Non-employee directors receive an annual retainer of
$35,000 for service on the Board of Directors plus $3,000 for each board
meeting and presentation attended. The chairman of the Audit Committee receives
annually a fee of $10,000 and the chairmen of each other board committee and
the presiding director of the non-management directors receive a fee of $5,000.
Non-employee directors also receive $1,500 for each committee meeting attended.
Prior to the commencement of each calendar year, directors are entitled to
elect to receive common shares in lieu of the cash compensation that would
otherwise be payable to them during such year. In addition to the annual
retainer, chairmen fees and meeting fees, each non-employee director receives
annually a grant of $35,000 worth of common shares pursuant to a restricted
stock grant at the fair market value of the common shares at the time of grant.
Prior to the commencement of each calendar year, directors may elect to receive
cash in lieu of the equity compensation that would otherwise be payable to them
during such year with the approval of the Compensation Committee. The
restricted stock vests six months after the date of grant. Directors who are
also employees do not receive compensation for their service as directors.
In addition to compensation received for service on
the Company’s board, Mr. Keane receives an annual retainer of $35,000 for
services as Chairman of the Board of AXIS Specialty Holdings Ireland Limited
and a director of AXIS Specialty Europe Limited plus $1,000 for each meeting
attended, and Mr. Grupe receives an annual retainer of $25,000 for
services as a director of AXIS Specialty Europe Limited and AXIS Re Limited. Prior
to the commencement of each calendar year, these directors are
6
entitled to elect to
receive common shares in lieu of the cash compensation that would otherwise be
payable to them during such year.
Shares issued to our directors in lieu of fees and
stock options and restricted stock grants made to our directors are made
pursuant to the AXIS Capital Holdings Limited 2003 Directors Long-Term Equity
Compensation Plan (the “Directors Plan”). The Directors Plan has been adopted
by our Board of Directors and approved by our shareholders. The maximum number
of common shares with respect to which awards may be granted under the
Directors Plan is 1,200,000. As of February 28, 2006, non-qualified stock
options exercisable for 120,000 common shares and 18,229 restricted shares have
been granted under the Directors Plan. The board has broad authority to
administer the plan, including the authority to determine when awards will be
made, the type and amount of awards, the exercise price of options, any
limitations, restrictions or conditions applicable to each award, if any, and
the terms of any instrument that evidences an award.
Options awarded under the Directors Plan are generally
granted for a ten-year term, but may terminate earlier if the participant’s
service terminates prior to the end of the term. The exercise price of an
option must be at least equal to the fair market value of the shares on the
date such option is granted. The exercise price of options may be paid (1) in
cash, (2) by delivery of previously-acquired common shares, (3) by
any combination of (1) and (2), (4) pursuant to a cashless exercise
program or (5) by any other means that our Board of Directors approves in
its discretion. Holders of restricted stock may generally exercise full voting
rights and may be credited with regular dividends paid with respect to the
underlying shares while they are so held. The shares generally become freely
transferable after the last day of the applicable period of restriction. Upon a
change in control of the Company, all outstanding stock options will become
immediately exercisable and remain exercisable throughout their entire term and
all restrictions with respect to outstanding restricted stock awards will
lapse.
Each non-employee director
may elect to participate in an unfunded nonqualified deferred compensation plan
(the “Directors Deferred Plan”), which has also been adopted by our Board of Directors
and approved by our shareholders. The Directors Deferred Plan allows
participating directors to elect (1) the amount, if any, of cash or stock
received as fees for services to be deferred (expressed as a dollar amount,
number of shares or percentage) and (2) the form in which payment is to be
made (lump sum or three annual installments). Directors who choose to defer
fees otherwise payable in shares are credited a number of phantom stock units
equal in amount to the number of shares of stock deferred. As of
February 28, 2006, 45,668 shares of phantom stock have been issued under
the Directors Deferred Plan. When a cash dividend is paid on the stock, the
portion of the participant’s deferral account denominated in phantom share
units is credited with additional phantom share units (or portions thereof).
Directors who choose to defer fees otherwise payable in cash are credited with
interest on their cash deferral at a rate for the year of deferral that is 100
basis points above the 12-month LIBOR rate for deposits of U.S. dollars.
Amounts deferred are 100% vested at all times. Generally, benefits are paid
upon termination of service as a director. The plan is administered by our
Board of Directors.
7
Executive Officers
The
table below sets forth certain information concerning our executive officers:
Name
Age
Positions
Michael A. Butt(1)
63
Chairman of the Board
John R. Charman(1)
53
Chief Executive Officer
and President
Andrew Cook
43
Chief Financial Officer
Dennis B. Reding
57
Chairman, AXIS Insurance
William A. Fischer
45
Chief Executive Officer
and President, AXIS Global Reinsurance
John Gressier
38
Deputy
Chairman, AXIS Insurance and Chief Executive Officer and
President of AXIS
Global Insurance
Karl Mayr
56
Chief Executive Officer
and President, AXIS Re Europe
Michael E. Morrill
46
Chief Executive Officer
and President, AXIS U.S. Reinsurance
F. Marshall Turner, II
48
Chief Executive Officer
and President, AXIS U.S. Insurance
Brian W. Goshen
44
Chief Human Resources
Officer
John J. Murray
45
Chief Operations Officer
Richard Strachan
38
Chief Claims Officer
(1)
Biography available
under “—Directors.”
