EX-10.02



 





ALLEGHANY CORPORATION OFFICERS, HIGHLY

COMPENSATED EMPLOYEES AND DIRECTORS

DEFERRED COMPENSATION PLAN




     Alleghany Corporation Officers, Highly Compensated Employees and Directors Deferred
Compensation Plan (the “Plan”), effective as of January 1, 2002, provides for unfunded deferred
compensation arrangements for officers, certain highly compensated employees and directors of
Alleghany Corporation, a Delaware corporation (“Alleghany”), as well as a savings benefit for
officers and certain highly compensated employees of Alleghany.



1. Purposes of the Plan.




     The purposes of the Plan are (i) to provide a means to defer a portion of the compensation of
the officers of Alleghany, highly compensated employees of Alleghany designated by the Board of
Directors of Alleghany (the “Board”) and directors of Alleghany and (ii) to provide a savings
benefit for officers of Alleghany and highly compensated employees of Alleghany designated by the
Board.



2. Administration of the Plan.




     The Plan shall be administered by an officer of Alleghany (the “Plan Administrator”) appointed
by the Board to serve as administrator under the direction of the Board (the “Plan Administrator”).
The Board shall have full power and authority to interpret, construe, administer, and amend the
Plan, provided, however, that no amendment to the Plan shall reduce the benefits to which any
Participant (as defined below) may be entitled hereunder, and the Board’s interpretation and
construction thereof and actions taken thereunder shall be binding on all persons for all purposes.



3. Participation.




 









 








     All officers who have completed one year of full-time service and other officers and highly
compensated employees designated by the Board (“Savings Benefit Participants”) shall participate in
the Plan in respect of the savings benefit described in section 4(b) hereof, and directors
(“Director Participants”) and officers and certain highly compensated employees designated by the
Board (“Officer Participants”) of Alleghany shall be eligible to participate in the Plan by
deferring amounts described in section 4(c) hereof. The term “Participants” as used in the Plan
shall include Savings Benefit Participants, Director Participants and Officer Participants
collectively.



4. Deferred Compensation.




     (a) Prime Rate Accounts. Alleghany shall establish in respect of each Savings Benefit
Participant a separate book reserve account (“Savings Benefit Prime Rate Account”), and shall
credit to such Savings Benefit Prime Rate Account (or if section 4(e) shall apply, to the Savings
Benefit Common Stock Account described thereunder), for eventual payment on the basis set forth in
section 4(f) hereof, the savings benefit described in section 4(b) below.



     Subject to the limitations set forth in section 4(g) hereof and to such administrative rules
as may be established by the Plan Administrator, each Participant may from time to time enter into
one or more agreements with Alleghany (“Deferred Compensation Agreements”) which in the aggregate
may provide for the establishment of one or more separate book reserve accounts “Deferred
Compensation Prime Rate Accounts” and for the crediting to such Deferred Compensation Prime Rate
Accounts or if section 4(e) shall apply, to the Deferred Compensation Common Stock Accounts of
Officer Participants described thereunder for eventual payment on the basis set forth in section
4(g) below, of the items described in section 4(c) below. Savings



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Benefit Prime Rate Accounts and Deferred Compensation Prime Rate Accounts are together
referred to herein as “Prime Rate Accounts.”



     (b) Savings Benefit. On the 30th days of March, June, September and December of each
year, Alleghany will credit each Savings Benefit Prime Rate Account (or if section 4(e) shall
apply, the Savings Benefit Common Stock Account described thereunder) with an amount equal to 3.75%
of the base annual salary (excluding bonuses, commissions, severance pay, amounts deferred under
this section 4(b) and contributions to employee benefit plans maintained by Alleghany, but
including base annual salary deferred under section 4(c)(1) below) payable to the Savings Benefit
Participant by Alleghany during the quarter then ended.



