PRELIMINARY
COPY
SUBJECT
TO COMPLETION
667
Madison Avenue
New York,
New York 10065-8087
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
Be Held on May 12, 2009
The Annual Meeting of Shareholders of
Loews Corporation will be held at the Loews Regency Hotel, 540 Park Avenue, New
York, New York, on Tuesday, May 12, 2009, at 11:00 A.M. New York City time, for
the following purposes:
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To
elect eleven directors;
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To
ratify the appointment of our independent auditors for
2009;
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To
approve a proposed amendment to simplify and update our
charter;
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To
consider and act upon one shareholder proposal;
and
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To
transact such other business as may properly come before the meeting or
any adjournment thereof.
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Shareholders of record at the close of
business on March 16, 2009 are entitled to notice of and to vote at the meeting
and any adjournment thereof.
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By
order of the Board of Directors,
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GARY
W. GARSON
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Secretary
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Dated:
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March
[ ], 2009
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WE
URGE YOU TO COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY
AND MAIL IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE,
WHICH REQUIRES NO POSTAGE IF
MAILED
IN THE UNITED STATES.
PRELIMINARY
COPY
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SUBJECT
TO COMPLETION
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LOEWS
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CORPORATION
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PROXY
STATEMENT
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We are providing this Proxy Statement
in connection with the solicitation by our Board of Directors of proxies to be
voted at our Annual Meeting of Shareholders, which will be held on May 12, 2009.
We expect to mail proxy materials to our shareholders on or about March [ ], 2009. Our
mailing address is 667 Madison Avenue, New York, New York
10065-8087. Please note that throughout this Proxy Statement we refer
to Loews Corporation as “we,” “us,” “our,” “Loews” or the
“Company.”
Voting
As of March 16, 2009, the record date
for determination of shareholders entitled to notice of and to vote at the
meeting, there were [ ] shares of our Common Stock
outstanding. Each outstanding share of our Common Stock is entitled to one vote
on all matters that may come before the meeting. All properly
executed proxies in the accompanying form received by us prior to the meeting
will be voted at the meeting. You may revoke your proxy at any time before it is
exercised by giving notice in writing to our Corporate Secretary, by granting a
proxy bearing a later date or by voting in person. Shares with
respect to which a broker indicates that it does not have authority to vote will
be considered “broker non-votes” and will not be counted as present at the
meeting.
Majority Vote Standard for Election
of Directors Our by-laws provide that a nominee for director
in an uncontested election such as this one will be elected to the Board if all
votes cast for that nominee’s election exceed the votes cast against his or her
election. Shares that are voted to abstain with respect to any one or
more nominees and broker non-votes will not be counted and will have no effect
on the outcome of the voting for directors. In the event that an incumbent
nominee is not re-elected, the Board will require that director to tender his or
her resignation and will establish a committee to consider whether to accept or
reject that resignation. The Board will act on the committee’s
recommendation and publicly disclose its decision.
Votes Required to Adopt Other
Proposals. The affirmative vote of shares representing a
majority of our Common Stock outstanding and entitled to vote is required to
approve the proposal to amend our charter to be voted on at the meeting. The
affirmative vote of shares representing a majority of the votes cast by the
holders of shares present and entitled to vote is required to approve each of
the other proposals to be voted on at the meeting. Shares that are
voted to abstain on these matters will be considered present at the meeting, but
since they are not affirmative votes for a proposal they will have the same
effect as votes against the proposal. Broker non-votes have the same
effect as a vote against the proposal to amend our charter and will have no
effect on the outcome of the voting for the other proposals.
Our Board of Directors has adopted a
policy of confidentiality regarding the voting of shares. Under this
policy, all proxies, ballots and voting tabulations that identify how an
individual shareholder has voted at the meeting will be kept
confidential
from us, except where disclosure is required by applicable law, a shareholder
expressly requests disclosure, or in the case of a contested proxy solicitation.
Proxy tabulators and inspectors of election will be employees of our transfer
agent or another third party and not our employees.
Principal
Shareholders
The following table shows certain
information, at February [ ], 2009 unless otherwise
indicated, as to all persons who, to our knowledge, were the beneficial owners
of 5% or more of our Common Stock. All shares reported were owned
beneficially by the persons indicated unless otherwise indicated
below.
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Amount
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Percent
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Name and Address
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Beneficially Owned
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of Class
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Davis
Selected Advisers, L.P. (1)
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46,906,457
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10.8
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%
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2949
Elvira Road, Suite 101
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Tucson,
AZ 85706
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Joan
H. Tisch (2)(3)
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41,341,744
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9.5
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c/o
Barry L. Bloom
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655
Madison Avenue
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New
York, NY 10065
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Wilma
S. Tisch (3)(4)
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29,308,031
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6.7
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c/o
Barry L. Bloom
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655
Madison Avenue
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New
York, NY 10065
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(1) This
information is as of December 31, 2008 and is based on a Schedule 13G report
filed by Davis Selected Advisers, L.P. According to the report, Davis
Selected Advisers, L.P. has sole voting power with respect to only 43,756,185
shares.
(2) This
information is as of December 31, 2008 and is based on a Schedule 13G report
filed by Mrs. J.H. Tisch. According to the report, the amount
beneficially owned includes 945,673 shares owned beneficially by Mrs. J.H. Tisch
directly and 40,396,071 shares held by her as trustee of various
trusts.
(3) Joan
H. Tisch was the wife of the late Preston R. Tisch, former Co-Chairman of the
Board of the Company. Wilma S. Tisch was the wife of the late
Laurence A. Tisch, former Co-Chairman of the Board of the
Company. James S. Tisch, President and Chief Executive Officer and a
director of the Company, and Andrew H. Tisch, Co-Chairman of the Board and
Chairman of the Executive Committee of the Company, are sons of Mrs. W.S. Tisch.
Jonathan M. Tisch, Co-Chairman of the Board of the Company and Chairman and
Chief Executive Officer of Loews Hotels, is the son of Mrs. J.H. Tisch. Each of
Messrs. J.S. Tisch, A.H. Tisch and J.M. Tisch are members of the Company’s
Office of the President.
(4) This
information is as of December 31, 2008 and is based on a Schedule 13G report
filed by Mrs. W.S. Tisch. According to the report, the amount
beneficially owned includes 2,513,162 shares owned beneficially by Mrs. W.S.
Tisch directly and 26,794,869 shares held by her as trustee of various
trusts.
Director
and Officer Holdings
The following table shows certain
information, at February [ ], 2009, as to the shares of
our Common Stock beneficially owned by each director and nominee, each executive
officer named in the Summary Compensation Table below and all of our executive
officers and directors as a group, based on data furnished by
them.
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Amount
Beneficially
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Percent
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Name
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Owned (1)
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of Class
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Ann
E. Berman
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31,200
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(2)
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*
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Joseph
L. Bower
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40,500
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(3)
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*
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Charles
M. Diker
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35,100
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(4)
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*
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David
B. Edelson
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112,499
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(5)
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*
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Paul
J. Fribourg
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44,100
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(3)
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*
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Walter
L. Harris
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30,000
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(6)
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*
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Peter
W. Keegan
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247,500
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(3)
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*
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Philip
A. Laskawy
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40,500
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(7)
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*
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Ken
Miller
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15,000
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(8)
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*
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Gloria
R. Scott
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16,500
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(3)
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*
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Andrew
H. Tisch
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14,736,816
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(9)
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3.4%
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James
S. Tisch
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15,223,913
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(10)
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3.5%
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Jonathan
M. Tisch
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8,341,929
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(11)
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1.9%
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All
executive officers and directors as
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39,452,836
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(12)
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9.0%
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a
group (16 persons including those
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listed
above)
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* Represents
less than 1% of the outstanding shares.
(1) Except
as otherwise indicated, the persons listed as beneficial owners of the shares
have sole voting and investment power with respect to those shares.
(2) Includes
18,000 shares issuable upon the exercise of awards granted under the Loews
Corporation 2000 Stock Option Plan (our “Stock Option Plan”) that are currently
exercisable, and 300 shares held by a charitable foundation as to which Ms.
Berman has shared voting and investment power.
(3) Represents
shares issuable upon the exercise of awards granted under our Stock Option Plan
that are currently exercisable.
(4) Includes
32,100 shares issuable upon the exercise of awards granted under our Stock
Option Plan that are currently exercisable.
(5) Represents
shares issuable upon the exercise of awards granted under our Stock Option Plan
that are currently exercisable. In addition, Mr. Edelson owns
beneficially 6,000 common units of Boardwalk Pipeline Partners, LP, a 74% owned
subsidiary of the Company (“Boardwalk Pipeline”), and 3,200 shares of CNA Surety
Corporation, a 62% owned subsidiary of CNA Financial Corporation, which is a 90%
owned subsidiary of the Company (“CNA”).
(6) Includes
27,000 shares issuable upon the exercise of awards granted under our Stock
Option Plan that are currently exercisable. In addition, Mr. Harris owns
beneficially 1,830 shares of CNA and 2,000 common units of Boardwalk
Pipeline.
(7) Includes
34,500 shares issuable upon the exercise of awards granted under our Stock
Option Plan that are currently exercisable and 6,000 shares owned beneficially
by Mr. Laskawy’s wife. In addition, Mr. Laskawy owns beneficially
20,000 common units of Boardwalk Pipeline.
(8) Includes
3,000 shares issuable upon the exercise of awards granted under our Stock Option
Plan that are currently exercisable. In addition, Mr. Miller owns
beneficially 1,100 shares of CNA Surety Corporation.
(9) Includes
450,000 shares issuable upon the exercise of awards granted under our Stock
Option Plan that are currently exercisable. Also includes 11,574,348
shares held by trusts of which Mr. A.H. Tisch is the managing trustee (inclusive
of 3,349,150 shares held in trust for his benefit), and 465,000 shares held by a
charitable foundation as to which Mr. A.H. Tisch has shared voting and
investment power. In addition, Mr. A.H. Tisch is the managing trustee
and beneficiary of a trust that owns beneficially 6,100 shares of CNA, and is a
trustee of trusts that own beneficially a 25% interest in general partnerships
that own, in the aggregate, 324,200 common units of Boardwalk
Pipeline.
(10) Includes
450,000 shares issuable upon the exercise of awards granted under our Stock
Option Plan that are currently exercisable. Also includes 12,366,786 shares held
by trusts of which Mr. J.S. Tisch is the managing trustee (inclusive of
3,219,193 shares held in trust for his benefit), and 484,100 shares held by a
charitable foundation as to which Mr. J.S. Tisch has shared voting and
investment power. In addition, Mr. J.S. Tisch owns beneficially
76,250 shares of Diamond Offshore Drilling, Inc., a 50.4% owned subsidiary of
the Company (“Diamond Offshore”), including 71,250 shares issuable upon the
exercise of awards that are currently exercisable. He is also the
managing trustee and beneficiary of a trust that owns beneficially 6,100 shares
of CNA, and is a trustee of trusts that own beneficially a 25% interest in a
general partnership that owns 74,200 common units of Boardwalk Pipeline and a
26.875% interest in a general partnership that owns 250,000 common units of
Boardwalk Pipeline.
(11) Includes
450,000 shares issuable upon the exercise of awards granted under our Stock
Option Plan that are currently exercisable. Also includes 7,335,466 shares held
by trusts of which Mr. J.M. Tisch is the managing trustee (inclusive of
3,539,934 shares held in trust for his benefit) and 240,000 shares held by a
charitable foundation as to which Mr. J.M. Tisch has shared voting and
investment power.
