UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Markel Corporation
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(Name of Registrant as Specified In Its Charter)
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Notes:
[MARKEL LOGO]
Notice of Annual Meeting of Shareholders
To the Shareholders of Markel Corporation:
Notice is hereby given that the 2001 Annual Meeting of Shareholders of
Markel Corporation (the "Company") will be held at the Jefferson Hotel,
Franklin & Adams Streets, Richmond, Virginia, on Wednesday, May 16, 2001,
starting at 4:30 p.m.
The purposes for which the meeting is being held are:
1. To elect a Board of Directors consisting of 10 persons to serve for
the ensuing year;
2. To ratify or reject the selection by the Board of Directors of KPMG
LLP as the Company's independent auditors for the year ending December 31,
2001; and
3. To transact such other business as may properly come before the
meeting.
It is important that your shares be represented and voted. Shareholders,
whether or not they expect to attend the meeting in person, are requested to
date, sign and return the accompanying proxy card in the envelope provided, on
which no postage is needed if mailed in the United States.
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 2000 is being mailed to you with this Notice and the Proxy
Statement.
You are cordially invited to attend the meeting.
By Order of the Board of Directors
Secretary
March 27, 2001
[MARKEL LOGO]
4521 Highwoods Parkway
Glen Allen, Virginia 23060
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2001
----------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Markel Corporation (the "Company") for use at the Annual Meeting
of Shareholders of the Company to be held May 16, 2001, or any adjournments
thereof, for the purposes set forth in this Proxy Statement and the attached
Notice of Annual Meeting of Shareholders. This Proxy Statement and the related
form of proxy are first being mailed to the shareholders of the Company on or
about March 27, 2001. The Board of Directors has fixed the close of business
on March 16, 2001, as the record date for the determination of shareholders
entitled to notice of and to vote at the meeting and any adjournments thereof.
Each holder of record of the Company's Common Stock, no par value (the "Common
Stock"), on the record date will be entitled to one vote for each share then
registered in his or her name with respect to each matter properly brought
before the meeting. As of the close of business on the record date, 8,625,061
shares of Common Stock were outstanding and entitled to vote at the meeting.
If sufficient proxies are not returned in response to this solicitation,
supplementary solicitations may also be made by mail, telephone, electronic
communication or personal interview by directors, officers and regular
employees of the Company, none of whom will receive additional compensation
for these services. The Company may retain an outside proxy solicitation firm
to assist in the solicitation of proxies, but at this time does not have plans
to do so. Costs of solicitation of proxies will be borne by the Company, which
will reimburse banks, brokerage firms and other custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in
forwarding proxy materials to the beneficial owners of shares held by them.
The shares represented by all properly executed proxies received by the
Secretary of the Company and not revoked as herein provided will be voted as
set forth herein, unless the shareholder directs otherwise in the proxy, in
which event such shares will be voted in accordance with such directions. Any
proxy may be revoked at any time before the shares to which it relates are
voted, either by written notice (which may be in the form of a substitute
proxy bearing a later date delivered to the secretary of the meeting) or by
attending the meeting and voting in person.
March 27, 2001
PRINCIPAL SHAREHOLDERS
The following table and footnotes set forth information with respect to
beneficial ownership of equity securities of the Company as of March 1, 2001,
except as otherwise noted, by (i) each director standing for election; (ii)
each executive officer named in the Summary Compensation Table; (iii) each
person known to the Company to be the beneficial owner of more than 5% of its
outstanding Common Stock and (iv) all directors and executive officers as a
group. For purposes of this table, "beneficial ownership" includes, as
required by applicable regulations, shares over which a person has or shares
voting or investment power. Except as otherwise indicated, each of the persons
named below has sole voting and investment power with respect to the shares of
Common Stock beneficially owned by that person.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
Contingent
Value Rights
Name Common Stock Percent (CVR) Percent
---- ------------ ------- ------------ -------
Anthony F. Markel................. 398,137(a) 4.62% -- --
4521 Highwoods Parkway
Glen Allen, VA 23060
Gary L. Markel.................... 355,725(b) 4.13% -- --
9700 Ninth Street North
St. Petersburg, FL 33702
Steven A. Markel.................. 624,912(c) 7.25% -- --
4521 Highwoods Parkway
Glen Allen, VA 23060
Alan I. Kirshner.................. 87,257(d) 1.01% -- --
John J. Byrne..................... 40,307(e) * 40,107(e) 2.29%
Mark J. Byrne..................... 15,311(f) * 15,311(f) *
Jeremy D. Cooke................... 10,047(g) * -- --
Douglas C. Eby.................... --(n) * -- --
Thomas S. Gayner.................. 25,693(h) * -- --
Leslie A. Grandis................. 19,589(i) * -- --
Stewart M. Kasen.................. 11,995 * -- --
Darrell D. Martin................. 79,011(j) * -- --
Paul W. Springman................. 13,025(k) * -- --
All directors and executive
officers as a group(l)........... 1,654,863 19.15% 55,418(m) 3.17%
Robert E. Torray & Co., Inc....... 773,205(n)
The Torray Fund
6610 Rockledge Drive, Suite 450
Bethesda, MD 20817-1869
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* Less than 1% of class.
(a) Includes 57,483 shares held in Grantor Retained Annuity Trusts for which
Mr. Anthony F. Markel is trustee and partial beneficiary. Includes 2,657
shares held as trustee for the benefit of Mr. Anthony F. Markel's
children as to which he disclaims beneficial ownership. Includes 5,300
shares held as co-trustee with Gary Markel under trusts created under
wills. Includes 2,850 shares held as trustee for the benefit of his
children as to which he disclaims beneficial ownership. Includes 6,000
shares held by Mr. Markel's wife as to which shares he disclaims
beneficial ownership.
