Typically, eligible employees are those who are in a position to significantly influence the achievement of the Company’s objectives. Awards granted to an individual are based upon a number of factors, including the Company’s performance, the individual’s performance, and the recipient's position, salary, and performance. In addition, the Committee considers the degree of each potential recipient’s ability to influence the attainment of the Company’s goals. We expect that individuals who receive these awards will retain a substantial portion of the shares awarded to them to foster a mutuality of interests with our stockholders.

     All stock option grants are made under the Investors Title Company 1997 and 2001 Stock Option and Restricted Stock Plans, which stockholders approved on May 13, 1997 and May 16, 2001, respectively. Stock option grants generally become exercisable in five or ten equal annual installments beginning on the grant date, and no more than 50,000 options may be granted to one individual under each Plan. No new stock option grants were made to the executive officers in 2008. No additional equity grants may be issued under the 1997 plan. Under the 2001 plan, 133,500 additional units are available for issuance, and they may be issued through February 11, 2011.

     The Board has recommended for shareholder approval a new 2009 Stock Appreciation Right Plan, referenced in this proxy statement as Proposal 2. The Committee believes approval of this plan is important to increase the reserve of equity available to us so that we can continue to provide equity-based incentive compensation to our key employees, officers, and directors, which is consistent with our long-term strategic objectives and the objectives of our executive compensation program.

      Non-Qualified Supplemental Retirement Benefit Plan. The Committee adopted a Non-Qualified Supplemental Retirement Benefit Plan of the Company’s wholly owned subsidiary, Investors Title Insurance Company (“ITIC”), in November 2003. This plan is an unfunded defined contribution plan designed to provide additional retirement benefits on a tax-deferred basis for select management or highly compensated employees. It is intended to promote long-term commitment by enhancing the participants’ post-retirement financial security. The Committee determines the roster of plan participants on the basis of the significance of each employee’s ability to influence the Company’s objectives. Currently, each of the named executive officers participates in this plan.

      For 2004 through 2008, ITIC made quarterly hypothetical contributions to each participant’s account under the plan equal to 22% of his cash compensation each quarter. The plan contemplates that after 20 quarters of participation, additional contributions to each participant’s account will be at the Committee’s discretion. The twentieth quarter for specified contributions ended on December 31, 2008.

      Amounts credited to a participant’s account may be deemed either to earn a specified rate of interest or to be invested in a security, index, or other investment as determined by the Committee from time to time. Since the effective date of the plan, the amounts credited to each participant’s account have been deemed to earn interest at an annual rate of return, compounded quarterly, based on the then current yield on the 10-Year U.S. Treasury Note.

      Except as discussed below, amounts in a participant’s account (reflecting the hypothetical contributions and any deemed returns) are paid at the earlier of the participant’s termination of employment or death. Each participant has the option of electing to be paid either a lump sum amount equal annual installments spread over a term, of five, ten, fifteen, or twenty years, or life annuity payments.

      The hypothetical Company contributions for 2008, reflecting amounts credited to the Non-Qualified Supplemental Retirement Benefit Plan accounts of the executive officers, are included in the “All Other Compensation” amounts shown in the Summary Compensation Table below.

      The Supplemental Retirement Benefit Plan was amended effective January 1, 2009, to provide clarification to certain provisions of the plan, and to provide for the plan’s compliance with the requirements of Internal Revenue Code Section 409A. The amendments also provided for a special one-time distribution election as permitted under Section 409A. Under the special distribution election, each participant was entitled to elect to receive a one-time lump sum distribution on January 15, 2009 of all amounts in the participant’s account. Each executive officer elected to be paid their respective plan balances in full on January 15, 2009.

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     Non-Qualified Deferred Compensation Plan. The Committee adopted a Non-Qualified Deferred Compensation Plan of ITIC in June 2004. This plan is an unfunded defined contribution plan designed to provide additional retirement benefits on a tax deferred basis for select management or highly compensated employees. It is intended to promote long-term commitment by enhancing the participants’ post-retirement financial security. The Committee determines the roster of plan participants on the basis of the significance of each employee’s ability to influence the Company’s objectives. Currently, each of the named executive officers participates.

     For 2005 and subsequent years, the Deferred Compensation Plan permits each participant to elect annually to defer any portion of his cash compensation. The plan also provides that on or before December 31^st of each year, beginning in 2004, the Company will make a hypothetical contribution to a participant’s account under the plan equal to the amount that would have been contributed to the participant’s Simplified Employee Pension Plan if the contributions to this plan were not limited under the federal tax laws.

     Except as discussed below, participant account balances (reflecting elective compensation deferrals, the hypothetical contributions, and any deemed returns) are paid at each participant’s termination of employment in a lump sum.

     The amounts credited to the Deferred Contribution accounts of the named executive officers reflecting the Company’s hypothetical contributions are included in the “All Other Compensation” amounts shown in the Summary Compensation Table below.

     The Non-Qualified Deferred Compensation Plan was amended effective January 1, 2009, to provide clarification to certain provisions of the plan, and to provide for the plan’s documentary compliance with the requirements of Internal Revenue Code Section 409A. Material amendments include the following:

• Removal of the requirement that the Company make a hypothetical contribution to each participant’s account under the plan equal to the amount that would have been contributed the participant’s Simplified Employee Pension Plan if the contributions to this plan were not limited under the federal tax laws.
• The provision of a special one-time distribution election as permitted under Section 409A. Under the special distribution election, each participant was entitled to elect to receive a one-time lump sum distribution on January 15, 2009 of all amounts in the participant’s account. Each executive officer elected to be paid their respective plan balances in full on January 15, 2009.
• A clarification that no further Company contributions shall be made for calendar years beginning on or after January 1, 2009.

