DEF 14A
1
y07478def14a.txt
W R BERKLEY
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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(as permitted by Rule 14a-6(e)(2))
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W. R. BERKLEY CORPORATION
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W. R. BERKLEY CORPORATION
475 STEAMBOAT ROAD
GREENWICH, CONNECTICUT 06830
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2005
------------------------------
To The Stockholders of
W. R. BERKLEY CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of W. R.
Berkley Corporation (the "Company") will be held at its executive offices at 475
Steamboat Road, Greenwich, Connecticut, on Tuesday, May 10, 2005 at 10:00 a.m.
for the following purposes:
(1) To elect three directors to serve until their successors are duly
elected and qualified;
(2) To ratify the appointment of KPMG LLP as the independent registered
public accounting firm for the Company for the fiscal year ending
December 31, 2005; and
(3) To consider and act upon any other matters which may properly come
before the Annual Meeting or any adjournment thereof.
In accordance with the provisions of the Company's By-Laws, the Board of
Directors has fixed the close of business on March 24, 2005 as the date for
determining stockholders of record entitled to receive notice of, and to vote
at, the Annual Meeting.
Your attention is directed to the accompanying proxy statement.
You are cordially invited to attend the Annual Meeting. If you do not
expect to attend the Annual Meeting in person, please date, sign and return the
enclosed proxy as promptly as possible in the enclosed reply envelope.
By Order of the Board of Directors,
IRA S. LEDERMAN
Senior Vice President,
General Counsel and Secretary
Dated: April 12, 2005
W. R. BERKLEY CORPORATION
PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
MAY 10, 2005
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SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited on behalf of the Board of Directors of W.
R. Berkley Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held at the executive offices of the Company, 475 Steamboat
Road, Greenwich, Connecticut, on Tuesday, May 10, 2005 at 10:00 a.m. and at any
adjournment thereof.
The giving of a proxy does not preclude a stockholder from voting in person
at the Annual Meeting. The proxy is revocable before its exercise by delivering
either written notice of such revocation or a later dated proxy to the Secretary
of the Company at its executive offices at any time prior to voting of the
shares represented by the earlier proxy. In addition, stockholders attending the
Annual Meeting may revoke their proxies by voting at the Annual Meeting.
The expense of preparing, printing and mailing this proxy statement will be
paid by the Company. The Company has engaged Georgeson Shareholder
Communications, Inc. to assist in the solicitation of proxies from stockholders
for a fee estimated at $6,500. In addition to the use of the mails, proxies may
be solicited personally or by telephone by regular employees of the Company
without additional compensation, as well as by Georgeson employees. The Company
will reimburse banks, brokers and other custodians, nominees and fiduciaries for
their direct costs in sending the proxy materials to the beneficial owners of
the Company's common stock.
The Annual Report of the Company for the fiscal year ended December 31,
2004 is being mailed to all stockholders with this proxy statement. The
approximate mailing date is April 12, 2005.
A list of stockholders will be available for inspection during business
hours for at least ten days prior to the Annual Meeting at the executive offices
of the Company at 475 Steamboat Road, Greenwich, Connecticut 06830.
The matters to be acted upon are described in this proxy statement. Proxies
will be voted at the Annual Meeting, or at any adjournment thereof, at which a
quorum is present, in accordance with the directions on the proxy. Votes cast by
proxy or in person at the Annual Meeting will be tabulated by election
inspectors appointed for the Annual Meeting. The election inspectors will also
determine whether a quorum is present. The holders of a majority of the common
stock outstanding and entitled to vote who are present either in person or
represented by proxy constitute a quorum for the Annual Meeting. The election
inspectors will treat abstentions and "broker non-votes" as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum, but as unvoted for purposes of determining the approval of any matter
submitted. A "broker non-vote" is when a broker indicates on a proxy that it
does not have discretionary authority as to certain shares to vote on a
particular matter and has not received instructions from the beneficial owner
with respect to that matter.
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OUTSTANDING STOCK AND VOTING RIGHTS
Only stockholders of record at the close of business on March 24, 2005 are
entitled to receive notice of and to vote at the Annual Meeting. The number of
shares of voting stock of the Company outstanding and entitled to vote on that
date was 84,508,405 shares of common stock, which number has not been adjusted
for the 3-for-2 common stock split effected on April 8, 2005. Each such share of
common stock is entitled to one vote. At March 24, 2005, executive officers and
directors of the Company owned or controlled approximately 14.8% of the
outstanding common stock. Information as to persons beneficially owning 5% or
more of the common stock may be found under the heading "Principal Stockholders"
below.
Unless otherwise directed in the proxy, the persons named therein will vote
"FOR" the election of the director nominees listed below and "FOR" the
ratification of the appointment of KPMG LLP as the Company's independent
registered public accounting firm for its fiscal year ending December 31, 2005.
If a returned proxy does not specify a vote for or against a proposal, it will
be voted in favor thereof.
The election of directors and the ratification of the appointment of KPMG
LLP require the affirmative vote of a majority of the shares present at the
meeting to constitute the action of the stockholders.
As of the date hereof, the Board of Directors knows of no other business
that will be presented for consideration at the Annual Meeting. If other
business shall properly come before the Annual Meeting, the persons named in the
proxy will vote according to their best judgment.
ELECTION OF DIRECTORS
As permitted by Delaware law, the Board of Directors is divided into three
classes, the classes being divided as equally as possible and each class having
a term of three years. Each year the term of office of one class expires. This
year the term of a class consisting of four directors expires, and one of such
directors, Richard G. Merrill, is retiring. The Board intends that the shares
represented by proxy, unless otherwise indicated therein, will be voted for the
election of Rodney A. Hawes, Jr., Jack H. Nusbaum and Mark L. Shapiro as
directors to hold office for a term of three years until the Annual Meeting of
Stockholders in 2008 and until their respective successors are duly elected and
qualified.
The persons designated as proxies reserve full discretion to cast votes for
other persons in the event any such nominee is unable to serve. However, the
Board has no reason to believe that any nominee will be unable to serve if
elected. The proxies cannot be voted for a greater number of persons than the
three named nominees.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES FOR DIRECTOR.
The following table sets forth information regarding each nominee and the
remaining directors who will continue in office after the Annual Meeting.
SERVED AS
DIRECTOR
CONTINUOUSLY BUSINESS EXPERIENCE DURING PAST 5 YEARS
NOMINEES TO SERVE IN OFFICE UNTIL 2008 SINCE/AGE AND OTHER INFORMATION
-------------------------------------- ------------ ------------------------------------------
Rodney A. Hawes, Jr.(1)......................... 2004 Mr. Hawes is the founder of Insurance
Age 67 Investment Associates ("IIA"), which has
provided investment banking services to
the insurance industry since 1972. Mr.
Hawes was the Chairman of the Board and
Chief Executive Officer of Life Re
Corporation from 1988 to 1998.
Jack H. Nusbaum(1)(2)(3)(4)..................... 1967 Chairman of the New York law firm of
Age 64 Willkie Farr & Gallagher LLP, where he has
been a partner for more than the last five
years. He is also a director of Strategic
Distribution, Inc. and The Topps Company,
Inc.
Mark L. Shapiro(1)(2)(5)........................ 1974 Since September 1998, Mr. Shapiro has been
Age 61 a private investor. From July 1997 through
August 1998, Mr. Shapiro was a Senior Con-
sultant to the Export-Import Bank of the
United States. Prior thereto, he was a
Managing Director in the investment
banking firm of Schroder & Co. Inc.
SERVED AS
DIRECTOR
CONTINUOUSLY BUSINESS EXPERIENCE DURING PAST 5 YEARS
DIRECTORS TO CONTINUE IN OFFICE UNTIL 2006 SINCE/AGE AND OTHER INFORMATION
------------------------------------------ ------------ -----------------------------------------
William R. Berkley(3)(4)........................ 1967 Chairman of the Board and Chief Executive
Age 59 Officer of the Company since its
formation in 1967. He also serves as
President and Chief Operating Officer,
positions which he has held since March
1, 2000 and has held at various times
from 1967 to 1995. Mr. Berkley also
serves as Chairman of the Board or
director of a number of public and
private companies. These include
Associated Community Bancorp, Inc. and
its Connecticut Community Bank, N.A.
subsidiary; Interlaken Capital, Inc.;
Strategic Distribution, Inc.; The First
Marblehead Corporation; and W. R. Berkley
Corporation Charitable Foundation. Mr.
Berkley is the father of W. Robert
Berkley, Jr.
3
SERVED AS
DIRECTOR
CONTINUOUSLY BUSINESS EXPERIENCE DURING PAST 5 YEARS
DIRECTORS TO CONTINUE IN OFFICE UNTIL 2006 SINCE/AGE AND OTHER INFORMATION
------------------------------------------ ------------ -----------------------------------------
George G. Daly(1)(6)............................ 1998 Fingerhut Professor and Dean Emeritus,
Age 64 Stern School of Business, New York
University, since August 2002.
Previously, he was Dean, Stern School of
Business, and Dean Richard R. West
Professor of Business, New York
University, for more than five years. In
addition to his academic career, Dr. Daly
served as Chief Economist at the U.S.
Office of Energy Research and Development
in 1974. He is also a director of The
First Marblehead Corporation.
Philip J. Ablove(1)(5).......................... 2002 Executive Vice President and Chief
Age 64 Financial Officer of Pioneer Companies,
Inc. from March 1996 to December 2002,
when he retired. Mr. Ablove was Senior
Vice President and Chief Financial
Officer of W. R. Berkley Corporation from
July 1973 until April 1983.