Andrew Cook
has been Chief
Financial Officer of the Company since our inception. He is also a director and
Executive Vice President of our subsidiary, AXIS Specialty Limited. Mr. Cook,
a chartered accountant, has 18 years of industry experience. From 1993 to
1999, he served as Senior Vice President and Chief Financial Officer of LaSalle
Re Holdings Limited. Mr. Cook worked as an independent consultant
assisting clients in raising private equity capital from 1999 to 2000. He then
served as Senior Vice President and Chief Financial Officer of Mutual Risk
Management Limited from 2001 until joining us in late 2001. Mr. Cook has
resigned as an officer of the Company effective April 1, 2006.
Dennis B. Reding
has been
Chairman of AXIS Insurance since January 2005. From January 2003
until December 2004, he was Chief Executive Officer of AXIS U.S.
Insurance. He is also Chief Executive Officer and President of our
subsidiaries, AXIS Specialty U.S. Holdings, Inc. and AXIS Specialty U.S.
Services, Inc., and an Executive Vice President of our subsidiaries, AXIS
Specialty Insurance Company, AXIS Reinsurance Company, AXIS Surplus Insurance
Company and AXIS Insurance Company. Mr. Reding has 35 years of industry
experience. Mr. Reding was President and Chief Executive Officer of
Westchester Specialty Group from 1992 to 1998. He then served as President and
Chief Executive Officer of ACE USA, Inc. from 1998 to 2001 and President
of ACE INA Holdings, Inc. from 2001 to 2002. Mr. Reding was Chairman
and Chief Executive Officer of Combined Specialty Group, Inc., an Aon
subsidiary, in 2002.
William A. Fischer
has been
Chief Executive Officer and President of AXIS Global Reinsurance since our
inception. He is also Executive Vice President of our subsidiary, AXIS
Specialty Limited. Mr. Fischer has 19 years of industry experience. Mr. Fischer
began his career at Skandia America Reinsurance in 1987 as a treaty
underwriter, where he served until November 1991. From November 1991
to October 1994, he served as Vice President of Treaty Property
Underwriting at Transatlantic Reinsurance Company. Mr. Fischer then served
as Executive Vice President with responsibilities for property, accident and
health, and financial products at Everest Re Group, Ltd. from October 1994
to May 2001. He then served as a Senior Vice President of the Brokered
Group of American Re, where he was responsible for all property business, until
joining us in late 2001.
John
Gressier
has been Chief Executive Officer and President of
AXIS Global Insurance since April 2002. He is also Chairman of the Board
of our subsidiary, AXIS Specialty Europe Limited, a director of our subsidiary,
AXIS Specialty Holdings Ireland Limited and Executive Vice President of our
8
subsidiary,
AXIS Specialty Limited. Mr. Gressier has over 19 years of experience
in the insurance industry. Mr. Gressier served as an underwriter at
Charman Underwriting Agencies from 1989 until ACE Limited acquired Charman in
1998. Mr. Gressier then served as Deputy Underwriter of Syndicates
488/2488, Director of ACE Global Markets Underwriting Limited and Director of
Marine and Specialty Lines for Syndicate 2488. He was also a member of ACE
Global Markets Executive Underwriting Committee. In February 2001, Mr. Gressier
was appointed Joint Active Underwriter of Syndicate 2488 and director of the
ACE Agency Board, where he served until joining us in 2002.
Dr. Karl Mayr
has been Chief
Executive Officer and President of AXIS Re Europe since August 2003. He is
also Chairman of the Board of our subsidiary, AXIS Re Limited, and a director
of our subsidiary, AXIS Specialty Holdings Ireland Limited. Mr. Mayr has
26 years of reinsurance experience. He joined Frankona
Ruckversicherungs-AG in 1980, where he was appointed a member of the Board of
Management in 1992. From 1988 to 1992, he held senior officer positions at the
U.S. branch of Frankona in Kansas City, Missouri, which he headed up from 1990.
After the acquisition of Frankona by ERC, he served on various boards of
management in the German companies as well as a director on the boards of
several European affiliates. From 2002 until July 2003, Mr. Mayr was
Chief Executive Officer of GE Frankona Re.
