Document:

EX-10.16

 

Exhibit 10.16

COMPENSATION OF NAMED EXECUTIVE OFFICERS OF ALLEGHANY CORPORATION (THE “COMPANY”)

     The following information relates to the compensation of the chief executive officer and the
four other most highly compensated executive officers of the Company serving as executive officers
at the end of 2005.

SUMMARY COMPENSATION TABLE

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Annual Compensation	 	Long-Term	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Other Annual	 	Incentive	 	All Other
	Name and Principal	 	 	 	 	 	 	 	 	 	Bonus	 	Compensation	 	Plan Payouts	 	Compensation
	Position	 	Year	 	Salary	 	(1)	 	(2)	 	(3)	 	(4)
	Weston M. Hicks,
	 	 	2005	 	 	$	800,000	 	 	$	810,000	 	 	$	8,074	 	 	$	—	 	 	$	126,915	 
	President and chief
	 	 	2004	 	 	 	700,000	 	 	 	518,007	 	 	 	5,104	 	 	 	—	 	 	 	111,430	 
	executive officer(5)
	 	 	2003	 	 	 	624,000	 	 	 	468,000	 	 	 	4,743	 	 	 	—	 	 	 	99,866	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Roger B. Gorham
	 	 	2005	 	 	$	416,667	 	 	$	337,500	 	 	$	6,457	 	 	$	—	 	 	$	67,227	 
	Senior Vice President –
Finance and Investments
and chief financial
officer (6)
	 	 	2004	 	 	 	25,189	 	 	 	—	 	 	 	277	 	 	 	—	 	 	 	142	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Robert M. Hart,
	 	 	2005	 	 	$	491,497	 	 	$	292,507	 	 	$	7,347	 	 	$	886,104	 	 	$	83,544	 
	Senior Vice President,
	 	 	2004	 	 	 	472,593	 	 	 	282,703	 	 	 	6,787	 	 	 	706,485	 	 	 	79,956	 
	General Counsel
and Secretary
	 	 	2003	 	 	 	454,416	 	 	 	268,149	 	 	 	6,304	 	 	 	460,788	 	 	 	76,581	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	James P. Slattery,
	 	 	2005	 	 	$	432,640	 	 	$	257,637	 	 	$	4,622	 	 	$	557,163	 	 	$	71,512	 
	Senior Vice President —
	 	 	2004	 	 	 	416,000	 	 	 	227,136	 	 	 	4,756	 	 	 	293,781	 	 	 	68,733	 
	Insurance
	 	 	2003	 	 	 	400,000	 	 	 	229,200	 	 	 	4,569	 	 	 	—	 	 	 	66,024	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Peter R. Sismondo,
	 	 	2005	 	 	$	239,455	 	 	$	136,203	 	 	$	3,208	 	 	$	455,328	 	 	$	40,200	 
	Vice President, Controller,
	 	 	2004	 	 	 	230,245	 	 	 	103,749	 	 	 	3,030	 	 	 	363,114	 	 	 	38,579	 
	Treasurer and Assistant
Secretary
	 	 	2003	 	 	 	221,389	 	 	 	101,485	 	 	 	2,867	 	 	 	236,940	 	 	 	37,034	 

 

			
	(1)	 	These amounts represent (i) bonuses earned in respect of the relevant year under the 2005
Management Plan, which is designed to reward executive officers for the attainment of one or
more performance goals established by the Compensation Committee, subject to reduction or
elimination of any such bonus based on such criteria as the Compensation Committee shall
determine, including, but not limited to, individual objectives established by the
Compensation Committee, and (ii) in the case of the 2005 amounts for Messrs. Gorham and
Sismondo, additional discretionary bonuses of $76,969 and $25,000, respectively, paid outside
the 2005 Management Plan.
	 
	(2)	 	These amounts represent (i) payments for reimbursement of taxes on income imputed pursuant to
the Company’s long-term disability and group term life insurance policies, and (ii) in the
case of the 2005 amounts for each of Messrs. Hicks and Gorham, the additional amount of $2,500
representing the payment of luncheon club dues and fees.
	 