SERVED AS
DIRECTOR
CONTINUOUSLY BUSINESS EXPERIENCE DURING PAST 5 YEARS
DIRECTORS TO CONTINUE IN OFFICE UNTIL 2007 SINCE/AGE AND OTHER INFORMATION
------------------------------------------ ------------ -----------------------------------------
W. Robert Berkley, Jr. ......................... 2001 Senior Vice President -- Specialty
Age 32 Operations of the Company since January
2003 and Vice Chairman of Berkley
International, LLC since May 2002. Mr.
Berkley served previously as Senior Vice
President of the Company from January
2002 to January 2003, Vice President of
the Company from May 2000 to January
2002, President of Berkley International,
LLC from January 2001 to May 2002 and
Executive Vice President of Berkley
International, LLC from March 2000 to
January 2001. He joined the Company in
September 1997. From July 1995 to August
1997, Mr. Berkley was employed in the
Corporate Finance Department of Merrill
Lynch Investment Company. Mr. Berkley is
also a director of Associated Community
Bancorp, Inc. and its Connecticut
Community Bank, N.A. subsidiary;
Interlaken Capital, Inc.; LD Realty
Advisors LLC; Strategic Distribution,
Inc.; and W. R. Berkley Corporation
Charitable Foundation. Mr. Berkley is the
son of William R. Berkley.
4
SERVED AS
DIRECTOR
CONTINUOUSLY BUSINESS EXPERIENCE DURING PAST 5 YEARS
DIRECTORS TO CONTINUE IN OFFICE UNTIL 2007 SINCE/AGE AND OTHER INFORMATION
------------------------------------------ ------------ -----------------------------------------
Ronald E. Blaylock(1)(2)(5)..................... 2001 Founder, Chairman and Chief Executive
Age 45 Officer of Blaylock & Partners, L.P., an
investment banking firm. Mr. Blaylock
held senior management positions with
PaineWebber Group and Citicorp before
launching Blaylock & Partners in 1993.
Mr. Blaylock is also a director of Radio
One, Inc.
Mark E. Brockbank(1)(6)......................... 2001 Mr. Brockbank retired from full
Age 53 employment in November 2000. He served
from 1995 to 2000 as Chief Executive of
XL Brockbank LTD, an underwriting
management agency at Lloyd's of London.
Mr. Brockbank was a founder of the
predecessor firm of XL Brockbank LTD and
was a director of XL Brockbank LTD from
1983 to 2000.
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(1) Member of Nominating and Corporate Governance Committee.
(2) Member of Business Ethics Committee.
(3) Member of Executive Committee.
(4) Member of Pricing Committee.
(5) Member of Audit Committee.
(6) Member of Compensation and Stock Option Committee.
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EXECUTIVE OFFICERS
The following provides the name, principal occupation and other pertinent
information concerning the executive officers of the Company who do not also
serve as a Director. The executive officers are elected by the Board of
Directors annually and serve at the pleasure of the Board. There are no
arrangements or understandings between the executive officers and any other
person pursuant to which the executive officers were selected. The information
is provided as of April 1, 2005.
NAME AGE POSITION
---- --- --------
Eugene G. Ballard......................... 52 Senior Vice President -- Chief Financial
Officer and Treasurer
Robert P. Cole............................ 55 Senior Vice President -- Regional
Operations
Robert W. Gosselink....................... 51 Senior Vice President -- Insurance Risk
Management
Paul J. Hancock........................... 43 Senior Vice President -- Chief Corporate
Actuary
Robert C. Hewitt.......................... 44 Senior Vice President -- Alternative
Markets Operations
Ira S. Lederman........................... 51 Senior Vice President -- General Counsel
and Secretary
James W. McCleary......................... 58 Senior Vice President -- Reinsurance
Operations
James G. Shiel............................ 45 Senior Vice President -- Investments
Clement P. Patafio........................ 40 Vice President -- Corporate Controller
Eugene G. Ballard has been Senior Vice President -- Chief Financial Officer
and Treasurer of the Company since June 1, 1999. Before joining the Company, Mr.
Ballard was Executive Vice President and Chief Financial Officer of GRE
Insurance Group, New York, New York from 1995.
Robert P. Cole has been Senior Vice President of the Company since January
1998. Prior thereto, he was Vice President from October 1996. Before joining the
Company, Mr. Cole was, from 1992, a senior officer of Christania General
Insurance Corp. of New York, which was purchased by Folksamerica Reinsurance
Company in 1996. He has been in the insurance/reinsurance business for more than
25 years.
Robert W. Gosselink has been Senior Vice President -- Insurance Risk
Management of the Company since October 2003. Before joining the Company, Mr.
Gosselink was Senior Vice President and Manager, Ceded Reinsurance and Portfolio
Management for XL Global Services from 2001, and Senior Vice President XL
America from 1999 to 2001, both subsidiaries of XL Capital Ltd. Mr. Gosselink
held various positions in treaty underwriting and risk management since 1990
when he joined NAC Reinsurance Corporation, which was acquired by XL Capital
Ltd. in 1999.
Paul J. Hancock has been Senior Vice President -- Chief Corporate Actuary
of the Company since January 2002. He joined the Company in 1997 and most
recently served as a Vice President in the actuarial department. Mr. Hancock
came to the Company from Berkley Insurance Company, a subsidiary of the Company,
where he was Vice President -- Actuarial Manager.
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Robert C. Hewitt has been Senior Vice President -- Alternative Markets of
the Company since January 2004. Prior thereto, Mr. Hewitt was Senior Vice
President -- Risk Management from January 2002. Before joining the Company, Mr.
Hewitt was a Senior Vice President for Benfield Blanch Inc. (and its
predecessor, E. W. Blanch Co., Inc.), where he served from 1986 to 2002 and
managed its New York City office since 1995. Mr. Hewitt has over 20 years of
experience in the reinsurance and insurance industries.
Ira S. Lederman has been Senior Vice President since January 1997 and
General Counsel and Corporate Secretary of the Company since November 2001.
Additionally, he has been General Counsel of Berkley International, LLC since
January 1998. Previously, Mr. Lederman was General Counsel -- Insurance
Operations from August 2000, Assistant Secretary from May 1986, Assistant
General Counsel from July 1989 until August 2000 and Vice President from May
1986 until January 1997. Prior thereto, Mr. Lederman was Insurance Counsel of
the Company from May 1986 and Associate Counsel from April 1983.
James W. McCleary has been Senior Vice President -- Reinsurance Operations
of the Company since August 2001. Mr. McCleary has served as President of
Facultative ReSources, Inc., a subsidiary of the Company, since 1990 and chief
underwriting officer since its inception. Mr. McCleary has over 31 years of
experience in the reinsurance sector.
James G. Shiel has been Senior Vice President -- Investments of the Company
since January 1997. Prior thereto, he was Vice President -- Investments of the
Company from January 1992. Since February 1994, Mr. Shiel has been President of
Berkley Dean & Company, Inc., a subsidiary of the Company, which he joined in
1987.
Clement P. Patafio has been Vice President -- Corporate Controller of the
Company since January 1997. Prior thereto, he was Assistant Vice
President -- Corporate Controller from July 1994 and Assistant Controller from
May 1993. Before joining the Company, Mr. Patafio was with KPMG LLP from 1986 to
1993.
CORPORATE GOVERNANCE AND BOARD MATTERS
Our Board of Directors is committed to sound and effective corporate
governance practices. Accordingly, our Board has adopted written Corporate
Governance Guidelines, which address, among other things, (1) director
qualification standards, (2) director responsibilities, (3) director access to
management and, as necessary and appropriate, independent advisors, (4) director
compensation, (5) director orientation and continuing education, (6) management
succession, and (7) annual performance evaluation of the Board.
The Board of Directors has standing committees including: the Audit
Committee, Compensation and Stock Option Committee, and Nominating and Corporate
Governance Committee. Each of these committees has a written charter. Our
Corporate Governance Guidelines and the charters for each of these standing
committees are available on our website at www.wrberkley.com.
The Board is currently composed of ten directors, all of whom, other than
Messrs. William R. Berkley and W. Robert Berkley, Jr., have been determined by
the Board to be independent in accordance with applicable New York Stock
Exchange rules, and not to have a material relationship with the Company which
would impair their independence from management or otherwise compro-
7
mise their ability to act as an independent director. Richard G. Merrill, a
director of the Company since 1994 and whose term as a director expires at this
year's annual meeting, is retiring.
In making its determination with respect to Mr. Nusbaum, the Board
considered his role as Chairman of Willkie Farr & Gallagher LLP, outside counsel
to the Company. The Board also considered Mr. Nusbaum's personal and business
relationships with William R. Berkley, the Company's Chairman of the Board and
Chief Executive Officer. The Board considered these relationships in light of
the attributes it believes need to be possessed by independent-minded directors,
including personal financial substance and a lack of economic dependence on the
Company, as well as business wisdom and ownership of the Company's shares. The
Board concluded that Mr. Nusbaum's relationships, rather than interfering with
his ability to be independent from management, are consistent with the business
and financial substance that has made and continue to make him a valuable
independent board member.
The Board held seven meetings during 2004. No director attended fewer than
75% of the total number of meetings of the Board and all committees on which he
served. The Company generally holds a meeting of the Board preceding the Annual
Meeting of Stockholders, and encourages its directors to attend its Annual
Meeting of Stockholders. At last years' annual meeting all ten of the directors
were in attendance.