(b) Includes 20,345 shares held as co-trustee with Steven A. Markel for the
benefit of Mr. Anthony F. Markel's children as to which he disclaims
beneficial ownership. Includes 321,230 shares held by the Markel Family
Limited Partnership, Bank of America Plaza, Suite 1100, South Fourth
Street, Las Vegas, Nevada 89101. Gary Markel is the sole general partner
of, and holder of 99.9% of the beneficial interests in, the Markel Family
Limited Partnership. Includes 5,300 shares held as co-trustee with
Anthony Markel under trusts created under wills. Includes 2,850 shares
held as trustee for the benefit of his child.
2
(c) Includes 91,726 shares held as co-trustee for the benefit of the Lewis C.
Markel Residuary Trust, 24,395 shares held as co-trustee for the benefit
of Mr. Kirshner's children, 20,345 shares held as co-trustee with Gary L.
Markel for the benefit of Mr. Anthony F. Markel's children, 4,040 shares
owned by Mr. Steven A. Markel's children and 18,000 shares held as trustee
under a trust for non-employee directors under the Company's 1989 Stock
Option Plan, as to all of which shares Mr. Markel disclaims beneficial
ownership.
(d) Includes 219 shares held by Mr. Kirshner's wife as to which he disclaims
beneficial ownership.
(e) Includes 15,236 shares and CVRs in a family partnership over which Mr.
Byrne's wife has voting control. Includes 200 shares held by Mr. Byrne's
wife.
(f) Includes 15,241 shares and CVRs owned by a corporation as to which Mark
Byrne has voting or dispositive power but as to which he disclaims
beneficial ownership.
(g) Includes 3,000 shares represented by options granted under the Company's
1986 Stock Option Plan which may be exercised within sixty days of
December 31, 2000.
(h) Includes 4,000 shares represented by options granted under the Company's
1986 Stock Option Plan which may be exercised within sixty days of
December 31, 2000. Includes 447 shares held as trustee for the benefit of
his wife as to which Mr. Gayner disclaims beneficial ownership.
(i) Includes 400 shares held by Mr. Grandis' wife and 600 shares held by Mr.
Grandis' children as to which shares he disclaims beneficial ownership.
(j) Includes 10,000 shares represented by options granted under the Company's
1986 Stock Option Plan which may be exercised within sixty days of
December 31, 2000. Includes 3,500 shares held by Mr. Martin's wife as to
which shares he disclaims beneficial ownership.
(k) Includes 1,000 shares represented by options granted under the Company's
1986 Stock Option Plan which may be exercised within sixty days of
December 31, 2000. Includes 200 shares held by Mr. Springman's wife as to
which he disclaims beneficial ownership.
(l) Includes 14,000 shares represented by options granted under the Company's
1986 Stock Option Plan which may be exercised within sixty days of
December 31, 2000. Includes 190,920 shares as to which beneficial
ownership is disclaimed.
(m) Includes 15,241 CVR's as to which beneficial ownership is disclaimed.
(n) Based upon Schedule 13G's filed by the named entities on February 13, 2001
and information supplied by Douglas C. Eby as of March 1, 2001. Robert E.
Torray & Co., Inc. has shared voting and investment power with respect to
these shares. In accordance with written procedures adopted by his
employer, Douglas C. Eby, President of Robert E Torray & Co., Inc.,
exercises no voting or investment control over Markel shares held by
clients of the Torray companies.
3
ELECTION OF DIRECTORS
Nominees
A board of ten directors is to be elected at the meeting to serve until the
next annual meeting of shareholders and the election and qualification of
their successors. The Company's Board of Directors presently consists of the
ten directors who are named below as nominees and John J. Byrne who is
retiring from the Board.
Each of the nominees has consented to his being named as a nominee in this
Proxy Statement, has agreed to serve if elected, and has furnished to the
Company the information set forth in the table on the following page with
respect to his age as of December 31, 2000 and his principal occupation or
employment.
It is expected that each of the nominees will be able to serve, but in the
event that any such nominee is unable to serve for any reason (which event is
not now anticipated), the proxies reserve discretion to vote or refrain from
voting for a substitute nominee or nominees.
Shareholders may withhold authority to vote for any of the nominees on the
accompanying proxy. In the election of directors, those receiving the greatest
number of votes will be elected even if they do not receive a majority.
Abstentions and broker non-votes will count towards a quorum but will have no
effect on any action taken at the meeting.
Name, Age, Positions With the Company* or Principal Occupation Director
for Past Five Years, And Other Information Since*
-------------------------------------------------------------- --------
ALAN I. KIRSHNER, 65.................................................. 1978
Chairman of the Board of Directors and Chief Executive Officer since
September 1986. President from 1979 to March 1992.
ANTHONY F. MARKEL, 58................................................. 1978
President and Chief Operating Officer since March 1992. Executive
Vice President from 1979 to March 1992. Director of Open Plan
Systems, Inc.; Hilb, Rogal and Hamilton Company.
STEVEN A. MARKEL, 52.................................................. 1978
Vice Chairman since March 1992. Treasurer from October 1986 to August
1993. Executive Vice President from October 1986 to March 1992.
Director of S&K Famous Brands, Inc.
DARRELL D. MARTIN, 52................................................. 1991
Executive Vice President and Chief Financial Officer since March
1992. Chief Financial Officer since 1988.
THOMAS S. GAYNER, 39.................................................. 1998
Chief Investment Officer since January 2001, Vice President, Equity
Investments May 1995 to December 2000. President, Markel Gayner Asset
Management Corporation, a subsidiary of the Company, since December
1990.