(12) Includes
2,459,754 shares issuable upon the exercise of awards granted under our Stock
Option Plan that are currently exercisable.
Section
16(a) Beneficial Ownership Reporting Compliance
Based upon a review of filings with the
Securities and Exchange Commission and written representations to us, we believe
that during 2008 all of our directors and executive officers complied with the
reporting requirements of Section 16(a) of the Securities Exchange Act of
1934.
ELECTION
OF DIRECTORS
(Proposal
No. 1)
Our Board of Directors has fixed the
number of directors constituting the full Board at eleven. Accordingly, at the
meeting shareholders will vote to elect a Board of eleven directors to serve
until the next annual meeting of shareholders and until their respective
successors are duly elected and qualified. It is the intention of the persons
named in the accompanying form of proxy, unless you specify otherwise in your
proxy, to vote for the election of the nominees named below, each of whom is now
a director. Our Board has no reason to believe that any of the persons named
will be unable or unwilling to serve as a director. If any nominee is unable or
unwilling to serve, we anticipate that either proxies will be voted for the
election of a substitute nominee or nominees recommended by our Nominating and
Governance Committee and approved by our Board, or our Board will adopt a
resolution reducing the number of directors constituting our full Board. Set
forth below is the name, age, principal occupation during the past five years
and other information concerning each nominee.
Ann E. Berman, 56 – Senior
advisor to the president of Harvard University since April 2006. Ms.
Berman served as Vice President of Finance and Chief Financial Officer of
Harvard University from 2002 until April 2006. Ms. Berman is also a
director of Eaton Vance Corporation. She has been a director of the
Company since 2006.
Joseph L. Bower, 70 –
Professor of Business Administration at Harvard University. Professor Bower is
also a director of Anika Therapeutics, Inc., Brown Shoe Company, Inc., New
America High Income Fund, Inc., Sonesta International Hotels Corporation and T H
Lee-Putnam EO Fund. He has been a director of the Company since
2001.
Charles M. Diker, 74 –
Managing Partner of Diker Management LLC, a registered investment
adviser. Mr. Diker is also the Chairman of the Board of Cantel
Medical Corp., a provider of infection prevention and control products and other
medical devices. He has been a director of the Company since
2003.
Paul J. Fribourg, 55 –
Chairman of the Board, President and Chief Executive Officer of Continental
Grain Company, a producer of pork and poultry products and provider of cattle
feeding services. Mr. Fribourg is also a director of Smithfield
Foods, Inc. and Estee Lauder Companies, Inc. He has been a director of the
Company since 1997.
Walter L. Harris, 57 –
President and Chief Executive Officer of Tanenbaum-Harber Co., Inc., an
insurance brokerage firm. He has been a director of the Company since
2004.
Philip A. Laskawy, 67 –
Retired Chairman and Chief Executive Officer of Ernst &
Young. Mr. Laskawy is also a director of General Motors Corporation,
Henry Schein, Inc., Lazard Ltd. and Federal National Mortgage Association
(Fannie Mae). He has been a director of the Company since
2003.
Ken Miller, 66 – President and Chief
Executive Officer of Ken Miller Capital, LLC, a merchant banking
firm. He has been a director of the Company since 2008.
Gloria R. Scott, 70 – Owner of
consulting services firm G. Randle Services. Dr. Scott served as
President of Bennett College in Greensboro, North Carolina until
2001. She has been a director of the Company since 1990.
Andrew H. Tisch, 59 –
Co-Chairman of the Board since 2006, Chairman of the Executive Committee and a
member of the Office of the President of the Company. He is also Chairman of the
Board of Directors of K12 Inc. and a director of CNA and of the general partner
of Boardwalk Pipeline. He has been a director of the Company since
1985.
James S. Tisch, 56 – President
and Chief Executive Officer and a member of the Office of the President of the
Company. He is also a director of CNA and Chairman of the Board of
Diamond Offshore. Mr. Tisch served as Chief Executive Officer of
Diamond Offshore until May 2008. He has been a director of the
Company since 1986.
Jonathan M. Tisch, 55 –
Co-Chairman of the Board of the Company since 2006, Chairman and Chief Executive
Officer of Loews Hotels and a member of the Office of the President of the
Company. He has been a director of the Company since
1986.
Director
Independence
Our Board of Directors has determined
that the following directors, constituting a majority of our directors and
nominees, are independent under the listing standards of the New York Stock
Exchange: Ann E. Berman, Joseph L. Bower, Charles M. Diker, Paul J.
Fribourg, Walter L. Harris, Philip A. Laskawy, Ken Miller and Gloria R.
Scott. We refer to these directors in this Proxy Statement as our
“Independent Directors.” Our Board considered all relevant facts and
circumstances and applied the independence standards described below in
determining that none of our Independent Directors has any material relationship
with our subsidiaries or us.
Our Board has established the following
standards to assist it in determining director independence. A director would
not be considered independent if any of the following relationships
exists:
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during
the past three years the director has been an employee, or an immediate
family member has been an executive officer, of the
Company;
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the
director or an immediate family member received, during any twelve month
period within the past three years, more than $120,000 in direct
compensation from the Company, excluding director and committee fees,
pension payments and certain forms of deferred
compensation;
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the
director is a current partner or employee or an immediate family member is
a current partner of a firm that is the Company’s internal or external
auditor, or an immediate family member is a current employee of such a
firm and personally works on the Company’s audit, or, within the last
three years, the director or an immediate family member was a partner or
employee of such a firm and personally worked on the Company’s audit
within that time;
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the
director or an immediate family member has at any time during the past
three years been employed as an executive officer of another company where
any of the Company’s present executive officers at the same time serves or
served on that company’s compensation committee;
or
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the
director is a current employee, or an immediate family member is a current
executive officer, of a company that has made payments to, or received
payments from, the Company for property or services in an amount which, in
any of the last three years, exceeds the greater of $1 million, or 2% of
the other company’s consolidated gross
revenues.
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In making its determination with
respect to Walter L. Harris, our Board considered the commercial relationship
between certain surety and insurance subsidiaries of CNA and Tanenbaum-Harber
Co., Inc., of which Mr. Harris is an executive officer and shareholder, and
certain of its affiliates, and determined that Mr. Harris meets all of the
requirements described above for Independent Directors and does not have a
material relationship with us. Please read “Transactions with Related
Persons,” below for more information concerning Mr. Harris’s relationship with
CNA.
Committees
of the Board
Our Board of Directors has a standing
Audit Committee, Compensation Committee, Nominating and Governance Committee,
Executive Committee and Finance Committee. Our Audit Committee,
Compensation Committee and Nominating and Governance Committee have written
charters which can be found on our website at www.loews.com and are
available in print to any shareholder who requests a copy by writing to our
Corporate Secretary.
Audit
Committee. The primary function of our Audit Committee is to
assist our Board of Directors in fulfilling its responsibility to oversee
management’s conduct of our financial reporting process, including review of our
financial reports and other financial information, our system of internal
accounting controls, our compliance with legal and regulatory requirements, the
qualifications and independence of our independent auditors and the performance
of our internal audit staff and independent auditors. Our Audit
Committee has sole authority to appoint, retain, compensate, evaluate and
terminate our independent auditors and to approve all engagement fees and terms
for our independent auditors.
The members of our Audit Committee are
Walter L. Harris (Chairman), Ann E. Berman, Joseph L. Bower, Charles M. Diker,
Paul J. Fribourg, Philip A. Laskawy, Ken Miller and Gloria R. Scott, each of
whom is an Independent Director and satisfies the additional independence and
other requirements for Audit Committee members provided for in the listing
standards of the New York Stock Exchange. Our Board has determined
that each of Ms. Berman and Mr. Laskawy is a “financial expert” under the rules
of the Securities and Exchange Commission and that Mr. Laskawy’s simultaneous
service on the audit committees of three public companies, in addition to our
Audit Committee, does not impair his ability to effectively serve on our Audit
Committee.
Compensation
Committee. The primary function of our Compensation Committee
is to assist our Board of Directors in discharging its responsibilities relating
to compensation of our executives. These responsibilities include reviewing our
general compensation philosophy for executive officers, overseeing the
development and implementation of compensation programs for executive officers
and reviewing compensation levels, including incentive and equity-based
compensation, for executive officers, directors and Board committee
members. Our Compensation Committee determines and approves
compensation for our executive officers and administers our incentive and
equity-based compensation plans. In doing so, it considers recommendations made
by our Chief Executive Officer meeting in executive session with the
Committee. Neither our Chief Executive Officer nor any of our other
executive officers participates in our Compensation Committee’s final
deliberations on compensation matters. The members of our Compensation Committee
are Joseph L. Bower (Chairman), Charles M. Diker and Paul J. Fribourg, each of
whom is an Independent Director.
Nominating and Governance
Committee. The primary functions of our Nominating and
Governance Committee are to identify individuals qualified to become members of
our Board of Directors, recommend to our Board a slate of director nominees for
election at our next annual meeting of shareholders and develop and recommend to
our Board a set of corporate governance principles. These corporate governance
principles are set forth in our Corporate Governance Guidelines which can be
found on our website at www.loews.com and are
available in print to any shareholder who requests a copy by writing to our
Corporate Secretary. The members of
our Nominating and Governance Committee are Paul J. Fribourg (Chairman), Joseph
L. Bower, Walter L. Harris, Ken Miller and Gloria R. Scott, each of whom is an
Independent Director.
Director
Nominating Process
In evaluating potential director
nominees, including those identified by shareholders, for recommendation to our
Board of Directors, our Nominating and Governance Committee seeks individuals
with talent, ability and experience from a wide variety of backgrounds to
provide a diverse spectrum of experience and expertise relevant to a diversified
business enterprise such as ours. A candidate should represent the
interests of all shareholders, and not those of a special interest group, have a
reputation for integrity and be willing to make a significant commitment to
fulfilling the duties of a director. Our Nominating and Governance
Committee will screen and evaluate all recommended director nominees based on
the criteria set forth above, as well as other relevant
considerations. Our Nominating and Governance Committee will retain
full discretion in considering its nomination recommendations to our
Board.
Executive
Sessions of Non-Management Directors
Our non-management directors meet in
regular executive sessions without management participation. The Chairman of our
Nominating and Governance Committee, currently Paul J. Fribourg, serves as the
presiding director at these meetings.
Director
Attendance at Meetings
During 2008 there were nine meetings of
our Board of Directors, six meetings of our Audit Committee, four meetings of
our Compensation Committee and three meetings of our Nominating and Governance
Committee. During 2008, each of our directors attended not less than
75% of the total number of meetings of our Board of Directors and committees of
our Board on which that director served during 2008. Our Board
encourages all directors to attend our annual meetings of shareholders, but
recognizes that circumstances may prevent attendance from time to
time. All of our directors then serving attended our 2008 Annual
Meeting of Shareholders.
2008
Director Compensation
Our non-management directors receive a
retainer of $18,750 and 1,500 stock appreciation right (“SAR”) awards per
quarter. In addition, members of our Audit Committee are paid $2,000,
and members of our Compensation Committee and Nominating and Governance
Committee are paid $1,000, for each committee meeting attended. The
following table shows information regarding the compensation of our
non-management directors during the year ended December 31, 2008.
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Fees
Earned
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or
Paid in
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Option/SAR
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Name
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Cash
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Awards
(1)
|
Total
|
|
|
|
A.E.
Berman
|
$87,000
|
|
$93,062
|
|
$180,062
|
|
|
|
|
|
|
|
|
|
|
|
|
J.L.