BOARD COMMITTEES
AUDIT COMMITTEE. The Audit Committee is appointed by the Board to assist
the Board in monitoring (1) the integrity of the financial statements of the
Company, (2) the independent auditors' qualifications and independence, (3) the
performance of the Company's internal audit function and independent auditors,
and (4) compliance by the Company with legal and regulatory requirements. The
Audit Committee has also adopted procedures to receive, retain and treat any
good faith complaints received regarding accounting, internal accounting
controls or auditing matters and provide for the anonymous, confidential
submission of concerns regarding these matters.
The Audit Committee is currently composed of Messrs. Shapiro, Blaylock and
Ablove, all of whom are independent under the rules of the Securities and
Exchange Commission and the New York Stock Exchange. Due to the effect of
certain transitional look-back provisions of the rules of the NYSE regarding
director independence, Mr. Ablove resigned from the Audit Committee on November
4, 2004. For the period November 4, 2004 through December 31, 2004, the Audit
Committee was composed of Messrs. Shapiro, Blaylock and Hawes, Jr., all of whom
were then independent under the rules of the SEC and the New York Stock
Exchange. Mr. Hawes, Jr. resigned from the Audit Committee effective January 1,
2005, when Mr. Ablove was reappointed to the Audit Committee. Mr. Shapiro is the
current Chair of the committee. The Board has identified Mr. Shapiro as a
current member of our Audit Committee who meets the definition of an "audit
committee financial expert" established by the SEC. During fiscal 2004, the
Audit Committee held thirteen meetings.
The Audit Committee has determined to engage KPMG LLP as its independent
registered public accounting firm for fiscal year 2005 and is recommending that
our stockholders ratify this appointment at our annual meeting. The report of
our Audit Committee is found on page 27 of this proxy statement.
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COMPENSATION AND STOCK OPTION COMMITTEE. The Compensation and Stock Option
Committee has overall responsibility for discharging the Board's
responsibilities relating to the compensation of the Company's senior executive
officers and directors.
The Compensation and Stock Option Committee is currently composed of
Messrs. Merrill, Brockbank and Daly, all of whom are independent under the rules
of the New York Stock Exchange. Mr. Merrill is the current Chair of the
committee. During fiscal 2004, the Compensation and Stock Option Committee held
seven meetings and took action by unanimous written consent on one occasion. The
report of our Compensation and Stock Option Committee on executive compensation
is found on page 16 of this proxy statement.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and
Corporate Governance Committee was formed in 2004 to assist the Board in (1)
identifying individuals qualified to become members of the Board (consistent
with criteria approved by the Board), (2) recommending that the Board select the
director nominees for the next annual meeting of stockholders or for other
vacancies on the Board, (3) overseeing the evaluation of the Board and
management, (4) reviewing the corporate governance guidelines and the corporate
code of ethics and (5) generally advising the Board on corporate governance and
related matters. Our Corporate Governance Guidelines address director
qualification standards.
The Nominating and Corporate Governance Committee will consider qualified
director nominees recommended by stockholders. Nominations for consideration by
the Nominating and Corporate Governance Committee, together with a description
of his or her qualifications and other relevant information, should be sent to
the attention of the General Counsel, c/o W. R. Berkley Corporation, 475
Steamboat Road, Greenwich, Connecticut 06830. Stockholders may also follow the
nomination procedures described under "Stockholder Nominations for Board
Membership and Other Proposals for 2006 Annual Meeting" below. The Company's
Corporate Governance Guidelines set forth certain qualifications and specific
qualities candidates should possess.
The Nominating and Corporate Governance Committee is currently composed of
Messrs. Ablove, Blaylock, Brockbank, Daly, Hawes, Jr., Merrill, Nusbaum and
Shapiro, all of whom are considered independent under the rules of the New York
Stock Exchange. Mr. Ablove resigned from the Nominating and Corporate Governance
Committee on November 4, 2004, and was reappointed to it effective January 1,
2005, for the reasons set forth above. Although during fiscal 2004 the
Nominating and Corporate Governance Committee did not hold any meetings, it held
a meeting in early 2005 regarding, among other things, the nominees for director
set forth above.
OTHER COMMITTEES. During 2004, the Board had three standing committees in
addition to the committees set forth above: the Executive Committee, the Pricing
Committee and the Business Ethics Committee.
The Executive Committee is authorized to act on behalf of the Board during
periods between Board meetings. The Committee is composed of Messrs. William R.
Berkley and Nusbaum. During 2004, the Committee took action by unanimous written
consent on two occasions.
The Pricing Committee, which during 2004 was composed of Messrs. William R.
Berkley and Nusbaum, acts in the event of certain offerings of the Company's
securities with respect to such
9
matters as determining the price and terms at which such securities shall be
sold to underwriters and the public. During 2004, the Committee took action by
unanimous written consent on one occasion.
The Business Ethics Committee, which during 2004 was composed of Messrs.
Blaylock, Nusbaum and Shapiro, administers the Company-wide business ethics
program. The Committee reviews disclosures made by Company employees under the
Company's Statement of Business Ethics, determines if any issue presented raises
an ethics concern and takes any appropriate action. During 2004, the Committee
held no meetings. The Committee held a meeting in the first quarter of 2005
regarding 2003 and 2004 reports.
CODE OF ETHICS
We have had a Statement of Business Ethics in place for many years. This
statement, which applies to all of our officers and employees, is a statement of
our high standards for ethical behavior and legal compliance, and governs the
manner in which we conduct our business. This Statement of Business Ethics
covers all areas of professional conduct, including employment policies,
conflicts of interest, anti-competitive practices, intellectual property and the
protection of confidential information, as well as adherence to the laws and
regulations applicable to the conduct of our business. In 2005, we also adopted
a Statement of Business Ethics for the Board of Directors.
In 2004, we also adopted a Code of Ethics for Senior Financial Officers.
This Code of Ethics, which applies to our chief executive officer, chief
financial officer and controller, addresses the ethical handling of conflicts of
interest, the accuracy and timeliness of SEC disclosure and other public
communications and compliance with law.
A copy of our Statement of Business Ethics, Statement of Business Ethics
for the Board of Directors and Code of Ethics for Senior Financial Officers can
be found on our website at www.wrberkley.com. We intend to disclose amendments
to these procedures, and waivers of these policies for executive officers and
directors, on our website.
COMMUNICATIONS WITH NON-MANAGEMENT DIRECTORS; EXECUTIVE SESSIONS
A stockholder who has an interest in communicating with management or
non-management members of the Board of Directors may do so by directing the
communication to the General Counsel. Information about the Company, including
with respect to its corporate governance policies and copies of its SEC filings,
is available on our website at www.wrberkley.com. Our filings with the SEC are
also available at the SEC's website at www.sec.gov. Persons who desire to
communicate with the non-management directors should send their correspondence
addressed to the attention of the General Counsel, c/o W. R. Berkley
Corporation, 475 Steamboat Road, Greenwich, Connecticut 06830. The General
Counsel will provide a summary of all appropriate communications to the
addressed non-management directors and will provide a complete copy of such
communications upon the request of the addressed director.
In accordance with applicable New York Stock Exchange Rules, the
independent directors will meet regularly in executive session. The presiding
director at these executive sessions rotates among the Chairman of the Audit
Committee, the Chairman of the Compensation and Stock Option Committee and the
non-management member of the Executive Committee.
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DIRECTOR COMPENSATION
For 2004, each director received a quarterly stipend of $6,000 and a fee of
$1,500 for each Board meeting attended. In addition, on May 11, 2004, pursuant
to the Company's 1997 Directors Stock Plan, each continuing director received
189 shares of common stock (not adjusted for the 3-for-2 stock split effected on
April 8, 2005). The number of shares to be granted to each director under such
Plan for each year is determined by dividing $7,500 by the closing price of the
common stock on the trading day preceding the date of the Annual Meeting of
Stockholders for the year in which the grant is made. For 2004, the annual
retainer, the fees and the fair market value of such shares of common stock on
the date of grant are included under "Executive Compensation" in the Summary
Compensation Table for William R. Berkley and W. Robert Berkley, Jr. relating to
their service as directors. These shares of common stock are also included in
the tables under "Principal Stockholders." Members of the Audit Committee and
the Compensation and Stock Option Committee, which are both comprised solely of
directors that are independent under the rules of the New York Stock Exchange,
each receive an annual stipend of $5,000, with their respective Chairmen each
receiving an additional $5,000 annual stipend. Beginning in 2005, the additional
annual stipends for the Chairmen of the Audit Committee and the Compensation and
Stock Option Committee have been increased to $25,000 and $10,000, respectively.
Members of the Audit Committee and the Compensation and Stock Option Committee
also each receive $1,000 for each substantive meeting attended. In accordance
with Company guidelines, each director of the Company, within 12 months of
becoming a director, is required to own an amount of common stock of the Company
equal to three times the annual stipend paid to the director.