MARK J. BYRNE, 39..................................................... 2000
Chairman and President, West End Capital Management (Bermuda) Limited
and affiliates. Since March, 2000 Mark Byrne has served as Chief
Executive Officer and since October 2000, as Chairman, of Gen Re
Securities and affiliates, a financial services subsidiary of General
Re Corporation. Mr. Byrne previously was Managing Director, Global
Fixed Income Arbitrage, Credit Suisse First Boston.
DOUGLAS C. EBY, 41.................................................... 2001
President of Robert E. Torray & Co. Inc., an independent money
management firm located in Bethesda, Maryland; Vice President of The
Torray Fund, an investment fund managed by Robert E. Torray & Co.
Inc.
4
Name, Age, Positions With the Company* or Principal Occupation Director
for Past Five Years, And Other Information Since*
-------------------------------------------------------------- --------
LESLIE A. GRANDIS, 56................................................ 1987
Secretary since February 1989. Partner, McGuireWoods LLP, Richmond,
Virginia, attorneys-at-law, since 1974. Director of Cornerstone
Realty Income Trust, Inc.; CSX Trade Receivables Corporation.
STEWART M. KASEN, 61................................................. 1987
Private investor from October 1999; Chairman, President and Chief
Executive Officer of Factory Card Outlet Corp. from May 1998 to
October 1999; Factory Card Outlet filed a petition for bankruptcy on
March 23, 1999; Private Investor from 1996 to 1998; Chairman from
January 1994 and President and Chief Executive Officer, Best
Products Co., Inc., Richmond, Virginia from June 1991 to April 1996;
Best Products Co., Inc. filed a petition in bankruptcy on September
24, 1996; Director of K2, Inc., Department 56, Inc., and The Singer
Companies.
GARY L. MARKEL, 54................................................... 1978
President, Gary Markel & Associates, Inc., St. Petersburg, Florida,
an independent insurance agency since December 1984. President, Gary
Markel Surplus Lines Brokerage, Inc.
--------
* For periods prior to 2000, includes service with the Company's now wholly-
owned subsidiary, Markel North America, Inc. (formerly Markel Corporation)
Section 16(a) Beneficial Ownership Reporting Compliance
Form 3 filings were made for Messrs. Springman and Cooke following the March
1, 2001 determination by the Board that they were executive officers of the
Company. During 2000, each of Anthony and Gary Markel inadvertently failed to
timely file one report under Section 16 of the Securities Exchange Act of 1934
with respect to two sales (totaling 850 shares of common stock) by a trust
created pursuant to the will of their father and for which they serve as co-
trustees.
Committees of the Board of Directors
The Board of Directors has a Compensation Committee and an Audit Committee.
The Company does not have a nominating committee.
Audit Committee members for 2000 included Mr. John Byrne, Mr. Grandis and
Mr. Kasen with Mr. Byrne serving as Chairman. The members of the Audit
Committee are "independent" as independence is defined in the applicable
listing standards of the New York Stock Exchange. The Audit Committee's
primary function is to assist the Board in fulfilling its oversight
responsibilities with respect to (i) the annual financial information to be
provided to shareholders and the Securities and Exchange Commission; (ii) the
system of internal controls that management has established; and (iii) the
internal and external audit process. In addition, the committee provides an
avenue for communication between internal audit, the independent auditors,
financial management and the Board and the committee recommends whether the
Board of Directors should include the audited financial statements in the
Company's Annual report on Form 10-K.
During 2000 the Board of Directors held four regular and one special
meeting. There were four meetings of the Audit Committee and two meetings of
the Compensation Committee during 2000.
Compensation of Directors
Each non-employee director other than Mark Byrne received for services as a
director during 2000 an annual fee of $10,000, plus $1,250 for each regular
director's meeting attended and reimbursement of expenses incurred in
connection with attending meetings. Mark Byrne receives no compensation for
service as a director but does receive reimbursement for expenses. Non-
employee directors are also eligible to participate, up to the total
5
amount of fees received by the director, in the Company's Employee Stock
Purchase and Bonus Plan (the "Stock Plan"). Under this plan amounts specified
by a director are withheld from a director's fees and forwarded to an
independent administrator who purchases shares of the Company's Common Stock
on behalf of the director participant. In addition the Company provides a
"bonus" of one share for every ten share (20 share if a Company loan is made)
net increase in shares owned under the plan in a calendar year. The Company
also offers loans to all employees and non-employee directors to facilitate
the purchase of shares under this Plan. Messrs. Kasen and Grandis availed
themselves of this opportunity during 1997. See "Certain Transactions." No
non-employee director participated in the Stock Plan during 2000.
Non-employee Director Stock Option Plan
In 1989, the Company established a Stock Option Plan for Non-Employee
Directors (the "Directors Plan") which provided for one-time automatic awards
to non-employee directors of options to purchase 6,000 shares of the Company's
Common Stock. This plan terminated, as to future grants, on December 31, 1998.
The Directors Plan was amended in early 1999 to permit participants to defer
receipt of shares of common stock upon exercise of options. At December 31,
1999, three non-employee directors had exercised options and deferred receipt
of shares under the Directors Plan.
Family Relationships
Anthony Markel and Gary Markel are brothers, and Steven Markel is their
first cousin. John J. Byrne is Mark Byrne's father.
EXECUTIVE COMPENSATION
The following table provides compensation information for the Company's
Chief Executive Officer and the four other most highly compensated executive
officers. Mr. Cooke and Mr. Springman became executive officers for 2000.
