Exhibit 10.1

 

SPECIAL DISCRETIONARY BONUS FOR THE CHIEF EXECUTIVE OFFICER

 

The following is a description of a special discretionary bonus to be paid to
the Chief Executive Officer of Zenith National Insurance Corp. (the “Company”)
outside of the Executive Officer Bonus Plan.  This description is provided
pursuant to Paragraph 10(iii) to Item 601 of Regulation S-K requiring a written
description of a compensatory arrangement when no formal document contains the
compensation information.

 

In addition to other compensation arrangements that the Company has adopted, the
Compensation Committee, in its discretion, may award bonuses on a recurring or
nonrecurring basis outside of the Executive Officer Bonus Plan in amounts that
are determined, taking into account factors used to determine Executive
Officers’ base compensation and any other factors the Compensation Committee
determines to be relevant.  Amounts paid as special discretionary bonuses do not
come under the exceptions set out in Section 162(m) of the Internal Revenue Code
of 1986, as amended, and may not be deductible for federal income tax purposes
to the extent a recipient’s other income is greater than $1,000,000 and does not
fall within one of the exceptions.

 

On January 12, 2005, the Compensation Committee of the Board of Directors of the
Company awarded Stanley R. Zax, Chairman and President, a special discretionary
bonus of $1,000,000.  This bonus was in recognition of the performance in the
Company’s investment portfolio that was achieved in 2004 due to Mr. Zax’s direct
involvement.

 

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