SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (ss.) 240.14a-11(c) or (ss.)
240.14a-12
Bexil Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing. (1) Amount
Previously Paid:
(2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4)
Date Filed:
Notes:
BEXIL CORPORATION
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Notice of Special Meeting of Stockholders
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To the Stockholders:
Notice is hereby given that a Special Meeting of Stockholders of Bexil
Corporation will be held at the American Stock Exchange, 86 Trinity Place, 14th
Floor, New York, New York on [meeting date] at [8:30 a.m.], local time, for the
following purpose:
1. To approve the Bexil Corporation 2004 Incentive Compensation Plan.
Stockholders of record at the close of business on [record date] are
entitled to receive notice of and to vote at the meeting.
By Order of the Board of Directors
Monica Pelaez
Secretary
New York, New York
[notice/proxy date]
Please Vote Immediately by Signing and Returning the Enclosed Proxy Card.
Delay may cause the Company to incur additional expenses to solicit
votes for the meeting.
2
BEXIL CORPORATION
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PROXY STATEMENT
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Special Meeting of Stockholders
To Be Held [meeting date]
This Proxy Statement, dated [notice/proxy date], is furnished in connection
with a solicitation of proxies by Bexil Corporation to be voted at a Special
Meeting of Stockholders of the Company to be held at the American Stock
Exchange, 86 Trinity Place, 14th Floor, New York, New York on [meeting date] at
[8:30 a.m.] and at any postponement or adjournment thereof for the purposes set
forth in the accompanying Notice of Special Meeting of Stockholders.
Stockholders of record at the close of business on [record date] are entitled to
be present and to vote on matters at the meeting. Stockholders are entitled to
one vote for each Company share held and fractional votes for each fractional
Company share held. Shares represented by executed and unrevoked proxies will be
voted in accordance with the specifications made thereon. If the enclosed form
of proxy is executed and returned, it nevertheless may be revoked by another
proxy or by letter or telegram directed to the Company, which must indicate the
stockholder's name. To be effective, such revocation must be received prior to
the meeting. In addition, any stockholder who attends the meeting in person may
vote by ballot at the meeting, thereby canceling any proxy previously given. As
of the record date, the Company had [o] shares of common stock issued and
outstanding. Stockholders of the Company will vote as a single class. It is
estimated that these proxy materials will be mailed to stockholders of record on
or about [mailing date]. The Company's principal executive offices are located
at 11 Hanover Square, New York, New York 10005. Copies of the Company's most
recent Annual and Semi-Annual Reports are available without charge upon written
request to the Company at 11 Hanover Square, New York, New York 10005, or by
calling toll-free 1-800-937-5449.
PROPOSAL 1: TO APPROVE THE 2004 INCENTIVE COMPENSATION PLAN
A proposal will be presented at the meeting to approve the Company's 2004
Incentive Compensation Plan, or the Plan, which was adopted by the Board of
Directors on January 9, 2004, subject to approval by the stockholders of the
Company. The complete text of the Plan is set forth in Appendix A to this proxy
statement and stockholders are urged to review it together with the following
information, which is qualified in its entirety by reference to Appendix A.
As previously announced, as of January 6, 2004 and pursuant to an order
issued by the Securities and Exchange Commission, the Company has ceased to be
an investment company under the Investment Company Act of 1940 (the "1940 Act").
As a result, the Company is no longer subject to the restrictions of the 1940
Act that had previously precluded the Company from adopting an equity-based
compensation plan such as the Plan absent receipt of an exemptive order from the
Securities and Exchange Commission. The Board believes, for the reasons
described below, that adoption of the Plan is in the best interests of the
Company and its stockholders.
Overview of the Plan
Purpose and Eligibility. The Company believes the Plan will help it and its
subsidiaries attract, retain, motivate and reward directors, executives and
employees of the Company and its subsidiaries by providing them with the
opportunity to earn incentive compensation directly linked to the long-term
value of the Company's common stock. If the market value of the Company's common
stock increases, these directors, executives and employees will receive value,
as will the Company's stockholders. As of [o], 2004, the closing market price of
Company common stock as quoted on The American Stock Exchange was $[o]. Under
the terms of the Plan, all directors, executives and employees of the Company
and its subsidiaries are eligible to participate in the Plan. Currently eight
directors, officers and employees of the Company and over 500 officers and
employees of York Insurance Services Group, Inc., a 50%-owned subsidiary of the
Company, will be eligible to participate in the Plan, although currently the
Committee does not intend to make grants to non-Company directors, officers, and
employees.
Administration. The Compensation Committee of the Board, or the Committee,
will administer the Plan. In general, the Committee has full discretion to
select participants, determine the type, terms and conditions of awards, and
adopt rules and regulations for the proper administration of the Plan. The
Committee may delegate certain of its duties, power and authority to the
Company's officers. Currently, the Committee is comprised of three directors
(Russell E. Burke III, Frederick A. Parker, Jr. and Douglas Wu), each of whom is
both (i) a "non-employee director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, or the 1934 Act, and (ii) an
"outside director" as defined under Section 162(m) of the Internal Revenue Code
of 1986, as amended, or the Code.
3
Types of Awards. The Plan permits the Committee to grant the following
types of performance-based compensation:
o non-qualified and incentive stock options;
o stock appreciation rights (including freestanding and tandem stock
appreciation rights), or SARs;
o restricted stock;
o deferred stock;
o bonus stock;
o dividend equivalents;
o annual incentive awards; and
o long-term performance awards.
Each grant of performance-based compensation under the Plan is referred to
individually as an "award" and, collectively, as "awards". The awards are
described more fully below.
Shares Available
Overall Limit. The Board of Directors has authorized reserving for issuance
20% of Company common stock outstanding as of the effective date of the Plan,
plus 20% of the number of shares of Company common stock issued or delivered by
the Company during the term of the Plan (excluding any issuance or delivery in
connection with awards under the Plan). As of [o], 2004, there are [o] shares of
Company common stock outstanding. The Committee may also adjust the number and
kind of shares available for use in awards when certain corporate transactions
occur. Shares covered by awards granted under the Plan that wholly or in part
are not earned, or that expire or are forfeited, terminated, cancelled, settled
in cash, payable solely in cash or exchanged for other awards, do not count
toward the overall limit. The Committee also has the authority to give
participants cash or other property in lieu of a stock-based award.
Limit on Incentive Stock Options. "Incentive stock options" are options
described in Section 422 of the Code, which provide certain tax advantages for
participants who receive such options. Under the Plan, the Company may not grant
incentive stock options for more than 20% of Company common stock outstanding as
of the effective date of the Plan. The Company can only grant incentive stock
options to individuals who at the time of grant are employees of the Company or
a subsidiary. In addition, the aggregate fair market value (determined as of the
date the option is granted) of the shares of Company common stock for which any
participant may be granted incentive stock options which are exercisable for the
first time in any calendar year may not exceed the maximum permitted under the
Code (currently $100,000).
Stock Award Limit. In each fiscal year, no individual may receive stock
options, SARs, restricted stock, deferred stock, or any other type of award
relating to, in each case, more than 1 million shares of Company common stock,
subject to adjustment.
Cash Award Limit. The Plan also limits the maximum dollar amount of cash
awards that a participant may earn in a single year to $1 million.
Types of Awards Permitted by the Plan
General. The Plan permits the grant of stock options, SARs, restricted
stock, deferred stock, stock bonuses and other awards valued in whole or in part
by reference to, or otherwise based on, Company common stock. Awards may be
granted alone or in addition to, in tandem with, or in substitution or exchange
for any other award.
Stock Options. A stock option is the right to purchase one share of stock
at a time in the future at a predetermined price. Stock options may be incentive
stock options or non-qualified stock options. The exercise price of any stock
option shall be determined by the Committee, provided that such exercise price
shall not be less than the fair market value of a share of stock on the date of
grant of the option. The Committee may adjust the price to reflect certain
corporate actions or, if the option is granted in lieu of cash compensation,
discount the exercise price by the amount of cash compensation the participant
surrenders in order to receive the option.
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Stock options issued under the Plan will expire five years from the date of
grant, or such shorter period as may be determined by the Committee. Although
the Committee has the discretion to determine otherwise, the Committee expects
that most stock options will vest at the end of a period commencing on the date
of grant and ending on a date which is the sooner of three years from the date
of grant date or three years from commencement of service to the Company, and if
the optionee has more than three years of service on the date of grant, the
options will vest immediately. All current directors, officers, and employees
have more than three years of service. Unless the Committee provides otherwise,
if a participant's employment is terminated
o other than by reason of death or disability, the participant may
exercise all or any part of his or her vested options within three
months, but only if the participant resigns or retires and the
Committee consents to the resignation or retirement, and the
termination of employment is not for cause (as defined in the
Plan);
o for cause or the Committee does not consent, the right of the
participant to exercise the option will terminate at the date of
termination;
o because of disability, the participant must exercise his or her
vested options within one year; and
o because of death, the participant's beneficiary must exercise the
vested options within one year. In the event of a participant's
death, the Committee may also, in its sole discretion, accelerate
the right to exercise all or any part of an option that would not
otherwise be exercisable.
In each case, no option may be exercised after the time when it would otherwise
expire.
Restricted Stock. The Plan permits the Committee to make grants of
restricted shares of Company common stock. Restricted stock is stock given to a
participant, usually without the participant having to make any payment in
return, that is subject to restrictions on transferability, risk of forfeiture
and other restrictions. A participant who receives restricted stock will have
all the rights of a stockholder, including the right to vote the restricted
stock and the right to receive dividends, unless the participant is limited by
the terms of the Plan or any award agreement relating to the restricted stock.
During the period of restriction, the participant may not sell, transfer,
pledge, hypothecate, margin or otherwise encumber the restricted stock. Except
as the Committee otherwise determines, if a participant's employment is
terminated during the restriction period, the participant will forfeit the
restricted stock which the Company will reacquire.
SARs. SARs entitle a participant to receive the excess, if any, of the fair
market value on the date of exercise over the exercise price of the SAR or, in
the case of a tandem SAR granted in tandem with an option, the exercise price of
the related stock option.