SUMMARY COMPENSATION TABLE
Annual
Compensation
-----------------
Name and Principal Salary Bonus Other Annual All Other
Position Year ($) ($) Compensation Compensation ($)(3)
------------------ ---- -------- -------- ------------ -------------------
Alan I. Kirshner........ 2000 $395,000 $158,000 -- $149,300
Chairman and CEO* 1999 $375,000 $262,500 -- $145,024
1998 $354,770 $300,000 -- $129,775
Anthony F. Markel....... 2000 $395,000 $158,000 -- $110,872
President and COO* 1999 $375,000 $262,500 -- $100,562
1998 $354,770 $300,000 -- $ 90,423
Steven A. Markel........ 2000 $395,000 $158,000 -- $ 86,094
Vice Chairman* 1999 $375,000 $262,500 -- $ 78,224
1998 $354,770 $300,000 -- $ 70,714
Jeremy D. Cooke(1)......
Chief Operating Officer 2000 $358,833 $197,500 $617,982(4) $ 24,160
Markel International,
Ltd.
Paul W. Springman(2).... 2000 $300,000 $369,200 $ 87,531(5) $ 23,443
President, Markel
North America, Inc.
6
--------
* For periods prior to March 24, 2000, includes service with the Company's
now wholly owned subsidiary, Markel North America, Inc., formerly Markel
Corporation.
(1) At December 31, 2000 Mr. Cooke held 23 restricted bonus shares received in
connection with the Company's 1998 stock loan plan with a value at
December 31, 2000 of $4,182. If dividends were paid on shares of Common
Stock the same dividend would be paid on restricted bonus shares. The
Company has never paid a cash dividend on its Common Stock and does not
anticipate paying cash dividends in the near future.
(2) At December 31, 2000 Mr. Springman held 14 restricted bonus shares
received in connection with the Company's 1998 stock loan plan with a
value at December 31, 2000 of $2,634. If dividends were paid on shares of
Common Stock the same dividend would be paid on restricted bonus shares.
The Company has never paid a cash dividend on its Common Stock and does
not anticipate paying cash dividends in the near future.
(3) Amounts shown in this column include the Company's contributions under the
Company's Retirement Savings (401k) Plan in the amount of $15,300 for each
executive. In the case of Messrs. Kirshner and Anthony and Steven Markel,
the amounts shown also include accruals of $134,000 for Mr. Kirshner,
$95,572 for Anthony Markel and $70,794 for Steven Markel pursuant to
Employment Agreements which provide for supplemental retirement benefits
and earnings thereon. Includes for Mr. Cooke and Mr. Springman, $6,060 and
$2,143, respectively, representing the difference between the interest
rate charged on loans made to them under the Company's stock loan plans
and 120% of the applicable federal long-term rate at the time the loan was
made (a rate presumed for certain purposes under Securities and Exchange
Commission regulations to be a maximum market rate). Includes $5,000 for
Mr. Springman representing the value of bonus shares awarded in 2000 in
connection with Mr. Springman's new stock loan in 2000. Includes $2,800
and $1,000, for Mr. Cooke and Mr. Springman, respectively, as Company
Incentive Payment for 2000 under the stock loan plan. See "Certain
Transactions." In accordance with applicable rules the information in this
footnote relates only to 2000.
(4) Includes $364,037 and $193,457 for foreign tax payments and foreign
housing allowance related to Mr. Cooke's overseas assignment. The Company
may receive a repayment from Mr. Cooke pursuant to tax equalization
agreements with him when his calendar year 2000 tax returns are completed
and filed. Any such payments will be reported as a reduction in this
footnote in future years.
(5) Represents relocation expenses reimbursed by the Company during 2000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Messrs. Kasen, Gary Markel and Mark Byrne are members of the Compensation
Committee of which Mr. Kasen is Chairman. The Compensation Committee has
responsibility for establishing and reviewing the compensation of the Chairman
and CEO, the Vice-Chairman, the President and the Chief Financial Officer
("Senior Executive Officers"), and administering the 1993 Incentive Stock
Plan. Compensation for other executive officers is recommended by the
Chairman, the Vice-Chairman and President.
The Company's compensation packages for executive officers for 2000
consisted of base salary, annual performance based bonuses and contributions
to retirement plans.
In general, base salary levels are set at the minimum levels believed by the
Committee to be sufficient to attract and retain qualified executives when
considered with other components of the Company's compensation structure.
Effective as of January 1, 2000, annual base salaries were set at $395,000 for
each of Messrs. Kirshner, Anthony Markel and Steven Markel. In establishing
salaries, including Mr. Kirshner's salary as Chief Executive Officer, the
Committee considers years of service, level of experience and areas of
responsibility, the annual rate of inflation and the Company's operating
performance.
In addition to base salary, the Company has approved a bonus plan for Senior
Executive Officers in which cash bonuses are paid based on increases in the
book value of the Company's Common Stock (the "Executive
7
Bonus Plan"). The Committee believes that consistent increases in book value
will enhance the value of the Company and will, over time, result in higher
stock prices. Bonuses for other executive officers are based primarily on
underwriting results of the operations reporting to them for operational
officers and investment results for investment officers. In all cases at least
a portion of the bonus is based on the Company's five year compound growth in
book value.
Bonus Plan For Senior Executive Officers
Under the Executive Bonus Plan, bonuses for Senior Executive Officers,
expressed as a percentage of base salary, are awarded based on a five year
average of the compound growth in book value per share of Common Stock as set
forth in the following table.
