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 7, 2007
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:
|_| 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 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers; Compensatory Arrangements of Certain Officers
On March 7, 2007 our Board of Directors approved our Compensation
Committee's recommendation for payment of annual incentive awards to each of
ProAssurance's senior executive officers for the year ended December 31, 2006.
We pay bonuses (annual incentive awards) in cash and in shares of our common
stock, based on the market value of the shares on the date our Board of
Directors approves the annual incentive awards.
The stock portion of the annual incentive award is funded by the shares of
common stock reserved for issuance under ProAssurance's 2004 Equity Incentive
Plan, which was approved by our stockholders at the annual meeting held on May
19, 2004.
The following annual incentive awards were approved for the named executive
officers in the proxy statement for the 2006 Annual Meeting of Stockholders (the
"2006 Proxy Statement"): A. Derrill Crowe, Chairman and Chief Executive Officer
- $714,625, which includes 6,456 shares valued at $332,384; Victor T. Adamo,
Vice Chairman and President - $350,138, which includes 3,163 shares valued at
$162,855; Paul R. Butrus, President and Vice Chairman - $189,974, which includes
1,716 shares valued at $88,360; Edward L. Rand, Jr., Chief Financial Officer and
Senior Vice President of Finance - $215,000, which includes 1,942 shares valued
at $100,000; and Howard H. Friedman, Senior Vice President - $198,875, which
includes 1,796 shares valued at $92,500. These annual incentive awards will also
be disclosed as part of the 2006 compensation data to be reported in our proxy
statement for the 2007 Annual Meeting of Stockholders to be filed before April
30, 2007 (the "2007 Proxy Statement").
In addition to the annual incentive awards, the Board of Directors approved
awards of long-term incentive compensation to our senior executive officers in
the form of stock options and performance shares under the 2004 Equity Incentive
Plan. The long term incentive awards will be considered part of the 2007
compensation to the executive officers and will not be disclosed in the 2007
Proxy Statement. The option price for each option is $51.48 per share, being the
closing price of a share of our common stock on the New York Stock Exchange on
the date of grant, March 7, 2007. Each option vests at the rate of 20% per year
over a period of five years. On average, the options has a estimated fair value,
calculated using the Black-Scholes Option Pricing Model, of $17.81 per share on
the date of grant. The average assumptions used in calculating the value of the
options were expected volatility of 0.24, risk free return to 4.4% and a
dividend value of zero, and an expected term of six years.
The following option awards were granted as long-term compensation to the
named executive officers in our 2006 Proxy Statement: A. Derrill Crowe - 25,000
shares valued at $445,150; Victor T. Adamo - 15,000 shares valued at $267,090;
Paul R. Butrus - 6,250 shares valued at $111,288; Edward L. Rand, Jr. - 12,500
shares valued at $222,575; and Howard H. Friedman - 12,500 shares valued at
$222,575.
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The following table reflects the number of performance shares awarded as
long-term compensation for our named executive officers in the 2006 Proxy
Statement:
Value
Name and Principal Position Target Maximum Threshold ($)
A. Derrill Crowe, Chairman and Chief Executive 8,335 10,415 6,250 429,086
Officer of ProAssurance
Victor T. Adamo, Vice Chairman and Chief Operating 5,000 6,250 3,750 257,400
Officer of ProAssurance
Paul R. Butrus, Vice Chairman of ProAssurance 2,085 2,605 1,565 107,336
Edward L. Rand, Jr., Chief Financial Officer and 4,170 5,210 3,130 214,672
Senior Vice President of Finance
Howard H. Friedman 4,170 5,210 3,130 214,672
Senior Vice President-ProAssurance
The value in the above table assumes that the target number of performance
shares will be awarded at a per share price equal to $51.48, the closing price
of a share of our common stock on the New York Stock Exchange on the date of
grant, March 7, 2007.
Our Board of Directors also approved the Compensation Committee's
recommended base salaries for our senior executive officers effective April 1,
2007. The following table reflects the 2007-08 salaries for the principal
executive officer, principal financial officer, and other named executive
officers in ProAssurance's 2006 Proxy Statement:
2007 Salary 2006 Salary
Name and Principal Position ($) ($)
A. Derrill Crowe, Chairman and Chief Executive 715,000 707,200
Officer of ProAssurance
Victor T. Adamo, Vice Chairman and Chief Operating 500,000 495,000
Officer of ProAssurance
Paul R. Butrus, Vice Chairman of ProAssurance 470,000 470,000
Edward L. Rand, Jr., Chief Financial Officer and 395,000 378,000
Senior Vice President of Finance
Howard H. Friedman 426,400 410,000
Secretary and Senior Vice President-ProAssurance
The base salaries will be reflected as part of the 2007 and 2008
compensation and will not be included in the disclosure of 2006 Compensation in
the 2007 Proxy Statement.
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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 8, 2007
PROASSURANCE CORPORATION
By: /s/ Edward L. Rand, Jr.
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Edward L. Rand, Jr.
Chief Financial Officer
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