Michael
E. Morrill
has been Chief Executive Officer and President of
AXIS U.S. Reinsurance since August 2002. He is also a director and an
Executive Vice President of our subsidiaries AXIS Specialty U.S. Holdings, Inc.
and AXIS Specialty U.S. Services, Inc., Chairman, Chief Executive Officer
and President of our subsidiary, AXIS Reinsurance Company, and an Executive
Vice President of AXIS Specialty Insurance Company, AXIS Surplus Insurance
Company and AXIS Insurance Company. Mr. Morrill has over 20 years of
experience in the insurance and reinsurance industry. From 2001 to 2002, Mr. Morrill
was the President and Chief Executive Officer of Gerling Global Reinsurance
Corporation of America. From 1996 to 2001, he served as Chief Underwriting
Officer for North America and Senior Vice President at Transatlantic
Reinsurance Company. He has also held senior management and underwriting positions
at Munich American Reinsurance Company, Cologne Reinsurance Company of America
and Christiania General Insurance Company.
F. Marshall Turner, II
has
been the Chief Executive Officer of AXIS U.S. Insurance since January 2005
and the President of AXIS U.S. Insurance since January 2004. He is also a
director and an Executive Vice President of our subsidiaries, AXIS Specialty
U.S. Holdings, Inc. and AXIS Specialty U.S. Services, Inc., Chairman,
Chief Executive Officer and President of our subsidiaries, AXIS Specialty
Insurance Company and AXIS Insurance Company, Chairman and Executive Vice
President of our subsidiary, AXIS Surplus Insurance Company, and a director and
an Executive Vice President of our subsidiary, AXIS Reinsurance Company. He
joined the Company in November 2002 as Executive Vice President and Chief
Operating Officer of AXIS U.S. Insurance. Prior to that, Mr. Turner was
President of the Specialty Property & Casualty Group of Aon
Corporation’s Combined Specialty Group from February 2002. From 1996 to
2002, he served in various senior positions, including President, with the
Westchester Specialty Group/ACE USA. Mr. Turner also served as Vice
President, Specialty Property Director for Zurich American Insurance Group
after holding several property/package underwriting and managerial positions
with the Hartford Insurance Group, where he began his insurance career in 1980.
Brian Goshen
has been the Chief
Human Resources Officer since January 2006. Mr. Goshen has over 20
years of professional human resources experience. From March 2004 to January 2006,
he served as a Vice President of Human Resources at Fifth Third Bank. From May 1996
to March 2004, he was a Managing Director with Marsh, Inc., a global
insurance and brokerage and risk management company. While at Marsh, he served
in various senior human resource positions, including the Head of Human
Resources for North America and the Head Human of Resources for their Asia and
Pacific operations. From February 1994 to May 1996, he was Vice President of Human Resources with
the Hong Kong and
9
Shanghai Banking
Corporation. Mr. Goshen started his corporate career with Goldman Sachs
following a period of service as a Personnel Officer with the United States
Army.
John J. Murray
has been Chief
Operations Officer since November 2001. He is also an Executive Vice
President of Operations of our subsidiary, AXIS Specialty Limited. Mr. Murray,
a chartered accountant, has 15 years of industry experience. From 1995 to
2000, he was the Head of Operations for ACE Global Markets Limited. He then
served as a Finance Director of Newmarket Underwriting Limited during 2000 and
2001.
Richard
Strachan
has been Chief Claims Officer since April 2002.
He is also a director of our subsidiaries, AXIS Re Limited and AXIS Specialty
Europe Limited. Mr. Strachan has 20 years of experience in the
insurance and reinsurance industry. From 1985 to 1997, he managed claims for
Syndicates 488 and 2488 at both Charman Underwriting Agencies and Tarquin plc.
From 1997 to 1999, Mr. Strachan served as a claims adjuster at ACE Global
Markets. From 1999 to 2001, he served as claims team leader for ACE Global
Markets.
Management Compensation
The following table sets
forth compensation earned by our Chief Executive Officer and each of our four other
