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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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Platinum Underwriters Holdings, Ltd.
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[PLATINUM UNGERWRITERS HOLDINGS LTD LOGO]
The Belvedere Building
69 Pitts Bay Road
Pembroke HM 08 Bermuda
------------------------
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held On May 6, 2004
------------------------
To the Shareholders of Platinum Underwriters Holdings, Ltd.:
Notice is hereby given that the 2004 Annual General Meeting of Shareholders
(the "Annual Meeting") of Platinum Underwriters Holdings, Ltd. (the "Company")
will be held at the Fairmont Hamilton Princess Hotel, 76 Pitts Bay Road,
Pembroke HM 08 Bermuda, on Thursday, May 6, 2004 at 3:00 p.m., local time, for
the following purposes:
1. To elect eight directors to the Company's Board of Directors to
serve until the Company's 2005 Annual General Meeting of Shareholders.
2. To consider and take action upon the proposal to elect three
directors to the Board of Directors of the Company's subsidiary Platinum
Underwriters Bermuda, Ltd., which, pursuant to the Bye-laws of the Company,
is required to be considered by the shareholders of the Company.
3. To consider and take action upon the proposal to ratify the
appointment of two executive directors of the Board of Directors of the
Company's subsidiary Platinum Re (UK) Limited, which, pursuant to the
Bye-laws of the Company, is required to be considered by the shareholders
of the Company.
4. To consider and take action upon the proposal to amend the
Bye-laws of the Company by removing Section 44(2), which requires the
submission to the shareholders of the Company of any matter required to be
voted on by the shareholders of any direct or indirect non-U.S. subsidiary
of the Company.
5. To consider and take action on the proposal to approve the 2002
Share Incentive Plan.
6. To consider and take action upon a proposal to ratify the
selection of KPMG LLP, independent certified public accountants, as
independent auditors for the Company and KPMG (Bermuda), independent
certified public accountants, as independent auditors for Platinum
Underwriters Bermuda, Ltd. for the 2004 fiscal year.
At the Annual Meeting, shareholders will receive the audited consolidated
financial statements of the Company and its subsidiaries as of and for the year
ended December 31, 2003 with the independent auditors' report thereon, and may
also be asked to consider and take action with respect to such other business as
may properly come before the meeting, or any postponement or adjournment
thereof.
The Company's Board of Directors has fixed the close of business on April
1, 2004 as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting and any postponement or
adjournment thereof. You are cordially invited to be present. Shareholders who
do not expect to attend in person are requested to sign and return the enclosed
form of proxy in the envelope provided. At any time prior to their being voted
at the Annual Meeting, proxies are revocable by written notice to the Secretary
of the Company, by a duly executed proxy bearing a later date or by voting in
person at the Annual Meeting.
By order of the Board of Directors,
Michael E. Lombardozzi
Executive Vice President, General
Counsel
and Secretary
Pembroke, Bermuda
April [ ], 2004
PLATINUM UNDERWRITERS HOLDINGS, LTD.
THE BELVEDERE BUILDING
69 PITTS BAY ROAD
PEMBROKE HM 08 BERMUDA
------------------------
ANNUAL GENERAL MEETING OF SHAREHOLDERS
MAY 6, 2004
------------------------
GENERAL INFORMATION
This proxy statement and the accompanying form of proxy are being furnished
to holders of the common shares (the "Common Shares") of Platinum Underwriters
Holdings, Ltd. (the "Company") to solicit proxies on behalf of the Board of
Directors of the Company for the 2004 Annual General Meeting of Shareholders
(the "Annual Meeting") to be held at the Fairmont Hamilton Princess Hotel, 76
Pitts Bay Road, Pembroke HM 08 Bermuda, on Thursday, May 6, 2004 at 3:00 p.m.,
local time. These proxy materials are first being mailed to shareholders on or
about April [ ], 2004.
The Board of Directors has fixed the close of business on April 1, 2004 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting. As of such date, there were [ ] Common
Shares outstanding and entitled to vote. Each shareholder is entitled to one
vote for each Common Share held of record on the record date with respect to
each matter to be acted upon at the Annual Meeting, provided that if the number
of "Controlled Shares" (as defined below) of any shareholder constitutes 10% or
more of the combined voting power of the issued Common Shares (such holder, a
"10% Shareholder"), the vote of any such shareholder is limited to 9.9% of the
voting power of the outstanding Common Shares pursuant to the Company's
Bye-laws. "Controlled Shares" of any person refers to all Common Shares owned
(i) directly, (ii) with respect to persons who are United States persons, by
application of the attribution and constructive ownership rules of Sections
958(a) and 958(b) of the U.S. Internal Revenue Code of 1986, as amended (the
"Code"), or (iii) beneficially, directly or indirectly, within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations thereunder.
As of the date of this proxy statement, the Company is aware of only two
shareholders, The St. Paul Companies, Inc. ("St. Paul") and RenaissanceRe
Holdings Ltd. ("RenaissanceRe"), which possess Controlled Shares requiring a
reduction in each of their voting power to 9.9%. However, the applicability of
such provisions may have the effect of increasing another shareholder's voting
power to more than 9.9%, thereby requiring a corresponding reduction in such
other shareholder's voting power. Because the applicability of the voting power
reduction provisions to any particular shareholder depends on facts and
circumstances that may be known only to the shareholder or related persons, the
Company requests that any holder of Common Shares (other than St. Paul and
RenaissanceRe) with reason to believe that it is a 10% Shareholder (as defined
in the Company's Bye-laws and described above) contact the Company promptly so
that the Company may determine whether the voting power of such holder's Common
Shares should be reduced. By submitting a proxy, a holder of Common Shares
(other than St. Paul and RenaissanceRe) will be deemed to have confirmed that,
to its knowledge, it is not, and is not acting on behalf of, a 10% Shareholder.
The directors of the Company are empowered to require any shareholder to provide
information as to that shareholder's beneficial ownership of Common Shares, the
names of persons having beneficial ownership of the shareholder's Common Shares,
relationships with other shareholders or any other facts the directors may
consider relevant to the determination of the number of Controlled Shares
attributable to any person. The directors may disregard the votes attached to
Common Shares of any holder who fails to respond to such a request or who, in
their judgment, submits incomplete or inaccurate information. The directors
retain certain discretion to make such final adjustments that they consider fair
and reasonable in all the circumstances as to the aggregate number of votes
attaching to the Common Shares of any shareholder to ensure that no person shall
be a 10% Shareholder at any time.
The presence, in person or by proxy, of holders of more than 50% of the
Common Shares outstanding and entitled to vote on the matters to be considered
at the Annual Meeting is required to constitute a quorum for the transaction of
business at the Annual Meeting. All of the proposals to be considered at the
Annual Meeting will be decided by the affirmative vote of a majority of the
voting power of the Common Shares present, in person or by proxy, at the Annual
Meeting, and entitled to vote thereon. A hand vote will be taken unless a poll
is requested pursuant to the Company's Bye-laws.
SOLICITATION AND REVOCATION
PROXIES IN THE FORM ENCLOSED ARE BEING SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY. Common Shares may be voted at the Annual Meeting by
returning the enclosed proxy card or by attending the Annual Meeting and voting
in person. The enclosed proxy card authorizes each of Steven H. Newman, Gregory
E.A. Morrison and Michael E. Lombardozzi to vote the Common Shares represented
thereby in accordance with the instructions given or, if no instructions are
given, in their discretion. They may also vote such Common Shares to adjourn or
postpone the meeting and will be authorized to vote such Common Shares at any
adjournment or postponement of the Annual Meeting. Common Shares held in "street
name" by a broker, bank or other nominee must be voted by the broker, bank or
nominee according to the instructions of the beneficial owner of the Common
Shares.
Proxies may be revoked at any time prior to the Annual Meeting by giving
written notice to the Secretary of the Company, by a duly executed proxy bearing
a later date or by voting in person at the Annual Meeting. For Common Shares
held in "street name" by a broker, bank or other nominee, new voting
instructions must be delivered to the broker, bank or nominee prior to the
Annual Meeting.
If a shareholder abstains from voting on a particular proposal, or if a
shareholder's Common Shares are treated as a broker non-vote, those Common
Shares will not be considered as votes cast in favor of or against the proposal
but will be included in the number of Common Shares represented for the purpose
of determining whether a quorum is present. Generally, broker non-votes occur
when Common Shares held for a beneficial owner are not voted on a particular
proposal because the broker has not received voting instructions from the
beneficial owner, and the broker does not have discretionary authority to vote
the Common Shares on a particular proposal. If a quorum is not present, the
shareholders who are represented may adjourn the Annual Meeting until a quorum
is present. The time and place of the adjourned meeting will be announced at the
time the adjournment is taken, and no other notice need be given. An adjournment
will have no effect on the business that may be conducted at the adjourned
meeting.
The Company will bear all costs of this proxy solicitation. Proxies may be
solicited by mail, in person, by telephone or by facsimile by officers,
directors, and regular employees. The Company may also reimburse brokerage
firms, banks, custodians, nominees and fiduciaries for their expenses to forward
proxy materials to beneficial owners. The Company has retained Mellon Investor
Services, LLC to assist in the solicitation of proxies and will pay a fee of
$7,500 plus reimbursement of out-of-pocket expenses for those services.
THE COMPANY
The Company was formed in April 2002 to assume substantially all of the
2002 property and casualty reinsurance business and related assets of the
reinsurance underwriting segment of St. Paul ("St. Paul Re"). The St. Paul Re
business and assets were transferred to the Company concurrently with the
completion by the Company of an initial public offering of the Common Shares and
equity security units on November 1, 2002 (the "Public Offering"). The Company
provides property and casualty reinsurance, operating through Platinum
Underwriters Bermuda, Ltd. ("Platinum Bermuda"), Platinum Underwriters
Reinsurance, Inc. ("Platinum US") and Platinum Re (UK) Limited ("Platinum UK").
2
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of the following
eight members, each of whom was elected director in September 2003 at the
Company's 2003 Annual General Meeting of Shareholders: Steven H. Newman, Gregory
E.A. Morrison, H. Furlong Baldwin, Jonathan F. Bank, Dan R. Carmichael, Neill A.
Currie, Jay S. Fishman and Peter T. Pruitt. Mr. Currie was designated by
RenaissanceRe as its nominee for election to the Board of Directors pursuant to
the Investment Agreement among the Company, St. Paul and RenaissanceRe dated as
of September 20, 2002 (the "Investment Agreement"). The terms of office of each
of the current directors will expire at the Annual Meeting. Each of the current
directors has been nominated by the Board of Directors for election as a
director at the Annual Meeting to serve until the Company's 2005 Annual General
Meeting of Shareholders.
The Board of Directors has no reason to believe that any of its nominees
would be unable or unwilling to serve if elected. If a nominee becomes unable or
unwilling to accept nomination or election, the Board will select a substitute
nominee and the Common Shares represented by proxies may be voted for such
substitute nominee unless shareholders indicate otherwise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES TO THE
COMPANY'S BOARD OF DIRECTORS.
INFORMATION CONCERNING NOMINEES
Set forth below is biographical and other information regarding the
nominees for election as directors, including their principal occupations during
the past five years.
Steven H. Newman.......................... Mr. Newman has been Chairman of the Board of Directors
Age: 60 of the Company since June 2002 and a consultant to
Director since 2002 Platinum US since March 2002. Mr. Newman was Chairman of
Chairman of the Board of Directors the Board of Directors of St Paul Re from March 2002
and Chairman of the Executive until he became Chairman of the Company. Mr. Newman was
Committee Chairman of the Board of Directors of Swiss Re America
Holding Company, a reinsurance holding company, from May
2000 to October 2000. Prior thereto, Mr. Newman served
as Chairman of the Board and Chief Executive Officer of
Underwriters Re Group, Inc., a reinsurance holding
company.
Gregory E.A. Morrison..................... Mr. Morrison has been President and Chief Executive
Age: 46 Officer of the Company since June 2003. Mr. Morrison was
Director since 2003 President and Chief Executive Officer of London
Member of the Executive Committee Reinsurance Group Inc. ("LRG"), a Canadian reinsurance
company that he founded, from 1989 until 1998 and again
from September 2000 until May 2003. Mr. Morrison also
served as the Chairman of LRG operating subsidiaries in
the United States, Barbados and Ireland and as a member
of the LRG board of directors. From January 1999 to June
2000, Mr. Morrison served as President of Unum
Reinsurance, the reinsurance division of Unum Provident
Corporation.
H. Furlong Baldwin........................ Mr. Baldwin was Chairman of Mercantile Bankshares
Age: 72 Corporation, a bank holding corporation, from March 2001
Director since 2002 until his retirement in March 2003. Prior thereto, Mr.
Chairman of the Audit Baldwin was Chairman and Chief Executive Officer of
Committee and member of the Mercantile Bankshares Corporation. Mr. Baldwin is the
Governance Committee Chairman of the Board of Directors of Nasdaq Stock
Market, Inc. and a director of W.R. Grace & Company and
Allegheny Energy, Inc.
3
Jonathan F. Bank.......................... Mr. Bank has been Senior Vice President of Tawa
Age: 60 Associates Ltd., which is engaged in the acquisition,
Director since 2002 Member of the restructuring and management of property and casualty
Compensation, Audit and Governance companies in run-off, since May 2000. From September
Committees 1999 until May 2000, Mr. Bank was the Insurance Practice
Leader of PricewaterhouseCoopers' U.S.
insurance/reinsurance regulatory and restructuring
practice group. Prior thereto, Mr. Bank was a partner at
Chadbourne & Parke LLP, a law firm.
Dan R. Carmichael......................... Mr. Carmichael has been President, Chief Executive
Age: 59 Officer and a director of Ohio Casualty Corporation, a
Director since 2002 property and casualty insurance company, since December
Chairman of the Governance 2000. Prior thereto, Mr. Carmichael served as President
Committee and member of the Audit and Chief Executive Officer of IVANs, Inc., an
Committee industry-owned organization that provides electronic
communications services to insurance, healthcare and
related organizations. Mr. Carmichael is a director of
Alleghany Corporation.
Neill A. Currie........................... Mr. Currie has been a private investor for the last six
Age: 51 years. Since June 2000, Mr. Currie has been the managing
Director since 2003 member and Chief Executive Officer of Currie Company,
Member of the Executive, LLC, a manager of equity investments and provider of
Compensation and Governance reinsurance consulting services. From 1993 to 1997, Mr.
Committees Currie was a Senior Vice President of RenaissanceRe.
Jay S. Fishman............................ Mr. Fishman has been Chairman, Chief Executive Officer
Age: 51 and President of St. Paul since October 2001. Prior
Director since 2002 thereto, Mr. Fishman was Chairman, President and Chief
Member of the Executive, Executive Officer of The Travelers Insurance Group and
Compensation and Governance Chief Operating Officer -- Finance and Risk of
Committees Citigroup, Inc. Mr. Fishman is a director of Nuveen
Investments, Inc.
Peter T. Pruitt........................... Mr. Pruitt was Chairman of Willis Re Inc., a reinsurance
Age: 71 intermediary, from June 1995 until his retirement in
Director since 2002 December 2001. He also served as Chief Executive Officer
Chairman of the Compensation of Willis Re Inc. from June 1995 through September 1999.
Committee and member of the Audit Prior thereto, Mr. Pruitt was President and a director
Committee of Frank B. Hall & Co., Inc., a global insurance broker.
Mr. Pruitt is a director of Poe Financial Group, Inc., a
privately held property and casualty insurance holding
company.
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company maintains four standing committees:
the Executive, the Audit, the Compensation and the Governance Committees. During
2003, the Board of Directors met six times, the Governance Committee met four
times, the Audit Committee met five times and the Compensation Committee met
five times. The Executive Committee did not meet in 2003. Each director attended
at least 75% of the aggregate number of meetings of the Board of Directors and
meetings of the Committees of the Board of Directors on which he served that
were held in 2003, with the exception of Mr. Fishman, who attended 50% of such
Board of Directors meetings and approximately 75% of such Committee meetings.
Board members are encouraged to attend the Company's Annual General Meetings of
Shareholders. Six directors attended the Company's 2003 Annual General Meeting
of Shareholders.
4
INDEPENDENCE OF DIRECTORS
Effective as of the date of the Annual Meeting, the New York Stock Exchange
("NYSE") listing standards require the Company to have a majority of independent
directors serving on the Board of Directors. A member of the Board qualifies as
independent if the Board affirmatively determines that the director has no
material relationship to the Company. The Board has determined that Messrs.
Baldwin, Bank, Carmichael, Currie and Pruitt, constituting a majority of the
Board, have no material relationship to the Company other than in their
capacities as members of the Board and committees thereof, and thus are
independent directors of the Company. None of Messrs. Baldwin, Bank and Currie
has any relationship to the Company. Mr. Carmichael is the President, Chief
Executive Officer and a director of Ohio Casualty Insurance Company, which is a
party to two reinsurance contracts with Platinum US. These contracts are
expected to generate gross payments to the Company of approximately $470,000 in
2004, representing .04% of the Company's consolidated total revenue for 2003.
Mr. Carmichael was not involved in the establishment of these contractual
arrangements and received no special benefits therefrom. Based on the foregoing,
the Board has determined that this is not a material relationship to the
Company. Mr. Pruitt is a director of and a consultant to Poe Financial Group,
Inc. ("Poe Financial"), a subsidiary of which is party to three reinsurance
contracts with Platinum US. These contracts are expected to generate gross
payments to the Company of approximately $27.3 million in 2004, representing
2.4% of the Company's consolidated total revenue for 2003. Mr. Pruitt was not
involved in the establishment of these contractual arrangements and received no
special benefits therefrom. Based on the foregoing, the Board has determined
that this is not a material relationship to the Company.
EXECUTIVE COMMITTEE
The Executive Committee presently consists of Messrs. Newman (Chairman),
Morrison, Currie and Fishman. The Executive Committee is authorized to exercise
all of the powers of the Board of Directors when the Board is not in session
upon a written determination of the Chairman of the Board that it is
impracticable to convene a meeting of the Board to exercise such powers, subject
to such limitations as are set forth in its charter or as may from time to time
be established by resolution of the Board.
AUDIT COMMITTEE
The Audit Committee presently consists of Messrs. Baldwin (Chairman), Bank,
Carmichael and Pruitt. The Board of Directors has determined that each member of
the Audit Committee is independent as defined in the NYSE listing standards and
meets the NYSE standards of financial literacy and accounting or related
financial management expertise. The Board of Directors has also determined that
Mr. Baldwin is an "audit committee financial expert" as defined by the
Securities and Exchange Commission ("SEC").
The Audit Committee operates pursuant to a charter, which was revised and
adopted by the Board of Directors in March 2004 and is attached hereto as Annex
A. The charter can also be viewed on the Company's website at
www.platinumre.com. The Audit Committee's primary responsibilities, as set forth
in its charter, are to:
- engage the independent auditors (subject to ratification by the
shareholders of the Company as required by Bermuda law), determine the
compensation and oversee the performance of the independent auditors, and
approve in advance all audit services and all permitted non-audit
services to be provided to the Company by the independent auditors;
- assess and take appropriate action regarding the independence of the
Company's auditors;
- oversee the compensation, activities and performance of the Company's
internal audit function and review the quality and adequacy of the
Company's internal controls and internal auditing procedures;
5
- periodically review with management and the independent auditors the
Company's accounting policies, including critical accounting policies and
practices and the estimates and assumptions used by management in the
preparation of the Company's financial statements;
- review with management and the independent auditors any material
financial or other arrangements of the Company which do not appear on the
Company's financial statements;
- discuss with management the Company's guidelines and policies with
respect to corporate risk assessment and risk management;
- discuss with management each of the earnings press releases and earnings
guidance provided to analysts and rating agencies;
- review with management and the independent auditors the financial
statements to be included in the quarterly and annual reports of the
Company, and recommend to the Board of Directors whether the audited
financial statements should be included in the annual reports of the
Company;
- approve a code of ethics, as required by rules of the SEC, for senior
financial officers and such other employees and agents of the Company as
it determines;
- establish procedures for the handling of complaints received by the
Company regarding accounting, internal accounting controls or auditing
matters; and
- annually review and evaluate Audit Committee performance and asses the
adequacy of the Audit Committee Charter.
The Audit Committee report for 2003 appears on page 28 of this proxy
statement.
COMPENSATION COMMITTEE
The Compensation Committee presently consists of Messrs. Pruitt (Chairman),
Bank, Currie and Fishman.
The Compensation Committee operates pursuant to a charter, which was
revised and adopted by the Board of Directors in March 2004. The charter can be
viewed on the Company's website at www.platinumre.com. The Compensation
Committee's primary responsibilities, as set forth in its charter, are to:
- review the compensation policies and practices of the Company and its
subsidiaries, including incentive compensation plans and equity plans,
and make recommendations to the Board of Directors with respect thereto;
- review the recommendations of the Chief Executive Officer concerning the
compensation of those officers of the Company and its subsidiaries with a
title more senior than Vice President and of any consultants, agents and
other persons to the extent that determinations with respect to their
compensation are expressly delegated to the Committee, and make
recommendations to the Board of Directors with respect thereto;
- review and approve the corporate goals and objectives relevant to the
Chief Executive Officer's compensation, evaluate the Chief Executive
Officer's performance in light of those goals and objectives and set the
Chief Executive Officer's compensation level based on such evaluation;
- review the recommendation of the Chief Executive Officer concerning the
aggregate amount available for the annual incentive bonus program each
year, and make a recommendation to the Board of Directors with respect
thereto;
- grant all awards under and oversee the administration of the 2002 Share
Incentive Plan and the Capital Accumulation Plan; and
- annually review and evaluate Compensation Committee performance and asses
the adequacy of the Compensation Committee Charter.
