Document:

EX-10.3

 

 Exhibit 10.3

ALLEGHANY CORPORATION 2005 DIRECTORS’ STOCK PLAN

RESTRICTED STOCK UNIT SUPPLEMENT

(Amended and Restated as of January 1, 2008)

     1. GRANT OF RESTRICTED STOCK UNITS. This Supplement (this “Supplement”), forming a part of
the Alleghany Corporation 2005 Directors’ Stock Plan the (“Plan”), permits a Non-Employee Director
to timely elect in accordance with Section 3 hereof to be credited with, in lieu of the automatic
grant of 250 shares of Restricted Stock pursuant to the Plan, on the first business day following
each Annual Meeting (each a “Grant Date”), 250 notional units of measurement each equivalent to a
share of Common Stock (each a “Restricted Stock Unit”).

     2. RESTRICTED STOCK UNIT ACCOUNTS. The Company shall establish and maintain a separate
unfunded, bookkeeping account in respect of any Restricted Stock Units granted to a Non-Employee
Director (an “Account”), which Account shall reflect the investment experience that the Account
would have had if such Account held whole or fractional shares of Common Stock equal to the number
of whole or fractional Restricted Stock Units credited to the Account. A separate sub-Account
shall be created to identify each grant of Restricted Stock Units on each Grant Date for purposes
of applying the provisions of this Supplement. The Account (and each sub-Account) shall exist
solely for record keeping purposes and shall not represent any actual interest in any shares of
Common Stock. If any cash or stock dividends are paid on the shares of Common Stock represented by
the Restricted Stock Units during the period between the Grant Date and the date of payment with
respect to such Restricted Stock Units, then additional whole or fractional Restricted Stock Units
shall be credited to the Non-Employee Director’s Account. Such credit shall be made as of the
applicable dividend payment date. The number of whole or fractional Restricted Stock Units
credited as a result of any cash dividends shall be determined by dividing (a) the aggregate dollar
amount of the cash dividends by (b) the fair market value of a share of Common Stock on the
dividend payment date. The additional whole and/or fractional Restricted Stock Units acquired with
any cash or stock dividends shall be payable at the same time as the Restricted Stock Units
representing the shares of Common Stock giving rise to the dividends.

     3. ELECTION. To be granted Restricted Stock Units in lieu of the automatic grant of 250
shares of Restricted Stock a Non-Employee Director must affirmatively elect (an “Election”) to
receive such Restricted Stock Units, which Election must be made on or before the December
31st preceding the Annual Meeting in respect of which the automatic grant of Restricted
Stock would otherwise be made; provided however, that a newly-elected Non-Employee Director may
make his or her Election on or before the date of the Annual Meeting at which he or she is or will
be first elected as a Non-Employee Director. Each Election to receive Restricted Stock Units may
also include an election specifying the date or dates and/or event or events for the payment in
respect of such Restricted Stock Units (each such date or dates and/or event or events being
referred to herein as a “Payment Date”); provided that any Payment Date elected may not be (a)
prior to the date that is the third anniversary of the Grant Date and (b)

 

 

later than the date that the Non-Employee Director is required to retire from the Board. Each
Payment Date: (i) specified as a calendar date must be January 1st and (ii) specified as
an event shall be deemed to be the January 1 coinciding with or next following the specified event.
A Non-Employee Director’s Election may provide that such Election shall remain in effect until
revoked (which revocation must be made on or before the December 31st preceding the
Annual Meeting at which such revocation is to take effect) with respect to all subsequently granted
Restricted Stock Units.

     4. PAYMENT.

     (a) All payments in respect of whole Restricted Stock Units shall be made in the form
of whole shares of Common Stock and any fractional Restricted Stock Unit shall be paid in
cash based upon the Fair Market Value of the equivalent fraction of a share of Common Stock.

     (b) Unless a Non-Employee Director’s Election provides otherwise, the Payment Date in
respect of the Restricted Stock Units credited to a Non-Employee Director’s Account shall be
the date that is the third anniversary of the Grant Date of such Restricted Stock Units.

