EX-10.2






Exhibit 10.2




ALLEGHANY CORPORATION

2002 LONG-TERM INCENTIVE PLAN




     1. PURPOSES OF THE PLAN. The purposes of the Alleghany Corporation 2002 Long-Term Incentive
Plan (the “Plan”) are to further the long-term growth of Alleghany Corporation (the “Corporation”),
to the benefit of its stockholders, by providing incentives to the officers and employees of the
Corporation and its subsidiaries who will be largely responsible for such growth, and to assist the
Corporation in attracting and retaining executives of experience and ability on a basis competitive
with industry practices. The Plan permits the Corporation to provide incentive compensation of the
types commonly known as restricted stock, stock options, stock appreciation rights, performance
shares, performance units and phantom stock, as well as other types of incentive compensation.



     2. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Compensation Committee
of the Board of Directors of the Corporation (the “Committee”). No member of the Committee, during
the one year period prior to such membership or during such membership, shall be granted or awarded
equity securities pursuant to the Plan or any other plan of the Corporation or any of its
affiliates, except as permitted by Rule 16b-3(c)(2)(i) promulgated under the Securities Exchange
Act of 1934, as amended, as such Rule may be amended from time to time. Subject to the provisions
of the Plan, the Committee shall have exclusive power to select the employees to participate in the
Plan, to determine the type, size and terms of awards to be made to each participant selected, and
to determine the time or times when awards will be granted. The Committee’s interpretation of the
Plan or of any awards granted thereunder shall be final and binding on all parties concerned,
including the Corporation and any participant. The Committee shall have authority, subject to the
provisions of the Plan, to establish, adopt and revise such rules, regulations, guidelines, forms
of agreements and instruments relating to the Plan as it may deem necessary or advisable for the
administration of the Plan.



     3. PARTICIPATION. Participants in the Plan shall be selected by the Committee from among the
employees of the Corporation and its subsidiaries. The term “employee” shall mean any person
(including any officer or director) employed by the Corporation or a subsidiary on a salaried
basis. The term “subsidiary” shall mean any corporation a majority of the total combined voting
power of whose stock is beneficially owned, directly or indirectly, by the Corporation.
Participants may receive multiple awards under the Plan.



     4. AWARDS.



     (a) Types. Awards under the Plan may include, but need not be limited to, cash and/or shares
of the Corporation’s common stock, $1.00 par value (“Common Stock”), rights to receive cash and/or
shares of Common Stock, and options (“Options”) to purchase shares of Common Stock, including
options intended to qualify as incentive stock options under section 422 of the Internal Revenue
Code of 1986, as amended, and options not intended so to qualify. The Committee may also make any
other type of award deemed by it to be consistent with the purposes of the Plan.



 









 





     (b) Certain Qualifying Awards. The Committee, in its sole discretion, may grant an award to
any participant with the intent that such award qualifies as “performance-based compensation” under
Section 162(m) of the Internal Revenue Code of 1986, as amended (a “Qualifying Award”). The right
to receive (or retain) any award granted as a Qualifying Award (other than an Option) shall be
conditional upon the achievement of performance goals established by the Committee in writing at
the time such award is granted. Such performance goals, which may vary from participant to
participant and award to award, shall be based upon the attainment of specific amounts of, or
increases in, one or more of the following: revenues, operating income, cash flow, income before
income taxes, net income, earnings per share, net worth, stockholders’ equity, return on equity or
assets or total return to stockholders, whether applicable to the Corporation or any relevant
subsidiary or business unit or entity in which the Corporation has a significant investment, or any
combination thereof as the Committee may deem appropriate. Prior to the payment of any award
granted as a Qualifying Award, the Committee shall certify in writing that the performance goals
were satisfied. The maximum number of shares of Common Stock with respect to which Qualifying
Awards may be granted to any participant in any calendar year shall be 100,000 shares of Common
Stock, subject to adjustment as provided in section 7(a) hereof.



     (c) Payment. Payment in respect of an award under the Plan (other than an Option) shall be
made as provided in an award agreement, or if none, then as soon as practicable following the date
that the award vests, but in no event later than the March 15th following the vesting
date; provided, however, that if the award is a Qualifying Award, then payment shall be made as
soon as practicable following the Committee’s certification that the performance goals applicable
to such award were satisfied, but in no event later than the March 15th following the
date of the certification.



     (d) Vesting, Other Performance Requirements and Forfeiture. In awarding any Options or any
rights to receive cash and/or shares of Common Stock (including Qualifying Awards), the Committee
(i) may specify that the right to exercise such Options or the right to receive payment of such
cash and/or shares of Common Stock shall be conditional upon the fulfillment of specified
conditions, including, without limitation, completion of specified periods of service in the employ
of the Corporation or its subsidiaries, and the achievement of specified business and/or personal
performance goals, and (ii) may provide for the forfeiture of all or any portion of any such
Options or rights in specified circumstances. The Committee may also specify by whom and/or in what
manner the accomplishment of any such performance goals shall be determined.



     (e) Agreements. Any award under the Plan may, in the Committee’s discretion, be evidenced by
an agreement, which, subject to the provisions of the Plan, may contain such terms and conditions
as may be approved by the Committee, and shall be executed by an officer on behalf of the
Corporation and by the recipient of the award.