The Committee will determine whether or not a SAR is granted as a tandem
award (which is an award that is combined with another award, usually to provide
an alternative form of compensation of comparable economic value), and any other
terms and conditions of any SAR.
Unless the Committee provides otherwise, SARs issued under the Plan will
vest and otherwise have the same general terms as described for stock options
above.
Deferred Stock. A grant of deferred stock is the right to receive Company
common stock, cash, or a combination of stock or cash at the end of a time
period specified by the Committee. At the end of the deferral period or, if
permitted by the Committee, at the time elected by the participant, the Company
will deliver Company common stock (or cash having an equal value, or a
combination of cash and stock) to the participant. Except as the Committee
otherwise determines, if a participant's employment is terminated during the
applicable deferral period, the participant will forfeit all deferred stock that
is at that time subject to deferral (other than a deferral at the election of a
participant).
Bonus Stock. The Plan authorizes the Committee to grant Company common
stock as a bonus, or to grant such stock or other awards in lieu of obligations
to pay cash or deliver other property under the Plan or other plans or
compensatory arrangements.
Dividend Equivalents. Under the Plan, the Committee may grant dividend
equivalents to a participant. Dividend equivalents entitle a participant to
receive cash, Company common stock or other awards equal in value to dividends
paid for a specified number of shares of Company common stock or other periodic
payments.
Annual Incentive Awards and Performance Awards. The Plan will permit the
Committee to make annual incentive awards and performance awards. The Company
may pay these awards in cash, Company common stock or other awards. The grant,
exercise and/or settlement of such award will be contingent upon the achievement
of pre-established performance goals, unless the Committee determines that a
performance award or annual incentive award is not intended to qualify as
"performance-based compensation" for purposes of Section 162(m) of the Code.
Section 162(m) of the Code provides that compensation in excess of $1 million to
certain officers of a public company is not deductible for income tax purposes
unless it qualifies as "performance-based compensation".
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The Committee will establish a targeted level or levels of performance
measured by one or more of the following general business criteria: earnings per
share; revenues; increase in revenues; the excess of all or a portion of
revenues over operating expenses (excluding expenses determined by the Committee
at the time performance goals are established); cash flow; cash flow return on
investment; return on net assets; return on assets; return on investment; return
on capital; return on equity; economic value added; operating margin; net
income; pretax earnings; pretax earnings before interest, depreciation,
amortization and/or incentive compensation; pretax operating earnings; operating
earnings; total stockholder return; performance of managed funds; increase in
market share or assets under management; reduction in costs; increase in the
fair market value of Company common stock; and any of the above goals as
compared to the performance of the Standard & Poor's 500 Stock Index or the
Standard & Poor's Small Cap Insurance Index. These performance goals are
objective and seek to meet the requirements of Section 162(m) of the Code. The
Committee will measure whether a participant has achieved a performance goal
over a performance period of one year for an annual incentive award, or up to
ten years for a performance award. The Committee may reduce the amount paid to a
participant in connection with an annual incentive award or performance award,
but may not increase the amount unless the Committee determines at the time of
grant that the award is not intended to qualify as "performance-based
compensation" for purposes of Section 162(m) of the Code.
Non-Employee Director Options. Under the Plan, the Company's non-employee
directors will receive non-qualified stock options for Company common stock. The
Company will grant an initial option for 1,000 shares of Company common stock
(i) to each non-employee director on the date the Company's stockholders approve
the Plan and (ii) after approval by the Company's stockholders of the Plan, on
the effective date of any other non-employee director's initial election to the
Board. The Company will also grant an annual option for 1,000 shares of Company
common stock to each non-employee director at the close of business on the date
of the Company's annual stockholder meeting (which normally occurs in September
of each year). These amounts are subject to adjustment for corporate
transactions. These option awards are the only type of awards that non-employee
directors of the Company are eligible to receive under the Plan.
The exercise price per share of non-employee director options will be equal
to 100% of the fair market value of a share of Company common stock on the date
of grant and these options will expire at the earlier of (i) five years from the
date of grant or (ii) three months after the date the non-employee director
ceases to serve as a director of the Company for any reason. Non-employee
director options will vest at the end of a period commencing on the date of
grant and ending on a date which is the sooner of three years from the date of
grant date or three years from commencement of service to the Company, and if
the optionee has more than three years of service on the date of grant, the
options will vest immediately. All current non-employee directors have more than
three years of service.
Amendment
The Board may amend, alter, suspend, discontinue or terminate the Plan or
the Committee's authority to grant awards under the Plan without stockholder
approval, except that any amendment or alteration to the Plan shall be subject
to stockholder approval not later than the annual meeting next following such
Board action if stockholder approval is required by state or federal law or
regulation or the rules of any stock exchange on which the Company's stock is
listed or quoted.
The Committee may waive any conditions or rights under or amend, alter,
suspend, discontinue or terminate any award granted. However, no Board or
Committee action may materially and adversely affect the rights of participants
under any previously granted and outstanding award without the consent of the
affected participant.
Effectiveness and Term
The Plan will become effective immediately upon approval by the Company's
stockholders. Under the Plan, awards may not be granted after January 8, 2014.
Section 162(m) of the Code generally requires stockholder approval of
"qualified performance-based criteria" every five years so that all types of
awards under the Plan qualify as "performance-based" compensation. Therefore,
the Company expects to submit the Plan to stockholders for reapproval at the
2009 annual meeting. Subject to such stockholder reapproval, the Plan will
remain in effect for an additional five year cycle.
6
Description of New Plan Benefits
Because the Plan is new and would permit the Company to pay compensation on
bases not previously permitted, the Company does not believe that it is possible
to state the benefits which would have been received by or allocated to
participants if the Plan had been in effect last year. The Company will not make
final decisions on awards under the Plan until after the Company's stockholders
approve the Plan.
Federal Income Tax Consequences
The following discussion is only a summary of the principal federal income
tax consequences to the Company and participants under present law and
regulations, and does not cover all possible federal, state or local income tax
consequences of benefits under the Plan.
Incentive Stock Options. The grant of an incentive stock option will not
result in any immediate tax consequences to the Company or the optionee. An
optionee will not recognize taxable income, and the Company will not be entitled
to any deduction, upon the timely exercise of an incentive stock option, but the
excess of the fair market value of the shares acquired over the option price
will be an item of tax preference for purposes of the alternative minimum tax.
If the optionee does not dispose of the shares acquired within one year after
their receipt (and within two years after the option was granted), gain or loss
recognized on the subsequent disposition of the shares will be treated as
long-term capital gain or loss. Capital losses of individuals are deductible
only against capital gains and a limited amount of ordinary income. In the event
of an earlier disposition, the optionee will recognize taxable ordinary income
in an amount equal to the lesser of (i) the excess of the fair market value of
the shares on the date of exercise over the option price; or (ii) if the
disposition is a taxable sale or exchange, the amount of any gain recognized.
Upon such a disqualifying disposition, the Company will be entitled to a
deduction in the same amount and at the same time as the optionee recognizes
such taxable ordinary income.
Non-qualified Stock Options. The grant of a non-qualified stock option will
not result in any immediate tax consequences to the Company or the optionee.
Upon the exercise of a non-qualified stock option, the optionee will recognize
taxable ordinary income, and the Company will be entitled to a deduction, equal
to the difference between the option price and the fair market value of the
shares acquired at the time of exercise.
Stock Appreciation Rights. The grant of either a tandem SAR or a
freestanding SAR will not result in any immediate tax consequences to the
Company or the grantee. Upon the exercise of either a tandem SAR or a
freestanding SAR, any cash received and the fair market value on the exercise
date of any shares received will constitute taxable ordinary income to the
grantee. The Company will be entitled to a deduction in the same amount and at
the same time as the grantee recognizes such taxable ordinary income.
Restricted Stock. An employee normally will not recognize taxable income
upon an award of restricted stock, and the Company will not be entitled to a
deduction, until the termination of the restrictions. Upon such termination, the
employee will recognize taxable ordinary income in an amount equal to the fair
market value of the shares at that time, plus the amount of any dividends and
interest thereon to which the employee then becomes entitled. However, an
employee may elect to recognize taxable ordinary income in the year the
restricted stock is awarded in an amount equal to its fair market value at that
time, determined without regard to the restrictions. The Company will be
entitled to a deduction in the same amount and at the same time as the employee
recognizes income, subject to the limitations of Section 162(m) of the Code.
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Unrestricted Stock. An employee will recognize taxable ordinary income at
the time of the receipt of unrestricted stock in an amount equal to the fair
market value of the shares at that time. The Company will be entitled to a
deduction in the same amount and at the same time as the employee recognizes
income, subject to the limitations of Section 162(m) of the Code.
Cash Awards. An employee will recognize taxable ordinary income at the time
of the receipt of a cash award in the amount of the award. The Company will be
entitled to a deduction in the same amount and at the same time as the employee
recognizes income, subject to the limitations of Section 162(m) of the Code.
Deferred Award. An award that is properly deferred will be taxable when
actually or constructively received by the participant. The Company will be
entitled to a deduction in the same amount and at the same time as the employee
recognizes income, subject to the limitations of Section 162(m) of the Code.
Annual Incentive Awards and Performance Awards. The designation of an award
or grant as an Annual Incentive Award or Performance Award will not change the
tax treatment described above to an employee who receives such an award or
grant. Such a designation will, however, unless the Committee specifically
determines otherwise, enable such award to qualify as performance-based
compensation not subject to the $1 million limitation on deductible compensation
under Section 162(m) of the Code.
Applicable taxes required by law will be withheld from all amounts paid in
satisfaction of an award.
Vote Required and Board's Recommendation
The affirmative vote of a majority of the shares of Company common stock
validly cast at the meeting, a quorum being present, is necessary to approve the
Plan. Unless otherwise instructed, properly executed proxies which are returned
in a timely manner will be voted in favor of approval of the Plan.
The Board of Directors recommends a vote FOR approval of the Plan.
STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
The following table sets forth information regarding the direct beneficial
ownership of Company common stock as of the record date by (i) each director and
executive officer and (ii) all directors and executive officers as a group.
