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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
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On May 12, 2020, Universal Insurance Holdings, Inc. (the “Company”) entered into an employment agreement with Jon W. Springer, the Company’s President and Chief Risk Officer (the “Agreement”), which is effective as of May 12, 2020. The following summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference thereto.
Term
Mr. Springer’s former employment agreement with the Company expired on December 31, 2019. Mr. Springer’s new employment agreement provides that he will continue to serve as President and Chief Risk Officer of the Company for a term beginning on May 12, 2020 and ending on January 1, 2021, unless earlier terminated in accordance with its terms (the “Term”).
Base Salary
Mr. Springer will receive a base salary of $1,000,000, which will not be increased or decreased during the Term.
Signing Bonus
Mr. Springer will receive a signing bonus of $1,000,000. Mr. Springer is required to refund the full amount of the signing bonus if he is terminated for cause or resigns without good reason (as such terms are defined in the Agreement) prior to January 1, 2021.
Annual Bonus
For the calendar year ending December 31, 2020, Mr. Springer is eligible to receive a discretionary bonus of up to 200% of base salary, with the actual bonus payable to be determined based on factors the Compensation Committee of the Board of Directors of the Company determines to be appropriate, including, but not limited to, the Company’s financial and operational performance objectives, the recommendation of the Executive Chairman, as well as local, national and/or global conditions that directly or indirectly affect the Company.
Restricted Share Units
Mr. Springer is eligible to receive a grant of 75,000 restricted share units (the “RSU Grant”) payable under and subject to the Company’s 2009 Omnibus Incentive Plan, as may be amended from time to time (the “Omnibus Plan”). The RSU Grant will be subject to time-vesting conditions set forth in the Agreement.
Options
Mr. Springer will receive a grant of stock options with a grant date fair value of $1,000,000, which will be subject to three-year annual vesting. The grant will be made pursuant to the Omnibus Plan, and will be subject to the terms of the Omnibus Plan and any applicable award agreement evidencing the grant.
Termination
If Mr. Springer is terminated without cause or resigns for good reason (as such terms are defined in the Agreement), he would be entitled to a lump-sum cash amount equal to 12 months’ base salary and 12 months of COBRA coverage, subject to his execution of a general release of claims in favor of the Company. He would also be entitled to receive a pro rata portion of his annual incentive award for the year of termination, calculated on the basis of the Company’s actual performance for such year, provided that the Company will endeavor to apply the same percentage of annual bonus for determining the pro rata portion of the annual incentive award as it applies for determining the annual bonus for other similarly-situated senior executives of the Company. Any stock options that would have vested had he been continuously employed through the end of the one-year period following the termination date will fully vest as of the termination date and will remain exercisable for
one year. In addition, any RSUs that would have vested had he been continuously employed through the end of the one-year period following the termination date will fully vest as of the termination date and become payable within 30 days following their originally scheduled vesting dates.
Change in Control
In the event of a change in control (as defined in the Agreement) and Mr. Springer is terminated without cause or resigns for good reason within 24 months after such change in control, Mr. Springer would be entitled to a lump-sum cash amount equal to 24 months’ base salary, plus two times any bonus paid for the calendar year 2018, subject to his execution of a general release of claims in favor of the Company. All stock options would immediately vest and all RSUs would immediately vest and become payable within 30 days following their regularly scheduled vesting dates. All such change in control payments would be reduced to the extent they would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, if such reduction would result in Mr. Springer receiving a higher net after-tax amount.
Disability
If Mr. Springer becomes disabled during the Term, then the Company would be entitled to suspend his officership, but Mr. Springer would be entitled to remain an employee of the Company and receive his compensation and benefits for the lesser of (i) one year from the date of such suspension or (ii) the date on which he is first eligible for long-term disability payments under the Company’s long-term disability plan. If Mr. Springer is terminated due to disability or dies during the Term, he or his estate, respectively, would be entitled to receive a pro rata portion of his annual incentive award for the year of termination, calculated on the basis of the Company’s actual performance for such year. In addition, such termination will be treated as a termination without cause for the purpose of determining the Company’s obligation with respect to stock options and RSUs held by Mr. Springer.
Non-Compete
Mr. Springer is subject to a non-compete provision under the Agreement that prohibits him from engaging in certain competitive activities during the Term and for a period of three years following his termination.
Other
The Agreement also contains nondisparagement, nonsolicitation and confidentiality provisions.