6
The Compensation Committee report for 2003 appears on page 18 of this proxy
statement.
GOVERNANCE COMMITTEE
The Governance Committee presently consists of Messrs. Carmichael
(Chairman), Baldwin, Bank, Currie and Fishman.
The Governance Committee operates pursuant to a charter, which was revised
and adopted by the Board of Directors in March 2004. The charter can be viewed
on the Company's website at www.platinumre.com. The Governance Committee's
primary responsibilities, as set forth in its charter, are to:
- develop a Board of Directors which is diverse in nature and provides
management with experienced and seasoned advisors with an appropriate mix
of skills in fields related to the current or future business directions
of the Company;
- identify, interview and screen individuals qualified to become members of
the Board of Directors and committees thereof, and the Chief Executive
Officer, for recommendation to the Board of Directors;
- develop and recommend to the Board of Directors a set of corporate
governance guidelines applicable to the Company addressing, among other
matters determined by the Committee to be appropriate, director
qualifications and responsibilities, director orientation and continuing
education, management succession and the annual performance evaluation of
the Board of Directors;
- regularly review issues and developments relating to corporate governance
and recommend to the Board of Directors proposed changes to the corporate
governance guidelines from time to time as the Committee determines to be
appropriate;
- annually evaluate the overall effectiveness of the Board of Directors and
the Chief Executive Officer and make recommendations to the Board of
Directors with respect thereto as appropriate, provided that any
determinations or recommendations relating to compensation are reserved
for the Compensation Committee;
- review periodically all committees of the Board of Directors and
recommend to the Board of Directors changes, as appropriate, in the
composition, responsibilities, charters and structure of the committees;
- recommend that the Board of Directors establish such special committees
as may be necessary or appropriate to address ethical, legal or other
matters that may arise; and
- annually review and evaluate Governance Committee performance and assess
the adequacy of the Governance Committee Charter.
The Governance Committee will consider recommendations from shareholders as
to candidates to be nominated for election to the Board of Directors. Any such
recommendations should include the candidate's name and qualifications for Board
membership and should be submitted in writing to the Governance Committee in
care of the Secretary, Platinum Underwriters Holdings, Ltd., The Belvedere
Building, 69 Pitts Bay Road, Pembroke HM 08 Bermuda.
The Governance Committee believes that members of the Board should have the
highest professional and personal ethics and values, consistent with the
Company's ethics and values. They should be committed to enhancing shareholder
value and should have sufficient time to carry out their duties and to provide
insight and practical wisdom based on experience. Their service on other boards
of public companies should be limited to a number that permits them, given their
individual circumstances, to perform responsibly all director duties. Each
director must represent the interests of all shareholders.
The Governance Committee regularly assesses the appropriate size of the
Board, and whether any vacancies on the Board are expected due to retirement or
otherwise. In the event that vacancies are
7
anticipated, or otherwise arise, the Governance Committee will consider various
candidates for director. Candidates may come to the attention of the Governance
Committee through current Board members, professional search firms, shareholders
or other persons. These candidates will be evaluated at regular or special
meetings of the Governance Committee, and may be considered at any point during
the year. In evaluating candidates, the Governance Committee will seek to assure
that specific talents, skills and other characteristics that are needed to
promote the Board's effectiveness are possessed by an appropriate combination of
directors.
EXECUTIVE SESSIONS
In accordance with the Company's corporate governance guidelines, separate
executive sessions of non-management directors and independent directors are
held after each Board meeting. Mr. Carmichael, as Chairman of the Governance
Committee, presides at such sessions.
COMMUNICATIONS WITH THE BOARD
Interested parties may communicate with the Board, anonymously if they
wish, by sending a written note or memo to the Secretary, Platinum Underwriters
Holdings, Ltd., The Belvedere Building, 69 Pitts Bay Road, Pembroke HM 08
Bermuda. Communications that are intended specifically for non-management or
independent directors should be sent to the above address to the attention of
the Chairman of the Governance Committee. The Secretary will ensure that all
such communications remain confidential and are delivered to the appropriate
Board member or members.
DIRECTOR COMPENSATION
Each director who is not an employee of the Company (other than Mr. Newman)
receives an annual retainer of $35,000. In addition, the Chairman of the Audit
Committee receives $20,000 per year, and each member of that committee receives
$10,000 per year. The Chairman of each other committee of the Board of Directors
(other than Mr. Newman) receives $15,000 per year, and each member of those
committees who is not an employee of the Company receives $7,500 per year. Each
director who is not an employee of the Company (other than Mr. Newman) also
receives $2,500 for attendance at each meeting of the Board and of any committee
of which he is a member.
In addition, under the Share Incentive Plan, each nonemployee director
(other than Mr. Newman) receives annually, on the date of the Annual General
Meeting of Shareholders of the Company, an option to purchase 5,000 Common
Shares with an exercise price equal to the fair market value of the Common
Shares on such date. This option has a five-year term and becomes exercisable on
the first anniversary of the date of grant. Any Common Shares that become
payable under an option award shall be paid from the shares previously
authorized under the Share Incentive Plan, and shall be subject to the terms and
conditions of such plan.
Mr. Newman entered into a letter agreement with St. Paul, dated March 1,
2002 and amended June 14, 2002, pursuant to which he agreed to serve as Chairman
of the Board of Directors of the Company. This agreement was assigned to and
assumed by the Company upon completion of the Public Offering. As Chairman, Mr.
Newman is entitled to receive an annual fee of $60,000, and a fee of $5,000 for
each meeting of the Board of Directors that he attends (not to exceed $20,000
per year). Pursuant to the agreement, Mr. Newman received an option to purchase
975,000 Common Shares at $22.50 per Common Share (the offering price of the
Common Shares in the Public Offering) effective upon completion of the Public
Offering. This option has a term of ten years and is exercisable in three equal
annual installments beginning November 1, 2003.
Pursuant to the Share Unit Plan for Nonemployee Directors (the "Share Unit
Plan"), 50% of all fees earned by a director who is not an employee of the
Company or any of its affiliates (including retainer fees, meeting fees and
committee fees) during each calendar quarter are automatically converted into
that number of share units equal to the number of Common Shares which could have
been purchased with such fees, based upon the closing price of the Common Shares
on the last day of the calendar quarter. In addition to the 50% mandatory
conversion, each nonemployee director may elect to have up to a total of
8
100% of his fees converted into share units, provided the election is made
before the start of the calendar year in which the fees are earned. For 2004,
Mr. Bank and Mr. Carmichael have elected to receive 100% of their fees in share
units. No Common Shares are actually purchased, but the value of the share units
is dependent upon the market value of the Common Shares. A nonemployee director
will receive distributions under the Share Unit Plan in respect of his share
units, each such share unit valued at the then closing price of one Common
Share, following the expiration of five calendar years following the year in
which his fees were originally converted into share units, or following
termination of his service on the Board of Directors, if earlier. Each
distribution under the Share Unit Plan will be made, at the discretion of the
Board, either in cash or in Common Shares or some combination thereof. The Share
Unit Plan provides that a total of 150,000 shares may be issued thereunder.
Under the Share Incentive Plan, a non-qualified option to purchase 25,000
Common Shares at $22.50 per Common Share (the offering price of the Common
Shares in the Public Offering) was granted to each of the nonemployee directors
(other than Mr. Newman) effective upon completion of the Public Offering. Each
option has a ten-year term and is exercisable in three equal annual installments
beginning November 1, 2003, except in the case of Mr. Currie, whose option is
exercisable beginning May 13, 2004, the first anniversary of his election as a
director.
MR. NEWMAN'S CONSULTING AGREEMENT
Mr. Newman entered into a letter agreement dated March 1, 2002 with St.
Paul, which was assigned to and assumed by Platinum US upon completion of the
Public Offering, pursuant to which he agreed to provide consulting services to
Platinum US through February 28, 2005 (which date is automatically extended from
year to year unless either party elects not to extend it). During the consulting
term, Mr. Newman performs services as reasonably requested, including assisting
with the establishment and development of Platinum US's reinsurance business,
for which he receives an annual consulting fee of $270,000. Pursuant to this
agreement, Mr. Newman received a one-time cash incentive payment of $100,000
from St. Paul and is eligible to receive for each year of the term of this
consulting arrangement an annual incentive payment with a target of $440,000 and
a maximum of 200% of the target incentive payment. The objectives for this
incentive are determined by the Compensation Committee in consultation with the
members of the Board of Directors and Mr. Newman and are based on the value of
Mr. Newman's contributions as a consultant to Platinum US. Mr. Newman assigned
all of his right, title and interest in the consulting agreement to SHN
Enterprises, Inc., which Mr. Newman established for estate planning purposes and
of which he is the sole shareholder. For 2003, SHN Enterprises, Inc. or Mr.
Newman received from the Company $270,000 in consulting fees and $725,000 in
respect of incentive payments. If Mr. Newman's consulting agreement is
terminated by Platinum US for cause (as defined in the agreement), he will
receive no further payments or benefits under the consulting agreement other
than amounts accrued prior to termination. Pursuant to the consulting agreement,
during the time Mr. Newman serves as a consultant and for fifteen months
thereafter, Mr. Newman is not permitted to be employed by, or to own, manage,
operate or control, any entity which is primarily engaged in the reinsurance
business, except that Mr. Newman is not prohibited from owning less than 5% of
any publicly traded corporation. In addition, Mr. Newman has agreed, during the
time he serves as a consultant and for two years thereafter, not to solicit any
senior executive of the Company or Platinum US who served as such at the time of
the termination of his consulting agreement. Mr. Newman would not be bound by
either of these provisions if he is terminated without cause unless he receives
a payment of $350,000 from Platinum US. Mr. Newman is also subject to certain
confidentiality provisions under the consulting agreement.
SHARE OWNERSHIP GUIDELINES
The Company has adopted share ownership guidelines requiring senior
executives to accumulate and hold a meaningful level of share ownership in the
Company in order to align the interests of the Company's senior executives and
the shareholders of the Company and to meet shareholder expectations that senior
executives have a long-term commitment to share price performance. These
guidelines apply to the Chief Executive Officer, Chief Underwriting Officer,
selected Executive Vice Presidents and selected Senior Vice Presidents, as
determined by the Board of Directors. The level of share ownership for each
9
executive under the guidelines is based on the executive's position with the
Company, and ranges from a minimum of 10,000 shares for Senior Vice Presidents
to a minimum of 100,000 shares for the Chief Executive Officer. The Board of
Directors may adjust the levels from time to time. Until senior executives meet
their ownership requirement, they must retain common shares representing a
certain percentage of the after-tax gain from the exercise of options or the
after-tax value of other share compensation awards. This percentage ranges from
50% for Senior and Executive Vice Presidents to 75% for the Chief Executive
Officer. Shares owned outright by or for the benefit of the executive, as well
as other vested share compensation awards, are counted toward fulfilling the
share ownership requirement. Common shares that are subject to unexercised stock
options or to unvested share compensation awards are not counted toward
satisfaction of the guideline levels, but are subject to the retention
percentage requirement upon exercise or payment.
INFORMATION CONCERNING EXECUTIVE OFFICERS
Set forth below is biographical and other information regarding the
Company's executive officers, including their principal occupations during the
past five years.
Gregory E.A. Morrison.........
Age: 46
President and Chief Executive
Officer Mr. Morrison has been President and Chief
Executive Officer of the Company since June
2003. Mr. Morrison was President and Chief
Executive Officer of London Reinsurance Group
Inc. ("LRG"), a Canadian reinsurance company
that he founded, from 1989 until 1998 and again
from September 2000 until May 2003. Mr.
Morrison also served as the Chairman of LRG
operating subsidiaries in the United States,
Barbados and Ireland and as a member of the LRG
board of directors. From January 1999 to June
2000, Mr. Morrison served as President of Unum
Reinsurance, the reinsurance division of Unum
Provident Corporation.
Michael D. Price..............
Age: 37
President and Chief
Underwriting
Officer of Platinum US Mr. Price has been President and Chief
Underwriting Officer of Platinum US since
November 2002. Mr. Price was Chief Underwriting
Officer of St. Paul Re from June 2002 until
November 2002. Mr. Price served as Chief
Operating Officer of Associated Aviation
Underwriters Incorporated, a subsidiary of
Global Aerospace Underwriting Managers Ltd.
specializing in aerospace insurance, from March
2001 through June 2002. From May 2000 to
September 2000, Mr. Price was Chief
Underwriting Officer at Swiss Re America
Holding Corporation, a reinsurance holding
company. He was Senior Vice President and Chief
Underwriting Officer of Underwriters Re Group,
Inc., a reinsurance holding company, from April
1998 until May 2000.
Michael E. Lombardozzi........
Age: 42
Executive Vice President,
General
Counsel and Secretary of the
Company Mr. Lombardozzi has been Executive Vice
President and General Counsel of the Company
since September 2002 and has been Secretary of
the Company since November 2002. Mr.
Lombardozzi was Executive Vice President and
General Counsel of St. Paul Re from August 2002
until November 2002. Mr. Lombardozzi was Senior
Vice President -- Planning and Operations of
W.R. Berkley Corporation, an insurance holding
company, from December 2001 to July 2002, and
Senior Vice President, Secretary and General
Counsel of Orius Corp., a telecommunications
infrastructure company, from January 2001 to
September 2001. From January 1994 to January
2001, Mr. Lombardozzi was Senior Vice
President, Secretary and General Counsel of
Berkley Insurance Company.
10
William A. Robbie.............
Age: 53
Executive Vice President and
Chief
Financial Officer of the
Company Mr. Robbie has been Executive Vice President
and Chief Financial Officer of the Company
since November 2002. Mr. Robbie was Executive
Vice President and Chief Financial Officer of
St. Paul Re from August 2002 until November
2002. Prior thereto, Mr. Robbie held various
positions with XL Capital Ltd. and its
subsidiaries, including Executive Vice
President -- Financial Services, Senior Vice
President -- Treasurer, and Executive Vice
President, Chief Financial Officer and Chief
Administrative Officer.
Neal J. Schmidt...............
Age: 47
Executive Vice President and
Chief
Actuary of Platinum US Mr. Schmidt has been Executive Vice President
and Chief Actuary of Platinum US since November
2002. Prior thereto, he was Executive Vice
President and Chief Actuary of St. Paul Re.
11
EXECUTIVE COMPENSATION
The following tables summarize compensation earned and certain information
regarding options granted to the Chief Executive Officer and the four other most
highly compensated executive officers of the Company serving as executive
officers at the end of 2003. Compensation information is also provided for
Jerome T. Fadden, the Company's former President and Chief Executive Officer,
who resigned from the Company effective May 31, 2003.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION COMMON
-------------------------------------------- SHARES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) COMPENSATION($)(3) OPTIONS(#) COMPENSATION($)(4)
------------------ ---- --------- ----------- ------------------ ------------ ------------------
Gregory E.A. 2003 $379,167 $1,000,000 $241,400 400,000 $ 37,917
Morrison.............
President and Chief
Executive Officer of
the Company(1)
Michael D. Price....... 2003 $500,000 $ 750,000 -- -- $ 60,000
President and Chief 2002 250,027 450,000 30,129 300,000 1,365
Underwriting Officer,
Platinum US
Michael E. 2003 $350,000 $ 446,250 $185,050 -- $ 42,000
Lombardozzi..........
Executive Vice 2002 144,038 465,000 30,000 150,000 4,475
President, General
Counsel and Secretary
of the Company
William A. Robbie...... 2003 $350,000 $ 262,500 $185,050 -- $ 42,000
Executive Vice 2002 144,038 465,000 30,000 150,000 975
President and Chief
Financial Officer of
the Company
Neal J. Schmidt........ 2003 $350,000 $ 393,750 $ 4,755 -- $ 42,000
Executive Vice 2002 317,211 450,000 -- 150,000 12,766
President and Chief
Actuary, Platinum US
Jerome T. Fadden....... 2003 $270,833 -- $187,884 -- $4,950,000
Former President and 2002 407,885 $1,250,000 40,000 975,000 13,260
Chief Executive
Officer of the
Company(5)
---------------
(1) Mr. Morrison became the Company's President and Chief Executive Officer on
June 1, 2003. See "Employment Arrangements" below.
(2) The amounts for 2003 consist of (i) for Mr. Morrison, $850,000 representing
his incentive bonus for 2003, $425,000 of which was paid in cash and
$425,000 of which was paid in the form of 13,073 restricted share units and
$150,000 representing a one-time cash sign-on bonus; (ii) for Mr. Price,
$750,000 representing his incentive bonus for 2003, $375,000 of which was
paid in cash and $375,000 of which was paid in the form of 11,535 restricted
share units; (iii) for Mr. Lombardozzi, $446,250 representing his incentive
bonus for 2003, $288,750 of which was paid in cash and $157,500 of which was
paid in the form of 4,845 restricted share units; (iv) for Mr. Robbie,
$262,500 representing his incentive bonus for 2003, $196,875 of which was
paid in cash and $65,625 of which was paid in the form of 2,019 restricted
share units; and (v) for Mr. Schmidt, $393,750 representing his incentive
12
bonus for 2003, $262,500 of which was paid in cash and $131,250 of which was
paid in the form of 4,038 restricted share units. The restricted share units
were granted to each of the above executive officers on March 12, 2004 based
on the closing price of the Common Shares of $32.51 on March 11, 2004. Each
restricted share unit entitles the holder thereof to one Common Share on the
date that is six months from the date of grant of the restricted share unit,
provided that the holder is employed by the Company or one of its
subsidiaries on such date.
(3) The amounts for 2003 include (i) for Mr. Morrison, $175,000 representing the
reimbursement of housing expenses, $16,400 representing the difference
between the market value and the purchase price of 20,000 Common Shares
purchased from the Company in July 2003, and $50,000 representing the
reimbursement of relocation expenses; (ii) For each of Messrs. Lombardozzi
and Robbie, $180,000 representing the reimbursement of housing expenses;
(iii) for Mr. Schmidt, the value of unvested St. Paul stock options; and
(iv) for Mr. Fadden, $180,000 representing the reimbursement of housing
expenses. The amounts for 2002 consist of housing expense reimbursements.
(4) The amounts for 2003 consist of (i) for Mr. Morrison, an employer
contribution made by the Company to Mr. Morrison's pension account; (ii) for
Mr. Price, employer contributions made by the Company of $8,000 pursuant to
the Company's 401(k) plan, $12,000 pursuant to the Company's Non-Qualified
Executive Savings Plan, $16,000 pursuant to the Company's qualified profit
sharing plan and $24,000 pursuant to the Company's non-qualified profit
sharing plan; (iii) for each of Messrs. Robbie, Lombardozzi and Schmidt,
employer contributions made by the Company of $8,000 pursuant to the
Company's 401(k) plan, $6,000 pursuant to the Company's Non-Qualified
Executive Savings Plan, $16,000 pursuant to the Company's qualified profit
sharing plan and $12,000 pursuant to the Company's non-qualified profit
sharing plan; and (iv) for Mr. Fadden, a $4,950,000 payment made in
consideration of the termination of and in accordance with the terms of his
employment agreement. The amounts for 2002 consist of (i) for Messrs. Price
and Robbie, premiums paid on life insurance maintained by St. Paul; (ii) for
Mr. Lombardozzi, $975 in premiums paid on life insurance maintained by St.
Paul and an employer contribution of $3,500 made by St. Paul pursuant to St.
Paul's 401(k) plan; and (iii) for Messrs. Fadden and Schmidt, premiums of
$2,260 and $2,340, respectively, paid on life insurance maintained by St.
Paul, employer contributions of $8,000 each made by St. Paul pursuant to St.
Paul's 401(k) plan and $3,000 and $2,426, respectively, made by St. Paul
pursuant to St. Paul's Non-Qualified Executive Savings Plan.
(5) Mr. Fadden resigned as the Company's President and Chief Executive Officer
effective May 31, 2003. See "Arrangements with Former President and Chief
Executive Officer" below.
OPTION GRANTS DURING FISCAL 2003
POTENTIAL REALIZABLE
PERCENT OF VALUE
NUMBER OF TOTAL AT ASSUMED ANNUAL RATES
COMMON OPTIONS EXERCISE OF COMMON SHARE PRICE
SHARES GRANTED PRICE APPRECIATION FOR
UNDERLYING TO ($ PER OPTION TERM
OPTIONS EMPLOYEES COMMON EXPIRATION -----------------------
NAME GRANTED(#) IN 2003 SHARE) DATE 5% 10%
---- ---------- ---------- -------- ------------ -------- --------
Gregory E.A. Morrison...... 400,000(1) 65% $26.00 May 12, 2013 $42.35 $67.44
Michael D. Price........... -- -- -- -- -- --
Michael E Lombardozzi...... -- -- -- -- -- --
William A. Robbie.......... -- -- -- -- -- --
Neal J. Schmidt............ -- -- -- -- -- --
Jerome T. Fadden........... -- -- -- -- -- --
---------------
(1) These options are exercisable in four equal annual installments beginning on
May 13, 2004, or immediately in the event of a Change in Control, Total
Disability (as each term is defined in the Share Incentive Plan), or death.