Name of Director or Officer Number of Shares Percent of Outstanding Shares
--------------------------- ---------------- -----------------------------
Russell E. Burke III None **
Frederick A. Parker, Jr. 391.00 **
Bassett S. Winmill 7,541.36 **
Thomas B. Winmill 45,272.00 5.15%
Douglas Wu None **
Marion E. Morris None **
Monica Pelaez None **
William G. Vohrer None **
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Total shares held by directors and officers 53,204.36 6.05%
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** Less than 1% of the outstanding shares.
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To the knowledge of the management of the Company, the following
stockholders beneficially owned 5% or more of the outstanding shares of Company
common stock according to their Schedules 13D filed on July 3, 2003 and October
8, 2003:
Approximate Percentage of the
Name and Address Common Stock Company's Total Outstanding Shares
---------------- ------------ ----------------------------------
Thomas B. Winmill* 45,272.00 shares 5.15%
11 Hanover Square
New York, New York 10005
Investor Service Center, Inc. 222,672.14 shares 25.32%
11 Hanover Square
New York, New York 10005
Winmill & Co. Incorporated ** 222,672.14 shares 25.32%
11 Hanover Square
New York, New York 10005
Bassett S. Winmill*** 230,213.50 shares 26.17%
11 Hanover Square
New York, New York 10005
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* Thomas B. Winmill has indirect beneficial ownership of 26,712.00 of these
shares held by his spouse and sons. Mr. Winmill disclaims ownership of the
shares held by his spouse and sons.
** Winmill & Co. Incorporated has indirect beneficial ownership of these
shares, as a result of its status as a controlling person of Investor
Service Center, Inc., the direct beneficial owner.
*** Bassett S. Winmill has indirect beneficial ownership of 222,672.14 of these
shares, as a result of his status as a controlling person of Winmill & Co.
Incorporated and Investor Service Center, Inc., the direct beneficial
owner. Mr. Winmill disclaims beneficial ownership of the shares held by
Investor Service Center, Inc.
COMPENSATION
Summary Compensation Table
The following table sets forth compensation for the fiscal years ended
December 31, 2003, 2002 and 2001 received by the Company's Chief Executive
Officer. No other executive officer of the Company serving at the end of fiscal
year 2003 had total annual salary and bonus in fiscal year 2003 in excess of
$100,000.
All Other
Annual Compensation Compensation
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Name and Other Annual
Principal Position Year Salary Bonus Compensation
----------------- ---- ------ ----- ------------
Thomas B. Winmill 2003 $250,000 $30,000 $0 $0
President and Chief 2002 150,000 200,000 0 0
Executive Officer 2001 62,500 0 0 0
The Company currently has no bonus, pension, profit-sharing, retirement
plans, or employment agreements.
Compensation Committee Report on Executive Compensation
The compensation committee of the board of directors makes decisions on
compensation of the Company's executives. The compensation committee establishes
the compensation of Thomas B. Winmill, Chief Executive Officer, based on its
evaluation of Mr. Winmill's performance. It establishes the compensation of the
other officers of the Company in consultation with Mr. Winmill. The full board
of directors reviews all decisions by the compensation committee relating to the
compensation of all the Company's officers.
The Company's executive compensation program reflects the philosophy that
compensation should reward executives for outstanding individual performance
and, at the same time, align the interests of executives closely with those of
stockholders. To implement that philosophy, the Company offers each of its
executives a combination of base salary and annual cash bonuses. Through this
compensation structure, the Company aims to reward above-average corporate
performance and recognize individual initiative and achievements.
9
If the Plan is approved, the Compensation Committee intends to consider the
grant of stock options and other equity based awards in connection with the
compensation of Company executives.
Russell R. Burke
Frederick A. Parker, Jr.
Douglas Wu
Directors' Compensation
Currently, the Company pays its non-employee directors an annual
retainer of $1,250, and a per meeting fee of $1,562.50, and reimburses them for
their meeting expenses. The Company also pays such directors $250 per special
telephonic meeting attended and per committee meeting attended.
The aggregate amount of compensation paid to each non-employee director by
the Company for the year ended December 31, 2003, was as follows:
Aggregate Compensation
Name of Director Position From the Company
---------------- -------- ----------------------
Russell E. Burke III Director (a) (b) $9,000
Frederick A. Parker, Jr. Director (a) (b) $9,000
Douglas Wu Director (a) (b) $9,000
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(a) Member of Compensation Committee
(b) Member of Audit Committee
PERFORMANCE GRAPH OF COMPANY'S RETURNS
The chart includes information about the Company during the period in which
the Company was operating as a registered investment company seeking total
return, although in January 2002 it began operating an insurance services
business and effective January 6, 2004 the Company's registration as an
investment company ceased. Accordingly, the chart sets forth a comparison of the
Company's total return with the annual return of (i) all closed-end funds
("Closed-End Funds") reported by Morningstar, Inc. at December 31, 2003; (ii)
the S&P Small Cap Insurance Index; and (iii) the S&P 500 Index. The chart is
based on an investment of $100 on December 31, 1998, and assumes that all
dividends and capital gain distributions were reinvested. The chart is not an
indicator of the future performance of the Company. Thus, it should not be used
to predict the future performance of the Company's stock.
COMPARISON OF CUMULATIVE FIVE YEAR TOTAL RETURN
12/31/98 12/31/99 12/31/00 12/29/01 12/31/02 12/31/03
BEXIL CORPORATION $100 $75.76 $76.80 $95.75 $109.33 $167.09
CLOSED-END FUNDS 100 108.21 114.27 116.67 121.38 144.53
S&P SMALLCAP INS INDEX 100 73.50 109.49 85.40 80.10 106.45
S&P 500 INDEX 100 121.08 110.10 97.04 75.67 97.38
ADDITIONAL INFORMATION
At the meeting, the presence in person or by proxy of stockholders entitled
to cast a majority of all the votes entitled to be cast at the meeting is
sufficient to constitute a quorum. In the event that a quorum is not present at
the meeting, or if a quorum is present but sufficient votes to approve a
proposal are not received, the chair of the meeting may adjourn the meeting to a
later date and time not more than 120 days after the original record date
without any other notice other than announcement at the meeting. A stockholder
vote may be taken for one or more proposals prior to any adjournment if
sufficient votes have been received for approval. If a proxy is properly
executed and returned accompanied by instructions to withhold authority to vote,
represents a broker "non-vote" (that is, a proxy from a broker or nominee
indicating that such person has not received instructions from the beneficial
owner or other person entitled to vote shares of the Company on a particular
matter with respect to which the broker or nominee does not have discretionary
power) or is marked with an abstention (collectively, "abstentions"), the
Company's shares represented thereby will be considered to be present at the
meeting for purposes of determining the existence of a quorum for the
transaction of business. Under Maryland law, abstentions do not constitute a
vote "for" or "against" a matter and will be disregarded in determining "votes
cast" on an issue.
10
In addition to the use of the mails, proxies may be solicited personally,
by telephone, or by other means, and the Company may pay persons holding its
shares in their names or those of their nominees for their expenses in sending
soliciting materials to their beneficial owners. The Company will bear the cost
of soliciting proxies. In addition, the Company will retain N.S. Taylor &
Associates, Inc., 131 South Stagecoach Road, P.O. Box 358, Atkinson, ME 04426 to
solicit proxies on behalf of its Board for a fee estimated at $5,000 plus
expenses, primarily by contacting stockholders by telephone and mail.
Authorizations to execute proxies may be obtained by telephonic instructions in
accordance with procedures designed to authenticate the stockholder's identity.
In all cases where a telephonic proxy is solicited, the stockholder will be
asked to provide his or her address, social security number (in the case of an
individual) or taxpayer identification number (in the case of an entity) or
other identifying information and the number of shares owned and to confirm that
the stockholder has received the Company's Proxy Statement and proxy card in the
mail. Within 48 hours of receiving a stockholder's telephonic voting
instructions and prior to the meeting, a confirmation will be sent to the
stockholder to ensure that the vote has been taken in accordance with the
stockholder's instructions and to provide a telephone number to call immediately
if the stockholder's instructions are not correctly reflected in the
confirmation. Stockholders requiring further information with respect to
telephonic voting instructions or the proxy generally should contact the
Company's proxy solicitor, N.S. Taylor & Associates, Inc., 131 South Stagecoach
Road, P.O. Box 358, Atkinson, ME 04426 at 1-866-794-2200. Any stockholder giving
a proxy may revoke it at any time before it is exercised by submitting to the
Company a written notice of revocation or a subsequently executed proxy or by
attending the meeting and voting in person.
SUBMISSION DEADLINES FOR STOCKHOLDER PROPOSALS
The deadline for submitting stockholder proposals for inclusion in the
Company's proxy statement and form of proxy for the Company's next annual
meeting is April 3, 2004, pursuant to Rule 14a-8(e)(2) under the 1934 Act.
Pursuant to Rule 14a-5(e)(2) under the 1934 Act, notice of a stockholder
proposal or nomination submitted outside the processes of Rule 14a-8 under the
1934 Act is considered untimely unless received no earlier than May 3, 2004 nor
later than June 2, 2004, as established by the Company's By-laws. In addition,
for a nomination to be made by a stockholder or for any other business to be
properly brought before the annual meeting by a stockholder, such stockholder
must give timely notice thereof in proper written form to the Secretary of the
Company in the manner set forth in the Company's By-laws. As of the date hereof,
the Company's By-laws provide that to be timely, a stockholder's notice to the
Secretary must be delivered to or mailed and received at the principal executive
offices of the Company not less than sixty (60) calendar days and not more than
ninety (90) calendar days prior to the anniversary date of the mailing date of
the notice of the preceding year's annual meeting; provided, however, that in
the event that the annual meeting is called for a date that is not within thirty
(30) calendar days before or sixty (60) calendar days after such anniversary
date, notice by the stockholder in order to be timely must be so received not
later than the close of business on the later of the sixtieth (60) calendar day
prior to such annual meeting or the tenth (10th) calendar day following the day
on which notice of the date of the annual meeting was mailed or public
disclosure of the date of the annual meeting was made, whichever first occurs.
For purposes of that provision, the date of a public disclosure shall include,
but not be limited to, the date on which such disclosure is made in a press
release reported by the Dow Jones News Services, the Associated Press or any
comparable national news service or in a document publicly filed by the Company
with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d)
(or the rules and regulations thereunder) of the 1934 Act.