PRINCIPAL STOCKHOLDERS
The following table sets forth as of March 24, 2005 (except as otherwise
noted below) those persons known by the Company to be the beneficial owners of
more than 5% of the common stock:
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) OF CLASS
------------------------------------------------------ -------------------------- --------
William R. Berkley 11,860,427(2) 13.3%
475 Steamboat Road
Greenwich, CT 06830
FMR Corp. 7,412,146(3) 8.4%(6)
82 Devonshire Street
Boston, MA 02109
Barclays Global Investors, NA 6,993,474(4) 7.9%(6)
45 Fremont Street
San Francisco, CA 94105
Gilder, Gagnon, Howe & Co. LLC 6,174,538(5) 7.0%(6)
1775 Broadway
New York, NY 10019
------------------------------
(1) These amounts do not reflect the 3-for-2 common stock split effected on
April 8, 2005.
(2) Includes 4,726,674 shares of common stock and 1,708,954 shares of common
stock held in separate limited liability companies of which Mr. Berkley is
the sole member, 2,562,187 shares which are subject to currently exercisable
stock options, 292,500 shares of common stock underlying restricted stock
units (202,500 of which vest on April 4, 2008 and 90,000 of which vest on
May 11, 2009), and 26,913 shares held by Mr. Berkley's wife, as to which
shares he disclaims beneficial ownership.
11
(3) Information as of December 31, 2004 based on a Schedule 13G, dated February
14, 2005, filed with the Securities and Exchange Commission on behalf of FMR
Corp. ("FMR"), Edward C. Johnson 3d, Abigail P. Johnson and Fidelity
Management & Research Company ("Fidelity"), a wholly-owned subsidiary of
FMR. Certain of the shares listed above are beneficially owned by FMR
subsidiaries and related entities. The Schedule 13G discloses that FMR had
sole voting power as to 1,537,866 shares and sole dispositive power as to
all 7,412,146 shares. The Schedule 13G states that Mr. and Ms. Johnson and
various family members, through their ownership of FMR voting common stock
and the execution of a shareholders' voting agreement, may be deemed to form
a controlling group with respect to FMR. The Schedule 13G indicates that
5,866,500 shares are beneficially owned by Fidelity as a result of acting as
an investment adviser to several investment companies ("ICs"). Mr. Johnson,
FMR, through its control of Fidelity, and the ICs each had sole dispositive
power as to all such shares. Neither Mr. Johnson nor FMR had sole voting
power as to such shares, as such power resides with the ICs' respective
Boards of Trustees and is carried out by Fidelity under written guidelines
established by such Boards. The Schedule 13G also indicates that 500,750
shares are beneficially owned by Fidelity Management Trust Company
("Fidelity Trust"), a wholly owned subsidiary of FMR, as a result of its
serving as investment manager of certain institutional accounts. Mr. Johnson
and FMR, through its control of Fidelity Trust, each had sole dispositive
power as to all such shares and sole voting power as to 492,450 of such
shares and no power to vote 8,300 of such shares. The Schedule 13G indicates
that 76 shares are beneficially owned by Strategic Advisors, Inc., a
wholly-owned subsidiary of FMR, as a result of its serving as an investment
advisor to individuals. The Schedule 13G indicates that 1,044,820 shares are
beneficially owned by Fidelity International Limited ("FIL"), an entity
independent of FMR. Mr. Johnson is Chairman of FIL, and approximately 40% of
the voting power of FIL is held by a partnership controlled by him and
family members. FIL had sole voting and dispositive power as to all such
shares. The Schedule 13G indicates that FMR and FIL are of the view that
they are not required to attribute to each other shares beneficially owned
by the other corporation.
(4) Information as of December 31, 2004 based on a Schedule 13G, dated February
14, 2005, filed with the Securities and Exchange Commission on behalf of
Barclays Global Investors, NA, Barclays Global Fund Advisors, Barclays
Global Investors, Ltd, Barclays Global Investors Japan Trust and Banking
Company Limited, Barclays Life Assurance Company Limited, Barclays Bank PLC,
Barclays Capital Securities Limited, Barclays Capital Inc., Barclays Private
Bank & Trust (Isle of Man) Limited, Barclays Private Bank and Trust (Jersey)
Limited, Barclays Bank Trust Company Limited, Barclays Bank (Suisse) SA,
Barclays Private Bank Limited, Bronco (Barclays Cayman) Limited, Palomino
Limited and Hymf Limited. In the Schedule 13G, the reporting entities do not
affirm the existence of a group. The Schedule 13G discloses that the
reporting entities, taken as a whole, had sole voting power over 6,349,249
shares and sole dispositive power over 6,993,474 shares.
(5) Information as of December 31, 2004 based on a Schedule 13G, dated February
14, 2005, filed with the Securities and Exchange Commission on behalf of
Gilder, Gagnon, Howe & Co. LLC ("GGH&C"). The Schedule 13G reported that
GGH&C has sole voting power over 58,747 shares and shared dispositive power
over 6,174,538 shares.
(6) The percent of class shown was based on the shares of common stock reported
on the respective Schedules 13G and the total number of shares outstanding
as of December 31, 2004. Assuming the beneficial ownership for these holders
did not change, the percent of class based on the shares of common stock
outstanding as of March 24, 2005 would be 8.3%, 7.8% and 6.9%, respectively.
12
The following table sets forth information as of March 24, 2005 regarding
ownership by all directors and executive officers of the Company, as a group,
and each director and each executive officer named in the Summary Compensation
Table, individually, of common stock. Except as described in the footnotes
below, all amounts reflected in the table represent shares the beneficial owners
of which have sole voting and investment power.
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
---------------------------------------- ----------------------- --------
All directors and executive officers as
a group (19 persons) 13,202,442(2)(3)(4)(6) 14.8%
Philip J. Ablove 2,329 *
Eugene G. Ballard 77,874(3) *
William R. Berkley 11,860,427(2)(3) 13.3%
W. Robert Berkley, Jr. 192,934(3) *
Ronald E. Blaylock 5,214 *
Mark E. Brockbank 356,714 *
George G. Daly 5,478 *
Rodney A. Hawes, Jr. 1,000 *
Ira S. Lederman 143,743(3)(4) *
Richard G. Merrill 27,432(5) *
Jack H. Nusbaum 26,812 *
Mark L. Shapiro 8,593 *
James G. Shiel 123,443(3) *
------------------------------
* Less than 1%.
(1) These amounts do not reflect the 3-for-2 common stock split effected on
April 8, 2005.
(2) Includes 4,726,674 shares of common stock and 1,708,954 shares of common
stock held in separate limited liability companies of which Mr. Berkley is
the sole member, and 26,913 shares held by Mr. Berkley's wife, as to which
shares he disclaims beneficial ownership.
(3) The amounts shown for Messrs. Ballard, Berkley, Berkley, Jr., Lederman and
Shiel include 50,624, 2,562,187, 162,001, 78,105, and 84,375 shares of
common stock, respectively, which are subject to stock options that are
either currently exercisable or are exercisable within sixty days of March
24, 2005, and 25,000, 292,500, 25,000, 25,000 and 19,250 shares of common
stock underlying restricted stock units (RSUs), respectively, which are
subject to forfeiture until vested.
(4) The amount shown for Mr. Lederman includes 2,712 shares of common stock held
in accounts for his children, as to which Mr. Lederman is a custodian.
(5) The amount shown for Mr. Merrill represents shares of common stock held in a
family trust with Mr. Merrill and his spouse as trustees.
(6) The amounts shown for all directors and executive officers as a group
include an aggregate of 3,167,354 shares of common stock which are subject
to stock options that are either currently exercisable or are exercisable
within sixty days of March 24, 2005 and are held by executive officers of
the Company, 467,000 shares of common stock underlying RSUs, which are
subject to forfeiture until vested, and 3,662 shares of common stock which
are held by executive officers under the Company's Profit Sharing Plan.
The Company knows of no arrangements, including any pledge by any person of
securities of the Company, the operation of which may at a subsequent date
result in a change of control of the Company. Under applicable Insurance Holding
Company Acts in various states, a potential owner cannot exercise voting control
over an amount in excess of 10% of the Company's outstanding voting securities
(5% in the State of Florida) without obtaining prior regulatory approval.
13
TRANSACTIONS WITH MANAGEMENT AND OTHERS
During 2004, Interlaken Capital, Inc., a company substantially owned and
controlled by William R. Berkley, the Company's Chairman of the Board and Chief
Executive Officer, paid rent of approximately $10,000 to the Company for
separate office space on the Company's premises and was reimbursed approximately
$5,000 by the Company for certain expenses, such as office supplies. Certain of
the Company's employees perform services for Interlaken as well for which
Interlaken compensates them separately.
During 2004, the Company engaged in certain transactions with Associated
Community Brokers, Inc., an insurance agency owned by Associated Community
Bancorp, Inc. William R. Berkley, the Company's Chairman of the Board and Chief
Executive Officer, serves as Chairman of the Board of Directors and is the
majority stockholder of Associated Community Bancorp, Inc. During 2004,
Associated Community Brokers, Inc. received commissions (both directly and
indirectly) from the relevant insurance carriers in the amount of $397,757 in
connection with insurance brokerage services provided to the Company. This
relationship was pre-approved by disinterested directors selected by the Board.
Jack H. Nusbaum, a director of the Company, is Chairman of Willkie Farr &
Gallagher LLP, outside counsel to the Company.