13
AGGREGATED OPTION EXERCISES IN 2003 AND YEAR-END 2003 OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 2003(#) AT DECEMBER 31, 2003($)
ACQUIRED ON VALUE ----------------------------- ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE(1)
---- ----------- ----------- ----------- ------------- ----------- ----------------
Gregory E.A. Morrison.... 0 -- 0 400,000 $ 0 $1,600,000
Michael D. Price......... 0 -- 100,000 200,000 750,000 1,500,000
Michael E. Lombardozzi... 0 -- 37,500 112,500 281,250 843,750
William A. Robbie........ 0 -- 37,500 112,500 281,250 843,750
Neal J. Schmidt.......... 0 -- 37,500 112,500 281,250 843,750
Jerome T. Fadden......... 0 -- 975,000(2) 0 7,312,500 0
---------------
(1) The value of unexercised in-the-money options at December 31, 2003 was
calculated by subtracting the exercise price of in-the-money options from
$30.00 per Common Share, which is the fair market value of one Common Share
on December 31, 2003 based upon the average of the high and low prices on
the NYSE on such date.
(2) These options became exercisable in connection with the termination of Mr.
Fadden's employment with the Company. See "Arrangements with Former
President and Chief Executive Officer" below.
EQUITY BASED COMPENSATION INFORMATION
The following table summarizes information as of December 31, 2003 relating
to equity based compensation plans of the Company pursuant to which grants of
options, restricted shares, share appreciation rights, share units or other
rights to acquire shares may be granted from time to time.
(C)
NUMBER OF SECURITIES
(B) REMAINING AVAILABLE FOR
(A) WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
NUMBER OF SECURITIES TO EXERCISE PRICE OF EQUITY COMPENSATION
BE ISSUED UPON EXERCISE OUTSTANDING PLANS (EXCLUDING
OF OUTSTANDING OPTIONS, OPTIONS, WARRANTS SECURITIES REFLECTED
PLAN CATEGORY WARRANTS AND RIGHTS AND RIGHTS IN COLUMN(A))
------------- ----------------------- ------------------- -----------------------
Equity compensation plans approved
by security holders(1)............ 4,613,625 $22.92 1,386,375(2)
Equity compensation plans not
approved by security holders...... -- -- --
--------- ------ ---------
Total............................... 4,613,625 $22.92 1,386,375
---------------
(1) These plans consist of the 2002 Share Incentive Plan, the Section 162(m)
Performance Incentive Plan, the Share Unit Plan for Non-Employee Directors
and the Capital Accumulation Plan, each of which was approved by the sole
shareholder of the Company prior to the Public Offering.
(2) Includes 1,000,000 Common Shares which are available for future grants of
restricted Common Shares under the 2002 Share Incentive Plan.
EMPLOYMENT ARRANGEMENTS
Mr. Morrison entered into an employment agreement with the Company on June
20, 2003, which was amended in January 2004, for a three-year term that began
June 1, 2003, subject to automatic one-year extensions thereafter unless either
party elects not to extend it, pursuant to which he has agreed to serve as the
President and Chief Executive Officer of the Company and Chief Executive Officer
of Platinum Bermuda. Pursuant to the employment agreement, Mr. Morrison is
entitled to receive a base annual salary of at least $650,000 and is eligible to
receive for each year of his term an annual bonus with a target of 100% of base
salary and a maximum of 200% of base salary. Mr. Morrison received a one-time
cash sign-
14
on bonus of $150,000 and was reimbursed for $50,000 of expenses relating to his
relocation to Bermuda. In addition, Mr. Morrison is entitled to reimbursement of
up to a maximum of $25,000 per month for reasonable housing expenses and an
allowance of $900 per month for expenses relating to the use of an automobile,
among other employee benefits and perquisites specified in the agreement.
Pursuant to the employment agreement, Mr. Morrison received an option to
purchase 400,000 Common Shares at $26.00 per Common Share (the closing price of
the Common Shares on the NYSE on the date prior to the date that the Board of
Directors approved his employment agreement) under the Share Incentive Plan. In
addition, Mr. Morrison agreed to purchase 20,000 Common Shares at a purchase
price of $26.00 per Common Share within 60 days of the date of his employment
agreement. Such purchase was made on July 30, 2003. If Mr. Morrison's employment
is terminated by the Company without "cause" or by Mr. Morrison for "good
reason" (each as defined in the employment agreement), he will receive monthly
payments equal to one-twelfth of the sum of (i) his base salary and (ii) the
greater of his current target bonus and his bonus for the preceding year for the
lesser of 24 months or the number of full months remaining in the term of his
employment, provided that this period shall not be less than twelve months. Mr.
Morrison will be required to execute a release of claims in order to be entitled
to this severance compensation. In addition, any vested and unexercised options
to purchase Common Shares held by Mr. Morrison at the date of termination will
remain exercisable for the greater of 45 days from such date or May 31, 2006,
whichever is later. Any unvested options to purchase Common Shares and any
unvested equity incentive awards held by Mr. Morrison at the date of such
termination will be immediately forfeited. If Mr. Morrison's employment is
terminated by Mr. Morrison other than for good reason, he will receive no
further payments, compensation or benefits under the employment agreement (other
than amounts accrued prior to termination), and all vested options will remain
exercisable for 45 days after termination. Any unvested options to purchase
Common Shares and any unvested equity incentive awards held by Mr. Morrison at
the date of such termination will be immediately forfeited. If Mr. Morrison's
employment is terminated by the Company for cause, he will receive no further
payments, compensation or benefits under the employment agreement (other than
amounts accrued prior to termination) and all vested and unvested options to
purchase Common Shares and any other equity incentive awards held by Mr.
Morrison at the date of such termination will be immediately forfeited. In the
event his employment is terminated due to death or "disability" (as defined in
the employment agreement), he will receive his base salary through the date of
termination and an annual bonus (at target level) prorated through the date of
termination and all outstanding options will immediately vest and remain
exercisable (but not beyond their term) for one year. Pursuant to the employment
agreement, during Mr. Morrison's employment and for fifteen months thereafter,
Mr. Morrison is not permitted to be employed by, or to own, manage, operate or
control, any entity which is primarily engaged in the reinsurance business,
except that Mr. Morrison is not prohibited from owning less than 2% of any
publicly traded corporation. Mr. Morrison is also subject to certain
confidentiality and non-solicitation provisions under the employment agreement.
Mr. Price entered into an employment agreement with St. Paul Re, which was
assigned to and assumed by Platinum US upon completion of the Public Offering,
which was amended in July 2003, for a three-year term that began June 3, 2002,
pursuant to which he has agreed to serve as the President and Chief Underwriting
Officer of Platinum US. Mr. Price is entitled to receive a minimum base annual
salary of at least $500,000 and is eligible to receive for each year of his term
a minimum annual bonus of 50% of his base salary. Pursuant to the employment
agreement, Mr. Price received a one-time cash sign-on bonus of $100,000 from St.
Paul Re and an option to purchase 300,000 Common Shares at $22.50 per Common
Share in 2002. Mr. Price received $30,129 for the reimbursement of his moving
expenses in 2002. If Mr. Price's employment is terminated by Platinum US without
"cause" or by Mr. Price for "good reason" (each as defined in the employment
agreement), he will receive a payment equal to any bonus payments to which he
would have been entitled during the term of the employment agreement which have
not been previously paid, 50% of his then current base salary and any base
salary or other amounts accrued and owing through the date of termination,
provided that Mr. Price executes a release of claims. If Mr. Price's employment
is terminated by Platinum US for cause or by Mr. Price other than for good
reason, he will receive no further payments, compensation or benefits under the
employment agreement (other than
15
amounts accrued prior to termination). Mr. Price is subject to certain
confidentiality and non-solicitation provisions under the employment agreement.
Mr. Lombardozzi entered into an employment agreement with St. Paul Re,
which was assigned to and assumed by the Company upon completion of the Public
Offering, for a three-year term that began August 5, 2002, subject to automatic
one-year renewal terms thereafter, pursuant to which he has agreed to serve as
the Executive Vice President, General Counsel and Secretary of the Company. Mr.
Lombardozzi is entitled to receive a base annual salary of at least $350,000,
and he is eligible to receive for each year of his term a target annual bonus of
75% of his base salary and a minimum annual bonus of 50% of base salary for the
2003 and 2004 calendar years. Pursuant to the employment agreement, Mr.
Lombardozzi received a one-time cash sign-on bonus of $275,000 from St. Paul Re
and an option to purchase 150,000 Common Shares at $22.50 per Common Share. Mr.
Lombardozzi is also entitled to the reimbursement of reasonable housing and
living expenses (not exceeding $15,000 per month) relating to his residence in
Bermuda; Mr. Lombardozzi received reimbursement of $180,000 in respect of such
expenses in 2003. If Mr. Lombardozzi's employment is terminated by the Company
without "cause" or by Mr. Lombardozzi for "good reason" (each as defined in the
employment agreement), he will receive a payment equal to the sum of one year's
base salary and target bonus and any base salary or other amounts accrued or
owing through the date of termination, provided that Mr. Lombardozzi executes a
release of claims. If Mr. Lombardozzi's employment is terminated by the Company
for cause or by Mr. Lombardozzi other than for good reason, he will receive no
further payments, compensation or benefits under the agreement (other than
amounts accrued prior to termination). Mr. Lombardozzi is subject to certain
confidentiality and non-solicitation provisions under the employment agreement.
Mr. Robbie entered into an employment agreement with St. Paul Re, which was
amended in August 2002 and assigned to and assumed by the Company upon
completion of the Public Offering, for a three-year term that began August 5,
2002, subject to automatic one-year renewal terms thereafter, pursuant to which
he has agreed to serve as the Executive Vice President and Chief Financial
Officer of the Company. Mr. Robbie is entitled to receive a base annual salary
of at least $350,000, and he is eligible to receive for each year of his term a
target annual bonus of 75% of his base salary. Pursuant to the employment
agreement, Mr. Robbie received one-time cash sign-on bonus of $200,000 from St.
Paul Re, a $75,000 one-time cash sign-on bonus from the Company and an option to
purchase 150,000 Common Shares at $22.50 per Common Share. Mr. Robbie is also
entitled to the reimbursement of reasonable housing and living expenses (not
exceeding $15,000 per month) relating to his residence in Bermuda; Mr. Robbie
received reimbursement of $180,000 in respect of such expenses in 2003. If Mr.
Robbie's employment is terminated by the Company without "cause" or by Mr.
Robbie for "good reason" (each as defined in the employment agreement), he will
receive a payment equal to one year's base salary and target bonus and any base
salary or other amounts accrued or owing through the date of termination,
provided that Mr. Robbie executes a release of claims. If Mr. Robbie's
employment is terminated by the Company for cause or by Mr. Robbie other than
for good reason, he will receive no further payments, compensation or benefits
under the agreement (other than amounts accrued prior to termination). Mr.
Robbie is subject to certain confidentiality and non-solicitation provisions
under the employment agreement.
Mr. Schmidt entered into a letter agreement with St. Paul Re, which was
assigned to and assumed by Platinum US upon completion of the Public Offering.
The letter agreement provides that Mr. Schmidt's base salary effective July 1,
2002 is $350,000 per year and he is eligible to receive an annual performance
bonus in the target amount of 75% of base salary. In addition, Mr. Schmidt is
eligible to receive no later than July 1, 2004 a retention bonus of $175,000 if
he is "continuously employed" (as defined in the letter agreement) with the
Company through such date. If Mr. Schmidt's employment is terminated other than
for cause prior to such date, he is entitled to receive the retention bonus.
ARRANGEMENTS WITH FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER
Mr. Fadden entered into an employment agreement with St. Paul for a
five-year term that began on March 4, 2002, subject to one-year renewal terms
thereafter, pursuant to which he agreed to serve as the Company's President and
Chief Executive Officer. Upon the completion of the Public Offering, St. Paul
16
assigned all of its rights and obligations under the employment agreement to the
Company. The employment agreement provided that Mr. Fadden would receive a base
annual salary of at least $650,000 following the Public Offering. He was also
eligible to receive a target annual bonus of 125% of base salary and a maximum
annual bonus of 200% of the target bonus following the Public Offering, and a
minimum annual bonus of 125% of his base annual salary for 2002. The objectives
for Mr. Fadden's annual bonus were to be determined by the Compensation
Committee, in consultation with Mr. Fadden. The employment agreement provided
for the purchase and maintenance by Platinum of a term life insurance policy in
the amount of $4 million payable to a beneficiary designated by Mr. Fadden. The
agreement provided that Mr. Fadden was entitled to the reimbursement of
reasonable Bermuda housing expenses, among other employee benefits and
perquisites specified in the agreement. On June 1, 2002, Mr. Fadden received a
sign-on bonus of $250,000 from St. Paul. Mr. Fadden also received an initial
grant of options to purchase up to 100,000 shares of St. Paul common stock,
which were subject to the terms of the St. Paul 1994 Stock Plan and which were
to vest in four equal annual installments on the first four anniversaries of the
date of grant. Upon completion of the Public Offering, Mr. Fadden forfeited such
St. Paul stock options to the extent they were unvested and received options to
purchase 975,000 Common Shares with an exercise price equal to the offering
price of the Common Shares in the Public Offering. These options had a ten-year
term and were to vest in equal annual installments on each of the first three
anniversaries of the date of grant.
Mr. Fadden's employment agreement provided that if his employment were
terminated by the Company without "cause" or by Mr. Fadden for "good reason"
(each as defined in the agreement), he would receive a payment equal to three
times the sum of his base salary and the greater of his target bonus and his
bonus for the preceding year, and any base salary or other amounts accrued or
owing through the date of termination, provided that Mr. Fadden executed a
release of claims, and up to three years of medical and dental coverage and
immediate vesting of all outstanding options. In addition, all outstanding
options would remain exercisable for the lesser of five years and the remainder
of their term. If Mr. Fadden's employment were terminated by the Company for
cause or by Mr. Fadden other than for good reason, he was to receive no further
payments, compensation or benefits under the agreement (other than amounts
accrued prior to termination of employment) and all vested options would remain
exercisable for 30 days after termination. In the event his employment were
terminated due to death or "disability" (as defined in the agreement), he was to
receive his base salary through the date of termination and an annual bonus (at
target level), prorated through the date of termination. In addition, all
outstanding options would immediately vest and would remain exercisable (but not
beyond their term) for three years, in the case of a disability termination, and
one year, in the case of death. In the event Mr. Fadden's employment were
terminated under circumstances described in the agreement within two years after
a change in control of the Company, Mr. Fadden would be entitled to certain
severance benefits. In the event Mr. Fadden were subject to excise tax on any
severance payments made to him under the agreement, the Company would make a
gross-up payment to compensate him for such tax liability. Mr. Fadden was
subject to certain confidentiality, non-competition and non-solicitation
provisions under the agreement.
The Company entered into a Separation and Consulting Agreement with Mr.
Fadden on May 13, 2003 following Mr. Fadden's resignation as President and Chief
Executive Officer of the Company effective May 31, 2003. Under this agreement,
Mr. Fadden agreed to provide consulting services to the Company relating to his
previous responsibilities with the Company and the transition of these
responsibilities to his successor through December 31, 2003. In consideration of
the termination of and in accordance with his employment agreement, he received
a payment of $4,950,000 and all base salary and other amounts accrued or owing
through the date of termination. Under the Separation and Consulting Agreement,
the Company also agreed to pay termination fees and lease payments in connection
with Mr. Fadden's residence in Bermuda and relocation expenses and paid Mr.
Fadden a total of $75,000 in respect thereof. The Separation and Consulting
Agreement superceded all terms of Mr. Fadden's employment agreement, except that
he continues to be bound by the terms of the confidentiality, non-competition
and non-solicitation provisions under the employment agreement. In addition,
pursuant to the terms of his Nonqualified Share Option Agreement, Mr. Fadden's
options to purchase 975,000 Common
17
Shares at $22.50 per share became fully vested and exercisable effective as of
June 1, 2003. These options expire on May 31, 2008.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is composed of the
directors whose names appear at the end of this report. The Compensation
Committee reviews the compensation policies and practices of the Company and its
subsidiaries and the recommendations of the Chief Executive Officer concerning
the compensation of those officers of the Company and its subsidiaries with a
title more senior than Vice President, and makes recommendations to the Board
with respect thereto. The Compensation Committee also reviews and approves the
corporate goals and objectives relevant to the Chief Executive Officer's
compensation, evaluates the Chief Executive Officer's performance in light of
those goals and objectives and sets the Chief Executive Officer's compensation
level based on such evaluation. The Compensation Committee grants awards under
and oversees the administration of the Section 162(m) Performance Incentive
Plan, the 2002 Share Incentive Plan, the Annual Incentive Plan and the Capital
Accumulation Plan. The Compensation Committee has retained the services of a
nationally recognized compensation consulting firm to assist it in its
responsibilities and to advise management on compensation issues.
The goals of the Company's executive officer compensation policies are to
attract, retain and motivate highly qualified personnel and to reward
achievement of specified financial performance objectives and enhancement of
shareholder value. In particular, compensation is based on the level of job
responsibility, individual performance and Company performance. As employees
progress to higher levels in the organization, an increasing proportion of their
total compensation is linked to Company performance. Compensation levels also
reflect the value of the job in the marketplace. To attract and retain a highly
skilled work force, the Company must remain competitive with the compensation
practices of other premier employers who compete with the Company for like
talent. To assure that the interests of employees and shareholders are aligned,
equity ownership is a significant component of the Company's compensation
program. The Compensation Committee believes that the Company's compensation
program fosters the long-term focus required for success in the Company's
industry.
The Company's compensation program for its executive officers consists
primarily of base salary, annual incentive compensation and options to purchase
Common Shares, and is designed to align the interests of the executive officers
and shareholders of the Company and to reward profitable underwriting results.
ANNUAL COMPENSATION
Base salaries for 2003 for all executive officers of the Company, other
than Mr. Morrison who is the Chief Executive Officer and who joined the Company
in June 2003, were determined pursuant to employment or other agreements between
each executive officer and St. Paul or St. Paul Re. These agreements were
assigned to the Company upon completion of the Public Offering and are more
fully described above under the heading "Employment Arrangements." The terms of
Mr. Morrison's annual compensation are more fully described below under the
heading "Chief Executive Officer Compensation."
The Company's executive officers are eligible to receive annual incentive
awards under the Company's Annual Incentive Plan, which was adopted in 2003.
This plan was designed to reward achievement of shorter-term corporate and
individual goals. Annual incentive awards paid in respect of 2003 were based
upon achievement of specified net income targets established by the Compensation
Committee as well as various qualitative measures of individual performance. The
Company's net income in 2003 exceeded the specified net income targets
established by the Compensation Committee and, in accordance with the Annual
Incentive Plan, annual incentives ranged from 100% to 170% of the target bonus
opportunities. In determining individual awards, the Committee also considered
individual contributions toward creation and enhancement of shareholder value.
18
Awards granted under the Annual Incentive Plan are made in a combination of
cash and restricted share units, as determined by the Compensation Committee.
Mr. Price and Mr. Morrison received 50% of their annual incentive award in the
form of restricted share units. The other executive officers received at least
25% of their annual incentive award in the form of restricted share units. Each
restricted share unit entitles the holder thereof to one Common Share on the
date that is six months from the date of grant. The Compensation Committee
believes that restricted share units directly align the interests of employees
with those of shareholders.
LONG TERM INCENTIVE COMPENSATION
The 2002 Share Incentive Plan provides that the Compensation Committee has
the authority in its discretion to grant equity-based compensation awards
thereunder in the form of options to purchase Common Shares, restricted Common
Shares, share appreciation rights or share units. All executive officers
received a grant of options effective upon completion of the Public Offering (in
the case of the Chief Executive Officer, effective upon his employment with the
Company in June 2003, as more fully described below) that, in view of the
Compensation Committee, sufficiently incentivizes executive officers to focus on
increasing shareholder value over the long term. The Compensation Committee may
make additional grants in the future.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Company's Chief Executive Officer, Mr. Morrison, was compensated
pursuant to an employment agreement entered into with the Company in June 2003
and amended in January 2004, as described above under the heading "Employment
Arrangements." Mr. Morrison's employment agreement provides for an annual base
salary of $650,000 and an annual incentive for each year of his term, with a
target of 100% of base salary and a maximum of 200% of the target. The
Compensation Committee considered the recommendations of a nationally recognized
compensation-consulting firm to determine the appropriateness of Mr. Morrison's
compensation. The evaluation involved reviewing the compensation practices of
other premier employers who compete with the Company for like talent and the
need to attract a highly motivated leader. For 2003, the Compensation Committee
made an annual incentive award to Mr. Morrison of $850,000, of which 50% was
paid in cash and 50% was paid in the form of restricted share units. Each
restricted share unit entitles the holder thereof to one Common Share on the
date that is six months from the date of grant. Mr. Morrison's annual incentive
award was approximately 130% of his target annual incentive opportunity. In
determining the amount of Mr. Morrison's annual incentive award, the
Compensation Committee took into account that the Company's net income in 2003
exceeded the specified net income target established by the Compensation
Committee under the Annual Incentive Plan for this award, as well as his
contributions toward creation and enhancement of shareholder value and his
dedication and leadership abilities.