NOTICE TO BANKS, BROKER/DEALERS
AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company's proxy solicitor, N.S. Taylor & Associates,
Inc., 131 South Stagecoach Road, P.O. Box 358, Atkinson, ME 04426 at
1-866-794-2200 whether other persons are the beneficial owners of the shares for
which proxies are being solicited and, if so, the number of copies of this proxy
statement and other soliciting material you wish to receive in order to supply
copies to the beneficial owners of shares.
It is important that proxies be returned promptly. Therefore,
stockholders who do not expect to attend the meeting in person are urged to
complete, sign, date and return the enclosed proxy card in the enclosed stamped
envelope in order to avoid unnecessary expense.
11
================================================================================
BEXIL CORPORATION
2004 Incentive Compensation Plan
12
TABLE OF CONTENTS
Page
1. Purpose..
2. Definitions
3. Administration
(a) Authority of the Committee
(b) Manner of Exercise of Committee Authority
(c) Limitation of Liability
4. Stock Subject to Plan.
(a) Overall Number of Shares of Bexil Stock Available for Delivery
(b) Application of Limitation to Grants of Awards
(c) Availability of Shares Not Delivered under Awards
5. Eligibility; Per-Person Award Limitations
6. Specific Terms of Awards.
(a) General
(b) Options
(c) Stock Appreciation Rights
(d) Restricted Stock
(e) Deferred Stock
(f) Bonus Stock and Awards in Lieu of Obligations
(g) Dividend Equivalents
(h) Annual Incentive and Performance Awards
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem and Substitute Awards
(b) Term of Awards
(c) Form and Timing of Payment under Awards; Deferrals
(d) Exemptions from Section 16(b) Liability
(e) General Terms Relating to Awards.
8. Performance and Annual Incentive Awards.
(a) Performance Conditions
(b) Performance Awards Granted to Designated Covered Employees
(c) Annual Incentive Awards Granted to Designated Covered Employees
(d) Written Determinations
(e) Status of Section 8(b) and Section 8(c) Awards under Code Section 162(m)
9. Options Granted Automatically to Non-Employee Directors.
(a) Initial Option Grants
(b) Annual Option Grants
(c) Number of Shares Subject to Automatic Option Grants
(d) Other Non-Employee Director Initial and Annual Option Terms
(e) Method of Exercise
(f) Availability of Shares
10. General Provisions.
(a) Compliance with Legal and Other Requirements
(b) Limits on Transferability; Beneficiaries
(c) Adjustments
(d) Taxes
(e) Changes to the Plan and Awards
(f) Limitation on Rights Conferred under the Plan
(g) Unfunded Status of Awards, Creation of Trusts
(h) Nonexclusivity of the Plan
(i) Payments in the Event of Forfeitures; Fractional Shares
(j) Governing Law
(k) Plan Effective Date and Shareholder Approval
1. Purpose. The purpose of this 2004 Incentive Compensation Plan (the "Plan")
is to assist Bexil Corporation ("Bexil") in attracting, retaining,
motivating and rewarding high-quality executives, employees and other
Eligible Persons (as defined below) who provide services to Bexil and/or
its Subsidiaries (as defined below), enabling such persons to acquire or
increase a proprietary interest in Bexil in order to strengthen the
mutuality of interests between such persons and shareholders of Bexil and
providing such persons with annual and long-term performance incentives to
expend their maximum efforts in the creation of shareholder value. The Plan
is also intended to qualify certain compensation awarded under the Plan for
tax deductibility under Code Section 162(m) to the extent deemed
appropriate by the Committee (or any successor committee) of the Board of
Directors of Bexil. Adoption of the Plan and the grant of Awards in
accordance with the terms of the Plan have been determined by the Board of
Directors of Bexil to be in the best interests of Bexil and its
shareholders.
2. Definitions. For purposes of the Plan, the following terms shall be defined
as set forth below, in addition to such terms defined in Section 1 hereof:
(a) "Annual Incentive Award" means an Award granted to a Participant which
is conditioned upon satisfaction, during a period not in excess of one
year, of performance criteria established by the Committee.
(b) "Award" means any Option, SAR, Restricted Stock, Deferred Stock, Bexil
Stock granted as a bonus or in lieu of another award, Dividend
Equivalent, other stock-based award, Performance Award or Annual
Incentive Award, together with any other right or interest granted to
a Participant under the Plan.
(c) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 under the Exchange Act and any successor to such Rule.
(d) "Beneficiary" means the person, persons, trust or trusts which have
been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the
benefits specified under the Plan upon such Participant's death or to
which Awards or other rights are transferred if and to the extent
permitted under Section 10(b) hereof. If, upon a Participant's death,
there is no designated Beneficiary or surviving designated
Beneficiary, then the term Beneficiary means the Participant's estate.
(e) "Bexil Stock" means common stock, par value $.01 per share, of Bexil
and such other securities as may be substituted (or resubstituted) for
Bexil Stock pursuant to Section 10(c) hereof.
(f) "Board" means Bexil's Board of Directors.
(g) "Cause" means termination for, as determined by the Committee in its
sole discretion, (i) dishonest or fraudulent conduct relating to Bexil
or any of its Subsidiaries or their businesses; (ii) conviction of any
felony that involves moral turpitude or otherwise reflects on Bexil or
any of its Subsidiaries in a significantly adverse way; or (iii) gross
neglect by the Participant in the performance of his or her duties as
an employee or director, or any material breach by a Participant under
any employment agreement with Bexil or any of its Subsidiaries.
1
(h) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, including regulations thereunder and successor provisions and
regulations thereto.
(i) "Committee" means the Compensation Committee of the Board, or such
other committee of two or more Non-Employee Directors designated by
the Board to administer the Plan; provided, however, that the
Committee shall consist solely of two or more directors, each of whom
shall be (i) a "non-employee director" within the meaning of Rule
16b-3 under the Exchange Act and (ii) an "outside director" as defined
under Code Section 162(m) unless administration of the Plan by
"outside directors" is not then required in order to qualify for tax
deductibility under Code Section 162(m).
(j) "Covered Employee" means an Eligible Person who is a Covered Employee
as specified in Section 8(e) of the Plan.
(k) "Deferred Stock" means a right, granted to a Participant under Section
6(e) hereof, to receive Bexil Stock, cash or a combination thereof at
the end of a specified deferral period.
(l) "Disability" means any physical or mental impairment or disability
that prevents a Participant from performing the duties of his or her
employment and that is expected to be of permanent duration. A
determination of whether a Participant is disabled shall be made by a
licensed physician appointed by the Committee.
(m) "Disability Date" means the date that is 120 days after the date on
which a Participant is first absent from active employment with Bexil
(or any of its Subsidiaries) by reason of a Disability.
(n) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g), to receive cash, Bexil Stock, or other Awards equal in
value to dividends and capital gain distributions paid with respect to
a specified number of shares of Bexil Stock, or other periodic
payments.
(o) "Effective Date" means the date on which Bexil shareholders approve
the adoption of the Plan.
(p) "Eligible Persons" means each Executive Officer or director of Bexil
and other officers and employees of Bexil or any of its Subsidiaries;
provided, however, that a director of Bexil who is not an officer or
employee of Bexil or any of its Subsidiaries shall be treated as an
Eligible Person only for purposes of Awards made pursuant to Section 9
hereof. An employee on leave of absence may be considered as still in
the employ of Bexil or any of its Subsidiaries for purposes of
eligibility for participation in the Plan. In addition, a person who
has been offered employment by Bexil or any of its Subsidiaries or
agreed to become a director of Bexil is eligible to be granted an
Award under the Plan; provided, however, that such Award shall be
canceled if such person fails to commence such employment or service
as a director, and no payment of value may be made in connection with
such Award until such person has commenced such employment or service.
(q) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions
and rules thereto.
(r) "Executive Officer" means an executive officer of Bexil as defined
under the Exchange Act.
2
(s) "Fair Market Value" means the fair market value of Bexil Stock, Awards
or other property as determined by the Committee or under procedures
established by the Committee. Unless otherwise determined by the
Committee, the Fair Market Value of Bexil Stock shall be equal to the
closing sale price of Bexil Stock as reported on the American Stock
Exchange or such other national securities exchange or automated
inter-dealer quotation system on which Bexil Stock has been duly
listed and approved for quotation and trading on the relevant date, or
if no sale of Bexil Stock is reported for such date, the next
preceding day for which there is a reported sale.
(t) "Incentive Stock Option" or "ISO" means any Option intended to be and
designated as an incentive stock option within the meaning of Code
Section 422 or any successor provision thereto.
(u) "Non-Employee Director" means a director of Bexil who is not, at the
time an Option is to be granted under Section 9(a) or (b), or during
the time he or she is a member of the Committee, an employee of Bexil.
(v) "Non-Employee Director Annual Option" means an Option to purchase the
number of shares of Bexil Stock specified in or under Section 9(b) and
(c), subject to adjustment as provided in Section 10(c), granted to a
Non-Employee Director.
(w) "Non-Employee Director Initial Option" means an Option to purchase the
number of shares of Bexil Stock specified in or under Section 9(a) and
(c), subject to adjustment as provided in Section 10(c), granted to a
Non-Employee Director.
(x) "Non-Employee Director Option" means either a Non-Employee Director
Annual Option or a Non-Employee Director Initial Option, or both, as
the case may be.
(y) "Option" means a right, granted to a Participant under Section 6(b)
hereof, to purchase Bexil Stock or other Awards at a specified price
during specified time periods.
(z) "Participant" means a person who has been granted an Award under the
Plan which remains outstanding, including a person who is no longer an
Eligible Person.
(aa) "Performance Award" means an Award granted to a Participant which is
conditioned upon satisfaction, during a period in excess of one year
but in no event more than ten years, of performance criteria
established by the Committee.
(bb) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d)
thereof.
(cc) "Restricted Stock" means Bexil Stock granted to a Participant under
Section 6(d) hereof that is subject to certain restrictions and to a
risk of forfeiture.
(dd) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities
and Exchange Commission under Section 16 of the Exchange Act.