5 Year Average Compound Growth Bonus as % of
In Adjusted Book Value Per Share Base Salary
-------------------------------- -------------
Under 15% 0%
15% 25%
16% 40%
17% 55%
18% 70%
19% 85%
20% 100%
21% 115%
22% 130%
23% 145%
24% 160%
25% 175%
Over 25% Discretionary
The five year average compound growth in adjusted book value per share for
2000 was 16% and accordingly a bonus of 40% of base salary was earned under
the Plan. Amounts paid in 2001 as bonus for 2000 are included in the Summary
Compensation Table.
For purposes of this plan book value calculations are adjusted to exclude
the benefit of issuing equity securities at prices above the preceding year
end per share book value and to exclude the goodwill amortization costs
resulting from a transaction in which equity securities are issued.
The Committee has not historically made annual stock option grants to
executive officers but has made grants from time to time to attract new
officers.
Section 162(m) of the Internal Revenue Code of 1986, as amended, which was
enacted in 1993, imposes a $1,000,000 limit on the amount of compensation that
will be deductible by the Company with respect to each of the Chief Executive
Officer and the four other most highly compensated executive officers.
Performance based compensation that meets certain requirements will not be
subject to the deduction limit. The Committee, with the assistance of the
Company's legal counsel, has reviewed the impact of Section 162(m) on the
Company and believes it is unlikely that the compensation paid to any
executive officer during the fiscal year ending December 31, 2001 will exceed
the limit. The Committee will continue to monitor the impact of the
Section 162(m) limit and will attempt to avoid loss of tax deductions in
future years as long as doing so is consistent with the Committee's objectives
for management compensation.
COMPENSATION COMMITTEE
Stewart M. Kasen, Gary L. Markel, Mark J. Byrne
8
Performance Graph
The following graph compares the cumulative total return (based on share
price) on the Company's Common Stock with the cumulative total return of
companies included in the S&P 500 Index and the Dow Jones Property and
Casualty Insurance Companies Index. This information is provided in accordance
with SEC requirements and is not necessarily indicative of future results.
COMPARISION OF FIVE YEAR CUMULATIVE TOTAL RETURN*
[GRAPH]
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
Markel Corporation............................... 100 119 207 240 205 240
S&P 500.......................................... 100 123 164 211 255 232
Dow Jones Property & Casualty Insurance.......... 100 118 167 158 118 161
--------
* $100 invested on 12/31/95 in stock or index--including reinvestment of
dividends. Fiscal years ending December 31. For periods prior to 2000,
based on historical reported stock prices of the Company's now wholly owned
subsidiary, Markel North America, Inc. (formerly Markel Corporation).
9
Employment Agreements
The Company has entered into employment agreements with Mr. Kirshner and Mr.
Anthony Markel and Mr. Steven Markel which provide for the employment of those
individuals as executive officers. Each agreement has an initial term of one
year and is automatically renewed for additional terms of one year unless
either party gives 60 days notice of non-renewal. If the Company chooses not
to renew, the Company will be deemed to have terminated the executive's
employment without cause. The agreements provide for a base annual salary,
currently $395,000 for Messrs. Kirshner, Anthony Markel and Steven Markel.
Each executive has agreed to preserve the confidentiality of the Company's
proprietary data and has also agreed not to compete with the Company for a
period of two years following termination. In the event of an executive's
death or disability, the Company will continue to pay base salary and benefits
for twelve months. In the event the agreement is terminated by the Company for
cause or voluntarily by the executive, the Company's obligations under the
agreement will terminate. In the event the agreement is terminated by the
Company without cause, the Company will pay the executive his base salary for
twenty-four months from the date of termination. The agreements also provide
for annual salary reviews, bonuses by the Board of Directors and certain
additional benefits.
The employment agreements also provide each executive with a deferred
compensation benefit pursuant to which the Company will set aside annually an
amount equal to between 8% and 16% of the executive's base salary plus
interest at the rate of 8% per annum on the amount set aside from the date of
each installment of base salary. The initial deferred compensation benefit
includes amounts previously accrued under the executive's former agreements
with the Company's subsidiary, Markel North America, Inc. The deferred
compensation benefit is payable at a time elected by the executive upon at
least six month's advance notice or failing an election upon the executive's
death or termination of employment. Payments may be limited to the extent
necessary to prevent the payments from becoming non-deductible to the Company
under Section 162(m) of the Internal Revenue Code. Amounts accrued for the
year ended December 31, 2000, are included in the Summary Compensation Table
in the "All Other Compensation" column.
Certain Transactions
Loan Program
In order to encourage employee and director share ownership, the Company
offers a loan program to all employees and non-employee directors to
facilitate the purchase of shares of the Company's Common Stock (the "Loan
Program"). The Loan Program also provides for the award of bonus shares to
participants at the rate of one bonus share for every 20 new shares purchased
in connection with the Loan Program. In 1998, an additional restricted bonus
feature was added which awards bonus shares at the same one for 20 share rate,
but the restricted shares vest 20% a year commencing on the second anniversary
of the purchase. In 2000, the Loan Program was further amended to eliminate
the restricted share award feature on a prospective basis and instead to
provide for an incentive payment if the Company's growth in book value goals
are met. This incentive payment feature was extended to all outstanding loans
as well.
10
The incentive payment is based on a five-year compound annual growth in book
value ("Company Incentive Payment") as follows:
5 year Compound Annual Company Incentive Payment
Growth in Book Value as % of Original Loan Balance
---------------------- -----------------------------
Under 15% 0%
15% 1.25%
16% 2.0%
17% 2.75%
18% 3.5%
19% 4.25%
20% 5%
21% 5.75%
22% 6.5%
23% 7.25%
24% 8.0%
25% 8.75%
Over 25% Discretionary
For these purposes book value will be calculated in the same manner as the
Company's Bonus Plan for Executive Officers. This means book value will be
adjusted to exclude the benefit of issuing equity securities at prices above
the preceding year end book value and to exclude the goodwill amortization
costs resulting from a transaction in which equity securities are issued.