The Compensation Committee also awarded Mr. Morrison options to purchase
400,000 Common Shares at $26.00 per Common Share (the closing price of the
Common Shares on the NYSE on the date prior to the date that the Board of
Directors approved his employment agreement). As with setting the annual
compensation components, the Compensation Committee considered the
recommendations of a nationally recognized consulting firm to determine the
appropriateness of Mr. Morrison's long-term incentives. Other elements of Mr.
Morrison's compensation package are described under the heading "Employment
Arrangements." The Committee considers Mr. Morrison's compensation appropriate
in view of the Company's achievements during 2003.
INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Code imposes a limitation of $1 million per year on
the corporate income tax deduction for compensation paid to the Company's named
executive officers that would otherwise be deductible by Platinum US. Among
other exceptions, the deduction limit does not apply to compensation that meets
the specified requirements for "performance-based compensation."
19
The Company's 2002 Share Incentive Plan was designed to meet the
requirements for performance-based compensation in the case of share options and
share appreciation rights granted under the plan. This plan, as amended and
restated, is being proposed for approval by the shareholders at the Annual
Meeting for purposes of continued compliance with Section 162(m). See Proposal
5 -- Approval of the 2002 Share Incentive Plan. In addition, the Company's
Section 162(m) Performance Incentive Plan, which was approved by the Company's
shareholders in 2003, allows the Company to grant restricted shares, share units
and other incentive compensation in a manner that meets the requirements for
performance-based compensation under Section 162(m). The Committee believes that
the deductibility of compensation is only one factor in assessing whether a
particular compensation arrangement is appropriate given the goal of motivating
executives to achieve corporate objectives and increase shareholder value.
Therefore, the Committee retains the flexibility under circumstances it
considers appropriate to pay compensation to its executive officers that may not
be deductible by Platinum US under Section 162(m).
Peter T. Pruitt, Chairman
Jonathan F. Bank
Neill A. Currie
Jay S. Fishman
The foregoing Report of the Compensation Committee shall not be deemed to
be "soliciting material" or "filed" with the SEC or incorporated by reference in
any previous or future document filed by the Company with the SEC under the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
except to the extent that the Company specifically incorporates such Report by
reference in any such document.
20
PERFORMANCE GRAPH
The Company commenced operations on November 1, 2002 upon completion of the
Public Offering. The graph below compares cumulative total return on the Common
Shares with the cumulative total return on the Standard & Poor's ("S&P") 500
Composite Stock Price Index (the "S&P 500 Index") and the S&P Property-Casualty
Industry Group Stock Price Index (the "S&P Property-Casualty Index"), for the
period commencing November 1, 2002 and ending on December 31, 2003, assuming
$100 was invested on November 1, 2002. The graph shows the value at the end of
each calendar year of $100 invested in the Common Shares, the S&P 500 Index, and
the S&P Property-Casualty Index as measured by the last sale price on the last
trading day of each calendar year during the period commencing November 1, 2002
and ending December 31, 2003.
(PERFORMANCE GRAPH)
S&P PROPERTY-CASUALTY
THE COMPANY S&P 500 INDEX INDEX
----------- ------------- ---------------------
November 1, 2002 100 100 100
December 31, 2002 105.61 97.98 96.57
March 31, 2003 101.96 94.89 92
June 30, 2003 109.48 109.5 107.47
September 30, 2003 113.68 112.4 108.82
December 31, 2003 121.69 126.08 122.07
The foregoing Performance Graph shall not be deemed to be "soliciting
material" or "filed" with the SEC or incorporated by reference in any previous
or future document filed by the Company with the SEC under the Securities Act or
the Exchange Act, except to the extent that the Company specifically
incorporates such Performance Graph by reference in any such document.
21
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to the beneficial
ownership of Common Shares as of March 1, 2004 of those persons known by the
Company to be the beneficial owners of more than 5% of the outstanding Common
Shares:
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------- ----------------- --------
The St. Paul Companies, Inc. .............................. 12,000,000(1) 24.4
385 Washington Street
St. Paul, MN 55102
RenaissanceRe Holdings Ltd. ............................... 6,460,000(2) 14.1
Renaissance House
8-12 East Broadway
Pembroke HM 19
Bermuda
Wellington Management Company, LLP......................... 2,462,460(3) 5.7
75 State Street
Boston, MA 02109
Perry Corp. ............................................... 2,389,500(4) 5.5
Richard C. Perry
599 Lexington Avenue
New York, NY 10022
Schroder Investment Management North America Inc. ......... 2,217,900(5) 5.1
Schroder Investment Management International Ltd.
875 Third Avenue, 22nd Floor
New York, NY 10022
---------------
(1) According to a Schedule 13D statement filed by St. Paul on November 8, 2002,
these Common Shares consist of 6,000,000 Common Shares owned by wholly owned
subsidiaries of St. Paul and options to acquire 6,000,000 Common Shares held
by St. Paul and one of its wholly owned subsidiaries. St. Paul reported
having sole voting power over the 6,000,000 owned Common Shares and sole
dispositive power over the 6,000,000 owned Common Shares and the 6,000,000
Common Shares issuable upon exercise of options. Pursuant to a limitation on
voting rights in the Company's Bye-laws, St. Paul's voting power with
respect to the Common Shares owned by it is limited to 9.9% of the voting
power of the outstanding Common Shares.
(2) In a Schedule 13G statement filed by RenaissanceRe on November 5, 2002,
RenaissanceRe reported sole voting power and sole dispositive power over
6,460,000 Common Shares, which included 2,500,000 Common Shares issuable to
RenaissanceRe upon exercise of options. Pursuant to a limitation on voting
rights in the Company's Bye-laws, RenaissanceRe's voting power with respect
to the Common Shares owned by it is limited to 9.9% of the voting power of
the outstanding Common Shares.
(3) In a Schedule 13G statement filed on February 12, 2004, Wellington
Management Company, LLP ("Wellington") reported shared voting power over
1,941,890 Common Shares and shared dispositive power over 2,462,460 Common
Shares. Wellington is an investment adviser registered under the Investment
Advisers Act of 1940. This Schedule 13G statement indicated that the
securities reported therein were owned of record by clients of Wellington
who had the right to receive, or the power to direct the receipt of,
dividends from, or the proceeds from the sale of, such securities, and that
no such client was known to have such right or power with respect to more
than 5% of the class of such securities.
(4) In a Schedule 13G statement filed on February 17, 2004, Perry Corp. and
Richard C. Perry (the president and sole stockholder of Perry Corp.) jointly
reported sole voting power and sole dispositive power over 2,389,500 Common
Shares of the Company. Perry Corp. is an investment adviser
22
registered under the Investment Advisers Act of 1940. This Schedule 13G
statement indicated that the limited partners of (or investors in) each of
two or more private investment funds for which Perry Corp. acts as general
partner and/or investment adviser had the right to participate in the
receipt of dividends from, and proceeds from the sale of, the Common Shares
held for the accounts of such funds in accordance with their respective
limited partnership interests (or investment percentages) in such funds. Mr.
Perry disclaimed any beneficial ownership interest of the Common Shares
owned beneficially by Perry Corp., except for that portion of such Common
Shares that related to his economic interest in Perry Corp.
(5) In a Schedule 13G statement filed on February 13, 2004, Schroder Investment
Management North America Inc. ("Schroder North America") reported sole
voting power and sole dispositive power over 2,210,000 Common Shares and
Schroeder Investment Management International Ltd. ("Schroder
International") reported sole voting power and sole dispositive power over
7,900 Common Shares. Schroeder North America and Schroder International are
investment advisers registered under the Investment Advisers Act of 1940.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Common
Shares as of March 1, 2004 of each of the directors and executive officers.
Except as otherwise indicated, each of these persons had sole voting power and
sole dispositive power with respect to the Common Shares beneficially owned by
him.
AMOUNT AND NATURE
OF BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------ ----------------- --------
Steven H. Newman............................................ 405,000(1)(2) *
Gregory E.A. Morrison....................................... 21,000 *
H. Furlong Baldwin.......................................... 13,334(1)(2) *
Jonathan F. Bank............................................ 10,334(1)(2) *
Dan R. Carmichael........................................... 10,834(1)(2) *
Neill A. Currie............................................. 10,000(1) *
Jay S. Fishman.............................................. 16,334(3) *
Peter T. Pruitt............................................. 12,334(1)(2) *
Michael D. Price............................................ 18,058 *
Michael E. Lombardozzi...................................... 42,500(2) *
William A. Robbie........................................... 7,004 *
Neal J. Schmidt............................................. 46,500(2) *
All directors and executive officers as a group (12
persons).................................................. 613,232 1.4%
---------------
* Represents less than 1% of the outstanding Common Shares.
(1) Does not include share units. Under the Share Unit Plan, 50% of all fees
earned by a director who is not an employee of the Company or any of its
affiliates (including retainer fees, meeting fees and committee fees) during
each calendar quarter are automatically converted into that number of share
units equal to the number of Common Shares which could have been purchased
with such fees, based upon the closing price of the Common Shares on the
last day of the calendar quarter, as more fully described under "Director
Compensation." As of March 1, 2004, the following non-employee directors had
been credited with the following number of share units: Mr. Newman: 2,058
share units; Mr. Bank: 1,728 share units; Mr. Carmichael: 1,739 share units;
Mr. Pruitt: 1,547 share units; Mr. Baldwin: 1,560 share units; and Mr.
Currie: 896 share units.
(2) Includes Common Shares issuable upon exercise of options as follows: Mr.
Newman: 325,000 Common Shares; Mr. Baldwin: 8,334 Common Shares; Mr. Bank:
8,334 Common Shares; Mr. Carmichael: 8,334 Common Shares; Mr. Fishman: 8,334
Common Shares; Mr. Pruitt:
23
8,334 Common Shares; Mr. Lombardozzi: 37,500 Common Shares; and Mr. Schmidt:
37,500 Common Shares.
(3) Mr. Fishman is Chairman, Chief Executive Officer and President of St. Paul,
which is the beneficial owner of 6,000,000 Common Shares and a currently
exercisable option to acquire 6,000,000 Common Shares, as more fully
described below under "Related Party Transactions." Mr. Fishman disclaims
beneficial ownership of these Common Shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the Exchange Act, the Company's directors and executive officers and
any persons holding more than 10% of the Common Shares are required to report
their initial ownership of Common Shares and any subsequent changes in that
ownership to the SEC. Specific filing dates for these reports have been
established by the SEC, and the Company is required to disclose in this proxy
statement any failure by such persons to file these reports in a timely manner
during the 2003 fiscal year. The Company has determined that, except as
described below, no person who at any time during 2003 was a director, executive
officer or holder of more than 10% of the Common Shares failed to file on a
timely basis reports required by the Exchange Act during 2003. This
determination was based solely upon the review by the Company of Forms 3, 4 and
5, and written representations that no Forms 5 were required to be submitted to
the Company during or with respect to 2003.
Each of Messrs. Baldwin, Bank, Carmichael, Newman and Pruitt did not timely
file a Form 4 reporting his receipt of share units under the Share Unit Plan for
Non-Employee Directors on January 1, 2003. In addition, each of Messrs. Baldwin,
Bank, Carmichael, Currie, Fishman and Pruitt did not timely file a Form 4
reporting the Company's grant of options to him on September 17, 2003.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Pruitt, Bank, Currie and Fishman currently serve on the
Compensation Committee of the Board of Directors of the Company. Mr. Fishman is
Chairman, Chief Executive Officer and President of St. Paul, which, as of March
1, 2004, beneficially owned 24.4% of the outstanding Common Shares of the
Company (the voting power of which is limited to 9.9% of the voting power of the
outstanding Common Shares pursuant to the Company's Bye-laws) and has entered
into various agreements with the Company, as described below under "Related
Party Transactions."
RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH ST. PAUL AND ITS SUBSIDIARIES
Concurrently with the completion of the Public Offering on November 1,
2002, the Company issued 6,000,000 Common Shares (or 14% of the then outstanding
Common Shares) to St. Paul in a private placement pursuant to a Formation and
Separation Agreement dated as of October 28, 2002 between the Company and St.
Paul (the "Formation Agreement"). The voting power of these Common Shares is
limited to 9.9% of the voting power of the outstanding Common Shares, pursuant
to the Bye-laws of the Company. St. Paul also received an option to purchase up
to 6,000,000 additional Common Shares at any time during the ten years following
the Public Offering at a price of $27.00 per share (the "St. Paul Option"). In
return for the Common Shares and the St. Paul Option, St. Paul contributed to
the Company cash in the amount of $122 million and substantially all of the 2002
reinsurance business and related assets of St. Paul Re, including all of the
outstanding capital stock of Platinum US. Among the fixed assets transferred
were furniture, equipment, systems and software, and the intangible assets
included broker lists, contract renewal rights and licenses. The Formation
Agreement contains provisions regarding indemnification of each of St. Paul and
the Company by the other, restrictions on St. Paul regarding competition with
the Company and the transfer or acquisition of Common Shares in certain
circumstances, and requirements relating to pre-emptive rights and participation
in Common Share buy-back programs. The Formation Agreement provided that the
Company and its subsidiaries enter into several agreements with St. Paul and its
subsidiaries, as described below.
24
The Company entered into a registration rights agreement with St. Paul as
of November 1, 2002, pursuant to which St. Paul has the right to require the
Company, subject to certain specified exceptions, on four occasions to register
under the Securities Act, any Common Shares owned by St. Paul or its affiliates
for sale in a public offering beginning as of November 1, 2003. Pursuant to this
agreement, the Company has also agreed to use its reasonable best efforts to
enable St. Paul from and after the third anniversary of the completion of the
Public Offering to distribute the Common Shares it beneficially owns in an
offering on a continuous or delayed basis pursuant to a registration statement
under the 1933 Act. After November 1, 2007, St. Paul will have the right to an
additional two demand registrations if St. Paul beneficially owns more than 9.9%
of the Common Shares then outstanding. Each demand must include a number of
Common Shares with a market value equal to at least $50 million, except that
this limitation will not apply to St. Paul's last demand registration.
Certain subsidiaries of the Company entered into several quota share
retrocession agreements with subsidiaries of St. Paul, pursuant to which St.
Paul's subsidiaries transferred the liabilities, related assets and rights and
risks under substantially all of the reinsurance contracts entered into by St.
Paul's subsidiaries on or after January 1, 2002, excluding certain liabilities
relating to the flooding in Europe in August 2002 and business underwritten in
London for certain financial services companies (the "Quota Share Retrocession
Agreements"). These agreements provided for the transfer to subsidiaries of the
Company of cash and other assets aggregating approximately $485,687,000, which
represents substantially all of the existing 2002 underwriting year loss
reserves, excluding certain liabilities retained by St. Paul, allocated loss
adjustment expense reserves, other reserves related to non-traditional
reinsurance treaties, unearned premium reserves (subject to agreed upon
adjustments) and other related reserves, which relate to contracts entered into
on and after January 1, 2002, as of the date of the transfer and 100% of future
premiums (less any ceding commission under the Quota Share Retrocession
Agreements) associated with the transferred reinsurance contracts relating to
periods after the date of the transfer. Trusts have been established and funded
to secure Platinum US's retrocession obligations to St. Paul's subsidiaries.
Platinum US and St. Paul Fire and Marine Insurance Company, a wholly owned
subsidiary of St. Paul ("St. Paul Fire and Marine"), entered into a US
Underwriting Management Agreement dated as of November 1, 2002. Pursuant to this
agreement, Platinum US has authority to write renewals of certain
non-traditional reinsurance contracts for a period of three years on behalf of
St. Paul Fire and Marine or Mountain Ridge Insurance Company, a wholly owned
subsidiary of St. Paul. Platinum US bears all the expenses incurred in
underwriting and administering the non-traditional business that it reinsures.
St. Paul Fire and Marine is required to pay the direct and reasonable indirect
costs of non-traditional business not reinsured by Platinum US. Platinum UK and
St. Paul Reinsurance Company Limited ("St. Paul Re UK") entered into a similar
agreement dated as of November 1, 2002 providing Platinum UK with substantially
the same rights to underwrite business on behalf of St. Paul Re UK.
In addition, St. Paul Re UK, St. Paul Management Limited and Platinum UK
entered into a UK Business Transfer Agreement under which Platinum UK acquired
the reinsurance business of St. Paul Re UK, together with the associated
customer lists and goodwill (other than the assumption of liability for, or the
management of, existing reinsurance contracts entered into by St. Paul Re UK on
or prior to November 1, 2002). Platinum UK is entitled to write reinsurance
business for its own account and benefit in succession to St. Paul Re UK. In
consideration for the transfer, a portion of the St. Paul Option, covering
894,260 Common Shares with an aggregate exercise price of $8,119,881, was
allocated to St. Paul Re UK.
The Company and Platinum UK entered into Master Services Agreements with
St. Paul and St. Paul Re UK pursuant to which St. Paul and its subsidiaries
provide certain services, including accounting, payroll administration, human
resources management and systems support, at cost until the Company and Platinum
UK deem it no longer necessary. Both of these Master Services Agreements, which
originally were scheduled to terminate on June 30, 2003, were amended by the
parties to terminate on June 30, 2004 with respect to certain services. The
Company and Platinum UK are required to pay St. Paul and St. Paul Re UK a total
of $166,263 for services provided in 2003 under the Master Services Agreements.
The Company and Platinum UK also entered into Run-off Services Agreements with
St. Paul and St. Paul Re
25
UK, pursuant to which the Company and Platinum UK, for a period of up to two
years following completion of the Public Offering, provide St. Paul and St. Paul
Re UK with specified services at cost in administering the run-off of certain
reinsurance contracts. St. Paul and St. Paul Re UK paid the Company and Platinum
UK approximately $465,892 for services provided in 2003 under the Run-off
Services Agreements.
Pursuant to the Employee Benefits and Compensation Matters Agreement, St.
Paul transferred certain of its employees to Platinum US. The agreement provides
for the allocation of assets and liabilities and certain other agreements with
respect to employee compensation and benefit plans. The agreement provides that
St. Paul will reimburse Platinum US pro rata for any retention bonuses that are
paid to certain employees of the Company.
Platinum UK is a party to a sublease agreement with St. Paul Re UK under
which Platinum UK subleases office space in London at a rate equivalent to St.
Paul's cost. A total of $710,000 is payable under this agreement for 2003.
Platinum US entered into an Aggregate Excess of Loss Retrocession Agreement
with Mountain Ridge Insurance Company, a St. Paul subsidiary, on June 11, 2003.
This Agreement related to an underlying agreement with Liberty Mutual which, in
turn, was reinsured by Platinum US under a 100% Quota Share Retrocession
Agreement with Mountain Ridge Insurance Company.
Platinum US has entered into several novation and other agreements with St.
Paul and various ceding insurance companies, whereby Platinum has replaced St.
Paul as the reinsurer on the respective contracts. In certain cases, these
contracts were originally issued by St. Paul Fire and Marine because Platinum US
was not authorized as a reinsurer in Wisconsin. Several novation agreements were
entered into after Platinum US became authorized in Wisconsin.
Platinum UK entered into an Excess of Loss Reinsurance contract with XL Re
on July 1, 2003 that replaced an existing contract between XL Re and St. Paul.
This contract includes a provision whereby St. Paul receives a commission as
compensation for forfeiting a $5.65 million deficit premium that would have been
paid to St. Paul if the existing contract had simply been terminated.
Platinum Bermuda is one of several reinsurers participating on five
excess-of-loss reinsurance contracts and a variable quota share reinsurance
contract with certain subsidiaries of St. Paul relating to contract surety
business. Platinum Bermuda expects to receive approximately $4.6 million in
premium under these contracts in 2004.
TRANSACTIONS WITH RENAISSANCERE AND ITS SUBSIDIARIES
Concurrently with the completion of the Public Offering, the Company sold
3,960,000 Common Shares to RenaissanceRe at a price of $22.50 per share less the
underwriting discount (the "RenaissanceRe Investment") in a private placement
pursuant to the Investment Agreement. In addition, RenaissanceRe received an
option to purchase up to 2,500,000 additional Common Shares at any time during
the ten years following the Public Offering at a purchase price of $27.00 per
share. The Investment Agreement provides that, for so long as RenaissanceRe
beneficially owns Common Shares representing at least 62.5% of the Common Shares
purchased pursuant to the Investment Agreement, one qualified person designated
by RenaissanceRe, who is reasonably acceptable to the Company, but not an
officer, director or employee of RenaissanceRe or any of its subsidiaries, will
be nominated by the Company for election as a director of the Company at each
shareholder meeting at which directors are elected and the Company shall use
commercially reasonable efforts to cause this director's appointment to the
Executive Committee and, subject to applicable law, rules or regulations, the
Governance Committee of the Board of Directors of the Company. The Investment
Agreement also provides that, for so long as RenaissanceRe beneficially owns
Common Shares representing at least 62.5% of the Common Shares purchased
pursuant to the Investment Agreement, RenaissanceRe will have the right to
designate a representative to attend (but not to vote at) meetings of the Board
of Directors and to receive notices, agendas, minutes and all other materials
distributed to participants at such meetings.