     Benefits Under Employment Agreements. ITIC has entered into employment agreements with the executive officers under which they are entitled to certain compensation and benefits, including severance benefits. These agreements are intended to provide employment security by specifying minimum base salaries and benefits. Additionally, under these agreements, the executive officers agree to certain non-competition and non-solicitation covenants. For additional information regarding these employment agreements see “– Summary Compensation Table – Employment Agreements” below. For detailed information regarding severance benefits see “– Potential Payments Upon Termination or Change of Control” below.

     The employment agreements for each of the executive officers were amended effective January 1, 2009. Material amendments include the following:

• Documentary compliance with Internal Revenue Code Section 409A, including a requirement that any annual performance-based incentive compensation be paid no later than March 15 of the calendar year following the year in which the compensation is earned as well as more stringent requirements regarding conditions under which a payment may be made under the plan and the timing of such payments.
• A provision that the Company will make an annual cash payment to each executive officer equal to the amount that would have been contributed to the Executive’s 401(k) plan account if the contributions to the 401(k) plan were not limited under the federal tax laws. This replaces a substantially similar provision that was removed in the amended Non-Qualified Deferred Compensation Plan.

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• An increase in the minimum base salary for each executive officer to reflect existing base salaries. Base salaries have increased in conjunction with the annual salary review process since the original employment agreements were executed, and the amended agreements reflect the current salaries.
• The establishment of minimum payments to each executive officer in the event of (i) disability or retirement, (ii) termination by the Company without cause, or (iii) termination by the officer for good reason or due to a change in control. Previously, such payment amounts were based on a multiple of each executive officer’s then current base salary and average bonus compensation, each of which is subject to uncertainty and volatility from year to year attributable primarily to market conditions.
• Removal of provisions that were redundant with the Non-Qualified Supplemental Retirement Benefit Plan, the Non-Qualified Deferred Compensation Plan, or the respective Death Benefit Plan Agreements.

     Potential Payments and Benefits Upon Change of Control. Under the employment agreements with the executive officers they are entitled to certain severance payments if they terminate employment because of a change of control, as well as a salary increase of 100% if a change in control does not result in termination of employment.

     The arrangements were established because:

• it is in the best interest of the Company and its stockholders to assure that the Company will have the continued dedication of the Company’s executive officers notwithstanding the possibility, threat, or occurrence of a change in control; and
• it is imperative to diminish the inevitable distraction to such executive officers by virtue of the personal uncertainties and risks created by a pending of threatened change in control.

     For detailed information regarding severance benefits payable in connection with a termination because of a change in control see “- Potential Payments Upon Termination or Change in Control” below.

     Benefits and Perquisites. The Company provides all eligible employees, including the named executive officers, with a benefit program that the Committee believes is reasonable, competitive, and consistent with the overall objectives of the compensation program.

     The executive officers are eligible to participate in the Company’s group insurance program, which during 2008 included group health, dental, vision, life insurance, and long-term disability insurance. Other benefits offered during 2008 included flexible spending accounts and a pretax premium plan, paid sick leave, paid holidays, and paid vacations.

     In 2008, ITIC adopted the Investors Title Company and Affiliates 401(k) Plan. The 401(k) plan went into effect February 1, 2008, and replaced the Simplified Employee Pension Plan. Under the 401(k) plan, the Company makes contributions amounting to three percent of compensation for each eligible employee. The Company may make additional contributions under the profit share provisions of the plan. For the 2008 plan year, the Company contributed an additional 1% of compensation for eligible employees under the profit share provisions of the plan.

     The Company provides Company-owned vehicles to certain officers and employees who hold positions requiring frequent travel. The Company does not prohibit the personal use of Company-owned vehicles, but the value of any personal use is treated as taxable compensation. Each of the executive officers is assigned a Company-owned vehicle, and may use the vehicle for personal use according to the Company’s policy covering all Company-owned vehicles.

     James A. Fine, Jr. and W. Morris Fine are also parties to Death Benefit Plan Agreements, which provide that, in the event of death, certain amounts payable under their respective employment agreements will be paid in a lump sum within 60 days of death to their respective beneficiaries. Under each agreement, the respective beneficiary would also be paid a lump sum amount equal to $2,000,000 subject to adjustments as described under “- Potential Payments Upon Termination or change of Control – James A. Fine Jr. and W. Morris Fine” below.

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James A. Fine, Jr.’s agreement was executed in May 2004, and amended in 2008 to provide consistency with his employment agreement. W. Morris Fine’s agreement was executed in December 2008. The terms of each agreement are materially identical. W. Morris Fine’s agreement was executed in 2008 in order to provide equity with the agreement in place for James A. Fine, Jr. The agreements are provided to minimize the distraction to the executive officers of personal risks and uncertainties.

     As a matter of policy, the Committee does not award personal benefits or perquisites that are unrelated to the Company’s business.

     The Committee reviews and approves annually all benefits and perquisites paid to our executive officers.

Tax and Accounting Implications

     Deductibility of Executive Compensation. As part of its role, the Committee reviews and considers the tax deductibility of executive compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended, which provides that a public company is generally not entitled to deduct for Federal income tax purposes non-performance-based compensation paid to any of its executive officers in excess of $1.0 million. Special rules apply for "performance-based" compensation, including the pre-approval of performance goals applicable to that compensation.

     All compensation paid to the named executive officers in 2008, 2007 and 2006 was fully deductible for the purposes of Section 162(m). However, to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee has not adopted a policy that all compensation must be deductible for Federal income tax purposes.

     Accounting for Stock-Based Compensation. Beginning on January 1, 2006, the Company began accounting for stock-based payments in accordance with the requirements of FASB Statement 123(R).

Summary Compensation Table

     The table below summarizes the total compensation for each of the named executive officers for each of the fiscal years ended December 31, 2008, December 31, 2007 and December 31, 2006.

