exv10w3






Exhibit 10.3




ALLEGHANY CORPORATION




2010 MANAGEMENT INCENTIVE PLAN



     1. PURPOSE OF THE PLAN. The purpose of the Alleghany Corporation 2010 Management Incentive
Plan (the “Plan”) is to allow Alleghany Corporation (the “Company”) to provide incentive
compensation bonuses (“Incentive Bonuses”) to its officers, upon whom, in large measure, the
sustained progress, growth and profitability of the Company depends. The Plan provides for the
award of both Incentive Bonuses that are intended to satisfy the requirements for performance-based
compensation (“Qualifying Incentives”) in Section 162(m) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the “Code”), and Incentive Bonuses that are not intended
to satisfy such requirements (“Non-Qualifying Incentives”).



     2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Compensation Committee
of the Board of Directors of the Company (the “Committee”). Subject to the provisions of the Plan,
the Committee shall have the exclusive authority to (i) select the officers to participate in the
Plan, (ii) establish performance goals for Incentive Bonuses, including without limitation, any
target, threshold or other level of performance that must be achieved to earn an Incentive Bonus,
(iii) determine whether Incentive Bonuses will be Qualifying Incentives or Non-Qualifying
Incentives, (iv) establish each Participant’s Incentive Bonus opportunity (or range thereof), (v)
determine the amount of the Incentive Bonus payable to any Participant, and (vi) make all other
determinations and take all other actions necessary or appropriate for the proper administration
and operation of the Plan. Any determination by the Committee on any matter relating to the Plan
shall be made in its sole discretion and need not be uniform among Participants. The Committee’s
interpretation of the Plan shall be final, conclusive and binding on all parties concerned,
including the Company, its stockholders and any Participant.



     3. ELIGIBILITY. Incentive Bonuses under the Plan may be paid to those officers (including
officers who are directors) of the Company who shall be selected by the Committee to participate in
the Plan after consideration of management’s recommendations (the “Participants”). Participants
may receive multiple Incentive Bonuses during the same year under the Plan.



     4. PERFORMANCE PERIODS. Qualifying Incentives shall be payable to a Participant as a result
of the satisfaction of performance goals in respect of the calendar year or such other period as is
selected by the Committee (a “Performance Period”). Non-Qualifying Incentives may be payable to a
Participant as a result of the satisfaction of performance goals in respect of a Performance Period
or as a result of the achievement of an individual objective or result, as determined by the
Committee in its sole discretion.



     5. INCENTIVE BONUSES.




     (a) Incentive Bonuses. The Committee, in its sole discretion, may grant
Incentive Bonuses to any Participant, which Incentive Bonuses may be Qualifying Incentives
or Non-Qualifying Incentives. A Participant may be granted one or more



 









 







Qualifying Incentives or Non-Qualifying Incentives in respect of the same Performance
Period and may be granted both Qualifying Incentives and Non-Qualifying Incentives at the
same time or in respect of the same Performance Period. Notwithstanding the foregoing, the
grant or payment of any Non-Qualifying Incentive shall not be made contingent on the failure
to earn any Qualifying Incentive.




     (b) Qualifying Incentives. Incentive Bonuses granted to any Participant who is
a “covered employee” (as defined in Section 162(m) of the Code) for that Performance Period
shall be a Qualifying Incentive unless otherwise determined by the Committee in its sole
discretion. The right to receive (or retain) any Qualifying Incentive shall be conditional
upon the achievement of one or more performance goals established by the Committee in
writing at the time such award is granted. Prior to the beginning of each Performance
Period, or at such other time no later than such time as is permitted by Section 162(m) of
the Code, the Committee shall establish in writing (i) the performance goal or goals upon
which a Participant’s Qualifying Incentive shall be based and (ii) after consideration of
management’s recommendations, the target (or range of) Qualifying Incentive opportunity for
each Participant based upon the attainment of such performance goal or goals. The Committee
may provide for a threshold level of performance below which no amount of a Qualifying
Incentive will be paid and a maximum level of performance above which no additional
Qualifying Incentive will be paid, and it may provide for the payment of differing amounts
for different levels of performance. The Committee may provide that a Qualifying Incentive
shall be determined as an amount or a percentage of a specified incentive pool based upon
operating income, cash flow, earnings before income taxes, net income or other measures
constituting a performance goal (as described in Section 5(c)), with such adjustments or
exclusions as the Committee may determine; provided, however, that if payment of the
Qualifying Incentive is based upon the attainment of one or more performance goals
established by the Committee, the Committee may determine the amount of the incentive pool
by reference to any measure (whether or not constituting a performance goal) as the
Committee deems appropriate. The total amount or percentage of the incentive pool awarded
to Participants shall not exceed 100% of the incentive pool, and the amount paid to any
Participant from such incentive pool shall not be increased by any amount not paid to any
other Participant.




