Table of Contents
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x1x1.jpg)
2021
Notice of Annual General Meeting of
Shareholders and Proxy Statement
RenaissanceRe
Holdings Ltd.
Table of Contents
“At RenaissanceRe, we are committed to being a positive
force for change. Whether we are promoting climate resilience, closing the protection gap, or creating an environment where our
people and communities thrive, we apply our risk acumen to help solve some of the world’s largest challenges.”
— Kevin J. O’Donnell, President
and Chief Executive Officer
Table of Contents
Table of Contents
Letter To Our Shareholders
Dear Fellow Shareholders,
At its core, our strategy is to employ an integrated system to match desirable
risk with efficient capital. Over the years, our consistent execution of this strategy regardless of market cycle has been a hallmark
of RenaissanceRe’s outperformance. In furtherance of this, the Board of Directors and executive team work closely together
to set strategic objectives, and the Board oversees their execution through robust corporate governance, industry-leading enterprise
risk management and aligned executive compensation.
Despite the unprecedented disruption of COVID-19 in 2020, our organization
remained focused and excelled in meeting our strategic objectives. We undertook a vigorous process to raise over $1 billion in
common equity capital, the largest in our history, and deployed it quickly and efficiently through a combination of organic growth
and risk retention. While our underwriting results were impacted by the global COVID-19 pandemic and multiple weather-related catastrophic
events, we grew book value per common share by 14.9%, increased gross premiums written by 20.8%, and improved our underwriting
expense ratio by 1.6 percentage points. Even with restricted travel, the Board increased engagement with management to deliver
a robust oversight process and fulfill our fiduciary responsibilities to shareholders.
Our executive compensation program reflects a pay-for-performance philosophy
that supports achievement of long-term strategic goals and thorough risk-management practices. We regularly review our compensation
program to ensure that the interests of our shareholders and executives are aligned. As a result of a comprehensive shareholder
outreach following our 2019 Annual General Meeting of Shareholders, we made several changes to our executive compensation program
which were implemented in 2020. This included shifting our performance shares to a three-year performance period with vesting based
on absolute and relative metrics. We also increased the performance share component of the long-term incentive awards to 50% for
all named executive officers. Our executive compensation programs demonstrated strong alignment with shareholder interests in 2020.
Financial results were not as uniformly strong as they were in 2019, and our named executive officers saw corresponding reductions
in incentive compensation payouts.
Advancing our ESG Strategy
As Kevin discussed in his Letter to Shareholders in our 2020 Annual Report,
we believe that serving all stakeholders and maximizing shareholder value are complementary endeavors. Environmental, social and
governance (“ESG”) issues have always been a central part of our culture and strategy, and in 2020 we formalized our
efforts through a comprehensive ESG strategy. We have focused on three strategic ESG priorities—promoting climate resilience,
closing the protection gap and inducing positive societal change—where we can apply our core business strengths
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x4x1.jpg)
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Table of Contents
to make a meaningful impact on our community and stakeholders. While we have
historically considered our ESG objectives when making compensation decisions, starting in 2021, management’s execution of
our ESG strategy will be formally assessed as part of the strategic accomplishments pillar of our annual incentive bonus plan.
We believe that this addition, as well as the changes we made to our compensation program in 2020, support our long-term strategy
and better align the interests of our executives with those of our shareholders and various stakeholders.
Diversity and Board Composition
Having directors with diverse skills, viewpoints, experience, knowledge,
and abilities allows the Board to fulfill its responsibilities as we execute our strategy in an evolving market. We are proud that
over a five-year period, we have increased gender diversity from less than 10% to over 36%. As we select new directors, the Board
is committed to seeking candidates who embody all aspects of diversity, including racial, ethnic and gender diversity, and expanding
the pool from which we source qualified directors.
In closing, despite a challenging year, we executed our strategy strongly
and consistently in 2020. We are excited about the many opportunities ahead of us and will continue to work hard on your behalf
to maximize shareholder value. Thank you for investing in RenaissanceRe.
March 23, 2021
Sincerely,
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x5x1.jpg) |
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James L. Gibbons
Non-Executive Chair of the Board of Directors
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x5x3.jpg)
Kevin J. O’Donnell
President and Chief Executive Officer
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x5x4.jpg) |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x5x5.jpg)
Table of Contents
Notice of Annual General Meeting of Shareholders
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x2.jpg) |
Date and Time
Wednesday, May 5, 2021
8:30 a.m. Atlantic Time
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x3.jpg) |
Location
Renaissance House
12 Crow Lane
Pembroke HM 19
Bermuda
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x4.jpg) |
Who Can Vote
Owners of our common shares as of March 9, 2021 are entitled to vote on all
matters
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How
to Vote |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x5.jpg) |
Telephone
In the United States or Canada you can vote your shares by calling
1-800-690-6903
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x6.jpg) |
Online
You can vote your shares online at www.proxyvote.com
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You will need the 16-digit control number on the Notice
of Internet Availability or proxy card |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x7.jpg) |
Mail
You can vote by mail by marking, dating and signing your proxy
card or voting instruction form and returning it in the postage-paid envelope provided
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x8.jpg) |
QR
Code
You can vote your shares online with your tablet or smartphone by scanning the QR code. |
Voting Items |
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Board Vote Recommendation |
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For Further
Details |
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1. |
Election of three Class II director nominees |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x9.jpg) |
“FOR”
each director nominee |
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Page 14 |
2. |
Advisory vote on the compensation of our named executive officers |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x9.jpg) |
“FOR” |
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Page 40 |
3. |
Approval of the appointment of Ernst & Young Ltd. as our independent registered public accounting firm for the
2021 fiscal year and the referral of the auditor’s remuneration to the Board of Directors |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x9.jpg) |
“FOR” |
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Page 78 |
Shareholders will also act on other business that properly comes before the
meeting.
Please Vote Your Shares
We encourage shareholders to vote promptly, as this will save the expense
of additional proxy solicitation.
By Order of the Board of Directors,
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x6x1.jpg)
Shannon L. Bender
Corporate Secretary
Important Notice of Internet Availability of Proxy Materials
This Notice of Annual General Meeting of Shareholders and related proxy materials
are being distributed or made available to shareholders beginning on or about March 23, 2021. This proxy statement includes instructions
on how to access these materials (including our proxy statement and 2020 annual report to shareholders) online.
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4 |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/footer.jpg) |
Table of Contents
Proxy Summary
The board of directors (the “Board”) of RenaissanceRe Holdings
Ltd. (“RenaissanceRe,” the “Company,” “we,” “us,” or “our”) is making
this proxy statement and proxy available to you in connection with the solicitation of proxies for our 2021 Annual General Meeting
of Shareholders (the “Annual Meeting”).
This proxy summary highlights information contained elsewhere in this
proxy statement. It does not contain all of the information that you should consider, and you should read the entire proxy statement
carefully before voting.
Election of Three Class II Director Nominees |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x7x1.jpg) |
The Board recommends a vote FOR each director nominee |
See page 14 |
Advisory Vote on the Compensation of Our Named Executive Officers |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x7x1.jpg) |
The Board recommends a vote FOR this proposal |
See page 40 |
Approval of the Appointment of Ernst & Young Ltd. as Our Independent Registered Public Accounting Firm for the 2021 Fiscal Year and the Referral of the Auditor’s Remuneration to the Board of Directors |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x7x1.jpg) |
The Board recommends a vote FOR this proposal |
See page 78 |
Table of Contents
Director Nominees and Continuing Directors
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Director |
Committee Membership |
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Name and Primary Occupation |
Age |
Since |
AC |
CCGC |
IRMC |
TC |
OC |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x16.jpg) |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x1.jpg) |
Brian G. J. Gray IND
Former Group Chief Underwriting Officer, Swiss Reinsurance Company Ltd.
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58 |
2013 |
I |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x17.jpg) |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x17.jpg) |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x2.jpg) |
Duncan P. Hennes IND
Co-Founder and Managing Member,
Atrevida Partners, LLC
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64 |
2017 |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x17.jpg) |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x3.jpg) |
Kevin J. O’Donnell
President and Chief Executive Officer,
RenaissanceRe Holdings Ltd.
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54 |
2013 |
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C |
C |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x15.jpg) |
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Henry Klehm III IND
Partner, Jones Day
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62 |
2006 |
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C |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x5.jpg) |
Valerie Rahmani IND
Former Chief Executive Officer, Damballa, Inc.
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63 |
2017 |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x17.jpg) |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x6.jpg) |
Carol P. Sanders IND
Former Chief Financial Officer,
Sentry Insurance a Mutual Company
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54 |
2016 |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x17.jpg) |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x7.jpg) |
Cynthia Trudell IND
Former Chief Human Resources Officer,
PepsiCo, Inc.
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67 |
2019 |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x17.jpg) |
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David C. Bushnell IND
Retired Chief Administrative Officer,
Citigroup Inc.
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66 |
2008 |
C |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x9.jpg) |
James L. Gibbons IND
Chairman, Harbour International Trust
Company Limited
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57 |
2008 |
I |
I |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x17.jpg) |
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Jean D. Hamilton IND
Retired Chief Executive Officer,
Prudential Institutional and Executive
Vice President, Prudential Financial, Inc.
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74 |
2005 |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x8x17.jpg) |
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Anthony M. Santomero IND
Former President, Federal Reserve Bank of Philadelphia
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74 |
2008 |
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C |
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IND |
Independent |
AC |
Audit Committee |
C |
Chair |
CCGC |
Compensation and Corporate Governance Committee |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/rnr3834911-def14ax8x1.jpg) |
Member |
IRMC |
Investment and Risk Management Committee |
I |
Interim Member |
TC |
Transaction Committee |
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OC |
Offerings Committee |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/footer.jpg) |
Table of Contents
Board Snapshot
Independence |
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Diversity |
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91%
Independent
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36%
Women
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x9x1.jpg) |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x9x2.jpg) |
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Tenure |
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Age |
9 years
Average
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63
Average
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x9x3.jpg) |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x9x4.jpg) |
Table of Contents
Corporate Governance Highlights
Our Board is comprised almost entirely of independent directors with a wide range
of professional experience, and has consistently implemented corporate governance best practices to ensure that we serve the long-term
interests of our shareholders.
Board Independence
and Composition |
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Active
Oversight |
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Shareholder
Alignment |
• Independent Non-Executive
Chair of the Board.
• Fully independent Audit,
Compensation and Corporate Governance, and Investment and Risk Management Committees.
• Majority vote standard
for uncontested director elections.
• Rigorous director evaluation
and selection criteria, which encourage diversity and refreshment. |
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• Board oversight of strategic
planning and enterprise-wide risk management.
• Enhanced management
interaction and Board participation to ensure effective oversight during COVID-19 pandemic.
• Active shareholder engagement.
• Robust Code of Ethics
and Conduct (“Code of Ethics”) for all directors and employees.
• Oversight of key ESG,
diversity, equity and inclusion (“DEI”), and corporate social responsibility (“CSR”) initiatives. |
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• Meaningful share ownership
guidelines for all directors and named executive officers.
• Anti-hedging, anti-pledging
and insider trading policies.
• At-risk pay is 86% of
total target compensation for our Chief Executive Officer and 80% on average for our other named executive officers.
• Pay-for-performance
philosophy guides executive compensation decisions. |
Environmental and Corporate Social Responsibility Highlights
Our commitment to ESG issues has always been
a central part of our corporate strategy at RenaissanceRe. We believe that our dedication to these values benefits our stakeholders,
communities and environment. In 2020, our leadership team adopted a formal ESG strategy, which focuses on three core areas
where we apply our core business strengths to make a meaningful impact on society—promoting climate resilience, closing
the protection gap, and inducing positive societal change. |
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For additional
information on our DEI and other ESG activities, see our new ESG webpage (www.renre.com/about-us/
esg-at-renaissancere) |
Promoting
Climate
Resilience |
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Closing
the
Protection Gap |
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Inducing
Positive
Societal Change |
• Continued leadership by our dedicated
team of scientists in researching and modeling atmospheric hazards and the economic impact of climate-related risks.
• Commitment to leadership in environmental
sustainability, climate change and risk mitigation.
• Active in promotion of risk mitigation
and disaster preparedness.
• Tracking and offsetting of our
estimated operational carbon emissions. |
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• Leveraging our partnerships to
increase economic resiliency of vulnerable communities.
• Formal strategy and dedicated
global team for our public sector partnership activities.
• Significant commitments to reduce the protection gap and mitigate the impact
of natural disasters.
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• Investment in our employees’
professional development and personal growth.
• DEI principles embedded throughout
the organization.
• Encouragement of open dialogue
with employees.
• Long-standing dedication to community
engagement and charitable giving.
• Global CSR strategy with a locally-led philosophy.
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/footer.jpg) |
Table of Contents
Strategic, Operational and Financial Highlights
While RenaissanceRe’s performance in 2020 was impacted by the COVID-19 pandemic
as well as the elevated frequency of the year’s natural catastrophic events, we had a strong year strategically, operationally
and financially. Some of the highlights included:
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STRONG
STRATEGIC AND OPERATIONAL PERFORMANCE |
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Strong
Strategic Plan Performance |
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Underwriting
Accomplishments |
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Capital
Management
Accomplishments |
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Strong
Operational
Performance |
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• Organic
growth and portfolio diversification |
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• Grew
gross premiums written by 20.8% to $5.8 billion
• Combined
Ratio of 101.9%, 5th best in peer group |
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• Maintained
financial strength ratings
• Raised
and deployed over $1.1 billion in equity capital
• Raised
$1 billion of capital across our third-party vehicles
• Lowered
cost of capital |
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• Executed
during global COVID-19 pandemic
• Increased
operational, capital and investment leverage |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/rnr3834911-def14ax11x1.jpg) |
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STRONG FINANCIAL PERFORMANCE |
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• Net
Income Available to Common Shareholders of $731 million |
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• Return
on Average Common Equity of 11.7%
• Operating Return
on Average Common Equity of 0.2%(1) |
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• Growth in Book Value per Common
Share of 14.9%
• Growth in Tangible
Book Value per Common Share plus Change in Accumulated Dividends of 17.9%(1)
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• Total Investment
Return of 5.9%
• Increased
dividend |
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(1) |
Operating return on average common equity and growth in tangible book value per common share plus change in accumulated dividends are non-GAAP financial measures. A reconciliation of non-GAAP financial measures is included in “Appendix A.” |
Executive Compensation Highlights
Our executive compensation program is designed to support our long-term strategy
and risk-management practices, align the interests of our shareholders and executives, and encourage operational and financial
consistency over the market cycles and earnings volatility that are inherent and unique to our industry. We have a team-based approach
to leading, managing and operating the Company. Our executives develop and implement our strategy on a Company-wide basis, and
our executive compensation program reflects this approach, rewarding executives based on overall Company performance.
Table of Contents
2020 Compensation Snapshot
To achieve the goals of our executive compensation program, the Compensation and
Corporate Governance Committee (the “Compensation and Governance Committee”) has developed a target pay mix for our
Chief Executive Officer (or, “CEO”) and other named executive officers (or, “NEOs”) that ties a significant
portion of their compensation to our short- and long-term performance. We measure success against a mix of key performance metrics,
the majority of which are objectively measurable. We believe this mix of metrics aligns the interests of our executives and shareholders
and rewards our Chief Executive Officer and other named executive officers for delivering strong performance on our strategic plan
without incentivizing excessive risk taking.
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Compensation Component* |
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Description |
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Benchmarks/Metrics |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x3.jpg) |
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Salary
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x4.jpg)
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Fixed component of compensation |
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Reflects expertise and scope of responsibilities in a competitive market for
executive talent |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x1.jpg) |
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Annual Incentive Bonus
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x5.jpg)
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Annual, at-risk cash incentive program designed to promote achievement of financial
metrics and strategic accomplishments against pre-defined targets that support long-term growth and operational efficiencies |
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• One-year
performance period
• Metrics:
• Combined
ratio rank (relative to peers) (16.7%)
• Ratio of
operating return on average common equity to peer median (33.3%)
• Ratio of
actual gross premiums written to budget (16.7%)
• Board-approved
strategic accomplishments (33.3%) |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x2.jpg) |
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Long-Term Incentive Awards |
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At-risk, long-term, equity-based compensation to encourage multi-year performance
and retention |
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Performance Shares
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x6.jpg)
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• Subject to
both performance-and service-based vesting
• Comprise 50%
of long-term incentive awards for all named executive officers ![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x8.jpg) |
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• Three-year
performance/vesting period ![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x8.jpg)
• Metrics:
• Average growth
in book value per common share plus change in accumulated dividends (75%)
• Average underwriting
expense ratio rank compared to peers (25%) ![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x8.jpg) |
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Time-Vested Restricted Shares
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x12x7.jpg)
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• Subject to service-based vesting |
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• Four-year
vesting period (equal annual installments) |
* |
2020 Target Pay Mix for CEO and Average Target Pay Mix for Other Named Executive Officers. |
10 |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/footer.jpg) |
Table of Contents
Pay for Performance
The
link between pay and performance and the outcomes of our executive compensation program
for 2020 are discussed in detail in the Compensation Discussion and Analysis
► Page 41 |
|
The Compensation and Governance Committee evaluates and
sets rigorous performance goals at the time of grant for all performance-based compensation. In 2020, in a time of unprecedented
disruption due to the COVID-19 pandemic and significant weather-related loss events, we benefited from strong execution of
our consistent long-term strategy. Reflecting the volatility in the markets and industry, our resulting performance against
our 2020 compensation metrics and strategic goals, all of which were determined prior to the onset of the COVID-19 pandemic,
led to varied outcomes. We saw substantial growth in gross premiums written and tangible book value per common share plus
change in accumulated dividends, a relatively strong combined ratio compared to peers, and total shareholder return in line
with our peer group, with operating return on average common equity falling somewhat short of the peer median. As a result,
our 2020 annual incentive bonuses paid out at approximately target and our 2020 performance share payouts ranged from below
target to maximum, depending on the metric. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x13x1.jpg)
(1) |
Operating return on average common equity and growth in
tangible book value per common share plus change in accumulated dividends are non-GAAP financial measures. A reconciliation
of non-GAAP financial measures is included in “Appendix A.” |
(2) |
Total shareholder return refers to total shareholder return relative
to a pre-approved performance share peer group during each calendar year performance period. For these purposes, total shareholder
return is determined as the increase in the 20-day average share price preceding the end of the performance period, plus the
dividends paid with respect to such shares during such period, expressed as a percentage of the 20-day average share price
preceding the beginning of the performance period. |
Table of Contents
Our 2020 performance represented a continuation of our success over time. Since
Mr. O’Donnell was named our Chief Executive Officer in 2013, we have performed strongly on key financial metrics. He has
led the Company to become a diversified reinsurer with an innovative and flexible operating platform. From 2013 to 2020, our gross
premiums written grew at a compound annual growth rate (“CAGR”) of 17.4% and our total shareholder return grew at a
CAGR of 10.4%, while our Chief Executive Officer’s total compensation grew at a CAGR of only 1.7%. The graph below illustrates
the alignment of Mr. O’Donnell’s pay with our performance during Mr. O’Donnell’s tenure.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x14x1.jpg)
|
|
Return on Average Common
Equity(1) |
Growth in Book Value per
Common Share(1) |
|
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x14x2.jpg) |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x14x3.jpg) |
Sources: S&P Research Insight (for 2009-2014 peer company data) and S&P
Capital IQ (for 2015-2020 peer company data).
(1) |
Includes our current compensation peer group except that Third Point Reinsurance Ltd. is excluded from 10-year calculations due to lack of data prior to 2012. |
12 |
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Table of Contents
Say-on-Pay and Shareholder Engagement
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x15x1.jpg) |
|
We reached out to shareholders totaling almost
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x15x2.jpg)
|
|
We are committed to ensuring that our shareholders fully understand our executive compensation program, including how the program rewards the achievement of our strategic objectives and aligns the interests of our named executive officers with those of our shareholders.
The results of the annual advisory say-on-pay vote at our 2020 Annual General Meeting of Shareholders (the “2020 Annual General Meeting”), where approximately 94% of the votes cast were in support of the compensation of our named executive officers, indicate strong shareholder support of our programs. This significant increase in support from our 2019 Annual Meeting followed the changes we made to our programs for 2020 taking into account the feedback we received during our extensive shareholder outreach efforts after the 2019 Annual Meeting and into 2020.
