Slide 1: Schedule 14A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant x Filed by a Party other than the Registrant ¨ Check the appropriate box: ¨ Preliminary Proxy
Slide 2: ACE Limited 2010 Proxy Statement: Long-Term Incentive Plan Amendment
ACE Limited 2010 Proxy Statement Long-Term Incentive Plan Amendment Agenda Item No. 8 May 6, 2010
Slide 3: What is Agenda Item No. 8 Asking Shareholders to Vote On?
What is Agenda Item No. 8 Asking Shareholders to Vote On? The primary effects of the amendment to the ACE Limited 2004 Long-Term Incentive Plan, or LTIP, would be: 11.6 million share increase to the total shares available for issuance under the terms of the LTIP 6.0 million share increase to the “su
Slide 4: What Would be the Practical Impact of the LTIP Amendment?
What Would be the Practical Impact of the LTIP Amendment? The LTIP Amendment would give the ACE Board discretion to grant awards/shares under the LTIP in the future This share pool increase would allow approximately 3 years of awards following shareholder approval before a further shareholder vote w
Slide 5: What are the Benefits of the LTIP Amendment?
What are the Benefits of the LTIP Amendment? Equity compensation has always been an important component of executive and employee compensation at ACE. Equity compensation aligns employee compensation with shareholder interests and it properly defers value to the medium- or long- term. Authorizing th
Slide 6: Advantages of a 3-Year Time Horizon
Advantages of a 3-Year Time Horizon Provides sufficient LTIP share replenishment to maintain a clear, stable plan to manage participants’ expectations Allows for continued and consistent use of equity as a compensation tool aligned with best practices Encourages shareholder value creation by reinfor
Slide 7: Are there Safeguards Against Improper or Excessive Equity Compensation?
Are there Safeguards Against Improper or Excessive Equity Compensation? Equity awards have been, and will be, reasonably stable and based on performance factors set forth in the company’s proxy statement LTIP includes caps and limitations on annual grants to individuals LTIP prohibits: Option repric
Slide 8: What Metrics are Important to Consider?
What Metrics are Important to Consider? Third party proxy advisory firms have analyzed the proposed LTIP amendment using various historical and other metrics These metrics tend to bias strongly in favor of a constant need to replenish = unreliability, instability and a short- term focus These metric
Slide 9: What Metrics are Important to Consider?
What Metrics are Important to Consider? Equity represents a significant percentage of senior executive compensation in the company: Equity as % of Compensation CEO 64% NEO 55% Equity grants/types are in line with relevant best practices: 50% of CEO restricted shares are performance based 33% of NEO
Slide 10: ACE Financial Performance
ACE Financial Performance ACE has established a strong track record of financial performance benefiting its shareholders. Over the past 5 years: Operating income has grown at a compound annual rate of 22.5% Shareholders’ equity has grown 14.8% while the average return on equity has been 15.7%, an ef
Slide 11: Burn Rate Reports
Burn Rate Reports ACE historical “burn rate” as published by proxy advisory firms RiskMetrics Group (RMG) and Glass Lewis shows modest outlay of shares to plan participants ACE 3-year ACE 3-year adjusted** Firm burn rate %* burn rate % Notes ACE “passes” the RMG burn rate test (2.31% industry RMG 1.
Slide 12: Dilution Reports
Dilution Reports ACE dilution from LTIP is modest compared to peers, as reported by RMG and Glass Lewis Reported ACE Peer Average* Firm Dilution % Notes ACE is also below RMG’s RMG 7.9% 11.34% “growth company” threshold of 10.0% Glass Lewis calculation includes ACE’s Employee Glass Lewis 9.1% 15.4%
Slide 13: Additional information
Additional information ACE Limited filed a definitive proxy statement with the SEC on April 5, 2010 (the “Proxy Statement”) in connection with its upcoming 2010 Annual General Meeting scheduled for May 19, 2010. This presentation is intended to provide additional information solely with respect to A