     (c) Qualifying Incentive Performance Goals. Performance goals, which may vary
from Participant to Participant and from Qualifying Incentive opportunity to Qualifying
Incentive opportunity, shall be based upon the attainment of specific amounts or percentages
of, or increases or decreases in, one or more of the following: revenues; operating income;
net operating income; cash flow; earnings before income taxes; net income, earnings per
share; stockholders’ equity; return or net return on assets, net assets, investments,
capital or equity; share price; share price appreciation; underwriting profits; gross or net
premiums written; net premiums earned; compound growth in net loss and loss adjustment
expense reserves; loss ratio or combined ratio of the Company’s insurance businesses;
operating efficiency or strategic business objectives consisting of one or more objectives
based on meeting specified cost targets; business expansion goals; goals relating to
acquisitions or divestitures; and productivity improvements, all whether applicable to the
Company or any relevant subsidiary or business unit or entity in which



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the Company has a significant investment, or any combination thereof as the Committee
may deem appropriate.




          Each performance goal may be expressed on an absolute and/or relative basis, may be
based on, or otherwise employ, comparisons based on internal targets, the past performance
of the Company or any subsidiary (or any business unit thereof) and/or the past or current
performance of other companies or indexes, may provide for the inclusion, exclusion or
averaging of specified items in whole or in part, including without limitation, catastrophe
losses, realized gains or losses on strategic investments, acquisitions and divestitures,
currency fluctuations, discontinued operations, extraordinary items whether of income or
expense, accounting and tax changes, and any unusual or nonrecurring items, and, in the case
of earnings-based measures, may use or employ comparisons relating to capital, shareholders’
equity and/or shares outstanding, assets or net assets.




     (d) Qualifying Incentive Determination. As soon as practicable after the end
of each Performance Period but before any Qualifying Incentives are paid, the Committee
shall certify in writing (i) whether the performance goal or goals were attained and (ii)
the amount of the Qualifying Incentive payable to each Participant based upon the attainment
of the performance goal or goals established by the Committee. The Committee may determine
to grant a Participant a Qualifying Incentive equal to, but not in excess of, the amount
specified in the foregoing certification. The Committee may also reduce or eliminate the
amount of any Qualifying Incentive of any Participant at any time prior to payment thereof,
based on such criteria as it shall determine, including but not limited to individual merit
and attainment of, or the failure to attain, specified personal goals established by the
Committee. Under no circumstances may the Committee increase the amount of the Qualifying
Incentive otherwise payable to a Participant beyond the amount originally established, waive
the attainment of the performance goals established by the Committee or otherwise exercise
its discretion so as to cause any Qualifying Incentive not to qualify as performance-based
compensation under Section 162(m) of the Code.




     (e) Non-Qualifying Incentives. A Non-Qualifying Incentive may be awarded by
the Committee to any Participant (including covered employees) at any time before, during or
following the completion of any Performance Period and may, but need not, be conditioned
upon the achievement of any performance goals established by the Committee. The Committee
may increase, decrease or eliminate the amount of any Non-Qualifying Incentive awarded to
any Participant at any time prior to payment thereof, based on such criteria as it shall
determine, including but not limited to individual merit and attainment of, or the failure
to attain or achieve, any performance goals or specified personal goals established by the
Committee or management, and the Committee may waive the attainment of or modify the terms
of any performance or personal goals established by the Committee or management or otherwise
exercise its discretion in any manner with respect to any Non-Qualifying Incentive.



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     6. OTHER TERMS OF INCENTIVE BONUSES




     (a) Death or Disability. In the event that a Participant previously awarded or
granted an Incentive Bonus shall die or become disabled prior to the payment thereof, the
Participant (or in the event of the Participant’s death, the Participant’s beneficiary)
shall be entitled to receive such amount, if any, of the Incentive Bonus granted or awarded
to the Participant as shall be determined by the Committee in its sole discretion. Nothing
contained herein shall preclude the Committee, in its sole discretion, from granting a
Non-Qualifying Incentive to any Participant in respect of the Participant’s employment by
the Company prior to such Participant’s death or disability.




     (b) Other Terminations of Employment. If a Participant’s employment terminates
prior to the end of a Performance Period for any reason other than death or disability, the
Participant shall not be entitled to receive any Qualifying Incentive established for the
Participant; provided, however, that if the performance goals applicable to such Qualifying
Incentive are achieved and certified by the Committee (in accordance with Section 5(d)), the
Committee, in its discretion, may determine that the Participant shall be entitled to
receive all or any part of the Qualifying Incentive that would be payable to the Participant
based upon the achievement of those performance goals. If a Participant previously granted
a Non-Qualifying Incentive terminates employment for any reason (other than death or
disability), the Committee, in its sole discretion, may determine that such Participant is
entitled to receive payment of all or any portion of such Non-Qualifying Incentive.