SUPPLEMENTAL BENEFITS AGREEMENT
On August 19, 2004, the Company entered into a Supplemental Benefits
Agreement with William R. Berkley, the Company's Chairman and Chief Executive
Officer. Under the agreement, upon the earliest to occur of: (a) Mr. Berkley's
resignation from employment as Chief Executive Officer for any reason; (b) any
termination of his employment by the Company other than for "cause," or (c)
termination of his employment by reason of his death, Mr. Berkley will be
entitled to an annual retirement benefit equal to the greater of (1) $1,000,000,
or (2) fifty percent (50%) of his highest average three-year compensation over
the prior ten fiscal years, but not exceeding one hundred fifty percent (150%)
of his average five-year compensation over the prior five fiscal years. If such
termination occurs following Mr. Berkley's 72nd birthday, he will be entitled to
an enhanced retirement benefit, actuarially increased to reflect the passage of
time from the date Mr. Berkley attained age 72 until the date of such
termination.
The retirement benefit will be paid annually for the remainder of Mr.
Berkley's life, and if he predeceases his spouse, fifty percent (50%) of such
benefit will be paid annually to his spouse for the remainder of her life. Mr.
Berkley may elect to have his spouse receive one hundred percent (100%) of the
retirement benefit following his death, provided, that, in such event, the
retirement benefit will be reduced by an amount such that the payments made to
Mr. Berkley and his spouse following such election will be the actuarial
equivalent to the payments that would otherwise been made had no such election
occurred.
Under the agreement, Mr. Berkley and his spouse will also be entitled to
receive continued health insurance coverage for the remainder of their
respective lives. During the two-year period following his termination or, if
longer, the period that Mr. Berkley performs consulting services to Company or
remains Chairman of the Board, he will be entitled to continue to receive
certain perquisites, including
14
continued use of the Company plane and a car and driver, in a manner consistent
with his prior use of such perquisites. Additionally, for so long as Mr. Berkley
requests, following such termination, the Company is required to provide him
with office accommodations and support, including secretarial support, in a
manner consistent with that provided prior to such termination. To the extent
that any benefits under the agreement or otherwise result in the imposition of
an excise tax under Section 4999 of the Internal Revenue Code, Mr. Berkley will
receive an additional payment to hold him harmless against such excise tax.
The agreement prohibits Mr. Berkley from competing against the Company for
two years following his resignation of employment other than for "good reason,"
during which time Mr. Berkley has agreed to be available to provide consulting
services to the Company.
15
COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee") is comprised
entirely of independent, non-management directors. The Committee has overall
responsibility for discharging the Board of Director's responsibility relating
to compensation of the Chief Executive Officer ("CEO"), other senior executive
officers and directors.
COMPENSATION PHILOSOPHY. The Committee follows a compensation philosophy
under which the principal determinants of compensation are both the current and
long-term financial performance of the Company, together with achievement of
non-financial corporate objectives and individual performance. The Company's
performance is reviewed by the Committee in both absolute terms and relative to
the performance of the property and casualty insurance industry as a whole. The
Committee believes that this approach provides incentives to the CEO and other
management personnel to focus on meeting key corporate strategic objectives,
such as enhancing returns and driving profitable growth while recognizing
individual achievements. Focusing on these key objectives should in turn enhance
stockholder value. The Committee also believes that it continues to be important
to use compensation to attract and reward executives who contribute to the
Company's long-term success by demonstrated, sustained performance.
To this end, the Company relies on salary, annual cash incentive awards,
equity-based compensation through the 2003 Stock Incentive Plan and long-term
cash incentives through the 2004 Long-Term Incentive Compensation Plan. The
Company has not entered into employment agreements with any of its officers. The
Company has entered into a Supplemental Benefits Agreement with the CEO, which
is described in the proxy statement under the heading Supplemental Benefits
Agreement.
For 2004, the Committee retained Hewitt Associates ("Hewitt") to provide
advice with respect to executive compensation. Hewitt advised the Committee with
respect to the plans referred to below and with respect to the compensation of
the CEO for 2004.
2004 COMPANY PERFORMANCE. Because financial performance is a critical
driver of executive compensation, the following is an overview of the Company's
2004 performance. This past year was an exceptional year for W. R. Berkley
Corporation as the Company delivered record results:
* Return on stockholders' equity rose to 26%, the highest in nearly three
decades, substantially surpassing the Company's targeted return of 15%
* The Company's combined ratio performance in 2004 exceeded the industry's
overall combined ratio performance by more than 8.3 points
* Net income reached a new high of $4.97 per share, advancing 28% over 2003
* Net premiums written increased 16% to $4.3 billion
* Cash flow from operations increased 15.7% to $1.6 billion
* Stock price on the New York Stock Exchange closed at $47.17 on December
31, a 35% increase since the beginning of the year
16
Through the leadership of the CEO and the other senior executive officers,
the Company achieved these results by capitalizing on increasing insurance
prices and improving insurance policy terms and conditions, while improving the
Company's market position relative to its competitors.
The primary components of senior executive officer compensation are base
salary, annual cash incentive compensation and long-term incentive compensation
of both cash and equity.
BASE SALARY. With respect to base compensation in 2004 for senior
executive officers other than the CEO, the Committee considered the Company's
performance, past pay levels, existing market conditions and recommendations of
the CEO with respect to such compensation.
ANNUAL INCENTIVE. The annual incentive compensation for senior executive
officers, other than the CEO, for 2004 was based primarily on the achievement of
return on capital goals for 2004 set for the Company as a whole, and for those
senior executives with business segment responsibility, the specific business
segment returns. Additional individual goals were established for each senior
executive based on the strategic direction for the areas managed. Actual awards
for 2004 were determined by the CEO and were based on an incentive compensation
range approved by the Committee. Due to positive results in many of the business
segments, and for the Company as a whole, most senior executive officers
received an increase in annual incentive compensation over prior years.
EQUITY-BASED COMPENSATION. Under the 2003 Stock Incentive Plan, options,
restricted stock units and other equity-based awards can be granted to the CEO
and to other executives on a discretionary basis. In the past, the Committee has
exercised this discretion to make grants based on an evaluation of each
individual's ability to contribute to the Company's long-term growth and
profitability. In addition, the Committee has also considered the level of a
recipient's annual salary. Historically, it had generally been the Company's
practice to grant stock options every other year.
In 2004 the Committee reviewed the Company's long-term incentive program.
The Committee determined that restricted stock unit grants would provide a
strong retention vehicle for senior executives and key employees while further
aligning their interests with those of the stockholders. Alignment with
stockholder interests comes not only through stock price appreciation, but also
through downside exposure and the dividend stream. In May 2004, in lieu of stock
options, the Committee made restricted stock unit grants under the 2003 Stock
Incentive Plan to the CEO and certain executive officers. Restricted stock units
for 77,000 shares of common stock were granted to senior executive officers
other than the CEO. Grant date values for units granted to the five executive
officers whose compensation is disclosed in the proxy statement are set forth in
the Summary Compensation Table under the heading "Executive Compensation." These
restricted stock units vest after five years, with no incremental vesting of the
units during the five year period, and the receipt of the actual shares is
deferred until the executive retires from the Company or as otherwise provided
in the agreement. This deferral allows recipients to remain fully invested in
the Company and aligned with stockholders for the remainder of their careers.
LONG-TERM INCENTIVE COMPENSATION PLAN. In 2004 the Company adopted and the
stockholders approved the W. R. Berkley Corporation 2004 Long-Term Incentive
Plan (the "LTIP"). The LTIP is a cash-based plan that does not provide for the
payment of any equity compensation. It is designed to encourage teamwork among
certain key employees of the Company and its subsidiaries and affiliates to
foster the achievement of the Company's long-term goals, to reward these
employees with pay that relates to the Company's performance and to provide a
means through which the
17
Company may attract, motivate and retain talented individuals who can assist the
Company in achieving its long-term goals. Compensation payable under the LTIP is
based on long-term corporate performance and, with respect to the awards granted
in 2004, is tied to an increase in book value, which has historically been
correlated with stockholder value.
In March 2004, awards of 22,500 units were granted under the LTIP, subject
to stockholder approval of the LTIP, to senior executive officers other than the
CEO. The units are subject to a five (5) year performance period and are also
subject to certain continued employment conditions. The cumulative unit value
over the course of the performance period will be payable only at the end of
such performance period, or earlier upon certain trigger events, and only to the
extent such continued employment conditions are satisfied.
CEO COMPENSATION. In general, the CEO's compensation is based on the
Committee's evaluation of corporate performance and the CEO's individual
performance based on specific targets.
With respect to base salary, based on the compensation philosophy stated
above and the data provided by Hewitt, the Committee determined that the CEO's
base salary for 2004 should remain at $1,000,000.
With respect to the CEO's annual incentive bonus for 2004, the Committee
established financial performance targets and individual performance goals for
the CEO. Quantitative financial goals represented 67% of the target annual
incentive compensation for the CEO and individual non-financial goals
represented 33% of that target. Quantitative financial performance targets were
based on the Company's earnings per share, net income, net premiums written,
return on equity and the Company's combined ratio as compared to industry. The
targets were then compared with actual Company performance to determine the
level of achievement and amount of annual incentive compensation earned by the
CEO for the quantitative portion of the award. At the beginning of the year, the
Committee and the CEO agreed upon several objective, individual non-financial
goals that were deemed to be in line with the strategic needs of the Company. At
the end of the year, the Committee reviewed achievement of these individual
non-financial goals to determine the amount of incentive compensation earned for
that component.