     (c) Optional Deferral. Deferred Compensation Agreements entered into by Officer
Participants and Director Participants of Alleghany may provide for the deferral of all or any part
of the following (as applicable):



          (1) The base annual salary (determined as provided in section 4(b) above) payable to such
person by Alleghany;



          (2) Directors’ fees payable to such person by Alleghany;



          (3) Entitlements of such person under the Alleghany Corporation Management Incentive Plan or
any similar bonus plan of Alleghany;



          (4) Entitlements of such person under the Alleghany Corporation 2002 Long-Term Incentive Plan,
the Alleghany Corporation 1993 Long-Term Incentive Plan or any successor long-term incentive plan
(collectively, “Long-Term Incentive Plans”); and



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          (5) Any cash bonus to which such person may become entitled other than pursuant to a plan
referred to in section 4(c)(3) or section 4(c)(4).


Amounts described in sections 4(c)(1) through 4(c)(5) shall be credited to the specified Deferred
Compensation Prime Rate Account (or if section 4(e) shall apply, to the Deferred Compensation
Common Stock Account described thereunder) in lieu of payment in the ordinary course and as of the
times when they would have been payable in the ordinary course. Entitlements in Common Stock of
Alleghany shall be valued at the mean between the high and low prices thereof on the New York Stock
Exchange Consolidated Tape on the date of crediting.




     (d) Interest. Amounts credited to a Prime Rate Account shall, while held in such
Prime Rate Account, be deemed to earn interest at the prime rate compounded on an annual basis and
credited to the Prime Rate Account on December 31st of each year or, if earlier, on the date of
transfer or payment of amounts out of such Prime Rate Account. The “prime rate” for purposes
hereof shall mean the rate of interest announced by JP Morgan Chase Bank, N.A. as its prime rate at
the close of the last business day of each month, which rate shall be deemed to remain in effect
through the last business day of the next month.



     (e) Common Stock Accounts. Upon the request of an Officer Participant made by written
notice given to the Plan Administrator, Alleghany shall establish in respect of such Officer
Participant a common stock account (“Savings Benefit Common Stock Account”) to which all or a
portion of the amounts described in section 4(b) shall be credited. A Deferred Compensation
Agreement entered into between an Officer Participant and Alleghany may provide for the
establishment of a common stock account (“Deferred Compensation Common Stock Account”) to which all
or a portion of the amounts deferred thereunder shall be credited;



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provided, however, that the sum of the amounts credited to an Officer
Participant’s Savings Benefit Common Stock Account and Deferred Compensation Common Stock Account
(including amounts credited thereto in respect of dividend income) may at no time exceed an amount
equal to (x) 30% of the cumulative base annual salary (determined as provided in section 4(b)
above) of such Officer Participant during the period in respect of which the savings benefit
referred to in section 4(b) has been credited for such Officer Participant less (y) the sum of the
original credits actually paid out to such Officer Participant in accordance with the provisions of
section 4(f) hereof. Savings Benefit Common Stock Accounts and Deferred Compensation Common Stock
Accounts are together referred to herein as “Common Stock Accounts.”




     Amounts credited to a Common Stock Account shall, while held in such Common Stock Account,
reflect the investment experience which the account would have had if the amount so designated had
been invested (without commissions or other transaction expenses) and held in whole or fractional
shares of common stock of Alleghany (“Alleghany Common Stock”) during such period. Common Stock
Accounts shall be adjusted as appropriate to reflect cash and stock dividends, stock splits, and
other similar distributions or transactions which, from time to time, occur with respect to
Alleghany Common Stock during the appropriate period. Dividends and other distributions shall be
automatically credited to the Common Stock Account at their cash value or the fair market value of
any non-cash dividend or other distribution and shall be deemed to purchase Alleghany Common Stock
on the date of payment thereof. Alleghany Common Stock shall be deemed acquired, and shall be
valued for purposes of payout or transfer, at a price per share equal to the mean between the high
and low prices thereof on the applicable date on the New York Stock Exchange Consolidated Tape.