To ensure that we continue to enjoy the support of our shareholders, we engaged in an extensive shareholder outreach effort in 2020. We focused our outreach on our top 25 shareholders, who generally represent about two-thirds of our shares outstanding.
In total, we reached out to shareholders representing almost 72% of our shares outstanding and spoke to about two-thirds of those shareholders. When requested, the Chair of the Compensation and Governance Committee participated in the discussions with shareholders.
For additional information see “Executive Compensation–Compensation Discussion and Analysis–Executive Summary–Response to our Say-on-Pay Vote– Shareholder Outreach and Feedback.” |
|
We received support for the compensation of our named executive officers of
approximately
94%
of
shares voted |
|
2020 Enhancements to Compensation Program
Our shareholders told us that they appreciated the opportunity to engage in discussions
and our willingness to consider their input in the design of our executive compensation program. They generally expressed support
for our strategy and the structure and design of our executive compensation program. However, we did hear feedback regarding some
areas for potential improvement following our 2019 Annual Meeting. To reflect the organic and inorganic growth of our business
that has resulted in larger, more diversified and longer duration risk and investment portfolios, the Compensation and Governance
Committee made the following changes which took effect in 2020:
Some shareholders expressed a preference for: |
|
Beginning with awards made in 2020: |
A three-year measurement period for performance shares.
Multiple metrics and relative metrics for performance shares.
Increased weighting of performance shares for our named executive officers (other
than our Chief Executive Officer).
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/rnr3834911-def14ax15x1.jpg) |
Our performance shares shifted from annual “banking” with three-year
vesting, to a three-year performance period.
75% of the performance shares will vest based on average growth in book value
per common share plus accumulated dividends over three years and 25% of the performance shares will vest based on our three-year
average underwriting expense ratio rank compared to peers.
We increased the percentage of long-term incentive awards comprised of performance
shares to 50% for all named executive officers (in line with our Chief Executive Officer).
|
Table of Contents
Corporate Governance
|
PROPOSAL 1 |
|
|
|
Election of Three
Class II
Director Nominees
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x16x1.jpg)
The Board unanimously recommends
that shareholders vote FOR the election of Mr. Gray,
Mr. Hennes and Mr. O’Donnell. |
Election of Directors
Our Amended and Restated Bye-laws (our “Bye-laws”) provide that the
number of directors shall be determined by our Board and shall be between eight and eleven members. Currently, that number has
been fixed by the Board at eleven. The Board consists of three classes, with directors of one class elected each year for terms
extending to the annual general meeting of shareholders held in the third year following their election.
The terms of our Class II directors will expire at the Annual Meeting. The Board,
upon the recommendation of the Compensation and Governance Committee, has nominated Brian G. J. Gray, Duncan P. Hennes and Kevin
J. O’Donnell for election as Class II directors. Mr. Gray, Mr. Hennes and Mr. O’Donnell were last elected to the Board
at our 2018 Annual General Meeting of Shareholders. If elected at the Annual Meeting, these nominees will serve until the expiration
of their terms in 2024, or until their earlier resignation or removal.
We have no reason to believe that any of the nominees will be unable or unwilling
to serve if elected. However, if a nominee becomes unable or unwilling to accept a nomination or election, the Board may select
a substitute nominee and the common shares represented by proxies may be voted for such nominee unless shareholders indicate otherwise.
Majority Vote Requirement
Each nominee for election to serve as a Class II director who receives a majority
of the votes cast at the Annual Meeting will be elected as a director. However, if a nominee fails to receive a majority of the
votes cast at the Annual Meeting, such nominee will tender an irrevocable resignation that will be effective upon the Board’s
acceptance of such resignation. Upon the submission of the resignation, the Compensation and Governance Committee will promptly
consider the resignation and make a recommendation to the Board, and the Board will consider any relevant factors in deciding whether
to accept or reject the director’s resignation.
Skills and Experience of our Nominees and Continuing Directors
Each nominee has extensive business experience, education and personal skills
that qualify him or her to serve as an effective Board member. The specific experience and qualifications of the nominees are set
forth below. We encourage you to read the biographies of our nominees and continuing directors, as well as the discussion of our
Board’s composition, below.
14 |
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Table of Contents
Director Nominees
Class II Directors (whose terms, if elected, expire
in 2024)
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x17x1.jpg) |
Brian G. J. Gray
INDEPENDENT
Committees: Investment and Risk Management,
Transaction, Offerings, Audit (Interim)
Age: 58
Director Since: 2013 |
|
|
Other Public
Company Boards
• None |
Background and Qualifications
From 2008 until his retirement in 2012, Mr. Gray served as Group Chief Underwriting Officer of Swiss
Reinsurance Company Ltd. (“Swiss Re”) and was a member of Swiss Re’s Group Executive Committee. From
2005 through 2008, he was a member of the Group Executive Board, responsible for underwriting Property and Specialty Product
Lines on a global basis for Swiss Re. Mr. Gray joined Swiss Re in Canada (“Swiss Re Canada”) in 1985, and
served in a variety of roles, including President and Chief Executive Officer of Swiss Re Canada from 2001 to 2005 and
Senior Vice President of Swiss Re Canada from 1997 to 2001. |
|
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x17x2.jpg) |
Duncan P. Hennes
INDEPENDENT
Committees: Investment and Risk Management
Age: 64
Director Since: 2017 |
|
|
Other Public
Company Boards
• Citigroup Inc.
(2013 to present) |
Background and Qualifications
Mr. Hennes has served as the Co-Founder and Managing Member
of Atrevida Partners, LLC (“Atrevida”) since 2007. Prior to co-founding Atrevida, he served as Co-Founder
and Partner of Promontory Financial Group from 1999 to 2006. Prior to that, Mr. Hennes served in a number of senior executive
positions at Bankers Trust Corporation, including Executive Vice President in charge of Trading, Sales and Derivatives,
and as the Chairman of the Board of Oversight Partners I, the consortium that took control of Long Term Capital Management,
from 1987 to 1998. From 1998 to 1999 he was the Chief Executive Officer at Soros Fund Management, LLC. Mr. Hennes currently
serves as the Chair of the Risk Management Committee and as a member of the Audit Committee, Compliance Committee, Executive
Committee and Personnel and Compensation Committee of Citigroup Inc. (“Citigroup”) and as a member of the
Board of Directors of Citibank, N.A. |
Table of Contents
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x17x3.jpg) |
Kevin
J. O’Donnell
CHIEF
EXECUTIVE OFFICER
Committees:
Transaction (Chair), Offerings (Chair)
Age: 54
Director Since: 2013 |
|
Other
Public Company Boards
• None |
Background
and Qualifications
Mr. O’Donnell has served as our Chief Executive Officer since July 2013 and as our President
since November 2012. Mr. O’Donnell previously served in a number of roles since joining the Company in 1996, including
Global Chief Underwriting Officer, Executive Vice President, Senior Vice President, Vice President and Assistant Vice
President. Mr. O’Donnell served as the Chair of the Global Reinsurance Forum from 2018 to 2020 and as the Chair
of the Association of Bermuda Insurers and Reinsurers in 2017 and 2018.
|
|
Continuing Directors |
|
The members of the Board whose terms do not expire at the Annual Meeting and who are not standing for election at this year’s Annual Meeting are set forth below. |
|
Class III Directors (whose terms expire in 2022) |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x18x2.jpg) |
Henry
Klehm III
INDEPENDENT
Committees:
Compensation and Corporate Governance (Chair)
Age: 62
Director Since: 2006 |
|
Other
Public Company Boards
• None |
Background and Qualifications
Mr. Klehm has been a partner at the law firm Jones Day
since 2008 and has been the Practice Leader of the firm’s Securities Litigation and SEC Enforcement Practice since
January 2017. From 2002 to 2007, Mr. Klehm served as Global Head of Compliance for Deutsche Bank, AG. Prior to joining
Deutsche Bank, AG, Mr. Klehm served as Chief Regulatory Officer and Deputy General Counsel at Prudential Financial from
1999 to 2002. Prior to joining Prudential Financial, Mr. Klehm served in various positions with the U.S. Securities and
Exchange Commission (the “Commission” or the “SEC”), including as Senior Associate Director of
the Northeast Regional Office. |
16 |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x19x1.jpg) |
Valerie Rahmani
INDEPENDENT
Committees: Audit
Age: 63
Director Since: 2017 |
|
|
Other
Public Company Boards
• Computer
Task Group, Incorporated
(2015
to present)
• London
Stock Exchange Group, plc
(2017
to present)
• Aberdeen
Asset Management PLC
(2015
to 2017) |
Background
and Qualifications
Dr. Rahmani has more than 30 years of experience in the technology
industry, including more than 25 years at IBM serving in roles of increasing seniority across multiple global business
segments from 1981 to 2009, most recently as General Manager of Internet Security Systems. Subsequent to her tenure at
IBM, Dr. Rahmani was Chief Executive Officer at Damballa, Inc., a privately held Internet security software company, from
2009 to 2012. From 2017 to 2019, she served as the part-time head of the Innovation Panel at Standard Life Aberdeen plc,
a UK-based FTSE 100 global investment company. She currently serves as Chair of the Compensation Committee and as a member
of the Audit Committee and the Nominating and Corporate Governance Committee of Computer Task Group, Incorporated, an
information technology solutions and software company, and as a member of the Nomination Committee, Risk Committee and
the Remuneration Committee of the Board of the London Stock Exchange Group, plc. |
|
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x19x2.jpg) |
Carol P. Sanders
INDEPENDENT
Committees: Audit
Age: 54
Director Since: 2016 |
|
Other
Public Company Boards
• Alliant
Energy Corporation
(2005
to present)
• First
Business Financial Services, Inc.
(2016
to present) |
Background
and Qualifications
Ms. Sanders has served as the President of Carol P. Sanders
Consulting, LLC, providing consulting services to the insurance and technology industries, since June 2015. From June
2013 until June 2015, she served as Executive Vice President, Chief Financial Officer and Treasurer of Sentry Insurance
a Mutual Company. Previously she served as the Executive Vice President and Chief Operating Officer of Jewelers Mutual
Insurance Company from November 2012 until June 2013, where she also served as Senior Vice President, Chief Financial
Officer and Treasurer from May 2011 until November 2012 and as Chief Financial Officer and Treasurer from 2004 until May
2011, after holding a series of positions of increasing responsibility in finance, accounting, treasury and tax. Ms. Sanders
currently serves as Chair of the Nominating and Governance Committee, as a member of the Audit Committee and the Executive
Committee and as the Lead Independent Director of Alliant Energy Corporation, a public utility holding company, and as
Chair of the Audit Committee of First Business Financial Services, Inc., a registered bank holding company. |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x20x3.jpg) |
Cynthia Trudell
INDEPENDENT
Committees: Compensation and Corporate
Governance
Age: 67
Director Since: 2019 |
Other
Public Company Boards
• ISS
A/S
(2015 to present)
• Canadian
Tire Corporation
(2019
to present)
• The
Pepsi Bottling Group, Inc.
(2008
to 2010)
• Canadian
Imperial Bank of Commerce
(2005
to 2008)
• PepsiCo,
Inc.
(2000 to 2007) |
Background
and Qualifications
From 2011 until her retirement in September 2017, Ms. Trudell
served as Executive Vice President and Chief Human Resources Officer of PepsiCo, Inc. (“PepsiCo”). From 2007
through 2011, she served as Senior Vice President and Chief Personnel Officer of PepsiCo. Prior to her tenure at PepsiCo,
Ms. Trudell held a number of executive operating and general management positions with General Motors Corporation from
1981 to 2001, and Brunswick Corporation from 2001 to 2006, including chairwoman and president of Saturn Corporation, president
of IBC Vehicles and president of Sea Ray Group. Since 2015, Ms. Trudell has served on the board of ISS A/S, a global facility
services provider based in Denmark and publicly traded on the NASDAQ OMX Copenhagen, where she currently serves as a member
of the Remuneration Committee and the Nomination Committee. Since 2019, Ms. Trudell has served on the board of Canadian
Tire Corporation, a Canadian retail company publicly traded on the Toronto Stock Exchange, where she is Chair of the Management
Resources and Compensation Committee and a member of the Audit Committee and Governance Committee. From 2013 to 2019,
she served as a member of the Defense Business Board, which provides business advice to the U.S. Department of Defense. |
|
Class I Directors (whose terms expire in 2023) |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x20x4.jpg) |
David C. Bushnell
INDEPENDENT
Committees: Audit (Chair)
Age: 66
Director Since: 2008 |
Other
Public Company Boards
• Cordia
Bancorp Inc.
(2011 to 2016) |
Background and Qualifications
Mr. Bushnell has served as the principal of Bushnell Consulting, a financial services consulting firm, since 2008.
Mr. Bushnell retired from Citigroup Inc. in 2007, after 22 years of service. Mr. Bushnell served as the Senior Risk Officer
of Citigroup from 2003 through 2007 and retired as Chief Administrative Officer in 2007. Following his retirement from Citigroup,
Mr. Bushnell served as a consultant to Citigroup until December 31, 2008. Previously, Mr. Bushnell worked for Salomon Smith
Barney Inc. (later acquired by Citigroup) and its predecessors in a variety of positions, including as a managing director
and Chief Risk Officer. In addition to his board service on Cordia Bancorp Inc. (“Cordia”), a public bank holding
company, Mr. Bushnell served as Chief Risk Officer of Cordia and its wholly owned subsidiary, Bank of Virginia, from 2011
until Cordia was acquired in September 2016. |
18 |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x21x1.jpg) |
James L. Gibbons
INDEPENDENT NON-EXECUTIVE CHAIR OF THE BOARD
Committees: Transaction, Offerings,
Compensation and Corporate Governance (Interim), Audit (Interim)
Age: 57
Director Since: 2008 |
Other
Public Company Boards
• Nordic
American Tankers Limited
(2013
to 2016) |
Background
and Qualifications
Mr. Gibbons, a Bermudian citizen, is Executive Chairman of Harbour International Trust Company Limited and the Treasurer,
a Director and member of the Executive Committee of Edmund Gibbons Limited (“EGL”). Mr. Gibbons also serves as
a Director and member of the Risk Committee of Clarien Group Limited (“Clarien”), an international financial company.
He was also Non-Executive President of Bermuda Air Conditioning Limited (“BACL”) through March 2019 and currently
serves as a Director of BACL. Mr. Gibbons served as Chair of Capital G Bank Limited from 1999 to 2013 and as President and
Chief Executive Officer of Capital G Limited from 1999 to 2010, prior to the change of name to Clarien from Capital G in 2014. |
|
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x21x2.jpg) |
Jean D. Hamilton
INDEPENDENT
Committees: Compensation and Corporate
Governance, Transaction, Offerings
Age: 74
Director Since: 2005 |
Other
Public Company Boards
• None
Investment Company
Boards
• First
Eagle Funds (2003 to present)
• First
Eagle Variable Funds (2003 to present)
• First
Eagle Credit Opportunities Fund (2020
to present) |
Background and
Qualifications
Ms. Hamilton held various positions with Prudential Financial, Inc., including Executive Vice President,
and was Chief Executive Officer of Prudential Institutional from 1998 through her retirement in 2002. Currently, she is an
independent consultant and private investor as well as a Senior Managing Director and Partner of Brock Capital Group LLC.
Prior to joining Prudential, she held several positions with The First National Bank of Chicago, including Senior Vice President
and Head of the Northeastern Corporate Banking Department. She is currently a Trustee, a member of the Audit Committee and
Deferred Compensation Committee, and Chair of the Board Valuation and Liquidity Committee of First Eagle Funds and First Eagle
Variable Funds, and a Trustee, a member of the Audit Committee and Chair of the Credit Valuation and Allocation Committee
of First Eagle Credit Opportunities Fund. |
Table of Contents
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x22x1.jpg) |
Anthony M. Santomero
INDEPENDENT
Committees: Investment and Risk Management
(Chair)
Age: 74
Director Since: 2008 |
Other
Public Company Boards
• Citigroup
Inc.
(2009 to 2019)
Investment
Company Boards
• Columbia
Funds Group
(2009 to present)
• Columbia
Seligman Premium Technology Growth
Fund
(2019 to present)
• Tri-Continental
Corporation
(2019
to present) |
Background
and Qualifications Mr. Santomero served as Senior
Advisor at McKinsey & Company from 2006 to 2008. From 2000 to
2006, Mr. Santomero was President and Chief Executive Officer of
the Federal Reserve Bank of Philadelphia. Prior to joining the Federal Reserve, Mr.
Santomero was the Richard K. Mellon Professor of Finance at the University of Pennsylvania’s
Wharton School and held various positions there, including Director of
the Financial Institutions Center and Deputy Dean. Mr. Santomero has served as
a Trustee of Penn Mutual Life Insurance Company since 2009. He has served on
the Board of Directors of Columbia Funds Group since 2009 and as a member of
the Governance Committee since 2020, and on the Board of Directors of two of Columbia
Funds’ registered investment company funds, Columbia Seligman Premium Technology
Growth Fund and Tri-Continental Corporation since 2019. Until April 2019, Mr.
Santomero served as the Chair of the Risk Management Committee and as a member
of both the Audit Committee and Executive Committee of Citigroup, as well as Chairman
of the Board of Directors of Citibank, N.A. In addition, he served on the Board of Directors of B of A Fund Series Trust from 2008 until
2011. |
20 |
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Table of Contents
Board Composition
|
Board Changes Over the Past Five Years |
|
We believe the Board benefits from a holistic approach to board composition. Our Board values a mix of new directors, who bring fresh perspectives, and longer-serving directors, who bring continuity and breadth of experience with our strategies and risk management processes. Our Board has developed comprehensive and ongoing assessment and succession planning processes and regularly reviews the biographical backgrounds and skills of its current members and potential nominees in connection with its ongoing evaluation of Board composition. |
|
Added four new directors |
|
|
Increased gender diversity from less than 10% to over 36% (currently four women on the Board) |
|
|
Enhanced Board skills relating to ESG, human resources, and cybersecurity |
|
|
|
|
Selection and Nomination of Directors
Director Nomination Process
The Compensation and Governance Committee is responsible for identifying
and recommending qualified candidates for nomination to the Board.
Assess Board Composition |
• Compensation
and Governance Committee regularly assesses appropriate Board size and
composition
• Determines
needs based on current and evolving strategies, potential vacancies and competencies
of the Board as a whole |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/rnr3834911-def14ax23x1.jpg) |
|
Identify and Source Candidates |
• Board
is committed to expanding the pool from which it selects qualified director candidates,
and is focused on seeking candidates who embody all aspects of diversity, including
racial, ethnic and gender diversity
• Candidate
recommendations may come from current Board members, management, search
firms, shareholders or others |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/rnr3834911-def14ax23x2.jpg) |
|
Select Director Nominees |
• Committee
reviews candidates to ensure fit with the needs and collegiality of the Board
• Seeks
a combination of qualities and experience that will complement and contribute to
the competencies of the Board as a whole
• Interviews
by Committee members, Non-Executive Chair and other members of the Board
before full Board votes to nominate |
Table of Contents
Director Qualifications
As discussed in our Guidelines on Significant Corporate Governance
Issues (“Corporate Governance Guidelines”), we do not set specific criteria for directors but believe that candidates
should show evidence of leadership in their particular field, and have broad experience and the ability to exercise sound business
judgment. The Board considers the diversity, skills and experience of candidates in the context of the needs of the Board as a
whole. In selecting directors, the Board generally seeks a combination of qualities and experience that will contribute to the
exercise of the duties of the Board, including active or former chief executive or senior officers of major complex businesses,
leading academics and entrepreneurs.