Bower
|
81,000
|
|
93,062
|
|
174,062
|
|
|
|
|
|
|
|
|
|
|
|
|
C.M.
Diker
|
90,000
|
|
93,062
|
|
183,062
|
|
|
|
|
|
|
|
|
|
|
|
|
P.J.
Fribourg
|
93,000
|
|
93,062
|
|
186,062
|
|
|
|
|
|
|
|
|
|
|
|
|
W.L.
Harris
|
90,000
|
|
93,062
|
|
183,062
|
|
|
|
|
|
|
|
|
|
|
|
|
P.A.
Laskawy
|
85,000
|
|
93,062
|
|
178,062
|
|
|
|
|
|
|
|
|
|
|
|
|
K.
Miller
|
37,500
|
|
46,928
|
|
84,428
|
|
|
|
|
|
|
|
|
|
|
|
|
G.R.
Scott
|
90,000
|
|
93,062
|
|
183,062
|
|
|
(1) These
amounts represent the dollar amount recognized for financial statement reporting
purposes for the fiscal year ended December 31, 2008, in accordance with the
Financial Accounting Standards Board’s Statement of Financial Accounting
Standards No. 123R (“FAS 123R”), for awards pursuant to our Stock Option Plan,
which is also the full grant date fair value of these awards. Assumptions used
in the calculation of these amounts are included in Footnote 18 to our audited
financial statements for the fiscal year ended December 31, 2008 included in our
Annual Report on Form 10-K filed with the Securities and Exchange Commission on
February [ ],
2009 (our “2008 Annual Report”). At December 31, 2008, the aggregate
number of stock option and SAR awards outstanding for each non-management
director was as follows: Ms. A.E. Berman, 18,000; Mr. J.L. Bower,
40,500; Mr. C.M. Diker,32,100; Mr. P.J. Fribourg, 44,100; Mr. W.L. Harris,
27,000; Mr. P.A. Laskawy, 34,500; Mr. K. Miller, 3,000; and Dr. G.R. Scott,
16,500.
Code
of Ethics
We have a Code of Business Conduct and
Ethics which applies to all of our directors, officers and employees, including
our principal executive officer, principal financial officer and principal
accounting officer. This Code can be found on our website at www.loews.com and is
available in print to any shareholder who requests a copy by writing to our
Corporate Secretary. We intend to post any changes to or waivers of
this Code for our principal executive officer, principal financial officer and
principal accounting officer on our website.
AUDIT
COMMITTEE REPORT
As discussed above under the heading
“Committees of the Board – Audit Committee,” the primary role of the Board’s
Audit Committee is to oversee the Company’s financial reporting process and
manage its relationship with the independent auditors. In fulfilling its
responsibilities, the Audit Committee has reviewed and discussed the Company’s
audited financial statements for the year ended December 31, 2008 with the
Company’s management and independent auditors. The Audit Committee
has also discussed with the Company’s independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61, “Communication with
Audit Committees,” as amended. In addition, the Audit Committee has
discussed with the independent auditors their independence in relation to the
Company and its management, including the matters in the written disclosures
provided to the Audit Committee as required by the applicable requirements of
the Public Company Accounting Oversight Board regarding the independent
auditors’ communications with the Audit Committee concerning independence, and
has determined that the provision of non-audit services provided by the auditors
is compatible with maintaining the auditors’ independence. For more
information about services provided by the auditors, please read “Audit Fees and
Services,” below.
The members of the Audit Committee rely
without independent verification on the information provided to them by
management and the independent auditors and on management’s representation that
the Company’s financial statements have been prepared with integrity and
objectivity. They do not provide any expert or special assurance as to the
Company’s financial statements or any professional certification as to the
independent auditors’ work. Accordingly, the Audit Committee’s
oversight does not provide an independent basis to determine that management has
applied appropriate accounting and financial reporting principles or internal
controls and procedures, that the audit of the Company’s financial statements
has been carried out in accordance with generally accepted auditing standards,
that the Company’s financial statements are presented in accordance with
generally accepted accounting principles or that the Company’s auditors are in
fact “independent.”
Based upon the reviews and discussions
referred to above, the Audit Committee recommended to the Board of Directors
that the audited financial statements be included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2008, which has been filed with the
Securities and Exchange Commission.
By the
Audit Committee:
Walter
L. Harris, Chairman
|
Paul
J. Fribourg
|
Ann
E. Berman
|
Philip
A. Laskawy
|
Joseph
L. Bower
|
Ken
Miller
|
Charles
M. Diker
|
Gloria
R. Scott
|
COMPENSATION
DISCUSSION AND ANALYSIS
Overview. The
objective of our executive compensation program is to attract and retain highly
qualified executive officers and motivate them to provide a high level of
performance for our shareholders. To meet this objective, we have
established a compensation policy for executive officers which combines elements
of base salary and cash and stock based incentive compensation, as well as
benefits. In selecting these elements of executive compensation, we
have considered our historical compensation policies as they have evolved over
the years, national surveys of executive compensation at comparable sized
companies and the executive compensation programs of various companies engaged
in businesses similar to ours and our principal subsidiaries (although we do not
benchmark our compensation to any particular group of companies), as well as
applicable tax and accounting impacts of executive compensation.
The principal components of
compensation for our Named Executive Officers are:
|
·
|
cash-based
incentive compensation awards;
|
|
·
|
grants
of stock appreciation rights; and
|
|
·
|
retirement,
medical and related benefits.
|
Our compensation program is intended to
align the interests of our senior executives with those of our shareholders with
a goal of increasing shareholder value and reasonably rewarding superior
performance which supports that goal. In establishing the aggregate
amount of compensation for each Named Executive Officer, we do not rely on
formula-driven plans which could result in unreasonably high compensation
levels. Instead, the primary factor in setting compensation is an
evaluation of the individual’s performance in the context of our financial
performance and compensation policies. The Compensation Committee
also reviews and considers compensation levels and practices as shown in the
surveys and other materials referred to above. Based on these
factors, we determine an overall level of cash compensation, a portion of which
is to be paid as base salary and the balance of which would be incentive-based,
and stock-based awards, which are described in further detail
below. Although the Compensation Committee reviews base salary and
stock based awards annually, the primary variable in our compensation program
for Named Executive Officers has been the establishment of incentive
compensation awards.
Our Chief Executive Officer, after
consulting with the other members of the Office of the President, reviews with
the Compensation Committee the performance of each Named Executive Officer and
each other executive officer and makes a recommendation to the Compensation
Committee with respect to their annual compensation, including the setting of
parameters for incentive compensation awards and stock based
awards. In accordance with its charter, the Compensation Committee
then makes the final determination regarding the compensation, including base
salary, cash-based incentive compensation and grants of stock appreciation
rights, for our Chief Executive Officer and each of the other Named Executive
Officers, as well as all of our executive officers.
Base Salary. As a
result of performance reviews and other factors described above, and the impact
of limits on the deductibility of compensation described below, the annual base
salary of each of our Named Executive Officers has been effectively limited to
approximately $1 million. This $1 million limit reflects principally
the impact of provisions of the Internal Revenue Code which generally limit the
amount of compensation we may deduct for federal income tax purposes to $1
million per Named Executive Officer per year, except to the extent that the
compensation is considered to be “performance-based.” Our policy has
been to maximize the deductibility of compensation to the extent
practicable. Accordingly, we have designed our performance-based
incentive compensation plan and stock-based plan described below so that
compensation under those plans will be deductible.
Incentive Compensation
Awards. A significant portion of compensation of our Named
Executive Officers comes from awards under our Incentive Compensation Plan for
Executive Officers (“Incentive Compensation Plan”). This element of
our compensation program makes a significant portion of the executive’s annual
compensation dependent on
the
Company’s attainment of a pre-determined level of net income. Under
the Incentive Compensation Plan the Compensation Committee employs both
quantitative factors - our attainment of the performance goal discussed below,
and qualitative factors - the Compensation Committee’s assessment of the
individual’s performance.
As more fully described below, under
the terms of the Incentive Compensation Plan, the Compensation Committee in
granting awards establishes a target amount and maximum award for each
participant and retains full negative discretion to reduce awards despite the
fact that funds may be available in the performance bonus pool. This
allows the Compensation Committee to review and evaluate each participant’s
performance in light of the year end results which, we believe, serves to
discourage excessive risk taking. We believe the features of the
Incentive Compensation Plan help align the interests of our executive officers
with those of our shareholders.
Under the Incentive Compensation Plan,
during the first quarter of each year our Compensation Committee establishes an
annual performance bonus pool, expressed as a percentage of our Performance
Based Income for that year. Performance Based Income is a term defined in the
Incentive Compensation Plan to mean our consolidated net income as adjusted by
the Compensation Committee in its sole discretion to take into account specific
factors that may impact our business generally which the Compensation Committee
deems reasonable and appropriate to exclude or include. Among other
things, the Compensation Committee may take into account realized and unrealized
gains and losses, accounting changes, the potential impact of acquisitions and
dispositions, charges relating to litigation, charges relating to reserve
strengthening and adverse development associated with prior accident years at
CNA, the impact of catastrophes and the impact of changes in legislation or
regulation.
After establishing the performance
bonus pool for the year, the Compensation Committee then allocates a portion of
that pool (expressed as a percentage of Performance Based Income) to each of the
Named Executive Officers and other executive officers who are participating in
the Incentive Compensation Plan and are eligible to receive incentive
compensation awards. The Compensation Committee establishes a target
award (expressed as a dollar amount) for each participant, based on its
assessment of the individual’s expected performance of his duties, with the
intention that the incentive compensation award will not exceed the target award
(even if the objective formula permits payment of an award in excess of the
established target) except based on the Compensation Committee’s
discretion. The Compensation Committee also establishes, for each
participant, a maximum award (expressed as a dollar amount) to potentially award
a bonus amount that exceeds the pre-established target award based on the
Compensation Committee’s discretion. In addition, in accordance with
the Incentive Compensation Plan, it has been the practice of the Compensation
Committee to retain negative discretion in the payment of awards, which allows
the Committee to reduce or eliminate any award at the Committee’s
discretion.
Once Performance Based Income for the
year has been determined, typically in February of the following year, the
Compensation Committee will review and re-assess each participant’s performance
for such year and, based upon such review and re-assessment, will award
incentive compensation out of each executive’s allocated percentage of the
performance bonus pool. Based on such review and assessment, the
Compensation Committee, in its discretion, will determine whether to award
incentive compensation that meets or exceeds the target award (up to the maximum
award established for that individual) or that is lower than the target
award.
For 2008, the Compensation Committee
established a performance bonus pool of 4% of Performance Based Income, and
determined that Performance Based Income would mean our consolidated net income,
without taking into account the impact of several items. In making
this determination, the Compensation Committee concluded that the impact of
these items would not be appropriate in measuring performance, but, by reserving
to itself the ability to exercise negative discretion to reduce an award
otherwise payable, the Compensation Committee in effect retains the ability to
take these items, and any other factors it deems relevant, into account in
awarding incentive compensation. The items identified for 2008
were:
|
·
|
The
effect of accounting changes;
|
|
·
|
Net
losses attributed to the impairment of
goodwill;
|
|
·
|
Net
losses attributed to any charges resulting from application of the Full
Cost Ceiling Limitation in relation to valuation of proved reserves at our
subsidiary, HighMount Exploration and Production,
LLC;
|
|
·
|
Realized
gains and losses;
|
|
·
|
Charges
relating to reserve strengthening and adverse dividend or premium
development at CNA associated with accident years prior to 2000 related to
claims within a limited number of claim
categories;
|
|
·
|
Catastrophe
losses of CNA in excess of CNA’s 2008 budgeted amount, but not less than
such budgeted amount;
|
|
·
|
Any
gain or loss on disposal of discontinued operations (but not income from
operations of the discontinued business) resulting from the exchange of
Lorillard, Inc. common stock for our Common Stock in the 2008 spin-off of
Lorillard, Inc.; and
|
|
·
|
Charges
relating to the disposition, by judgment or settlement, of smoking and
health related litigation, excluding litigation related to filter
cases.
|
After giving effect to these
adjustments, 2008 Performance Based Income was approximately 42% of consolidated
net income for the year.
