SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): March 8, 2005
ProAssurance Corporation
(Exact name of registrant as specified in its charter)
Delaware 001-16533 63-1261433
(State of Incorporation) (Commission File No.) (IRS Employer I.D. No.)
100 Brookwood Place, Birmingham, Alabama 35209
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (205) 877-4400
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|X| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Securities Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-(c) under the Exchange
Act (17CFR 240.13e-(c))
Item 1.01 Entry into a Material Definitive Agreement.
On March 8, 2006, our Board of Directors approved the Compensation Committee's
recommendations for executives' 2006 base salaries and bonus compensation based
on 2005 results. Our Compensation Committee is comprised entirely of independent
directors who made their recommendations after reviewing a number of factors
they believe are important. These include our results of operations, the
creation of shareholder value, individual performance and comparative
compensation information. The report of the Compensation Committee will appear
in our proxy for the upcoming annual meeting of shareholders.
1. Base Salary for 2006
(a) Effective April 1, 2006 the base salaries of our executive officers
will increase. The yearly salary for our Chairman and Chief Executive
Officer, A. Derrill Crowe, M.D., will increase from $680,000 to
$707,200. The yearly salary for our President and Chief Operating
Officer, Victor T. Adamo, Esq., will increase from $490,000 to
$495,000. The yearly salary for our Vice-Chairman, Paul R. Butrus,
will increase from $465,000 to $470,000. The yearly salary for our
Chief Financial Officer, Ned L. Rand, Jr. will increase from $360,000
to $378,000. The yearly salary of Howard H. Friedman, the co-President
of our Professional Liability Group and our Chief Underwriting Officer
and Chief Actuary will increase from $390,000 to $410,000. The yearly
salary of Darryl K. Thomas, the co-President of our Professional
Liability Group and our Chief Claims Officer will increase from
$300,000 to $330,000. The yearly salary of our Chief Accounting
Officer, James J. Morello will increase from $235,788 to $245,200. The
yearly salary of Frank B. O'Neil, our Senior Vice-President for
Corporate Communications and Investor Relations will increase from
$185,000 to $205,000.
2. Annual Incentive Compensation
(a) Bonus compensation will be paid on April 1, 2005 and will consist of
stock and cash. The stock portion of the bonus will be issued from
shares reserved under the ProAssurance Incentive Compensation Stock
Plan and will be reported to the SEC by each individual in a Form 4.
Dr. Crowe will receive a total bonus of $709,500, which includes 6,422
shares as the stock portion of the bonus. Mr. Adamo will receive a
total bonus of $365,500, which includes 3,308 shares as the stock
portion of the bonus. Mr. Butrus will receive a total bonus of
$188,125, which includes 1,702 shares as the stock portion of the
bonus. Mr. Rand will receive a total bonus of $193,500, which includes
1,751 shares as the stock portion of the bonus. Mr. Friedman will
receive a total bonus of $193,500, which includes 1,751 shares as the
stock portion of the bonus. Mr. Thomas will receive a total bonus of
$161,250, which includes 1,459 shares as the stock portion of the
bonus. Mr. Morello will receive a total bonus of $107,500, which
includes 973 shares as the stock portion of the bonus. Mr. O'Neil will
receive a total bonus of $99,115, which includes 897 shares as the
stock portion of the bonus. For purposes of determining the number of
shares to be awarded, the shares were valued at $51.38 per share, the
closing price of a share of common stock on the New York Stock
Exchange on March 8, 2006, the day the bonus and incentive
compensation was confirmed by the Board.
3. Long-Term Incentive Compensation: Option and Performance Share Grants
(a) The Board of Directors has endorsed the Compensation Committees'
desire to transition long-term incentive compensation to performance
shares, or similar instruments, that are awarded based on the
achievement of certain performance targets. In 2006 both performance
shares and options will be awarded to executives, but the number of
options is being reduced as compared to prior years. Both the options
and performance shares are issued pursuant to terms of the
ProAssurance Incentive Compensation Stock Plan.
2
(b) The number of performance shares that can ultimately be earned will
depend on Company performance as measured against three-year goals for
Total Return or Economic Value Added. The performance period is
January 1, 2006 through December 31, 2008, and results will be
evaluated by the Compensation Committee in 2009. The number of
performance shares that are earned will vary from 75% to 125% of the
target award if performance goals are met or exceeded. Results between
those parameters will be interpolated. However, if the performance
requirements are not met, all performance shares will be forfeited.
Performance shares will covert to shares of ProAssurance Common Stock
on a one-for-one basis if issued.
(c) Dr. Crowe's target award is 8,335 performance shares; Mr. Adamo's
target award is 5,000 performance shares; Mr. Butrus' target award is
2,085 shares; Mr. Rand's target award is 4,170 performance shares; Mr.
Friedman's target award is 4,170 shares; Mr. Thomas's target award is
4,170 targeted performance shares; Mr. Morello's target award is 2,085
performance shares and Mr. O'Neil's target award is 2,085 performance
shares. These targeted awards are not derivative securities and as
such, we will not report them on Form 4 unless they are awarded in
2009.
(d) The Board approved the Compensation Committee's recommendation to
award options for 2006 at a price of $51.38 per share, the closing
price of a share of common stock on the New York Stock Exchange on
March 8, 2006, the day the bonus and incentive compensation was
confirmed by the Board. Dr. Crowe will receive 25,000 options; Mr.
Adamo will receive 15,000 options; Mr. Butrus will receive 6,250
options; Mr. Rand will receive 12,500 options; Mr. Friedman will
receive 12,500 options; Mr. Thomas will receive 12,500 options; Mr.
Morello will receive 6,250 options and Mr. O'Neil will receive 6,250
options.
SIGNATURE
Pursuant to the requirements of the Securities Exchange act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 9, 2006
PROASSURANCE CORPORATION
By: /s/ Edward L. Rand, Jr.
----------------------------------------------
Edward L. Rand, Jr.
Chief Financial Officer
3