most highly compensated executive officers for the year ended December 31,
2005. These individuals are referred to as the “named executive officers.”
Summary Compensation Table
Annual Compensation
Long Term Compensation
Awards
Name and
Principal Position
Year
Salary
Bonus
Other Annual
Compensation(1)
Restricted
Stock
Awards(2)
Securities
Underlying
Options/SARs(3)
All Other
Compensation(4)
John R. Charman
2005
$
1,250,000
$
1,406,250
$
319,348
$
4,620,000
0
$
146,164
CEO and President
2004
1,250,000
3,000,000
245,419
2,521,800
130,000
153,749
2003
1,000,000
2,250,000
130,978
2,369,600
130,000
125,080
Michael A. Butt
2005
750,000
762,500
341,294
2,310,000
0
75,742
Chairman
of the
2004
750,000
1,325,000
233,177
1,050,750
55,000
75,336
Board
2003
500,000
1,125,000
196,052
888,600
55,000
50,360
Dennis B. Reding
2005
605,755
452,813
73,141
1,540,000
0
61,347
Chairman, AXIS
2004
575,000
700,000
50,297
1,050,750
55,000
58,473
Insurance
2003
500,000
625,000
36,759
592,400
40,000
58,513
William A. Fischer
2005
750,000
562,500
309,053
1,540,000
0
77,822
CEO
and President,
2004
575,000
1,000,000
266,743
840,600
40,000
60,197
Global
Reinsurance
2003
475,000
950,000
256,101
592,400
40,000
50,313
John Gressier(5)
2005
914,991
663,250
6,556
1,540,000
0
144,039
CEO and President,
2004
665,078
1,140,000
4,555
840,600
40,000
104,167
Global Insurance
2003
490,598
950,000
1,676
592,400
40,000
105,661
(1)
Other Annual Compensation includes (i) housing
allowance paid to Mr. Charman for 2005 in the amount of $180,000, for 2004
in the amount of $185,782 and for 2003 in the amount of $83,761; (ii) housing
allowance paid to Mr. Butt for 2005 in the amount of $180,000, for 2004 in
the amount of $180,000 and for 2003 in the amount of $144,000; (iii) car
allowance paid to Mr. Reding for each of 2005 and 2004 in the amount of
$12,000 and for 2003 in the amount of $11,000; and (iv) housing allowance
paid to Mr. Fischer for each of 2005, 2004 and 2003 in the amount of
$204,000. The reported amount also includes the amount we paid for health and
long term disability insurance, social insurance and taxes, club membership
fees, car allowances, home leave reimbursement, tax preparation fees and
relocation expenses on behalf of the named executive officers. Other Annual
Compensation also includes the incremental cost to the Company of personal use
of an aircraft leased by the Company by Mr. Charman for 2005 in the amount
of $46,114 and by Mr. Butt for 2005 in the amount of $73,185. The incremental cost to the Company is based
on the variable operating costs to the Company, including fuel costs, hourly
costs, landing fees, and other miscellaneous variable costs. Fixed costs that
do not change based on useage, such as the lease costs for
10
the aircraft, are not
included. On certain occasions, an executive’s family member or other guest may
accompany the executive on a flight. No additional direct operation cost is
incurred in these situations.
(2)
Includes restricted stock that was granted with respect
to the 2005, 2004 and 2003 fiscal years on January 17, 2006, January 13,
2005 and January 2, 2004, respectively, and reflects the fair value per
share on the date of grant for shares granted for the years ended December 31,
2005, 2004 and 2003, respectively. The number and aggregate value of all
restricted stock holdings at December 31, 2005 based on the closing market
price of our common shares at such date of $31.28 for each of the named
executive officers was as follows: Mr. Charman had 320,000 shares with a
value of $10,009,600; Mr. Butt had 142,500 shares with a value of
$4,457,400; Mr. Reding had 107,500 shares with a value of $3,362,600; Mr. Fischer
had 100,000 shares with a value of $3,128,000; and Mr. Gressier had
100,000 shares with a value of $3,128,000. Dividends are paid on the restricted
stock but are held by the Company until the restrictions lapse.
(3)
Includes stock options that were granted with respect
to the 2004 and 2003 fiscal years on January 13, 2005 and January 2,
2004, respectively.
(4)
Includes amounts paid in 2005, 2004 and 2003 under our
defined contribution retirement plans, under arrangements to compensate
employees whose contributions under those plans exceed statutory maximum limits
and for term life insurance.
(5)
Mr. Gressier’s annual salary in 2005,
2004 and 2003 was £500,000, £364,210 and £301,000, respectively. The amounts
shown for 2005, 2004 and 2003 are converted at the rate of exchange in force at
the date of payment.
Options/SAR Grants in 2005
The Company did not grant
any stock options to the named executive officers for the year ended December 31,
2005.
Aggregated Options/SAR Exercises in 2005
And Fiscal Year-End Option/SAR Values
The following table presents information concerning
stock options exercised by the named executive officers during the year ended December 31,
2005 and the number and value of unexercised options held by them at December 31,
2005.
Name
Number of
Shares
Acquired
On Exercise
Value
Realized
Number of Securities
Underlying
Unexercised Options/SARs
at Fiscal Year End
Exercisable/Unexercisable
Value of Unexercised
In-the-Money
Options/SARs
At Fiscal Year End
Exercisable/Unexercisable
John R. Charman
—
—
2,268,445/216,667
$
41,459,537/567,667
Michael A. Butt
—
—
130,000/75,000
2,178,200/212,500
Dennis B. Reding
—
—
73,333/81,667
1,091,933/223,567
William A.
Fischer
—
—
166,667/53,333
2,855,867/152,533
John Gressier
—
—
146,666/53,334
2,480,266/152,534
Retirement Plans
We provide retirement benefits to eligible employees
through various plans sponsored by the Company in Bermuda, Ireland, the United
Kingdom, the United States and Switzerland. For 2005, in Bermuda, we
contributed 10% of base salary to a registered plan for Bermudians and 10% of
base salary to an unregistered plan for non-Bermudians. In Ireland and the
United Kingdom, we contributed 15% of base salary to defined contribution
plans, subject to certain statutory maximum limits. In the United States, we
contributed 10% of eligible compensation to a 401(k) profit sharing plan,
subject to certain statutory maximum limits, and, for certain highly
compensated employees for which the statutory limits were met, contributed 10%
of base salary (less amounts contributed to the 401(k) plan) to a
supplemental retirement plan. In Switzerland, we contributed 15% of base salary
to a defined contribution plan. Under the plans in Ireland, the United Kingdom,
the United States and Switzerland, some employees are entitled to contribute to
the plans on a tax-deferred basis. Under the Swiss plan, contributions are
invested by an insurance company with a minimum guaranteed return on
statutorily mandated amounts. Under all of the other plans, contributions are
invested at the discretion of the participants in a variety of investment
11
options selected by the
Company. Benefits under the plans generally vest upon one to four years of
service with the Company (other than the Swiss plan, which vest immediately)
and generally are distributable upon termination or retirement.