	(3)	 	These amounts represent payouts in February 2005 in settlement of performance shares awarded
under the 1993 Long-Term Incentive Plan (the “1993 Plan”), which entitled the holder thereof
to payouts of cash and/or Common Stock (in such proportion as is determined by the
Compensation Committee) up to a maximum amount equal to the value of one share of Common Stock
on the payout date for each performance share, depending upon the average annual compound
growth in the Company’s Earnings Per Share (as defined by the Compensation Committee pursuant
to the 1993 Plan) for the 2001-2004 award period. Such payout was made in cash to the extent
of minimum statutory withholding requirements in respect of the award, with the balance in
Common Stock.
	 
	(4)	 	The 2005 amounts listed for Messrs. Hicks, Gorham, Hart, Slattery and Sismondo include (i)
savings benefits of $119,375, $61,875, $73,606, $64,792 and $35,861, respectively, credited
pursuant to the Deferred Compensation Plan; and (ii) benefits valued at $3,520, $1,332,
$5,918, $2,700 and $1,130, respectively, pursuant to the Securities and Exchange Commission
rules, of life insurance maintained by the Company on their behalf. Such life insurance
policies provide a death benefit to an executive

 

 

			
	 	 	officer who is an employee at the time of his death equal to four times the amount of such
executive officer’s annual salary at January 1 of the year of his death. The 2005 amounts listed
for each of Messrs. Hicks, Gorham, Hart and Slattery also include compensation of $4,020, and the
2005 amount listed for Mr. Sismondo also includes compensation of $3,209, in respect of other
insurance coverage.
	 
	(5)	 	Mr. Hicks was appointed President and chief executive officer of the Company effective
December 31, 2004, and was Executive Vice President of the Company prior thereto.
	 
	(6)	 	Mr. Gorham has been a Senior Vice President of the Company since December 2004 and chief
financial officer since May 1, 2005.<PAGE>
                                                                   Exhibit 10.23

                             STOCK OPTION AGREEMENT

      This Stock Option Agreement, dated as of the Grant Date set forth on
Schedule A hereto, between Dresser-Rand Group Inc., a Delaware corporation (the
"Company"), and the grantee whose name appears on Schedule A (the "Grantee"), is
being entered into pursuant to the Dresser-Rand Group Inc. 2005 Stock Incentive
Plan (the "Plan"). Capitalized terms used herein without definition have the
meaning given in the Plan.

      1. Grant of Options.

      (a) Confirmation of Grant. The Company hereby evidences and confirms its
grant to the Grantee, effective as of the Grant Date set forth on Schedule A, of
NSOs (the "Options") to purchase the number of Shares set forth on Schedule A.
The Options are subject to the terms of the Plan, which terms are incorporated
by reference herein. If there is any inconsistency between the terms hereof and
the terms of the Plan, the terms of the Plan shall govern.

      (b) Exercise Price. The Options shall have an exercise price of $21.00 per
share, subject to adjustment as provided in the Plan (the "Exercise Price").

      2. Vesting and Exercisability. Except as otherwise provided in this
Agreement and subject to the continuous employment of the Grantee with the
Company or a Subsidiary until the applicable vesting date, the Options shall
vest and become exercisable in four equal installments on each of the first four
anniversaries of the Grant Date.

      3. Termination of the Options.

      (a) Normal Termination Date. Unless earlier terminated pursuant to Section
3(b), the Options shall terminate and be canceled on the tenth anniversary of
the Grant Date (the "Normal Termination Date").

      (b) Early Termination.

            (i) Death or Disability. If the Grantee's employment terminates by
      reason of death or Disability, the Grantee (or the Grantee's estate,
      beneficiary or legal representative) may exercise any Options (regardless
      of whether then vested or exercisable) until the earlier of (A) the
      twelve-month anniversary of the date of such termination of employment and
      (B) the Normal Termination Date.

            (ii) Other Terminations Except Cause. If the Grantee's employment
      terminates for any reason other than death, Disability or Cause, the
      Grantee may exercise any Options that are vested and exercisable at the
      time of such termination of employment until the earlier of (A) the 90-day
      anniversary of the
<PAGE>

      date of such termination of employment and (B) the Normal Termination
      Date. Any Options that are not vested and exercisable at the time of such
      a termination of employment shall be forfeited and canceled as of the date
      of termination of employment.