26
The Company and RenaissanceRe entered into a Transfer Restrictions,
Registration Rights and Standstill Agreement as of November 1, 2002, pursuant to
which, prior to November 1, 2003, RenaissanceRe could not transfer any interest
in the Common Shares it purchased pursuant to the Investment Agreement except
under certain conditions. Under this agreement, RenaissanceRe has the right to
require the Company, subject to certain specified exceptions, on four occasions
to register under the 1933 Act any Common Shares owned by RenaissanceRe or its
affiliates for sale in a public offering beginning as of November 1, 2003. The
Company has also agreed to use its reasonable best efforts to enable
RenaissanceRe, from and after the third anniversary of the completion of the
Public Offering, to distribute the Common Shares it beneficially owns in an
offering on a continuous or delayed basis pursuant to a registration statement
under the 1933 Act. After November 1, 2007, RenaissanceRe will have the right to
an additional two demand registrations if RenaissanceRe beneficially owns more
than 9.9% of the Common Shares then outstanding. Each demand must include a
number of Common Shares with a market value equal to at least $50 million,
except that this limitation will not apply to RenaissanceRe's last demand
registration. This agreement also contains provisions regarding indemnification
of each of RenaissanceRe and the Company by the other, restrictions on
RenaissanceRe regarding the acquisition of Common Shares in certain
circumstances, and requirements relating to pre-emptive rights and participation
in Common Share buy-back programs.
The Company entered into a five-year Services and Capacity Reservation
Agreement with RenaissanceRe, effective October 1, 2002, pursuant to which
RenaissanceRe provides services to the subsidiaries of the Company in connection
with its property catastrophe book of business. At the Company's request,
RenaissanceRe will analyze the Company's property catastrophe treaties and
contracts and will assist the Company in measuring risk and managing the
Company's aggregate catastrophe exposures. Based upon such analysis,
RenaissanceRe will furnish quotations at the Company's request for rates for
non-marine property catastrophe retrocessional coverage with aggregate limits up
to $100 million annually, either on an excess-of-loss or proportional basis. The
Company and RenaissanceRe may then enter into retrocessional agreements on the
basis of the quotations. The fee for the coverage commitment and the services
provided by RenaissanceRe under this agreement is $4 million at inception and at
each anniversary, adjusted to 3.5% of the Company's gross written non-marine
non-finite property catastrophe premium for the previous annual period, if and
to the extent such amount is greater than the fee paid in such previous annual
period. Either party may terminate this agreement if the other is deemed
impaired or insolvent by applicable regulatory or judicial authorities or is the
subject of conservation, rehabilitation, liquidation, bankruptcy or similar
insolvency proceedings. The Company paid a total of $4 million to RenaissanceRe
pursuant to this agreement for 2003.
Platinum Bermuda and Platinum US have each entered into substantially
similar Referral Agreements with Renaissance Underwriting Managers Ltd. ("RUM"),
a subsidiary of RenaissanceRe, effective November 1, 2002 (collectively, the
"Referral Agreements"), pursuant to which RUM provides referrals of treaty and
facultative reinsurance contracts to Platinum Bermuda and Platinum US (the
"Referred Contracts"). Under the Referral Agreements, Platinum Bermuda and
Platinum US each have the opportunity to quote on Referred Contracts that would
not otherwise be presented to Platinum Bermuda or Platinum US in the normal
course. Under each of the Referral Agreements, Platinum Bermuda and Platinum US
pay RUM an annual finder's fee and, in certain circumstances, a profit
commission for Referred Contracts actually bound by Platinum Bermuda or Platinum
US in accordance with formulas set forth in the Referral Agreements. Under the
Referral Agreements, RUM may elect, at the time it refers a Referred Contract,
to cause Platinum Bermuda or Platinum US to retrocede up to 30% of such Referred
Contract actually bound by Platinum Bermuda or Platinum US (the "RenRe Retro
Share"). The finder's fee and any profit commission due to RUM under each
Referral Agreement is reduced by the amount of the RenRe Retro Share. The RenRe
Retro Share may be subject to an aggregate loss ratio cap that will limit the
maximum liability of RenaissanceRe to 225% of Gross Premium Written (as defined
in the Referral Agreement) for each annual period. The Referral Agreements
expire on October 31, 2007. No amounts were paid to RUM by Platinum US under its
Referral Agreement in 2003. Platinum Bermuda paid RUM $400,283 under its
Referral Agreement in 2003.
27
Platinum US entered into an Excess of Loss Contract with RenaissanceRe
effective as of June 11, 2003, where the loss index is based on a property
catastrophe program purchased by Platinum US. Under this contract, RenaissanceRe
is liable for 50% of all premiums (plus a 2% override) and is entitled to 50% of
any loss recoveries under the indexed property catastrophe program.
Platinum US is party to two property catastrophe excess of loss programs
with the Glencoe Group of Companies, which are affiliates of RenaissanceRe.
Platinum has a 5% participation across four layers of reinsurance on one program
and a 15% participation on the other program.
OTHER TRANSACTIONS
The Company is a party to an investment management agreement with Alliance
Capital Management L.P. ("Alliance"), pursuant to which Alliance provides
investment advisory services to the Company. The Company pays a fee to Alliance
for these services based on the amount of the Company's assets managed by
Alliance. A total of $1,374,058 is payable to Alliance for investment advisory
services provided in 2003. Holly Price, a Senior Vice President at
AllianceBernstein Institutional Investment Management, a unit of Alliance, is
the wife of Michael Price, the President and Chief Underwriting Officer of
Platinum US.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is currently composed of the
directors whose names appear at the end of this report. The members are
independent as defined in the NYSE's listing standards, which provide, among
other things, that directors shall have no relationship with the Company that
may interfere with the exercise of their independence from management and the
Company. The Board of Directors has determined that the members of the Audit
Committee also meet the qualifications set forth in the NYSE's listing standards
regarding financial literacy and accounting or related financial management
expertise.
The Audit Committee is responsible for, among other things, reviewing with
management and the independent auditors the audited financial statements to be
included in the Company's Annual Report on Form 10-K, reviewing with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61, "Communications With Audit Committees," as amended by
Statement on Audit Standards No. 90, "Audit Committee Communications" ("SAS No.
61") and recommending whether the audited financial statements should be
included in the Company's Annual Report on Form 10-K. The Company's management
has the primary responsibility for the financial statements and the reporting
process, including the systems of internal controls.
In this context, the Audit Committee has reviewed and discussed the
Company's audited financial statements as of December 31, 2003 and for the year
then ended with management and KPMG LLP ("KPMG"), the Company's independent
auditors. The Audit Committee has also discussed with KPMG the matters required
to be discussed by SAS No. 61, including the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the disclosures in the financial statements.
The Audit Committee also discussed with KPMG the critical accounting
policies and practices used in the preparation of the audited financial
statements as of December 31, 2003 and for the year then ended; any alternative
treatments within accounting principles generally accepted in the United States
of America for policies and practices related to material items that have been
discussed with management, including the ramifications of the use of such
alternative treatments and the treatment preferred by KPMG; and any material
written communications between KPMG and management.
KPMG also provided to the Audit Committee the written disclosures and the
letter required by Independence Standards Board Standard No. 1, "Independence
Discussions with Audit Committees," as adopted by the Independence Standards
Board, and the Audit Committee discussed with KPMG its independence. When
considering KPMG's independence, the Audit Committee considered, among other
28
matters, whether KPMG's provision of non-audit services to the Company is
compatible with maintaining the independence of KPMG.
Based on the reviews and discussions with management and KPMG referred to
above, the Audit Committee has recommended to the Board of Directors that the
audited financial statements as of December 31, 2003 and for the fiscal year
then ended be included in the Company's Annual Report on Form 10-K for such
fiscal year. The Audit Committee also recommended to the Board of Directors that
KPMG be selected as independent auditors of the Company for the year 2004,
subject to shareholder ratification as required by Bermuda law.
H. Furlong Baldwin, Chairman
Jonathan F. Bank
Dan R. Carmichael
Peter T. Pruitt
The foregoing Report of the Audit Committee shall not be deemed to be
"soliciting material" or "filed" with the SEC or incorporated by reference in
any previous or future document filed by the Company with the SEC under the
Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates such Report by reference in any such document.
PROPOSAL 2 -- ELECTION OF PLATINUM BERMUDA DIRECTORS
Pursuant to the Company's Bye-Laws, when any matter is required to be
submitted to a vote of the shareholders of any direct or indirect non-U.S.
subsidiary of the Company, the Company is required to submit a proposal relating
to such matter to the shareholders of the Company, and the Company shall then
vote or cause to be voted all the shares of such subsidiary owned by the Company
in accordance with or proportional to the vote of its shareholders. Accordingly,
the shareholders of the Company are being asked to consider the following
proposal.
The Board of Directors of Platinum Bermuda currently consists of three
directors: Gregory E.A. Morrison, Michael D. Price and William A. Robbie.
Messrs. Price and Robbie were appointed directors in November 2002 to fill
vacancies on the Platinum Bermuda Board. Mr. Morrison was appointed director in
June 2003 to fill the vacancy created when Mr. Fadden, Platinum Bermuda's former
Chairman and Chief Executive Officer, resigned as director of Platinum Bermuda
in May 2003. The terms of office of each of the current directors will expire at
the next annual general meeting of Platinum Bermuda, which will be held on the
date of the Annual Meeting. Each of the current directors has been nominated by
the Board of Directors of Platinum Bermuda for election as a director at the
Annual Meeting to serve until the next annual general meeting of Platinum
Bermuda.
Set forth below is biographical and other information regarding the
nominees for election as directors of Platinum Bermuda, including their
principal occupations during the past five years.
Gregory E.A. Morrison.........
Age: 46
Director of Platinum
Bermuda since 2003 Mr. Morrison has been President and Chief
Executive Officer of the Company since June
2003. Mr. Morrison was President and Chief
Executive Officer of London Reinsurance Group
Inc. ("LRG"), a Canadian reinsurance company
that he founded, from 1989 until 1998 and again
from September 2000 until May 2003. Mr.
Morrison also served as the Chairman of LRG
operating subsidiaries in the United States,
Barbados and Ireland and as a member of the LRG
board of directors. From January 1999 to June
2000, Mr. Morrison served as President of Unum
Reinsurance, the reinsurance division of Unum
Provident Corporation.
Michael D. Price..............
Age: 37
Director of Platinum
Bermuda since 2002 Mr. Price has been President and Chief
Underwriting Officer of Platinum US since
November 2002. Mr. Price was Chief
29
Underwriting Officer of St. Paul Re from June
2002 until November 2002. Mr. Price served as
Chief Operating Officer of Associated Aviation
Underwriters Incorporated, a subsidiary of
Global Aerospace Underwriting Managers Ltd.
specializing in aerospace insurance, from March
2001 through June 2002. From May 2000 to
September 2000, Mr. Price was Chief
Underwriting Officer at Swiss Re America
Holding Corporation, a reinsurance holding
company. He was Senior Vice President and Chief
Underwriting Officer of Underwriters Re Group,
Inc., a reinsurance holding company, from April
1998 until May 2000.
William A. Robbie.............
Age: 53
Director of Platinum
Bermuda since 2002 Mr. Robbie has been Executive Vice President
and Chief Financial Officer of the Company
since November 2002. Mr. Robbie was Executive
Vice President and Chief Financial Officer of
St. Paul Re from August 2002 until November
2002. Prior thereto, Mr. Robbie held various
positions with XL Capital Ltd. and its
subsidiaries, including Executive Vice
President -- Financial Services, Senior Vice
President -- Treasurer, and Executive Vice
President, Chief Financial Officer and Chief
Administrative Officer.
The Board of Directors of Platinum Bermuda has no reason to believe that
any of these nominees would be unable or unwilling to serve if elected. If a
nominee becomes unable or unwilling to accept nomination or election, the Board
of Directors of Platinum Bermuda will select a substitute nominee and the Common
Shares represented by proxies may be voted for such substitute nominee unless
the shareholders indicate otherwise.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES TO THE PLATINUM
BERMUDA BOARD OF DIRECTORS.
PROPOSAL 3 -- RATIFICATION OF APPOINTMENT OF PLATINUM UK DIRECTORS
Pursuant to the Bye-Law provisions discussed in connection with Proposal 2
above, the shareholders of the Company are being asked to consider the following
proposal.
The Board of Directors of Platinum UK currently consists of seven
directors: Michael J. Coldman, A.P.D. Lancaster, Gregory E.A. Morrison, Craig T.
Pettengell, Robert S. Porter, William A. Robbie and Russell Worsley. According
to Platinum UK's Articles of Association, the appointment of executive
(employee) directors appointed after June 2002 must be ratified by Platinum UK's
sole shareholder, Platinum Regency Holdings ("Platinum Regency"). Platinum
Regency is a direct non-U.S. subsidiary of the Company. Mr. Pettengell was
appointed to the Board in October 2002, while Mr. Morrison and Mr. Porter were
appointed directors in May 2003 to fill the vacancies created by the
resignations of Mr. Fadden and Mr. Price. Messrs. Robbie and Worsley have each
been approved as directors by the United Kingdom Financial Services Authority.
The appointments of Messrs. Pettengell, Morrison and Porter were ratified
at the Company's 2003 Annual General Meeting of Shareholders. Mr. Coldman was
appointed to the Board before June 2002 and, therefore, his appointment does not
require ratification by Platinum Regency. In addition, the appointment of
Platinum UK's non-executive (non-employee) director, Mr. Lancaster, does not
require ratification by Platinum Regency.
Set forth below is biographical and other information regarding Messrs.
Robbie and Worsley, including their principal occupations during the past five
years.
William A. Robbie.............
Age: 53
Director of Platinum UK
since 2003 Mr. Robbie has been Executive Vice President
and Chief Financial Officer of the Company
since November 2002.
30
Mr. Robbie was Executive Vice President and
Chief Financial Officer of St. Paul Re from
August 2002 until November 2002. Prior thereto,
Mr. Robbie held various positions with XL
Capital Ltd. and its subsidiaries, including
Executive Vice President -- Financial Services,
Senior Vice President -- Treasurer, and
Executive Vice President, Chief Financial
Officer and Chief Administrative Officer.
Russell Worsley...............
Age: 43
Director of Platinum UK
since 2003 Mr. Worsley has been Finance Director of
Platinum UK since September 2003. Mr. Worsley
was Financial Control Manger of Gerling UK
Limited from January 2002 until August 2003.
Prior thereto, Mr. Worsley was Financial
Controller at IC Insurance Holdings Limited.
The Board of Directors of Platinum UK has no reason to believe that any of
these nominees should not be ratified as directors of Platinum UK.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
PLATINUM UK DIRECTORS.
PROPOSAL 4 -- AMENDMENT TO THE BYE-LAWS OF THE COMPANY TO REMOVE SECTION 44(2)
The Board of Directors recommends that the shareholders of the Company
adopt an amendment (the "Amendment") to the Bye-laws of the Company to remove
Section 44(2), which requires the submission to the shareholders of the Company
of any matter to be voted on by the shareholders of any direct or indirect
non-U.S. subsidiary of the Company (the "Directed Voting Provision"). If the
Amendment is adopted by the shareholders of the Company, the Directed Voting
Provision will be removed in its entirety.
The Company currently has two direct non-U.S. subsidiaries, Platinum
Regency and Platinum Bermuda, and one indirect non-U.S. subsidiary, Platinum UK,
a wholly owned subsidiary of Platinum Regency (collectively, the "Non-U.S.
Subsidiaries"). The Directed Voting Provision requires the Company to submit any
matter to be voted on by the shareholders of any of the Non-U.S. Subsidiaries to
the shareholders of the Company and to vote all the shares of the Non-U.S.
Subsidiary owned by the Company in accordance with and proportional to such vote
of the Company's shareholders. Thus, this proxy statement contains proposals, to
be voted on by the Company's shareholders, for the election of directors of
Platinum Bermuda, the ratification of the selection of directors for Platinum UK
and the ratification of the selection of KPMG (Bermuda) to serve as Platinum
Bermuda's independent auditors.
When the Company was organized in 2002, the Directed Voting Provision was
implemented to reduce the possibility that certain of the Company's shareholders
might be required to include in their reportable income their pro rata share of
the Non-U.S. Subsidiaries' so-called "subpart F income."
Each "United States shareholder" of a foreign corporation that is a
"controlled foreign corporation" ("CFC") for an uninterrupted period of thirty
days or more during a taxable year, and who owns shares in the CFC directly or
indirectly through foreign entities on the last day of the CFC's taxable year,
must include in its gross income for United States federal income tax purposes,
inter alia, its pro rata share of the CFC's "subpart F income," whether or not
such income has been distributed to such person. A "United States shareholder"
for this purpose is a "U.S. person" (i.e., a U.S. citizen or resident, a
domestic corporation or partnership and certain estates and trusts) who owns,
directly or indirectly through foreign persons, or is considered to own (by
application of the constructive ownership rules set forth in the U.S. Internal
Revenue Code of 1986, as amended), 10% or more of the total combined voting
power of all classes of stock of the foreign corporation. A foreign corporation
is treated as a CFC with respect to its insurance income (which is one type of
subpart F income) if its United States shareholders collectively own more than
25% of the total combined voting power or total value of its stock. (With
respect to other
31
types of subpart F income, United States shareholders must own more than 50% of
the total combined voting power or total value of the foreign corporation to be
a CFC.)
The Bye-laws of the Company provide that the Company will not issue any
Common Shares if such issuance would result in any person other than St. Paul
and RenaissanceRe becoming a United States shareholder, or if such issuance
would result in St. Paul or RenaissanceRe becoming a holder of 25% or more of
the voting power or value of all classes of shares of the Company. The Bye-laws
also include a diluted voting provision whereby if any shareholder would be a
United States shareholder absent this diluted voting provision, the vote of such
shareholder will be limited to 9.9% of such voting power and the votes of the
other shareholders will be correspondingly increased (but not above 9.9%). Since
no single shareholder, not even St. Paul, is permitted to hold 10% or more of
the voting power of the Company, there are no United States shareholders of the
Company, and the Company will not be a CFC, for purposes of these rules.
For purposes of these rules, a proportionate amount of the shares of the
Non-U.S. Subsidiaries will be treated as owned by any U.S. person that is a
corporation and that owns 10% or more of the value of the Common Shares of the
Company. Where this provision applies, however, there is no authority for
determining whether the shares of the Non-U.S. Subsidiaries attributed to the
U.S. person are deemed to carry a proportionate share of the vote attached to
those shares or the diluted vote (where applicable) that attaches to the
Company's Common Shares. The Directed Voting Provision was intended to
strengthen the argument that the diluted vote also applies to the shares of the
Non-U.S. Subsidiaries that are deemed to be owned by U.S. persons, although this
provision has not been tested in the courts and could be challenged by the
Internal Revenue Service and found to be ineffective.
To the Company's knowledge, St. Paul is the only U.S. person that owns 10%
or more of the value of the Company's Common Shares and thus deemed to own 10%
or more of the value of the shares of the Non-U.S. Subsidiaries. (RenaissanceRe,
which owns 10% or more of the value of the Company's Common Shares, is organized
under the laws of Bermuda, and thus is not a U.S. person.) We believe that the
restrictions on issuance of Common Shares, the limitations on concentration of
voting power of our Common Shares, and the wide dispersion of our share
ownership among holders other than St. Paul provide more than adequate
protection against the risks that the Company's shareholders will be required to
include in their gross income for United States federal income tax purposes
their pro rata share of any Non-U.S. Subsidiaries' subpart F income.
Over the last year, the Directed Voting Provision has proven to be
administratively burdensome. It has become apparent that the benefit of the
modest additional protection from adverse tax consequences afforded by the
Directed Voting Provision is outweighed by cumbersome additions to the Company's
voting process. The Board of Directors believes that the removal of the Directed
Voting Provision is in the best interest of the Company and its shareholders
because it does not provide an important independent benefit and its removal
will substantially simplify shareholder voting procedures. The Board of
Directors believes that it is in the best interest of the Company and its
shareholders to return to more customary shareholder voting procedures on the
subsidiary level. If the Amendment is adopted, the shareholders of the Company
will continue to have all of the voting rights accorded to shareholders of a
Bermuda company listed on the NYSE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE AMENDMENT
TO THE BYE-LAWS OF THE COMPANY TO REMOVE SECTION 44(2).
PROPOSAL 5 -- APPROVAL OF THE 2002 SHARE INCENTIVE PLAN
The Board of Directors recommends that the shareholders of the Company
approve the Company's 2002 Share Incentive Plan (the "Plan"). The Plan provides
for the award, to employees, officers, directors, agents, consultants or
advisors of the Company, of share options, share appreciation rights, share
units and restricted shares. The Plan was originally adopted in connection with
the Public Offering and has been in
32
effect since such time. The Plan was amended by the Company's Board of Directors
in certain respects in March 2004.