				All Other
		Salary	Bonus	Compensation	Total
Name and Principal Position	Year	($)	($)	($) (1)	($)
J. Allen Fine	2008	302,027	-0-	140,318	442,345
Chief Executive Officer & Chairman of the	2007	282,500	330,000	193,175	805,675
Board	2006	273,700	345,000	184,030	802,730
James A. Fine, Jr.	2008	254,393	-0-	136,474	390,867
President, Chief Financial Officer &	2007	235,900	325,000	182,900	743,800
Treasurer	2006	219,333	335,000	174,285	728,618
W. Morris Fine	2008	252,487	-0-	137,153	389,640
Executive Vice President & Secretary	2007	227,733	325,000	177,005	729,738
	2006	219,333	320,000	174,285	713,618

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	(1)		The amounts set forth in this column for 2008 consisted of (i) Company contributions to the 401(k) Plan, (ii) Company contributions under the Nonqualified Supplemental Retirement Benefit Plan, (iii) Company contributions under the Nonqualified Deferred Compensation Plan, (iv) Company-paid premiums for life insurance and health insurance, and (v) personal use of Company vehicle, as follows:

		Supplemental	Deferred		Personal
		Retirement	Compensation	Life and	Use of
	401(k)	Plan	Plan	Health	Company
	Contributions	Contributions	Contributions	Insurance	Vehicle	Total
Name	($)	($)	($)	($)	($)	($)
J. Allen Fine	24,500	102,561	9,447	720	3,090	140,318
James A. Fine, Jr.	24,500	94,711	8,020	8,661	582	136,474
W. Morris Fine	24,500	94,291	7,944	8,661	1,757	137,153

     For further information regarding the Nonqualified Supplemental Retirement Benefit Plan and Nonqualified Deferred Compensation Plan, see “– Nonqualified Deferred Compensation” below.

Employment Agreements

     Under the employment agreements in effect on December 31, 2008, with J. Allen Fine, James A. Fine, Jr., and W. Morris Fine, they were entitled to minimum base salaries of $259,500, $207,000, and $207,000, respectively. Under these agreements, which have five year rolling terms, Messrs. Fine, Fine, Jr., and Fine participate in the Company’s Nonqualified Supplemental Retirement Benefit Plan, participate in the benefits programs generally provided to other executives, receive 30 days of paid vacation and unlimited sick leave, and are entitled to reimbursement for reasonably incurred out-of-pocket business expenses. Under these agreements, Messrs. Fine, Fine, Jr., and Fine would, upon termination, receive as severance certain payments as described under “– Potential Payments Upon Termination or Change of Control” below. The agreements also prohibit Messrs. Fine, Fine, Jr., and Fine from engaging in certain activities involving competition with the Company for a two year period following termination of employment. Effective January 1, 2009, the employment agreements were amended as described above under “- Compensation Discussion and Analysis – Elements of Executive Compensation – Benefits under Employment Agreements.”

Outstanding Equity Awards at Fiscal Year-End

     There were no equity awards outstanding at December 31, 2008.

Option Exercises and Stock Vested

     There were no option exercises or stock vested during the year ended December 31, 2008 with respect to the named executive officers.

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Nonqualified Deferred Compensation

     As discussed above, under the heading “Compensation Discussion and Analysis – Elements of Executive Compensation,” the named executive officers participate in a Non-Qualified Supplemental Retirement Benefit Plan and a Non-Qualified Deferred Compensation Plan. The table below shows the activity in each of these plans during 2008.

			Aggregate	Aggregate	Aggregate
	Executive	Employer	Earnings	Withdrawals/	Balance
	Contributions	Contributions	in Last	Distributions	at Last
	in Last FY	in Last FY	FY	in Last FY	FYE
Name	($)	($)(1)	($)(2)	($)	($)(3)
J. Allen Fine
(Deferred Compensation Plan)	0	9,447	5,808	0	171,316
J. Allen Fine
(Supplemental Retirement Plan)	0	102,561	22,073	0	713,909
James A. Fine, Jr.
(Deferred Compensation Plan)	0	8,020	4,959	0	144,151
James A. Fine, Jr.
(Supplemental Retirement Plan)	0	94,711	19,959	0	645,255
W. Morris Fine
(Deferred Compensation Plan)	0	7,944	4,888	0	141,903
W. Morris Fine
(Supplemental Retirement Plan)	0	94,291	19,768	0	639,166

	(1)		Amounts in this column reflect hypothetical contributions and are included in the “All Other Compensation” column of the Summary Compensation Table above.
	(2)		None of the amounts reflected in this column are reported as above-market earnings on deferred compensation in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column of the Summary Compensation Table above.
	(3)		Of the amounts reported in this column, the following amounts have been reported in the Summary Compensation tables of the Company’s proxy statements for previous years: Mr. J. Allen Fine - $156,061 (Deferred Compensation Plan) and $589,275 (Supplemental Retirement Plan); Mr. James A. Fine, Jr. - $131,172 (Deferred Compensation Plan) and $530,585 (Supplemental Retirement Plan); and Mr. W. Morris Fine - $129,071 (Deferred Compensation Plan) and $525,107 (Supplemental Retirement Plan)

Potential Payments Upon Termination or Change of Control

     Under the employment agreements in effect on December 31, 2008, the executive officers are entitled to severance payments and benefits under their employment agreements as described below. The following descriptions do not reflect amendments to the employment agreements that became effective on January 1, 2009 as described above.

     J. Allen Fine. Under Mr. J. Allen Fine’s employment agreement, if his employment is terminated due to his death, disability, or retirement (following his 70^th birthday), he is entitled to receive:

• his then current base salary paid monthly for three years;

• three annual payments paid on each of the first, second and third anniversaries of the termination date equal to his average bonus compensation during the preceding three years;

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• accrued benefits under the Nonqualified Supplemental Retirement Benefit Plan and Nonqualified Deferred Compensation Plan;

• accelerated vesting in full of all his stock options;

• continued participation in the Company’s health insurance plans by him and his wife at no expense until his death or, if later, his wife’s death; and

• continued participation in the Company’s health insurance plans by his dependent children at no expense until any such children are no longer dependent.