Based on the results for 2004 outlined above, the Company exceeded target
performance with respect to substantially all quantitative financial goals in
2004. The CEO also achieved substantially all of the individual non-financial
goals established. As a result of these achievements, the Committee approved an
annual incentive payment for the CEO under the Annual Incentive Compensation
Plan of $4,137,000, which was above his target 2004 incentive compensation bonus
amount, but below the maximum amount allowable. In addition the Committee
decided to award, outside of the Annual Incentive Compensation Plan, a
discretionary quantitative bonus of $1,155,000 in recognition of achievements of
the CEO that exceeded plan and the significant increase in stockholder value
during the year. This discretionary bonus will not be deductible for tax
purposes by reason of Section 162(m) of the Internal Revenue Code. The total
annual incentive bonus of $6,042,000 is disclosed in the Summary Compensation
Table.
The Committee believes that the CEO's leadership has contributed greatly to
the Company's long-term financial strength and is important to the Company's
future earnings power. Therefore, as discussed earlier under Equity-Based
Compensation, restricted stock units of 90,000 shares of Common Stock were
granted to the CEO in May 2004. These units vest at the end of five years, with
18
no incremental vesting of the units during the five year period, and the receipt
of the actual shares is deferred until retirement or as otherwise provided in
the grant agreement. The CEO was granted an award of 40,000 units under the LTIP
in March 2004. This award is subject to the same terms described above under the
heading Long-Term Incentive Plan.
The Committee recognizes the long-standing stock ownership position of the
CEO and his continued commitment to the Company demonstrated by his acquisition
of additional shares of common stock of the Company from time to time. The
Committee also recognizes (i) the significant contribution to the Company the
CEO has made over the past 37 years and continues to make, (ii) that the CEO is
a founder of the Company, (iii) that the CEO has never had an employment
agreement with the Company and (iv) that the Company has never maintained a
supplemental retirement plan for the CEO. The Committee approved a supplemental
benefits agreement for the CEO that includes mutual obligations. A detailed
description of this agreement is set forth in the proxy statement under the
heading Supplemental Benefits Agreement.
POLICY ON QUALIFYING COMPENSATION FOR DEDUCTIBILITY. For purposes of
setting incentive compensation for the CEO, the Committee has determined that
the Company should consider the limitations on tax deductibility imposed under
Section 162(m) of the Internal Revenue Code. Section 162(m) disallows deductions
for compensation in excess of $1,000,000 per year paid by a public corporation
to certain of its executives unless certain criteria are met. In order to meet
the criteria, the Committee has determined that, subject to the matters
discussed below, the CEO's annual and long-term incentive compensation should be
structured as "qualified performance-based compensation," which is exempt from
the deduction limit. In general, this rule requires that the CEO's incentive
compensation be based on attainment of one or more objective performance goals,
which include quantitative financial goals and individual non-financial goals,
and that the Company's stockholders approve in the Annual Incentive Compensation
Plan both the performance criteria and the total amount that can be earned,
which approval was obtained. For these reasons, the incentive compensation for
the CEO is generally payable and/or granted under the Company's Annual Incentive
Compensation Plan, LTIP and 2003 Stock Incentive Plan, each of which was
approved by stockholders of the Company and is designed so that compensation
payable thereunder, or attributable to the exercise of options or the delivery
of shares in settlement of restricted stock units, will generally be exempt from
the deduction limits. The Committee believes that it is important to maintain
discretion to pay additional compensation in appropriate circumstances.
Therefore, the Committee may, in its discretion and where deemed appropriate,
pay compensation to the CEO or other executive officers in addition to
compensation earned under these plans. Such additional compensation may not be
"qualified performance-based compensation" and would not be exempt from the
deduction limits. The Committee believes that at times there are circumstances
where the payment of such additional
19
compensation may be justified as a means of furthering the Company's interest in
retaining and rewarding its key personnel.
Compensation and Stock Option
Committee
Richard G. Merrill, Chairman
Mark E. Brockbank
George G. Daly
April 5, 2005
The above report of the Compensation and Stock Option Committee shall not
be deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or under the Securities Exchange Act of 1934, except to the extent that the
Company specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such Acts.
20
EXECUTIVE COMPENSATION
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the Chairman of the Board
and Chief Executive Officer of the Company and the four other highest paid
executive officers of the Company whose earnings exceeded $100,000 in salary and
bonus.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------ ------------------------------------
AWARDS PAYOUTS
----------------------- ----------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#)(1) ($)
------------------ ---- --------- ---------- ------------ ---------- ---------- ----------
William R. Berkley............ 2004 1,000,000 6,042,000 247,431(2) 3,548,700(3) -- --
Chairman of the Board and 2003 1,000,000 4,933,562 268,110(6) 5,751,000(7) -- 10,000,000(8)
Chief Executive Officer 2002 1,000,000 5,036,000 269,140(9) -- 168,750 --
W. Robert Berkley, Jr. ....... 2004 425,000 285,000 -- 394,300(3) -- --
Senior Vice President -- 2003 370,000 215,000 -- 426,000(7) -- 500,000(8)
Specialty Operations 2002 300,000 185,000 -- -- 90,000 --
James G. Shiel................ 2004 425,000 280,000 -- 315,440(3) -- --
Senior Vice President -- 2003 405,000 215,050 -- 319,500(7) -- 500,000(8)
Investments 2002 385,000 200,000 -- -- 28,125 --
Ira S. Lederman............... 2004 425,000 280,000 -- 394,300(3) -- --
Senior Vice President -- 2003 385,000 215,100 -- 426,000(7) -- 500,000(8)
General Counsel and 2002 350,000 185,000 -- -- 33,750 --
Secretary
Eugene G. Ballard............. 2004 425,000 275,000 -- 394,300(3) -- --
Senior Vice President -- 2003 390,000 215,050 -- 426,000(7) -- 500,000(8)
Chief Financial Officer and 2002 360,000 185,000 -- -- 33,750 --
Treasurer
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)
------------------ ------------
William R. Berkley............ 227,229(4)(5)
Chairman of the Board and 190,032
Chief Executive Officer 163,821
W. Robert Berkley, Jr. ....... 101,413(4)(5)
Senior Vice President -- 81,904
Specialty Operations 64,952
James G. Shiel................ 94,930(4)
Senior Vice President -- 78,559
Investments 67,555
Ira S. Lederman............... 96,415(4)
Senior Vice President -- 69,226
General Counsel and 51,511
Secretary
Eugene G. Ballard............. 94,602(4)
Senior Vice President -- 63,124
Chief Financial Officer and 45,497
Treasurer
---------------
(1) These amounts reflect the 3-for-2 common stock splits effected on August 27,
2003 and July 2, 2002, but do not reflect the 3-for-2 common stock split
effected on April 8, 2005.
(2) Of this amount, $200,000 represents consulting fees paid by Berkley
International, LLC and $47,431 represents personal use of Company and
chartered aircraft.
(3) Represents the market value of the common stock underlying restricted stock
units (RSUs) granted on May 11, 2004 using the closing price per share on
the grant date ($39.43). As of December 31, 2004, Messrs. Berkley, Berkley,
Jr., Shiel, Lederman and Ballard held 292,500, 25,000, 19,250, 25,000 and
25,000 RSUs, respectively, and the underlying shares of common stock with
respect to such RSUs had a 2004 year-end value of $13,797,225, $1,179,250,
$908,023, $1,179,250 and $1,179,250, respectively.
(4) For Messrs. Berkley, Berkley, Jr., Shiel, Lederman and Ballard, these
amounts include contributions to the Profit Sharing Plan of $23,575 each,
premiums for term life insurance of $2,160 each, Benefit Replacement Plan
contributions of $93,637, $26,167, $26,213, $26,187 and $26,193,
respectively, interest accrued, but unfunded, on deferred compensation of
$46,653, $-0-, $35,040, $36,182 and $34,905, respectively, and certain
amounts of salary received in 2004 due to a one-time adjustment resulting
from the Company's change from a bi-weekly to semi-monthly payroll of
$19,231, $7,538, $7,942, $8,311 and $7,769, respectively.
(5) This amount includes $34,500 of Company director fees and $7,473,
representing the value of 189 shares of common stock awarded to directors,
for each of Messrs. Berkley and Berkley, Jr., and does not include outside
director fees paid directly by Kiln plc to such persons for serving in their
individual capacity as directors thereof.
(6) Of this amount, $200,000 represents consulting fees paid by Berkley
International, LLC and $68,110 represents personal use of Company and
chartered aircraft.
(7) Represents the market value of the common stock underlying restricted stock
units (RSUs) granted on April 4, 2003 using the closing price per share on
the grant date ($42.60, or, as adjusted for the 3-for-2 common stock split
effected on August 27, 2003, $28.40).
(8) Paid in February 2004. The units awarded in 2001 became fully vested and
payable as of December 31, 2003 after reaching the maximum unit value on an
accelerated basis due to the Company significantly exceeding its expected
performance during the relevant three-year period.
(9) Of this amount, $200,000 represents consulting fees paid by Berkley
International, LLC and $69,140 represents personal use of Company and
chartered aircraft.
21
The following table shows for the fiscal year ended December 31, 2004
information concerning the number and value of unexercised options for the
executive officers named in the Summary Compensation Table. None of these
executives exercised any options during 2004.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT FISCAL
YEAR-END YEAR-END
12/31/04(#) 12/31/04($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE(1) UNEXERCISABLE(2)
---- ----------------- -----------------
William R. Berkley.......................................... 2,255,625/ 70,961,850/
922,500 24,464,925
W. Robert Berkley, Jr. ..................................... 74,249/ 2,196,514/
276,751 7,078,166
James G. Shiel.............................................. 69,750/ 2,114,681/
43,313 1,217,586
Ira S. Lederman............................................. 62,636/ 1,956,179/
47,813 1,293,433
Eugene G. Ballard........................................... 33,750/ 1,296,169/
56,250 1,612,182
---------------
(1) These amounts do not reflect the 3-for-2 common stock split effected on
April 8, 2005.