     (c) Notwithstanding the foregoing or any Election or Amended Election (as hereinafter
defined) made by the Non-Employee Director:

(i) If a Non-Employee Director resigns prior to the Next Annual Meeting
following the Grant Date of such Restricted Stock Units, such Restricted Stock
Units shall be forfeited.

(ii) If a Non-Employee Director ceases to be a member of the Board (and,
therefore, the Non-Employee Director “Separates from Service” for purposes of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)),
all Restricted Stock Units remaining in the Non-Employee Director’s Account
(after the application of clause (i) above) shall be paid to such Non-Employee
Director.

     (d) Notwithstanding the foregoing or any Election or Amended Election made by a
Non-Employee Director, if a Non-Employee Director dies, all Restricted Stock Units remaining
in the Non-Employee Director’s Account shall be paid to the individual or entity designated
by the Non-Employee Director in writing and filed with the Company (and if the Non-Employee
Director did not designate a beneficiary or such designated beneficiary predeceases the
Non-Employee Director, the Non-Employee Director’s beneficiary shall be the Non-Employee
Director’s spouse, if any, or if none, his/her estate)

     (e) All payments in respect of Restricted Stock Units shall be made as promptly as
possible following the Payment Date and in any event, on or before the last day of the
calendar year in which the Payment Date occurs.

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     5. AMENDED ELECTIONS. At least twelve months prior to the date any Restricted Stock Units
would have been paid to the Non-Employee Director (such date being the “Original Payment Date”), a
Non-Employee Director may elect (an “Amended Election”) to defer distribution of all or any number
of the Restricted Stock Units credited to his/her Account to a date later than twelve months after
the Original Payment Date; provided, however, that (a) such Amended Election will not take effect
for at least 12 months after the date on which it is made, (b) the distribution in respect of the
Restricted Stock Units with respect to which the Amended Election is made must be at least 5 years
from the Original Payment Date and (c) the Payment Date elected in the Amended Election may not be
later than the Non-Employee Director’s required retirement date. A Non-Employee Director’s Amended
Election may otherwise provide for distribution at any time as could have been elected under an
original Election.

     6. LIMITS ON TRANSFERABILITY. No Restricted Stock Units shall be pledged, encumbered, or
hypothecated to, or in favor of, or subject to any lien, obligation, or liability of a Non-Employee
Director to, any party, nor shall such Restricted Stock Units be assignable or transferable by the
recipient thereof.

     7. INTEGRATION WITH PLAN. As this Supplement is a part of the Plan, any capitalized term used
herein and not otherwise defined, shall have the meaning ascribed to it in the Plan. To the extent
not otherwise inconsistent with this Supplement, all of the terms and provisions of the Plan shall
govern this Supplement.

     8. COMPLIANCE WITH SECTION 409A OF THE CODE. The Supplement is intended to be operated in
compliance with Section 409A of the Code. If any provision of the Supplement is subject to more
than one interpretation, then the Supplement shall be interpreted in a manner that is consistent
with Section 409A of the Code. All Elections and Amended Elections shall be in writing and shall
be effective on and when received by the Company pursuant to procedures established by the Board
from time to time. An Amended Election when received pursuant to such procedures is irrevocable
when received.

3EX-10.4

 

 Exhibit 10.4

ALLEGHANY CORPORATION

MANAGEMENT INCENTIVE PLAN

     1. PURPOSE OF THE PLAN. The purpose of the Alleghany Corporation Management Incentive Plan
(the “Plan”) is to allow Alleghany Corporation (the “Company”) to provide performance-based
incentive compensation that satisfies the requirements for performance-based compensation in
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), consisting of
incentive compensation bonuses to its officers, upon whom, in large measure, the sustained
progress, growth and profitability of the Company depends.

     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 select the officers to participate in the Plan,
to establish performance goals for performance during each Performance Period (as defined in
Section 4), to determine the amount of the incentive compensation bonus payable to any Participant
(as defined in Section 3), and to make all 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 compensation 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 after
consideration of management’s recommendations (“the Participants”). Participants may receive
multiple incentive compensation bonuses during the same year under the Plan.