     Under Mr. Fine’s employment agreement, if his employment is terminated by the Company other than for “cause” or by him due to the Company’s materially breaching the agreement (“i.e., good reason”), he is entitled to receive:

• his then current base salary paid monthly for five years;

• five annual payments paid on each of the first, second and third anniversaries of the termination date equal to his average bonus compensation during the preceding three years;

• accrued benefits under the Nonqualified Supplemental Retirement Benefit Plan and Nonqualified Deferred Compensation Plan;

• accelerated vesting in full of all his stock options; and

• continued health insurance coverage as described above.

     Under Mr. Fine’s employment agreement, if he terminates his employment because of a “change in control,” he is entitled to receive:

• a lump sum payment equal to 2.99 times his then current base salary;

• a lump sum payment equal to 2.99 times his average bonus compensation during the preceding three years;

• accrued benefits under the Nonqualified Supplemental Retirement Benefit Plan and Nonqualified Deferred Compensation Plan;

• accelerated vesting in full of all his stock options; and

• continued health insurance coverage as described above.

     If a change in control does not result in a termination of employment, Mr. Fine is entitled to a base salary increase of 100%.

     If any portion of these payments and benefits, or payments and benefits under any other plan, agreement or arrangement, would constitute an “excess parachute payment” for purposes of the Internal Revenue Code, such payments and benefits payable under the agreement will be reduced until no portion thereof would fail to be deductible by reason of being “an excess parachute payment.”

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     Under Mr. Fine’s employment agreement, if his employment is terminated by the Company for “cause,” he is entitled to receive:

• an amount equal to that amount he would have received as salary had he remained an employee until the later of the date of his termination and 30 days after notice of termination; and
   
• accrued benefits under the Nonqualified Supplemental Retirement Benefit Plan and Nonqualified Deferred Compensation Plan.

     Under Mr. Fine’s employment agreement, “cause” is defined as:

• the executive’s conviction of, or plea of guilty or nolo contendere to, any crime involving dishonesty or moral turpitude;
   
• the commission by executive of a fraud against the Company for which he is convicted;
   
• gross negligence or willful misconduct by executive with respect to the Company which causes material detriment to the Company;
   
• the falsification or manipulation of any records of the Company;
   
• repudiation of the agreement by executive or executive’s abandonment of employment with the Company;
   
• breach by executive of his confidentiality, non-competition or non-solicitation obligations under the agreement; or
   
• failure or refusal of executive to perform his duties with the Company or to implement or follow the policies or directions of the Board of Directors within 30 days after a written demand for performance is delivered to executive that specifically identifies the manner in which the Board of Directors believes that executive has not performed his duties or failed to implement or follow the policies or directions of the Board of Directors.

     Under Mr. Fine’s employment agreement, a “change in control” will occur if:

• any person or group acting in concert, other than the executive or his affiliates or immediate family members, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s outstanding shares entitled to vote for the election of directors;
   
• the directors serving at the time the agreement was entered into or any successor to any such director (and any additional director) who after such time (i) was nominated or selected by a majority of the directors serving at the time of his or her nomination or selection and (ii) who is not an “affiliate” or “associate” (as defined in Regulation 12B under the Securities Exchange Act of 1934) of any person who is the beneficial owner, directly or indirectly, of securities representing 50% or more of the combined voting power of the Company’s outstanding shares entitled to vote for the election of directors, cease for any reason to constitute at least a majority of the Company’s Board of Directors;
   
• a sale of more than 50% of the Company’s assets (measured in terms of monetary value) is consummated; or
   
• any merger, consolidation, or like business combination or reorganization of the Company is consummated that results in the occurrence of any event described above.

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     J. Allen Fine is also party to a Death Benefit Plan Agreement with the Company. Notwithstanding the payout provisions of Mr. Fine’s employment agreement, the Death Benefit Plan Agreement provides that certain amounts payable under Mr. Fine’s employment agreement in the event of his death will be paid in a lump sum within 60 days of his death to a beneficiary designated by Mr. Fine.

     James A. Fine, Jr. and W. Morris Fine. The employment agreements of James A. Fine, Jr. and W. Morris Fine are substantially identical to J. Allen Fine’s employment agreement, except that under their agreements (1) Messrs. Fine, Jr. and Fine are eligible to receive retirement benefits under their agreements after age 50, rather than age 70, and (2) following termination of employment by the Company other than for “cause” or by the executive due to a material breach by the Company of the agreement (i.e., “good reason”) or because of a “change in control,” they are entitled to cause the Company to transfer to them any life insurance policies owned by the Company on their lives.

     James A. Fine, Jr. is also party to a Death Benefit Plan Agreement with the Company. Notwithstanding the payout provisions of Mr. Fine’s employment agreement, the Death Benefit Plan Agreement provides that certain amounts payable under Mr. Fine’s employment agreement in the event of his death will be paid in a lump sum within 60 days of his death to a beneficiary designated by him. Under the Death Benefit Plan Agreement, Mr. Fine’s designated beneficiary would also be paid a lump sum amount equal to $2,000,000,

• reduced by the following amounts that would be paid under Mr. Fine’s employment agreement and the Supplement Retirement Plan in the event of his death:

(a)		the Company’s contributions to Mr. Fine’s account under the Supplemental Retirement Plan;
(b)		three times his then current base salary;
(c)		three times his average bonus compensation during the preceding three years;
(d)		the cost of continued participation in the Company’s health insurance plans by him and his wife until his death or, if later, his wife’s death; and
(e)		the cost of continued participation in the Company’s health insurance plans by his dependent children until any such children are no longer dependent; and

• increased by the amounts accrued on the Company’s books as of the date of death for the payments described in items (a) through (e) above.

     In 2008, W. Morris Fine also became party to a Death Benefit Plan Agreement which is substantially identical to the Death Benefit Plan Agreement with James A. Fine, Jr.

     Conditions to Receipt of Severance Benefits. Under each named executive officer’s employment agreement, the Company’s obligations to provide the executive with the severance benefits described above are contingent on:

• The executive’s compliance with certain covenants with respect to confidential information;
   
• The executive’s compliance with a two year non-competition covenant; and
   
• The executive’s compliance with a two year non-solicitation covenant.