When identifying and considering potential director nominees and evaluating
the current composition of our Board, the Compensation and Governance Committee focuses on the composition and competencies of
our Board as a whole, how the traits possessed by individual directors and director nominees complement one another, the ability
of the current and proposed members to operate collegially and effectively, and the intersection of these factors with our current
strategy, operational plans and oversight requirements. The factors considered by the Compensation and Governance Committee when
evaluating individual director nominees include:
• |
personal and professional ethics, integrity and values; |
• |
independence, including the ability to represent all of our shareholders and other key stakeholders without any conflicting relationship with any particular constituency; |
• |
business acumen, leadership qualities and record of accomplishment; |
• |
professional experience and industry expertise in light of our evolving strategic and operational plans over time; |
• |
compatibility with the existing Board composition; |
• |
ability and willingness to devote sufficient time to carrying out Board duties and responsibilities fully and effectively, particularly in light of our Bermuda headquarters location; |
• |
commitment to serve on our Board for a potentially extended period of time, with a view toward effective oversight of management’s efforts to ensure the safety and soundness of our Company in light of the market cycles and earnings volatility that characterize our industry; |
• |
maintaining a diverse set of skills, experience and viewpoints on the Board as a whole, including with respect to racial, ethnic and gender diversity; and |
• |
other attributes of the candidate, our business and strategic conditions and external factors that the Compensation and Governance Committee deems appropriate. |
The Compensation and Governance Committee has the discretion to weigh
these factors as it deems appropriate. The relative importance of these factors may vary from candidate to candidate, depending
on our evolving circumstances, and no particular criterion is necessarily applicable to all prospective nominees.
Board Diversity
Our Board believes that the backgrounds and qualifications of the
directors, considered as a group, should provide a diverse mix of skills, viewpoints, experience, knowledge, and abilities that
will allow the Board to fulfill its responsibilities, taking into account our evolving strategic direction and needs. The Compensation
and Governance Committee evaluates and discusses diversity at both the Board and committee levels when carrying out its director
selection, recruitment and nomination obligations and also when assessing the performance of current directors. This assessment
is undertaken at least annually.
Our Board is committed to expanding the pool from which it selects
qualified director candidates, and is focused on seeking candidates who embody all aspects of diversity, including racial, ethnic
and gender diversity, while considering the skills and experience of the Board as a whole.
22 |
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Table of Contents
Director Independence
The Compensation and Governance Committee has reviewed the independence
of each of our current directors and affirmatively determined that each of Mses. Hamilton, Sanders and Trudell, Dr. Rahmani and
Messrs. Bushnell, Gibbons, Gray, Hennes, Klehm and Santomero are independent. Mr. O’Donnell is not independent because of
his employment as our President and Chief Executive Officer.
The New York Stock Exchange (the “NYSE”) listing standards
require that a majority of our directors be independent. For a director to be considered independent, the Board must determine
that the director does not have any direct or indirect material relationship with us either directly or as a partner, shareholder
or officer of an organization that has a relationship with us. Our Corporate Governance Guidelines provide that a majority of our
directors will meet the NYSE’s independence criteria and set forth additional parameters that the Board uses to determine
director independence, which we believe are more stringent than the independence requirements in the NYSE listing standards. In
addition, the Board considers all relevant facts and circumstances known or reported to it in making independence determinations.
In particular, when making its independence determinations, the Compensation
and Governance Committee considered the following relationships and determined that none of the directors involved had a material
relationship with us as a result of these relationships. Mr. Hennes serves (and until April 2019, Mr. Santomero served) as a director
of Citigroup. We have current and historical financial relationships with Citigroup and its subsidiaries and affiliates, including
Citigroup acting in manager roles in several of our securities offerings over the last few years and being a party to letter of
credit facilities with us. Mr. Gibbons is the Treasurer and a director of EGL, the parent company of a number of varied businesses
in Bermuda, including Coralisle Group Ltd., formerly Colonial Group International (“Coralisle”), and a director of
BACL. We have entered into reinsurance contracts with Coralisle which are described under “Board Structure and Processes—Certain
Relationships and Related Transactions” below. In addition, we have other immaterial business relationships with a variety
of the other businesses owned by EGL and BACL relating primarily to local services and procurement in Bermuda, for which we paid
these entities a total of approximately $12,500 in 2020. Mr. Gibbons is not directly involved in the management of Coralisle or
any of the other businesses owned by EGL or BACL with which we do business, and all of the transactions were entered into in the
ordinary course of business on terms available to similarly situated parties. Furthermore, EGL and BACL entities did not make payments
to, or receive payments from, us in an amount which, in any of the last three fiscal years, exceeded the greater of $1 million
or 2% of EGL’s or BACL’s consolidated gross revenues.
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Shareholder Nomination Process
Candidates recommended by shareholders for nomination to the Board
will be considered and evaluated by the Compensation and Governance Committee using the same process and criteria that we use to
evaluate other candidates, assuming the proper procedures for shareholder nominations are followed. The Compensation and Governance
Committee will consider nominees to the Board recommended by no fewer than 20 shareholders holding in the aggregate not less than
10% of the outstanding paid-up share capital of RenaissanceRe. Any shareholder recommendation must be sent to our Corporate Secretary
not less than 60 days prior to the scheduled date of the annual general meeting of shareholders and must set forth for each nominee:
(i) the name, age, business address and residence address of the nominee; (ii) the principal occupation or employment of the nominee;
(iii) the class or series and number of shares of capital stock of RenaissanceRe that are owned beneficially or of record
by the nominee; and (iv) any other information relating to the nominee that would be required to be disclosed in a proxy statement
or other filing required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14
of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated
thereunder. The written notice must also include the following information with regard to the shareholders giving the notice:
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the name and record address of such shareholders; |
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the class or series and number of shares of capital stock of RenaissanceRe that are owned beneficially or of record by such shareholders; |
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a description of all arrangements or understandings between such shareholders and each proposed nominee and any other person (including his or her name and address) pursuant to which the nomination(s) are to be made by such shareholders; |
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a representation that such shareholder intends to appear in person or by proxy at the annual general meeting of shareholders to nominate the persons named in its notice; and |
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any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filing. |
Such notice must be accompanied by a written consent of each proposed
nominee to be named as a nominee and to serve as a director if elected. The Compensation and Governance Committee may refuse to
acknowledge the nomination of any person not made in compliance with the foregoing procedure.
Board Assessment and Evaluation
The Board recognizes that a robust and constructive evaluation process
is an essential part of good corporate governance and Board effectiveness. Pursuant to its charter, the Compensation and Governance
Committee has responsibility for oversight of the Board’s annual overall effectiveness reviews, review of individual director
performance and similar matters.
At the direction of the Compensation and Governance Committee, our
Non-Executive Chair of the Board facilitates the annual assessment of the Board’s effectiveness. He conducts individual interviews
with Board members and management, facilitating reviews of individual director effectiveness, as well as of the Board as a whole.
In turn, the Chair of the Compensation and Governance Committee, along with the Board members, reviews the performance of the Non-Executive
Chair of the Board. From time to time, the Board engages independent third parties to review the Board’s practices and procedures
and assess its effectiveness. Each standing committee of the Board performs a comprehensive annual self-assessment as part of the
Board’s overall governance effectiveness review and assessment. Results are compiled and discussed by the Board and each
committee, and changes in practices, Board composition and procedures are recommended by the Compensation and Governance Committee
as necessary.
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Board Structure and Processes
Our Commitment to Corporate Governance
Our Board and management have a strong commitment to effective corporate
governance. We believe we have a comprehensive corporate governance framework which takes into account applicable regulatory requirements
and best practices. The key components of this framework are set forth in the following documents:
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our Bye-laws; |
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our Corporate Governance Guidelines; |
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our Code of Ethics; |
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our Audit Committee Charter; and |
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our Compensation and Governance Committee Charter. |
The Board regularly reviews corporate governance developments and
modifies our Corporate Governance Guidelines, Code of Ethics, committee charters and key Board practices when it believes modifications
are warranted. A copy of each of these documents is published on our website at www.renre.com under
“Investors—Corporate Governance,” except our Bye-laws, which are filed with the SEC and can be found on the SEC
website at www.sec.gov. Each of these documents is available in print to any shareholder upon
request.
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Governance Highlights
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Over 90% of our directors are independent, with an Independent Non-Executive Chair of the Board and fully independent Audit, Compensation and Governance, and Investment and Risk Management Committees. |
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Rigorous director evaluation and selection criteria, which encourage diversity and refreshment. |
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Board oversight of strategic planning and enterprise-wide risk management, including environmental sustainability and climate change matters. |
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Active shareholder engagement. |
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Meaningful share ownership guidelines for directors and named executive officers; anti-hedging, anti-pledging and insider trading policies. |
Code of Ethics
Our Code of Ethics applies to all of our directors and employees,
including our principal executive officer, principal financial officer, and principal accounting officer, and all of our employees
performing financial or accounting functions. Our Code of Ethics is available free of charge on our website, www.renre.com,
under “Investors—Corporate Governance.” We will also provide a printed copy of our Code of Ethics to any shareholder
upon request. We intend to disclose any amendments to our Code of Ethics by posting them on our website. Any waivers of our Code
of Ethics applicable to our directors, principal executive officer, principal financial officer, principal accounting officer,
controller and other executive officers who perform similar functions will be disclosed by filing a current report on Form 8-K
with the SEC.
Board Leadership Structure and Engagement
Role of the Non-Executive Chair of the Board
Pursuant to our Corporate Governance Guidelines, the Chair of the
Board may be an officer/director or an outside director and may or may not be the Chief Executive Officer, at the option of the
Board. The Board believes it should be free to make these determinations depending on what it believes is best for the Company
and our shareholders in light of all the circumstances. At this time, the Board has determined that it is appropriate to separate
the roles of Chair and Chief Executive Officer. The Board believes that having an independent director serve as Non-Executive
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Chair of the Board is in the best interests of the Company and our
shareholders at this time and that this structure currently assists the independent directors in the oversight of the Company and
facilitates participation of the independent directors in setting agendas and establishing priorities and procedures for the work
of the Board.
Currently, Mr. Gibbons serves as the Non-Executive Chair of the Board.
In addition to chairing each meeting of the Board, the Non-Executive Chair of the Board has significant responsibilities, including:
(i) having the authority to call meetings of the Board; (ii) setting the agendas for Board meetings and executive sessions to ensure
that Board members receive the information necessary to fulfill the Board’s primary responsibilities; (iii) chairing executive
sessions of the independent directors; (iv) briefing the Chief Executive Officer on issues that arise in the executive sessions,
as appropriate; (v) facilitating discussion among the independent directors on key issues and concerns that arise outside of Board
meetings and serving as a non-exclusive conduit to communicate views, concerns and issues of the independent directors to the Chief
Executive Officer; (vi) interviewing candidates for directorship; (vii) facilitating the assessment of the Board’s effectiveness,
at the direction of the Compensation and Governance Committee; and (viii) together or in coordination with the Chief Executive
Officer, representing the organization in external interactions with shareholders, employees and other stakeholders.
The Non-Executive Chair of the Board typically does not serve as a
member of the Board’s three principal standing committees (the Audit Committee, the Compensation and Governance Committee,
and the Investment and Risk Management Committee), but rather attends such meetings and other functions of the committees on an
ex officio basis as warranted by the facts and circumstances. Given the challenges presented by the COVID-19 pandemic, Mr. Gibbons
has been serving as an interim member of the Audit Committee and the Compensation and Governance Committee, as further discussed
in “—Meetings and Attendance” below. The Non-Executive Chair of the Board serves as a member of the Transaction
Committee and the Offerings Committee, which meet on an as-needed basis.
Meetings and Attendance
Our Bye-laws and operating guidelines prohibit directors from participating
in meetings of the Board or its committees while present in the United States or its territories, whether in person, via teleconference
or otherwise. Due to these prohibitions, as well as travel restrictions and safety concerns related to the COVID-19 pandemic, our
eight directors who are based in the United States were unable to attend certain Board and committee meetings held in Bermuda in
2020. Three of our directors (two of whom are independent) are based outside of the United States: Mr. Gibbons, our Non-Executive
Chair of the Board, Mr. O’Donnell, our Chief Executive Officer, and Mr. Gray.
Despite these unique circumstances, our independent directors continued
to discharge their oversight and fiduciary duties in the ordinary course, including by holding regular, robust virtual informational
sessions designed to cover the same information normally covered at Board and committee meetings, supplemented by additional informational
calls and reports. When action requiring a formal Board or committee meeting with a vote of directors was necessary, we convened
formal meetings of the Board or the applicable committee (or subcommittee thereof) with only those directors not based in the United
States participating in order to comply with our Bye-laws and operating guidelines. Despite these unprecedented challenges, we
believe we maintained good governance practices while complying with Bermuda law and SEC and NYSE regulations, as well as with
our Bye-laws, corporate governance documents and operating guidelines.
Our Board held the following informational sessions and formal meetings
of the Board and committees during 2020:
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Compensation and |
Investment and Risk |
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Audit Committee or |
Governance Committee |
Management |
Transaction |
Offerings |
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Board |
Subcommittee |
or Subcommittee |
Committee |
Committee |
Committee |
Meetings |
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5 |
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Virtual Informational Sessions |
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Messrs. Gibbons, Gray and O’Donnell – our three directors
who are based outside of the United States – each attended 100% of the meetings of the Board and committees of the Board
on which he served during 2020 (during the periods that he served). Due to the restrictions noted above, our eight U.S.-based directors
– Messrs. Bushnell, Santomero, Hennes and Klehm, Mses. Hamilton, Sanders and Trudell, and Dr. Rahmani – were not able
to attend certain Board and committee meetings, and, as a result, did not attend 75% or more of the formal meetings of the Board
and committees of the Board on which he or she served during 2020 (during the periods that he or she served). However, each U.S.-based
director attended all of the informational sessions of the Board and respective committees, and attended all of the formal meetings
of the Board and committees of the Board on which he or she served during 2020 (during the periods that he or she served) that
he or she was able to safely attend. For more information on our committees, please see below.
Generally, it is the practice of our Board to attend our annual general
meetings of shareholders. However, due to the safety concerns and travel restrictions discussed above, none of our non-executive
directors were able to attend our 2020 Annual General Meeting, which was held on May 18, 2020 in Bermuda.
As travel bans and restrictions enacted in response to the COVID-19
pandemic are eased or lifted, we expect that our directors will attend meetings of the Board and of the committees of the Board
on which he or she serves, and the annual general meeting of shareholders, in line with historical practices.
Executive Sessions
Separate executive sessions of our non-management directors are held
in conjunction with each regular quarterly Board meeting. The Non-Executive Chair of the Board presides at these executive sessions
of the Board. The standing committees of the Board also conduct regular executive sessions, which are chaired by the respective
chairs of the committees. In 2020, executive sessions of our non-management directors were also held in connection with the virtual
informational sessions of the Board and standing committees.
Director Orientation and Continuing Education
Our Compensation and Governance Committee oversees the orientation
process for new directors. Each new director and new member of a Board committee participates in a comprehensive orientation program
run by management. The orientation includes presentations by senior management to familiarize the new director with our strategic
plan, significant accounting and risk management issues, compliance programs, Code of Ethics, and other relevant topics.
We encourage our directors to participate in continuing education
programs and reimburse them for reasonable expenses associated with third-party training programs relating to our business, industry
or the discharge of Board duties. We also provide ongoing education programs on topics relevant to RenaissanceRe and our industry
as part of regular Board and committee meetings, and directors are invited and encouraged to visit our offices to meet with management.
Communicating with the Board
Any shareholder or other party may communicate directly with the Board,
any committee of the Board or our non-management directors as a group by writing to the intended recipient in the care of the Corporate
Secretary. Shareholders can send communications electronically through our website at www.renre.com
by clicking on “email” under “About Us—Contacts—Legal or Corporate Information” or by
mail to: RenaissanceRe Holdings Ltd., P.O. Box HM 2527, Hamilton HMGX, Bermuda, Attn: Corporate Secretary. If properly addressed,
communications will be forwarded to the intended recipient unopened.
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The Audit Committee, on behalf of itself and our other non-management
directors, has established procedures to enable employees or other parties who may have a concern about our conduct or policies
to communicate that concern. Our employees are encouraged and expected to report any conduct which they believe in good faith to
be an actual or apparent violation of our Code of Ethics. In addition, as required by the Sarbanes-Oxley Act of 2002, the Audit
Committee has established procedures for receiving, retaining and treating complaints regarding accounting, internal accounting
controls or auditing matters, as well as for confidential submission by Company employees of concerns regarding questionable accounting
or auditing matters, among other things. These communications may be anonymous, and may be submitted in writing, e-mailed or reported
by phone through various internal and external mechanisms as provided on the Company’s internal website. Additional procedures
by which internal communications may be made are provided to each employee. Our Code of Ethics prohibits any employee or director
from retaliating or taking any adverse action against anyone for raising or helping to resolve an integrity concern.
Committees of the Board
The Board maintains three principal standing committees: the Audit
Committee, the Compensation and Governance Committee, and the Investment and Risk Management Committee. The primary responsibilities
of these committees are summarized below and more fully described in their charters. These committees may delegate any of their
responsibilities to a subcommittee composed of one or more members of the committee. In addition, the Board maintains two standing,
special purpose committees: the Transaction Committee and the Offerings Committee. The responsibilities of these committees are
summarized below.
The Board has determined that each member of the Audit Committee and
the Compensation and Governance Committee meets the applicable independence standards of the Commission and the NYSE. The Board
has also determined that each member of the Audit Committee is financially literate and has accounting or related financial management
expertise as required by NYSE rules and is an “audit committee financial expert” under the Commission’s rules
in each case given his or her experience as set forth in his or her biography above.
Audit Committee |
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Members
David C. Bushnell (Chair)
Valerie Rahmani
Carol P. Sanders
James L. Gibbons (interim)
Brian G. J. Gray (interim) |
The Audit Committee’s key responsibilities
include oversight of:
• Our
accounting and financial reporting process, as well as the integrity, quality and accuracy of our financial statements, including
internal controls;
• Our
operational risk assessment and risk management process;
• Our
compliance with legal and regulatory requirements, including review of our Code of Ethics and internal compliance program;
• Our
information and cybersecurity programs;
• Our
independent auditor’s appointment, compensation, qualifications, independence and performance; and
• The
performance of our internal audit function. |
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Compensation and Corporate Governance Committee |
Members
Henry Klehm III (Chair)
Jean D. Hamilton
Cynthia Trudell
James L. Gibbons (interim) |
The Compensation and Corporate Governance Committee’s
key responsibilities include:
Compensation-Related
• Determining
compensation of our Chief Executive Officer and directors, and reviewing and approving our Chief Executive Officer’s recommendations
of other key executives’ compensation;
• Overseeing
incentive and stock-based compensation plans, including granting and setting the terms of awards;
• Evaluating
performance of executive officers;
• Reviewing
and recommending policies, practices and procedures concerning compensation strategy and other human resources-related matters,
including DEI and employee development;
• Reviewing
and advising on executive succession planning; and
• Reviewing,
analyzing and overseeing the mitigation of risks associated with our compensation programs.
Corporate Governance-Related
• Overseeing
and supervising the director nomination process, including identifying and evaluating prospective Board candidates;
• Reviewing
and monitoring the performance and composition of the Board and its committees;
• Overseeing
the new director orientation process and director continuing education policies;
• Developing
and evaluating our corporate governance practices and procedures, including compliance with legal and regulatory requirements;
• Assisting
our Board in overseeing sustainability and corporate responsibility policies and programs and similar ESG, DEI and CSR initiatives;
and
• Reviewing
any properly submitted shareholder proposals. |
Compensation and Corporate Governance Committee
Advisors
The Compensation and Governance Committee has the authority to select,
retain and dismiss compensation consultants, financial and other advisors and independent legal counsel as it deems necessary in
accordance with the procedures set forth in the charter and considering independence and potential conflicts of interest. For a
discussion regarding our independent compensation consultant, please see “Executive Compensation—Compensation Discussion
and Analysis—Compensation Determination Process—Role of Compensation Consultants” below.
In addition, our Compensation and Governance Committee reviews our
compensation programs for consistency with our risk management practices and to assist us in ensuring that our programs align our
executives and employees with the long-term interests of shareholders in light of the market cycles and earnings volatility that
characterize our industry. For a discussion regarding our compensation policies and practices as they relate to our risk management
see “Executive Compensation—Compensation Discussion and Analysis—Compensation Governance—Compensation and
Risk Management” below.
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Compensation Committee Interlocks and Insider
Participation
Mr. Gibbons, Mr. Gray, Ms. Hamilton, Mr. Klehm and Ms. Trudell served
on the Compensation and Governance Committee during the 2020 fiscal year. No member of the Compensation and Governance Committee
during the 2020 fiscal year was an officer or employee of the Company during the 2020 fiscal year or was formerly an officer of
the Company, or had any relationship requiring disclosure by the Company as a transaction with a related person under Item 404
of Regulation S-K (“Regulation S-K”) of the U.S. Securities Act of 1933, as amended (the “Securities Act”).