In January 2004, we
implemented supplemental retirement plans for Messrs. Charman and Butt.
The plan for Mr. Charman requires us to make annual payments to Mr. Charman
upon his retirement for a period of 20 years. The benefits vest over a
period of two years commencing in 2006. Commencing at age 56, Mr. Charman
is entitled to an annual payment of $750,000 compounded by 3% annually for each
year commencing from inception. The plan for Mr. Butt requires us to make
annual payments to Mr. Butt upon his retirement for a period of
10 years. The benefits vest over a period of two years commencing in 2006.
Commencing at age 66, Mr. Butt is entitled to an annual payment of
$250,000 compounded by 3% annually for each year commencing from inception. If
either Mr. Charman or Mr. Butt dies, is permanently disabled or a
change of control of the Company occurs, the remaining benefits under his plan
are payable by the Company in a lump sum. The benefits received under these
plans will be offset by the benefits received by Messrs. Charman and Butt
under the Bermuda retirement plan.
2003
Long-Term Equity Compensation Plan
Our Board of Directors has adopted and our
shareholders have approved a long-term incentive plan (the “Employees Plan”).
The plan provides for the granting of non-qualified stock options, incentive
stock options (within the meaning of Section 422 of the U.S. Internal
Revenue Code of 1986 (the “Code”)), stock appreciation rights (“SARs”),
restricted stock awards, performance share and performance unit awards and
share purchase rights to employees, directors and consultants. To date, the
Company has issued only non-qualified stock options, restricted stock and share
purchase rights under the Employees Plan. The maximum number of common shares
with respect to which awards may be granted under the plan is 14,855,192, of
which 1,200,000 are available for issuance pursuant to share purchase rights
and of which 13,655,192 are available for issuance under all other awards. As
of February 28, 2006, 11,947,035 shares have been issued or are subject to
issuance upon the exercise or payment of outstanding awards under the Employees
Plan. The Compensation Committee has broad authority to administer the plan,
including the authority to determine when awards will be made, determine the
type and amount of awards, determine the exercise price of options and SARs,
determine any limitations, restrictions or conditions applicable to each award,
determine the terms of any instrument that evidences an award and select plan
participants.
Stock
Options.
Options awarded
under the Employees Plan are generally granted for a ten-year term, but may
terminate earlier if the participant’s employment or service terminates prior
to the end of the term. The exercise price of an option must be at least equal
to the fair market value of the shares on the date such option is granted. The
exercise price of options may be paid (1) in cash, (2) by delivery of
previously-acquired common shares, (3) by any combination of
(1) and (2), (4) pursuant to a cashless exercise program or
(5) by any other means the Compensation Committee approves, in its
discretion. The outstanding stock options generally vest in three equal
installments on the first, second and third anniversaries of the date of grant
or earlier upon the retirement, death or permanent disability of the
participant or a change of control of the Company. As of February 28,
2006, non-qualified stock options exercisable for 6,414,675 common shares had
been granted under the Employees Plan.
12
Restricted
Stock.
Holders
of restricted stock may generally exercise full voting rights and may be
credited with regular dividends paid with respect to the underlying shares
while they are so held. The shares generally become freely transferable after
the last day of the applicable period of restriction. The period of restriction
with respect to outstanding stock awards generally expires on the third
anniversary of the date of grant or earlier upon the retirement, death or
permanent disability of the participant or a change of control of the Company.
As of February 28, 2006, 4,610,800 restricted shares have been granted
under the Employees Plan.
Share Purchase Rights.
Share purchase rights may only be granted to
employees according to terms determined by the Compensation Committee. To
assist employees in purchasing shares pursuant to a grant of share purchase
rights, we may offer employees who are not executive officers of the Company
full recourse loans secured by the shares purchased with the loan proceeds. As
of February 28, 2006, share purchase rights exercisable for 921,560 common
shares had been granted and exercised under the Employees Plan.
Equity Compensation Plan Information
The
following table presents information concerning our equity compensation plans
as of December 31, 2005.
Plan category
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in the first column)
Equity
compensation plans approved by security holders (1)
6,054,464
$
19.05
4,765,081
(3)
Equity
compensation plans not approved by security holders (2)
120,000
$
14.50
—
Total
6,174,464
$
18.96
4,765,081
(3)
(1)
Includes stock options
granted under the Employees Plan and the Directors Plan.