One-half of the calculated annual incentive payment will be applied to a
participant's outstanding indebtedness to reduce the amount of the required
balloon payment or the loan balance and one-half of the calculated annual
incentive payment, net of taxes required to be withheld on the entire Company
Incentive Payment, will be paid directly to the associate by March 31 of a
given year. If a loan commitment is received on or before July 1 of a year, a
participant will be eligible for one-half of the applicable incentive payment,
if any, for the year in which the loan is made.
Messrs. Springman and Gayner participated in the Loan Program in 2000,
borrowing $100,000 and $50,000 respectively. They received bonus share awards
of 35 and 17 shares respectively. The value of the bonus shares awarded to Mr.
Springman is included in the "All Other Compensation" column of the Summary
Compensation Table.
Messrs. Kasen and Grandis, non-employee directors, participated in the 1997
Loan Program, each borrowing a total of $500,000 and each purchasing 3,427
shares. They each also received 171 bonus shares with an approximate value at
the time of the award of $25,000.
All loans made under the Loan Program bear interest at 3% and are generally
due and payable within 10 years of the loan date. The unsecured loans are full
recourse and are partially amortizing, requiring a balloon payment at maturity
in the case of Messrs. Cooke, Gayner, Martin and Springman, and are fully
amortizing in the case of Messrs. Grandis and Kasen. The loan may be prepaid
at any time, must be repaid in the event of an employee's termination, or in
the event a non-employee director ceases to be a director, and the interest
rate and payment terms are adjusted to terms comparable to market rates and
terms in the event a participant sells or pledges the shares purchased
pursuant to the Loan Program (including bonus shares awarded in connection
with the Program) without the Company's prior consent.
The largest aggregate amount of principal and interest outstanding during
2000 in loans made to the named executive officers and directors was as
follows: Jeremy D. Cooke--$267,846; Thomas J. Gayner--$280,089; Leslie A.
Grandis--$448,398; Stewart M. Kasen--$448,398; Darrell D. Martin--$987,681;
Paul W. Springman--$178,196.
11
Other Transactions
In April 2000 the Company made a loan to Mr. Kirshner in the amount of
$859,000. This loan was made to induce Mr. Kirshner to agree to a
restructuring of the supplemental retirement benefit accrued under his
previous employment agreement with Markel North America. Had Mr. Kirshner not
agreed to such a restructuring, approximately $660,000 would have been non-
deductible compensation expense to the Company. The loan to Mr. Kirshner is in
the form of a demand note which bears interest at 8% per annum, the same rate
at which interest accrues on the deferred compensation benefits payable to Mr.
Kirshner. It is expected that Mr. Kirshner will repay the note over time as
distributions are made of the deferred compensation benefits. The largest
aggregate amount of principal and interest outstanding on this loan during
2000 was $908,339. At December 31, 2000 the loan balance was $710,589.
In December 1997 the Company purchased for approximately $160,000 a 1/8th
interest in Dominion Citation Group, L.C. ("Dominion"), a limited liability
company formed to own and operate a private aircraft. Steven Markel and
Anthony Markel also purchased individually 1/8th interests in Dominion on the
same terms as those afforded to the Company. In May of 1999 Mr. Kirshner also
purchased a 1/8th interest in Dominion. Ownership interests in Dominion
entitle the member to use of the aircraft for a specified number of hours at
rates believed to be more favorable than those generally available in the
market.
During 2000, the Company committed to make a $25 million equity investment
in White Mountains Insurance Group subject to the successful acquisition of
Commercial General Norwich Union's North American Insurance operations by
White Mountains. This transaction is subject to regulatory and financing
requirements and is expected to close during the 2nd quarter of 2001. Mr. Jack
Byrne is the Chairman of White Mountains Insurance Group and served as a
director of Markel Corporation during 2000. The Company's investment in the
proposed transaction is at identical terms and conditions as the other
unrelated equity participants in this transaction.
McGuireWoods LLP, of which Leslie A. Grandis is a partner, provides legal
services to the Company.
Stock Plans For Employees
The Company has outstanding options under the 1986 Stock Option Plan which
expired on November 3, 1996. As of January 31, 2000, 99,000 shares were
available for issuance to employees of the Company and its consolidated or
unconsolidated subsidiaries under the 1993 Incentive Stock Plan. It is the
Company's current policy to use option and other stock award plans sparingly.
No options or other awards were granted to executive officers during 2000.
The following table provides information, as of December 31, 2000,
concerning options held by the individuals included in the Summary
Compensation Table.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR -END OPTION VALUES
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired Value Options at FY-End (#) FY-End ($)(2)
on Exercise Realized ------------------------- -------------------------
Name (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Jeremy D. Cooke......... -- -- 3,000 2,000 282,000 188,000
Paul W. Springman....... 1,000 143,375 2,000 -- 289,500 --
--------
(1) Difference between fair market value and exercise price on date of
exercise.
(2) Difference between fair market value and exercise price at fiscal year
end.
12
Compensation Committee Interlocks And Insider Participation
As noted earlier, the Members of the Compensation Committee are Messrs.
Kasen, Mark Bryne and Gary Markel. Mr. Kasen participated in the Company's
1997 Loan Program and as a result had indebtedness outstanding to the Company
at December 31, 2000 of $401,319. See "Certain Transactions--Loan Program."