Following determination of our
consolidated net income and Performance Based Income for 2008, the Compensation
Committee granted incentive compensation awards under the Incentive Compensation
Plan at the target amounts established at the beginning of the
year. As a result, the Compensation Committee granted awards to our
executive officers which amounted to approximately 17% of the total amount
available for award under the Incentive Compensation Plan. The
Compensation Committee determined, for each Named Executive Officer, to neither
increase any award above the target, nor to reduce any award below the
target. This was determined by the Compensation Committee in
executive session following a meeting with our Chief Executive
Officer. The awards under this Plan for each of the Named Executive
Officers are included in the column entitled “Non-Equity Incentive Plan
Compensation” on the Summary Compensation Table, below.
Compensation under the Incentive
Compensation Plan meets the requirements of the Internal Revenue Code for the
deductibility for federal income tax purposes.
Stock-Based
Awards. The third principal element of our compensation policy
for Named Executive Officers is stock based awards under our Stock Option
Plan. The value of awards under our Stock Option Plan is directly
correlated to our performance as measured by the price of our Common Stock over
the long-term. These awards only have value if, and to the extent
that, the price of our Common Stock in the future exceeds the price on the date
awards are granted. In addition, unlike base salary and incentive
compensation awards, which are earned and paid based on the annual performance
of the individual and the Company, awards under the Stock Option Plan generally
vest over a period of four years and have a term of ten years. As a
result, these awards recognize performance over a longer term and encourage
executives to continue their employment with the Company. All of
these elements further serve to align the executive’s interest with those of our
shareholders.
Since the establishment of the Stock
Option Plan in 2000, it has been our policy not to increase the number of
options or rights awarded to our Named Executive Officers each year (other than
to adjust for stock splits), and the total number of options and rights issued
to all employees who participate in the Plan has increased only modestly during
this period.
Our practice has been to consider an
annual award in January of each year, but to grant awards in four increments
over the year, the first grant being made on the date of the Compensation
Committee meeting in January at the time the award is established, and the
following three grants being made on the last business day of March, June and
September of the year. Each grant is made at an exercise or strike
price equal to the average of the high and low sales prices of our Common Stock
on the trading day immediately preceding the date of grant. Thus the
Compensation Committee knows the exercise or strike price of grants made at its
January meeting, but the exercise or strike price for the three subsequent
grants is based on our Common Stock price at a future date. We
believe that this practice is fair and reasonable to the individual executive
and to the Company and its shareholders since it minimizes the impact that any
particular event could have on the exercise or strike price of
awards.
Compensation under the Stock Option
Plan meets the requirements of the Internal Revenue Code for the deductibility
for federal income tax purposes.
Employment
Agreements. It has been our practice to maintain employment
agreements with each member of the Office of the President: James S.
Tisch, Andrew H. Tisch and Jonathan M. Tisch. Consistent with our
compensation policies and our goal of maximizing the deductibility of the
compensation for federal income tax purposes, base salary under each employment
agreement has been limited to $975,000 per annum for each
individual. The agreements provide that each individual shall
participate in our Incentive Compensation Plan; however, the amount of any award
which may be granted remains subject to the discretion of the Compensation
Committee. In February 2009, the employment agreement with each of
the members of the Office of the President was extended for an additional term
of one year, to expire March 31, 2010. Our employment agreements with
the members of the Office of the President contain no provision for severance on
termination, or payment upon a change in control, nor do such agreements require
us to provide any perquisites. We have no employment or other
agreement relating to severance or payment upon a change of control with any of
our other Named Executive Officers. Information concerning automobile
related perquisites provided to certain Named Executive Officers is provided in
the Summary Compensation Table, below.
Employee
Benefits. Our Company’s Named Executive Officers also
participate in benefit programs available to salaried employees generally,
including our Employees Savings Plan under Section 401 (k) of the Internal
Revenue Code, Retirement Plan and Benefit Equalization Plan. In
addition, from time to time we have provided one or more Named Executive
Officers with unfunded supplemental retirement benefits pursuant to the
Supplemental Retirement Agreements that are described under the heading “Pension
Plans” below. No supplemental retirement benefits were granted in
2008.
Share Ownership
Guidelines. Although we have not adopted any share ownership
guidelines for our executive officers, we note that the members of the Office of
the President own significant amounts of our Common Stock.
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
In fulfilling its responsibilities, the
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis with the Company’s management. Based on this review and
discussion, the Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in this Proxy
Statement.
By the
Compensation Committee:
Joseph
L. Bower, Chairman
Charles
M. Diker
Paul
J. Fribourg
EXECUTIVE
COMPENSATION
The following table shows information
for the years indicated regarding the compensation of our Chief Executive
Officer, Chief Financial Officer and each of our other three most highly
compensated executive officers as of December 31, 2008, whom we refer to in this
Proxy Statement as our “Named Executive Officers,” for services in all
capacities to us and our subsidiaries.
2008 Summary Compensation
Table
|
|
|
|
|
|
Changes
in
|
|
|
|
|
|
|
|
|
|
Pension
Value
|
|
|
|
|
|
|
|
|
|
And
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
Non-Equity
|
Deferred
|
|
|
|
|
|
|
|
Option/SAR
|
Incentive
Plan
|
Compensation
|
All
Other
|
|
Name and Position
|
Year
|
Salary
|
Bonus
|
Awards (1)
|
Compensation (2)
|
Earnings (3)
|
Compensation
|
Total
|
J.S.
Tisch
|
2008
|
$1,100,000
|
(4)
|
$ 0
|
$1,902,234
|
(5)
|
$2,500,000
|
|
$1,413,637
|
|
$104,264
|
(6)(7)
|
$7,020,135
|
President,
Chief
|
2007
|
1,275,000
|
(4)
|
0
|
1,300,115
|
(5)
|
2,000,000
|
|
1,843,305
|
|
115,868
|
|
6,534,288
|
Executive
Officer,
|
2006
|
1,275,000
|
(4)
|
0
|
910,421
|
(5)
|
1,500,000
|
|
1,245,014
|
|
112,970
|
|
5,043,405
|
Office
of the President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P.W.
Keegan
|
2008
|
990,000
|
|
0
|
513,084
|
|
1,510,000
|
|
397,792
|
|
23,100
|
(8)
|
3,433,976
|
Chief
Financial
|
2007
|
990,000
|
|
0
|
383,234
|
|
1,260,000
|
|
362,208
|
|
20,254
|
|
3,015,696
|
Officer,
Senior Vice
|
2006
|
990,000
|
|
250,000
|
292,288
|
|
760,000
|
|
314,210
|
|
22,700
|
|
2,629,198
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.H.
Tisch
|
2008
|
975,000
|
|
0
|
684,235
|
|
2,100,000
|
|
1,475,777
|
|
121,335
|
(6)(9)
|
5,356,347
|
Co-Chairman
of
|
2007
|
975,000
|
|
0
|
511,023
|
|
2,000,000
|
|
1,388,973
|
|
128,686
|
|
5,003,682
|
the
Board, Chairman
|
2006
|
975,000
|
|
0
|
389,664
|
|
1,500,000
|
|
963,660
|
|
109,943
|
|
3,938,267
|
of
the Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee,
Office of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
the
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.M.
Tisch
|
2008
|
975,000
|
|
0
|
684,235
|
|
2,100,000
|
|
1,675,121
|
|
62,574
|
(6)(10)
|
5,496,930
|
Co-Chairman
of
|
2007
|
975,000
|
|
0
|
511,023
|
|
2,000,000
|
|
1,454,074
|
|
47,692
|
|
4,987,789
|
the
Board, Chairman
|
2006
|
975,000
|
|
0
|
389,664
|
|
1,500,000
|
|
1,003,545
|
|
57,522
|
|
3,925,731
|
and
Chief Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
of Loews
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotels,
Office of the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.B.
Edelson
|
2008
|
975,000
|
|
0
|
513,469
|
|
2,425,000
|
|
117,358
|
|
22,950
|
(11)
|
4,053,777
|
Senior
Vice President
|
2007
|
975,000
|
|
0
|
332,030
|
|
1,925,000
|
|
177,083
|
|
20,450
|
|
3,432,044
|
|
2006
|
975,000
|
|
0
|
181,331
|
|
1,675,000
|
|
165,836
|
|
22,550
|
|
3,019,717
|
(1) These
amounts represent the dollar amount recognized for financial statement reporting
purposes for the fiscal years ended on December 31, 2008, 2007 and 2006,
respectively, in accordance with FAS 123R, of awards pursuant to our Stock
Option Plan through December 31, 2008, 2007 and 2006, respectively (but
disregarding estimates of forfeitures for service-based
vesting). Assumptions used in the calculation of these amounts are
included in Footnote 18 to our audited financial
statements for the fiscal year ended December 31, 2008 included in our 2008
Annual Report.
(2) These
amounts represent awards under our Incentive Compensation Plan.
(3) These
amounts represent the actuarial increase in the present value of each Named
Executive Officer’s retirement benefits under our retirement plans and
supplemental retirement agreements as of December 31, 2008, 2007 and 2006 over
the value of those benefits as of December 31, 2007, 2006 and 2005,
respectively, all as determined using the same interest rate and other
assumptions as those used in our financial statements.
(4) Mr.
J.S. Tisch served as chief executive officer of Diamond Offshore through May 28,
2008. This information includes compensation for his services as
chief executive officer of Diamond Offshore through that date of $125,000 for
2008 and $300,000 for each of 2007 and 2006.
(5) Also
includes $1,217,999, $789,092 and $520,757, representing the dollar amount
recognized for financial statement reporting purposes by Diamond Offshore for
the fiscal years ended on December 31, 2008, 2007 and 2006, respectively, in
accordance with FAS 123R, of awards pursuant to Diamond Offshore’s stock option
plan granted as compensation for service as chief executive officer of Diamond
Offshore during 2008, 2007 and 2006 (but disregarding estimates of forfeitures
for service-based vesting). This information has been provided by
Diamond Offshore.
(6) Includes
the portion of the expense of a car and driver we provide to each member of our
Office of the President attributable to personal use during 2008, as
follows: (a) $18,274 for Mr. J.S. Tisch; (b) $30,096 for Mr. A.H.
Tisch; and (c) $38,520 for Mr. J.M. Tisch. These amounts represent
approximately 15%, 22% and 24% of our annual costs associated with the car and
driver provided for Messrs. J.S. Tisch, A.H. Tisch and J.M. Tisch, respectively,
in 2008.
(7) Includes
(a) $9,200, representing our contributions under our Employees Savings Plan for
2008; (b) $1,106, representing allocations under our Benefit Equalization Plan
for 2008; (c) $13,750, representing additional cash compensation paid or applied
to the cost of benefit choices under our flexible benefits plan, which may
include, among other things, premiums on medical, dental, vision, life and
disability insurance policies, for 2008; (d) $58,000, representing director’s
fees paid by CNA for 2008; and (e) $3,934, representing retirement plan
contributions and premiums on life and disability insurance policies paid by
Diamond Offshore for 2008.