(2)
Includes a grant of
stock options made to Robert J. Newhouse, a director of the Company until May 2005,
pursuant to a non-qualified option agreement dated as of December 31, 2002.
The grant was for 120,000 shares at an exercise price of $14.50 per share with
a termination date of November 12, 2012. The options were fully vested
upon grant.
(3)
Includes
common shares available for issuance (i) under the Employees Plan pursuant
to awards of stock options, stock appreciation rights, restricted stock,
performance units and performance shares and share purchase rights and (ii) under
the Directors Plan pursuant to awards of unrestricted stock, stock options and
restricted stock.
Employment Agreements
John
R. Charman.
Under Mr. Charman’s
employment agreement, dated as of December 15, 2003, Mr. Charman has
agreed to serve as our Chief Executive Officer and President, a member of our
Board of Directors and a member of the Executive Committee of our Board of
Directors. Mr. Charman’s term of service under this agreement continues
until December 31, 2008, at which time he will retire. Mr. Charman
receives an annual base salary of $1,250,000 as of January 1, 2004 and an
annual target incentive bonus opportunity, to be determined by the board, of no
less than 150% of his base salary. Mr. Charman’s salary can be subject to
review for increase at the discretion of the board, however, it cannot be
decreased.
13
Mr. Charman also was
granted stock options and restricted shares as an inducement to accept such position
and as a performance incentive. Mr. Charman is entitled to participate in
all incentive plans and all employee benefit plans in which senior executives
of the Company are eligible to participate and also is entitled to a
supplemental executive retirement benefit upon terms and conditions determined
by the board.
If Mr. Charman’s employment terminates as a
result of death, Mr. Charman’s employment agreement automatically
terminates, and his designated beneficiary or legal representatives are
entitled to (1) base salary through the end of the month in which he dies,
(2) a lump sum payment of one year’s base salary, (3) a separation
bonus no less than the greater of (A) $1,250,000 and (B) the highest
amount awarded to Mr. Charman as an annual bonus for any of the three
years immediately preceding his death, (4) immediate vesting of his
previously unvested stock options and restricted shares as if his employment
continued until the end of the 12-month period following his death, with
the stock options to remain exercisable for no longer than one year, (5) vesting
and exercisability of all other equity awards in accordance with their terms
and (6) any accrued benefits under the Company’s plans, programs or
agreements.
Either Mr. Charman or we may terminate his
employment agreement if Mr. Charman becomes disabled by providing
15 days prior written notice to the other party. If Mr. Charman’s
employment ceases because of disability, then in addition to the entitlements
discussed immediately above in the case of death, Mr. Charman is also
entitled to (1) disability benefits and (2) continued coverage for
one year under all benefit programs he was participating in immediately prior
to the date of his termination.
If we terminate Mr. Charman’s employment
agreement for cause, which includes conviction of a felony involving moral
turpitude, gross negligence or gross misconduct, or if Mr. Charman
voluntarily terminates his employment agreement with us, all of our obligations
cease, and Mr. Charman will only be entitled to receive (1) accrued
base salary through the date of termination, (2) continued eligibility for
one year under all medical benefit programs he was participating in immediately
prior to the date of his termination at Mr. Charman’s expense for the full
cost of premiums for such coverage and (3) other benefits under the
Company’s plans, programs and agreements.
If we terminate Mr. Charman’s employment without
cause or if Mr. Charman terminates his employment with good reason as
defined in the agreement, then Mr. Charman is subject to the same terms as
if he ceased employment as a result of disability, except that Mr. Charman
is entitled to receive payment of two year’s base salary instead of one and two
times the amount of the separation bonus and he is not entitled to disability
benefits. If we terminate Mr. Charman’s employment agreement without
cause, or if Mr. Charman terminates his employment with good reason, in
anticipation of, or within the 12-month period following, a change in
control as defined in the agreement, Mr. Charman is also entitled to
receive the foregoing benefits, excluding disability benefits, except that he
is also entitled to (1) three times the amount of the separation bonus
instead of two, (2) immediate vesting of his previously unvested stock
options and restricted shares as if his employment continued until the third
anniversary of the date of his termination, with the stock options to remain
exercisable for no longer than one year, and (3) continued coverage for
two years under all benefit programs.
Any amount payable to Mr. Charman pursuant to his
employment agreement upon his termination of employment for any reason must be
paid in a lump sum with respect to 50% promptly following his termination, and
with respect to the remaining 50%, with accrued interest, on the first
anniversary of his termination date.
Mr. Charman is also subject to non-competition
and non-solicitation provisions for a period of one year after termination of
the agreement along with ongoing confidentiality and non-disparagement
requirements.