     Estimated Post-Employment Compensation and Benefits. The following tables set forth the estimated post-employment compensation and benefits that would have been payable to each of the named executive officers under his agreements, assuming that each covered circumstance occurred on December 31, 2008.

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     The following table shows the potential payments upon termination or a change of control of the Company for J. Allen Fine, the Company’s Chief Executive Officer:

		Termination			Involuntary
Executive Benefits and		Due to			or Good	Termination for
Payments Upon	Voluntary	Change in		For Cause	Reason	Retirement (1)
Termination	Termination	Control	Death	Termination	Termination	or Disability
Compensation:
Base Salary	-	907,046 (3)	910,080	25,280 (2)	1,516,800 (5)	910,080 (4)
Bonus	-	921,917 (6)	925,000	-	1,541,667 (8)	925,000 (7)
Supplemental Retirement        Plan (9)	713,909	713,909	713,909	713,909	713,909	713,909
Deferred Compensation        Plan (10)	171,316	171,316	171,316	171,316	171,316	171,316
Benefits and Perquisites:
Health Plan (11)	-	41,001	41,001	-	41,001	41,001
Total – J. Allen Fine	885,225	2,755,189	2,761,306	910,505	3,984,693	2,761,306

     The following table shows the potential payments upon termination or a change of control of the Company for James A. Fine, Jr., the Company’s President and Chief Financial Officer:

		Termination			Involuntary	Termination
Executive Benefits and		Due to			or Good	for
Payments Upon	Voluntary	Change in		For Cause	Reason	Retirement or
Termination	Termination	Control	Death	Termination	Termination	Disability
Compensation:
Base Salary	-	764,124 (3)	766,680	21,297 (2)	1,277,800 (5)	766,680 (4)
Bonus	-	911,950 (6)	915,000	-	1,525,000 (8)	915,000 (7)
Supplemental	645,255	645,255	645,255	645,255	645,255	645,255
Retirement Plan (9)
Deferred Compensation	144,152	144,152	144,152	144,152	144,152	144,152
Plan (10)
Benefits and Perquisites:
Health Plan (11)	-	253,399	253,399	-	253,399	253,399
Death Benefit Plan	-	-	1,299,300	-	-	-
Agreement (12)
Life Insurance (13)	-	65,986	65,986	-	65,986	65,986
Total - James A. Fine, Jr.	789,407	2,784,866	4,089,772	810,704	3,911,592	2,790,472

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     The following table shows the potential payments upon termination or a change of control of the Company for W. Morris Fine, the Company’s Executive Vice President and Secretary:

		Termination			Involuntary
Executive Benefits and		Due to			or Good	Termination
Payments Upon	Voluntary	Change in		For Cause	Reason	for Retirement
Termination	Termination	Control	Death	Termination	Termination	or Disability
Compensation:
Base Salary	-	764,124 (3)	766,680	21,297 (2)	1,277,800 (5)	766,680 (4)
Bonus	-	901,983 (6)	905,000		1,508,333 (8)	905,000 (7)
Supplemental Retirement	639,166	639,166	639,166	639,166	639,166	639,166
Plan (9)
Deferred Compensation	141,903	141,903	141,903	141,903	141,903	141,903
Plan (10)
Benefits and Perquisites:
Health Plan (11)	-	176,249	176,249	-	176,249	176,249
Death Benefit Plan	-	-	1,059,680	-	-	-
Agreement (12)
Life Insurance (13)	-	34,468	34,468	-	34,468	34,468
Total – W. Morris Fine	781,069	2,657,893	3,723,146	802,366	3,777,919	2,663,466

	(1)		J. Allen Fine was eligible to retire on May 2, 2004.
	(2)		Represents 30 days severance.
	(3)		Represents lump sum severance payment equal to 2.99 times base salary.
	(4)		Represents three years severance, payable monthly.
	(5)		Represents five years severance, payable monthly.
	(6)		Represents lump sum severance payment equal to 2.99 times average bonus for past three years.
	(7)		Represents three times average bonus for past three years, payable in three annual installments.
	(8)		Represents five times average bonus for past three years, payable in three annual installments.
	(9)		Represents accumulated benefit under the Company’s Nonqualified Supplemental Retirement Benefit Plan plus contribution required to ensure minimum of 20 quarters of Company contributions.
	(10)		Represents accumulated benefit under the Company’s Nonqualified Deferred Compensation Plan.
	(11)		Reflects estimated cost of providing health insurance plan coverage using assumptions used for financial reporting purposes.
	(12)		Represents the estimated lump sum amount that would be payable under the officer’s Death Benefit Plan Agreement.
	(13)		Reflects cash surrender value of life insurance policy, transferable at the executive’s request.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Board of Directors recognizes that related party transactions present a heightened risk of conflicts of interest, or the perception of conflicts of interest, and has adopted a written policy to be followed in connection with all related party transactions involving the Company. Pursuant to the policy, all related party transactions must be approved by either (1) a majority of the disinterested members of the Audit Committee of the Board of Directors or (2) a majority of independent and disinterested members of the Board of Directors. In either case, a related party transaction may not be approved by a single director. For purposes of the policy, the term “related party transaction” is defined as any transaction that is required to be disclosed in the Company’s proxy statements or other filings with the SEC pursuant to Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934 and any material “conflict of interest” transaction with a director, as that term is defined under the North Carolina Business Corporation Act. For fiscal year 2008, there were three related party transactions required to be disclosed in this Proxy Statement. On June 23, 2008, the Company purchased 10,000 shares of its common stock from Betty Dickey, sister of A. Scott Parker III, Director, for $470,100, or $47.01 per share. On August 12, 2008, the Company purchased 65,000 shares of its common stock from A. Scott Parker III, Director, for $3,087,500 or $47.50 per share. On September 4, 2008, the Company purchased 31,000 shares of its common stock from Betty Dickey for $1,364,310 or $44.01 per share. All three transactions were approved by the Company’s Audit Committee.