(8) Includes
(a) $9,200, representing our contributions under our Employees Savings Plan for
2008; and (b) $13,900, representing additional cash compensation paid or applied
to the cost of benefit choices under our flexible benefits plan, which may
include, among other things, premiums on medical, dental, vision, life and
disability insurance policies, for 2008.
(9) Includes
(a) $8,816, representing the expense of a car provided for personal use during
2008; (b) $9,200, representing our contributions under our Employees Savings
Plan for 2008; (c) $1,473, representing allocations under our Benefit
Equalization Plan for 2008; (d) $13,750, representing additional cash
compensation paid or applied to the cost of benefit choices under our flexible
benefits plan, which may include, among other things, premiums on medical,
dental, vision, life and disability insurance policies, for 2008; and (e)
$58,000, representing director’s fees paid by CNA for 2008.
(10) Includes
(a) $9,200, representing our contributions under our Employees Savings Plan for
2008; (b) $1,104, representing allocations under our Benefit Equalization Plan
for 2008; and (c) $13,750, representing additional cash compensation paid or
applied to the cost of benefit choices under our flexible benefits plan, which
may include, among other things, premiums on medical, dental, vision, life and
disability insurance policies, for 2008.
(11) Includes
(a) $9,200, representing our contributions under our Employees Savings Plan for
2008; and (b) $13,750, representing additional cash compensation paid or applied
to the cost of benefit choices under our flexible benefits plan, which may
include, among other things, premiums on medical, dental, vision, life and
disability insurance policies, for 2008.
Narrative
Discussion of Summary Compensation Table
For more information about our
employment agreements with each of Messrs. J.S. Tisch, A.H. Tisch and J.M. Tisch
and about the components of compensation reported in the Summary Compensation
Table, please read the “Compensation Discussion and Analysis,”
above.
Compensation
Plans
The following table shows information
regarding awards granted to each of our Named Executive Officers under our Stock
Option Plan and Incentive Compensation Plan during the year ended December 31,
2008.
2008
Grants of Plan-Based Awards
(Loews)
|
|
|
|
All
Other
|
|
|
|
|
|
|
|
Option/SAR
|
|
|
|
|
|
|
Estimated
Future
|
Awards;
|
|
|
Grant
Date
|
|
|
|
Payouts
Under
|
Number
of
|
Exercise
or
|
Closing
|
Fair
Value
|
|
|
|
Non-Equity
|
Securities
|
Base
Price
|
Market
Price
|
of
Stock and
|
|
Grant
|
Action
|
Incentive
Plan
|
Underlying
|
of
Option/SAR
|
on
Date
|
Option/SAR
|
Name
|
Date
|
Date
|
Awards (1)
|
Options/SARs (2)
|
Awards (3)
|
of Grant
|
Awards
|
|
|
|
|
|
|
|
|
|
|
|
Target
|
Maximum
|
|
|
|
|
J.S.
Tisch
|
01/08/08
|
|
|
|
15,000
|
$49.17
|
|
$47.82
|
|
$257,481
|
|
|
02/08/08
|
|
$2,500,000
|
$4,000,000
|
|
|
|
|
|
|
|
|
03/31/08
|
01/08/08
|
|
|
15,000
|
40.34
|
|
40.22
|
|
228,225
|
|
|
06/30/08
|
01/08/08
|
|
|
15,000
|
47.71
|
|
46.90
|
|
233,088
|
|
|
09/30/08
|
01/08/08
|
|
|
15,000
|
38.38
|
|
39.49
|
|
249,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P.W.
Keegan
|
01/08/08
|
|
|
|
11,250
|
49.17
|
|
47.82
|
|
193,111
|
|
|
02/08/08
|
|
1,510,000
|
2,200,000
|
|
|
|
|
|
|
|
|
03/31/08
|
01/08/08
|
|
|
11,250
|
40.34
|
|
40.22
|
|
171,191
|
|
|
06/30/08
|
01/08/08
|
|
|
11,250
|
47.71
|
|
46.90
|
|
174,816
|
|
|
09/30/08
|
01/08/08
|
|
|
11,250
|
38.38
|
|
39.49
|
|
186,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.H.
Tisch
|
01/08/08
|
|
|
|
15,000
|
49.17
|
|
47.82
|
|
257,481
|
|
|
02/08/08
|
|
2,100,000
|
4,000,000
|
|
|
|
|
|
|
|
|
03/31/08
|
01/08/08
|
|
|
15,000
|
40.34
|
|
40.22
|
|
228,225
|
|
|
06/30/08
|
01/08/08
|
|
|
15,000
|
47.71
|
|
46.90
|
|
233,088
|
|
|
09/30/08
|
01/08/08
|
|
|
15,000
|
38.38
|
|
39.49
|
|
249,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.M.
Tisch
|
01/08/08
|
|
|
|
15,000
|
49.17
|
|
47.82
|
|
257,481
|
|
|
02/08/08
|
|
2,100,000
|
4,000,000
|
|
|
|
|
|
|
|
|
03/31/08
|
01/08/08
|
|
|
15,000
|
40.34
|
|
40.22
|
|
228,225
|
|
|
06/30/08
|
01/08/08
|
|
|
15,000
|
47.71
|
|
46.90
|
|
233,088
|
|
|
09/30/08
|
01/08/08
|
|
|
15,000
|
38.38
|
|
39.49
|
|
249,030
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D.B.
Edelson
|
01/08/08
|
|
|
|
11,250
|
49.17
|
|
47.82
|
|
193,111
|
|
|
02/08/08
|
|
2,425,000
|
3,000,000
|
|
|
|
|
|
|
|
|
03/31/08
|
01/08/08
|
|
|
11,250
|
40.34
|
|
40.22
|
|
171,191
|
|
|
06/30/08
|
01/08/08
|
|
|
11,250
|
47.71
|
|
46.90
|
|
174,816
|
|
|
09/30/08
|
01/08/08
|
|
|
11,250
|
38.38
|
|
39.49
|
|
186,773
|
|
(1) These
amounts represent awards granted under our Incentive Compensation
Plan. The target amount of each award was authorized for payment by
our Compensation Committee in February 2009 and included in the Summary
Compensation Table above under the heading “Non-Equity Incentive Plan
Compensation.” Awards under our Incentive Compensation Plan are not
subject to thresholds, but instead consist of an amount equal to a proportion of
that percentage of our Performance Based Income established by our Compensation
Committee as our annual performance goal, subject to the target and maximum
amounts set forth on the table above. Please read our “Compensation
Discussion and Analysis” above, under the heading “Incentive Compensation
Awards,” for more information concerning awards under our Incentive Compensation
Plan.
(2) These
amounts represent awards of SARs granted under our Stock Option
Plan. In accordance with its practice, in 2008 our Compensation
Committee established an annual award in January authorizing the grant of SARs
in four increments over the year. These SARs vest with respect to 25%
of the total number of securities underlying each annual award on an annual
basis commencing on the anniversary of the date our Compensation Committee took
action to authorize the awards. Please read our “Compensation
Discussion and Analysis” above, under the heading “Stock Based Awards,” for more
information concerning awards under our Stock Option Plan.
(3) The
exercise prices per share shown were calculated in accordance with our Stock
Option Plan by averaging the high and low sales prices of our Common Stock as
traded on The New York Stock Exchange on the business day immediately preceding
the grant date.
The following table shows information
provided by Diamond Offshore regarding grants to Mr. J.S. Tisch under Diamond
Offshore’s stock option plan during the year ended December 31,
2008.
2008
Grants of Plan-Based Awards
(Diamond
Offshore)
|
|
|
All
Other
|
|
|
|
|
|
|
Option/SAR
|
|
|
Grant
|
|
|
|
Awards;
|
|
|
Date
Fair
|
|
|
|
Number
of
|
Exercise
or
|
Closing
|
Value
of
|
|
|
|
Securities
|
Base
Price of
|
Market
Price
|
Stock
and
|
|
|
|
Underlying
|
Option/SAR
|
on
Date of
|
Option/SAR
|
Name
|
Grant Date
|
Action Date
|
Options/SARs
(1)
|
Awards
(2)
|
Grant
|
Awards
|
J.S.
Tisch
|
04/01/08
|
01/30/08
|
7,500
|
|
$ 117.36
|
|
$ 117.70
|
|
$274,125
|
|
|
07/01/08
|
01/30/08
|
7,500
|
|
140.54
|
|
139.70
|
|
334,200
|
|
|
10/01/08
|
09/18/08
|
7,500
|
|
103.02
|
|
100.35
|
|
234,675
|
|
(1) These
amounts represent awards of SARs granted to Mr. J.S. Tisch by Diamond Offshore
under its stock option plan. In accordance with its practice, in 2008
the incentive compensation committee of Diamond Offshore’s board of directors
established an annual award in January authorizing the award of SARs to its
directors and executive officers, including Mr. J.S. Tisch, in four increments
over the year. Each SAR granted to Mr. J.S. Tisch prior to October
2008 and reported above vests and becomes exercisable with respect to 25% of its
underlying securities per year over the first four years of its
term. Each SAR granted to Mr. J.S. Tisch from and after October 2008
and reported above vested and become exercisable with respect to 100% of its
underlying securities on the date it was granted.
(2) The
exercise prices per share were calculated in accordance with Diamond Offshore’s
stock option plan by averaging the high and low sales prices of Diamond
Offshore’s common stock as traded on The New York Stock Exchange on the business
day immediately preceding the grant date.
The following table shows information
regarding awards granted to each of our Named Executive Officers under our Stock
Option Plan that were outstanding as of December 31, 2008. All awards with
expiration dates prior to January 2016 represent stock options, and all awards
with expiration dates during or after January 2016 represent
SARs.
2008
Outstanding Equity Awards at Fiscal Year-End
(Loews
Common Stock)
Option/SAR
Awards
(1)
|
|
Number
of Securities
|
|
Number
of Securities
|
|
|
|
|
Underlying
Unexercised
|
|
Underlying
Unexercised
|
|
|
|
|
Options/SARs
|
|
Options/SARs
|
Option/SAR
|
Option/SAR
|
Name
|
|
Exercisable
|
|
Unexercisable
|
Exercise Price
|
Expiration
Date
|
J.S.
Tisch
|
60,000
|
|
0
|
|
$10.05
|
|
01/18/10
|
|
60,000
|
|
0
|
|
15.57
|
|
01/24/11
|
|
60,000
|
|
0
|
|
19.71
|
|
01/30/12
|
|
60,000
|
|
0
|
|
15.61
|
|
01/21/13
|
|
15,000
|
|
0
|
|
17.36
|
|
01/16/14
|
|
15,000
|
|
0
|
|
19.61
|
|
01/16/14
|
|
15,000
|
|
0
|
|
20.06
|
|
01/16/14
|
|
15,000
|
|
0
|
|
19.43
|
|
01/16/14
|
|
11,250
|
|
3,750
|
|
23.68
|
|
01/20/15
|
|
11,250
|
|
3,750
|
|
24.32
|
|
01/20/15
|
|
11,250
|
|
3,750
|
|
25.91
|
|
01/20/15
|
|
11,250
|
|
3,750
|
|
30.54
|
|
01/20/15
|
|
7,500
|
|
7,500
|
|
33.14
|
|
01/31/16
|
|
7,500
|
|
7,500
|
|
34.18
|
|
01/31/16
|
|
7,500
|
|
7,500
|
|
34.89
|
|
01/31/16
|
|
7,500
|
|
7,500
|
|
38.31
|
|
01/31/16
|
|
3,750
|
|
11,250
|
|
40.34
|
|
01/09/17
|
|
3,750
|
|
11,250
|
|
45.75
|
|
01/09/17
|
|
3,750
|
|
11,250
|
|
51.08
|
|
01/09/17
|
|
3,750
|
|
11,250
|
|
48.04
|
|
01/09/17
|
|
0
|
|
15,000
|
|
49.17
|
|
01/08/18
|
|
0
|
|
15,000
|
|
40.34
|
|
01/08/18
|
|
0
|
|
15,000
|
|
47.71
|
|
01/08/18
|
|
0
|
|
15,000
|
|
38.38
|
|
01/08/18
|
|
|
|
|
|
|
|
|
P.W.
