Markel Corporation Non-Employee Director Compensation Description (Effective May 23, 2005)
Markel Corporation outlines its compensation plan for non-employee directors, effective May 23, 2005. Each non-employee director receives an annual fee of $30,000 and reimbursement for certain expenses. Directors can participate in the Employee Stock Purchase and Bonus Plan, allowing them to use their fees to buy company stock, with a 10% bonus on net share increases. No new loans are available to directors for stock purchases, but existing loans remain under prior terms, with incentive payments tied to company book value growth. Directors also receive restricted stock units that vest over five years.
Exhibit 10.4
Description of Non-Employee Director Compensation
Effective May 23, 2005, each non-employee director of Markel Corporation (“Company”) will receive for services as director an annual fee of $30,000, plus reimbursement of expenses incurred in connection with attending meetings and training sessions attended at the request of the Company. All individual meeting fees were eliminated.
Non-employee directors are also eligible to participate, up to the total amount of fees received by the director, in the Company’s Employee Stock Purchase and Bonus Plan (“Stock Plan”). Under the Stock Plan, amounts specified by a director are withheld from that director’s fees and forwarded to an independent administrator who purchases shares of the Company’s Common Stock on behalf of the director participant. In addition, the Company provides a “bonus” of 10% of the net increase in shares purchased under the Stock Plan in a calendar year.
The Company also offers loans to employees to facilitate the purchase of shares under the Stock Plan. Effective July 30, 2002, directors may no longer receive new loans under the Stock Plan, and existing loans will continue in accordance with their terms in effect on that date. In connection with the “grandfathered” loans for directors, the Company provides an incentive payment based on a five-year compound annual growth in book value (“Company Incentive Payment”) as follows:
| 5 year Compound Annual Growth in Book Value | Company Incentive Payment as % of Original Loan Balance | |
| Under 15% | 0% | |
| 15% | 1.25% | |
| 16% | 2.0% | |
| 17% | 2.75% | |
| 18% | 3.5% | |
| 19% | 4.25% | |
| 20% | 5% | |
| 21% | 5.75% | |
| 22% | 6.5% | |
| 23% | 7.25% | |
| 24% | 8.0% | |
| 25% | 8.75% | |
| Over 25% | Discretionary |
For these purposes, book value is adjusted to exclude the benefits of issuing equity securities at prices above the preceding year-end book value per share and to exclude the goodwill amortization costs resulting from a transaction in which equity securities are issued.
Each non-employee director previously received a one-time award of 1,000 Restricted Stock Units under the Company’s Omnibus Incentive Plan. Such awards vest ratably over a five-year period from the date of grant, although no shares will be issued until the end of five years. Upon vesting and issuance of previously granted restricted stock unit
awards, or if a new non-employee director joins the Board of Directors, it is expected that the Board will approve new awards of restricted stock units with the amount and terms of such awards to be determined at that time.