(ee) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Section 6(c) hereof.
(ff) "Subsidiary" means (i) any corporation or other entity in which Bexil,
directly or indirectly, controls 50% or more of the total combined
voting power of such corporation or other entity and (ii) any
corporation or other entity in which Bexil has a significant equity
interest and which the Committee has determined to be considered a
Subsidiary for purposes of the Plan.
3
3. Administration.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. A majority of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which
a quorum is present, or acts approved in writing by all of the
members, shall be the acts of the Committee. The Committee shall have
full and final authority, in each case subject to and consistent with
the provisions of the Plan, to select Eligible Persons to become
Participants, grant Awards, determine the type, number and other terms
and conditions of, and all other matters relating to, Awards,
prescribe Award agreements (which need not be identical for each
Participant) and rules and regulations for the administration of the
Plan, construe and interpret the Plan and Award agreements and correct
defects, supply omissions or reconcile inconsistencies therein and
make all other decisions and determinations as the Committee may deem
necessary or advisable for the administration of the Plan. Other
provisions of the Plan notwithstanding, the Board shall perform the
functions of the Committee for purposes of interpreting or otherwise
administering automatic grants to Non-Employee Directors pursuant to
Section 9.
(b) Manner of Exercise of Committee Authority. Any action of the Committee
shall be final, conclusive and binding on all persons, including
Bexil, Participants, Beneficiaries, transferees under Section 10(b)
hereof or other persons claiming rights from or through a Participant,
and shareholders. The express grant of any specific power to the
Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The
Committee may delegate to officers or managers of Bexil or any
Subsidiary, or committees thereof, the authority, subject to such
terms as the Committee shall determine, to perform such functions,
including administrative functions, as the Committee may determine, to
the extent that such delegation will not result in the loss of an
exemption under Rule l6b-3(d)(1) for Awards granted to Participants
subject to Section 16 of the Exchange Act in respect of Bexil and will
not cause Awards intended to qualify as "performance-based
compensation" under Code Section 162(m) to fail to so qualify. The
Committee may appoint agents to assist it in administering the Plan.
(c) Limitation of Liability. The Committee and each member thereof shall
be entitled, in good faith, to rely or act upon any report or other
information furnished to it or him or her by any officer or employee
of Bexil, Bexil's independent auditors, consultants or any other
agents assisting in the administration of the Plan. Members of the
Committee and any officer or employee of Bexil acting at the direction
or on behalf of the Committee shall not be personally liable for any
action or determination taken or made, or not taken or made, in good
faith with respect to the Plan, and shall, to the extent permitted by
law, be fully indemnified and protected by Bexil with respect to any
such action or determination.
4. Stock Subject to Plan.
(a) Overall Number of Shares of Bexil Stock Available for Delivery.
Subject to adjustment as provided in Section 10(c) hereof, the total
number of shares of Bexil Stock reserved and available for delivery in
connection with Awards under the Plan shall be (i) 20% of the number
of outstanding shares of Bexil Stock as of the Effective Date, plus
(ii) 20% of the number of shares of Bexil Stock issued or delivered by
Bexil during the term of the Plan (excluding any issuance or delivery
in connection with Awards, or any other compensation or benefit plan
of Bexil); provided, however, that the total number of shares of Bexil
Stock with respect to which ISOs may be granted shall in no event
exceed 20% of the total number of authorized shares of Bexil Stock as
of the Effective Date. Any shares of Bexil Stock delivered under the
Plan shall consist of authorized and unissued shares or treasury
shares.
(b) Application of Limitation to Grants of Awards. No Award may be granted
if the number of shares of Bexil Stock to be delivered in connection
with such Award or, in the case of an Award relating to shares of
Bexil Stock but settleable only in cash (such as cash-only SARs), the
number of shares to which such Award relates, exceeds the number of
shares of Bexil Stock remaining available for grant under the Plan.
The Committee may adopt reasonable counting procedures to ensure
appropriate counting, avoid double counting (as, for example, in the
case of tandem or substitute awards) and make adjustments if the
number of shares of Bexil Stock actually delivered differs from the
number of shares previously counted in connection with an Award.
4
(c) Availability of Shares Not Delivered under Awards. Shares of Bexil
Stock subject to an Award under the Plan that is canceled, expired,
forfeited, settled in cash or otherwise terminated without a delivery
of shares to the Participant, including (i) the number of shares
withheld in payment of any exercise or purchase price of an Award or
taxes relating to any Award and (ii) the number of shares surrendered
in payment of any exercise or purchase price of an Award or taxes
relating to any Award, will again be available for Awards under the
Plan, except that if any such shares could not again be available for
Awards to a particular Participant under any applicable law or
regulation, such shares shall be available exclusively for Awards to
Participants who are not subject to such limitation.
5. Eligibility; Per-Person Award Limitations. Awards may be granted under the
Plan only to Eligible Persons. Subject to the maximum number of shares of
Bexil Stock available for Awards under the Plan, in each fiscal year during
any part of which the Plan is in effect, an Eligible Person may not be
granted Awards relating to more than 1,000,000 shares of Bexil Stock,
subject to adjustment as provided in Section 10(c), under each of Sections
6(b), 6(c), 6(d), 6(e), 6(f), 6(g) and 6(h). For purposes of applying the
foregoing limitation to Sections 6(b) and 6(c), any Option or SAR that is
canceled shall be treated as remaining outstanding, and any amendment to an
Option or SAR that reduces the exercise or grant price (other than
customary anti-dilution adjustments) shall be treated as the cancellation
of the original Option or SAR and the issuance of a new Option or SAR. In
addition, the maximum cash Award that may be earned under the Plan pursuant
to Section 6(h) in respect of any fiscal year shall be $1,000,000,
determined on an annualized basis in the case of a Performance Award. 6.
Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award
or the exercise thereof, at the date of grant or thereafter (subject
to Section 10(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
determine, including terms requiring forfeiture of Awards in the event
of termination of employment by the Participant and terms permitting a
Participant to make elections relating to his or her Award. The
Committee shall retain full power and discretion to accelerate, waive
or modify, at any time, any term or condition of an Award that is not
mandatory under the Plan. Except in cases in which the Committee is
authorized to require other forms of consideration under the Plan, or
to the extent other forms of consideration must by paid to satisfy the
requirements of the Maryland General Corporation Law, no consideration
other than services may be required for the grant (but not the
exercise) of any Award.
(b) Options. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Bexil Stock
purchasable under an Option shall be determined by the Committee,
provided that such exercise price shall be not less than the Fair
Market Value of a share of Bexil Stock on the date of grant of
such Option except as provided under Section 7(a) hereof.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which or the circumstances under which an Option
may be exercised in whole or in part (including based on
achievement of performance goals and/or future service
requirements), the methods by which such exercise price may be
paid or deemed to be paid, the form of such payment, including,
without limitation, cash or Bexil Stock, and the methods by or
forms in which Bexil Stock will be delivered or deemed to be
delivered to Participants.
(iii) ISOs. The terms of any ISO granted under the Plan shall comply
in all respects with the provisions of Code Section 422. Anything
in the Plan to the contrary notwithstanding, no term of the Plan
relating to ISOs (including any SAR in tandem therewith) shall be
interpreted, amended or altered, nor shall any discretion or
authority granted under the Plan be exercised, so as to
disqualify either the Plan or any ISO under Code Section 422,
unless the Participant has first requested the change that will
result in such disqualification of the Participant's ISO. No
grant of an ISO to any one Participant shall cover a number of
shares of Bexil Stock whose aggregate Fair Market Value
(determined on the date the Option is granted), together with the
aggregate Fair Market Value (determined on the respective date of
grant of any ISO) of the shares of Bexil Stock covered by any
ISOs which have been previously granted under the Plan or any
other plan of Bexil or any of its Subsidiaries and which are
exercisable for the first time during the same calendar year,
exceeds $100,000 (or such other amount as may be fixed as the
maximum amount permitted by Code Section 422(d)).
(c) Stock Appreciation Rights. The Committee is authorized to grant SARs
to Participants on the following terms and conditions:
(i) Right to Payment. A SAR shall confer on the Participant to whom
it is granted a right to receive consideration (the form of which
will be determined pursuant to Section 6(c)(ii) below), upon
exercise thereof, equal to the excess of (A) the Fair Market
Value of one share of Bexil Stock on the date of exercise over
(B) the grant price of the SAR as determined by the Committee at
the time of grant.
(ii) Other Terms. The Committee shall determine at the date of grant
or thereafter, the time or times at which and the circumstances
under which a SAR may be exercised in whole or in part (including
based on achievement of performance goals and/or future service
requirements), the method of exercise, method of settlement, form
of consideration payable in settlement, method by or forms in
which Bexil Stock will be delivered or deemed to be delivered to
Participants, whether or not a SAR shall be in tandem or in
combination with any other Award and any other terms and
conditions of any SAR. SARs may be either freestanding or in
tandem with other Awards.
5
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose, which
restrictions may lapse separately or in combination at such
times, under such circumstances (including based on achievement
of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the
date of grant or thereafter. Except to the extent restricted
under the terms of the Plan and any Award agreement relating to
the Restricted Stock, a Participant granted Restricted Stock
shall have all of the rights of a shareholder, including the
right to vote the Restricted Stock and the right to receive
dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee). During the restricted
period applicable to the Restricted Stock, subject to Section
10(b) below, the Restricted Stock may not be sold, transferred,
pledged, hypothecated, margined or otherwise encumbered by the
Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment during the applicable restriction
period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by Bexil; provided
that the Committee may provide, by rule or regulation or in any
Award agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted
Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee
may in other cases waive in whole or in part the forfeiture of
Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine.
If certificates representing Restricted Stock are registered in
the name of the Participant, the Committee may require that such
certificates bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock,
that Bexil retain physical possession of the certificates and
that the Participant deliver a stock power to Bexil, endorsed in
blank, relating to the Restricted Stock.