     5. SHARES OF STOCK SUBJECT TO THE PLAN. Subject to adjustment as provided in section 7(a)
hereof, the number of shares of Common Stock which may be paid to



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participants under the Plan and/or purchased pursuant to Options granted under the Plan shall
not exceed an aggregate of 700,000 shares. Shares to be delivered or purchased under the Plan may
be either authorized but unissued shares of Common Stock or shares of Common Stock held by the
Corporation as treasury shares.



     6. OPTIONS.



     (a) Term of Options. The term of any Option shall be determined by the Committee, but in no
event shall any Option be exercisable more than twelve years after the date on which it was
granted.



     (b) Option Price; Fair Market Value. The price (“Option Price”) at which shares of Common
Stock may be purchased pursuant to any Option shall be determined by the Committee at the time the
Option is granted, but in no event shall the Option Price be less than 100 percent of the Fair
Market Value of such shares on the date the Option is granted. For purposes of the Plan, Fair
Market Value is the mean of the high and low sales prices of the Common Stock on the relevant date
as reported on the stock exchange or market on which the Common Stock is primarily traded, or, if
no sale is made on such date, then Fair Market Value is the weighted average of the mean of the
high and low sales prices of the Common Stock on the next preceding day and the next succeeding day
on which such sales were made as reported on the stock exchange or market on which the Common Stock
is primarily traded.



     (c) Payment Upon Exercise. Upon exercise of an Option, the Option Price shall be payable to
the Corporation in cash, or, at the discretion of the Committee, in shares of Common Stock valued
at the Fair Market Value thereof on the date of payment, or in a combination of cash and shares of
Common Stock.



     (d) Surrender of Options. The Corporation may, if the Committee so determines, accept the
surrender by a participant, or the personal representative of a participant, of an Option, in
consideration of a payment by the Corporation equal to the difference obtained by subtracting the
aggregate Option Price from the aggregate Fair Market Value of the Common Stock covered by the
Option on the date of such surrender, such payment to be in cash, or, if the Committee so provides,
in shares of Common Stock valued at Fair Market Value on the date of such surrender, or partly in
shares of Common Stock and partly in cash.



     (e) Effect of Expiration, Termination or Surrender of Options. If an Option shall expire or
terminate unexercised as to any shares of Common Stock covered thereby, such shares of Common Stock
shall not be deducted from the number available under section 5 hereof. If an Option shall be
surrendered as provided in section 6(d) hereof, the shares of Common Stock (if any) paid in
consideration of such surrender, but not the shares which had been covered by the Option, shall be
deducted from the number available under section 5 hereof.



     7. DILUTION AND OTHER ADJUSTMENTS.



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     (a) Changes in Capital Structure. In the event of any corporate transaction involving the
Corporation (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 Corporation), the Board of Directors of the Corporation shall make such
equitable adjustments as it may deem appropriate in the Plan and the awards thereunder, including,
without limitation, an adjustment in the total number of shares of Common Stock which may
thereafter be delivered or purchased under the Plan and in the maximum number of shares of Common
Stock with respect to which awards may be granted to any participant in any year under Section 4(b)
hereof. Agreements evidencing Options may include such provisions as the Committee may deem
appropriate with respect to the adjustments to be made to the terms of such Options upon the
occurrence of any of the foregoing events.



     (b) Tender Offers and Exchange Offers. In the event of any tender offer or exchange offer, by
any person other than the Corporation, for shares of Common Stock, the Committee may make such
adjustments in outstanding awards and authorize such further action as it may deem appropriate to
enable the recipients of outstanding awards to avail themselves of the benefits of such offer,
including, without limitation, acceleration of the exercise date of outstanding Options so that
they become immediately exercisable in whole or in part, or offering to acquire all or any portion
of specified categories of Options for a price determined pursuant to section 6(d) hereof, or
acceleration of the payment of outstanding awards payable, in whole or in part, in shares of Common
Stock.



     (c) Limits on Discretion to Make Adjustments. Notwithstanding any provision of this section 7
to the contrary, no adjustment shall be made in any outstanding Qualifying Awards to the extent
that such adjustment would adversely affect the status of that Qualifying Award as
“performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as
amended.



     8. MISCELLANEOUS PROVISIONS.



     (a) Right to Awards. No employee or other person shall have any claim or right to be granted
any award under the Plan.



     (b) Rights as Stockholders. A participant shall have no rights as a holder of Common Stock by
reason of awards under the Plan, unless and until certificates for shares of Common Stock are
issued to the participant.



     (c) No Assurance of Employment. Neither the Plan nor any action taken thereunder shall be
construed as giving any employee any right to be retained in the employ of the Corporation or any
subsidiary.



     (d) Costs and Expenses. All costs and expenses incurred in administering the Plan shall be
borne by the Corporation.



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     (e) Unfunded Plan. The Plan shall be unfunded. The Corporation shall not be required to
establish any special or separate fund nor to make any other segregation of assets to assure the
payment of any award under the Plan.