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     Subject to rules which may be established by the Plan Administrator or by the Board, the
designation of the account to which the amounts described in section 4(b) shall be credited, or the
allocation of such amounts between accounts, may from time to time be changed. Subject to the
provisions of section 5(h) hereof and to rules which may be established by the Plan Administrator
or by the Board, an Officer Participant may direct that amounts credited to a Prime Rate Account be
transferred to a Common Stock Account, or that amounts credited to a Common Stock Account be
transferred to a Prime Rate Account, by written notice given to the Plan Administrator. Except as
may otherwise be agreed to by the Plan Administrator, amounts transferred as set forth above shall
be paid according to the same payout schedule in effect with respect to such amounts prior to the
transfer.



     (f) Payout of Section 4(b) Amounts. All amounts theretofore credited to a Savings
Benefit Prime Rate Account and/or to an Officer Participant’s Savings Benefit Common Stock Account
shall be paid to the Participant in a lump sum (or in such installments as approved by the chief
executive officer of Alleghany in his sole discretion) at the conclusion of the then current
five-year savings benefit deferral period or, if earlier, upon the date of the Participant’s
termination of employment with Alleghany or such date or dates after such termination as approved
by the chief executive officer of Alleghany in his sole discretion. The Board may, at its sole
option, cause any savings benefit deferral period to terminate at such earlier time as the Board
may, in its sole discretion, determine, in which event the next succeeding five-year savings
benefit deferral period shall commence on the day following the date the preceding period
terminated. The first five-year savings benefit deferral period commenced on January 2, 1984 and
terminated on December 15, 1988.



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     Subject to rules which may be established by the Plan Administrator or by the Board, a
Participant may defer payment of all or a portion of the amounts otherwise payable to him
(including as a result of successive deferrals) at the conclusion of each savings benefit deferral
period until completion of the next succeeding savings benefit deferral period or, if earlier,
until the date of the Participant’s termination with Alleghany (or such date or dates after such
termination as approved by the chief executive officer of Alleghany in his sole discretion), by
giving written notice to the Plan Administrator not later than six months prior to the date on
which such amount would otherwise be paid.



     (g) Payout of Section 4(c) Amounts. Each Deferred Compensation Agreement entered into
between Alleghany and a Participant shall set forth the terms for payment in cash of amounts
attributable to compensation deferred thereunder (a “Payout Schedule”) subject to the following:




     (1) A Payout Schedule may provide for a lump sum payment or for payment in annual
installments.




     (2) Payments shall not extend beyond the year in which the Participant attains age 90.




     (3) All payments shall be made in the month of January.




     (4) The amount of each annual installment payment shall be computed by dividing the
then balance of such Deferred Compensation Prime Rate Account and/or Deferred Compensation
Common Stock Account by the number of installments remaining, including the current
installment; provided, however, that a different method of computation may be specified if
agreed to by Alleghany.



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     (5) In addition to the normal payout schedule specified with respect to such Deferred
Compensation Prime Rate Account and/or Deferred Compensation Common Stock Account, special
payout schedules may be specified with respect to such account to apply, respectively, in
the event of (i) the Participant’s disability, (ii) his death or (iii) the termination of
his employment or his ceasing to be a director of Alleghany.




     (6) Notwithstanding the foregoing or any provision of any Deferred Compensation
Agreement, whether in effect as of the date hereof or subsequently entered into, the Board
may at its sole option direct that payment to a Participant of amounts described in section
4(c) shall occur at such earlier time as the Board may, in its sole discretion, designate.



     Deferred Compensation Agreements entered into between a Director Participant and Alleghany may
provide in aggregate for payment in accordance with no more than two Payout Schedules. Deferred
Compensation Agreements entered between an Officer Participant and Alleghany may provide in the
aggregate for payment in accordance with no more than two Payout Schedules applicable to Deferred
Compensation Prime Rate Accounts and two Payout Schedules applicable to Deferred Compensation
Common Stock Accounts.