(iv) Dividends, Capital Gain Distributions and Splits. As a condition
to the grant of an Award of Restricted Stock, the Committee may
require that any cash dividends or capital gain distributions
paid on a share of Restricted Stock be automatically reinvested
in additional shares of Restricted Stock. Unless otherwise
determined by the Committee, Bexil Stock distributed in
connection with a stock split, stock dividend or capital gain
distribution, and other property distributed as a dividend, shall
be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such Bexil
Stock or other property has been distributed.
(e) Deferred Stock. The Committee is authorized to grant Deferred Stock to
Participants, which are rights to receive Bexil Stock, cash, or a
combination thereof at the end of a specified deferral period, subject
to the following terms and conditions:
(i) Award and Restrictions. Satisfaction of an Award of Deferred
Stock shall occur upon expiration of the deferral period
specified for such Deferred Stock by the Committee (or, if
permitted by the Committee, as elected by the Participant). In
addition, Deferred Stock shall be subject to such restrictions
(which may include a risk of forfeiture) as the Committee may
impose, if any, which restrictions may lapse at the expiration of
the deferral period or at earlier specified times (including
based on achievement of performance goals and/or future service
requirements), separately or in combination, in installments or
otherwise, as the Committee may determine. Deferred Stock may be
satisfied by delivery of Bexil Stock, cash equal to the Fair
Market Value of the specified number of shares of Bexil Stock
covered by the Deferred Stock, or a combination thereof, as
determined by the Committee at the date of grant or thereafter.
(ii) Forfeiture. Except as otherwise determined by the Committee, upon
termination of employment during the applicable deferral period
or portion thereof to which forfeiture conditions apply (as
provided in the Award agreement evidencing the Deferred Stock),
all Deferred Stock that is at that time subject to deferral
(other than a deferral at the election of the Participant) shall
be forfeited; provided that the Committee may provide, by rule or
regulation or in any Award agreement, or may determine in any
individual case, that restrictions or forfeiture conditions
relating to Deferred Stock shall be waived in whole or in part in
the event of terminations resulting from specified causes, and
the Committee may in other cases waive in whole or in part the
forfeiture of Deferred Stock.
6
(iii) Dividend Equivalents. Unless otherwise determined by the
Committee at date of grant, Dividend Equivalents on the specified
number of shares of Bexil Stock covered by an Award of Deferred
Stock shall be either (A) paid with respect to such Deferred
Stock at the dividend payment date in cash or in shares of
unrestricted Bexil Stock having a Fair Market Value equal to the
amount of such dividends, or (B) deferred with respect to such
Deferred Stock and the amount or value thereof automatically
deemed reinvested in additional Deferred Stock, other Awards or
other investment vehicles, as the Committee shall determine or
permit the Participant to elect.
(iv) Notwithstanding any other provision of the Plan to the contrary,
no deferral will be permitted if it will result in the Plan
becoming an "employee pension benefit plan" under Section 3(2) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), that is not otherwise exempt under Sections 201(2),
301(a)(3) and 401(a)(1) of ERISA.
(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is
authorized to grant Bexil Stock as a bonus, or to grant Bexil Stock or
other Awards in lieu of obligations to pay cash or deliver other
property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of Participants subject to
Section 16 of the Exchange Act, the amount of such grants remains
within the discretion of the Committee to the extent necessary to
ensure that acquisitions of Bexil Stock or other Awards are exempt
from liability under Section 16(b) of the Exchange Act. Bexil Stock or
Awards granted under this Section 6(f) shall be subject to such other
terms as shall be determined by the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to a Participant, entitling the Participant to receive
cash, Bexil Stock, or other Awards equal in value to dividends paid
with respect to a specified number of shares of Bexil Stock, or other
periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee
may provide that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been reinvested in additional
Bexil Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the
Committee may specify.
(h) Annual Incentive and Performance Awards. The Committee is authorized
to make Annual Incentive Awards and Performance Awards payable in
cash, Bexil Stock, or other Awards, on terms and conditions
established by the Committee, subject to Section 8 in the event of
Annual Incentive Awards or Performance Awards intended to qualify as
"performance-based compensation" for purposes of Code Section 162(m).
7. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan
of Bexil, any Subsidiary, or any business entity to be acquired by
Bexil or any Subsidiary, or any other right of a Participant to
receive payment from Bexil or any Subsidiary. Such additional, tandem,
and substitute or exchange Awards may be granted at any time. If an
Award is granted in substitution or exchange for another Award or
award, the Committee shall require the surrender of such other Award
or award in consideration for the grant of the new Award. In addition,
Awards may be granted in lieu of cash compensation, including in lieu
of cash amounts payable under other plans of Bexil or any Subsidiary
or any business entity to be acquired by Bexil or any Subsidiary, in
which the value of Bexil Stock subject to the Award is equivalent in
value to the cash compensation (for example, Deferred Stock or
Restricted Stock), or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying Bexil
Stock minus the value of the cash compensation surrendered (for
example, Options granted with an exercise price "discounted" by the
amount of the cash compensation surrendered).
7
(b) Term of Awards. The term of each Award shall be for such period as may
be determined by the Committee; provided that in no event shall the
term of any Option or SAR exceed a period of five years after the date
of grant.
(c) Form and Timing of Payment under Awards; Deferrals. Subject to the
terms of the Plan and any applicable Award agreement, payments to be
made by Bexil upon the exercise of an Option or other Award or
settlement of an Award may be made in such forms as the Committee
shall determine, including, without limitation, cash, Bexil Stock, or
other Awards, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may
be accelerated, and cash paid in lieu of Bexil Stock in connection
with such settlement, in the discretion of the Committee or upon the
occurrence of one or more specified events. Installment or deferred
payments may be required by the Committee to the extent necessary to
qualify payments for deductibility under Code Section 162(m), or
permitted at the election of the Participant on terms and conditions
established by the Committee. Payments may include, without
limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting
of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Bexil Stock. Any payments mandatorily
deferred by the Committee to qualify such payments for deductibility
under Code Section 162(m) shall include a reasonable rate of interest.
(d) Exemptions from Section 16(b) Liability. It is the intent of Bexil
that the grant of any Awards to or other transaction by a Participant
who is subject to Section 16 of the Exchange Act shall be exempt under
Rule 16b-3 (except for transactions acknowledged in writing to be
non-exempt by such Participant). Accordingly, if any provision of this
Plan or any Award agreement does not comply with the requirements of
Rule 16b-3 as then applicable to any such transaction, such provision
shall be construed or deemed amended to the extent necessary to
conform to the applicable requirements of Rule 16b-3 so that such
Participant shall avoid liability under Section 16(b).
(e) General Terms Relating to Awards.
(i) Vesting. Unless the Committee provides otherwise at the time of
grant or by amendment, an Option, SAR, grant of Restricted Stock
or Deferred Stock will become exercisable or settleable, as the
case may be, at the end of a period commencing on the date of
grant and ending on a date which is the sooner of three years
from the date of grant date or three years from commencement of
service to the Company, and if the grantee has more than three
years of service on the date of grant, the grant will vest
immediately, subject to the Participant's continued employment
with Bexil.
(ii) Term of Awards. Except as provided in Section 7(e)(iii) below and
unless the Committee provides otherwise at the time of grant or
by amendment, an Option or SAR will have a maximum term of five
years after the date of grant.
(iii) Termination of Employment.
(A) Unless the Committee provides otherwise at the time of grant
or by amendment, upon a Participant's termination of
employment other than by reason of death or Disability, the
Participant may, within three months from the date of such
termination of employment, exercise all or any part of his
or her Options or SARs as were exercisable at the date of
termination of employment but only if (x) the Participant
resigns or retires and the Committee consents to such
resignation or retirement and (y) such termination of
employment is not for Cause. If such termination of
employment is for Cause or the Committee does not so
consent, the right of such Participant to exercise such
Options or SARs shall terminate at the date of termination
of employment. In no event, however, may any Option or SAR
be exercised after the time when it would otherwise expire.
(B) Disability. Unless the Committee provides otherwise at the
time of grant or by amendment, upon a Participant's
Disability Date, the Participant may, within one year after
the Disability Date, exercise all or a part of his or her
Options or SARs that were exercisable upon such Disability
Date. In no event, however, may any Option or SAR be
exercised after the time when it would otherwise expire.
8
(C) Death. Unless the Committee provides otherwise at the time
of grant or by amendment, in the event of the death of a
Participant while employed by Bexil, or prior to the
expiration of the Option or SAR as provided in Section
7(e)(iii)(B) above, to the extent all or any part of the
Option or SAR was exercisable as of the date of the
Participant's death, the right of the Participant's
Beneficiary to exercise the Option or SAR shall expire upon
the expiration of one year from the date of the
Participant's death (but in no event more than one year from
the Participant's Disability Date) or on the stated
termination date of the Option or SAR, whichever is earlier.
In all other cases of death following a Participant's
termination of employment, the Participant's Beneficiary may
exercise the Option or SAR within the remaining time, if
any, provided in Section 7(e)(iii)(A) above. In the event of
the Participant's death, the Committee may, in its sole
discretion, accelerate the right to exercise all or any part
of an Option or SAR that would not otherwise be exercisable.
(iv) Expiration of Unvested Options. Unless the Committee provides
otherwise at the time of grant or by amendment, and subject to Section
7(e)(iii)(C), to the extent all or any part of an Option or SAR was
not exercisable as of the date of a Participant's termination of
employment, such right shall expire at the date of such termination of
employment.
8. Performance and Annual Incentive Awards.
(a) Performance Conditions. The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof,
may be subject to such performance conditions as may be specified by
the Committee. The Committee may use such business criteria and other
measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce or
increase the amounts payable under any Award subject to performance
conditions; provided, however, that all Performance Awards and Annual
Incentive Awards shall comply with the requirements of Sections 8(b)
and 8(c) hereof unless the Committee specifically determines at the
time of grant that such Award is not intended to qualify as
"performance-based compensation" under Code Section 162(m).
(b) Performance Awards Granted to Designated Covered Employees. Unless the
Committee determines that a Performance Award is not intended to
qualify as "performance-based compensation" for purposes of Code
Section 162(m), the grant, exercise and/or settlement of such
Performance Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this
Section 8(b).