            (iii) Terminations for Cause. If the Grantee's employment is
      terminated for Cause, all Options, whether or not then vested and
      exercisable, shall be immediately forfeited and canceled as of the date of
      such termination of employment.

      4. Manner of Exercise. The Grantee may exercise any Options that have
become vested and exercisable by providing written notice of exercise to the
Company and paying the aggregate Exercise Price for such Options (i) in cash or
its equivalent, (ii) by exchanging Shares that are not the subject of any pledge
or other security interest, (iii) through an arrangement with a broker approved
by the Company whereby payment is accomplished in whole or in part with the
proceeds of the sale of Shares or (iv) by any combination of the foregoing.

      5. Change in Control.

      (a) Accelerated Vesting and Cancellation. Subject to Section 5(b) below,
in the event of a Change in Control, each outstanding Option (whether vested or
unvested) shall be canceled in exchange for a payment having a value equal to
the excess, if any, of the Change in Control Price over the Exercise Price.

      (b) Alternative Awards. No cancellation, acceleration of vesting and
exercisability, settlement or other payment shall occur with respect to any
Options in connection with a Change in Control if the Committee reasonably
determines in good faith prior to the occurrence of a Change in Control that the
Options shall be honored or assumed, or new rights substituted therefor (such
honored, assumed or substituted award an "Alternative Award") by the Grantee's
employer (or the parent or a Subsidiary of such employer) immediately following
the Change in Control, provided that any such Alternative Award must:

            (i) be based on stock that is traded on an established U.S.
      securities market, or that will be so traded within 60 days of the Change
      in Control;

            (ii) provide the Grantee (or each Grantee in a class of Grantees)
      with rights and entitlements substantially equivalent to or better than
      the rights and terms applicable to the Options, including, but not limited
      to, an identical or better exercise and vesting schedule and identical or
      better timing and methods of payment;

                                       2
<PAGE>
            (iii) have substantially equivalent economic value to the Options
      (determined at the time of the Change in Control); and

            (iv) have terms that provide that if the Grantee's employment is
      involuntarily or constructively terminated, any conditions on the
      Grantee's rights under, and any restrictions on transfer or exercisability
      applicable to, each such Alternative Award shall be waived or shall lapse,
      as the case may be.

For this purpose, a constructive termination shall mean a termination by the
Grantee following (i) a material reduction in the Grantee's base salary or
incentive compensation opportunity or (ii) a material reduction in the Grantee's
responsibilities, in each case without the Grantee's written consent.

      6. Miscellaneous.

      (a) Tax Withholding. No Shares shall be issued pursuant to the exercise of
Options unless and until the Grantee has made arrangements satisfactory to the
Committee to satisfy applicable withholding tax obligations.

      (b) Binding Effect; Benefits. This Agreement shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than the parties to this
Agreement or their respective successors or assigns any legal or equitable
right, remedy or claim under or in respect of any agreement or any provision
contained herein.

      (c) Amendment. This Agreement may not be amended, modified or supplemented
orally, but only by a written instrument executed by both the Grantee and the
Company.

      (d) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by the Company or the Grantee without the prior written consent of
the other party, provided that the Company may assign all or any portion of its
rights or obligations under this Agreement to one or more persons or other
entities designated by it.

      (e) APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICT OF LAWS WHICH WOULD REQUIRE APPLICATION OF THE LAW OF
ANOTHER JURISDICTION.

      (f) Severability; Blue Pencil. In the event that any one or more of the
provisions of this Agreement shall be or become invalid, illegal or
unenforceable in any

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<PAGE>
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not be affected thereby.

      (g) Section and Other Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect the
meaning or interpretation of this Agreement.

      (h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.

                          -- Signature page follows --

                                       4
<PAGE>
         IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.

                                         DRESSER-RAND GROUP INC.

                                         By: /s/ Elizabeth C. Powers
                                             --------------------------------
                                             Name:  Elizabeth C. Powers
                                             Title: Vice President and
                                                    Chief Administrative Officer

                                         GRANTEE

                                         /s/ Lonnie Arnett
                                         ------------------------------------
                                             Lonnie Arnett

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