No executive officer of the Company served on any board of directors or compensation committee of any other company for which any
of our directors served as an executive officer at any time during the 2020 fiscal year.
Investment and Risk Management Committee |
Members
Anthony M. Santomero (Chair)
Brian G. J. Gray
Duncan P. Hennes |
The Investment and Risk Management Committee’s
key responsibilities include:
• Overseeing
our investment strategies, performance and risk management;
• Reviewing
management procedures to develop investment strategies and risk limits and monitoring adherence to those guidelines;
• Reviewing
and monitoring investment manager and investment portfolio performance;
• Assisting
the Board with assessing our financial, non-operational risk management, in coordination with the Audit Committee; and
• Overseeing
the processes used to manage key financial risks, including risks related to liquidity, solvency margins, reinsurance program limits,
third-party credit risk and foreign exchange exposure. |
Special Purpose Committees
Transaction Committee
The Transaction Committee presently consists of Messrs. Gibbons, Gray
and O’Donnell (Chair) and Ms. Hamilton. The Transaction Committee has the authority of the Board to consider and approve,
on behalf of the full Board, certain strategic investments and other possible transactions.
Offerings Committee
The Offerings Committee presently consists of Messrs. Gibbons, Gray
and O’Donnell (Chair) and Ms. Hamilton. The Offerings Committee has the authority to consider and approve, on behalf of the
full Board, transactions pursuant to our shelf registration program, including setting the terms, amount and price of any such
offering.
Certain Relationships and Related Transactions
We have adopted a written policy with respect to the review, approval
and ratification of transactions with related persons. The policy covers, among other things, transactions between us and any of
our executive officers, directors, nominees for director, any of their immediate family members or any other related persons as
defined in Item 404 of Regulation S-K. Each transaction covered by this policy is reviewed to determine whether the transaction
is in the best interests of the Company and our shareholders. The transactions described below include certain transactions we
have entered into with parties that are, or could be deemed to be, related to us.
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Relationship with BlackRock, Inc.
BlackRock, Inc. (“BlackRock”) reported a beneficial ownership
interest of more than 5% of our common shares as of December 31, 2020. Affiliates of BlackRock provide investment management, risk
analytics and investment accounting services to us. During 2020, we incurred $6.3 million in fees relating to these services. These
fees were at then-prevailing market rates determined pursuant to arm’s-length negotiations between us and such affiliates.
Relationship with Coralisle Group Ltd.
Mr. Gibbons is the Treasurer of EGL, the parent company of Coralisle.
We entered into reinsurance contracts with Coralisle pursuant to which we received premiums of approximately $278,000 from Coralisle
in 2020, and paid claims to Coralisle of approximately $62,000 in 2020. We renewed certain of these reinsurance contracts in December
2020 and we expect to receive premiums of approximately $296,000 from Coralisle in 2021 as a result of those renewals. To date
in 2021, we have paid approximately $1,200 of claims to Coralisle. In his position at EGL, Mr. Gibbons is not directly involved
in the management of Coralisle, and all of these transactions with Coralisle were entered into in the ordinary course of business
on terms available to similarly situated parties.
Use of Company Aircraft
Pursuant to their employment agreements, our named executive officers
and certain other officers are permitted business use and a limited amount (the equivalent of 15 hours per year of use of the base
airplane for 2020) of Company-funded personal use of our fractional interest program with NetJets Aviation Inc. (“NetJets”).
On occasion, we may allow additional hours of Company-funded personal use of our aircraft interest on a case-by-case basis. In 2020, for safety reasons, the Compensation and Governance Committee
adopted a policy allowing our named executive officers reasonable additional Company-funded personal use of our NetJets program
for the duration of the COVID-19 pandemic. The aggregate incremental cost to us of any personal use is included in the Summary
Compensation Table below. Our named executive officers pay imputed income tax on the value of these benefits and are not entitled
to tax gross-ups on any perquisites. In addition, Mr. O’Donnell; Ross Curtis, our Chief Underwriting Officer; and Robert
Qutub, our Chief Financial Officer have each entered into an aircraft use agreement with us which allows them to use our fractional
interest program with NetJets for additional travel beyond that which is provided for in their employment arrangements, provided
that they pay for such use in advance of any trip at the fully loaded variable rate (which rate represents our aggregate incremental
cost of such use within the meaning of Regulation S-K and the rules and other guidance of the Commission). In addition, they must
maintain a deposit with us from which we are authorized to withdraw funds in order to satisfy any amounts owed under the agreement.
Prior to his departure, Stephen Weinstein, our former Group General Counsel and Chief Compliance Officer, was also a party to an
aircraft use agreement with us. The form of aircraft use agreement was approved by the Compensation and Governance Committee. None
of our named executive officers had any additional personal use of the aircraft interest for travel during 2020 for which they
were required to reimburse us. For additional information regarding our named executive officers’ and certain other officers’
use of our corporate aircraft, see “Executive Compensation—Compensation Discussion and Analysis—Principal Components
of Our Executive Compensation Program—Additional Compensation Practices—Other Benefits and Perquisites” below.
Housing Arrangements with Executive Officers
As discussed under “Executive Compensation—Compensation
Discussion and Analysis—Principal Components of Our Executive Compensation Program—Additional Compensation Practices—Other
Benefits and Perquisites” below, we provide housing allowances to certain of our named executive officers, as well as to
other executive officers and employees. The amount of the housing allowance is included in the Summary Compensation Table for each
named executive officer (see “Executive Compensation—Executive Compensation Tables—All Other Compensation Table”
below). Our executive officers pay imputed income tax on the value of these benefits and are not entitled to tax gross-ups on any
perquisites. From time to time, our subsidiaries enter into long-term leases for properties in Bermuda, which we sublease to certain
officers, including certain of our named executive officers. In November 2015, one of our subsidiaries entered into a long-term
lease of a property in Bermuda and subsequently subleased this property to Mr. O’Donnell for his Bermuda residence. We are
not currently the lessee on the lease of residences of any of our other named executive officers.
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Charitable Donations
RenaissanceRe provides support to various charitable organizations
in Bermuda and other communities in which we operate, including organizations that support insurance industry education and training,
crime prevention, substance abuse prevention, affordable housing and educational assistance. As part of our efforts, we match donations
made by our employees to appropriately registered charities up to certain maximum amounts and make direct charitable contributions.
Certain of our executive officers and directors, and spouses of certain of these persons, serve and have served as directors, officers
or trustees of some of these organizations. In 2020, we donated $220,000 to the R Street Institute. Mr. Weinstein was elected a
director of the R Street Institute in December 2020. We have made donations to the R Street Institute in the past, and other employees
of RenaissanceRe have served on the R Street Institute Board of Directors. Except for this donation, we did not contribute more
than $120,000 to any one charity in 2020 for which any of our executive officers and directors, and spouses of certain of these
persons served as a director, officer or trustee.
The Board’s Role and Key Responsibilities
Strategic Oversight
Our Board believes that long-range strategic issues should be discussed
and reviewed at regular Board meetings. Our Corporate Governance Guidelines provide that the Board review and critique our strategic
plan at least annually, with quarterly reviews of performance in comparison to the financial plan. Senior management and the full
Board engage in long-term strategy discussions at least annually, and the Board and committees regularly receive updates from business
function leaders on our performance against our tactical plans.
Our strategic plan drives the Board’s goal setting in many areas.
For example, the goals of each Board committee are tied to the achievement of the strategic plan. The Compensation and Governance
Committee determines and measures compensation against the achievement of strategic goals and objectives.
Risk Oversight
We consider enterprise-wide risk management to be a key strategic
objective and believe that our enterprise-wide risk management processes and practices help to identify potential events that may
affect us; quantify, evaluate and manage the risks to which we are exposed; and provide reasonable assurance regarding the achievement
of corporate objectives. For each identified and measured risk, we have identified (i) a day-to-day owner and management response,
(ii) a process for monitoring and reporting on the risk, (iii) a senior management committee, and (iv) Board and/or committee oversight.
We believe that this risk management process, along with our culture and focus on enterprise-wide risk management, ensures effective
risk oversight by our Board.
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Risk Management Process
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• The Board
is responsible for overseeing enterprise-wide risk management and is actively involved in the monitoring of risks that
could affect us.
• The
members of the Board have regular, direct access to the senior executives and other officers responsible for coordinating
enterprise-wide risk management, including our Chief Financial Officer, Group Chief Risk Officer, Group Chief Underwriting
Officer, and Group General Counsel, each of whom reports directly to our Chief Executive Officer, as well as other senior
personnel such as our Chief Investment Officer, Chief Accounting Officer, Chief Human Resources Officer, Head of Internal
Audit, Chief Compliance Officer, Chief Technology Officer, Corporate Information Security Officer and Corporate Actuary.
• The
Board delegates certain of its risk management responsibilities to its committees as set forth in the committee charters
and described under “—Board Structure and Processes—Committees of the Board” above, with key risks
set forth below.
• The
Non-Executive Chair of the Board participates in meetings of each committee from time to time on an ex officio basis and
monitors the identification of risks or other matters that might require cross-committee coordination and collaboration
or the attention of the full Board. As discussed in “—Board Structure and Processes—Board Leadership
and Engagement—Meetings and Attendance” above, Mr. Gibbons has also been serving as an interim member of the
Audit Committee and the Compensation and Governance Committee during the COVID-19 pandemic. |
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• Each committee
regularly receives and discusses materials from the other committees, and we believe this allows the directors to be aware of the various
risks across the Company.
• Each committee
performs a comprehensive annual self-assessment as part of the Board’s overall governance effectiveness review and assessment, which reflects
the committees’ evaluation of our corporate risk management practices and, if applicable, the
identification of potential new oversight needs in light of changes in our strategy, operations or business environment.
Key Risks Overseen |
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Audit
Committee |
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Compensation
and Governance Committee |
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Investment
and Risk Management Committee |
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• Financial statements integrity and reporting
• Cybersecurity and business continuity
• Legal, regulatory and compliance
• Tax compliance |
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• Executive and employee compensation
• Succession planning (executive
and director)
• DEI, employee development,
CSR and similar ESG matters
• Governance structure and
processes
• Shareholder concerns |
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• Enterprise risk management framework
• Investment strategies and
risk limits
• Key financial, non-operational
risk or exposures
• Reserve risk
• Capital and liquidity requirements |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/rnr3834911-def14ax11x1.jpg) |
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•
At least annually, our Chief Risk Officer presents a comprehensive
risk management overview to the Board to demonstrate management coverage and Board oversight of significant identified risks. This overview outlines our
procedures for the identification and measurement of, response to, and monitoring and reporting of risk.
•
Management representatives from our risk, legal, regulatory, compliance, human resources, treasury, finance, investments, reserving, information
security, accounting and internal audit functions:
•
Regularly report to the Board and each committee at quarterly scheduled sessions, including at least annually to the Compensation and Governance Committee regarding the potential risks of our compensation policies
and practices; and
•
Separately meet with, and are interviewed by, our committees in executive sessions. |
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Table of Contents
Cross-Committee Risk and Strategy Oversight Collaboration
At their quarterly meetings, each committee reviews and discusses
its current and future agendas in the context of our strategic plan and any new Company, industry or market information and identifies
matters that should be discussed with other committees or the full Board. In addition, each standing committee reports to the full
Board at each quarterly Board meeting. Our Audit, Compensation and Governance, and Investment and Risk Management Committees coordinate
their oversight of our financial and operating risks and routinely collaborate to address specific matters requiring coordination
and cross-committee oversight. We believe that these collaborative efforts sustain high levels of enterprise-wide risk management
and facilitate sound corporate governance.
Succession Planning
We believe that succession planning is key to ensuring effective
risk oversight and execution of our strategy and that our succession planning programs ensure that the Board has appropriate oversight.
On behalf of the Board, our Compensation and Governance Committee collaborates with our Chief Executive Officer in the development
and monitoring of our programs for emergency and long-term executive succession, generally on a quarterly basis. To foster diverse
talent, we apply a DEI lens to the selection process for our leadership and management development programs. Individuals who we
believe have potential for senior executive positions are identified to the Compensation and Governance Committee, in part utilizing
the results of the Company’s internal review and feedback processes. The careers of these individuals are monitored to ensure
that over time they have appropriate exposure both to the Board and to our businesses. These individuals interact with our Board
in various ways, including through participation in Board meetings and other Board-related activities and meetings with individual
directors. The Compensation and Governance Committee regularly briefs the full Board on these matters.
Environmental and Corporate Social Responsibility
Our commitment to ESG matters has been a central part of our corporate
strategy at RenaissanceRe and it remains one of our core values today. Our Board recognizes the importance of investing time and
resources in business practices that emphasize environmental and CSR, and oversees internal strategies and related activities through
regularly scheduled reports by management to the Board and its committees throughout the year.
In 2020, our leadership team adopted a formal ESG strategy, which
focuses on three core areas where we apply our core business strengths to make a meaningful impact on society—promoting climate
resilience, closing the protection gap, and inducing positive societal change: |
|
For additional information on our ESG activities, see our new ESG webpage (www.renre.com/about-us/esg-at-renaissancere) |
34 |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/footer.jpg) |
Table of Contents
Promoting Climate Resilience
At RenaissanceRe, we understand the considerable environmental and
social risks related to climate change. For more than 25 years, we have been a leader in understanding and modeling atmospheric
hazards and the economic impact of climate-related events. Based on the research of our team of scientists, meteorologists, and
engineers at our RenaissanceRe Risk Sciences Inc. subsidiary, we believe that climate change is driven by human activity and is
contributing to an increase in the frequency and severity of natural catastrophes over and above normal climate variability, and
that this trend will persist into the future.
We proactively engage with our stakeholders to promote resiliency
in order to help our clients, and the homeowners and businesses they serve, adapt to and manage climate change risks. Consideration
of the impacts of climate change on our clients and the communities they serve is integral to our enterprise risk management process.
We have taken measures to mitigate losses related to climate change through our underwriting process and by continuously monitoring
and adjusting our risk management models to reflect the higher level of risk that we think will persist. We leverage our industry-leading
climate data and expertise to integrate the anticipated impact of climate change holistically into our enterprise risk management
process and catastrophe models. Our management provides regular reports to our Board and its committees on these issues, which
are central to our governance processes.
Closing the Protection Gap
We have a long track record of leadership in applying our risk expertise
and leveraging our partnerships to increase the economic resiliency of vulnerable communities. Reinsurance plays an important role
in helping communities recover after a natural disaster, and we have made significant commitments to reduce the protection gap
and mitigate the impact of natural disasters on populations and economies in the developing world. We have a dedicated global team
focused on public sector partnership activities to support our continued work in this space.
Inducing Positive Societal Change
At RenaissanceRe, our people are our most valuable resource and core
to our success. There is a uniform commitment by executive management to foster an environment where every person on our team can
succeed. The Compensation and Governance Committee is actively engaged in the oversight of these initiatives and receives regular
updates from management on progress and developments.
We strive to hire talented people and invest heavily in their development
to aid them in their professional and personal growth. We endeavor to provide a safe, healthy and supportive work environment that
promotes the well-being of our employees and the value that they contribute to our global organization. We believe that by seeking
diversity, creating equity and practicing inclusion we will build an even stronger culture and company. Our cross-functional DEI
Executive Council chaired by Mr. Curtis, our Chief Underwriting Officer, sets our DEI strategy, identifying focus areas such as
raising awareness of DEI throughout our organization, enhancing our recruitment and selection process, and furthering equity around
leadership opportunities and development. We take a thoughtful and thorough approach to learning and discussing important DEI topics
at RenaissanceRe utilizing our Think Global, Act Local framework.
We also believe that it is important to be an engaged member of the
communities in which we live and work, and that CSR is good for our communities, employees and business. We execute our global
CSR strategy through a locally-led philosophy, encouraging our employees to engage in volunteer activities and initiatives that
make an impact in local communities while contributing to our annual global giving theme and CSR objectives for the year. We have
a generous charitable donation program and primarily give through our employee matching program, global and local community grants,
employee volunteerism, and our RenaissanceRe Undergraduate Scholarship Program. Additional information on our human capital resources
and practices related thereto can be found in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020
Form 10-K”).
Table of Contents
Director Compensation
Director Compensation Table
The following table sets forth information concerning compensation
paid to each director who served on the Board during 2020, other than Mr. O’Donnell, whose compensation as our President
and Chief Executive Officer is set forth under “Executive Compensation—Executive Compensation Tables—Summary
Compensation Table” below:
Name | |
Fees Earned or Paid in Cash(1) ($) |
|
Stock Awards(2) ($) |
|
Total ($) |
David
C. Bushnell | |
145,000 | |
154,894 | |
299,894 |
James L.
Gibbons | |
190,000 | |
304,846 | |
494,846 |
Brian G.
J. Gray | |
110,000 | |
154,894 | |
264,894 |
Jean D.
Hamilton | |
110,000 | |
154,894 | |
264,894 |
Duncan P.
Hennes | |
110,000 | |
154,894 | |
264,894 |
Henry Klehm
III | |
145,000 | |
154,894 | |
299,894 |
Valerie
Rahmani | |
110,000 | |
154,894 | |
264,894 |
Carol P. Sanders | |
110,000 | |
154,894 | |
264,894 |
Anthony M. Santomero | |
145,000 | |
154,894 | |
299,894 |
Cynthia Trudell | |
110,000 | |
154,894 | |
264,894 |
(1) |
Amounts shown reflect annual retainer and annual committee chair retainer, as described
below. |
(2) |
The amounts in this column represent the aggregate grant date fair value of time-vested restricted
shares granted to our non-employee directors in 2020, computed in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 718, excluding the effect of estimated forfeitures. The assumptions
made in the valuation of stock awards are discussed in Note 17 (Stock Incentive Compensation and Employee Benefit Plans) of
our 2020 Form 10-K. These values do not represent the actual value the recipient will or has received from the award. On March
1, 2020, each of Messrs. Bushnell, Gray, Hennes, Klehm and Santomero, Mses. Hamilton and Sanders, and Dr. Rahmani were awarded
909 restricted shares and Mr. Gibbons was awarded 1,789 restricted shares. All of the restricted shares awarded to our non-employee
directors in 2020 will vest in three substantially equal annual installments beginning on March 1, 2021. The aggregate number
of stock awards outstanding as of December 31, 2020 for each director who served on the Board during 2020 was as follows:
Mr. Gibbons: 3,872 restricted shares; Messrs. Bushnell, Gray, Hennes, Klehm and Santomero, Mses. Hamilton and Sanders, and
Dr. Rahmani: 1,915 restricted shares each; and Ms. Trudell: 1,468 restricted shares. |
Director Compensation Program
The Compensation and Governance Committee reviews director
compensation annually. While the Compensation and Governance Committee does not target specific director pay levels against
market data, with the assistance of Mercer (U.S.) Inc. (“Mercer”), its independent compensation consultant, the
Compensation and Governance Committee analyzes the competitiveness of our director compensation using market data for
non-employee directors of the same group of peer companies used to evaluate executive compensation (see “Executive
Compensation—Compensation Discussion and Analysis—Compensation Determination Process—Peer Group—The
Market for Talent” below). The Compensation and Governance Committee reviews both the structure and amount of
non-employee director compensation paid at these companies. In addition, since the talent market for directors is broader
than the market for executives, the Compensation and Governance Committee also reviews director compensation among companies
in the S&P MidCap 400 and the S&P 500 indices. In connection with its annual 2020 review, the Compensation and
Governance Committee determined to increase certain elements of non-executive director compensation as described below.
Annual Cash Retainers. During
2020, each of our non-employee directors other than the Non-Executive Chair of the Board received an annual cash retainer of $110,000,
increased from $90,000 in 2019. Our Non-Executive Chair of the Board received an annual cash retainer of $190,000, increased from
$170,000 in 2019, due to the additional responsibilities and duties of his position, which are described above under “—Board
Structure and Processes—Board Leadership Structure and Engagement—Role of the Non-Executive Chair of the Board.”
In addition, the
36 |
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Table of Contents
Chairs of our Audit Committee, Compensation and Governance Committee,
and Investment and Risk Management Committee each received a committee chair cash retainer of $35,000, increased from $30,000 in
2019. If a non-employee director joins the Board after the start of the fiscal year, the director will be paid a prorated retainer
based on the number of regularly scheduled Board meetings anticipated to be attended as director, subject to a minimum of 50% of
the annual retainer fee.