(i) Performance Goals Generally. The performance goals for such
Performance Awards shall consist of one or more business criteria
and a targeted level or levels of performance with respect to
each of such criteria, as specified by the Committee consistent
with this Section 8(b). Performance goals shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and
regulations thereunder (including Regulation 1.162-27 and
successor regulations thereto), including the requirement that
the level or levels of performance targeted by the Committee
result in the achievement of performance goals being
"substantially uncertain." The Committee may determine that such
Performance Awards shall be granted, exercised and/or settled
upon achievement of any one performance goal or that two or more
of the performance goals must be achieved as a condition to the
grant, exercise and/or settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to
any one Participant or to different Participants.
(ii) Business Criteria. One or more of the following business criteria
for Bexil, on a consolidated basis, and/or for specified
Subsidiaries or business units of Bexil (except with respect to
the total shareholder return and earnings per share criteria),
shall be used by the Committee in establishing performance goals
for such Performance Awards: (1) earnings per share; (2)
revenues; increase in revenues; the excess of all or a portion of
revenues over operating expenses (excluding expenses determined
by the Committee at the time performance goals are established);
(3) cash flow; (4) cash flow return on investment; (5) return on
net assets; return on assets; return on investment; return on
capital; return on equity; (6) economic value added; (7)
operating margin; (8) net income; pretax earnings; pretax
earnings before interest, depreciation, amortization and/or
incentive compensation; pretax operating earnings; operating
earnings; (9) total shareholder return; (10) performance of
managed funds; (11) increase in market share or assets under
management; (12) reduction in costs; (13) increase in the Fair
Market Value of Bexil Stock; and (14) any of the above goals as
compared to the performance of the Standard & Poor's 500 Stock
Index or the Standard & Poor's Small Cap Insurance Index. One or
more of the foregoing business criteria shall also be used in
establishing performance goals for Annual Incentive Awards
granted to a Covered Employee under Section 8(c) hereof.
9
(iii) Performance Period; Timing for Establishing Performance Goals.
Achievement of performance goals in respect of such Performance
Awards shall be measured over a performance period of up to ten
years, as specified by the Committee. Performance goals shall be
established not later than 90 days after the beginning of any
performance period applicable to such Performance Awards, or at
such other date as may be required or permitted for
"performance-based compensation" under Code Section 162(m).
(iv) Performance Award Pool. The Committee may establish a Performance
Award pool, which shall be an unfunded pool, for purposes of
measuring the performance of Bexil, any Subsidiary and/or any
business unit of Bexil in connection with Performance Awards. The
amount of such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on one or more
of the business criteria set forth in Section 8(b)(ii) hereof
during the given performance period, as specified by the
Committee in accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Performance Award pool as
a percentage of any of such business criteria, a percentage
thereof in excess of a threshold amount, or as another amount
which need not bear a strictly mathematical relationship to such
business criteria, provided that the amount of the Performance
Award pool can be determined by an independent third party in
possession of all the relevant facts.
(v) Settlement of Performance Awards; Other Terms. Settlement of such
Performance Awards shall be in cash, Bexil Stock or other Awards,
in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be
made in connection with such Performance Awards, but may not
exercise discretion to increase any such amount payable to a
Covered Employee in respect of a Performance Award subject to
this Section 8(b). The Committee shall specify the circumstances
in which such Performance Awards shall be paid or forfeited in
the event of termination of employment by the Participant prior
to the end of a performance period or settlement of Performance
Awards.
(c) Annual Incentive Awards Granted to Designated Covered Employees.
Unless the Committee determines that an Annual Incentive Award is not
intended to qualify as "performance-based compensation" for purposes
of Code Section 162(m), the grant, exercise and/or settlement of such
Annual Incentive Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this
Section 8(c).
(i) Annual Incentive Award Pool. The Committee may establish an
Annual Incentive Award pool, which shall be an unfunded pool, for
purposes of measuring performance of Bexil, any Subsidiary and/or
any business unit of Bexil in connection with Annual Incentive
Awards. The amount of such Annual Incentive Award pool shall be
based upon the achievement of a performance goal or goals based
on one or more of the business criteria set forth in Section
8(b)(ii) hereof during the given performance period, as specified
by the Committee. The Committee may specify the amount of the
Annual Incentive Award pool as a percentage of any of such
business criteria, a percentage thereof in excess of a threshold
amount, or as another amount which need not bear a strictly
mathematical relationship to such business criteria, provided
that the amount of the Annual Incentive Award pool can be
determined by an independent third party in possession of all the
relevant facts.
(ii) Potential Annual Incentive Awards. Not later than the end of the
90th day of each fiscal year, or at such other date as may be
required or permitted in the case of Awards intended to be
"performance-based compensation" under Code Section 162(m), the
Committee shall determine the Eligible Persons who will
potentially receive Annual Incentive Awards, and the amounts
potentially payable thereunder, for that fiscal year, either out
of an Annual Incentive Award pool established by such date under
Section 8(c)(i) hereof or as individual Annual Incentive Awards.
In the case of individual Annual Incentive Awards intended to
qualify under Code Section 162(m), the amount potentially payable
shall be based upon the achievement of a performance goal or
goals based on one or more of the business criteria set forth in
Section 8(b)(ii) hereof in the given performance year, as
specified by the Committee; in other cases, such amount shall be
based on such criteria as shall be established by the Committee.
(iii) Payout of Annual Incentive Awards. After the end of each fiscal
year, the Committee shall determine the amount, if any, of (A)
the Annual Incentive Award pool, and the maximum amount of
potential Annual Incentive Awards payable to each Participant in
the Annual Incentive Award pool, or (B) the amount of potential
Annual Incentive Awards otherwise payable to each Participant.
The Committee may, in its discretion, determine that the amount
payable to any Participant as a final Annual Incentive Award
shall be increased or reduced from the amount of his or her
potential Annual Incentive Award, including a determination to
make no final Award whatsoever, but may not exercise discretion
to increase any such amount in the case of an Annual Incentive
Award intended to qualify under Code Section 162(m). The
Committee shall specify the circumstances in which an Annual
Incentive Award shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of
a fiscal year or settlement of such Annual Incentive Award.
Settlement of Annual Incentive Awards shall be in cash, Bexil
Stock or other Awards, in the discretion of the Committee.
(d) Written Determinations. All determinations made by the Committee as to
the establishment of performance goals, the amount of any Performance
Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards under
Section 8(b), and the amount of any Annual Incentive Award pool or
potential individual Annual Incentive Awards and the amount of final
Annual Incentive Awards under Section 8(c), shall be made in writing
in the case of any Award intended to qualify under Code Section
162(m). No Performance Award or Annual Incentive Award intended to
quality under Code Section 162(m) shall be paid until the Committee
has certified in writing that the applicable performance goals have
been achieved. The Committee may not delegate any responsibility
relating to such Performance Awards or Annual Incentive Awards.
10
(e) Status of Section 8(b) and Section 8(c) Awards under Code Section
162(m). It is the intent of Bexil that Performance Awards and Annual
Incentive Awards under Sections 8(b) and 8(c) hereof granted to
persons who are likely to be Covered Employees within the meaning of
Code Section 162(m) and regulations thereunder (including Regulation
1.162-27 and successor regulations thereto) shall, if so designated by
the Committee, constitute "performance-based compensation" within the
meaning of Code Section 162(m) and regulations thereunder.
Accordingly, the terms of Sections 8(b), (c), (d) and (e), including
the definitions of Covered Employee and other terms used therein,
shall be interpreted in a manner consistent with Code Section 162(m)
and regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Participant
will be a Covered Employee with respect to a fiscal year that has not
yet been completed, the term Covered Employee as used herein shall
mean any Eligible Person who receives a Performance Award or an Annual
Incentive Award unless the Committee determines, at the time of grant,
that such Award is not intended to qualify as "performance-based
compensation" for purposes of Code Section 162(m). If any provision of
the Plan as in effect on the date of adoption or any agreements
relating to Performance Awards or Annual Incentive Awards that are
designated as intended to comply with Code Section 162(m) does not
comply or is inconsistent with the requirements of Code Section 162(m)
or regulations thereunder, such provision shall be construed or deemed
amended to the extent necessary to conform to such requirements.
9. Options Granted Automatically to Non-Employee Directors.
(a) Initial Option Grants. A Non-Employee Director Initial Option will be
automatically granted (i) to each Non-Employee Director upon approval
of the Plan by Bexil's shareholders and (ii) after approval of the
Plan by Bexil's shareholders, at the effective date of any other
director's initial election to the Board if he or she qualifies as a
Non-Employee Director at that date.
(b) Annual Option Grants. A Non-Employee Director Annual Option will be
automatically granted, at the close of business on the date of final
adjournment of each annual meeting of Bexil's shareholders, to each
member of the Board who then qualifies as a Non-Employee Director. The
foregoing notwithstanding, any person who has been automatically
granted a Non-Employee Director Initial Option under Section 9(a)
shall not be automatically granted a Non-Employee Director Annual
Option at the first annual meeting of shareholders following such
grant of the Initial Option if such annual meeting takes place within
three months after the effective date of such grant of the Initial
Option.
(c) Number of Shares Subject to Automatic Option Grants. The number of
shares of Bexil Stock to be subject to each Non-Employee Director
Initial Option shall be 1,000, and the number of shares of Bexil Stock
to be subject to each Non-Employee Director Annual Option shall be
1,000, in each case subject to adjustment as provided in Section
10(c).
(d) Other Non-Employee Director Initial and Annual Option Terms. Other
terms of Non-Employee Director Options shall be as follows:
(i) The exercise price per share of Bexil Stock purchasable upon
exercise of any Non-Employee Director Option will be equal to
100% of the Fair Market Value of a share of Bexil Stock on the
date of grant of the Option.
(ii) A Non-Employee Director Option will expire at the earlier of (A)
five years after the date of grant or (B) three months after the
date the Participant ceases to serve as a director of Bexil for
any reason.
(iii) Each Non-Employee Director Option will become exercisable at the
end of a period commencing on the date of grant and ending on a
date which is the sooner of three years from the date of grant
date or three years from commencement of service to the Company,
and if the optionee has more than three years of service on the
date of grant, the options will vest immediately.
