for that year, his or her election must be
made within thirty (30) days following the date upon which he or she
becomes an Eligible Person. Elections will be made on forms prescribed by
the Company and may be obtained from the office of the Secretary of the
Company ("Election Forms"). Election Forms must be fully completed,
executed and returned to the office of the Secretary on or before the
applicable deadline in order to be effective. If an Election Form is not so
returned by the applicable deadline, the Eligible Person will be deemed to
have elected to continue his prior year's election, or if there is no prior
year election, such Eligible Person will be deemed to have elected to
receive Current Compensation in accordance with Section III.A.(a) above.
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C. Revocation of Elections. No Eligible Person shall have the right to
retroactively revoke any prior election under this Article III. An Eligible
Person may prospectively revoke his or her election and make a new election
for the next calendar year if such Eligible Person executes and delivers a
new Election Form to the Secretary of the Company not later than December
31 of the current calendar year.
ARTICLE IV
CURRENT COMPENSATION
If the Eligible Person elects to receive Current Compensation, a stock
certificate (or equivalent electronic transfer to an account with a registered
broker dealer) for the appropriate number of shares of Stock will be issued to
the Eligible Person within thirty (30) days after the annual meeting of the
stockholders for the year to which such Current Compensation relates.
ARTICLE V
DEFERRED COMPENSATION
A. Time of Payment. Any Eligible Person who elects to receive Deferred
Compensation under this Section V shall be paid the balance in his or her
Deferred Compensation Account (herein defined) within 60 days after such
person ceases to qualify as an Eligible Person. In the case of any Eligible
Person who dies, payment of the balance in his or her Account shall be made
to the beneficiary designated by the Eligible Person in his or her most
recent annual Election Form within 60 days after the Eligible Person's date
of death, or, if the designated beneficiary is the Eligible Person's
estate, within 60 days after the appointment of the personal representative
of the Eligible Person's estate. The Deferred Compensation Account will be
established and maintained in accordance with Section V.C. below.
B. Source of Payment. The Stock payable or distributable hereunder will not be
funded currently nor will segregated shares of Stock be maintained to pay
such Deferred Compensation. Until the time of payment of the Deferred
Compensation, the Eligible Person shall have no rights of ownership with
respect to the Stock credited to the Account and such Stock shall not be
considered to be issued and outstanding until issued and delivered to the
Eligible Person at the time provided in Section V.A. above; provided,
however, that notwithstanding anything herein to the contrary, there shall
be credited to the Account as a liability of the Company to the Eligible
Person: (i) an amount equal to all dividends that would otherwise be
payable with respect to the Stock credited to the Account; and (ii) an
amount equal to the sum of all proceeds that would otherwise be payable
with respect to the Stock credited to the Account as a result of a merger,
consolidation, recapitalization, liquidation or other reorganization of the
Company; and provided further that the Stock credited to the Account shall
be subject to adjustment in the case of changes in the capitalization of
the Company or change of control of the Company in accordance with Section
4(c) of the Incentive Plan.
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1. Liability of the Company. The obligation to pay the Deferred
Compensation shall be considered a liability of the Company to make
benefit payments in the future to the Eligible Person subject to the
claims of its general unsecured creditors and shall be payable to the
Eligible Person in consideration for the cancellation of such
liability (and not for past services). In the event that the Company
is involved in bankruptcy proceedings at any time prior to the payment
of the Deferred Compensation, the liability of the Company to pay the
Deferred Compensation shall be subject to adjustment and discharge on
the same basis as liabilities to the other general unsecured creditors
of the Company. It is the intention of the Company that the Plan be
unfunded for tax purposes and for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended.
2. Spendthrift Provision. An Eligible Person's rights to payments under
the Plan are not subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, attachment, or
garnishment by creditors of the Eligible Person or the Eligible
Person's beneficiary.
C. Deferred Compensation Accounts. The Company will establish a Deferred
Compensation Account ("Deferred Compensation Account") for each Eligible
Person who elects to receive Deferred Compensation. The Deferred
Compensation Account will evidence the amount of Stock that the Eligible
Person would receive at any time if he or she ceased to be an Eligible
Person. The amount of Stock payable to an Eligible Person will be credited
to his or her Deferred Compensation Account within thirty (30) days
following the annual meeting of the shareholders of the Company.
ARTICLE V
STOCK CERTIFICATES
Stock certificates issued and delivered to Eligible Persons shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws.
ARTICLE VI
TERMINATION AND AMENDMENT OF PLAN
A. The Board of Directors of the Company may at any time terminate the Plan,
and may at any time and from time to time and in any respect amend the
Plan.
B. No termination, amendment or modification of the Plan shall affect
adversely the rights of an Eligible Person with respect to his or her
Deferred Compensation Account nor shall any Eligible Person be entitled to
accelerate the terms and conditions for the payment of Deferred
Compensation by reason of the termination, amendment or modification of the
Plan.
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C. This Plan shall terminate upon termination of the Incentive Plan or upon
the issuance of awards with respect to all shares of Stock reserved for
issuance under the Incentive Plan.
ARTICLE VII
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its subsidiaries from establishing any other form of incentive or other
compensation plan for employees, officers, or directors of the Company or any of
its subsidiaries.
ARTICLE VIII
MISCELLANEOUS
A. Plan Binding on Successors. The Plan shall be binding upon the successors
and assigns of the Company.
B. Singular, Plural; Gender. Whenever used herein, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine
gender.
C. Headings, etc. Headings of Articles and Sections hereof are inserted for
convenience and reference; they do not constitute part of the Plan.
D. Interpretation. Subject to the express provisions of the Plan, the Board of
Directors of the Company shall have complete authority to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to
it, and to make all determinations necessary or advisable for the
administration of the Plan. No member of the Board of Directors of the
Company shall be liable to any person for any act or determination made in
good faith with respect to the Plan or any Compensation payable hereunder.
E. Taxes. If the Company is required to collect withholding taxes upon the
issuance of Stock to any Eligible Person, the Company may not deliver the
shares to the Eligible Person until the Eligible Person has delivered to
the Company the required amount for the withholding taxes.
F. Applicable Law. This Plan shall be administered, construed and enforced in
accordance with the laws of the State of Delaware.
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