Keegan
|
45,000
|
|
0
|
|
19.71
|
|
01/30/12
|
|
45,000
|
|
0
|
|
15.61
|
|
01/21/13
|
|
11,250
|
|
0
|
|
17.36
|
|
01/16/14
|
|
11,250
|
|
0
|
|
19.61
|
|
01/16/14
|
|
11,250
|
|
0
|
|
20.06
|
|
01/16/14
|
|
11,250
|
|
0
|
|
19.43
|
|
01/16/14
|
|
8,438
|
|
2,812
|
|
23.68
|
|
01/20/15
|
|
8,438
|
|
2,812
|
|
24.32
|
|
01/20/15
|
|
8,438
|
|
2,812
|
|
25.91
|
|
01/20/15
|
|
8,438
|
|
2,812
|
|
30.54
|
|
01/20/15
|
|
5,625
|
|
5,625
|
|
33.14
|
|
01/31/16
|
|
5,625
|
|
5,625
|
|
34.18
|
|
01/31/16
|
|
5,625
|
|
5,625
|
|
34.89
|
|
01/31/16
|
|
5,625
|
|
5,625
|
|
38.31
|
|
01/31/16
|
|
2,812
|
|
8,438
|
|
40.34
|
|
01/09/17
|
|
2,812
|
|
8,438
|
|
45.75
|
|
01/09/17
|
|
2,812
|
|
8,438
|
|
51.08
|
|
01/09/17
|
|
2,812
|
|
8,438
|
|
48.04
|
|
01/09/17
|
|
0
|
|
11,250
|
|
49.17
|
|
01/08/18
|
|
0
|
|
11,250
|
|
40.34
|
|
01/08/18
|
|
0
|
|
11,250
|
|
47.71
|
|
01/08/18
|
|
0
|
|
11,250
|
|
38.38
|
|
01/08/18
|
|
|
Number
of Securities
|
|
Number
of Securities
|
|
|
|
|
Underlying
Unexercised
|
|
Underlying
Unexercised
|
|
|
|
|
Options/SARs
|
|
Options/SARs
|
Option/SAR
|
Option/SAR
|
Name
|
|
Exercisable
|
|
Unexercisable
|
Exercise Price
|
Expiration
Date
|
A.H.
Tisch
|
60,000
|
|
0
|
|
$10.05
|
|
01/18/10
|
|
60,000
|
|
0
|
|
15.57
|
|
01/24/11
|
|
60,000
|
|
0
|
|
19.71
|
|
01/30/12
|
|
60,000
|
|
0
|
|
15.61
|
|
01/21/13
|
|
15,000
|
|
0
|
|
17.36
|
|
01/16/14
|
|
15,000
|
|
0
|
|
19.61
|
|
01/16/14
|
|
15,000
|
|
0
|
|
20.06
|
|
01/16/14
|
|
15,000
|
|
0
|
|
19.43
|
|
01/16/14
|
|
11,250
|
|
3,750
|
|
23.68
|
|
01/20/15
|
|
11,250
|
|
3,750
|
|
24.32
|
|
01/20/15
|
|
11,250
|
|
3,750
|
|
25.91
|
|
01/20/15
|
|
11,250
|
|
3,750
|
|
30.54
|
|
01/20/15
|
|
7,500
|
|
7,500
|
|
33.14
|
|
01/31/16
|
|
7,500
|
|
7,500
|
|
34.18
|
|
01/31/16
|
|
7,500
|
|
7,500
|
|
34.89
|
|
01/31/16
|
|
7,500
|
|
7,500
|
|
38.31
|
|
01/31/16
|
|
3,750
|
|
11,250
|
|
40.34
|
|
01/09/17
|
|
3,750
|
|
11,250
|
|
45.75
|
|
01/09/17
|
|
3,750
|
|
11,250
|
|
51.08
|
|
01/09/17
|
|
3,750
|
|
11,250
|
|
48.04
|
|
01/09/17
|
|
0
|
|
15,000
|
|
49.17
|
|
01/08/18
|
|
0
|
|
15,000
|
|
40.34
|
|
01/08/18
|
|
0
|
|
15,000
|
|
47.71
|
|
01/08/18
|
|
0
|
|
15,000
|
|
38.38
|
|
01/08/18
|
J.M.
Tisch
|
60,000
|
|
0
|
|
10.05
|
|
01/18/10
|
|
60,000
|
|
0
|
|
15.57
|
|
01/24/11
|
|
60,000
|
|
0
|
|
19.71
|
|
01/30/12
|
|
60,000
|
|
0
|
|
15.61
|
|
01/21/13
|
|
15,000
|
|
0
|
|
17.36
|
|
01/16/14
|
|
15,000
|
|
0
|
|
19.61
|
|
01/16/14
|
|
15,000
|
|
0
|
|
20.06
|
|
01/16/14
|
|
15,000
|
|
0
|
|
19.43
|
|
01/16/14
|
|
11,250
|
|
3,750
|
|
23.68
|
|
01/20/15
|
|
11,250
|
|
3,750
|
|
24.32
|
|
01/20/15
|
|
11,250
|
|
3,750
|
|
25.91
|
|
01/20/15
|
|
11,250
|
|
3,750
|
|
30.54
|
|
01/20/15
|
|
7,500
|
|
7,500
|
|
33.14
|
|
01/31/16
|
|
7,500
|
|
7,500
|
|
34.18
|
|
01/31/16
|
|
7,500
|
|
7,500
|
|
34.89
|
|
01/31/16
|
|
7,500
|
|
7,500
|
|
38.31
|
|
01/31/16
|
|
3,750
|
|
11,250
|
|
40.34
|
|
01/09/17
|
|
3,750
|
|
11,250
|
|
45.75
|
|
01/09/17
|
|
3,750
|
|
11,250
|
|
51.08
|
|
01/09/17
|
|
3,750
|
|
11,250
|
|
48.04
|
|
01/09/17
|
|
0
|
|
15,000
|
|
49.17
|
|
01/08/18
|
|
0
|
|
15,000
|
|
40.34
|
|
01/08/18
|
|
0
|
|
15,000
|
|
47.71
|
|
01/08/18
|
|
0
|
|
15,000
|
|
38.38
|
|
01/08/18
|
|
|
Number
of Securities
|
|
Number
of Securities
|
|
|
|
|
Underlying
Unexercised
|
|
Underlying
Unexercised
|
|
|
|
|
Options/SARs
|
|
Options/SARs
|
Option/SAR
|
Option/SAR
|
Name
|
|
Exercisable
|
|
Unexercisable
|
Exercise Price
|
Expiration
Date
|
D.B.
Edelson
|
16,875
|
|
5,625
|
|
$24.17
|
|
01/20/15
|
|
8,438
|
|
2,812
|
|
25.91
|
|
01/20/15
|
|
8,438
|
|
2,812
|
|
30.54
|
|
01/20/15
|
|
5,625
|
|
5,625
|
|
33.14
|
|
01/31/16
|
|
5,625
|
|
5,625
|
|
34.18
|
|
01/31/16
|
|
5,625
|
|
5,625
|
|
34.89
|
|
01/31/16
|
|
5,625
|
|
5,625
|
|
38.31
|
|
01/31/16
|
|
2,812
|
|
8,438
|
|
40.34
|
|
01/09/17
|
|
2,812
|
|
8,438
|
|
45.75
|
|
01/09/17
|
|
2,812
|
|
8,438
|
|
51.08
|
|
01/09/17
|
|
2,812
|
|
8,438
|
|
48.04
|
|
01/09/17
|
|
0
|
|
11,250
|
|
49.17
|
|
01/08/18
|
|
0
|
|
11,250
|
|
40.34
|
|
01/08/18
|
|
0
|
|
11,250
|
|
47.71
|
|
01/08/18
|
|
0
|
|
11,250
|
|
38.38
|
|
01/08/18
|
(1) Each
stock option and SAR reported above vests and becomes exercisable with respect
to 25% of its underlying securities per year over the first four years of its
term, and has or will commence vesting nine years prior to the expiration date
reported for such stock option or SAR above.
The following table shows information
provided by Diamond Offshore regarding awards granted to Mr. J.S. Tisch under
Diamond Offshore’s stock option plan that were outstanding as of December 31,
2008. All awards to Mr. J.S. Tisch with expiration dates prior to
April 2016 represent stock options, and all awards with expiration dates during
or after April 2016 represent SARs.
2008
Outstanding Equity Awards at Fiscal Year-End
(Diamond
Offshore Common Stock)
Option/SAR Awards
(1)
|
|
Number
of Securities
|
|
Number
of Securities
|
|
|
|
|
Underlying
Unexercised
|
|
Underlying
Unexercised
|
|
|
|
|
Options/SARs
|
|
Options/SARs
|
Option/SAR
|
Option/SAR
|
Name
|
|
Exercisable
|
|
Unexercisable
|
Exercise Price
|
Expiration
Date
|
J.S.
Tisch
|
1,875
|
|
0
|
|
$22.49
|
|
05/18/14
|
|
1,875
|
|
0
|
|
23.65
|
|
07/01/14
|
|
1,875
|
|
0
|
|
32.78
|
|
10/01/14
|
|
1,875
|
|
0
|
|
39.98
|
|
12/31/14
|
|
1,875
|
|
1,875
|
|
45.77
|
|
04/19/15
|
|
1,875
|
|
1,875
|
|
53.60
|
|
07/01/15
|
|
1,875
|
|
1,875
|
|
61.90
|
|
10/03/15
|
|
1,875
|
|
1,875
|
|
69.38
|
|
12/31/15
|
|
1,875
|
|
3,750
|
|
92.67
|
|
04/27/16
|
|
1,875
|
|
3,750
|
|
83.44
|
|
07/03/16
|
|
1,875
|
|
3,750
|
|
71.87
|
|
10/02/16
|
|
1,875
|
|
3,750
|
|
79.77
|
|
12/31/16
|
|
1,875
|
|
5,625
|
|
81.42
|
|
04/02/17
|
|
1,875
|
|
5,625
|
|
101.97
|
|
07/02/17
|
|
1,875
|
|
5,625
|
|
114.21
|
|
10/01/17
|
|
1,875
|
|
5,625
|
|
144.44
|
|
12/31/17
|
|
0
|
|
7,500
|
|
117.36
|
|
04/01/18
|
|
0
|
|
7,500
|
|
140.54
|
|
07/01/18
|
|
7,500
|
|
0
|
|
103.02
|
|
10/12/18
|
(1) Each
stock option and SAR granted to Mr. J.S. Tisch and reported above with an
expiration date prior to October 2018 vests and becomes exercisable with respect
to 25% of its underlying securities per year over the first four years of its
term, and has or will commence vesting nine years prior to the first expiration
date reported for stock options or SARs in each calendar year
above. Each SAR granted to Mr. J.S. Tisch and reported above with an
expiration date during or after October 2018 vested and become exercisable with
respect to 100% of its underlying securities on the date it was
granted.