14
Michael
A. Butt.
Under Mr. Butt’s
service agreement, dated as of December 15, 2003, Mr. Butt has agreed
to serve as Chairman of our Board of Directors. Mr. Butt’s term of service
under this agreement continues until December 31, 2008. Mr. Butt
receives an annual base salary of $750,000 as of January 1, 2004 and an
annual target incentive bonus opportunity of no less than 100% of his base
salary. Mr. Butt’s salary can be subject to review for increase at the
discretion of the board, however, it cannot be decreased. Mr. Butt also
was granted stock options and restricted shares as an inducement to accept such
position and as a performance incentive. Mr. Butt is entitled to
participate in all incentive plans and all employee benefit plans in which
senior executives of the Company are eligible to participate and also is
entitled to a supplemental executive retirement benefit upon terms and
conditions determined by the board.
If Mr. Butt’s employment terminates as a result
of death, Mr. Butt’s agreement automatically terminates, and his spouse,
other beneficiary or legal representatives are entitled to (1) any accrued
base salary through the end of the month in which he dies, (2) a
separation bonus no less than the greater of (A) $750,000 and (B) the
highest amount awarded to Mr. Butt as an annual bonus for any of the three
years immediately preceding his death, (3) immediate vesting of his
previously unvested stock options and restricted shares as if his employment
continued until the end of the 12-month period following his death, with
the stock options to remain exercisable for no longer than one year, (4) vesting
and excercisability of all other equity awards in accordance with their terms
and (5) any accrued benefits under the Company’s plans, programs or
agreements.
Either Mr. Butt or we may terminate his service
agreement if Mr. Butt becomes disabled by providing 15 days prior
written notice to the other party. If Mr. Butt’s employment ceases because
of disability, then in addition to the entitlements discussed immediately above
in the case of death, Mr. Butt is also entitled to (1) payment of one
year’s base salary, (2) disability benefits and (3) continued
coverage for one year under all benefit programs he was participating in
immediately prior to the date of his termination.
If we terminate Mr. Butt’s service agreement for
cause, which includes conviction of a felony involving moral turpitude, gross
negligence or gross misconduct, or if Mr. Butt voluntarily terminates his
service agreement with us, all of our obligations cease, and Mr. Butt will
only be entitled to receive accrued base salary through the date of termination
and any accrued benefits under the Company’s plans, programs or agreements.
If we terminate Mr. Butt’s employment without
cause or if Mr. Butt terminates his employment with good reason as defined
in the agreement, then Mr. Butt is subject to the same terms as if he
ceased employment as a result of disability, except that Mr. Butt is
entitled to receive payment of two year’s base salary instead of one and is not
entitled to disability benefits. If we terminate Mr. Butt’s agreement
without cause or if Mr. Butt terminates his employment with good reason in
anticipation of, or within the 12-month period following, a change in
control as defined in the agreement, Mr. Butt is also entitled to receive
the foregoing benefits, excluding disability benefits, except that he is also
entitled to (1) two times the amount of the separation bonus, (2) immediate
vesting of his previously unvested stock options and restricted shares as if
his employment continued until the three-year anniversary of the date of his
termination, with the stock options to remain exercisable for no longer than
one year, and (3) continued coverage for two years under all benefit
programs.
Any amount payable to Mr. Butt pursuant to his
service agreement upon his termination of employment for any reason must be
paid in a lump sum with respect to 50% promptly following his termination, and
with respect to the remaining 50%, with accrued interest, on the first
anniversary of his termination date.
Mr. Butt is also subject to non-competition and
non-solicitation provisions for a period of one year after termination of the
service agreement along with ongoing confidentiality and non-disparagement
requirements.
15
Dennis
Reding.
Under Mr. Reding’s
employment agreement, dated as of January 1, 2004, Mr. Reding has
agreed to serve as Chief Executive Officer of AXIS U.S. Insurance or in such
other position as is mutually agreeable to Mr. Reding and the Company. Mr. Reding’s
term of service under this agreement continues until December 31, 2005
followed by automatic one-year renewals unless notice of termination of his
employment is provided by us or Mr. Reding at least six months prior to
the end of the term. Mr. Reding receives an annual base salary of $575,000
as of January 1, 2004 and an annual bonus payable at the discretion of the
Company. We have also granted Mr. Reding options and restricted shares.
Mr. Reding’s employment will automatically
terminate upon his death. The Company may terminate Mr. Reding’s
employment as a result of his disability, for cause (which includes willful
misconduct or gross negligence in the performance of duties, willful engagement
of conduct that is demonstrably injurious to the Company, material breach of
the agreement or conviction of a felony or a crime involving moral turpitude)
or without cause at any time. Mr. Reding may terminate his employment upon
at least six months notice to the Company.
In the event of termination of employment for any
reason, Mr. Reding will be entitled to any accrued base salary though the
date of termination and all employee benefits to which he is entitled under all
employee benefit plans in which he participates. If we terminate Mr. Reding’s
employment without cause, he is entitled to continuation of his base salary and
employee benefits for a period of 12 months after the date of termination.
If Mr. Reding terminates his employment with good reason as defined in the
agreement within the 12-month period following a change in control as
defined in the agreement, Mr. Reding is entitled to continuation of his
base salary and employee benefits for a period of 12 months after the date
of termination and the bonus to which he would have been entitled as if all performance
targets were met.