Additionally, we reimburse all directors for expenses incurred in
connection with service on the Board, including reimbursement of expenses incurred in connection with attending educational seminars.
Further, the Non-Executive Chair of the Board is reimbursed for expenses incurred in connection with attending certain industry
events and functions. Generally, spousal travel on our corporate aircraft in connection with a business-related trip of a director
is permitted, with spousal travel added to the director’s reported U.S. federal income, as applicable, based on the standard
industry fare level valuation method. There is no incremental cost to us of providing this benefit.
Equity Awards. Our Compensation
and Governance Committee weights directors’ compensation heavily in equity-based incentive awards to align their interests
with the long-term interests of our shareholders. During 2020, each non-employee director other than the Non-Executive Chair of
the Board received a grant of restricted shares valued at approximately $155,000, and the Non-Executive Chair of the Board received
a grant of restricted shares valued at approximately $305,000. These grants represented increases of $15,000 as compared to the
2019 grants. Restricted shares granted to our non-employee directors generally vest in equal annual installments over three years.
These restricted shares generally accelerate and vest on a director’s separation from service on the Board unless a director
is requested to depart the Board for cause, in which case such restricted shares are forfeited. Dividends are paid currently on
time-vested restricted shares. Non-employee directors who start mid-year receive a full-value annual restricted stock grant. The
date of grant for such awards will be the director’s start date, and the awards will vest on the same dates as the regular
director grants.
Limitation on Non-Employee Director
Compensation. Pursuant to the RenaissanceRe Holdings Ltd. 2016 Long-Term Incentive Plan (the “2016 LTI Plan”),
the maximum value of any awards granted to any non-employee director in any one calendar year, taken together with any cash fees
paid to such non-employee director during such calendar year, may not exceed $1,500,000.
Director Equity Ownership Policy; No Hedging or
Pledging
Pursuant to our equity ownership policy for independent directors,
which furthers our goal of aligning the interests of our directors and shareholders, each of our independent directors is required
to hold common shares (including vested and unvested restricted shares) having a value equal to five times his or her then-current
annual cash retainer or such lesser amount as the director has been granted to date. Our independent directors generally are not
permitted to sell any of the equity granted to them unless they have met their ownership requirements. As of December 31, 2020,
all of our independent directors had satisfied their ownership requirements other than Ms. Trudell, who did not join the Company
until May 15, 2019. Ms. Trudell is in compliance with our guidelines because she is not required to purchase shares in the open
market in order to satisfy her ownership requirements.
In addition, our directors are subject to our anti-hedging, anti-pledging
and other trading policies, which prohibit transactions in our securities outside of designated “window” periods (except
pursuant to previously adopted and approved Rule 10b5-1 plans), hedging the market value of any of our securities, and short sales
of, or margin loans on, our securities. We believe that each of our directors is in compliance with our anti-hedging, anti-pledging
and other trading policies.
Table of Contents
Executive Officers
Our executive officers provide functional oversight of our business
units and have primary responsibility for setting Company policy and decision-making authority. Our executive officers, as defined
in the Exchange Act, include our Chief Executive Officer, Chief Financial Officer, Group Chief Underwriting Officer, Group Chief
Risk Officer and Group General Counsel, Chief Investment Officer and Chief Accounting Officer.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x40x1.jpg) |
Kevin J. O’Donnell
Age: 54
President and Chief Executive Officer |
Mr. O’Donnell has served as our Chief Executive Officer since
July 2013 and as our President since November 2012. Mr. O’Donnell has served in a number of roles since joining the Company
in 1996, including Global Chief Underwriting Officer, Executive Vice President, Senior Vice President, Vice President and Assistant
Vice President. Mr. O’Donnell also served as the Chair of the Global Reinsurance Forum from 2018 to 2020 and as the Chair
of the Association of Bermuda Insurers and Reinsurers in 2017 and 2018.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x40x2.jpg) |
Robert Qutub
Age: 59
Executive Vice President and Chief Financial Officer |
Mr. Qutub has served as our Executive Vice President and Chief Financial
Officer since August 2016. Prior to joining RenaissanceRe, Mr. Qutub served as Chief Financial Officer and Treasurer for MSCI Inc.,
a leading provider of portfolio construction and risk management tools and services for global investors, from July 2012 to May
2016. Prior to MSCI Inc., Mr. Qutub was with Bank of America from November 1994 to June 2012, where he held several segment Chief
Financial Officer roles. He has served on the Board of Directors of USAA Federal Savings Bank since June 2014 and also served in
the United States Marine Corps.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x40x3.jpg) |
Ross A. Curtis
Age: 48
Executive Vice President and Group Chief Underwriting
Officer |
Mr. Curtis has served as our Group Chief Underwriting Officer since
July 2014 and Executive Vice President since May 2020. Mr. Curtis has served in a number of roles since joining the Company in
1999 as a Catastrophe Reinsurance Analyst, including Chief Underwriting Officer of European Operations based in London from 2010
to 2014 and Senior Vice President of Renaissance Reinsurance Ltd. in Bermuda, primarily responsible for underwriting the international
and retrocessional property catastrophe portfolios and assisting in the development of our specialty reinsurance lines, from 2006
to 2010.
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Table of Contents
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x41x1.jpg) |
Ian D. Branagan
Age: 53
Executive Vice President and Group Chief Risk
Officer |
Mr. Branagan has served as our Group Chief Risk Officer since 2009
and as Executive Vice President since May 2020. Mr. Branagan joined the Company in 1998 to open our Dublin office, later relocating
to Bermuda with additional responsibilities for underwriting risk and modeling across our (re)insurance operations. Mr. Branagan
subsequently assumed the responsibility of managing risk globally, including as Head of Group Risk Modeling in 2005 and, in 2013,
relocated to our London office. Prior to joining the Company, Mr. Branagan led the international activities of Applied Insurance
Research Inc. (“AIR”), which included the development and marketing of AIR’s catastrophe models and tools.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x41x2.jpg) |
Shannon L. Bender
Age: 54
Senior Vice President, Group General Counsel and
Corporate Secretary |
Ms. Bender has served as our Senior Vice President, Group General
Counsel and Corporate Secretary since joining the Company in January 2021. Prior to joining RenaissanceRe, Ms. Bender served as
Senior Vice President and Chief Corporate Counsel of CIT Group Inc.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x41x3.jpg) |
Sean G. Brosnan
Age: 45
Senior Vice President and Chief Investment Officer |
Mr. Brosnan has served as our Senior Vice President and Chief Investment
Officer since April 2017. Mr. Brosnan has served in a number of roles since joining the company in 2004, including Vice President,
Managing Director of Investments from 2012 to 2017 and Chief Executive Officer of Renaissance Reinsurance of Europe Unlimited Company
from 2014 to 2017. Prior to joining the Company, Mr. Brosnan worked in investment and finance positions at Irish Life Investment
Managers and Bank of Ireland. Mr. Brosnan is a Chartered Certified Accountant and a CFA Charterholder.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x41x4.jpg) |
James C. Fraser
Age: 45
Senior Vice President and Chief Accounting Officer |
Mr. Fraser has served as our Senior Vice President and Chief Accounting
Officer since December 2016. He joined RenaissanceRe in 2009, and served as our Vice President and Head of Internal Audit from
2011 through 2016. Prior to joining the Company, Mr. Fraser worked in finance and risk management positions at XL Capital and Deloitte.
Mr. Fraser is a Chartered Professional Accountant and a Certified Internal Auditor.
Table of Contents
Executive Compensation
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PROPOSAL
2 |
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Advisory
Vote on the
Compensation of our
Named Executive
Officers |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x42x1.jpg) |
The Board unanimously recommends
that shareholders vote FOR the approval of
the compensation of the Company’s named executive officers, as disclosed in the compensation discussion and analysis,
compensation tables and narrative discussion contained in this proxy statement. |
We are submitting to our shareholders an advisory vote, commonly
known as a “say-on-pay” proposal, to approve the compensation of our named executive officers as disclosed in this
proxy statement pursuant to Item 402 of Regulation S-K. This advisory vote gives shareholders a mechanism to convey their views
about our executive compensation program and policies. This vote is not intended to address any specific item of compensation,
but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this
proxy statement. The following resolution will be submitted for a shareholder vote at our Annual Meeting:
“RESOLVED, that the shareholders of the Company approve
the compensation of the Company’s named executive officers, as disclosed in the proxy statement for the Company’s Annual
General Meeting pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables
and narrative discussion.”
Recommendation and Vote Required
The Board urges you to review carefully the information under
the heading “Executive Compensation” in this proxy statement and to vote, on an advisory basis, to approve the compensation
of our named executive officers. Although your vote on executive compensation is not binding on the Board or the Company, the Board
values the views of the Company’s shareholders. The Board and the Compensation and Governance Committee will review the results
of the vote and take them into consideration in addressing future compensation policies and decisions.
Approval of this proposal requires the affirmative vote of a majority
of the votes cast at the Annual Meeting and entitled to vote thereon.
40 |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/footer.jpg) |
Table of Contents
Compensation Discussion and Analysis
Our named executive officers for purposes of this proxy statement
are:
| • | Kevin J. O’Donnell, our President and Chief Executive Officer; |
| • | Robert Qutub, our Executive Vice President and Chief Financial Officer; |
| • | Ross A. Curtis, our Executive Vice President and Group Chief Underwriting Officer; |
| • | Ian D. Branagan, our Executive Vice President and Group Chief Risk Officer; and |
| • | Stephen H. Weinstein, our former Executive Vice President, Group General Counsel, Corporate Secretary and Chief Compliance
Officer until his departure on December 31, 2020. |
Executive Summary
Our Strategy and Compensation Philosophy
We aspire to be the world’s best underwriter by matching
well-structured risks with efficient sources of capital, and our mission is to produce superior returns for our shareholders over
the long term. Our strategy for achieving these objectives, which is supported by our core values, our principles and our culture,
is to operate an integrated system of what we believe are our three competitive advantages: superior customer relationships,
superior risk selection and superior capital management.
We have a team-based approach to leading, managing and operating
the Company. Our executives develop and implement our strategy on a Company-wide basis, in addition to being responsible for their
specific business units and functions. Our executive compensation program reflects this approach, rewarding executives based on
overall Company performance.
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Our executive compensation program is designed to: |
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We do this by: |
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•
•
•
• |
support our strategy and risk-management practices;
align the interests of our executives with the long-term interests of our shareholders;
encourage operational and financial consistency
over the market cycles and earnings volatility that are inherent and unique to our industry; and
promote our team-based approach. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/rnr3834911-def14ax15x1.jpg) |
•
•
• |
making a meaningful portion of named executive officer compensation at-risk pay through annual incentive bonuses and long-term incentive awards;
rewarding our named executive officers based
primarily on our overall performance rather than the performance of individual business units or functions; and
requiring our named executive officers to own a significant number of our shares and
prohibiting pledging, hedging and similar transactions of our shares. |
Table of Contents
2020 Executive Compensation Highlights
To achieve the goals of our executive compensation program, the
Compensation and Governance Committee has developed a target pay mix for our Chief Executive Officer and other named executive
officers that ties a significant portion of their compensation to the Company’s short- and long-term performance. We measure
success against a mix of key performance metrics, the majority of which are objectively measurable. We believe this mix of metrics
aligns the interests of our executives and shareholders and rewards our Chief Executive Officer and other named executive officers
for delivering strong performance on our strategic plan without incentivizing excessive risk taking.
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x3.jpg) |
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Compensation Component* |
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Description |
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Benchmarks/Metrics |
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Salary
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x4.jpg)
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Fixed component of compensation |
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Reflects expertise and scope of responsibilities in a competitive market for executive talent |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x1.jpg) |
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Annual Incentive Bonus
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x5.jpg)
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Annual, at-risk cash incentive program designed to promote achievement of financial metrics and strategic accomplishments against pre-defined targets that support long-term growth and operational efficiencies |
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• One-year
performance period
• Metrics:
• Combined ratio rank (relative to peers) (16.7%)
• Ratio of
operating return on average common equity to peer median (33.3%)
• Ratio of actual gross premiums written to budget (16.7%)
• Board-approved strategic accomplishments (33.3%) |
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![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x2.jpg) |
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Long-Term Incentive Awards |
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At-risk, long-term, equity-based compensation to encourage multi-year performance and retention |
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Performance Shares
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x6.jpg)
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• Subject to both performance-and service-based vesting
• Comprise 50%
of long-term incentive awards for all named executive officers ![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x8.jpg) |
|
• Three-year
performance/vesting period ![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x8.jpg)
• Metrics:
• Average growth in book value per common share plus change in accumulated dividends (75%)
• Average
underwriting expense ratio rank compared to peers (25%) ![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x8.jpg) |
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Time-Vested Restricted Shares
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/d383491x44x7.jpg)
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• Subject to service-based vesting |
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• Four-year
vesting period (equal annual installments) |
* |
2020 Target Pay Mix for CEO and Average Target Pay Mix for Other Named Executive Officers. |
42 |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/footer.jpg) |
Table of Contents
The Compensation and Governance Committee does not mandate a specific
allocation among the compensation components, but believes that a majority of total direct compensation should be at-risk and subject
to the achievement of performance objectives as well as service-based criteria.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x45x1.jpg)
Table of Contents
Link Between Pay and Performance for 2020
When reviewing the performance and considering the compensation
of our named executive officers, the Compensation and Governance Committee considers our strategic, operational and financial performance
over both the short and long term. The Compensation and Governance Committee evaluates and sets rigorous performance goals at the
time of grant for all performance-based compensation. In 2020, in a time of unprecedented disruption due to the COVID-19 pandemic
and significant weather-related loss events, we benefited from strong execution of our consistent long-term strategy. Reflecting
the volatility in the markets and industry, our resulting performance against our 2020 compensation metrics: operating return on
average common equity, gross premiums written, relative combined ratio, growth in tangible book value per common share plus change
in accumulated dividends, and total shareholder return, as well as our strategic goals, all of which were determined prior to the
onset of the COVID-19 pandemic, led to varied outcomes. We saw substantial growth in gross premiums written and tangible book value
per common share plus change in accumulated dividends, a relatively strong combined ratio compared to peers, and total shareholder
return in line with our peer group, with operating return on average common equity falling somewhat short of the peer median. As
a result, our 2020 annual incentive bonuses paid out at approximately target and our 2020 performance share payouts ranged from
below target to maximum, depending on the metric.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x46x1.jpg)
| (1) | Operating return on average common equity and growth in tangible book value per common share plus change in accumulated dividends
are non-GAAP financial measures. A reconciliation of non-GAAP financial measures is included in “Appendix A.” |
| (2) | Total shareholder return refers to total shareholder return relative to a pre-approved performance share peer group during
each calendar year performance period. For these purposes, total shareholder return is determined as the increase in the 20-day
average share price preceding the end of the performance period, plus the dividends paid with respect to such shares during such
period, expressed as a percentage of the 20-day average share price preceding the beginning of the performance period. |
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Our 2020 performance represented a continuation of our success
over time. Since Mr. O’Donnell was named our Chief Executive Officer in 2013, we have performed strongly on key financial
metrics. He has led the Company to become a diversified reinsurer with an innovative and flexible operating platform. From 2013
to 2020, our gross premiums written grew at a CAGR of 17.4% and our total shareholder return grew at a CAGR of 10.4%, while our
Chief Executive Officer’s total compensation grew at a CAGR of only 1.7%. The graph below illustrates the alignment of Mr.
O’Donnell’s pay with our performance during Mr. O’Donnell’s tenure.
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The effectiveness of our pay-for-performance philosophy is further
illustrated by the graphs below, which show the alignment of our Chief Executive Officer’s three-year realizable pay with
total shareholder return, return on equity, growth in book value per common share and combined ratio over the same period. Each
graph is based on the most recently available complete compensation peer group proxy data. As shown below, on each of these key
strategic metrics, our Chief Executive Officer’s realizable pay over the last three years was aligned with our performance
versus our peers:
3-Year Realizable Pay vs. 3-Year TSR Growth Performance Rank(1) |
|
3-Year Realizable Pay vs. 3-Year ROACE Average Performance Rank(1) |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x48x1.jpg) |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x48x2.jpg) |
|
|
|
3-Year Realizable Pay vs. 3-Year BVPS Growth Performance Rank(1) |
|
Realizable Pay vs. 3-Year Average GAAP Combined Ratio Performance Rank |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x48x3.jpg) |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x48x4.jpg) |
Source: S&P Capital IQ databases.
(1) |
The financial ratios used above are calculated using the closest GAAP financial measures to the financial
metrics used in various components of our executive compensation program. “3-Year Realizable Pay” is defined as
the sum of: (i) base salary earned in each fiscal year, (ii) actual bonus payout for each fiscal year (including discretionary,
sign-on and special bonuses), (iii) in-the-money value, at December 31, 2020, of all options granted during the three-year
period, (iv) full value, at December 31, 2020, of all restricted shares/units granted during the three-year period and (v)
full value, at December 31, 2020, of all performance shares/units granted during the three-year period (using the actual shares
earned for completed performance cycles and the target number of shares for cycles that are ongoing). Time periods for pay
are based on most recent available information (2015-2019 for peers and 2016-2020 for RenaissanceRe). Time periods for performance
are based on most recent available information (2016-2020 for peers and RenaissanceRe, unless otherwise noted). |
46 |
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Table of Contents
Response to our Say-on-Pay Vote
Shareholder Outreach and Feedback
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x49x1.jpg) |
|
|
Say-on-Pay Vote Results from 2017 to 2020
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x49x2.jpg)
|
|
The results of the annual advisory “say-on-pay” vote at
our 2020 Annual Meeting, where approximately 94% of the votes cast were in support of the compensation of our named executive officers,
indicate strong shareholder support of our programs.
The significant increase in support from our 2019 Annual Meeting followed
the changes we made to our programs for 2020 taking into account the feedback we received during our extensive shareholder outreach
efforts after the 2019 Annual Meeting and into 2020. |
|
|
We have reached out to shareholders totaling
almost
|
|
To ensure that we continue to benefit from the support of our shareholders,
we engaged with our shareholders to seek feedback on our executive compensation program and any other subject of interest. We are
committed to ensuring that we understand our shareholders’ concerns, and that our shareholders understand our executive compensation
program. This includes how our executive compensation program rewards the achievement of our strategic objectives and aligns the
interests of our named executive officers with those of our shareholders.
Our top 25 shareholders generally represent about two-thirds of our
shares outstanding, and we focused our outreach efforts on these shareholders, though we also spoke to many other shareholders
among our top 50.
• We reached out to all
of our top 25 shareholders.
• In total, we reached out
to shareholders representing almost 72% of our shares outstanding and spoke with about two-thirds of those shareholders.
• When requested, the Chair
of the Compensation and Governance Committee participated in the discussions with shareholders. |
What We Heard |
|
|
|
Our shareholders generally expressed support for our strategy
and the structure and design of our executive compensation program. They have said that they appreciate the opportunity
to engage in these discussions and our willingness to consider their input in designing our executive compensation program.
Feedback we received following our 2019 Annual Meeting and into 2020 included:
Performance measurement
period for the performance shares – A number of shareholders expressed a preference for a three-year
measurement period for our performance share awards.
Relative weighting
of performance shares and traditional time-vested equity – Some shareholders expressed a preference for
an increased weighting of performance shares for our named executive officers other than our Chief Executive Officer,
whose weighting was already 50%.
Relative and/or multiple
metrics for our performance shares – While shareholders recognized that we use relative performance measures
in our annual incentive bonus plan, some of our shareholders would also like us to use either relative measurements of
performance or multiple metrics for performance shares.
Peer group –
We heard no negative feedback regarding our compensation peer group construction, and some of our shareholders confirmed
that the peer group we use for compensation determinations aligns with shareholder views.