     (h) Beneficiaries. A Savings Benefit Participant may designate a beneficiary to
receive payment of the value of amounts credited to his Savings Benefit Prime Rate Account and/or
to his Savings Benefit Common Stock Account following the Participant’s death by filing a written
notice with the Plan Administrator. In the case of deferral by a Director Participant of amounts
described in section 4(c), a beneficiary for each Deferred Compensation Prime Rate Account
following a different Payout Schedule may be designated in the Deferred Compensation



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Agreement or Agreements providing for such deferral. In the case of deferral by an Officer
Participant of amounts described in section 4(c), a beneficiary for each Deferred Compensation
Prime Rate Account or Deferred Compensation Common Stock Account following a different Payout
Schedule may be designated in the Deferred Compensation Agreement or Agreements providing for such
deferral. A Participant may at any time, and from time to time, change beneficiaries by filing a
written notice with the Plan Administrator.



     (i) Hardship. Notwithstanding anything herein contained to the contrary, upon the
request of a Participant and based on a showing of financial hardship caused by accident or
illness, or by an event beyond the control of the Participant, the Board may, in its sole
discretion, vary the manner and time of making the payments under section 4(g) from those provided
for in the Participant’s Deferred Compensation Agreement.



     (j) Deferred Compensation Agreements. Deferred Compensation Agreements shall be
entered into by the parties:



          (1) No later than June 15th and December 15th with respect to amounts described in sections
4(c)(1) and 4(c)(2) which would otherwise be payable during the next six calendar months;



          (2) With respect to entitlements under the Alleghany Corporation Management Incentive Plan or
any similar bonus plan, no later than December 15th of the year prior to the year during which the
bonus is earned;



          (3) With respect to entitlements under the Long-Term Incentive Plans, (i) in the case of
awards of performance shares, no later than September 1 of the calendar year preceding the year in
which the Participant would otherwise be entitled to payment with respect



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to such performance shares, and (ii) in the case of other forms of awards, as the Plan
Administrator may designate;



          (4) With respect to any bonus referred to in section 4(c)(5), no less than two weeks prior to
the authorization of such bonus by Alleghany.




The Plan Administrator may prescribe forms of Deferred Compensation Agreement. Deferred
Compensation Agreements shall be executed on behalf of Alleghany either by the Chairman of
the Board or by the President of Alleghany, except that in the case of a Deferred
Compensation Agreement with the Chairman of the Board such Deferred Compensation Agreement
shall be executed on behalf of Alleghany by the President of Alleghany and in the case of a
Deferred Compensation Agreement with the President such Deferred Compensation Agreement
shall be executed on behalf of Alleghany by the Chairman of the Board of Alleghany. Subject
to the provisions of section 5(h) hereof, Deferred Compensation Agreements may be amended or
modified by agreement of the Participant and Alleghany, including amendments or
modifications to extend or accelerate scheduled payments.



5. General Provisions.




     (a) This Plan is intended to constitute a plan which is unfunded and is maintained by
Alleghany primarily for the purpose of providing deferred compensation for the directors, officers
and certain highly compensated employees of Alleghany, representing a select group of management or
highly compensated employees of Alleghany within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of the Employee Retirement Income Security Act of 1974, as amended. Nothing in the Plan
shall create, or be construed to create, a trust or fiduciary relationship of any kind between
Alleghany and a Participant, his designated beneficiary, or any



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other person. Any amounts deferred under the Plan shall be construed for all purposes as a
part of the general funds of Alleghany, and any right to receive payments from Alleghany under the
Plan shall be no greater than the right of any unsecured general creditor. Alleghany may, but need
not, purchase any securities or instruments as a means of hedging its obligations to any
Participant under the Plan, but if it does, neither the Participant, his beneficiary nor any other
person shall have any interest therein or other right to such property. All payments hereunder
shall be made in cash and no Participant shall be entitled hereunder to any shares of Alleghany
Common Stock.