None of our Named Executive Officers
exercised awards granted under our Stock Option Plan or Diamond Offshore’s stock
option plan during the year ended December 31, 2008.
Pension
Plans
We provide a funded, tax qualified,
non-contributory retirement plan for salaried employees, including executive
officers (our “Retirement Plan”). Tax qualified retirement plans, such as our
Retirement Plan, are subject to limitations under the Internal Revenue Code on
the benefits they may provide. Accordingly, we also provide an unfunded,
non-qualified, non-contributory Benefit Equalization Plan (our “Benefit
Equalization Plan”) which provides for the accrual and payment of benefits which
are not available under our Retirement Plan as a result of these
limitations.
Our Retirement Plan is structured as a
cash balance plan. A cash balance plan is a form of defined benefit pension plan
in which the value of each participant’s benefit is expressed as a nominal cash
balance account established in the name of the participant. Under the
cash balance plan, we increase each participant’s nominal account annually by a
“pay-based credit” based on a specified percentage of annual earnings (based on
the participant’s age or years of service) and an “interest credit” based on a
specified interest rate, which we set annually for all
participants. At retirement or termination of employment, a vested
participant is entitled to receive the cash balance account in a lump sum or to
convert the account into a monthly annuity. Compensation covered under our
Retirement Plan consists of salary paid by us and our wholly owned subsidiaries,
other than HighMount Exploration and Production, LLC, included under the heading
“Salary” in the Summary Compensation Table above, plus the value of benefits
awarded under our flexible benefits plan and included under the heading “All
Other Compensation” in the Summary Compensation Table above. In
addition, awards under our Incentive Compensation Plan are deemed compensation
for purposes of our Benefit Equalization Plan. Pension benefits are not subject
to reduction for Social Security benefits or other amounts.
Participants in our Retirement Plan who
met certain age and years of service requirements at January 1, 1998 (the year
that our Retirement Plan was converted into a cash balance plan) are entitled to
a minimum retirement benefit (“Minimum Benefit”) equal to the benefit they would
have earned under our Retirement Plan before its conversion to a cash balance
plan. This Minimum Benefit is based upon the highest average annual
salary during any period of five consecutive years of the ten years immediately
preceding retirement and years of credited service with us. The
information set forth in the “Pension Benefits” table below with respect to
Messrs. J. S. Tisch, A.H. Tisch and J.M. Tisch reflects this Minimum
Benefit.
We also maintain a supplemental
retirement account for each of Messrs. Keegan, J.S. Tisch, A.H. Tisch and J.M.
Tisch, pursuant to supplemental retirement agreements with each such individual
(“Supplemental Benefit”). We credit each such nominal account
annually with the interest credit established under our Retirement Plan, and the
accounts of Messrs. J.S. Tisch, A.H. Tisch and J.M. Tisch with the pay-based
credit established under our Retirement Plan. Upon retirement, each
such Named Executive Officer will receive the value of his account in the form
of an annuity or, subject to certain conditions, in a single lump sum
payment.
The following table shows information
regarding pension benefits accrued for and paid to each of our Named Executive
Officers as of December 31, 2008.
2008 Pension Benefits
|
|
Number
of Years
|
Present
Value of
|
Payments
During
|
Name
|
Plan Name
|
Credited Service
|
Accumulated
Benefit (1)
|
Last Fiscal
Year
|
J.S.
Tisch
|
Retirement
Plan
|
31
|
|
$1,054,716
|
|
$0
|
|
|
Benefit
Equalization Plan
|
31
|
|
9,030,869
|
|
0
|
|
|
Supplemental
Benefit
|
|
|
822,512
|
|
0
|
|
|
|
|
|
|
|
|
|
P.W.
Keegan
|
Retirement
Plan
|
11
|
|
305,705
|
|
0
|
|
|
Benefit
Equalization Plan
|
11
|
|
1,375,733
|
|
0
|
|
|
Supplemental
Benefit
|
|
|
1,795,657
|
|
0
|
|
|
|
|
|
|
|
|
|
A.H.
Tisch
|
Retirement
Plan
|
35
|
|
1,157,409
|
|
0
|
|
|
Benefit
Equalization Plan
|
35
|
|
9,910,162
|
|
0
|
|
|
Supplemental
Benefit
|
|
|
905,598
|
|
0
|
|
|
|
|
|
|
|
|
|
J.M.
Tisch
|
Retirement
Plan
|
29
|
|
893,756
|
|
0
|
|
|
Benefit
Equalization Plan
|
29
|
|
7,652,666
|
|
0
|
|
|
Supplemental
Benefit
|
|
|
802,842
|
|
0
|
|
|
|
|
|
|
|
|
|
D.B.
Edelson
|
Retirement
Plan
|
3
|
|
50,444
|
|
0
|
|
|
Benefit
Equalization Plan
|
3
|
|
398,786
|
|
0
|
|
|
Supplemental
Benefit
|
|
|
0
|
|
0
|
|
(1) Assuming
(a) a normal retirement age of 65, (b) a discount rate of 6.3% and (c) interest
credits of 3.53% for 2009 and later years. Other interest rate and
mortality rate assumptions used are consistent with those used in our financial
statements.
Deferred
Compensation
The following table shows information
regarding compensation deferred by Mr. Edelson during 2008 on a non-qualified
basis pursuant to our Deferred Compensation Plan. Under this plan,
employees earning in excess of $100,000 per year may defer up to ten percent of
their base salaries for a period of not less than three years, or until they are
no longer employed by us. Deferred amounts are maintained by us in an
interest bearing account. Upon electing to participate in this plan
each year, each participating employee must choose the amount to be deferred and
the duration of the deferral; whether to receive distributions of deferred
amounts in a single payment or in equal annual installments over any period of
time up to 15 years; and an interest rate from a selection of short-term and
long-term rates established in accordance with the plan’s
requirements. None of our other Named Executive Officers deferred
compensation during 2008.
2008
Nonqualified Deferred Compensation
|
Executive
|
Company
|
Aggregate
|
Aggregate
|
Aggregate
|
|
Contributions
in
|
Contributions
in
|
Earnings
in
|
Withdrawals/
|
Balance
at Last
|
Name
|
Last Fiscal Year
|
Last Fiscal Year
|
Last Fiscal Year
|
Distributions
|
Fiscal Year End
|
|
|
|
|
|
|
D.B.
Edelson
|
$90,000
(1)
|
$0
|
$2,102
(2)
|
$0
|
$307,570
(3)
|
(1)
Represents a portion of Mr. Edelson’s compensation reported as “Salary” on the
Summary Compensation Table, above.
(2)
Represents interest earned on Mr. Edelson’s Deferred Compensation Plan account
balance at an annual, compounded rate of 4.94%.
(3)
Includes contributions of $97,500 reported as “Salary” on the Summary
Compensation Table, above, for each of 2007 and 2006.
TRANSACTIONS
WITH RELATED PERSONS
It is our policy that any transaction,
regardless of the size or amount, involving us or any of our subsidiaries in
which any of our directors, director nominees, executive officers, principal
shareholders or any of their immediate family members has had or will have a
direct or indirect material interest, be reviewed and approved or ratified by
our Audit Committee, without the participation of any member who may be involved
in the transaction. All such transactions are submitted to our
General Counsel for review and reported to our Audit Committee for its
consideration. In each case, the Audit Committee will consider, in light of all
of the facts and circumstances it deems relevant, whether the transaction is
fair and reasonable to us.
TFMG LLC and Walnut Hill Media LLC,
entities affiliated with the family of Messrs. J.S. Tisch, A.H. Tisch and J.M.
Tisch, who are the members of our Office of the President, and certain related
persons occupy space and utilize certain services and facilities of ours, the
cost of which is reimbursed to us. In addition, from time to time
Messrs. Tisch and members of their immediate families have chartered our
aircraft for personal travel. For the use of our owned aircraft, the charterer
pays us at the same rate we charge unaffiliated third parties to charter our
aircraft, which rate equals or exceeds our out-of-pocket operating costs. For
the use of an aircraft in which we hold a fractional interest, the charterer
pays us at a rate equal to our incremental cost. The total amount
reimbursed to us in 2008 in connection with the foregoing was approximately
$1,130,000. In addition, we chartered an aircraft owned by a member
of the family of Messrs. Tisch on one occasion in 2008. The total
cost of this charter was approximately $16,000.
Mrs. Joan Tisch, mother of Mr. J.M.
Tisch, occupies an apartment at the Loews Regency Hotel pursuant to a lease that
was approved by our Audit Committee and entered into in 2001. The lease became
effective upon the death of her late husband, Preston R. Tisch, our former
Co-Chairman of the Board, in late 2005. The rent is set forth in the
lease and adjusts upward each year, beginning in 2007, by an amount equal to the
increase in the consumer price index during the prior year. Mrs. Tisch
separately pays rent for another room at the hotel in an amount that was
determined based on an analysis of market rates for comparable extended stay
rentals at the hotel. Mrs. Tisch paid the hotel an aggregate of approximately
$761,000 for these rentals in 2008.
Walter L.
Harris, a director of the Company and Chairman of the Company’s Audit Committee,
is an executive officer and shareholder of Tanenbaum-Harber Co., Inc. and
certain affiliated insurance brokerage companies (collectively,
“T-H”). T-H places surety bond and insurance business, including
property, casualty and professional liability coverages, with surety and
insurance company subsidiaries of CNA. T-H earns commissions for the business it
writes for CNA in accordance with commission schedules that are standard to CNA
brokerage contracts of this type. Total commissions earned by T-H in
2008 were approximately $1,600,000. In addition, CNA
provides certain insurance coverages to T-H. The 2008 premiums for these items
were approximately $60,000.
RATIFICATION
OF THE APPOINTMENT
OF
OUR INDEPENDENT AUDITORS
(Proposal
No. 2)
Our Audit Committee has selected
Deloitte & Touche LLP to serve as our independent auditors for
2009. Although it is not required to do so, our Board of Directors
wishes to submit the selection of Deloitte & Touche LLP for ratification by
our shareholders at the Annual Meeting. Even if this selection is ratified by
our shareholders at the Annual Meeting, our Audit Committee may at its
discretion change the appointment at any time during the year if it determines
that such a change would be in the best interests of us and our
shareholders. If our shareholders do not ratify the selection of
Deloitte & Touche LLP, our Audit Committee will reconsider its
selection. Representatives of Deloitte & Touche LLP are expected
to be at the Annual Meeting to answer appropriate questions and, if they choose
to do so, to make a statement.
Audit
Fees and Services
The following table shows fees billed
by Deloitte & Touche LLP and its affiliates for professional services
rendered to us and our subsidiaries in 2008 and 2007, by category as described
in the notes to the table.
|
|
|
2008
|
|
2007
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
|
|
|
|
Audit
Fees
(1)
|
|
$19,062
|
|
$21,451
|
|
|
Audit
Related Fees (2)
|
|
2,427
|
|
1,636
|
|
|
Tax
Fees
(3)
|
|
64
|
|
72
|
|
|
All
Other Fees (4)
|
|
1,568
|
|
0
|
|
|
|
|
|
|
|
|
|
Total
|
|
$23,121
|
|
$23,159
|
|
(1) Includes
the aggregate fees and expenses for the audit of our annual financial statements
and internal control over financial reporting and the reviews of our quarterly
financial statements.