ESG disclosure –
We received some feedback requesting additional or more expansive disclosure of our ESG commitments and initiatives, and
Board oversight of those initiatives.
|
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2020 Compensation Program and Disclosure Enhancements
In response to the disappointing outcome of the 2019 say-on-pay vote,
and to reflect the organic and inorganic growth of our business that has resulted in larger, more diversified and longer duration
underwriting risk and investment portfolios, the Compensation and Governance Committee and management undertook a year-long review
of our executive compensation program. They took into account the feedback of our shareholders and, with input from the Compensation
and Governance Committee’s independent compensation consultant, Mercer, as well as a management compensation consultant,
Fredric W. Cook & Co., Inc. (“F.W. Cook”), made the following changes for 2020:
2020
Changes |
|
Rationale |
|
Feedback
Addressed |
Performance Shares |
|
|
|
|
Beginning with awards made in 2020, our performance shares
shifted from annual “banking” with three-year vesting, to a three-year performance period, based on two new
metrics:
• 75% of the
performance shares will vest based on average growth in book value per common share plus accumulated dividends over three years;
and
• 25% of the
performance shares will vest based on our three-year average underwriting expense ratio rank compared to peers. |
|
We believe adding an operating metric such as underwriting expense ratio is consistent with changes over time in our mix of business.
We moved from growth in tangible book value per common share plus change in accumulated dividends to growth in book value per common share plus change in accumulated dividends because the latter is an easily measurable financial metric that closely aligns with our strategy. The metrics do not overlap with our annual incentive bonus plan metrics, are key measures of the successful execution of our strategy and combine with the existing metrics to create a mix of metrics which will measure performance across the short- and long-term without incentivizing excessive risk taking. |
|
• Performance
measurement period for performance shares.
• Relative
and/or multiple metrics. |
Increased the percentage of long-term incentive awards comprised of performance shares to 50% for all named executive
officers (in line with the Chief Executive Officer). |
|
Higher percentage will align the compensation of the senior management team with the Chief Executive Officer and increase
the pay-for-performance alignment for these named executive officers. |
|
• Relative weighting of performance shares and traditional time-vested
equity. |
ESG Disclosure |
|
|
|
|
Enhanced ESG disclosure on our website and in our public filings. |
|
We have always had a strong commitment to ESG matters and, in response to feedback, have enhanced our public disclosure
in our SEC filings and on our website, including the launch of a new ESG webpage in 2020. |
|
• Enhance disclosure of RenaissanceRe’s ESG activities, including
Board-level oversight. |
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Compensation Changes Over Time
The changes we made to our executive compensation program in 2020,
together with the evolution of our executive compensation program over time, reflect the changes in our Company and mix of business,
aligning executive compensation with our strategy and shareholder interests, without incentivizing excessive risk taking.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x1.jpg)
Executive Compensation Best Practices
We have always been, and remain, committed to continually reviewing
and improving our executive compensation program to ensure that we have reflected the views of our shareholders and implemented
best practices. Some highlights of the best practices we have implemented in our executive compensation program include the following:
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x2.jpg) |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x3.jpg) |
Tie Pay to Performance, with a Rigorous
Goal-Setting Process Aligned to Shareholder Returns. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x3.jpg) |
Robust Share Ownership Guidelines. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x3.jpg) |
Clawback Policy for Incentive Compensation. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x3.jpg) |
Minimum Vesting Periods for Equity Awards. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x3.jpg) |
Independent Compensation Consultant. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x3.jpg) |
Active Shareholder Engagement. |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x3.jpg) |
Maximum Payout Cap for Long-Term Incentives and
Annual Incentive Bonus. |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x3.jpg) |
Double-Trigger Severance and Vesting in the Event
of a Change in Control. |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x3.jpg) |
Fixed Share Reserve
for Equity Awards. |
|
|
|
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x4.jpg) |
No Tax Gross-ups for Excise Taxes or Perquisites. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x4.jpg) |
No Special Retirement Arrangements for
Executive Officers. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x4.jpg) |
No Option or Stock Appreciation Rights
Repricing. |
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x4.jpg) |
No Hedging, Pledging or Unapproved
Trading Plans. |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x4.jpg) |
No Dividends or Dividend Equivalents
Paid on Unvested Performance Shares. |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x4.jpg) |
No Vesting of Performance Shares if
Threshold Performance Not Met. |
|
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x51x4.jpg) |
No Payments at or Above Target for
Below Median Performance of Relative Total Shareholder Return. |
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Compensation Determination Process
In order to ensure that we maintain an executive compensation program
that aligns the interests of our executives with the long-term interests of our shareholders, our Compensation and Governance Committee
leads a rigorous and continuous process evaluating our executive compensation program throughout the year.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x52x1.jpg)
Role of Compensation and Governance Committee
Our Compensation and Governance Committee establishes and oversees
our executive compensation philosophy and has primary responsibility for overseeing executive compensation policies and programs.
The Compensation and Governance Committee is responsible for determining all aspects of our Chief Executive Officer’s compensation
and for approving compensation for all other key executives, including the named executive officers, after reviewing the Chief
Executive Officer’s recommendations with respect to those executives. The Compensation and Governance Committee’s responsibilities
with respect to compensation, are set forth in its charter, and are described in more detail above under, “Corporate Governance—Board
Structure and Processes—Committees of the Board—Compensation and Corporate Governance Committee.”
The Compensation and Governance Committee meets at least quarterly
and meetings may include other members of the Board, members of management and third-party advisors. A portion of each meeting
is spent in executive session in which no members of management are present. Only members of the Compensation and Governance Committee
may vote on committee matters.
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Role of Compensation Consultants
The Compensation and Governance Committee has retained Mercer as its
independent compensation consultant to provide market intelligence on compensation trends, views and recommendations with respect
to our compensation programs, and analyses and recommendations with respect to the amount and form of senior executive and director
compensation.
During 2020, the Compensation and Governance Committee renewed its
engagement of Mercer, a wholly owned subsidiary of Marsh & McLennan Companies, Inc. (“Marsh”). Other subsidiaries
of Marsh acted as a broker or agent with respect to 24.5% of our gross premiums written and 23.3% of ceded written premiums in
2020. No member of management or the Compensation and Governance Committee has any contractual or pecuniary arrangement with Mercer.
During 2020, Mercer performed compensation advisory and other services on behalf of the Compensation and Governance Committee and
the Company. We incurred fees in 2020 in respect of these engagements totaling approximately $408,000. No individual consultant
or personnel who provided compensation or advisory services received any additional compensation as a result of Mercer providing
these other services. The Compensation and Governance Committee approved fees for all compensation or related advisory services.
The Compensation and Governance Committee has assessed the independence
of Mercer pursuant to the SEC rules and the NYSE listing standards and has concluded that the engagement did not raise any conflicts
of interest. In reaching this conclusion, the Compensation and Governance Committee considered the factors relevant to Mercer’s
independence from management, including the factors set forth in the NYSE listing standards.
Additionally, in 2020, management retained F.W. Cook as its compensation
consultant to assist us with our response to the say-on-pay vote in 2019 and to review our executive compensation program more
generally.
Role of Management
Our executive officers and key members of our human resources function
help support the Compensation and Governance Committee’s executive compensation process, and the Chief Executive Officer
regularly attends and participates in portions of the Compensation and Governance Committee’s meetings. He provides the Compensation
and Governance Committee with strategic context regarding our products, underwriting and operational risks, strategy and performance,
and shareholder value-creation over time. Our Chief Executive Officer also advises the Compensation and Governance Committee on
matters such as the alignment of our incentive plan performance measures with our overall strategy and the impact of the design
of our equity incentive awards on our ability to attract, motivate and retain highly talented executive officers. The Chief Executive
Officer also makes recommendations regarding the compensation of key executive officers who report to him, including our named
executive officers, and reports to the Compensation and Governance Committee regarding his evaluation of their performance. In
addition, our executive officers collaborate on the development of our strategic plan, which the Compensation and Governance Committee
uses as the basis for setting the goals and targets for our performance-based compensation.
Peer Group
The Market for Talent
Our ability to attract and retain talented executive officers is critical
to achieving our strategic goals. We believe that the pool of candidates that meet our criteria is small and that competition for
talent continues to increase as a result of non-traditional entrants into our industry (such as investment banks, hedge funds and
pension funds); new reinsurance companies backed or funded by such other entities entering the market; the proliferation of third-party
capital utilization by insurance and reinsurance companies and non-traditional competitors; and the growth in demand for catastrophe
and specialty risk coverage in emerging markets.
While the Compensation and Governance Committee does not target specific
compensation component levels or total compensation of the named executive officers against market data, it periodically assesses
the competitiveness of the compensation levels of our named executive officers and considers the overall competitive market in
which we operate. With the assistance of management and its independent compensation consultant, Mercer, the Compensation and Governance
Committee uses market data of a group of peer companies to conduct this assessment.
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Peer Selection
The Compensation and Governance Committee dedicates significant time
and effort to developing a relevant compensation peer group for the Company and works with Mercer and management to regularly review
and assess the peer group to ensure continued applicability. Our compensation peer group is composed of companies with significant
reinsurance operations and risk portfolios that are comparable to ours, taking into account the criteria listed described below.
In selecting peers, the Compensation and Governance Committee considers
the following key criteria:
Key Criteria when Identifying Peer Group Companies
Companies that have a similar business and whose results are driven
by a similar risk portfolio |
|
The companies in our compensation peer group should be companies with which we compete for business.
The companies
are in risk-bearing businesses with significant reinsurance operations and risk portfolios, with similar financial characteristics.
|
Company size, by revenue and market capitalization |
|
We consider both
the revenue and market capitalization of prospective peer companies.
Our market presence
and financial position are broadly comparable with our compensation peer group as a whole and with the individual companies
that comprise it.
We include some
companies with higher revenues because they are our primary competitors for both business and executive talent and the
number of similarly sized competitors continues to shrink due to industry consolidation.
To ensure competitive
pay analysis is not unduly influenced by the larger companies, we review the competitive pay information for all companies
individually, rather than relying on average or other summary statistics that may be distorted by outliers.
|
Companies we compete with for qualified executive talent |
|
The companies
in our compensation peer group should be those companies with which we compete for executive talent and from which we
seek to attract qualified executives.
The companies
should have similar professional skill and talent needs.
We consider companies
who select us for inclusion in their peer group.
|
Companies located in similar jurisdictions |
|
Companies in similar jurisdictions to us are in competitive pay markets with
similar pay practices. |
Consistency from year-to-year |
|
We seek to maintain consistency in the peer group from year-to-year, to the
extent appropriate to ensure long-term alignment of goal measurement. |
In February 2020, the Compensation and Governance Committee assessed
and determined the composition of our compensation peer group for 2020. The following nine companies comprised our compensation
peer group for 2020:
• Alleghany Corporation
• Arch Capital Group Ltd.(1)
• Argo Group International
Holdings, Ltd. |
• Axis Capital Holdings
Limited
• Everest Re Group, Ltd.
• Greenlight Capital Re,
Ltd. |
• Markel Corporation
• Third Point Reinsurance
Ltd.(2)
• W. R. Berkley Corporation |
|
Overlap with Selected Peers
All the companies in our compensation peer group that
disclosed a peer group for compensation purposes in their 2020 proxy statements also listed us as a peer. |
(1) |
On October 14, 2020, Arch Capital Group Ltd. and Watford Holdings Ltd. announced a merger agreement
pursuant to which Arch Capital Group Ltd. will acquire Watford Holdings Ltd. The merger is expected to close in the first
half of 2021. |
(2) |
On February 26, 2021, Third Point Reinsurance Ltd. and Sirius International Insurance Group, Ltd. completed their previously
announced merger and launched SiriusPoint Ltd. |
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Table of Contents
Due to industry consolidation, the number of standalone publicly traded
companies that meet the above criteria has decreased over the past several years. Nevertheless, we believe this is still a carefully
considered peer group comprised of companies that we compete with for business and executive talent. We also compete for talent
with non-traditional entrants into our industry and other companies in a variety of different sectors. Although we do not include
these firms in our compensation peer group, we monitor their compensation practices to inform our compensation program design and
determinations.
As discussed below under “—Principal Components of Our
Executive Compensation Program,” in addition to using our compensation peer group to set and analyze our executive compensation
program and levels, we also used this peer group of companies to measure certain performance metrics for annual incentive bonuses
for 2020.
Managing Dilution
Management and the Compensation and Governance Committee balance the
goal of aligning the interests of our executives and employees with the long-term interests of shareholders with active monitoring
of our equity-based grant practices and potential for shareholder dilution. In determining 2020 equity-based grants, the Compensation
and Governance Committee and the Board considered our prior equity grant practices, currently outstanding restricted share awards,
and the impact on shareholder dilution of these instruments and of contemplated grants. We periodically analyze the impact of our
equity-based grants on dilution and share plan utilization models used by our institutional shareholders and by third parties who
issue proxy voting recommendations.
Principal Components of Our Executive Compensation
Program
Salary
Base salaries provide a fixed component of compensation at a competitive
level to attract and retain executives. Salaries for our named executive officers are based on several factors, including the scope
of job responsibilities, experience, expertise, performance and competitive market compensation. From time to time, salaries may
be adjusted to reflect promotions, increases in responsibilities and competitive considerations. None of our named executive officers
received a salary increase in 2020.
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Annual Incentive Bonus
Our annual incentive bonus contributes to the alignment of named executive
officer compensation and corporate performance. Amounts are earned based on our attainment of both financial measures and quantitative
and qualitative strategic and operating accomplishments. The Compensation and Governance Committee and management believe that
quantitative results should be the primary measure of executive performance, but not be the sole measure. This is because our business
is subject to significant volatility over the short- and intermediate-term due to our exposure to catastrophic events, which makes
it difficult to evaluate performance purely on a quantitative basis. This mix of qualitative and quantitative objectives is chosen
to encourage underwriting discipline and to discourage excessive or inappropriate risk taking. When considered together with the
other components of our program that utilize different performance metrics and time frames, this mix helps ensure that short-term
corporate performance is not pursued at the expense of long-term shareholder value creation.
We believe that our performance-based annual incentive bonus process
fosters relative internal pay equity and aligns employees with overall corporate results in a manner consistent with our team-based
compensation philosophy and organizational culture.
Annual Incentive Bonus Mechanics
At the beginning of each year, in connection with its annual compensation
review, the Compensation and Governance Committee determines a target level for each named executive officer’s annual incentive
bonus. At the same time, the Compensation and Governance Committee selects and approves the financial performance metrics and strategic
accomplishments that will be used to determine the ultimate amount of the annual incentive bonus. This includes establishing specific
targets, thresholds and maximums for each of the performance metrics.
Following year end, the Compensation and Governance Committee measures
our performance against the approved financial metrics and strategic accomplishments to determine a “business performance
factor.” The business performance factor is equal to the sum of the outcomes for each performance metric, calculated as the
percentage achievement multiplied by its relative weight, and subject to a maximum. Bonus allocations for all employees, including
our named executive officers, are then made from a pool funded by multiplying the aggregate target bonuses by the business performance
factor after adjusting for individual performance and contributions.
2020 Annual Incentive Bonus Determinations
The target levels for our named executive officers’ 2020 annual
incentive bonuses are the same as the 2019 levels:
Name | |
2020
Target (% of Salary) | |
Kevin J. O’Donnell | |
| 225% | |
Robert Qutub | |
| 125% | |
Ross A. Curtis | |
| 125% | |
Ian D. Branagan | |
| 125% | |
Stephen H. Weinstein | |
| 125% | |
These amounts were determined by the Compensation and Governance Committee
based on its annual analysis of the competitiveness of our executive compensation program, which is conducted with the assistance
of our independent compensation consultant Mercer. The Compensation and Governance Committee believes these amounts reflect our
competitive position in the industry and support our goal of having a significant portion of our named executive officer pay be
at-risk.
54 |
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Performance Metrics
For 2020, the Compensation and Governance Committee approved a mix
of financial performance metrics and strategic accomplishments in its annual incentive bonus determinations, as set forth below.
The Compensation and Governance Committee believes that each financial performance metric represents an important measure of the
financial success of our business, and, together with the strategic accomplishments, serve to balance risk and reward and drive
achievement of our strategic goals.
The performance metrics approved by the Compensation and Governance
Committee for 2020 are set forth below.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x57x1.jpg)
The financial performance metrics for 2020 were consistent with 2019.
For relative performance metrics, combined ratio rank versus peers and ratio of operating return on average common equity to peer
median, we continued to target outperformance against our peers. For our ratio of actual gross written premiums to budget metric,
we increased the targeted gross premiums written by approximately 22.6% to reflect anticipated growth in 2020.
The strategic accomplishments approved by the Board for 2020 included:
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x57x2.jpg)
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Full details of the specific targets, thresholds and maximums for
each metric, as well as the actual results for 2020, are set forth in the graphic below. For each performance metric, an actual
result below the set threshold would result in no payout related to that metric.
![](https://www.sec.gov/Archives/edgar/data/913144/000120677421000787/g383491x58x1.jpg)
(1) |
Actual payout between threshold and target and target and maximum is determined by straight-line interpolation.
|
(2) |
To calculate, we compared our performance to our compensation peer group for 2020, which is described above. |
(3) |
Operating return on average common equity is a non-GAAP financial measure. A reconciliation of non-GAAP financial measures
is included in “Appendix A” to this proxy statement. |
(4) |
With input from management and in conjunction with the Board’s annual review of our strategic plan, the Compensation
and Governance Committee evaluates performance on the pre-established strategic accomplishments, resulting in a score between
0 and 3.0, which translates to a specific payout on the pre-established payout schedule. |
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2020 Payout Determination
In February 2021, the Compensation and Governance Committee reviewed
the Company’s performance for the 2020 fiscal year. Performance against financial metrics is calculated formulaically based
on actual results. To determine performance against strategic accomplishments, the Compensation and Governance Committee reviews
detailed information provided by management regarding progress on each of the various pre-established goals and consults with the
Audit Committee, the Investment and Risk Management Committee, and the Non-Executive Chair of the Board, then gives a score to
each area and averages the results to determine a final “strategic projects score” that corresponds to a pre-established
payout percentage. The Compensation and Governance Committee believes that, as discussed above under “—Executive Summary—Link
Between Pay and Performance for 2020,” the Company performed very well against the pre-established strategic accomplishments
for the annual incentive bonuses for 2020. Based on our actual performance achievements, the Compensation and Governance Committee
established an overall business performance factor of 105% of target for 2020 (in accordance with the formula described above)
and determined that the actual annual incentive bonus for 2020 for each named executive officer (other than Mr. Weinstein, who
departed the Company on December 31, 2020) would be equal to our business performance factor of 105%, multiplied by his target
bonus amount.
The target and actual annual incentive bonuses for 2020 for each of
our named executive officers, as determined by the Compensation and Governance Committee, are set forth in the table below:
Name | |
Base Salary ($) | |
Target 2020 Bonus as a Percent of
Base Salary (%) | |
Target 2020 Bonus ($) | |
Actual 2020 Bonus
($) |
Kevin J. O’Donnell | |
1,100,000 | |
225% | |
2,475,000 | |
2,598,750 |
Robert Qutub | |
635,000 | |
125% | |
793,750 | |
833,438 |
Ross A. Curtis | |
675,000 | |
125% | |
843,750 | |
885,938 |
Ian D. Branagan(1) | |
649,325 | |
125% | |
811,656 | |
852,239 |
Stephen H. Weinstein(2) | |
525,000 | |
125% | |
656,250 | |
— |
(1) |
Mr. Branagan’s base salary of £475,000 was converted into U.S. dollars at the exchange rate of 1.37 on December 31, 2020. |
(2) |
Mr. Weinstein departed the Company on December 31, 2020. His separation payments are discussed below under “—Executive Compensation Tables—Narrative Disclosure to Summary Compensation Table and Grants of Plan Based Awards Table—Employment Agreements—Separation Agreement with Mr. Weinstein.” |
TMR Deferred Bonus Determination
In May 2020, the Compensation and Governance Committee reviewed the
Company’s performance against the measurable strategic performance goals related to the acquisition of Tokio Millennium Re
AG and certain associated entities and subsidiaries (collectively, “TMR”) that it previously established in respect
of the deferred portion of the named executive officers’ 2018 annual bonus and determined that the named executive officers
earned 148.7% of the deferred portion of the 2018 annual bonus. In accordance with applicable SEC rules, the 2018 annual bonus
(including the portion that was deferred) was reported in the Non-Equity Incentive Plan Compensation column of the Summary Compensation
Table for 2018 and the portion of the deferred 2018 annual bonus earned by each named executive officer in excess of the 100% performance
level is disclosed in the Non-Equity Incentive Plan Compensation column for 2020 in the Summary Compensation Table below. For additional
information regarding the deferred 2018 annual bonuses, including a summary of the applicable performance goals established by
the Compensation and Governance Committee, see page 34 of our proxy statement filed with the SEC on April 2, 2019.