     (c) Payment. As soon as practicable following the Committee’s determination of
the amount of any Qualifying Incentive payable to a Participant (in accordance with Section
5(d)), but no later than December 31st of such year, such Qualifying Incentive
shall be paid by the Company in cash to such Participant. A Non-Qualifying Incentive shall
be paid in cash promptly (and in any event within two and one-half months) following the
date for payment specified by the Committee at the time a Non-Qualifying Incentive is
granted. Notwithstanding the foregoing, if the Committee, in its sole discretion,
determines that a Participant who died or became disabled shall be entitled to receive an
Incentive Bonus, then such Incentive Bonus shall be paid to such Participant (or in the
event of the Participant’s death, the Participant’s beneficiary) in cash promptly following
the date for payment specified by the Committee at the time the Incentive Bonus is
determined by the Committee, but in no event later than March 15th of the year
following the year in which such death or disability occurred. Nothing contained in this
Plan shall require the acceleration of the time of payment of any Incentive Bonus that the
Participant has elected to defer under any deferred compensation plan or arrangement of the
Company.




     (d) Annual Maximum. The Qualifying Incentives payable to any Participant
pursuant to the Plan in any single calendar year shall not exceed $5 million.



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     7. DILUTION AND OTHER ADJUSTMENTS.



          To the extent that a performance goal is based on, or calculated with respect to, the
Company’s common stock (such as earnings per share, book value per share or other similar
measures), then in the event of any corporate transaction involving the Company (including, without
limitation, any subdivision or combination or exchange of the outstanding shares of common stock,
stock dividend, stock split, spin-off, split-off, recapitalization, capital reorganization,
liquidation, reclassification of shares of common stock, merger, consolidation, extraordinary cash
distribution, or sale, lease or transfer of substantially all of the assets of the Company), the
Committee shall make or provide for such adjustments in such performance goal as the Committee may
in good faith determine to be equitably required in order to prevent dilution or enlargement of the
rights of Participants.




     8. MISCELLANEOUS PROVISIONS.




     (a) No Right to Incentive Bonus. Notwithstanding anything contained herein to
the contrary, no officer or other person shall have any claim or legally binding right to be
paid any Incentive Bonus awarded or granted under the Plan prior to the actual payment
thereof, and any Participant who terminates employment (other than due to death or
disability) prior to the payment of an Incentive Bonus shall forfeit any right to receive
such Incentive Bonus, regardless of the terms of any award or grant or any prior
determination by the Committee.




     (b) No Assurance of Employment. Neither the establishment of the Plan nor any
action taken thereunder shall be construed as giving any officer or other person any right
to be retained in the employ of the Company.




     (c) Withholding Taxes. The Company shall have the right to deduct from all
Incentive Bonuses payable hereunder any federal, state, local or foreign taxes required by
law to be withheld with respect to such payments.




     (d) No Transfers or Assignments. No Incentive Bonus under the Plan nor any
rights or interests herein or therein shall be assigned, transferred, pledged, encumbered,
or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of a
Participant to, any party (other than the Company or any subsidiary), except, in the event
of the Participant’s death, to his designated beneficiary as hereinafter provided.




     (e) Beneficiary. Any payments on account of an Incentive Bonus payable under
the Plan to a deceased Participant shall be paid to such beneficiary as has been designated
by the Participant in writing to the Secretary of the Company or in the absence of such
designation, according to the Participant’s will or the laws of descent and distribution.




     (f) Non-exclusivity of Plan. Nothing in the Plan shall be construed in any way
as limiting the authority of the Committee, the Board of Directors of the Company, the
Company or any subsidiary to establish any other annual or other incentive compensation plan
or as limiting the authority of any of the foregoing to pay cash



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bonuses or other supplemental or additional incentive compensation to any persons
employed by the Company, whether or not such person is a Participant in this Plan and
regardless of how the amount of such bonus or compensation is determined.



     9. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors of the Company, without the
consent of any Participant, may at any time terminate or from time to time amend the Plan in whole
or in part, whether prospectively or retroactively, including in any manner that adversely affects
the rights of Participants; provided, however, that no amendment with respect to, or affecting,
Qualifying Incentives that would require the consent of the stockholders of the Company pursuant to
Section 162(m) of the Code shall be effective without such consent.



     10. LAW GOVERNING. The validity and construction of the Plan shall be governed by the laws of
the State of New York, but without regard to the conflict laws of the State of New York except to
the extent that such conflict laws require application of the laws of the State of Delaware.



     11. EFFECTIVE DATE. The Plan shall be effective when approved by the stockholders of the
Company in accordance with Section 162(m) of the Code.




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