SHAREHOLDER PROPOSALS FOR 2010 ANNUAL MEETING

     Shareholder proposals to be presented at the 2010 Annual Meeting of Shareholders must be received by the Company on or before December 15, 2009 to be considered for inclusion in the Company’s proxy materials relating to that meeting. If a shareholder notifies the Company after February 28, 2010 of an intent to present a proposal at the Company’s 2010 Annual Meeting of Shareholders, the request will be considered untimely and the persons named as the Company’s proxies will have the right to exercise their discretionary voting authority with respect to such proposal without including information regarding the proposal in the proxy materials.

BY ORDER OF THE BOARD OF DIRECTORS:

W. Morris Fine

Secretary

April 14, 2009

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APPENDIX A

INVESTORS TITLE COMPANY
2009 STOCK APPRECIATION RIGHT PLAN

ARTICLE I

GENERAL PROVISIONS

     Section 1.1 Purpose. This 2009 Stock Appreciation Right Plan (the “Plan”) of Investors Title Company and its subsidiaries (the "Company") is intended to induce those persons who are in a position to contribute materially to the success of the Company to remain with the Company, to offer them rewards in recognition of their contributions to the Company and to offer them incentives to continue to promote the Company’s best interests.

     Section 1.2 Administration. The Plan shall be administered by the Compensation Committee of the Board of Directors (the “Committee”); provided, however, that (i) with respect to any awards under the Plan to an individual who is, on the relevant date, an officer, director or ten percent (10%) beneficial owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), all as defined under Section 16 of the Exchange Act, Committee shall mean a subcommittee of at least two (2) members of the Compensation Committee who are “non-employee” directors within the meaning of Rule 16b-3 adopted under the Exchange Act, and (ii) with respect to any awards under the Plan to “covered employees” within the meaning of Section 162(m) of the Code or any successor statute, Committee shall mean a subcommittee of the Compensation Committee consisting of at least two members of the Compensation Committee who are “outside directors” within the meaning of Section 162(m) of the Code. Any action by the Committee shall be taken by majority vote at a meeting thereof called in accordance with procedures adopted thereby, or by unanimous written consent of the Committee.

     Section 1.3 Authority of Committee.

     (a) Subject to the other provisions of this Plan, the Committee shall have sole authority in its absolute discretion: to grant stock appreciation rights (“SARs”) pursuant to Article II under the Plan; to determine the officers, employees and directors to whom SARs shall be granted under the Plan; to determine the number of shares subject to any SAR under the Plan; to fix the exercise price and the duration of each SAR granted under the Plan; to establish corporate or individual performance or other vesting standards for SARs granted under the Plan; to establish any other terms and conditions of SARs granted under the Plan; and to accelerate the time at which any outstanding SAR granted under the Plan may be exercised. The Board may also grant SARs from time to time to consultants who are not employees of the Company. No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any SAR granted thereunder. In addition, directors or former directors of the Company, including members or former members of the Committee, shall be entitled to indemnification by the Company to the extent permitted by applicable law and by the Company’s Articles of Incorporation or Bylaws with respect to any liability or expense arising out of such person’s participation in the administration of this Plan.

     (b) Subject to the other provisions of this Plan, and with a view to effecting its purpose, the Committee shall have sole authority in its absolute discretion: to construe and interpret the Plan; to prescribe, amend, and rescind rules and regulations relating to the Plan; to make any other determinations relating to the Plan; and to do everything necessary or advisable to administer the Plan.

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     (c) All decisions, determinations, and interpretations made by the Committee shall be binding and conclusive on all SAR grantees and on their legal representatives, heirs and beneficiaries.

     Section 1.4 Shares Subject to the Plan: Reservation of Shares. The maximum aggregate number of shares of common stock of the Company available pursuant to the Plan for the grant of SARs, subject to adjustments as provided in Section 1.6, shall be 250,000 shares of the Company's common stock, no par value (the "Common Stock"). The aggregate number of shares of Common Stock with respect to which SARs under the Plan may be granted to any individual (including SARs that are subsequently cancelled) shall not exceed an aggregate of 50,000 shares of Common Stock. If any SAR granted pursuant to the Plan expires or terminates for any reason before it has been exercised in full, the unpurchased shares subject to that SAR shall again be available for the purposes of the Plan. The Company shall at all times reserve and keep available such number of shares of its Common Stock as shall be sufficient to satisfy the requirements of the Plan.

     Section 1.5 Eligibility. SARs may be granted under the Plan to such key employees (including statutory employees within the meaning of Section 3121(d) of the Code), officers, directors or consultants of the Company or a subsidiary of the Company, whether or not employees, as the Committee shall select from time to time in its discretion.

     Section 1.6 Adjustments. If the shares of Common Stock of the Company are increased, decreased, changed into or exchanged for a different number or kind of shares or securities through merger, consolidation, combination, exchange of shares, other reorganization, recapitalization, reclassification, stock dividend, stock split or reverse stock split in which the Company is the surviving entity, an appropriate and proportionate adjustment shall be made in the maximum number and kind of shares as to which SARs may be granted under this Plan. A corresponding adjustment changing the number or kind of shares allocated to unexercised SARs that shall have been granted prior to any such change shall likewise be made. Any such adjustment in outstanding SARs shall be made without change in the aggregate purchase price applicable to the unexercised portion of any such SAR, but with a corresponding adjustment in the price for each share covered by the SAR, and shall be made in a manner consistent with the requirements of Section 409A of the Code in order for any such SAR to remain exempt from the requirements of Section 409A of the Code. In making any adjustment pursuant to this Section 1.6, any fractional shares shall be disregarded.

     In the event of a change in the Common Stock of the Company as presently constituted, which is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any such change shall be deemed to be Common Stock within the meaning of the Plan.

     The grant of a SAR under the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure.