(2) Includes
the aggregate fees and expenses for services that were reasonably related to the
performance of the audit or reviews of our financial statements and not included
under “Audit Fees” above, including, principally, consents and comfort letters,
accounting consultations, the audit of employee benefit plans, and due diligence
related to potential mergers and acquisitions.
(3) Includes
the aggregate fees and expenses for tax compliance and tax planning
services.
(4)
Includes the aggregate fees and expenses for products and services, other than
those services described above, related to human capital advisory and other
consulting services.
Auditor
Engagement Pre-Approval Policy
In order to assure the continued
independence of our independent auditors, currently Deloitte & Touche LLP,
our Audit Committee has adopted a policy requiring pre-approval of all audit and
non-audit services performed by our independent auditors. Under this
policy, our Audit Committee annually pre-approves certain limited, specified
recurring services which may be provided by Deloitte & Touche LLP, subject
to maximum dollar limitations. All other engagements for services to
be performed by Deloitte & Touche LLP must be specifically pre-approved by
our Audit Committee, or a designated committee member to whom this authority has
been delegated. Our Audit Committee, or a designated member,
pre-approves all engagements by us and our subsidiaries, other than CNA, Diamond
Offshore and Boardwalk Pipeline, for services of Deloitte & Touche LLP,
including the terms and fees thereof, and our Audit Committee has concluded that
all such engagements have been compatible with the continued independence of
Deloitte & Touche LLP in serving as our independent auditors. Engagements of
Deloitte & Touche LLP by CNA, Diamond Offshore and Boardwalk Pipeline are
reviewed and approved by the independent audit committees of those subsidiaries
pursuant to pre-approval policies adopted by those committees.
Our Board of Directors recommends a
vote FOR Proposal No. 2.
APPROVE
A PROPOSED
AMENDMENT
TO SIMPLIFY AND UPDATE OUR CHARTER
(Proposal
No. 3)
Shareholders are being asked to approve
a proposal to amend our Restated Certificate of Incorporation, also referred to
as our “charter” in this Proxy Statement. The proposed amendment is
intended to update our charter to reflect our simplified capital structure
following the exchange of all outstanding shares of our Carolina Group tracking
stock and to simplify our charter by removing unnecessary
provisions. It is summarized below.
In June 2008 we exchanged all
outstanding shares of our Carolina Group tracking stock for shares of Lorillard,
Inc. Consequently, there is no longer a Carolina Group and no shares
of Carolina Group stock are outstanding. In an effort to reflect this
simplified capital structure, the proposed charter amendment would eliminate all
provisions relating to the Carolina Group and Carolina Group stock, as well as
all provisions relating to the allocation between Common Stock and Carolina
Group stock of dividends and distributions, because these concepts are no longer
applicable. The adoption of this proposal would have no effect on our
authorized and outstanding Common Stock.
The corporate purpose clause currently
set forth in our charter was originally adopted in 1969. It provides
that we may engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware. Consistent
with the practice at that time, the purpose clause also includes additional
detailed language. Our Board of Directors believes it would be
advisable to remove this unnecessary language while retaining the language in
our original charter authorizing us to engage in any lawful
business. The adoption of the proposal would have no effect on the
operation of our business.
If this proposed amendment to our
charter is approved by our shareholders, we intend promptly to file a
certificate of amendment to our charter with the Secretary of State of the State
of Delaware. The text of the charter provisions as proposed to be amended are
set forth on Exhibit A to this Proxy Statement.
Our Board of Directors recommends a
vote FOR Proposal No. 3.
SHAREHOLDER
PROPOSAL
We have been advised that the
shareholder proposal described below will be presented at the Annual
Meeting. For the reasons set forth below, our Board of Directors
recommends a vote against this proposal.
SHAREHOLDER
PROPOSAL RELATING TO
CUMULATIVE
VOTING
(Proposal
No. 4)
Evelyn Y. Davis, 2600 Virginia Avenue,
N.W., Washington, D.C. 20037, owner of 732 shares of our Common Stock, has
notified us in writing that she intends to present the following resolution at
the Annual Meeting for action by our shareholders:
“RESOLVED: That the
stockholders of Loews, assembled in Annual Meeting in person and by proxy,
hereby request the Board of Directors to take the necessary steps to provide for
cumulative voting in the election of directors, which means each stockholder
shall be entitled to as many votes as shall equal the number of shares he or she
owns multiplied by the number of directors to be elected, and he or she may cast
all of such votes for a single candidate, or any two or more of them as he or
she may see fit.
“REASONS: Many states have
mandatory cumulative voting, so do National Banks.
“In addition, many corporations have
adopted cumulative voting.
“Last year the owners of 125,784,540
shares representing approximately 26.7% of shares voting, voted FOR this
proposal.
“If you AGREE, please mark your proxy
FOR this resolution.”
Our Board of Directors recommends a
vote AGAINST Proposal No. 4.
Our Board of Directors believes that
the present system of voting for directors provides the best assurance that the
decisions of our Board will be in the interests of all shareholders, rather than
those of any particular group. Cumulative voting could make it
possible for a special interest group, which may not represent the interests of
all shareholders, to
elect one
or more directors beholden only to that special interest group. The
aims of such special interest group may be adverse to us and our shareholders as
a whole and therefore could impede our Board’s power to act on our behalf and on
behalf of all of our shareholders. Furthermore, our Board believes
that cumulative voting may interfere with the continuing efforts of our
Nominating and Governance Committee to develop and maintain a diverse Board of
Directors comprised of individuals with the wide range of knowledge, experience
and expertise necessary to best serve us. Accordingly, our Board of
Directors recommends a vote against this proposal.
OTHER
MATTERS
We know of no other matters to be
brought before the Annual Meeting. If other matters should properly
come before the meeting, proxies will be voted on such matters in accordance
with the best judgment of the persons appointed as proxies.
We will bear all costs in connection
with the solicitation of proxies for the meeting. We intend to
request brokerage houses, custodians, nominees and others who hold our voting
stock in their names to solicit proxies from the persons who beneficially own
such stock, and we will reimburse these brokerage houses, custodians, nominees
and others for their out-of-pocket expenses and reasonable clerical
expenses. We have engaged Innisfree M&A Incorporated
(“Innisfree”) to solicit proxies for us, at an anticipated cost of approximately
$8,500. In addition to the use of the mails, solicitation may be made
by Innisfree or our employees personally or by telephone, facsimile or
electronic transmission.
Important
Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting
to Be Held on May 12, 2009
This Proxy Statement and our 2008
Annual Report on Form 10-K are available on our website at www.loews.com/reports.
Communications
with Us by Shareholders and Others
If you or any other interested party
wish to communicate directly with our presiding director, other non-management
directors or our Board as a whole, you or the other interested party may do so
by writing to our Corporate Secretary. All communications will be delivered to
the director or directors to whom they are addressed.
If you wish to propose an individual to
be considered by our Nominating and Governance Committee for possible
recommendation to our Board of Directors as a candidate to serve as a director,
you must do so by writing to our Corporate Secretary. Your recommendation must
include the candidate’s name, a brief biographical description, a statement of
the candidate’s qualifications, a description of any relationship between the
candidate and either the recommending shareholder or the Company, and the
candidate’s signed consent to serve as a director, if elected. We
must receive your recommendations for director nominees for our 2010 Annual
Meeting not later than October 1, 2009.
If you wish to nominate an individual
for election as a director at our 2010 Annual Meeting, you must provide notice
of your intention to do so by writing to our Corporate
Secretary. Your notice must include the nominee’s name, age, business
and residence addresses, principal occupation or employment, ownership interests
in our securities, and any other information which would be required to be
disclosed with respect to that nominee in connection with a solicitation of
proxies for the election of directors. It must also include your name
and address, ownership interests in our securities, a description of any
arrangement or understanding between you and the nominee or any other person
under which the nomination is being made, your representation that you intend to
attend the 2010 Annual Meeting to nominate the nominee in person, and any other
information which would be required to be disclosed with respect to you in
connection with a solicitation of proxies for the election of
directors. Your notice must be accompanied by a written consent of
the nominee to being named as a nominee and to serve as a director, if
elected. We must receive your notice not earlier than January 12, and
not later than February 11, 2010.
If you wish to submit a proposal for
our 2010 Annual Meeting, it must be received by us not later than December [ ], 2009 in order
to be included in our proxy materials. In order for any proposal by
you made outside of Rule 14a-8 under
the
Securities Exchange Act of 1934 to be considered “timely” within the meaning of
Rule 14a-4(c) of that act, it must be received by us not later than February
[ ], 2010. If your proposal is not “timely” within the
Rule 14a-4(c), then proxies solicited by us for next year’s annual meeting may
confer discretionary authority to us to vote on that proposal. Your
proposals should be addressed to our Corporate Secretary.
If you wish to obtain directions to our
2009 Annual Meeting of Shareholders and to be able to attend and vote in person,
you may do so by writing to our Corporate Secretary.
You
should address all communications directed to our Corporate Secretary regarding
the matters discussed above to Loews Corporation, 667 Madison Avenue, New York,
New York 10065-8087.
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By
order of the Board of Directors,
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GARY
W. GARSON
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Secretary
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Dated: March
[ ],
2009
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PLEASE
COMPLETE, DATE, SIGN AND
RETURN
YOUR PROXY PROMPTLY
Exhibit
A
Charter Provisions as
Proposed to be Amended
THIRD: The purpose of the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of Delaware.
FOURTH: The total number of
shares of all classes of stock which the Corporation shall have the authority to
issue is 1,900,000,000 shares, consisting of 100,000,000 shares of Preferred
Stock, having a par value of $.10 per share (“Preferred Stock”), and
1,800,000,000 common shares, having a par value of $.01 per shares (“Common
Stock”).
The Board of Directors is hereby
authorized to issue the Preferred Stock, from time to time, in one or more
series, on such terms and conditions as it may deem advisable and to fix by
resolution the designation of each series and the powers, preferences and
relative, participating, option or other special rights of the shares of each
series, and the qualifications, limitations or restrictions thereof, to the full
extent now or hereafter permitted by law. The authority of the Board
of Directors with respect to each such series shall include, but not be limited
to, determination of the following:
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(a)
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the
designation and number of shares comprising such series;
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(b)
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the
dividends, if any, which shall be payable on the shares of such series and
any preferences and other terms and conditions applicable
thereto;
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(c)
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any
rights and preferences of the holders of the shares of such series upon
the liquidation, dissolution, or winding up of the affairs of, or upon any
distribution of the assets of, the Corporation;
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(d)
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the
full, limited or special voting rights, if any, of the shares of such
series, in addition to voting rights
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(e)
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any
provisions with respect to the conversion of the shares of such series
into, or the exchange of such shares for, shares of any other class or
classes, or of any other series of any class, of the capital stock of the
Corporation and/or any other property or cash, and the terms and
conditions applicable to any such conversion or exchange;
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(f)
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any
provision with respect to the redemption, purchase or retirement of such
shares and the terms and conditions applicable thereto;
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(g)
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any
provision with respect to the issuance of additional shares of such series
or of an other class or series on a parity with or superior to the shares
of such series; and
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(h)
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any
other relative, participating, optional or special powers, preferences, or
rights of, and any other qualifications, limitations or restrictions with
respect to, the shares of such series as the Board of Directors may deem
advisable.
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