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Long-Term Incentives
Our long-term incentive awards link the compensation of our named
executive officers directly to corporate performance over the long term. These awards make up a significant component of total
direct compensation. Each named executive officer’s long-term incentive award consists of a combination of performance
shares and time-vested restricted shares. The combination of awards with performance-based and service-based vesting supports our
pay-for-performance philosophy by encouraging long-term performance, retention and shareholder value-creation and fostering an
ownership culture.
Long-Term Incentive Award Mechanics
Generally, the Compensation and Governance Committee makes annual
long-term incentive awards to the named executive officers in connection with its annual review of compensation in the first quarter
of the year. The Compensation and Governance Committee may also grant equity awards from time to time to reflect promotions, special
achievements, new hires or retention needs.
Time-vested restricted shares generally vest in four equal annual
installments subject to continued service with the Company. Performance share awards generally have a three year performance period,
and cliff vest at the end of a three-year service period.
The Compensation and Governance Committee reviews the terms and conditions
of our performance shares at least annually to ensure alignment with our strategic plan. It selects the performance metric or metrics
that will be used, and sets specific targets, thresholds and maximums. In response to shareholder feedback, the Compensation and
Governance Committee made significant enhancements to the weighting, design and structure of the 2020 performance shares.
Dividends are generally payable currently with respect to time-vested
restricted shares. Dividends are accrued on unvested performance shares and are paid without interest at the same time as the underlying
shares vest. No dividends are paid on forfeited performance shares.
2020 Long-Term Incentive Award Determinations
In 2020, all of our named executive officers received 50% of their long-term incentive award in performance shares, up from 35% for the named executive officers other than the Chief Executive Officer. |
|
2020 Grants of Equity Awards
In 2020, the Compensation and Governance Committee granted each named
executive officer an annual long-term incentive award, split evenly between performance shares and restricted shares.
The total target values of the long-term incentive awards made in
2020 were based on the named executive officers’ responsibilities, performance and contributions during the previous year.
The total target values of the awards for named executive officers other than the CEO were increased in 2020 to recognize the Company’s
strong performance in 2019, including the successful integration of TMR, and to reflect the expanding scope of the named executive
officers’ responsibilities as the Company continues to grow. The total target value of the award for our CEO was consistent
with the prior year. |
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The annual long-term incentive awards granted to our named executive
officers in 2020 are set forth in the following table:
Name | |
Performance Shares(1) ($) | |
Time-Vested Restricted Shares ($) | |
Total Target Long-Term Equity-Based Incentive Award ($) |
Kevin J. O’Donnell | |
2,337,377 | |
2,337,377 | |
4,674,754 |
Robert Qutub | |
839,220 | |
839,220 | |
1,678,440 |
Ross A. Curtis | |
884,206 | |
884,206 | |
1,768,412 |
Ian D. Branagan | |
833,256 | |
833,256 | |
1,666,512 |
Stephen H. Weinstein(2) | |
715,510 | |
715,510 | |
1,431,020 |
(1) |
The values of the performance shares are shown at target based on the closing price of our common shares on the date of grant. |
(2) |
Mr. Weinstein departed the Company on December 31, 2020. His separation payments are discussed below under “—Executive Compensation Tables—Narrative Disclosure to Summary Compensation Table and Grants of Plan Based Awards Table—Employment Agreements—Separation Agreement with Mr. Weinstein.” |
2020 Performance Share Metrics
In response to shareholder feedback, the Compensation and Governance
Committee enhanced the rigor of the performance share awards by extending the performance period from one-year “banking”
to a three-year performance period and adding an additional performance metric.
Metrics | |
Weighting |
Average growth in book value per common share plus change in
accumulated dividends during the three-year performance period | |
75% |
Three-year average underwriting expense ratio rank compared to peers | |
25% |
Key Features | |
|
• |
Assuming performance conditions are met, cliff vest after three years, subject to continued service |
• |
In the event that industry-wide losses during a performance period are greater than a pre-set magnitude determined at the time of grant and growth in tangible book value per common share plus change in accumulated dividends is below the set threshold, the Compensation and Governance Committee may award performance shares to the participant in an amount not to exceed a set percentage (for grants in February 2020, February 2019 and May 2018, this amount was 25%) of the “target” payout if our performance against our modeled outcomes for such an event is within the acceptable modeled range |
The Compensation and Governance Committee believed these terms and
metrics continued to align with the Company’s current business, risk and investment portfolios.
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In addition, consistent with 2019 performance share awards, the maximum
payout for the 2020 performance share awards was 200% for all named executive officers. The performance metrics and corresponding
vesting levels for the 2020 performance award are set forth in the following table:
| |
| |
| |
Average | |
|
| |
Average Growth in Book Value per | |
Vesting Level | |
Underwriting | |
Vesting Level |
| |
Common Share plus Change in | |
(as Percent | |
Expense Ratio | |
(as Percent |
Hurdle | |
Accumulated Dividends | |
of Target) | |
Rank | |
of Target) |
Below Threshold | |
< 3.5% | |
0% | |
< 6 | |
0% |
Threshold | |
3.5% | |
35% | |
6 | |
35% |
Target | |
7% | |
100% | |
10 | |
100% |
Maximum | |
14% | |
200% | |
19 | |
200% |
If performance falls between threshold and target or between target
and maximum, vesting level (as a percent of target) is determined using linear interpolation. The Compensation and Governance Committee
has the authority to consider downward adjustments in conjunction with any vesting of performance shares but may not make any upward
adjustments.
To determine average underwriting expense ratio rank relative to our
peers for the purposes of payout of our performance shares granted in 2020, the Compensation and Governance Committee, in consultation
with Mercer and management, selected an expanded group of peers that includes all of the companies in our compensation peer group,
plus nine additional companies. The following 18 companies comprised our performance share peer group for 2020:
Compensation Peer Group |
Additional Performance Share Peers |
• |
Alleghany Corporation |
• |
Beazley PLC |
• |
Arch Capital Group Ltd.(1) |
• |
Enstar Group Limited |
• |
Argo Group International Holdings, Ltd. |
• |
Global Indemnity Limited |
• |
Axis Capital Holdings Limited |
• |
Hannover Rueck SE |
• |
Everest Re Group, Ltd. |
• |
Hiscox LTD |
• |
Greenlight Capital Re, Ltd. |
• |
James River Group Holdings, Ltd. |
• |
Markel Corporation |
• |
Lancashire Holdings LTD |
• |
Third Point Reinsurance Ltd.(2) |
• |
Scor SE |
• |
W. R. Berkley Corporation |
• |
Watford Holdings Ltd.(1) |
(1) |
On October 14, 2020, Arch Capital Group Ltd. and Watford Holdings Ltd. announced a
merger agreement pursuant to which Arch Capital Group Ltd. will acquire Watford Holdings Ltd. The merger is expected to close
in the first half of 2021. |
(2) |
On February 26, 2021, Third Point Reinsurance Ltd. and Sirius International Insurance Group, Ltd.
completed their previously announced merger and launched SiriusPoint Ltd. |
Performance Share Measurement For 2020
In February 2021, the Compensation and Governance Committee reviewed
and approved the applicable performance metrics with respect to performance shares vesting for 2020.
For outstanding performance share grants made prior to May 2018, performance
shares were earned in three substantially equal annual installments based upon the Company’s total shareholder return relative
to a pre-approved performance share peer group during each calendar year performance period and vested at the end of a three-year
service period, subject to continued service with the Company. For purposes of these performance share awards, total shareholder
return was determined as the increase in the 20-day average share price preceding the end of the performance period, plus the dividends
paid with respect to such shares during such period, expressed as a percentage of the 20-day average share price preceding the
beginning of the performance period. The performance-
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based vesting level of one-third of the award was determined at the
end of each year of the performance period based on that year’s performance, and earned shares generally remained subject
to a service-based vesting requirement through the end of the full three-year service period. In addition, the performance shares
would pay out at target only if our relative total shareholder return was above the median of our performance share peer group
and would not pay out greater than target if our absolute total shareholder return was negative. For 2020, our total shareholder
return for purposes of these performance share awards was negative 14.7%, which was in the 50th percentile relative
to our pre-determined performance share peer group for awards made in 2018.
The Compensation and Governance Committee also reviewed and approved
the growth in tangible book value per common share for 2020 for purposes of determining the vesting amount for the third tranche
of the performance shares granted to Mr. O’Donnell in May 2018 and the second tranche of the performance shares granted to
the named executive officers in 2019.
The following table illustrates actual performance and shares earned
for performance shares granted in 2018 and 2019.
| |
2018 | |
2019 | |
2020 |
| |
Performance Achieved | |
% of Target Earned | |
Performance Achieved | |
% of Target Earned | |
Performance Achieved | |
% of Target Earned |
Total Shareholder Return | |
| |
| |
| |
| |
| |
|
2018-2020 Performance Share Cycle | |
5.9% | |
81.3% | |
46.7% | |
200.0% | |
(14.7%) | |
75% |
Growth in Tangible Book Value per Common Share plus Change in Accumulated Dividends(1) |
|
|
|
|
2018-2020 Performance Share Cycle (CEO
only) | |
6.4% | |
88.3% | |
17.9% | |
200% | |
17.9% | |
200% |
2019-2021 Performance Share Cycle | |
— | |
— | |
17.9% | |
200% | |
17.9% | |
200% |
(1) |
Growth in tangible book value per common share plus change in accumulated dividends is a non-GAAP financial measure. A reconciliation of non-GAAP financial measures is included in “Appendix A.” |
Additional Compensation Practices
Other Benefits and Perquisites
Messrs. O’Donnell and Qutub, our Bermuda-based, expatriate named
executive officers, participate in a perquisite and benefit program that we believe furthers our goal of attracting and retaining
key talent to our strategic Bermuda headquarters. Mr. Weinstein also participated in this program prior to his departure. Given
the unique challenges of the Bermuda market, including travel to and from the island and the cost of living and maintaining a residence,
we provide benefits and perquisites, such as personal travel and housing allowances, that are consistent with our competitors operating
in this market and which we believe are necessary for recruitment and retention purposes.
Our named executive officers are also permitted Company-funded personal
use of the corporate aircraft up to the equivalent of 15 hours per year of use of the base airplane. On occasion, the Compensation
and Governance Committee may allow additional hours of Company-funded personal use of our aircraft interest on a case-by-case basis,
including determining to permit reasonable Company-funded personal use during the COVID-19 pandemic. See “Corporate Governance—Board
Structure and Processes—Certain Relationships and Related Transactions—Use of Company Aircraft” above for additional
information. Messrs. O’Donnell and Qutub are, and prior to his departure Mr. Weinstein was, also entitled to the value of
four round trips per year on commercial airlines for themselves and each member of their respective immediate families.
We do not pay tax gross-ups on perquisites for our named executive
officers. Our named executive officers pay imputed income tax on the value of these benefits.
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Change in Control and Post-Termination Payments
Our named executive officers may be entitled to vesting of equity-based
incentive awards and other severance payments and benefits pursuant to the terms of our equity compensation plans and their employment
agreements, and upon a qualifying termination of employment or a change in control. These benefits are described in detail under
“—Executive Compensation Tables—Potential Payments Upon Termination or Change in Control” below. The Compensation
and Governance Committee views post-termination payments primarily as consideration for restrictive covenants applicable to our
executives following these terminations, which we believe are essential to the protection of our business given the specialized
markets in which we compete. In addition, the Compensation and Governance Committee believes that both the change in control and
post-termination payments and benefits are necessary components of a competitive compensation program.
Compensation Governance
Clawback of Incentive Compensation
If our Board were to determine that an executive officer engaged in
fraudulent or intentional misconduct, the Board would impose appropriate discipline, including possibly terminating the executive
officer’s employment, initiating an action for breach of fiduciary duty, and/or, if the misconduct resulted in a significant
restatement of our financial results, seeking reimbursement of any portion of performance-based or incentive compensation paid
or awarded to the executive that was greater than the amount that would have been paid or awarded if calculated based upon the
restated financial results. These remedies would be in addition to any actions that might be imposed by law enforcement agencies,
regulators or other authorities. We also have a right to set off against certain amounts owing to the executive officers should
they engage in certain activities that are detrimental to the Company.
In addition, Mr. O’Donnell’s employment agreement provides
that incentive compensation (including both cash bonuses and equity awards) that is determined to have been earned based upon financial
statements that were subsequently restated may be clawed back, or forfeited if unpaid, to the extent that such compensation would
not have been earned based upon the restated financials. If the restatement is determined to have been due to Mr. O’Donnell’s
misconduct, the clawback would apply to compensation paid within 60 months following our first filing with the SEC containing the
financial statement that was restated. For restatements not determined to have been due to Mr. O’Donnell’s misconduct,
our clawback rights apply only to compensation paid within 24 months following the first SEC filing containing the financial statement
that was restated. In addition, our clawback rights apply to gains realized on sales of our securities in the 12 months following
the first SEC filing containing a financial statement that is ultimately restated due to Mr. O’Donnell’s misconduct.
Compensation and Risk Management
The Compensation and Governance Committee evaluates the relationship
between our executive and firm-wide compensation programs and policies and risk management on an annual basis. As discussed in
this Compensation Discussion and Analysis, we design our compensation programs to incorporate a range of components that we believe
help to mitigate potential risks while rewarding employees for pursuing our strategic and financial objectives through appropriate
risk taking, risk management and prudent tactical and strategic decision making. The Compensation and Governance Committee reviews
the programs and policies on a regular basis in an effort to eliminate or mitigate potential risks arising from such programs and
policies. In light of the market cycles and earnings volatility that characterize our industry, our efforts to align the interests
of our executives and employees with the long-term interests of our shareholders and to ensure that our compensation structure,
elements and incentives are not reasonably likely to have a material adverse effect on the Company are ongoing. Senior executives
representing our risk, legal and compliance, human resources, finance and internal audit functions, as well as the Compensation
and Governance Committee’s independent compensation consultant, are involved in this review process, which is conducted under
the oversight of the Compensation and Governance Committee. Based on this review, we do not believe that there are any risks arising
from our compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on
us.
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For additional information regarding our risk management practices,
see “Corporate Governance—The Board’s Role and Key Responsibilities—Risk Oversight” above.
Equity Ownership Requirements
Our named executive officers are subject to equity ownership guidelines.
In keeping with our overall compensation philosophy, we believe that the equity ownership levels that they are required to maintain
are high enough to assure our shareholders of our executives’ commitment to long-term value creation. Under our guidelines,
our named executive officers are required to maintain ownership of our equity with a value equal to a multiple of salary as follows:
• | 7.5
times actual salary for our Chief Executive Officer; and |
• | 4.5 times target salary for our other named executive
officers. |
Equity ownership value is calculated by adding the value of common
shares owned outright, time-vested restricted shares, performance shares calculated at target achievement, and the spread value
of vested “in-the-money” options. A named executive officer is not required to purchase shares in the open market in
order to satisfy their ownership requirements and is prohibited from selling any of the equity granted to them, other than automatic
dispositions for tax withholding, until ownership requirements are satisfied.
As of December 31, 2020, all of our named executive officers had satisfied
their ownership requirements. The table below shows the equity ownership for our named executive officers as of December 31, 2020,
calculated in accordance with the methodology described above.
| |
Equity
Ownership as of Fiscal Year-End |
Name | |
Required Multiple of Salary | |
Actual Multiple of Salary | |
Dollar
Value(1) ($) |
Kevin
J. O’Donnell | |
7.5 | |
27.2 | |
29,932,168 |
Robert
Qutub | |
4.5 | |
9.4 | |
5,960,400 |
Ross
A. Curtis | |
4.5 | |
25.1 | |
16,955,095 |
Ian
D. Branagan | |
4.5 | |
10.9 | |
6,624,012 |
Stephen
H. Weinstein | |
4.5 | |
26.5 | |
13,917,604 |
(1) |
Based on the closing price of our common shares of $165.82 on December 31, 2020. |
Anti-Hedging, Anti-Pledging and Other Insider
Trading Policies
Our employees, including our named executive officers, are subject
to our insider trading policies and practices, which prohibit:
• | transactions
in our securities outside of Company-designated “window” periods, except pursuant to previously adopted and approved
Rule 10b5-1 plans; |
• | employees and their designees from
hedging the market value of RenaissanceRe securities; and |
• | employees and their designees from
engaging in short sales of, margin loans on, or pledging of RenaissanceRe securities. |
It is the Board’s view that such activities are generally against
the interest of our shareholders and could cause significant repercussions to us and our shareholders if allowed.
We believe that each of our named executive officers is in compliance
with our anti-pledging, anti-hedging and other trading policies.
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Compensation Committee Report
The information contained in this report shall
not be deemed to be “soliciting material” or to be “filed” with the Commission, nor shall such information
or report be incorporated by reference into any future filing by us under the Securities Act, or the Exchange Act, except to the
extent that we specifically incorporate it by reference in such filing.
We have reviewed and discussed with management the disclosure set
forth under the heading “—Compensation Discussion and Analysis” in this proxy statement. Based on these reviews
and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement
and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020. This report is provided by the
following independent directors, who constitute the Compensation and Governance Committee:
Henry Klehm III, Chair
James L. Gibbons
Jean D. Hamilton
Cynthia Trudell
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Executive Compensation Tables
Summary Compensation Table
The following table sets forth compensation for our named executive officers
in fiscal years 2020, 2019 and 2018:
Name
and Principal Position | |
Year | |
Salary
($) | |
Bonus
($) | |
Stock
Awards(1) ($) | |
Non-Equity
Incentive Plan Compensation(2) ($) | |
All
Other Compensation(3) ($) | |
Total
($) |
Kevin J. O’Donnell | |
2020 | |
1,100,000 | |
— | |
4,674,754 | |
2,900,258 | |
881,623 | |
9,556,635 |
President and Chief | |
2019 | |
1,100,000 | |
— | |
4,674,908 | |
4,232,250 | |
761,001 | |
10,768,159 |
Executive Officer | |
2018 | |
1,070,000 | |
— | |
4,643,024 | |
4,331,250 | |
775,089 | |
10,819,363 |
Robert Qutub | |
2020 | |
635,000 | |
— | |
1,678,440 | |
930,134 | |
396,421 | |
3,639,995 |
Executive Vice President | |
2019 | |
635,000 | |
— | |
1,428,566 | |
1,357,313 | |
369,447 | |
3,790,326 |
and Chief Financial Officer | |
2018 | |
610,000 | |
— | |
1,491,254 | |
1,389,063 | |
472,633 | |
3,962,950 |
Ross A.
Curtis | |
2020 | |
675,000 | |
— | |
1,768,412 | |
988,725 | |
189,280 | |
3,621,417 |
Executive Vice President and | |
2019 | |
675,000 | |
— | |
1,518,563 | |
1,442,813 | |
199,059 | |
3,835,435 |
Group Chief Underwriting Officer | |
2018 | |
654,167 | |
— | |
1,599,335 | |
1,476,563 | |
162,728 | |
3,892,793 |
Ian D.
Branagan(4) | |
2020 | |
609,900 | |
— | |
1,666,512 | |
939,677 | |
179,610 | |
3,395,699 |
Executive Vice President and | |
2019 | |
598,500 | |
— | |
1,309,056 | |
1,345,797 | |
190,196 | |
3,443,549 |
Group Chief Risk Officer | |
2018 | |
572,923 | |
— | |
1,417,394 | |
1,256,063 | |
129,693 | |
3,376,073 |
Stephen H.