ARTICLE II

STOCK APPRECIATION RIGHTS

     Section 2.1 Grant. The Committee may cause the Company to grant SARs to eligible participants under the Plan in such amounts as the Committee, in its sole discretion shall determine. The Committee shall have complete discretion in determining the terms and conditions pertaining to such SARs consistent with the provisions of the Plan. The grant price of a SAR shall not be less than the fair market value (as hereinafter defined) per share of the Common Stock at the time the SAR is granted. For the purpose of the Plan, the "fair market value" per share of Common Stock on any date of reference shall be the Closing Price of the Common Stock referred to in clauses (i), (ii) or (iii) below, whichever appropriate, on the business day immediately preceding such date. For this purpose, the Closing Price of the Common Stock on any business day shall be: (i) if the Common Stock is listed or admitted for trading on any United States national securities exchange, or if actual transactions are otherwise reported on the National Market System of the National Association of Securities Dealers Automated Quotation

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System ("NASDAQ") or other consolidated transaction reporting system, the last reported sale price of Common Stock on such exchange or reporting system on which the Common Stock is principally traded, as reported in any newspaper of general circulation; (ii) if clause (i) is not applicable and the Common Stock is otherwise quoted on NASDAQ, or any similar system of automated dissemination of quotations of securities prices in common use, the mean between the closing high bid and low asked quotations for the Common Stock on such system for such day; or (iii) if neither clause (i) nor (ii) is applicable, the mean between the high bid and low asked quotations for the Common Stock as reported by the National Quotation Bureau, Incorporated if at least two securities dealers have inserted both bid and asked quotations for Common Stock on at least five of the preceding ten days. If neither clause (i) nor clauses (ii) or (iii) are applicable, "fair market value" per share of Common Stock shall be such value as shall be determined by the Committee in its sole discretion, unless the Committee shall identify a different method for determining fair market value in a fair and uniform manner.

     Section 2.2 Exercise of SARs. SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.

     Section 2.3 SAR Agreement. Each SAR grant shall be evidenced by a SAR agreement that shall specify the grant price, the term of the SAR, and such other provisions as the Committee shall determine.

     Section 2.4 Term of SARs. The term of a SAR granted under the Plan shall be determined by the Committee, in its sole discretion; provided, however, that such term shall not exceed ten (10) years.

     Section 2.5 Payment of SAR Amount. Upon exercise of a SAR, the grantee of the SAR shall be entitled to receive payment from the Company in an amount determined by multiplying:

	(a)		The difference between the fair market value (as defined in Section 2.1) of a share of Common Stock on the date of exercise over the grant price; by
	(b)		The number of shares of Common Stock with respect to which the SAR is exercised.

     At the discretion of the Committee or as otherwise provided in the applicable SAR agreement, the payment upon SAR exercise shall be in cash, in shares of Common Stock of equivalent value, or in some combination thereof.

     Section 2.6 SARs Not Transferable. Except as otherwise provided in the applicable SAR Agreement, SARs granted pursuant to this Plan may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent or distribution and may be exercised during the lifetime of a SAR grantee only by that grantee.

     Section 2.7 Termination of Employment, Disability or Death

     (a) If a SAR grantee ceases to be employed by the Company, or any subsidiary corporation, for any reason other than death or disability, any SAR granted to such grantee that is unexercised or still subject to any restrictions or conditions shall be terminated and forfeited, unless otherwise provided in the applicable SAR agreement.

     (b) If a SAR grantee becomes disabled within the meaning of Section 22(e)(3) of the Code while employed by the Company, or any subsidiary corporation, any SAR may be exercised at any time within three months after the date of termination of employment due to disability, unless a longer or shorter period is provided in the applicable SAR agreement.

     (c) If a SAR grantee dies while employed by the Company, or any subsidiary corporation, any SAR shall expire one year after the date of death, unless a longer or shorter period of exercise is provided in the applicable SAR agreement. During this period, the SAR may be exercised, except as otherwise provided in the applicable SAR agreement, by the person or persons to whom the SAR grantee's rights under the SAR shall pass by will or by the laws of descent and distribution, but in no event may the SAR be exercisable more than ten years from the date of grant.

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     (d) Unless otherwise provided in the applicable SAR agreement, any SAR that may be exercised for a period following termination of the SAR grantee's employment may be exercised only to the extent it was exercisable immediately before such termination and in no event after the SAR would expire by its terms without regard to such termination.

     (e) Unless otherwise provided in the applicable SAR agreement, if a nonemployee director ceases to serve the Company in that capacity, the SAR grantee’s rights upon such termination shall be governed in the manner of a SAR grantee’s rights upon termination of employment as set forth above.

     Section 2.8 Reorganizations. Unless otherwise provided in the applicable SAR agreement, if the Company shall be a party to any merger or consolidation in which it is not the surviving entity or pursuant to which the shareholders of the Company exchange their Common Stock for other securities or for cash in any acquisition transaction, or if the Company shall dissolve or liquidate or sell all or substantially all of its assets, or upon consummation of a tender offer approved by the Board, all SARs outstanding under this Plan, unless otherwise provided in the applicable SAR agreement, shall terminate on the effective date of such merger, consolidation, dissolution, liquidation, sale or tender offer; provided, however, that prior to such effective date, the Committee may, in its discretion, either (i) make any or all outstanding SARs immediately exercisable, (ii) authorize a payment to any SAR grantee that approximates the economic benefit that he would realize if his SAR were exercised immediately before such effective date, (iii) authorize a payment in such other amount as it deems appropriate to compensate any SAR grantee for the termination of his SAR, or (iv) arrange for the granting of a substitute SAR to any SAR grantee.

ARTICLE III

MISCELLANEOUS PROVISIONS

     Section 3.1 Tax Reimbursement Payments or Loans. In view of the federal and state income tax savings expected to be realized by the Company upon exercise of a SAR, the Committee may, in its discretion, provide that the Company will make a cash payment or a loan or a combination thereof to the grantee of a SAR (or his personal representatives or heirs) for the purpose of assisting such grantee in the payment of personal income taxes arising from such exercise or lapse of restrictions and conditions. The basis for determining the amount and conditions of such cash payment or loan or combination thereof and the terms and conditions of any such loan shall be specified in the agreement pursuant to which the grant is made or may be subsequently determined by the Committee. The Committee, in its discretion, may from time to time forgive any such loan in whole or in part.