(2) The unexercisable options are unvested options that are subject to
forfeiture in the event the executive voluntarily terminates employment with
the Company prior to vesting. In addition, all options, whether exercisable
or not, are subject to forfeiture in the event the executive's employment is
terminated for cause, and the value of unexercised options may be subject to
recapture by the Company in certain circumstances. As such, the executives
may never realize the full value of these options if such forfeiture or
recapture occurs.
In 2004 the Company adopted and the stockholders approved the W. R. Berkley
Corporation 2004 Long-Term Incentive Compensation Plan (the "LTIP"). The LTIP is
a cash-based plan that does not provide for the payment of any equity
compensation. It is designed to encourage teamwork among certain key employees
of the Company and its subsidiaries and affiliates to foster the achievement of
the Company's long-term goals, to reward these employees with pay that relates
to the Company's performance and to provide a means through which the Company
may attract, motivate and retain talented individuals who can assist the Company
in achieving its long-term goals. Compensation payable under the LTIP is based
on long-term corporate performance and is tied to an increase in stockholder
value. The following table shows for the fiscal year ended December 31, 2004 the
number of units granted by the Compensation and Stock Option Committee to the
executive officers named in the Summary Compensation Table.
22
LONG-TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER LONG-TERM INCENTIVE COMPENSATION PLAN(1)
PERFORMANCE
NUMBER OF PERIOD UNTIL
UNITS MATURATION OR 5 YEARS
NAME AWARDED(#) PAYOUT(1) THRESHOLD($)(2) MAXIMUM($)
---- ---------- ------------- --------------- -----------
William R. Berkley...... 40,000 5 years $2,127,107 $10,000,000
W. Robert Berkley,
Jr. .................. 3,000 5 years $ 159,533 $ 750,000
James G. Shiel.......... 2,500 5 years $ 132,944 $ 625,000
Ira S. Lederman......... 3,000 5 years $ 159,533 $ 750,000
Eugene G. Ballard....... 3,000 5 years $ 159,533 $ 750,000
---------------
(1) Each of these Units had a $-0- value at the time of grant. The future payout
value for each Unit is determined by multiplying the aggregate year-to-year
increase in the per-share book value of the Company's common stock over the
five-year performance period by a factor of ten. The dollar value of the
award to each named executive is the product of that per-Unit value and the
number of Units awarded to each such executive. The dollar value of the
awards will be paid to the executives at the end of the five-year
performance period, subject to earlier payout upon a termination of
employment on account of death, disability or retirement, upon a change of
control of the Company or the achievement of the awards' maximum payout
value. The Units are subject to forfeiture if certain continued employment
conditions are not satisfied through the end of the performance period. The
Units are also subject to forfeiture or recapture in the event the executive
violates certain noncompetition provisions required by the award during the
performance period and for two years following the end of the performance
period.
(2) This represents the current value of the awards based on the increase in the
per-share book value of the Company's common stock over the 2004 fiscal
year, the first year of the five-year performance period.
23
EQUITY COMPENSATION PLAN INFORMATION
The following table gives information about our common stock that may be
issued upon the exercise of options, warrants and rights under our existing
equity compensation plans and arrangements as of December 31, 2004. These plans
include the W. R. Berkley Corporation 2003 Stock Incentive Plan and the Amended
and Restated W. R. Berkley Corporation 1997 Directors Stock Plan. The table also
includes information regarding restricted stock units ("RSUs") awarded to
officers of the Company and its subsidiaries on April 4, 2003 (as adjusted for
the 3-for-2 common stock split effected on August 27, 2003, but not adjusted for
the 3-for-2 stock split effected on April 8, 2005) under a plan not approved by
stockholders.
(C) NUMBER OF
(A) NUMBER OF SECURITIES REMAINING
SECURITIES TO BE (B) WEIGHTED-AVERAGE AVAILABLE FOR FUTURE
ISSUED UPON EXERCISE PRICE OF ISSUANCE UNDER EQUITY
EXERCISE OF OUTSTANDING COMPENSATION PLANS
OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
OPTIONS, WARRANTS WARRANTS AND REFLECTED IN
PLAN CATEGORY AND RIGHTS RIGHTS COLUMN (A))
------------- ----------------- -------------------- ------------------------
Equity compensation plans
approved by stockholders..... 8,232,016 $19.59 3,174,842
Equity compensation plans not
approved by stockholders..... 450,000(1) $28.40 --
--------- ------ ---------
Total.......................... 8,682,016 $20.04 3,174,842
========= ====== =========
---------------
(1) On April 4, 2003 the Company granted an aggregate of 450,000 restricted
stock units ("RSUs") (as adjusted for the 3-for-2 common stock split
effected on August 27, 2003) to certain officers of the Company and its
subsidiaries. Such grants were made prior to the Company's adoption and its
stockholder's approval of the W. R. Berkley Corporation 2003 Stock Incentive
Plan. Each RSU represents the right to receive one share of common stock,
subject to vesting requirements and continued employment, following the
recipient's termination of employment with the Company and its subsidiaries.
Delivery of shares of common stock to the RSU recipients in satisfaction of
the settlement of RSUs will be satisfied exclusively from treasury shares
held by the Company. The RSUs held by any recipient will vest in full in one
installment on April 4, 2008 (the "Vesting Date"), provided the recipient
remains employed with the Company and/or its subsidiaries on the Vesting
Date. If a recipient terminates employment prior to the Vesting Date on
account of death, disability or retirement, a pro rata share of the number
of RSUs granted to the recipient shall vest and be distributed to the
recipient as of such termination date. Upon termination of employment for
any other reason prior to vesting, all RSUs held by the recipient will
expire and be forfeited. In the event of a Change of Control of the Company
(as defined in the RSU Agreements) all RSUs will vest in full and the shares
of common stock underlying each RSU will be delivered to the RSU recipients.
The Compensation and Stock Option Committee of the Board retains the right
to accelerate the vesting of any or all RSUs at any time, for any reason.
The following list sets forth the names of the executive officers of the
Company who received such RSUs and the number of RSUs each individual
received: William R. Berkley -- 202,500; W. Robert Berkley, Jr. -- 15,000;
Eugene G. Ballard -- 15,000; Robert P. Cole -- 11,250; Paul J.
Hancock -- 7,500; Robert C. Hewitt -- 7,500; Ira S. Lederman -- 15,000;
James W. McCleary -- 11,250; Clement P. Patafio -- 3,750; and James G.
Shiel -- 11,250; and an aggregate of 150,000 RSUs were granted to 24 other
officers of the Company and its subsidiaries.
24
COMPANY STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total return on the Company's
common stock for the last five fiscal years with the cumulative total return on
the Standard & Poor's (S&P) 500 Index and a Custom Composite Index over the same
period (assuming the investment of $100 in each category on December 31, 1999
and the reinvestment of all dividends). The Custom Composite Index was selected
based upon current comparable industry criteria.
(CUMULATIVE TOTAL RETURN LINE GRAPH)
----------------------------------------------------------------------------------------------------------------
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04
----------------------------------------------------------------------------------------------------------------
W. R. Berkley Corporation........ $100 $231 $266 $297 $397 $539
S&P 500(R)....................... $100 $ 91 $ 80 $ 62 $ 80 $ 89
Custom Composite Index (11
Stocks)......................... $100 $157 $144 $123 $149 $162
The Custom Composite Index consists of ACE Limited, The Chubb Corporation,
Cincinnati Financial Corp., CNA Financial Corp., Everest Re Group, Ltd., HCC
Insurance Holdings, Inc., Markel Corp., The Ohio Casualty Corporation, SAFECO
Corp., The St. Paul Travelers Companies, Inc. and XL Capital Ltd.
25
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
KPMG LLP has been appointed by the Board as the independent registered
public accounting firm to audit the financial statements of the Company for the
fiscal year ending December 31, 2005. The appointment of this firm was
recommended to the Board by the Audit Committee. The Board is submitting this
matter to a vote of stockholders in order to ascertain their views. If the
appointment of KPMG LLP is not ratified, the Board will reconsider its action
and will appoint auditors for the 2005 fiscal year without further stockholder
action. Further, even if the appointment is ratified by stockholder action, the
Board may at any time in the future in its discretion reconsider the appointment
without submitting the matter to a vote of stockholders.
It is expected that representatives of KPMG LLP will attend the Annual
Meeting, will have the opportunity to make a statement if they desire to do so
and will be available to respond to appropriate stockholder questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF THE APPOINTMENT OF KPMG LLP.
AUDIT AND NON-AUDIT FEES
The aggregate amount of the fees billed or expected to be billed by KPMG
for its professional services in 2004 and 2003 were as follows:
TYPE OF FEES 2004($) 2003($)
------------ --------- ---------
Audit Fees(1)............................................... 4,200,000 2,289,750
Audit-Related Fees(2)....................................... 202,347 40,000
Tax Fees(3)................................................. 111,520 68,250
All Other Fees.............................................. -- --
Total Fees.................................................. 4,513,867 2,398,000
------------------------------
(1) Audit fees consist of fees the Company paid to KPMG for professional
services for the audit of the Company's consolidated financial statements
included in its Form 10-K and review of financial statements included in its
Forms 10-Q, or for services that are normally provided by the accountant in
connection with statutory and regulatory filings or engagements and public
offerings of securities.