The Plan must be approved by the shareholders so that awards of share
options and stock appreciation rights will continue to qualify as exempt
performance-based compensation under Section 162(m) of the U.S. Internal Revenue
Code of 1986, as amended (the "Code"), which applies to awards made to the
Company's executive officers whose compensation is otherwise tax deductible for
U.S. federal income tax purposes. Under the Section 162(m) regulations, such
awards have previously been exempt under Section 162(m) due to a special
transition rule that applied in connection with the Company's initial public
offering. This transition rule expires on the date of the Annual Meeting.
Approval of the Plan by shareholders at the Annual Meeting will allow such
awards to continue to be exempt for the remainder of the Plan's 10-year term. At
the 2003 Annual General Meeting of Shareholders, shareholders separately
approved the Company's "Section 162(m) Performance Incentive Plan," which allows
other types of incentive compensation (including share units and restricted
shares under the Plan) to be exempt from the deduction limitations of Section
162(m).
The following is a summary of the material terms of the Plan. This
description is qualified by reference to the full text of the Plan, which is
attached hereto as Annex B.
DESCRIPTION OF THE PLAN
Purpose. The purpose of the Plan is to advance the interests of the
Company and its shareholders by attracting, retaining and motivating key
personnel upon whose judgment, initiative and effort the successful conduct of
the Company's operations is largely dependent. The Plan is also intended to
further align the interests of employees, officers, directors, agents,
consultants and advisors of the Company with those of the shareholders by
promoting the ownership of Common Shares by these individuals.
Reservation of Shares. A total of 6,000,000 Common Shares are reserved for
issuance under the Plan, which will be made available from authorized but
unissued Common Shares or from reacquired Common Shares. If any Common Shares
that are the subject of an award are not issued and cease to be issuable for any
reason, these Common Shares will no longer be charged against the maximum share
limitations and may again be made subject to awards. In addition, the number of
Common Shares exchanged by a participant as payment to the Company of the
exercise price or tax withholding upon exercise of an option will be added to
the share reserve. The maximum number of Common Shares that may be made the
subject of restricted share awards under the Plan is limited to 1,000,000 Common
Shares. In the event of recapitalizations, reclassifications or other specified
events affecting the Company or the Common Shares, appropriate and equitable
adjustments may be made to the number and kind of Common Shares available for
grant, as well as to other maximum limitations, under the Plan, and the number
and kind of Common Shares or other rights and prices under outstanding awards.
Administration. The Plan is administered by the Compensation Committee of
the Board of Directors of the Company. The Compensation Committee shall, to the
extent deemed necessary or advisable by the Board, be constituted so as to
comply with the "non-employee director" requirements of Rule 16b-3 of the
Exchange Act, the "outside director" requirements of Section 162(m) of the
Internal Revenue Code, and the "independent director" requirements of the NYSE
listing standards. Subject to the limitations set forth in the Plan, the
Compensation Committee has the authority to determine the persons to whom awards
are granted, the types of awards to be granted, the time at which awards will be
granted, the number of Common Shares, units or other rights subject to each
award, the exercise, base or purchase price of an award, the time or times at
which the award will become vested, exercisable or payable, the performance
criteria, performance goals and other conditions of an award, and the duration
of the award. The Compensation Committee has the right, from time to time, to
delegate to one or more executive officers of the Company the authority of the
Compensation Committee to grant and determine the terms and conditions of
awards, subject to certain limitations. Pursuant to this right, the Compensation
Committee has delegated the authority to the Chief Executive Officer of the
Company to grant options to employees or prospective employees of the Company
with the rank of Vice President or below in limited amounts.
33
Eligibility. Awards under the Plan may be granted to any employee,
officer, director, agent, consultant or advisor of the Company or any of its
subsidiaries. Recipients of awards will be selected from time to time by the
Compensation Committee in its sole discretion.
Share Options. Share options granted under the Plan may be issued as
either incentive options (within the meaning of Section 422 of the Code), or as
non-qualified options. The exercise price of an option will be determined by the
Compensation Committee, provided that the exercise price per share will not be
less than the fair market value of a Common Share on the date of the grant of
the option. The Compensation Committee will determine the vesting requirements
and the term of exercise of each option, including the effect of termination of
employment or service of a participant. The maximum term of a share option will
be ten years from the date of grant. To exercise an option, the participant must
pay the exercise price, subject to specified conditions, in cash or in Common
Shares that have been held for at least six months, through a broker-assisted
"cashless exercise," by combination of any of the above methods or by such other
method approved by the Compensation Committee, and must pay any required tax
withholding amounts. Under the Code, the maximum value of Common Shares
(determined at the time of grant) that may be subject to incentive options that
become exercisable by an employee in any one year is limited to $100,000. The
maximum number of Common Shares that may be covered under options granted under
the Plan to any individual in any calendar year is 1,000,000 Common Shares.
Share Appreciation Rights. A share appreciation right may be granted
either in tandem with an option or without a related option. A share
appreciation right entitles the participant, upon exercise, to receive a payment
based on the excess of the fair market value of a Common Share on the date of
exercise over the base price of the right (which may not be less than the fair
market value of a Common Share on the date of grant), multiplied by the number
of Common Shares as to which the right is being exercised. The maximum term of a
share appreciation right will be ten years from the date of grant. No more than
1,000,000 Common Shares may be subject to share appreciation rights granted
under the Plan to any one participant during any calendar year. Share
appreciation rights may be payable in cash or in Common Shares or in a
combination of both. Share appreciation rights may also be granted together with
related dividend equivalent rights.
Share Units. An award of share units gives the participant the right to
receive a payment based on the value of a Common Share. Share units may be
subject to vesting requirements, restrictions and conditions to payment as the
Compensation Committee determines are appropriate. Such vesting requirements may
be based on the continued employment of the participant for a specified time
period or on the attainment of specified business performance goals established
by the Compensation Committee. Share units may also be granted on a fully vested
basis, but with a deferred payment date as determined by the Compensation
Committee in its discretion. Share unit awards are payable in cash or in Common
Shares or in a combination of both. Share units may also be granted together
with related dividend equivalent rights. A participant granted an award of share
units will have no rights as a shareholder with respect to Common Shares subject
to the award until such time as Common Shares are delivered to the participant.
Restricted Share Awards. A restricted share award represents Common Shares
that are issued subject to restrictions on transfer and vesting requirements as
determined by the Compensation Committee. Vesting requirements may be based on
the continued employment of the participant for specified time periods and on
the attainment of specified business performance goals established by the
Compensation Committee. Subject to the transfer restrictions and vesting
requirements of the award, the participant will have the rights of a shareholder
of the Company, including all voting and dividend rights, during the restriction
period, unless the Compensation Committee determines otherwise at the time of
the grant.
Change In Control. The Compensation Committee may, in an award agreement,
provide for the effect of a change in control on an award. These provisions may
include the acceleration of vesting of an award, the elimination or modification
of performance or other conditions, the extension of the time for
34
exercise or realizing gain from an award, the acceleration of payment, cash
settlement of an award or other adjustments that the Compensation Committee
considers appropriate.
Term; Amendment and Termination. The term of the Plan is ten years. The
Board may terminate or amend the Plan at any time, subject to shareholder
approval under certain circumstances provided in the Plan. However, no
termination or amendment of the Plan will adversely affect the rights under any
previously granted award.
United Kingdom Sub-Plan. In connection with the 2002 Share Incentive Plan,
the Company has also implemented a United Kingdom ("UK") Sub-Plan that operates
under the general terms of the 2002 Share Incentive Plan. The purpose of the UK
Sub-Plan is to enable tax advantaged share options to purchase Common Shares to
be granted to employees of Platinum UK. The UK Sub-Plan was approved by the UK
Inland Revenue. Under the UK Sub-Plan, both UK employees and Platinum UK can
benefit from favorable tax treatment on grants of share options made pursuant to
the 2002 Share Incentive Plan.
The terms of the UK Sub-Plan essentially mirror the terms of the 2002 Share
Incentive Plan and have been modified only to the extent necessary to satisfy
the applicable UK tax legislation. In general, the substantive modifications
under the UK Sub-Plan are as follows: (i) the UK Sub-Plan does not provide for
the granting of share appreciation rights, restricted stock awards or share unit
awards; (ii) the aggregate fair market value of Common Shares that may be
subject to outstanding share options granted to any eligible individual under
the UK Sub-Plan (measured as at the relevant dates of grant) is limited to
L30,000; (iii) no amendment to the UK Sub-Plan or the rules of the 2002 Share
Incentive Plan which are incorporated within the UK Sub-Plan can take effect
until approval by the UK Inland Revenue is obtained and (iv) share options
granted under the UK Sub-Plan will become fully vested and immediately
exercisable upon a participant's termination of employment as a result of death
or disability.
PLAN BENEFITS
During the fiscal year ended 2003, share options to purchase Common Shares
were granted to the Company's named executive officers, as set forth in the
table captioned "Option Grants During Fiscal 2003" above. Share options were
granted during the year to Mr. Morrison to purchase 400,000 Common Shares at an
exercise price of $26.00 per share. No other named executive officers of the
Company received share options during 2003. In addition, share options were
granted to all other employees of the Company as a group to purchase an
aggregate of 215,000 Common Shares at an average weighted exercise price of
$24.40 per share. The terms and number of options or other awards to be granted
in the future under the Plan are to be determined based upon the discretion of
the Compensation Committee. Since no such determinations have yet been made and
since the actual value of future awards will be based upon the future
performance of the Company, the benefits or amounts that will be received by or
allocated to the Company's executive officers or other eligible employees cannot
be determined at this time.
As of April 1, 2004, the closing price on the NYSE of the Company's Common
Shares was $[ ] per share.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summarizes the United States federal income tax consequences
of awards under the Plan to participants who are subject to United States tax.
The tax consequences of the Plan to the Company and participants in other
jurisdictions is not summarized below.
Share Options. An optionee will not generally recognize taxable income
upon the grant of a nonqualified share option to purchase Common Shares. Upon
exercise of the option, the optionee will generally recognize ordinary income
for federal income tax purposes equal to the excess of the fair market value of
the Common Shares over the exercise price. The tax basis of the Common Shares in
the hands of the optionee will equal the exercise price paid for the Common
Shares plus the amount of ordinary compensation income the optionee recognizes
upon exercise of the option, and the holding period for the Common Shares for
capital gains purposes will commence on the day the option is exercised. An
optionee
35
who sells any of the Common Shares will recognize capital gain or loss measured
by the difference between the tax basis of the Common Shares and the amount
realized on the sale. The Company will be entitled to a federal income tax
deduction equal to the amount of ordinary compensation income recognized by the
optionee. The deduction will be allowed at the same time the optionee recognizes
the income.
An optionee will not generally recognize income upon the grant of an
incentive share option to purchase Common Shares and will not generally
recognize income upon exercise of the option, provided the optionee is an
employee of the Company or a subsidiary at all times from the date of grant
until three months prior to exercise. If an optionee who has exercised an
incentive share option sells the Common Shares acquired upon exercise more than
two years after the grant date and more than one year after exercise, capital
gain or loss will be recognized equal to the difference between the sales price
and the exercise price. An optionee who sells the Common Shares before the
expiration of this holding period within two years will generally recognize
ordinary income upon the sale, and the Company will be entitled to a
corresponding federal income tax deduction at the same time the participant
recognizes ordinary income.
Other Awards. The current United States federal income tax consequences of
other awards authorized under the Plan are generally in accordance with the
following: (i) share appreciation rights are generally subject to ordinary
income tax at the time of exercise; (ii) restricted Common Shares are generally
subject to ordinary income tax at the time the restrictions lapse, unless the
recipient elects to accelerate recognition as of the date of grant; and (iii)
share units are generally subject to ordinary income tax at the time of payment.
In each of the foregoing cases, the Company will generally be entitled to a
corresponding federal income tax deduction at the same time the participant
recognizes ordinary income.
Section 162(m). Compensation of persons who are "covered employees" of the
Company and whose compensation is otherwise deductible in the United States is
subject to the tax deduction limits of Section 162(m) of the Code. Awards that
qualify as "performance-based compensation" are exempt from Section 162(m), thus
allowing the Company the full federal tax deduction otherwise permitted for such
compensation. If approved by the Company's shareholders, the Plan will enable
the Compensation Committee to grant share options and share appreciation rights
that will be exempt from the deduction limits of Section 162(m). Share units and
restricted shares may be exempt under Section 162(m) when issued in combination
with the Company's Section 162(m) Performance Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
2002 SHARE INCENTIVE PLAN.
PROPOSAL 6 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee, the Board of Directors has
selected KPMG LLP, independent certified public accountants, to serve as the
Company's independent auditors and KPMG (Bermuda), independent certified public
accountants, to serve as Platinum Bermuda's independent auditors for the 2004
fiscal year. KPMG LLP and KPMG (Bermuda) are referred to collectively in this
proposal as "KPMG." A proposal will be submitted to shareholders at the Annual
Meeting for ratification of such selection as required by Bermuda law. A
representative of KPMG is expected to attend the Annual Meeting and will have an
opportunity to make a statement and respond to questions.
36
The following table summarizes the aggregate fees billed by KPMG for
services rendered for the years ended December 31, 2003 and December 31, 2002:
2003 2002
---------- --------
Audit fees(1)............................................... $ 923,890 $589,315
Audit-related fees(2)....................................... 7,089 58,500
Tax fees(3)................................................. 151,652 30,000
All other fees(4)........................................... 48,709 0
---------- --------
Total....................................................... $1,131,340 $677,815
---------------
(1) The amount shown for "Audit fees" for 2003 represents fees for professional
services rendered by KPMG for (a) the audit of the Company's annual
financial statements for 2003, (b) the review of the Company's financial
statements included in its Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2003, June 30, 2003 and September 30, 2003, (c) statutory
audits for the Company's insurance subsidiaries and (d) assistance with the
review of documents filed with the SEC. The amount shown for "Audit fees"
for 2002 represents fees for professional services rendered by KPMG for (a)
the audit of the Company's annual financial statements for 2002, (b) the
review of the Company's financial statements included in its Quarterly
Report on Form 10-Q for the period ended September 30, 2002, (c) statutory
audits for the Company's insurance subsidiaries and (d) assistance with the
review of documents filed with the SEC (including comfort letters and
consents).
(2) The amount shown for "Audit-related fees" for 2003 represents audit-related
fees for assistance with United Kingdom statutory accounting matters. The
amount shown for "Audit-related fees" for 2002 represents audit-related fees
for professional services rendered by KPMG for services in connection with
the Public Offering.
(3) The amount shown for "Tax fees" for 2003 represents fees for tax compliance
matters in the United States and the United Kingdom. The amount shown for
"Tax fees" for 2002 primarily represents fees for tax advice regarding the
formation of the Company.
(4) The amount shown for "All other fees" for 2003 represents fees for
administrative services relating to obtaining work permits and due diligence
and accounting consultation provided by KPMG Bermuda in connection with a
strategic investment. KPMG did not perform any other services during the
Company's 2002 fiscal year.
The Audit Committee is primarily responsible for managing the Company's
relationship with its independent auditors. Subject to ratification by the
shareholders of the Company as required by Bermuda law, the Audit Committee has
the sole authority to approve the engagement, determine the compensation and
oversee the performance of the Company's independent auditors. The Audit
Committee has considered whether the provision of non-audit services is
compatible with maintaining the independence of KPMG. It is the Company's policy
that all audit services and all permitted non-audit services to be provided to
the Company by the independent auditors are approved in advance by the Audit
Committee (or by one or more of its members if duly authorized by the Audit
Committee). The Audit Committee pre-approved all audit, tax and other services
provided by KPMG in 2003.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
SELECTION OF INDEPENDENT AUDITORS.
ADDITIONAL INFORMATION
OTHER ACTION AT THE ANNUAL MEETING
As of the date of this statement, the Board of Directors knows of no
business that will be presented for consideration at the Annual Meeting other
than that referred to above. As to other business, if any,
37
that may come before the Annual Meeting, proxies in the enclosed form will be
voted in accordance with the discretion of the person or persons voting the
proxies.
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL GENERAL MEETING OF SHAREHOLDERS
In accordance with Rule 14a-8 of the Exchange Act, any shareholder who
wishes to present a proposal at the 2005 Annual General Meeting of Shareholders
and to include the proposal in next year's proxy statement must deliver the
proposal to the Company's principal executive offices no later than the close of
business on December 5, 2004. Proposals should be addressed to the Secretary,
Platinum Underwriters Holdings, Ltd., The Belvedere Building, 69 Pitts Bay Road,
Pembroke HM 08 Bermuda.
Pursuant to Rule 14a-4(c)(1) of the Exchange Act, if a shareholder who
intends to present a proposal at the 2005 Annual General Meeting of Shareholders
does not notify the Company of such a proposal on or before February 20, 2005,
then proxies received by the Company for that meeting will be voted by the
persons named as such proxies in their discretion with respect to such
proposals. Notices of such proposals are to be sent to the above address.
By order of the Board of Directors,
Michael E. Lombardozzi
Executive Vice President, General
Counsel
and Secretary
Pembroke, Bermuda
April [ ], 2004
38
ANNEX A
AS ADOPTED ON
MARCH 12, 2004
CHARTER
OF THE
AUDIT COMMITTEE
OF THE
BOARD OF DIRECTORS
OF
PLATINUM UNDERWRITERS HOLDINGS, LTD.
I. PURPOSE
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") of Platinum Underwriters Holdings, Ltd. (the "Company") shall assist
the Board in its oversight of the integrity of the Company's financial
statements, the Company's compliance with legal and regulatory requirements, the
performance, qualifications and independence of the Company's independent
auditors, and the performance of the Company's internal audit function. The
Committee shall also prepare a report as required by the Securities and Exchange
Commission (the "SEC") to be included in the Company's annual proxy statement.
II. ORGANIZATION
A. The Committee shall be composed of three or more directors appointed by
the Board. The Board must determine that each member of the Committee satisfies
the requirements governing independence of audit committee members established
by the New York Stock Exchange and the SEC (including those issued pursuant to
Rule 10A-3 of the Securities Exchange Act of 1934), and the requirements of all
other applicable laws and regulations as they exist from time to time. The Board
shall designate one of the members as Chairman.
B. Each member of the Committee shall be financially literate, and at
least one member shall have accounting or related financial management
expertise, as such qualifications are determined by the Board in its business
judgment.
C. No Committee member shall serve on the audit committees of more than
two other public companies at the same time as he or she serves on the
Committee, unless the Board specifically determines that it would not impair the
ability of the Committee member to serve effectively on the Committee.
D. Each Committee member shall serve until a successor to such member is
duly elected and qualified or until such member's resignation or removal from
the Board or the Committee. The Board may, pursuant to the Company's Bye-laws,
remove a member of the Committee, or replace the Chairman, provided that the
Board must, at all times, assure that the Committee will have a Chairman and
sufficient members to satisfy the requirements set forth above relating to the
number and qualifications of Committee members.
E. The Committee shall have the authority to delegate its responsibilities
to a subcommittee of its members.
F. The Chairman of the Committee or any two members of the Committee may,
and the Secretary on the requisition of the Chairman or any two members shall,
at any time summon a meeting of the Committee by giving at least two (2)
business days' notice to each member of the Committee, unless such member
consents to shorter notice.
G. Notice of a meeting of the Committee need not specify the nature of the
business to be considered at such meeting and shall be deemed to be duly given
to a member of the Committee if it is
A-1
given to such member in person or otherwise communicated or sent to such member
by registered mail, courier service, telecopier, facsimile, e-mail or other mode
of representing words in a legible and non-transitory form at such member's last
known address or any other address given by such member to the Company for this
purpose. If such notice is sent by next-day courier service, telecopier,
facsimile or e-mail, it shall be deemed to have been given the business day
following the sending thereof and, if by registered mail, five (5) business days
following the sending thereof.
H. Meetings of the Committee may be held within or outside of Bermuda,
except not in the United States or the United Kingdom.
I. The quorum necessary for the transaction of business at a meeting of
the Committee shall be a majority of the members of the Committee then in
office, present in person or represented.
J. Members of the Committee may participate in any meeting of the
Committee by means of such telephone, electronic or other communication
facilities from anywhere in the world except the United States and the United
Kingdom as permit all persons participating in the meeting to communicate with
each other simultaneously and instantaneously, and participation in such a
meeting shall constitute presence in person at such meeting.
K. Each member of the Committee shall have one (1) vote.
L. A resolution put to a vote at a duly constituted meeting of the
Committee at which a quorum is present and acting throughout shall be carried by
the affirmative votes of a majority of the votes cast and in the case of an
equality of votes, the resolution shall fail.
M. A resolution in writing signed by all of the members of the Committee,
which may be in counterparts, shall be as valid as if it had been passed at a
meeting of the Committee duly called and constituted, such resolution to be
effective on the date on which the last member signs and delivers such
resolution to the Company at its address, provided that none of the members
signs in the United States or the United Kingdom.
