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Omnibus Plan

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Omnibus Plan Powered By Docstoc
					an average price of $0.5 ($5. million) relating to       provided for grants of up to ,5,000 shares under 
00’s contribution.                                        the incentive plan and 500,000 shares under the 
    a portion of both MvP and operating earnings is         directors’ plan. through May 5, 005, we had granted 
shared by executives, managers, and associates              ,60,88 options under these plans. 
provided certain thresholds are met. MvP, in                    During 005, our shareholders approved the 
particular, requires that we generate a return in excess    Rli corp. omnibus stock Plan (omnibus plan). in 
of our cost of capital before the payment of such           conjunction with the adoption of this plan, effective 
bonuses. annual expenses for these bonus plans              May 5, 005, options will no longer be granted under 
totaled $5. million, $9. million, and $6.8 million       the two other option plans previously in existence. 
for 006, 005, and 00, respectively.                     the purpose of the omnibus plan is to promote the 
                                                            interests of our shareholders by providing our key 
DeF eRReD coMPensation                                      personnel an opportunity to acquire a proprietary 
    We maintain Rabbi trusts for deferred                   interest in the company and reward them for 
compensation plans for directors, key employees,            achieving a high level of corporate performance and 
and executive officers through which our shares             to encourage our continued success and growth. 
are purchased. the emerging issues task Force               awards under the omnibus plan may be in the form 
consensus on issue 9- governs the accounting             of restricted stock, stock options (both incentive and 
for Rabbi trusts. this issue prescribed an accounting       nonqualified), stock appreciation rights, performance 
treatment whereby the employer stock in the plan is         units, as well as other stock based awards. eligibility 
classified and accounted for as equity, in a manner         under the omnibus plan is limited to our employees or 
consistent with the accounting for treasury stock. the      employees of any affiliate and to individuals or entities 
deferred compensation obligation is classified as an        who are not employees but who provide services to 
equity instrument.                                          us or an affiliate, including services provided in the 
    the expense associated with funding these plans is      capacity of consultant, advisor or director. the granting 
recognized through salary, bonus, and esoP expenses         of awards is solely at the discretion of the executive 
for key employees and executive officers. the expense       resources committee and the nominating/corporate 
recognized from the directors’ deferred plan was $0.       governance committee of our board of directors. the 
million, $0. million, and $0. million in 006, 005,      total number of shares of common stock available for 
and 00, respectively.                                     distribution under the omnibus plan may not exceed 
    in 006, the trusts purchased ,9 shares of          ,500,000 shares (subject to adjustment for changes 
our common stock on the open market at an average           in our capitalization). in 005, we granted ,500 
price of $5.6 ($0. million). in 005, the trusts         stock options under this plan. in 006, we granted 
purchased , shares of common stock on the              06,00 stock options under this plan. 
open market at an average price of $.8 ($.                 under the omnibus plan, we grant to officers, 
million). in 00, the trusts purchased 0, shares       directors, and other employees stock options for 
of common stock on the open market at an average            shares with an exercise price equal to the fair value of 
price of $9.05 ($0.8 million). at December , 006,       the shares at the date of grant. options generally vest 
the trusts’ assets were valued at $. million.            and become exercisable ratably over a five-year period 
                                                            and have a 0-year life. the related compensation 
stock oPtion anD stock Pl ans
                                                            expense is recognized over the requisite service 
   During 995, we adopted and the shareholders 
                                                            period. in most instances, the requisite service period 
approved a tax-favored incentive stock option plan 
                                                            and vesting period will be the same. For participants 
(the incentive plan). During 99, the shareholders 
                                                            who are retirement eligible, defined by the plan as 
approved the outside Directors’ stock option Plan (the 
                                                            those individuals whose age and years of service 
directors’ plan). normal vesting for options granted 
                                                            equals 5, the requisite service period is deemed 
was pro rata over five years under the incentive plan 
                                                            to be met and options are immediately expensed on 
and pro rata over three years under the directors’ 
                                                            the date of grant. For participants who will become 
plan with a 0-year life for both plans. the plans 
                                                            retirement eligible during the vesting period, the 

                                                                NOTES   TO  CONSOLIDATED   FINANCIAL  STATEMENTS   | 

				
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posted:11/3/2009
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