(2) Fees associated with the audit of health and benefit plans.
(3) Tax fees consist of fees for tax consultations and tax compliance services.
PRE-APPROVAL POLICIES
Consistent with SEC policies regarding auditor independence, the Audit
Committee has adopted a policy regarding the pre-approval of services of the
Company's independent auditors. Pursuant to this policy, such services may be
generally pre-approved on an annual basis; other services, or services exceeding
the pre-approved cost levels, must be specifically pre-approved by the Audit
Committee. The Audit Committee may also delegate pre-approval authority to one
or more of its members. All of such fees for 2004 were approved by the Audit
Committee in accordance with this policy.
26
AUDIT COMMITTEE REPORT
To the Board of Directors of W. R. Berkley Corporation:
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the system of
internal controls.
In this context, the Audit Committee has met and held discussions with
management and KPMG LLP, the Company's independent registered public accounting
firm, regarding the fair and complete presentation of the Company's results and
the assessment of the Company's internal control over financial reporting. The
Audit Committee has discussed significant accounting policies applied by the
Company in its financial statements, as well as alternative treatments.
Management represented to the Audit Committee that the Company's consolidated
financial statements were prepared in accordance with accounting principles
generally accepted in the United States of America, and the Audit Committee has
reviewed and discussed the consolidated financial statements with management and
the independent registered public accounting firm. The Audit Committee discussed
with the independent registered public accounting firm matters required to be
discussed by Statement on Auditing Standards No. 61 (Communication With Audit
Committees).
In addition, the Audit Committee has discussed with the independent
registered public accounting firm the auditor's independence from the Company
and its management, including the matters in the written disclosures required by
the Independence Standards Board Standard No. 1 (Independence Discussions With
Audit Committees). The Committee also has considered whether the independent
registered public accounting firm's provision of non-audit services to the
Company is compatible with the auditor's independence.
During the course of 2004, management completed the documentation, testing
and evaluation of the Company's system of internal control over financial
reporting in response to the requirements set forth in Section 404 of the
Sarbanes-Oxley Act of 2002 and related regulations. The Audit Committee was kept
apprised of the progress of the evaluation and provided oversight and advice to
management during the process. At the conclusion of the process, the Committee
reviewed a report prepared by management regarding the effectiveness of the
Company's internal control over financial reporting. The Committee also reviewed
the report of management contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 2004 filed with the SEC, as well as KPMG LLP's
reports included in such Annual Report related to its audit of (i) the
consolidated financial statements and financial statement schedules, (ii)
management's assessment of the effectiveness of internal control over financial
reporting and (iii) the effectiveness of internal control over financial
reporting. The Committee continues to oversee the Company's efforts related to
its internal control over financial reporting and management's preparations for
the evaluation in 2005.
The Audit Committee has concluded that the independent registered public
accounting firm is independent from the Company and its management.
The Audit Committee discussed with the Company's internal auditor and
independent registered public accounting firm the overall scope and plans for
their respective audits. The Audit Committee met with the internal auditor and
the independent registered public accounting firm, with and without
27
management present, to discuss the results of their examinations, the
evaluations of the Company's internal controls, and the overall quality of the
Company's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2004, for filing with the
Securities and Exchange Commission. The Audit Committee has selected, and the
Board of Directors has ratified, subject to shareholder ratification, the
selection of KPMG LLP as the Company's independent registered public accounting
firm for the fiscal year ending December 31, 2005.
Audit Committee
Mark L. Shapiro, Chairman
Ronald E. Blaylock
Philip J. Ablove
April 5, 2005
The above report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
OTHER MATTERS TO COME BEFORE THE MEETING
Management is not aware of any matters to come before the Annual Meeting
other than as set forth above. However, since matters of which management is not
now aware may come before the Annual Meeting or any adjournment thereof, the
proxies intend to vote, act and consent in accordance with their best judgment
with respect thereto. Upon receipt of such proxies (in the form enclosed and
properly signed) in time for voting, the shares represented thereby will be
voted as indicated therein and in this proxy statement.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the copies of Forms 3, 4 and 5 received by
it, or written representations from certain reporting persons that no Forms 5
were required for such persons, the Company believes that all filing
requirements under Section 16(a) of the Exchange Act applicable to its officers,
directors and ten-percent stockholders were complied with during the fiscal year
ended December 31, 2004, except that the purchase of 1,000 shares of the
Company's stock in July 2004 by a director, Rodney A. Hawes, Jr., was not timely
reported. A filing reporting such purchase of shares has since been made.
28
STOCKHOLDER NOMINATIONS FOR BOARD MEMBERSHIP
AND OTHER PROPOSALS FOR 2006 ANNUAL MEETING
It is anticipated that the next Annual Meeting of Stockholders after the
one scheduled for May 10, 2005 will be held on or about May 2, 2006. The
Company's By-Laws require that, for nominations of directors or other business
to be properly brought before an Annual Meeting of Stockholders, written notice
of such nomination or proposal for other business must be furnished to the
Company. Such notice must contain certain information concerning the nominating
or proposing stockholder and information concerning the nominee and must be
furnished by the stockholder (who must be entitled to vote at the meeting) to
the Secretary of the Company, in the case of the Annual Meeting of Stockholders
to be held in 2006 no earlier than February 9, 2006 and no later than March 11,
2006. A copy of the applicable provisions of the By-Laws may be obtained by any
stockholder, without charge, upon written request to the Secretary of the
Company at the address set forth below.
Since the Company did not receive notice of any stockholder proposal for
the 2005 Annual Meeting, it will have discretionary authority to vote on any
stockholder proposals presented at such meeting.
In addition to the foregoing, and in accordance with the rules of the
Securities and Exchange Commission, in order for a stockholder proposal,
relating to a proper subject, to be considered for inclusion in the Company's
proxy statement and form of proxy relating to the Annual Meeting of Stockholders
to be held in 2006, such proposal must be received by the Secretary of the
Company by December 13, 2005 in the form required under and subject to the other
requirements of the applicable rules of the Securities and Exchange Commission.
Any such proposal should be submitted by certified mail, return receipt
requested, or other means, including electronic means, that allow the
stockholder to prove the date of delivery.
A COPY OF ANY OR ALL OF THE COMPANY'S (I) ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2004; (II) CORPORATE GOVERNANCE GUIDELINES;
(III) STATEMENT OF BUSINESS ETHICS; (IV) STATEMENT OF BUSINESS ETHICS FOR THE
BOARD OF DIRECTORS; (V) CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS; (VI) AUDIT
COMMITTEE CHARTER; (VII) NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER;
AND (VIII) NOMINATING AND STOCK OPTION COMMITTEE CHARTER IS AVAILABLE ON OUR
WEBSITE AT WWW.WRBERKLEY.COM AND IS ALSO AVAILABLE WITHOUT CHARGE TO ANY
STOCKHOLDER OF THE COMPANY WHO REQUESTS A COPY IN WRITING. REQUESTS FOR COPIES
OF ANY OR ALL OF THESE DOCUMENTS SHOULD BE DIRECTED TO THE SECRETARY, W. R.
BERKLEY CORPORATION, 475 STEAMBOAT ROAD, GREENWICH, CONNECTICUT 06830.
By Order of the Board of Directors,
WILLIAM R. BERKLEY
Chairman of the Board and
Chief Executive Officer
29
W. R. BERKLEY CORPORATION
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
W. R. BERKLEY CORPORATION
The undersigned stockholder of W. R. BERKLEY CORPORATION hereby appoints
EUGENE G. BALLARD and IRA S. LEDERMAN, and either of them, the true and lawful
agents and proxies of the undersigned, with full power of substitution to each
of them, to vote all shares of common stock which the undersigned may be
entitled to vote at the Annual Meeting of Stockholders to be held at the
executive offices of the Company, 475 Steamboat Road, Greenwich, Connecticut on
May 10, 2005, and at any adjournment of such meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
See reverse for voting instructions.
--------------------------------------------------------------------------------
--PLEASE DETACH HERE--
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 and 2.
1. ELECTION OF DIRECTORS:
01 Rodney A. Hawes, Jr.
02 Jack H. Nusbaum
03 Mark L. Shapiro
[ ] FOR all nominees listed except as marked to the contrary below
[ ] WITHHOLD AUTHORITY to vote for all nominees listed
INSTRUCTION: To withhold authority to vote for any indicated nominee, write the
number(s) of the nominee(s) in the box provided to the right [ ]
FOR AGAINST ABSTAIN
2. To ratify the appointment of [ ] [ ] [ ]
KPMG LLP as the independent registered
public accounting firm for W. R. Berkley
Corporation for the fiscal year ending
December 31, 2005
In their discretion, the proxies are authorized to vote upon such other matters
as may properly come before the meeting.
1
Address change? Mark box [ ]
Indicate changes below:
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement for the 2005 Annual Meeting and the Annual Report for the fiscal
year ended December 31, 2004.
DATE, SIGN AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
Date_____________________________
[ ]
Signature(s) in Box
Please sign your name or names exactly as printed opposite. When signing as
attorney, executor, administrator, trustee, guardian or corporate officer,
please give your full title as such. Joint owners should each sign. DATE, SIGN
AND MAIL PROMPTLY IN THE ENCLOSED ENVELOPE.
2