     (b) The right of any Participant to any amount payable pursuant to this Plan shall not be
assigned, transferred, pledged or encumbered except by the laws of descent and distribution.



     (c) Participation in the Plan shall not be construed as conferring upon any Participant the
right to continue as a director of Alleghany or in the employ of Alleghany as an executive or in
any other capacity.



     (d) The Board may at any time, in its sole discretion, suspend the availability of the Common
Stock Account or impose limitations upon the frequency and amount of transfers to and from the
Common Stock Account.



     (e) No employee benefits to which a Participant would be entitled under any other employee
benefit plan or arrangement maintained by Alleghany for its employees shall be decreased or
modified because of the deferral of salary under the Plan.



     (f) Payment by Alleghany to a Participant or to a Participant’s beneficiary or beneficiaries,
as designated or otherwise determined pursuant to the provisions of the Plan, shall be binding on
all interested parties and on such Participant’s heirs, executors, administrators and



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assigns, and shall discharge Alleghany and its directors, officers and employees from all
claims, demands, actions or causes of action of every kind arising out of or on account of such
Participant’s participation in the Plan, known or unknown, for himself, his heirs, executors,
administrators and assigns.



     (g) Notwithstanding the provisions of sections 4(f) and 4(g) hereof, but subject to section
5(h) hereof, all amounts described in sections 4(b) and 4(c) hereof and credited to a Participant’s
Prime Rate Account and/or an Officer Participant’s Common Stock Account, together with interest
and/or dividend income accrued thereon, shall become immediately due and payable to such
Participant in the event of the liquidation of Alleghany or in the event that a petition shall be
filed or a case commenced in respect of Alleghany (by Alleghany or by any other person) under Title
11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or that any court shall appoint a receiver, liquidator, trustee (or similar
official of Alleghany) or order the winding-up or liquidation of the affairs of Alleghany, and such
case or order shall continue unstayed and in effect for a period of sixty consecutive days.



     (h) Notwithstanding any other provision hereof, the Plan Administrator shall give effect to a
transfer of amounts between a Common Stock Account and a Prime Rate Account only if an Officer
Participant directs such transfer by written notice given to the Plan Administrator during the
period beginning on the third business day and ending on the twelfth business day following the
issuance by Alleghany of a press release setting forth its quarterly or annual summary statement of
sales and earnings (“Common Stock Account Transfer Period”). An amendment or modification of a
Payout Schedule set forth in a Deferred Compensation Agreement providing for deferral of amounts
described in section 4(c) hereof and crediting of



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such amounts to a Common Stock Account shall be entered into by Alleghany and an Officer
Participant only during a Common Stock Account Transfer Period. The Plan Administrator may
establish other rules in respect of transfers of amounts to and from Common Stock Accounts and
execution of amendments to Deferred Compensation Agreements providing for crediting of amounts to
Common Stock Accounts.



     (i) All amounts deferred under the Plan shall be subject to employment taxes, and all payments
shall be subject to income tax withholding, if applicable. Each Participant shall make
arrangements satisfactory to Alleghany with respect to the collection of such taxes with respect to
all amounts deferred or payable hereunder.



     (j) The Plan is the successor plan to the Alleghany Corporation Deferred Compensation Plan
(the “Old Plan”). Accordingly, effective as of January 1, 2002, each separate book reserve account
maintained by Alleghany pursuant to the Old Plan as of the close of business on December 31, 2001,
for each person who is or was an officer or director (“Old Plan Participants”) shall be transferred
to, and shall become, a separate book reserve account for such Participant under this Plan, and all
amounts to which any such Old Plan Participant was therefore entitled to under the Old Plan shall
instead be paid pursuant to this Plan. Further, each election and beneficiary designation of an
Old Plan Participant in effect under the Old Plan shall be given effect as if made pursuant to this
Plan. Finally, each reference to the Old Plan in any Deferred Compensation Agreement of an Old
Plan Participant shall be deemed to refer to this Plan.




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