Gary Markel & Associates, Inc. and Gary Markel Surplus Lines Brokerage,
Inc., entities owned by Gary L. Markel, place insurance with and on behalf of
the Company. During 2000, the Company paid approximately $483,600 in
commissions on premium volume placed by entities owned by Gary Markel.
SELECTION OF AUDITORS
KPMG LLP, independent certified public accountants, has been selected by the
Board of Directors as independent auditors of the Company for the current
fiscal year, subject to ratification or rejection by the shareholders.
Representatives of KPMG LLP are expected to be present at the Annual Meeting
of Shareholders and will have an opportunity to make a statement if they so
desire and are expected to be available to respond to appropriate questions
from the shareholders. In the event the shareholders do not ratify the
selection of KPMG LLP the selection of other independent auditors will be
considered by the Board of Directors.
Report Of The Audit Committee
The Audit Committee acts pursuant to the Audit Committee Charter, a copy of
which is attached as Appendix I to this Proxy Statement. The Audit Committee
has reviewed the audited financial statements of the Company for the year
ended December 31, 2000, and has met with management and KPMG LLP, the
Company's independent auditors, to discuss the audited financial statements.
The Audit Committee received from KPMG LLP written disclosures regarding
their independence and the letter required by Independence Standards Board
Standard No. 1, and has discussed with KPMG LLP their independence. In
connection with its review, the Audit Committee has also discussed with KPMG
LLP the matters required to be discussed by Statement of Auditing Standards
No. 61.
Based on its review and discussions with management and KPMG LLP, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000.
MEMBERS OF THE AUDIT COMMITTEE
John J. Byrne, Chairman, Leslie A. Grandis, Stewart M. Kasen
Audit Fees
The aggregate fees billed to the Company by KPMG LLP for the performance of
the annual audit and the interim reviews of the Company's financial statements
during 2000 were $1,928,271.
All Other Fees
The aggregate fees billed to the Company by KPMG LLP for all non-audit
services during 2000 were $751,044. Such non-audit services did not include
any financial information systems design and implementation services. All non-
audit services were approved or ratified by the Audit Committee after
consideration of whether the provision of non-audit services by KPMG LLP was
compatible with maintaining KPMG LLP's independence with respect to the
Company.
13
OTHER MATTERS
The Board of Directors knows of no other matters which will be brought
before the meeting. However, if any other matters are properly presented, or
if any question arises as to whether any matter has been properly presented
and is a proper subject for shareholder action, the persons named as proxies
in the accompanying proxy intend to vote the shares represented by such proxy
in accordance with their best judgment.
SHAREHOLDER PROPOSALS FOR NEXT MEETING
Any shareholder desiring to make a proposal to be acted upon at the next
Annual Meeting of Shareholders must present the proposal to the Company at its
principal executive offices in Glen Allen, Virginia, no later than December
15, 2001 in order for the proposal to be included in the Company's proxy
materials. Any such proposal should meet the applicable requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations thereunder.
For shareholder proposals not included in the Company's proxy statement for
the 2002 Annual Meeting, the persons named by the Board of Directors proxy
will be entitled to exercise discretionary voting power in the circumstances
set forth in Rule 14a-4(c) of the Exchange Act unless the shareholder making a
proposal (i) notifies the Company Secretary of the proposal by February 28,
2002 and (ii) otherwise follows the procedures specified in Rule 14a-4(c).
By Order of the Board of Directors
Secretary
March 27, 2001
14
Appendix I
Markel Corporation
Audit Committee Charter
The Audit Committee ("the Committee"), of the Board of Directors ("the
Board") of Markel Corporation ("the Company"), will have the oversight
responsibility, authority and specific duties as described below.
COMPOSITION
The Committee will be comprised of three or more directors as determined by
the Board. The members of the Committee will meet the independence and
experience requirements of the New York Stock Exchange (NYSE). The members of
the Committee will be elected annually at the meeting of the full Board held
in May. One of the members of the Committee will be elected Committee Chair by
the Board.
RESPONSIBILITY
The Committee is a part of the Board. It's primary function is to assist the
Board in fulfilling its oversight responsibilities with respect to (i) the
annual financial information to be provided to shareholders and the Securities
and Exchange Commission (SEC); (ii) the system of internal controls that
management has established; and (iii) the internal and external audit process.
In addition, the Committee provides an avenue for communication between
internal audit, the independent auditors, financial management and the Board.
The Committee should have a clear understanding with the independent auditors
that they must maintain an open and transparent relationship with the
Committee, and that the ultimate accountability of the independent auditors is
to the Board and the Committee. The Committee will make regular reports to the
Board concerning its activities.
While the Audit Committee has the responsibilities and powers set forth in
this charter, it is not the duty of the Audit Committee to determine that the
Company's financial statements are complete and accurate and are in accordance
with generally accepted accounting principles or to plan or conduct audits.
This is the responsibility of management and the independent auditor.
AUTHORITY
Subject to the prior approval of the Board, the Committee is granted the
authority to investigate any matter or activity involving financial accounting
and financial reporting, as well as the internal controls of the Company. In
that regard, the Committee will have the authority to approve the retention of
external professionals to render advice and counsel in such matters. All
employees will be directed to cooperate with respect thereto as requested by
members of the Committee.
MEETINGS
The Committee is to meet at least two times annually and as many additional
times as the Committee deems necessary. Content of the agenda for each meeting
should be cleared by the Committee Chair. The Committee is to meet in separate
executive sessions with the chief financial officer, independent auditors and
internal audit at least once each year and at other times when considered
appropriate.
15
SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will:
1. Review and reassess the adequacy of this charter annually and recommend any
proposed changes to the Board for approval. This should be done in
compliance with applicable NYSE Audit Committee Requirements.