III. RESPONSIBILITY AND AUTHORITY
A. The Committee shall be directly responsible for the appointment
(subject to ratification by the shareholders of the Company as required by
Bermuda law), compensation, retention, termination, evaluation and oversight of
the work of the independent auditors (including resolution of disagreements
between management and the independent auditors regarding financial reporting)
for the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the Company. The independent auditors must
report directly to the Committee. The Committee shall approve (or delegate to
one of its members the authority to approve) in advance all audit services
(which shall include a review of the audit plan) and all permitted non-audit
services to be provided to the Company by the independent auditors. The
independent auditors shall not provide any non-audit services to the Company
that are prohibited under Section 10A(g) of the Securities Exchange Act of 1934,
including bookkeeping or other services related to accounting records or
financial statements; financial information systems design and implementation;
appraisal or valuation services; fairness opinions; actuarial services; internal
audit outsourcing services; management functions or human resources; broker or
dealer, investment adviser or investment banking services; and legal services
and expert services unrelated to the audit.
B. The Committee shall annually request from the independent auditors a
formal written statement delineating all relationships between the independent
auditors and the Company consistent with Independence Standards Board Standard
No. 1 and such other requirements as may be established from time to time,
discuss with the independent auditors any such relationships and their impact on
the independent auditors' independence, and take appropriate action regarding
the independence of the independent auditors, including monitoring the rotation
of the lead audit partner and review partner of the independent auditors and
establishing a policy for hiring employees and former employees of the
independent auditors. This policy shall provide that no former employee of the
independent auditors may become the chief executive officer, controller, chief
financial officer or chief accounting officer (or serve in
A-2
a similar capacity) for the Company if such person participated in any capacity
in the audit of the Company within the one-year period preceding the date of
initiation of the audit.
C. The Committee shall, at least annually, obtain and review a report by
the independent auditors describing: the independent auditors' internal
quality-control procedures; any material issues raised by the most recent
internal quality-control review, or peer review, of the independent auditors, or
by any inquiry or investigation by governmental or professional authorities
within the preceding five years respecting one or more independent audits
carried out by the independent auditors; any steps taken to deal with any such
issues; and (to assess the independent auditor's independence) all relationships
between the independent auditors and the Company. After reviewing such report,
the Committee shall evaluate the qualifications, performance and independence of
the independent auditors and the lead partner of such independent auditors,
taking into account the opinions of management and internal auditors and
considering whether there should be a regular rotation of the independent
auditors. The Committee shall present its conclusions with respect to the
independent auditors to the Board.
D. The Committee shall annually request from the independent auditors a
report regarding, and shall periodically discuss with management and the
independent auditors, the quality and adequacy of the Company's internal audit
function, internal controls and internal auditing procedures, including (i) any
significant deficiencies in the design or operation of those controls which
could adversely affect the Company's ability to record, process, summarize and
report financial data and any material weaknesses in internal controls, and (ii)
any fraud, whether or not material, that involves management or other employees
who have a significant role in the Company's internal controls, and shall
discuss with the independent auditors how the Company's financial systems and
controls compare with industry practices.
E. The Committee shall periodically review with management and the
independent auditors the quality, as well as the acceptability, of the Company's
accounting policies, including the Company's critical accounting policies and
practices and the estimates and assumptions used by management in the
preparation of the Company's financial statements, and shall discuss with the
independent auditors how the Company's accounting policies compare with those in
the industry and alternative treatments of financial information within
generally accepted accounting principles that have been discussed with
management, the ramifications of use of such alternative treatments and the
treatment preferred by the independent auditors. The Committee shall review with
the independent auditors any audit problems or difficulties and management's
response.
F. The Committee shall oversee the compensation, activities, termination,
evaluation and performance of the internal audit function. The internal audit
function shall report directly to the Committee.
G. The Committee shall meet at least annually in separate executive
sessions with representatives of management, the internal audit function and the
independent auditors to discuss any matters that the Committee or any of these
groups believe should be discussed privately. The Committee may meet in its
discretion without representatives of management, the internal audit function or
the independent auditors.
H. The Committee shall review with the independent auditors all material
communications between the independent auditors and management, such as any
management letters or schedules of unadjusted differences, and shall
periodically discuss with the independent auditors whether all material
correcting adjustments identified by the independent auditors in accordance with
generally accepted accounting principles and the rules of the Securities and
Exchange Commission are reflected in the Company's financial statements.
I. The Committee shall review with management and the independent auditors
any material financial or other arrangements of the Company which do not appear
on the Company's financial statements and any transactions or courses of dealing
with third parties that are significant in size or involve terms or other
aspects that differ from those that would likely be negotiated with independent
parties, and which arrangements or transactions are relevant to an understanding
of the Company's financial statements.
A-3
J. The Committee shall discuss with management the Company's guidelines
and policies with respect to corporate risk assessment and corporate risk
management, including discussion of the Company's major financial risk exposures
and the steps management has taken to monitor and control such exposures.
K. The Committee shall review with the Board any issues that arise with
respect to the quality or integrity of the Company's financial statements, the
Company's compliance with legal or regulatory requirements, the performance and
independence of the Company's independent auditors or the performance of the
internal audit function.
L. The Committee shall review with management and the independent auditors
the audited financial statements to be included in the Company's Annual Report
on Form 10-K and the Annual Report to Shareholders, including management's
discussion and analysis of financial condition and results of operations, and
shall review and discuss with the independent auditors the matters required to
be discussed by Statement on Auditing Standards No. 61, "Communication With
Audit Committees," as amended by Statement on Auditing Standards No. 90, "Audit
Committee Communications" ("SAS No. 61").
M. The Committee shall recommend to the Board whether, based on the
reviews and discussions referred to above, the audited financial statements
should be included in the Company's Annual Report on Form 10-K and the Annual
Report to Shareholders.
N. The Committee shall review with management and the independent auditors
the interim financial statements to be included in the Company's Quarterly
Reports on Form 10-Q, including management's discussion and analysis of
financial condition and results of operations.
O. The Committee (or Committee Chairman) shall discuss with management
each of the Company's earnings press releases and earnings guidance provided to
analysts and rating agencies. Such discussion may be done generally, consisting
of discussing the types of information to be disclosed and the types of
presentations to be made.
P. The Committee shall prepare an annual report as required by the SEC for
inclusion in the Company's proxy statement.
Q. The Committee shall approve a code of ethics, as required by rules of
the Securities and Exchange Commission, for senior financial officers and such
other employees and agents of the Company as it determines.
R. The Committee shall establish procedures for (i) the receipt, retention
and treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and (ii) the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters.
S. The Committee may (in its discretion) and shall (if so directed by the
Board) review such other aspects of the affairs of the Company and its
subsidiaries as it or the Board deems appropriate, and may make reports and
recommendations to the Board with respect thereto.
T. The Committee shall report to the Board on a regular basis.
U. The Committee shall have the right as it deems appropriate to retain
its own legal and other advisers to assist in the discharge of its duties. The
Committee shall have sole authority to retain, evaluate and replace such
advisers, including sole authority to approve fees and other retention terms.
V. The Committee shall annually review and evaluate its performance and
assess the adequacy of this Charter, and shall report the results thereof to the
Board.
W. The Committee shall cause minutes to be made of all meetings and of the
attendance thereat and shall cause such minutes and resolutions adopted by
unanimous written consent to be included in the Company's minute book.
A-4
IV. LIMITS ON RESPONSIBILITY
As the role of the Board and the Committee is one of oversight, it is
recognized that the Company's management is responsible for preparing the
Company's financial statements and the Company's independent auditors are
responsible for auditing those financial statements. While the Committee has the
responsibilities and powers set forth in this Charter, it is not the duty of the
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. These are responsibilities of the Company's
management and independent auditors.
A-5
ANNEX B
PLATINUM UNDERWRITERS HOLDINGS, LTD.
2002 SHARE INCENTIVE PLAN
1. PURPOSE OF THE PLAN
The purpose of this Platinum 2002 Share Incentive Plan is to advance the
interests of the Company and its shareholders by attracting, retaining and
motivating key personnel upon whose judgment, initiative and effort the
successful conduct of the Company's operations is largely dependent. The Plan is
also intended to further align the interests of employees, officers and
directors with those of the shareholders by promoting the ownership of Common
Shares by these individuals. The Plan, as amended and restated herein, shall
become effective following the approval of the Company's shareholders at its
2004 annual meeting of shareholders.
2. DEFINITIONS
Wherever the following capitalized terms are used in this Plan, they shall
have the meanings specified below:
(a) "Award" means an award of an Option, Share Appreciation Right,
Restricted Share Award or Share Unit Award granted under the Plan.
(b) "Award Agreement" means an agreement entered into between the
Company and a Participant setting forth the terms and conditions of an
Award granted to a Participant.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" shall have the meaning specified in Section 10
hereof.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the Compensation Committee of the Board or any
other committee of the Board appointed by the Board to administer the Plan
from time to time.
(g) "Common Shares" means the common shares of the Company, par value
$0.01 per share.
(h) "Company" means Platinum Underwriters Holdings, Ltd., a Bermuda
corporation.
(i) "Date of Grant" means the date on which an Award under the Plan is
made by the Committee, or such later date as the Committee may specify to
be the effective date of the Award.
(j) "Dividend Equivalent Right" means the right of a Participant to
receive cash payments or Common Shares, as determined by the Committee,
with respect to dividends declared on a specified number of Common Shares
during the term of a Share Appreciation Right or a Share Unit Award.
(k) "Effective Date" means the Effective Date of this Plan, as
described in Section 0 hereof.
(l) "Eligible Person" means any person who is an employee, officer,
director, agent, consultant or advisor of the Company or any Subsidiary, as
determined by the Committee, or any person who is determined by the
Committee to be a prospective employee, officer, director, insurance agent,
consultant or advisor of the Company or any Subsidiary.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Fair Market Value" of Common Shares as of a given date means the
closing sales price of Common Shares on the New York Stock Exchange or
other exchange or securities market as reflected on the composite index on
the trading day immediately preceding the date as of which Fair Market
Value is to be determined, or in the absence of any reported sales of
Common Shares on such date, on the first preceding date on which any such
sale shall have been reported. If the Common
B-1
Shares are not listed on the New York Stock Exchange or other exchange or
securities market on the date as of which Fair Market Value is to be
determined, the Board shall determine in good faith the Fair Market Value
in whatever manner it considers appropriate.
(o) "Incentive Option" means an Award under Section 0 hereof to
purchase Common Shares that is intended to qualify as an "incentive stock
option" under Section 422 of the Code and the Treasury Regulations
thereunder.
(p) "Nonqualified Option" means an Award under Section 0 hereof to
purchase Common Shares that is not an Incentive Option.
(q) "Option" means an Incentive Option or a Nonqualified Option
granted under Section 0 hereof.
(r) "Participant" means any Eligible Person who holds an outstanding
Award under the Plan.
(s) "Plan" means this Platinum Underwriters Holdings, Ltd. 2002 Share
Incentive Plan as set forth herein, as amended and restated herein, and as
it may be amended from time to time.
(t) "Restricted Share Award" means an Award under Section 0 hereof
entitling a Participant to Common Shares that are nontransferable and
subject to forfeiture until specific conditions established by the
Committee are satisfied.
(u) "Share Appreciation Right" or "SAR" means an Award under Section 0
hereof entitling a Participant to receive an amount, representing the
difference between the base price per share of the right and the Fair
Market Value of a Common Share on the date of exercise.
(v) "Share Unit Award" means an Award under Section 0 hereof entitling
a Participant to a payment at the end of a vesting period of a unit value
based on the Fair Market Value of a Common Share.
(w) "Subsidiary" means an entity (whether or not a corporation) that
is wholly or majority owned or controlled, directly or indirectly, by the
Company, or any other affiliate of the Company that is so designated, from
time to time, by the Committee; provided, however, that with respect to
Incentive Options, the term "Subsidiary" shall include only an entity that
qualifies under Section 424(f) of the Code as a "subsidiary corporation"
with respect to the Company.
3. COMMON SHARES SUBJECT TO THE PLAN
3.1 Number of Shares. Subject to the following provisions of this Section
0, the aggregate number of Common Shares that may be issued pursuant to all
Awards under the Plan is 6,000,000 Common Shares. The Common Shares to be
delivered under the Plan will be made available from authorized but unissued
Common Shares or from reacquired shares. To the extent that any Award payable in
Common Shares is forfeited, cancelled, returned to the Company for failure to
satisfy vesting requirements or upon the occurrence of other forfeiture events,
or otherwise terminates without payment being made thereunder, the Common Shares
covered thereby will no longer be charged against the foregoing maximum share
limitations and may again be made subject to Awards under the Plan pursuant to
such limitations. In addition, any Common Shares exchanged by an Optionee as
full or partial payment to the Company of the exercise price or tax withholding
upon exercise of an Option shall be added to the number of Common Shares
available for issuance under the Plan from time to time. The number of Common
Shares that may be issued and sold under Incentive Options shall be limited to
6,000,000 shares, without giving effect to the immediately preceding sentence.
3.2 Adjustments. If there shall occur any recapitalization,
reclassification, share dividend, share split, reverse share split, or other
distribution with respect to the Common Shares, or other change in corporate
structure affecting the Common Shares, the Committee may, in the manner and to
the extent that it deems appropriate and equitable to the Participants and
consistent with the terms of this Plan, cause an adjustment to be made in (i)
the maximum number and kind of shares provided in Section 0
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hereof, (ii) the maximum number and kind of shares set forth in Sections 0, 0
and 0 hereof, (iii) the number and kind of shares of Common Shares, share units,
or other rights subject to then outstanding Awards, (iv) the price for each
share or unit or other right subject to then outstanding Awards, or (v) any
other terms of an Award that are affected by the event. Notwithstanding the
foregoing, in the case of Incentive Options, any such adjustments shall be made
in a manner consistent with the requirements of Section 424(a) of the Code. In
the event of any merger, consolidation, reorganization, amalgamation or similar
corporate event in which Common Shares are to be exchanged for payment of cash
(the "Cash Consideration"), the Committee may, in its discretion, (i) make
equitable adjustments as provided above, or (ii) cancel any outstanding Award in
exchange for payment in cash, if any, equal to the excess of the Cash
Consideration for the shares underlying such Award over the exercise, base or
purchase price for such shares.
4. ADMINISTRATION OF THE PLAN
4.1 Committee Members. The Plan shall be administered by a Committee
comprised of no fewer than two members of the Board. Solely to the extent deemed
necessary or advisable by the Board, each Committee member shall satisfy the
requirements for (i) an "independent director" under rules adopted by the New
York Stock Exchange, (ii) a "nonemployee director" for purposes of such Rule
16b-3 under the Exchange Act, and (iii) an "outside director" under Section
162(m) of the Code. The Board shall also have the authority to exercise the
powers and duties of the Committee under the Plan. The Committee shall have such
powers and authority as may be necessary or appropriate for the Committee to
carry out its functions as described in the Plan. No member of the Committee
shall be liable for any action or determination made in good faith by the
Committee with respect to the Plan or any Award thereunder.
4.2 Discretionary Authority. Subject to the express limitations of the
Plan, the Committee shall have authority in its discretion to determine the
Eligible Persons to whom, and the time or times at which, Awards may be granted,
the number of shares, units or other rights subject to each Award, the exercise,
base or purchase price of an Award (if any), the time or times at which an Award
will become vested, exercisable or payable, the performance criteria,
performance goals and other conditions of an Award, the duration of the Award,
and all other terms of the Award. The Committee shall also have discretionary
authority to interpret the Plan, to make all factual determinations under the
Plan, and to make all other determinations necessary or advisable for Plan
administration. The Committee may prescribe, amend, and rescind rules and
regulations relating to the Plan. All interpretations, determinations, and
actions by the Committee shall be final, conclusive, and binding upon all
parties.
4.3 Delegation of Authority. The Committee shall have the right, from
time to time, to delegate to one or more officers of the Company the authority
of the Committee to grant and determine the terms and conditions of Awards
awarded under the Plan, subject to such limitations as the Committee shall
determine; provided, however, that no such authority may be delegated with
respect to Awards awarded to any member of the Board or any Participant who the
Committee determines may be covered by Rule 16b under the Exchange Act or
Section 162(m) of the Code.
4.4 Grants to Nonemployee Directors. Awards to nonemployee directors
under the Plan shall be approved by the Board. With respect to awards to such
directors, all rights, powers and authorities vested in the Committee under the
Plan shall instead be exercised by the Board, and all provisions of the Plan
relating to the Committee shall be interpreted in a manner consistent with the
foregoing by treating any such reference as a reference to the Board for such
purpose.
5. ELIGIBILITY AND AWARDS
All Eligible Persons are eligible to be designated by the Committee to
receive an Award under the Plan. The Committee has authority, in its sole
discretion, to determine and designate from time to time those Eligible Persons
who are to be granted Awards, the types of Awards to be granted and the number
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of shares or units subject to the Awards that are granted under the Plan. Each
Award will be evidenced by an Award Agreement as described in Section 0 hereof.
6. SHARE OPTIONS
6.1 Grant of Option. An Option may be granted to any Eligible Person
selected by the Committee. Subject to the applicable provisions of Section 422
of the Code, each Option shall be designated, in the discretion of the
Committee, as an Incentive Option or a Nonqualified Option. The maximum number
of Common Shares that may be granted under Options to any Participant during any
calendar year shall be limited to 1,000,000 shares (subject to adjustment as
provided in Section 0 hereof).
6.2 Exercise Price. The exercise price under any Option shall be
determined by the Committee; provided, however, that the exercise price per
share under an Option shall not be less than 100 percent of the Fair Market
Value per share of the Common Shares on the Date of Grant.
6.3 Vesting; Term of Option. The Committee, in its sole discretion, shall
prescribe the time or times at which, or the conditions upon which, an Option or
portion thereof shall become vested and exercisable, and may accelerate the
exercisability of any Option at any time. The period during which a vested
Option may be exercised shall be ten years from the Date of Grant, unless a
shorter exercise period is specified by the Committee in an Award, subject to
such limitations as may apply under an Award relating to the termination of a
Participant's employment or other service with the Company or any Subsidiary or
any other cancellation of an Option in accordance with this Plan or an Award
Agreement.
6.4 Option Exercise; Withholding. Subject to such terms and conditions as
shall be specified in an Award, an Option may be exercised in whole or in part
at any time during the term thereof by written notice to the Company, together
with payment of the aggregate exercise price therefor. Payment of the exercise
price shall be made, at the discretion of the Committee as specified in the
Award Agreement, by (i) payment in cash or cash equivalent acceptable to the
Committee, (ii) payment in Common Shares that have been held by the Participant
for at least six months (or such other period as the Committee may deem
appropriate for purposes of applicable accounting rules), valued at the Fair
Market Value of such shares on the date of exercise, (iii) a broker-assisted
"cashless exercise," (iv) a combination of the methods described above, or (v)
such other method as may be approved by the Committee and set forth in the Award
Agreement. In addition to and at the time of payment of the exercise price, the
Participant shall pay to the Company the full amount of any and all applicable
income tax and employment tax amounts required to be withheld in connection with
such exercise, payable under such of the methods described above for the payment
of the exercise price of the Options as may be approved by the Committee.
6.5 Limited Transferability of Nonqualified Options. All Options shall be
nontransferable except (i) upon the Participant's death, by the Participant's
will or the laws of descent and distribution or (ii) in the case Nonqualified
Options only, on a case-by-case basis as may be approved by the Committee in its
discretion, in accordance with the terms provided below. An award for a
Nonqualified Option may provide that the Participant shall be permitted to,
during his or her lifetime and subject to the prior approval of the Committee at
the time of proposed transfer, transfer all or part of the Option to the
Participant's family member (as defined in the Award Agreement in a manner
consistent with the requirements for the Form S-8 registration statement, if
applicable). The transfer of a Nonqualified Option may be subject to such other
terms and conditions as the Committee may in its discretion impose from time to
time. Subsequent transfers of an Option shall be prohibited other than by will
or the laws of descent and distribution upon the death of the transferee.
6.6 Additional Rules for Incentive Options.
(a) Eligibility. An Incentive Option may only be granted to an Eligible
Person who is considered an employee of the Company or any Subsidiary for
purposes of Treasury Regulations sec.1.421-7(h).
(b) Annual Limits. No Incentive Option shall be granted to a Participant
as a result of which the aggregate Fair Market Value (determined as of the Date
of Grant) of the share with respect to which
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Incentive Options are exercisable for the first time in any calendar year under
the Plan and any other share option plans of the Company, any Subsidiary, or any
parent Company, would exceed $100,000, determined in accordance with Section
422(d) of the Code. This limitation shall be applied by taking Options into
account in the order in which granted.
(c) Termination of Employment. An Award of an Incentive Option may provide
that such Option may be exercised not later than 3 months following termination
of employment of the Participant with the Company and all Subsidiaries, or not
later than one year following death and disability, as and to the extent
determined by the Committee to be consistent with the requirements of Section
422 of the Code and Treasury Regulations thereunder.
(d) Other Terms and Conditions; Nontransferability. Any Incentive Option
granted hereunder shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as are deemed necessary or desirable
by the Committee, which terms, together with the terms of this Plan, shall be
intended and interpreted to cause such Incentive Option to qualify as an
incentive stock option under Section 422 of the Code. Such terms shall include,
if applicable, limitations on Incentive Options granted to ten-percent owners of
the Company. An Award Agreement for an Incentive Option may provide that such
Option shall be treated as a Nonqualified Option to the extent that certain
requirements applicable to incentive options under the Code shall not be
satisfied. An Incentive Option shall by its terms be nontransferable otherwise
than by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of a Participant only by such Participant.