(e) Method of Exercise. Unless the Committee provides otherwise at the
time of grant or by amendment, a Participant may exercise a
Non-Employee Director Option, in whole or in part, at such time as it
is exercisable and prior to its expiration, by giving written notice
of exercise to the Secretary of Bexil, specifying the Option to be
exercised and the number of shares to be purchased, and paying in full
the exercise price in cash (including by check) or by surrender of
shares of Bexil Stock already owned by the Participant having a Fair
Market Value at the time of exercise equal to the exercise price, or
by a combination of cash and shares.
11
(f) Availability of Shares. If an automatic grant of Options authorized
under Section 9(a) or (b) cannot be made in full due to the limitation
set forth in Section 4(a), such grant shall be made (together with
other automatic grants to occur at the same time) to the greatest
extent then permitted under Section 4(a).
10. General Provisions.
(a) Compliance with Legal and Other Requirements. Bexil may, to the extent
deemed necessary or advisable by the Committee, postpone the issuance
or delivery of Bexil Stock or payment of other benefits under any
Award until completion of such registration or qualification of such
Bexil Stock or other required action under any federal or state law,
rule or regulation, listing or other required action with respect to
any stock exchange or automated quotation system upon which the Bexil
Stock or other securities of Bexil are listed or quoted, or compliance
with any other obligation of Bexil, as the Committee may consider
appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be
subject to such other conditions as it may consider appropriate in
connection with the issuance or delivery of Bexil Stock or payment of
other benefits in compliance with applicable laws, rules and
regulations, listing requirements or other obligations.
(b) Limits on Transferability; Beneficiaries. Unless the Committee
provides otherwise at the time of grant or by amendment, no Award or
other right or interest of a Participant under the Plan shall be
pledged, hypothecated or otherwise encumbered or subject to any lien,
obligation or liability of such Participant to any party (other than
Bexil or a Subsidiary), or assigned or transferred by such Participant
otherwise than by will or the laws of descent and distribution or to a
Beneficiary upon the death of a Participant, and such Awards or rights
that may be exercisable shall be exercised during the lifetime of the
Participant only by the Participant or his or her guardian or legal
representative, except that Awards and other rights (other than ISOs
and SARs in tandem therewith) may be transferred to one or more
Beneficiaries or other transferees during the lifetime of the
Participant to facilitate estate planning, and may be exercised by
such transferees in accordance with the terms of such Award, but only
if and to the extent such transfers are permitted by the Committee
pursuant to the express terms of an Award agreement (subject to any
terms and conditions which the Committee may impose thereon). A
Beneficiary, transferee, or other person claiming any rights under the
Plan from or through any Participant shall be subject to all terms and
conditions of the Plan and any Award agreement applicable to such
Participant, except as otherwise determined by the Committee, and to
any additional terms and conditions deemed necessary or appropriate by
the Committee.
(c) Adjustments. In the event that any dividend, capital gain distribution
or other distribution (whether in the form of cash, Bexil Stock or
other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination,
repurchase, share exchange, liquidation, dissolution or other similar
corporate transaction or event affects the Bexil Stock such that an
adjustment is determined by the Committee to be appropriate under the
Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (i) the number and kind of shares of
Bexil Stock which may be delivered in connection with Awards
(including ISOs) granted thereafter, (ii) the number and kind of
shares of Bexil Stock by which annual per-person Award limitations are
measured under Section 5 hereof, (iii) the number and kind of shares
of Bexil Stock subject to or deliverable in respect of outstanding
Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or
other property in respect of any outstanding Award. In addition, the
Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards (including
Performance Awards and any Performance Award pool or performance goals
relating thereto, and Annual Incentive Awards and any Annual Incentive
Award pool or performance goals relating thereto) in recognition of
unusual or nonrecurring events (including, without limitation, events
described in the preceding sentence, as well as acquisitions and
dispositions of businesses and assets) affecting Bexil, any Subsidiary
or any business unit, or the financial statements of Bexil or any
Subsidiary or business unit, or in response to changes in applicable
laws, regulations, accounting principles, tax rates and regulations or
business conditions or in view of the Committee's assessment of the
business strategy of Bexil, any Subsidiary or business unit thereof,
performance of comparable organizations, economic and business
conditions, personal performance of a Participant, and any other
circumstances deemed relevant, provided that no such adjustment shall
be authorized or made if and to the extent that such authority or the
making of such adjustment would cause Options, SARs, Performance
Awards granted under Section 8(b) hereof or Annual Incentive Awards
granted under Section 8(c) hereof to Participants designated by the
Committee as Covered Employees and intended to qualify as
"performance-based compensation" under Code Section 162(m) and
regulations thereunder to otherwise fail to qualify as
"performance-based compensation" under Code Section 162(m) and
regulations thereunder.
12
(d) Taxes. Bexil is authorized to withhold from any Award granted, any
payment relating to an Award under the Plan, including from a
distribution of Bexil Stock, or any payroll or other payment to a
Participant, amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to
take such other action as the Committee may deem advisable to enable
Bexil and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Bexil
Stock or other property and to make cash payments in respect thereof
in satisfaction of a Participant's tax obligations, either on a
mandatory or elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate the Plan or the Committee's authority to
grant Awards under the Plan without the consent of shareholders or
Participants, except that any amendment or alteration to the Plan
shall be subject to the approval of Bexil's shareholders if such
shareholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation
system on which the Bexil Stock may then be listed or quoted, and the
Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to shareholders for approval; provided that,
subject to Section 10(c), without the consent of an affected
Participant, no such Board action may materially and adversely affect
the rights of such Participant under any previously granted and
outstanding Award. The Committee may waive any conditions or rights
under, or amend, alter, suspend, discontinue or terminate any Award
theretofore granted and any Award agreement relating thereto, except
as otherwise provided in the Plan; provided that, subject to Section
10(c), without the consent of an affected Participant, no such
Committee action may materially and adversely affect the rights of
such Participant under such Award.
(f) Limitation on Rights Conferred under the Plan. Neither the Plan nor
any action taken hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible
Person or Participant or in the employ or service of Bexil, (ii)
interfering in any way with the right of Bexil to terminate any
Eligible Person's or Participant's employment or service at any time,
(iii) giving an Eligible Person or Participant any claim to be granted
any Award under the Plan or to be treated uniformly with other
Participants and employees, or (iv) conferring on a Participant any of
the rights of a shareholder of Bexil unless and until the Participant
is duly issued or transferred shares of Bexil Stock in accordance with
the terms of an Award.
(g) Unfunded Status of Awards, Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation.
With respect to any payments not yet made to a Participant or
obligation to deliver Bexil Stock pursuant to an Award, nothing
contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of Bexil;
provided that the Committee may authorize the creation of trusts and
deposit therein cash, Bexil Stock, other Awards or other property, or
make other arrangements to meet Bexil's obligations under the Plan.
Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise
determines with the consent of each affected Participant. The trustee
of such trusts may be authorized to dispose of trust assets and
reinvest the proceeds in alternative investments, subject to such
terms and conditions as the Committee may specify and in accordance
with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of Bexil for approval
shall be construed as creating any limitations on the power of the
Board or a committee thereof to adopt such other incentive
arrangements as it may deem desirable including incentive arrangements
and awards which do not qualify under Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless
otherwise determined by the Committee, in the event of a forfeiture of
an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash
or other consideration. No fractional shares of Bexil Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee
shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
13
(j) Governing Law. The validity, construction and effect of the Plan, any
rules and regulations under the Plan, and any Award agreement shall be
determined in accordance with the Maryland General Corporation Law,
without giving effect to principles of conflicts of laws, and
applicable federal law.
(k) Plan Effective Date and Shareholder Approval. The Plan was adopted by
the Board on January 9, 2004, including all of the Non-Employee
Directors, and will become effective upon approval of the Plan by the
shareholders of Bexil. The Plan shall remain in effect until all
Awards have been exercised or terminated under the terms of the Plan
and applicable Award agreements; provided, however, that Awards under
the Plan may be granted only within ten (10) years from the adoption
of the Plan.
14
PROXY CARD
BEXIL CORPORATION
This proxy is solicited by and on behalf of the Company's Board of Directors for
the Special Meeting of Stockholders on [meeting date], and at any postponement
or adjournment thereof.
The undersigned stockholder of Bexil Corporation (the "Company") hereby appoints
Thomas B. Winmill and Monica Pelaez and each of them, the attorneys and proxies
of the undersigned, with full power of substitution in each of them, to attend
the Special Meeting of Stockholders to be held at the American Stock Exchange,
86 Trinity Place, 14th Floor, New York, New York on [meeting date] at [8:30
a.m.], local time, and at any postponement or adjournment thereof ("Meeting") to
cast on behalf of the undersigned all votes that the undersigned is entitled to
cast at the Meeting and otherwise to represent the undersigned at the Meeting
with all of the powers possessed by the undersigned if personally present at the
Meeting. The undersigned hereby acknowledges receipt of the Notice of Special
Meeting and the accompanying Proxy Statement and revokes any proxy heretofore
given for the Meeting.
The votes entitled to be cast by the undersigned will be cast as instructed on
the reverse side hereof. If this Proxy is executed but no instruction is given,
the votes entitled to be cast by the undersigned will be cast "for" the Bexil
Corporation 2004 Incentive Compensation Plan and in any event in the discretion
of the Proxy holder on any other matter that may properly come before the
Meeting.
(Continued and to be signed on the reverse side)
SPECIAL MEETING OF STOCKHOLDERS OF BEXIL CORPORATION
[meeting date]
Please detach along perforated line and mail in
the envelope provided Please date, sign and mail your
proxy card in the envelope provided as soon as possible.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [x]
1. To approve the Bexil Corporation 2004 Incentive Compensation Plan.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
Your vote is important! Please sign and date the proxy/voting
instructions card below and return it promptly in the enclosed postage-
paid envelope or otherwise to Bexil Corporation c/o American Stock
Transfer and Trust Company, 59 Maiden Lane, New York, NY 10038 so that
your shares can be represented at the Meeting. If no instructions
are given on a proposal, the proxies will vote FOR the proposal,in
accordance with the Company Board's recommendations.
To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this method.
Signature of Stockholder ___________Date:_____Signature of Stockholder
___________Date:_____
Note: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person.