If either the Company or Mr. Reding gives notice
of non-renewal of Mr. Reding’s employment or we terminate Mr. Reding’s
employment without cause and give him notice or Mr. Reding terminates his
employment and gives us notice, we may until the termination date (1) require
Mr. Reding to perform only those duties as we may choose, (2) require
him not to perform any of his duties, (3) require him to not have any
contact with customers, clients or employees, (4) exclude him from our premises
and/or (5) require him to resign from all positions with the Company. If
we elect to take any such action, Mr. Reding will continue to be an
employee and we will continue to pay him his base salary and afford him all
employee benefits to which he is entitled until the date of termination.
Mr. Reding is also subject to non-competition and
non-solicitation provisions for a period of six months after termination of
employment and ongoing confidentiality requirements.
William
A. Fischer.
Under Mr. Fischer’s
employment agreement, dated as of January 1, 2004, Mr. Fischer has
agreed to serve as Chief Executive Officer and President of AXIS Global
Reinsurance or in such other position as is mutually agreeable to Mr. Fischer
and the Company. Mr. Fischer’s term of service under this agreement
continues until December 31, 2005 followed by automatic one-year renewals
unless notice of termination of his employment is provided by us or Mr. Fischer
at least six months prior to the end of the term. Mr. Fischer receives an
annual base salary of $575,000 as of January 1, 2004 and an annual bonus
payable at the discretion of the Company. We have also granted Mr. Fischer
options and restricted shares.
Mr. Fischer’s employment will automatically
terminate upon his death. The Company may terminate Mr. Fischer’s
employment as a result of his disability, for cause (which includes willful
misconduct or gross negligence in the performance of duties, willful engagement
of conduct that is demonstrably injurious to the Company, material breach of
the agreement or conviction of a felony or a crime involving moral turpitude)
or without cause upon 30 days notice. Mr. Fischer may terminate his
employment upon at least six months notice to the Company.
16
In the event of termination of employment for any
reason, Mr. Fischer will be entitled to any accrued base salary through
the date of termination and all employee benefits to which he is entitled under
all employee benefit plans in which he participates. If we terminate
Mr. Fischer’s employment without cause, he is entitled to continuation of
his base salary and employee benefits for a period of 12 months after the
date of termination. If Mr. Fischer terminates his employment with good
reason as defined in the agreement within the 12-month period following a
change in control as defined in the agreement, Mr. Fischer is entitled to
continuation of his base salary and employee benefits for a period of
12 months after the date of termination and the bonus to which he would
have been entitled as if all performance targets were met. If
Mr. Fischer’s employment is terminated for any reason, other than for
cause or by Mr. Fischer without the required notice, the Company will pay
the costs of repatriating him and his family to the United States.
If either the Company or Mr. Fischer gives notice
of non-renewal of Mr. Fischer’s employment or we terminate Mr. Fischer’s
employment without cause and give him notice or Mr. Fischer terminates his
employment and gives us notice, we may until the termination date (1) require
Mr. Fischer to perform only those duties as we may choose, (2) require
him not to perform any of his duties, (3) require him to not have any
contact with customers, clients or employees, (4) exclude him from our
premises and/or (5) require him to resign from all positions with the
Company. If we elect to take any such action, Mr. Fischer will continue to
be an employee and we will continue to pay him his base salary and afford him
all employee benefits to which he is entitled until the date of termination.
Mr. Fischer is also subject to non-competition
and non-solicitation provisions for a period of six months after termination of
employment and ongoing confidentiality requirements.
John
Gressier.
Under Mr. Gressier’s
employment agreement, dated as of December 20, 2002, Mr. Gressier has
agreed to serve as Chief Executive Officer and President of AXIS Global
Insurance. Mr. Gressier receives an annual base salary of £364,210 as of January 1,
2004 and an annual bonus payable at the discretion of the Company. The Company
has also granted Mr. Gressier options and restricted shares.
We may terminate Mr. Gressier’s employment
without cause upon at least six months notice, for cause (which includes
material breach of the agreement, grave misconduct, gross default or willful
neglect in the discharge of his duties, commission of any serious act of
dishonesty or conviction of any indictable offence that affects his position
with the Company), as a result of his disability or upon reaching age 60. Mr. Gressier
may terminate his employment upon at least six months notice to the Company.
If we terminate Mr. Gressier’s employment, we may
pay him in lieu of providing the required notice his base salary for the notice
period. In addition, we may upon notice to Mr. Gressier during some or all
of the notice period require Mr. Gressier to (1) cease performing
some or all of the powers, authorities and discretions delegated to him, (2) cease
attending our offices and the offices of our brokers, clients and potential
clients and/or (3) complete specifically assigned projects.
Mr. Gressier is also
subject to non-competition provisions and non-solicitation provisions for a
period of six months after termination of employment and ongoing
confidentiality requirements.
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