(e) Disqualifying Dispositions. If Common Shares acquired by exercise of
an Incentive Option are disposed of within two years following the Date of Grant
or one year following the issuance of such shares to the Participant upon
exercise, the Participant shall, promptly following such disposition, notify the
Company in writing of the date and terms of such disposition and provide such
other information regarding the disposition as the Committee may reasonably
require.
7. SHARE APPRECIATION RIGHTS
7.1 Grant of SARs. A Share Appreciation Right granted to a Participant is
an Award in the form of a right to receive, upon surrender of the right but
without other payment, an amount based on appreciation in the Fair Market Value
of Common Shares over a base price established for the Award, exercisable at
such time or times and upon conditions as may be approved by the Committee. The
maximum number of shares of Common Shares that may be subject to SARs granted to
any Participant during any calendar year shall be limited to 1,000,000 shares
(subject to adjustment as provided in Section 0 hereof). An SAR may be granted,
at the discretion of the Committee, together with a Dividend Equivalent Right
with respect to the same number of Common Shares.
7.2 Freestanding SARs. A Share Appreciation Right may be granted without
any related Option, and in such case, will be exercisable as determined by the
Committee, but in no event after 10 years from the Date of Grant. The base price
of an SAR granted without any related Option shall be determined by the
Committee in its sole discretion; provided, however, that the base price per
share of any such freestanding SAR shall not be less than 100 percent of the
Fair Market Value of the Common Shares on the Date of Grant.
7.3 Tandem SARs. A Share Appreciation Right may be granted in connection
with an Option, either at the time of grant or at any time thereafter during the
term of the Option. An SAR granted in connection with an Option will entitle the
holder, upon exercise, to surrender such Option or any portion thereof to the
extent unexercised, with respect to the number of shares as to which such SAR is
exercised, and to receive payment of an amount computed as described in Section
0 hereof. Such Option will, to the extent and when surrendered, cease to be
exercisable. An SAR granted in connection with an Option hereunder will have a
base price per share equal to the per share exercise price of the Option, will
be exercisable at such time or times, and only to the extent, that a related
Option is exercisable, and will expire no later than the related Option expires.
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7.4 Payment of SARs. An SAR will entitle the holder, upon exercise of the
SAR, to receive payment of an amount determined by multiplying: (i) the excess
of the Fair Market Value of a the Common Shares on the date of exercise of the
SAR over the base price of such SAR, by (ii) the number of shares as to which
such SAR is exercised. Payment of the amount determined under the foregoing may
be made, in the discretion of the Committee, in cash, in Common Shares valued at
their Fair Market Value on the date of exercise, or in a combination of cash and
Common Shares.
8. RESTRICTED SHARE AWARDS
8.1 Grant of Restricted Share Awards. A Restricted Share Award to a
Participant represents Common Shares that are issued subject to such
restrictions on transfer and other incidents of ownership and such forfeiture
conditions as the Committee may determine. The Committee may, in connection with
any Restricted Share Award, require the payment of a specified purchase price.
The maximum number of Common Shares that may be subject to Restricted Share
Awards granted to all Participants during the term of the Plan shall be limited
to 1,000,000 shares (subject to adjustment as provided in Section 0 hereof).
8.2 Vesting Requirements. The restrictions imposed on shares granted
under a Restricted Share Award shall lapse in accordance with the vesting
requirements specified by the Committee in the Award Agreement. Such vesting
requirements may be based on the continued employment of the Participant with
the Company or its Subsidiaries for a specified time period or periods, and may
also be based on the attainment of specified business goals or measures
established by the Committee in its sole discretion.
8.3 Restrictions. Shares granted under any Restricted Share Award may not
be transferred, assigned or subject to any encumbrance, pledge, or charge until
all applicable restrictions are removed or have expired, unless otherwise
allowed by the Committee. The Committee may require the Participant to enter
into an escrow agreement providing that the certificates representing the shares
granted or sold under a Restricted Share Award will remain in the physical
custody of an escrow holder until all restrictions are removed or have expired.
Failure to satisfy any applicable restrictions shall result in the subject
shares of the Restricted Share Award being forfeited and returned to the
Company, with any purchase price paid by the Participant to be refunded, unless
otherwise provided by the Committee. The Committee may require that certificates
representing the shares granted under a Restricted Share Award bear a legend
making appropriate reference to the restrictions imposed.
8.4 Rights as Shareholder. Subject to the foregoing provisions of this
Section 0 and the applicable Award Agreement, the Participant will have all
rights of a shareholder with respect to the shares granted to him under a
Restricted Share Award, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto, unless the
Committee determines otherwise at the time the Restricted Share Award is
granted.
8.5 Section 83(b) Election. The Committee may provide in an Award
Agreement that the Restricted Share Award is conditioned upon the Participant's
refraining from making an election with respect to the Award under Section 83(b)
of the Code. Irrespective of whether an Award is so conditioned, if a
Participant makes an election pursuant to Section 83(b) of the Code with respect
to a Restricted Share Award, the Participant shall be required to promptly file
a copy of such election with the Company.
9. SHARE UNIT AWARDS
9.1 Grant of Share Unit Awards. A Share Unit Award is an Award to a
Participant of a number of hypothetical share units with respect to Common
Shares, with an initial value based on the Fair Market Value of the Common
Shares on the Date of Grant. A Share Unit Award shall be subject to such
restrictions and conditions as the Committee shall determine. A Share Unit Award
may be granted, at the discretion of the Committee, together with a Dividend
Equivalent Right with respect to the same number of Common Shares.
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9.2 Vesting of Share Unit Awards. The Committee may determine and provide
in the Award Agreement any installment or other vesting period of a Share Unit
Award. Vesting requirements may be based on the continued employment of the
Participant with the Company or its Subsidiaries for a specified time period or
periods. Vesting requirements may also be based on the attainment of specified
business goals or measures established by the Committee in its sole discretion.
Share Units may also be granted on a fully vested basis, with a deferred payment
date.
9.3 Payment of Share Unit Awards. A Share Unit Award shall become payable
to a Participant at the time or times determined by the Committee and set forth
in the Award Agreement, which may be upon or following the vesting of an Award.
The payment with respect to each share unit under a Share Unit Award shall be
determined by reference to the Fair Market Value of one Common Share on each
applicable payment date. Payment may be made, at the discretion of the
Committee, in cash or in Common Shares, or in a combination thereof, subject to
applicable tax withholding.
9.4 No Rights as Stockholder. The Participant shall not have any rights
as a shareholder with respect to the Common Shares subject to a Share Unit Award
until such time as any Common Shares are delivered to the Participant pursuant
to the terms of the Award.
10. CHANGE IN CONTROL
10.1 Effect of Change in Control. The Committee may, in an Award
Agreement, provide for the effect of a "Change in Control" of the Company (as
defined below) on an Award. Such provisions may include any one or more of the
following: (i) the acceleration or extension of time periods for purposes of
exercising, vesting in, or realizing gain from any Award, (ii) the elimination
or modification of performance or other conditions related to the payment or
other rights under an Award, (iii) provision for the cash settlement of an Award
for an equivalent cash value, as determined by the Committee, or (iv) such other
modification or adjustment to an Award as the Committee deems appropriate to
maintain and protect the rights and interests of Participants upon or following
a Change in Control. Unless otherwise provided by the Committee and set forth in
the Award Agreement, upon a Change in Control, (i) each outstanding Option and
Share Appreciation Right, to the extent that it shall not otherwise have become
vested and exercisable, shall automatically become fully and immediately vested
and exercisable, without regard to any otherwise applicable vesting requirement,
(ii) any restricted period in effect shall automatically terminate as to all
Common Shares awarded pursuant to a Restricted Share Award, and (iii) each
outstanding Share Unit Award shall become immediately and fully vested and
payable.
10.2 Definition of Change in Control. For purposes hereof, a "Change in
Control" of the Company shall mean:
(i) an acquisition subsequent to the Effective Date hereof by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty
percent (50%) or more of either (A) the then outstanding Common Shares or
(B) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors;
excluding, however, the following: (1) any acquisition directly from the
Company, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself
acquired directly from the Company, (2) any acquisition by the Company and
(3) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary;
(ii) during any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning of
such period constitute the Board (and any new directors whose election by
the Board or nomination for election by the Company's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was so approved) cease for any reason
(except for death, disability or voluntary retirement) to constitute a
majority thereof;
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(iii) the consummation of a merger, consolidation, reorganization,
amalgamation or similar corporate transaction which has been approved by
the shareholders of the Company, whether or not the Company is the
surviving Company in such transaction, other than a merger, consolidation,
reorganization or amalgamation that would result in the voting securities
of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least fifty percent (50%) of
the combined voting power of the voting securities of the Company (or such
surviving entity) outstanding immediately after such merger, consolidation,
reorganization, amalgamation or similar corporate transaction;
(iv) the approval by the shareholders of the Company of (A) the sale
or other disposition of all or substantially all of the assets of the
Company or (B) a complete liquidation or dissolution of the Company; or
(v) adoption by the Board of a resolution to the effect that any
person has acquired effective control of the business and affairs of the
Company.
11. AWARD AGREEMENTS
11.1 Form of Agreement. Each Award under this Plan shall be evidenced by
an Award Agreement in a form approved by the Committee setting forth the number
of Common Shares, units or other rights (as applicable) subject to the Award,
the exercise, base, or purchase price (if any) of the Award, the time or times
at which an Award will become vested, exercisable or payable and the duration of
the Award. The Award Agreement shall also set forth other material terms and
conditions applicable to the Award as determined by the Committee consistent
with the limitations of this Plan. Award Agreements evidencing Incentive Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
11.2 Forfeiture Events. The Committee may specify in an Award that the
Participant's rights, payments and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture or recoupment upon the occurrence
of certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Such events shall include, but shall not be
limited to, termination of employment for cause, violation of material Company
policies, breach of noncompetition, confidentiality or other restrictive
covenants that may apply to the Participant, or other conduct by the Participant
that is detrimental to the business or reputation of the Company.
12. GENERAL PROVISIONS
12.1 No Assignment or Transfer; Beneficiaries. Except as provided in
Section 0 hereof, Awards under the Plan shall not be assignable or transferable,
except by will or by the laws of descent and distribution, and during the
lifetime of a Participant, the Award shall be exercised only by such Participant
or by his guardian or legal representative. Notwithstanding the foregoing, the
Committee may provide in the terms of an Award Agreement that the Participant
shall have the right to designate a beneficiary or beneficiaries who shall be
entitled to any rights, payments or other specified benefits under an Award
following the Participant's death.
12.2 Deferrals of Payment. Notwithstanding any other provisions of the
Plan, the Committee may permit a Participant to defer the receipt of payment of
cash or delivery of Common Shares that would otherwise be due to the Participant
by virtue of the exercise of a right or the satisfaction of vesting or other
conditions with respect to an Award. If any such deferral is to be permitted by
the Committee, the Committee shall establish the rules and procedures relating
to such deferral, including, without limitation, the period of time in advance
of payment when an election to defer may be made, the time period of the
deferral and the events that would result in payment of the deferred amount, the
interest or other earnings attributable to the deferral and the method of
funding, if any, attributable to the deferred amount.
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12.3 Rights as Shareholder. A Participant shall have no rights as a
holder of Common Shares with respect to any unissued securities covered by an
Award until the date the Participant becomes the holder of record of such
securities. Except as provided in Section 0 hereof, no adjustment or other
provision shall be made for dividends or other shareholder rights, except to the
extent that the Award Agreement provides for a Dividend Equivalent Right, or
otherwise provides for dividend payments or similar economic benefits.
12.4 Employment or Service. Nothing in the Plan, in the grant of any
Award or in any Award Agreement shall confer upon any Eligible Person the right
to continue in the capacity in which he is employed by, or otherwise serves, the
Company or any Subsidiary.
12.5 Securities Laws. No Common Shares will be issued or transferred
pursuant to an Award unless and until all then applicable requirements imposed
by federal and state securities and other laws, rules and regulations and by any
regulatory agencies having jurisdiction, and by any exchanges upon which the
Common Shares may be listed, have been fully met. As a condition precedent to
the issuance of shares pursuant to the grant or exercise of an Award, the
Company may require the Participant to take any reasonable action to meet such
requirements. The Committee may impose such conditions on any Common Shares
issuable under the Plan as it may deem advisable, including, without limitation,
restrictions under the Securities Act of 1933, as amended, under the
requirements of any exchange upon which such shares of the same class are then
listed, and under any blue sky or other securities laws applicable to such
shares.
12.6 Tax Withholding. The Participant shall be responsible for payment of
any taxes or similar charges required by law to be withheld from an Award or an
amount paid in satisfaction of an Award, which shall be paid by the Participant
on or prior to the payment or other event that results in taxable income in
respect of an Award. The Award Agreement shall specify the manner in which the
withholding obligation shall be satisfied with respect to the particular type of
Award.
12.7 Unfunded Plan. The adoption of this Plan and any setting aside of
cash amounts or Common Shares by the Company with which to discharge its
obligations hereunder shall not be deemed to create a trust or other funded
arrangement. The benefits provided under this Plan shall be a general, unsecured
obligation of the Company payable solely from the general assets of the Company,
and neither a Participant nor the Participant's permitted transferees or estate
shall have any interest in any assets of the Company by virtue of this Plan,
except as a general unsecured creditor of the Company. Notwithstanding the
foregoing, the Company shall have the right to implement or set aside funds in a
grantor trust, subject to the claims of the Company's creditors, to discharge
its obligations under the Plan.
12.8 Section 162(m) Compliance. Awards of Options and Share Appreciation
Rights under the Plan may be granted in a manner that complies with the
requirements for "performance-based" compensation under Section 162(m) of the
Code. Restrictive Share Awards and Share Unit Awards may be granted in
compliance with such requirements by making such Awards jointly pursuant to the
terms of this Plan and the Company's "Section 162(m) Performance Incentive Plan"
(or any successor plan).
12.9 Other Compensation and Benefit Plans. The adoption of the Plan shall
not affect any other share incentive or other compensation plans in effect for
the Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of share incentive or other compensation for
employees of the Company or any Subsidiary. The amount of any compensation
deemed to be received by a Participant pursuant to an Award shall not constitute
compensation with respect to which any other employee benefits of such
Participant are determined, including, without limitation, benefits under any
bonus, pension, profit sharing, life insurance or salary continuation plan,
except as otherwise specifically provided by the terms of such plan.
12.10 Plan Binding on Transferees. The Plan shall be binding upon the
Company, its transferees and assigns, and the Participant, his executor,
administrator and permitted transferees and beneficiaries.
12.11 Construction and Interpretation. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Sections hereof are inserted for convenience and
reference and constitute no part of the Plan.
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12.12 Severability. If any provision of the Plan or any Award Agreement
shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
12.13 Fractional Shares. No fractional shares shall be issued or
delivered pursuant to this Pan or any Award. The Committee shall determine
whether cash, Common Shares, Share Options or other property shall be issued or
paid in lieu of fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.
12.14 Other Jurisdictions. The Committee may adopt, amend and terminate
such arrangements and grant such Awards, not inconsistent with the intent of the
Plan, as it may deem necessary or desirable to comply with or take advantage of
tax, securities, regulatory or other laws of other jurisdictions with respect to
Participants who are subject to such laws. The terms and conditions of such
Awards may vary from the terms and conditions that would otherwise be required
by the Plan solely to the extent the Committee deems necessary for such purpose.
12.15 Governing Law. The Plan and all rights hereunder shall be subject
to and interpreted in accordance with the laws of the State of New York, without
reference to the principles of conflicts of laws, and to applicable federal
securities laws.
13. EFFECTIVE DATE, TERMINATION AND AMENDMENT
13.1 Effective Date; Shareholder Approval. The Plan, as amended and
restated herein, shall become effective following its adoption by the Board upon
the date of its approval by the Company's shareholders at the 2004 annual
meeting of shareholders.
13.2 Amendment. The Board may at any time and from time to time and in
any respect, amend or modify the Plan; provided, however, that the Board may
seek the approval of any amendment or modification by the Company's shareholders
to the extent it deems necessary or advisable in its sole discretion for
purposes of compliance with Section 162(m) or Section 422 of the Code, the
listing requirements of the New York Stock Exchange or other exchange or
securities market or for any other purpose. No amendment or modification of the
Plan shall adversely affect any Award theretofore granted without the consent of
the Participant or the permitted transferee of the Award.
13.3 Termination. The Plan shall terminate on the date immediately
preceding the tenth anniversary of the date it become effective in accordance
with Section 13.1 hereof. The Board may, in its sole discretion and at any
earlier date, terminate the Plan. Notwithstanding the foregoing, no termination
of the Plan shall adversely affect any Award theretofore granted without the
consent of the Participant or the permitted transferee of the Award.
PLATINUM UNDERWRITERS HOLDINGS, LTD.
B-10
PLATINUM UNDERWRITERS HOLDINGS, LTD.
THE BELVEDERE BUILDING
69 PITTS BAY ROAD
2ND FLOOR
PEMBROKE HM 08 BERMUDA
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED FOR ITEMS 1 THROUGH 6 IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED.
The undersigned hereby appoints STEVEN H. NEWMAN, GREGORY E.A. MORRISON and
MICHAEL E. LOMBARDOZZI, jointly and severally, proxies, with the power of
substitution and with the authority in each to act in the absence of the other,
to vote all shares the undersigned is entitled to vote at the Annual General
Meeting of Shareholders on May 6, 2004 or postponements or adjournments thereof
on all matters that may properly come before the meeting, and particularly to
vote as hereinafter indicated. The undersigned hereby acknowledges receipt of
the Notice of Annual General Meeting of Shareholders and Proxy Statement dated
April 7, 2004.
IMPORTANT - This proxy must be signed and dated on the reverse side.
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ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
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-- FOLD AND DETACH HERE --
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 THROUGH 6. Please [ ]
PLEASE MARK YOUR VOTE IN BOX IN THE FOLLOWING MANNER [X] USING DARK INK ONLY. Mark Here
for Address
Change or
Comments
SEE REVERSE SIDE
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE. IF NO CHOICES ARE INDICATED,
THIS PROXY WILL BE VOTED "FOR" ITEMS 1 THROUGH 6.
1. To elect the following nominees to the Company's Board of Directors:
01 H. Furlong Baldwin, 02 Jonathan F. Bank, FOR ALL
03 Dan R. Carmichael, 04 Neill A. Currie, FOR WITHHOLD EXCEPT
05 Jay S. Fishman, 06 Gregory E. A. Morrison,
07 Steven H. Newman, and 08 Peter T. Pruitt. [ ] [ ] [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, MARK
THE BOX LABELED "FOR ALL EXCEPT" AND STRIKE A LINE THROUGH
THE NOMINEE'S NAME ABOVE.
2A. To consider and take action upon the proposal to FOR AGAINST ABSTAIN
elect Gregory E.A. Morrison to the Board of
Directors of Platinum Underwriters Bermuda, Ltd. [ ] [ ] [ ]
2B. To consider and take action upon the proposal to FOR AGAINST ABSTAIN
elect Michael D. Price to the Board of Directors of
Platinum Underwriters Bermuda, Ltd. [ ] [ ] [ ]
2C. To consider and take action upon the proposal to FOR AGAINST ABSTAIN
elect William A. Robbie to the Board of Directors of
Platinum Underwriters Bermuda, Ltd. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
3A. To consider and take action upon the proposal to ratify the appointment of
William A. Robbie to the Board of Directors of Platinum Re (UK) Limited. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
3B. To consider and take action upon the proposal to ratify the appointment of
Russell Worsley to the Board of Directors of Platinum Re (UK) Limited. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
4. To consider and take action upon the proposal to amend the Bye-laws of the
Company by removing Section 44(2), which requires the shareholders of the [ ] [ ] [ ]
Company to consider matters that are submitted to the shareholders of the
Company's non-U.S. subsidiaries.
FOR AGAINST ABSTAIN
5. To consider and take action on the proposal to approve the Company's 2002 Share
Incentive Plan.
[ ] [ ] [ ]
FOR AGAINST ABSTAIN
6. To consider and take action upon a
proposal to ratify the selection of KPMG [ ] [ ] [ ]
LLP, independent certified public
accountants, as independent auditors for
the Company and KPMG (Bermuda),
independent certified public accountants,
as independent auditors for Platinum
Underwriters Bermuda, Ltd. for the 2004
fiscal year.
PLACE "X" HERE IF YOU PLAN TO ATTEND AND [ ]
VOTE YOUR SHARES AT THE MEETING
Upon such other business as may properly come before the meeting or any postponement or adjournment thereof.
SIGNATURE SIGNATURE DATED , 2004
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PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ABOVE. IF SHARES ARE HELD IN THE NAME OF JOINT HOLDERS, EACH SHOULD SIGN.
IF YOU ARE SIGNING AS A TRUSTEE, GUARDIAN, EXECUTOR, ETC., PLEASE SO INDICATE.
-- FOLD AND DETACH HERE --