2. Review with the Company's management, internal audit and independent
auditors the Company's accounting and financial reporting controls. Obtain
annually in writing from the independent auditors their letter as to the
adequacy of such controls.
3. Review with the Company's management, internal audit and independent
auditors significant accounting and reporting principles, practices and
procedures applied by the Company in preparing its financial statements.
Discuss with the independent auditors their judgements about the quality,
not just the acceptability, of the Company's accounting principles used in
financial reporting.
4. Review the scope of internal audit's work plan for the year and receive a
summary report of major findings by internal auditors and how management is
addressing the conditions reported.
5. Review the scope and general extent of the independent auditors' annual
audit. The Committee's review should include an explanation from the
independent auditors of the factors considered by the auditors in
determining the audit scope, including the major risk factors. The
independent auditors should confirm to the Committee that no limitations
have been placed on the scope or nature of their audit procedures. The
Committee will review annually with management the fee arrangement with the
independent auditors.
6. Inquire as to the independence of the independent auditors and obtain from
the independent auditors, at least annually, a formal written statement
delineating all relationships between the independent auditors and the
Company as contemplated by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees.
7. Have a predetermined arrangement with the independent auditors that they
will advise the Committee through its Chair and management of the Company
of any matters that need to be communicated in accordance with SAS 61
identified through procedures followed for interim quarterly financial
statements. Such notification is to be made prior to the related press
release or, if not practicable, prior to filing Form 10-Q.
8. At the completion of the annual audit, review with management, internal
audit and the independent auditors the following:
-- Results of the audit of the financial statements and the related
report thereon and, if applicable, a report on changes during the
year in accounting principles and their application.
-- Significant changes to the audit plan, if any, and any serious
disputes or difficulties with management encountered during the
audit. Inquire about the cooperation received by the independent
auditors during their audit, including access to all requested
records, data and information. Inquire of the independent auditors
whether there have been any disagreements with management, which, if
not satisfactorily resolved, would have caused them to issue a
nonstandard report on the Company's financial statements.
-- Other communications as required to be communicated by the
independent auditors by Statement of Auditing Standards (SAS) 61 as
amended relating to the conduct of the audit. Discussions will
include the quality, and not just the acceptability, of the
Company's accounting principles and the underlying estimates in its
financial statements, including the independent auditors' judgement
thereon, and audit adjustments.
16
9. Discuss with the independent auditors the quality of the Company's
financial and accounting personnel. Also, elicit the comments of management
regarding the responsiveness of the independent auditors to the Company's
needs.
10. Recommend to the Board the selection, retention or termination of the
Company's independent auditors.
11. Review the appointment and replacement of the senior internal audit
executive.
12. Review with management, internal audit and the independent auditors the
methods used to establish and monitor the Company's policies with respect
to unethical or illegal activities by Company employees that may have a
material impact on the financial statements.
13. Generally as part of the review of the annual financial statements,
receive an oral report(s), at least annually, from the Company's general
counsel concerning legal and regulatory matters that may have a material
impact on the financial statements.
14. Based on review and discussions with management and independent auditors,
including but not limited to, receipt and discussion of items mentioned
above, recommend to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K and
approve the report required under SEC rules to be included in the
Company's annual proxy statement. The audit committee charter is to be
published as an appendix to the proxy statement every three years or
whenever changes are made.
17
- FOLD AND DETACH HERE -
MARKEL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 16, 2001
The undersigned, having received the Annual Report to Shareholders and the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement
dated March 27, 2001 hereby appoints Alan I. Kirshner, Anthony F. Markel and
Steven A. Markel (each with power to act alone) as proxies, with full power of
substitution, and hereby authorizes them to represent and vote, as directed
below, all the shares of Common Stock of Markel Corporation, held of record by
the undersigned on March 16, 2001, at the Annual Meeting of Shareholders to be
held on May 16, 2001, and any adjournment thereof.
The Board of Directors recommends a vote "FOR" Proposals 1 and 2.
(1) ELECTION OF DIRECTORS
[_] FOR all nominees listed [_] WITHHOLD AUTHORITY to vote for all
(except as indicated nominees listed
to the contrary)
Nominees: Mark J. Byrne, Douglas C. Eby, Thomas S. Gayner, Leslie A. Grandis,
Stewart M. Kasen,Alan I. Kirshner, Anthony F. Markel, Gary L. Markel, Steven
A. Markel, Darrell D. Martin
(INSTRUCTION: To withhold authority to vote for any individual nominee write
the nominee's name on the line provided below.)
----------------------------------------------------
(2) TO RATIFY OR REJECT THE SELECTION BY THE BOARD OF DIRECTORS OF KPMG LLP as
the Company's independent auditors for the year ending December 31, 2001.
[_] FOR [_] AGAINST [_] ABSTAIN
(Please date and sign on the reserve side)
- FOLD AND DETACH HERE -
(3) IN THEIR DISCRETION, on such other matters as may properly come before the
meeting, or, if any nominee listed in Proposal 1 above is unable to serve
for any reason, to vote or refrain from voting for a substitute nominee or
nominees.
This proxy when properly executed, will be voted as directed. WHERE NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please sign your name(s) exactly as they appear hereon. If signer is a
corporation, please sign the full corporate name by duly authorized officer.
If an attorney, guardian, administrator, executor, or trustee, please give
full title as such. If a partnership, sign in partnership name by authorized
person.
SIGNATURE:
---------------------
DATED: ____________________, 2001
PLEASE COMPLETE, DATE, SIGN AND
RETURN THIS PROXY PROMPTLY IN
THE ACCOMPANYING ENVELOPE.