     Section 3.2 Tax Withholding. No SAR grantee shall be entitled to issuance of a stock certificate representing shares purchased upon exercise of a SAR until such grantee has paid, or made arrangements for payment, to the Company of an amount equal to the income and other taxes that the Company is required to withhold from such person as a result of his exercise of a SAR. In addition, such amounts as the Company is required to withhold by reason of any tax reimbursement payments made pursuant to Section 3.1 may be deducted from such payments.

     Section 3.3 Employment. Nothing in the Plan or in any SAR agreement shall confer upon any eligible employee any right to continued employment by the Company or any subsidiary of the Company, or limit in any way the right of the Company or any subsidiary of the Company at any time to terminate or alter the terms of that employment.

     Section 3.4 Effective Date of Plan. This Plan shall be effective March 2, 2009, the date of adoption of the Plan by the Board of Directors of the Company, subject to approval of the Plan by the shareholders of the Company by the a majority of the votes cast at a meeting at which a majority of the Company’s Common Stock is present either in person or by proxy held within 12 months of the date of adoption of the Plan by the Board.

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     Section 3.5 Termination and Amendment of Plan. The Plan may be amended, revised or terminated at any time by the Board; provided, however, that no amendment or revision shall, without the approval of the Company’s shareholders, (a) increase the maximum aggregate number of shares subject to this Plan, except as permitted under Section 1.6; (b) change the minimum purchase price for shares subject to SARs granted under the Plan; (c) extend the maximum duration established under the Plan for any SAR; or (d) permit the granting of a SAR to anyone other than those individuals described in Section 1.5 hereof. Unless sooner terminated, the Plan shall terminate on March 2, 2019. No SAR shall be granted under the Plan after the Plan is terminated.

     Section 3.6 Prior Rights and Obligations. No amendment, suspension, or termination of the Plan shall, without the consent of the person who has received a SAR, alter or impair any of that person's rights or obligations under any SAR granted under the Plan prior to such amendment, suspension, or termination.

     Section 3.7 Securities Laws. Shares of Common Stock issuable pursuant to this Plan may, at the option of the Company, be registered under applicable federal and state securities laws, but the Company shall have no obligation to undertake such registrations and may, in lieu thereof, issue shares hereunder only pursuant to applicable exemptions from such registrations. In the event that no such registrations are undertaken, the shares shall be issued only to persons who qualify to receive such shares in accordance with the exemption from registration on which the Company relies. In connection with any issuance of shares or certificates under the Plan, the Committee may require appropriate representations from the recipient of such shares and take such other action as the Committee may deem necessary, including but not limited to placing restrictive legends on certificates evidencing such shares and placing stop transfer instructions in the Company's stock transfer records, or delivering such instructions to the Company's transfer agent, in order to assure compliance with any such exemptions. Notwithstanding any other provision of the Plan, no shares will be issued pursuant to the Plan unless such shares have been registered under all applicable federal and state securities laws or unless, in the opinion of counsel satisfactory to the Company, exemptions from such registrations are available.

     Section 3.8 Compliance With Section 409A of the Code. The Plan is intended to comply with Section 409A of the Code, to the extent applicable. Notwithstanding any provision of the Plan to the contrary, the Plan shall be interpreted, operated and administered consistent with this intent. In that regard, and notwithstanding any provision of the Plan to the contrary, the Company reserves the right to amend the Plan or any award granted under the Plan, by action of the Committee, without the consent of any affected participant, to the extent deemed necessary or appropriate for purposes of maintaining compliance with Section 409A of the Code and the regulations promulgated thereunder.

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6 DETACH PROXY CARD HERE 6

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ELECTION OF THE DIRECTOR NOMINEES LISTED BELOW.

Mark “X” for only one box. Shares will be voted in the manner directed. If no direction is indicated, shares will be voted “FOR” the following director nominees:

1 – James A. Fine, Jr.           2 – H. Joe King, Jr.          3 – James R. Morton

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FOR all nominees

¨

WITHHOLD authority for all nominees

¨

Withhold authority to vote for any individual nominee.

To withhold authority to vote for any nominee, write number(s) of nominee(s) below.    _____________________________________________________________________

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL TO APPROVE THE APPROVAL OF THE 2009 STOCK APPRECIATION RIGHT PLAN.

¨

FOR

¨

AGAINST

¨

ABSTAIN

In their discretion, the proxies are authorized to vote in their best judgment with respect to any other business that may properly come before the meeting.

Dated:

, 2009

(Signature)

(Signature if held jointly)

SHAREHOLDER

NUMBER OF SHARES

Note: Please sign above exactly as name appears on this proxy. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer, giving title as such. If a partnership, please sign in partnership name by authorized person.

 

 

 

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6 DETACH PROXY CARD HERE 6

121 North Columbia Street, Chapel Hill, North Carolina 27514 This Proxy is Solicited on Behalf of the Board of Directors for the Annual Meeting of Shareholders on May 20, 2009. The undersigned hereby appoints J. Allen Fine and W. Morris Fine, and each of them, each with power of substitution, as lawful proxies, to vote all shares of common stock of Investors Title Company that the undersigned would be entitled to vote if personally present at the Annual Shareholders’ Meeting of Investors Title Company to be held at The Siena Hotel located at 1505 East Franklin Street, Chapel Hill, North Carolina on Wednesday, May 20, 2009 at 11:00 a.m. EDT, and at any adjournment thereof, upon such business as may properly come before the meeting. Please sign and date on reverse side and return in the enclosed postage-paid envelope. PROXY PLEASE SIGN ON REVERSE SIDE AND RETURN IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

 

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