     (f) Withholding Taxes. The Corporation shall have the right to deduct from all awards
hereunder paid in cash any federal, state, local or foreign taxes required by law to be withheld
with respect to such payments and, with respect to awards paid in stock, to require the payment
(through withholding from the participant’s salary or otherwise) of any such taxes, but the
Committee may make such arrangements for the payment of such taxes as the Committee in its
discretion shall determine, including payment with shares of Common Stock.



     (g) Limits on Transferability. No awards under the Plan nor any rights or interests therein
shall be 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 Corporation or any
subsidiary, nor shall such awards or any rights or interests therein be assignable or transferable
by the recipient thereof except, in the event of the recipient’s death, to his designated
beneficiary as hereinafter provided, or by will or the laws of descent and distribution. During the
lifetime of the recipient, awards under the Plan requiring exercise shall be exercisable only by
such recipient or by the guardian or legal representative of such recipient. Notwithstanding the
foregoing, the Committee may, in its discretion, provide that awards granted pursuant to the Plan
(other than an option granted as an incentive stock option) be transferable, without consideration,
to a participant’s immediate family members (i.e., children, grandchildren or spouse), to trusts
for the benefit of such immediate family members and to partnerships in which such family members
are the only partners. The Committee may impose such terms and conditions on such transferability
as it may deem appropriate.



     (h) Beneficiary. Any payments on account of awards 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 Corporation or, in the absence of such designation, according to the participant’s
will or the laws of descent and distribution.



     (i) Nature of Benefits. Awards under the Plan, and payments made pursuant thereto, are not a
part of salary or base compensation.



     (j) Compliance with Legal Requirements. The obligation of the Corporation to issue or deliver
shares of Common stock upon exercise of Options or otherwise shall be subject to satisfaction of
all applicable legal and securities exchange requirements, including, without limitation, the
provisions of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended. The Corporation shall endeavor to satisfy all such requirements in such a manner as to
permit at all times the exercise of all outstanding Options in accordance with their terms, and to
permit the issuance and delivery of shares of Common Stock whenever provided for by the terms of
any award made under the Plan.



     9. AMENDMENT OR TERMINATION OF THE PLAN. The Board of Directors of the Corporation, without
the consent of any participant, may at any time terminate or from



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time to time amend the Plan in whole or in part; provided, however, that no such action shall
adversely affect any rights or obligations with respect to any awards theretofore made under the
Plan; and provided, further, that no amendment, without approval of the holders of Common Stock by
an affirmative vote of a majority of the shares of Common Stock voted thereon in person or by
proxy, shall (i) increase the aggregate number of shares subject to the Plan (other than increases
pursuant to section 7 hereof), (ii) extend the period during which awards may be granted under the
Plan, (iii) increase the maximum term for which Options may be issued under the Plan, (iv) decrease
the minimum Option Price at which Options may be issued under the Plan, or (v) materially modify
the requirements for eligibility to participate in the Plan. With the consent of the participants
affected, the Committee may amend outstanding agreements evidencing awards under the Plan, and may
amend the terms of awards not evidenced by such agreements, in any manner not inconsistent with the
terms of the Plan.



     10. EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective when approved at a
meeting of stockholders by a majority of the voting power of the Voting Stock (all as defined in
the Corporation’s Restated Certificate of Incorporation) present in person or represented by proxy
and entitled to vote at such meeting. The Plan shall terminate at the close of business on December
31, 2006, unless sooner terminated by action of the Board of Directors of the Corporation. No award
may be granted hereunder after termination of the Plan, but such termination shall not affect the
validity of any award then outstanding.



     11. LAW GOVERNING. The validity and construction of the Plan and any agreements entered into
thereunder 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.



     12. SECTION 409A PROVISION. Notwithstanding any provision of the Plan to the contrary, if at
the time of a participant’s termination of employment (within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (“Section 409A”)) the participant is a “specified
employee,” then any payments that are required to be made to such participant under the Plan as a
result of the participant’s termination of employment that constitute the deferral of compensation
(within the meaning of Treasury Regulation Section 1.409A-1(b)) and that would in the absence of
this provision have been paid to the participant within six months and one day of the participant’s
termination of employment (the “Deferred Compensation Payments”) shall not be paid to the
participant at the time herein provided but shall instead be accumulated and paid to the
participant in a lump sum with interest thereon at a rate equal to the yield per annum on 6-month
Treasury bills (secondary market) on the date the participant terminates employment (as reported by
the Federal Reserve Board) from the date payment would have been made to the participant under the
Plan until the date paid, such payment to be made on the day after the date that is six (6) months
from the date of the participant’s termination of employment; provided, however, if the participant
dies prior to the expiration of such six (6) month period, payment shall be made to the
participant’s estate as soon as practicable following the participant’s death. For these purposes,
a participant will be a “specified employee” if, on the date of the participant’s termination of
employment, the participant is an individual who is, under the method of determination adopted by
the Committee



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designated as, or within the category of employees deemed to be, a “specified employee” within
the meaning and in accordance with Treasury Regulation Section 1.409A-1(i). The Committee shall
determine in its sole discretion all matters relating to who is a “specified employee” and the
application of and effects of the change in such determination.




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