     4. PERFORMANCE PERIODS. Incentive compensation bonuses may be payable to each 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”).

     5. INCENTIVE COMPENSATION BONUSES.

     (a) Target Incentive Compensation Bonuses. Prior to the beginning of each
Performance Period, or at such other time no later than such time as is permitted by the
applicable provisions of the Code, the Committee after consideration of management’s
recommendations shall establish in writing the target (or range of) incentive compensation
bonus opportunity for each Participant based upon the attainment of one or more performance
goals established by the Committee at such time. The Committee may provide for a threshold
level of performance below which no amount of incentive compensation bonus will be paid and
a maximum level of performance above which no additional incentive compensation bonus will
be paid, and it may provide for the payment of differing amounts for different levels of
performance.

     (b) Performance Goals. Performance goals, which may vary from Participant to
Participant and target incentive compensation bonus opportunity to target incentive

 

 

compensation bonus opportunity, shall be based upon the attainment of specific amounts
of, or increases in, one or more of the following: revenues, operating income, cash flow,
earnings before income taxes, net income, earnings per share, stockholders’ equity, return
on equity, underwriting profits, 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 and goals relating to acquisitions
or divestitures, all whether applicable to the Company or any relevant subsidiary or
business unit or entity in which 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 and/or the past or current performance of other companies, may provide for
the inclusion, exclusion or averaging of specified items in whole or in part, such as
catastrophe losses, realized gains or losses on strategic investments, discontinued
operations, extraordinary items, accounting changes, and 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.

     (c) Incentive Compensation Bonus Determination. As soon as practicable after
the end of each Performance Period but before any incentive compensation bonuses are paid,
the Committee shall certify in writing (i) whether the performance goal or goals were
attained and (ii) the amount of the incentive compensation bonus payable to each Participant
based upon the attainment of the performance goals established by the Committee. The
Committee may determine to grant a Participant an incentive compensation bonus 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 incentive compensation bonus 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 circumstance may the
Committee increase the amount of the incentive compensation bonus otherwise payable to a
Participant beyond the amount originally established, waive the attainment of the
performance goals established by Committee or otherwise exercise its discretion so as to
cause any incentive compensation bonus not to qualify as performance-based compensation
under Section 162(m) of the Code.

     (d) Payment. As soon as practicable following the Committee’s determination of
the amount of any incentive compensation bonus payable to a Participant, but no later than
December 31st of such year, such incentive compensation bonus shall be paid by
the Company in cash to such Participant.

     (e) Death, Disability, Etc. In the event a Participant shall die or become
disabled prior to the end of a Performance Period, the Participant (or in the event of the
Participant’s death, the Participant’s beneficiary) shall be entitled to receive such
pro-rata

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portion of the incentive compensation bonus established for the Participant as shall be
determined by the Committee, subject to Section 7(a). In the event a Participant’s
employment with the Company is otherwise terminated during the Performance Period, the
Committee, in its discretion, shall determine the amount, if any, of the incentive
compensation bonus that shall be payable to the Participant.

     (f) Annual Maximum. The incentive compensation bonuses payable to any
Participant pursuant to the Plan in a single calendar year shall not exceed $5 million.

     6. 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 increases in earnings 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 any increase or
decrease in the rights of Participants.

     7. MISCELLANEOUS PROVISIONS.

     (a) Right to Incentive Compensation Bonus. No officer or other person shall
have any claim or right to receive any incentive compensation bonus under the Plan prior to
the actual payment thereof.

     (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 compensation 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 compensation 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 compensation 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.

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     (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
bonus plan or as limiting the authority of any of the foregoing to pay cash 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.

     8. 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 or terminate 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 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.

     9. 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.

     10. EFFECTIVE DATE. The Plan shall be effective commencing January 1, 2005, subject to
approval by the stockholders of the Company in accordance with Section 162(m) of the Code.

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