Weinstein(5) | |
2020 | |
525,000 | |
— | |
1,431,020 | |
79,946 | |
1,026,161 | |
3,062,127 |
Former Executive Vice President, | |
2019 | |
525,000 | |
— | |
1,181,072 | |
1,122,188 | |
420,733 | |
3,248,993 |
Group General Counsel, | |
2018 | |
515,000 | |
— | |
1,331,158 | |
1,148,438 | |
389,813 | |
3,384,409 |
Corporate Secretary and | |
| |
| |
| |
| |
| |
| |
|
Chief Compliance Officer | |
| |
| |
| |
| |
| |
| |
|
(1) |
The amounts shown in this column represent the aggregate grant date fair value of time-vested restricted shares and performance shares granted to our named executive officers in the applicable fiscal year, computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions made in the valuation of stock awards are discussed in Note 17 (Stock Incentive Compensation and Employee Benefit Plans) of our 2020 Form 10-K. These values do not represent the actual value the recipient will or has received from the award. The terms of our time-vested restricted shares and performance shares are discussed above under “—Compensation Discussion and Analysis—Principal Components of Our Executive Compensation Program—Long-Term Incentives.” The maximum value as of the grant date of performance share awards made in 2020 is as follows: Mr. O’Donnell: $4,674,754; Mr. Qutub: $1,678,440; Mr. Curtis: $1,768,412; Mr. Branagan: $1,666,512; and Mr. Weinstein: $1,431,020. |
(2) |
The amounts shown in this column represent the actual amounts of the annual incentive bonuses paid to or deferred for each named executive officer for the applicable fiscal year. They also include the portion of the deferred 2018 annual incentive bonus earned by each named executive officer in excess of the 100% performance level, which were achieved and paid in 2020 as follows: Mr. O’Donnell: $301,508; Mr. Qutub: $96,696; Mr. Curtis: $102,787; Mr. Branagan: $87,438; and Mr. Weinstein: $79,946. |
|
The deferred bonus was subject to successful achievement of certain performance metrics tied to the TMR acquisition, which were met in 2020. These amounts were in addition to the target amounts of the deferred 2018 annual incentive bonus tied to the TMR acquisition included in the Summary Compensation Table in 2018, as follows: Mr. O’Donnell: $618,750; Mr. Qutub: $198,438; Mr. Curtis: $210,938; Mr. Branagan: $179,438; and Mr. Weinstein: $164,063. The details of the payment of the annual incentive bonuses and TMR deferred bonuses are discussed above under “—Compensation Discussion and Analysis—Principal Components of Our Executive Compensation Program—Annual Incentive Bonus.” |
(3) |
See the “All Other Compensation Table” below for information on the amounts included in the “All Other Compensation” column for 2020. |
(4) |
Salary and All Other Compensation payments made to Mr. Branagan in pounds sterling have been converted into U.S. dollars at the average daily exchange rate of 1.28, 1.28 and 1.33 for the years ended December 31, 2020, 2019 and 2018, respectively. Non-Equity Incentive Plan Compensation for Mr. Branagan has been converted into U.S. dollars at the exchange rate of 1.37, 1.33 and 1.28 on December 31, 2020, 2019 and 2018, respectively. |
(5) |
Mr. Weinstein served as our Executive Vice President, Group General Counsel, Corporate Secretary and Chief Compliance Officer until December 31, 2020. |
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All Other Compensation Table
The following table sets forth information regarding the amounts included in
the “All Other Compensation” column of the Summary Compensation Table for 2020:
Name |
|
Company
401(k)/Pension
Matching
Contribution(1)
($) |
|
Value of Life
Insurance
Premiums(2)
($) |
|
Personal
Travel(3)
($) |
|
Pre-Paid
Non-Compete
Consideration(4)
($) |
|
Housing
Benefits(5)
($) |
|
Severance
Payments(6)
($) |
|
Other
Benefits(7)
($) |
|
Total Other
Compensation
($) |
Kevin
J. O’Donnell |
|
17,100 |
|
5,962 |
|
310,696 |
|
— |
|
511,916 |
|
— |
|
35,949 |
|
881,623 |
Robert Qutub |
|
17,100 |
|
2,116 |
|
122,789 |
|
— |
|
235,916 |
|
— |
|
18,500 |
|
396,421 |
Ross A. Curtis |
|
17,100 |
|
5,962 |
|
158,618 |
|
— |
|
— |
|
— |
|
7,600 |
|
189,280 |
Ian D. Branagan |
|
42,875 |
|
8,453 |
|
97,232 |
|
31,050 |
|
— |
|
— |
|
— |
|
179,610 |
Stephen H. Weinstein |
|
17,100 |
|
4,889 |
|
98,506 |
|
— |
|
229,916 |
|
656,250 |
|
19,500 |
|
1,026,161 |
(1) |
This column reports Company matching contributions to our named executive officers under our 401(k) plan for Messrs. O’Donnell, Qutub and Weinstein, the National Pension Scheme and International Savings Plan for Mr. Curtis and the RenaissanceRe Syndicate Management Plan for Mr. Branagan. |
(2) |
This column reports the value of premiums paid on behalf of our named executive officers with respect to life insurance coverage. The death benefit under the life insurance coverage is equal to four times the named executive officer’s annual salary up to a maximum of $2.0 million for Bermuda-based employees and ten times the named executive officer’s annual salary for U.K.-based employees. |
(3) |
Personal travel includes costs for personal commercial travel for Mr. O’Donnell and Mr. Weinstein and their immediate family members during 2020, personal use of the corporate aircraft by the named executive officers and commuting by taxi in Bermuda for Mr. O’Donnell. The named executive officers may also invite family members or other guests from time to time to fly on already scheduled corporate aircraft trips. There is no incremental cost to us and, therefore, there is no value included in this column for such use of the corporate aircraft by family or other guests. For more information on travel benefits provided to our named executive officers, please see “—Compensation Discussion and Analysis—Principal Components of Our Executive Compensation Program—Additional Compensation Practices—Other Benefits and Perquisites” above. |
(4) |
The amounts in this column represent prepayment of the severance benefits to which Mr. Branagan is entitled pursuant to his employment agreements as a result of an amendment made in 2008 to comply with Section 457A of the Internal Revenue Code while preserving the economics agreed to in his original employment agreement. The amount does not represent extra-contractual or additional payments not otherwise due. The amount is equal to a portion of the lump sum salary to which the executive would become entitled upon a future termination of employment and the amount of any future non-compete consideration would be reduced by the prepaid amount. In addition, the amount is subject to clawback in the event of a future termination for cause or a violation of the restrictive covenants contained in the executive’s employment agreement. The amount is converted into U.S. dollars at the exchange rate of 1.24 on March 31, 2020. |
(5) |
This column reports the value of housing benefits for Messrs. O’Donnell, Qutub and Weinstein. |
(6) |
Separation payments made to Mr. Weinstein pursuant to his Separation, Consulting and Release Agreement. Please see “—Narrative Disclosure to Summary Compensation Table and Grants of Plan Based Awards Table—Separation Agreement with Mr. Weinstein” below for a detailed discussion of Mr. Weinstein’s severance payments. |
(7) |
Other benefits include tax planning expenses for Messrs. O’Donnell, Qutub, Curtis, Branagan and Weinstein, club dues for Mr. O’Donnell, and Company matching on charitable donations for Messrs. O’Donnell, Qutub, Curtis and Weinstein. |
66 |
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Table of Contents
Grants of Plan-Based Awards Table
The following table sets forth information concerning grants of plan-based awards
to the named executive officers during the calendar year ended December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Other |
|
Grant |
|
|
|
|
|
|
|
|
Estimated
Possible
Payouts Under
Non-Equity Incentive
Plan Awards(2) |
|
Estimated
Future
Payouts Under
Equity Incentive
Plan Awards(3)(4) |
|
Stock
Awards:
Number of
Shares of
Stock or |
|
Date
Fair
Value of
Stock and
Option |
|
|
Grant |
|
Approval |
|
|
|
Threshold |
|
Target |
|
Maximum |
|
Threshold |
|
Target |
|
Maximum |
|
Units(4)(5) |
|
Awards(6) |
Name |
|
Date(1) |
|
Date(1) |
|
Award
Type |
|
($) |
|
($) |
|
($) |
|
(#) |
|
(#) |
|
(#) |
|
(#) |
|
($) |
Kevin J. O’Donnell |
|
3/1/2020 |
|
2/6/2020 |
|
Performance Shares |
|
|
|
|
|
|
|
4,800 |
|
13,717 |
|
27,434 |
|
|
|
2,337,377 |
|
|
3/1/2020 |
|
2/6/2020 |
|
Time-Vested Restricted Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
13,717 |
|
2,337,377 |
|
|
|
|
|
|
Annual Cash Bonus |
|
969,375 |
|
2,475,000 |
|
4,950,000 |
|
|
|
|
|
|
|
|
|
|
Robert Qutub |
|
3/1/2020 |
|
2/6/2020 |
|
Performance Shares |
|
|
|
|
|
|
|
1,723 |
|
4,925 |
|
9,850 |
|
|
|
839,220 |
|
|
3/1/2020 |
|
2/6/2020 |
|
Time-Vested Restricted Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
4,925 |
|
839,220 |
|
|
3/1/2020 |
|
2/6/2020 |
|
Annual Cash Bonus |
|
310,885 |
|
793,750 |
|
1,587,500 |
|
|
|
|
|
|
|
|
|
|
Ross A. Curtis |
|
3/1/2020 |
|
2/6/2020 |
|
Performance Shares |
|
|
|
|
|
|
|
1,816 |
|
5,189 |
|
10,378 |
|
|
|
884,206 |
|
|
3/1/2020 |
|
2/6/2020 |
|
Time-Vested Restricted Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
5,189 |
|
884,206 |
|
|
3/1/2020 |
|
2/6/2020 |
|
Annual Cash Bonus |
|
330,469 |
|
843,750 |
|
1,687,500 |
|
|
|
|
|
|
|
|
|
|
Ian D. Branagan |
|
3/1/2020 |
|
2/6/2020 |
|
Performance Shares |
|
|
|
|
|
|
|
1,711 |
|
4,890 |
|
9,780 |
|
|
|
833,256 |
|
|
3/1/2020 |
|
2/6/2020 |
|
Time-Vested Restricted Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
4,890 |
|
833,256 |
|
|
3/1/2020 |
|
2/6/2020 |
|
Annual Cash Bonus(7) |
|
317,899 |
|
811,656 |
|
1,623,312 |
|
|
|
|
|
|
|
|
|
|
Stephen H. Weinstein |
|
3/1/2020 |
|
2/6/2020 |
|
Performance Shares |
|
|
|
|
|
|
|
1,469 |
|
4,199 |
|
8,398 |
|
|
|
715,510 |
|
|
3/1/2020 |
|
2/6/2020 |
|
Time-Vested Restricted Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
4,199 |
|
715,510 |
|
|
3/1/2020 |
|
2/6/2020 |
|
Annual Cash Bonus |
|
257,031 |
|
656,250 |
|
1,312,500 |
|
|
|
|
|
|
|
|
|
|
(1) |
On February 6, 2020, the Compensation and Governance Committee
approved annual long-term incentive awards for our named executive officers pursuant to the 2016 LTI Plan. In accordance with
our practice, these equity-based awards were granted on March 1, 2020. On February 6, 2020, the Compensation and Governance
Committee set the terms of the annual incentive bonuses in respect of 2020 for each of our named executive officers. |
(2) |
The amounts reported in these columns represent estimated possible payouts
of annual incentive bonuses in respect of 2020, assuming threshold achievement, target achievement and maximum achievement
of the applicable performance metrics. These annual incentive bonuses were paid in March 2021 and the actual amounts paid
to or deferred for our named executive officers are included in the Summary Compensation Table in the “Non-Equity Incentive
Plan Compensation” column. See “—Compensation Discussion and Analysis—Principal Components of Our Executive
Compensation Program—Annual Incentive Bonus” above for a detailed description of our annual incentive bonus program. |
Table of Contents
(3) |
The amounts reported in these columns represent awards of performance
shares made pursuant to the 2016 LTI Plan that are scheduled to vest following the expiration of the service period on December
31, 2022 and the Compensation and Governance Committee’s determination of growth in book value per common share plus
change in accumulated dividends and underwriting expense ratio rank compared to peers. These columns represent the number
of performance shares that vest at threshold achievement, target achievement and maximum achievement of the performance metrics.
At or below the threshold performance level, no shares will be paid out. See “—Compensation Discussion and Analysis—Principal
Components of Our Executive Compensation Program—Long-Term Incentives” above for a detailed description of the
performance share program. |
(4) |
The number of time-vested restricted shares and target number of performance
shares awarded were computed by dividing the approved grant value by the closing price of our common shares on the date of
grant of $170.40 per common share on March 1, 2020. See “—Compensation Discussion and Analysis—Principal
Components of Our Executive Compensation Program—Long-Term Incentives” above for a detailed description of our
equity grant practices. |
(5) |
The amounts reported in this column represent awards of time-vested restricted
shares made pursuant to the 2016 LTI Plan that are scheduled to vest in four substantially equal annual installments beginning
on March 1, 2021. Dividends are paid currently on time-vested restricted shares. |
(6) |
The amounts shown in this column represent the grant date fair value of time-vested
restricted shares and performance shares granted to our named executive officers in the applicable fiscal year, computed in
accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. The assumptions made in the valuation of
stock awards are discussed in Note 17 (Stock Incentive Compensation and Employee Benefit Plans) of our 2020 Form 10-K. These
values do not represent the actual value the recipient will or has received from the award. The terms of our time-vested restricted
shares and performance shares are discussed above under “—Compensation Discussion and Analysis—Principal
Components of Our Executive Compensation Program—Long-Term Incentives” and the maximum value as of the grant date
of performance share awards made in 2020 is included in the Narrative Disclosure to Summary Compensation Table and Grants
of Plan-Based Awards Table below. |
(7) |
Based on Mr. Branagan’s salary of £475,000, converted into U.S.
dollars at the exchange rate of 1.37 as of December 31, 2020. |
68 |
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Table of Contents
Narrative Disclosure to Summary Compensation Table
and Grants of Plan-Based Awards Table
Restricted Shares and Performance Shares
The awards and other compensation included in the Summary Compensation
Table and Grants of Plan-Based Awards Table are discussed in “—Compensation Discussion and Analysis—Principal
Components of Our Executive Compensation Program” above. Details of severance arrangements are described below under “—Potential
Payments Upon Termination or Change in Control.”
Employment Agreements
We have entered into employment agreements with each of our named
executive officers that entitle the officers to salary, annual bonus opportunity, participation in our perquisites and benefits
programs, and severance payments and benefits upon certain qualifying terminations of employment (as discussed in further detail
under “—Potential Payments Upon Termination or Change in Control” below). Each executive’s employment agreement,
other than our Chief Executive Officer’s, runs for a one-year term that extends automatically absent 30 days’ notice
by either party of such party’s intent not to renew the term. Our Chief Executive Officer’s employment agreement provides
that his term of employment currently runs for a one-year term from July 1 each year and extends automatically for an additional
year on an annual basis absent 180 days’ notice by either party of such party’s intent not to renew the term.
Separation Agreement with Mr. Weinstein
In connection with the termination of his employment on December 31,
2020, we entered into a Separation, Consulting, and Release Agreement with Mr. Weinstein. Pursuant to the terms of the agreement,
and in consideration for Mr. Weinstein’s agreement to, among other things, release us from claims arising in connection with
his employment or the termination thereof and comply with the restrictive covenants set forth in his employment agreement, Mr.
Weinstein became entitled to the separation payments and benefits provided under his employment agreement. In addition, in consideration
for assisting us as a consultant through December 31, 2021 during our transition to a new Group General Counsel, Mr. Weinstein
will receive aggregate consulting fees equal to $262,500. Please see “—Potential Payments Upon Termination or Change
in Control—Components of Severance Benefits” below for a detailed discussion of Mr. Weinstein’s severance payments
and “—Potential Payments Upon Termination or Change in Control—Restrictive Covenants” below for a detailed
discussion of the restrictive covenants applicable to Mr. Weinstein.
Option Exercises and Stock Vested Table
The following table sets forth information concerning the vesting
of restricted shares and performance shares held by our named executive officers during 2020. There were no options outstanding
or exercised by any named executive officers during the 2020 fiscal year.
|
Number of Shares |
Value Realized |
|
Acquired on Vesting |
on Vesting(1) |
Name |
(#) |
($) |
Kevin J. O’Donnell |
41,055 |
7,130,923 |
Robert Qutub |
10,587 |
1,834,210 |
Ross A. Curtis |
13,999 |
2,428,050 |
Ian D. Branagan |
11,969 |
2,073,777 |
Stephen H. Weinstein(2) |
24,873 |
4,214,195 |
(1) |
The value realized on vesting is calculated by multiplying the number of common shares acquired on vesting by the closing price of our common shares on the vesting date. |
(2) |
Certain of Mr. Weinstein’s equity awards vested pursuant to his Separation, Consulting and Release Agreement. Please see “—Separation Agreement with Mr. Weinstein” above for a detailed discussion of Mr. Weinstein’s severance benefits. |
Table of Contents
Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth the outstanding equity awards held
by our named executive officers as of December 31, 2020.
| |
| |
Stock
Awards |
| |
| |
Number | |
Market Value | |
Equity Incentive | |
Equity Incentive |
| |
| |
of Shares or | |
of Shares or | |
Plan Awards: | |
Plan Awards: Market |
| |
| |
Units of Stock | |
Units of Stock | |
Number of Unearned | |
Value of Unearned |
| |
| |
That Have | |
That Have | |
Shares That Have | |
Shares That Have |
| |
Grant | |
Not Vested | |
Not Vested(1) | |
Not Vested | |
Not Vested(1) |
Name | |
Date | |
(#) | |
($) | |
(#) | |
($) |
Kevin J. O’Donnell | |
3/1/2017(2) | |
3,268 | |
541,900 | |
| |
|
| |
3/1/2018(3) | |
6,246 | |
1,035,712 | |
| |
|
| |
5/14/2018(3) | |
2,945 | |
488,340 | |
| |
|
| |
3/1/2019(4) | |
12,000 | |
1,989,840 | |
| |
|
| |
3/1/2020(5) | |
13,717 | |
2,274,553 | |
| |
|
| |
3/1/2018(6) | |
3,122 | |
517,690 | |
| |
|
| |
5/14/2018(7) | |
3,927 | |
651,175 | |
| |
|
| |
3/1/2019(8) | |
21,332 | |
3,537,272 | |
10,666 | |
1,768,636 |
| |
3/1/2020(9) | |
— | |
— | |
27,434 | |
4,549,106 |
Robert Qutub | |
3/1/2017(2) | |
1,355 | |
224,686 | |
| |
|
| |
3/1/2018(3) | |
3,839 | |
636,583 | |
| |
|
| |
3/1/2019(4) | |
4,767 | |
790,464 | |
| |
|
| |
3/1/2020(5) | |
4,925 | |
816,664 | |
| |
|
| |
3/1/2018(6) | |
1,033 | |
171,292 | |
| |
|
| |
3/1/2019(8) | |
4,563 | |
756,637 | |
2,282 | |
378,401 |
| |
3/1/2020(9) | |
— | |
— | |
9,850 | |
1,633,327 |
Ross A. Curtis | |
3/1/2017(2) | |
1,743 | |
289,024 | |
| |
|
| |
3/1/2018(3) | |
4,117 | |
682,681 | |
| |
|
| |
3/1/2019(4) | |
5,067 | |
840,210 | |
| |
|
| |
3/1/2020(5) | |
5,189 | |
860,440 | |
| |
|
| |
3/1/2018(6) | |
1,108 | |
183,729 | |
| |
|
| |
3/1/2019(8) | |
4,850 | |
804,227 | |
2,426 | |
402,279 |
| |
3/1/2020(9) | |
— | |
— | |
10,378 | |
1,720,880 |
Ian D. Branagan | |
3/1/2017(2) | |
1,446 | |
239,776 | |
| |
|
| |
3/1/2018(3) | |
3,649 | |
605,077 | |
| |
|
| |
3/1/2019(4) | |
4,368 | |
724,302 | |
| |
|
| |
3/1/2020(5) | |
4,890 | |
810,860 | |
| |
|
| |
3/1/2018(6) | |
982 | |
162,835 | |
| |
|
| |
3/1/2019(8) | |
4,181 | |
693,293 | |
2,091 | |
346,730 |
| |
3/1/2020(9) | |
— | |
— | |
9,780 | |
1,621,720 |
Stephen H. Weinstein | |
3/1/2018(6) | |
922 | |
152,886 | |
| |
|
| |
3/1/2019(8) | |
3,772 | |
625,473 | |
1,887 | |
312,902 |
| |
3/1/2020(9) | |
— | |
— | |
8,398 | |
1,392,556 |
(1) |
These amounts were determined based on the closing price of our common shares of $165.82 on December 31, 2020. |
(2) |
Unvested portion remaining from an award of time-vested restricted shares granted under the 2016 LTI Plan that vests in four substantially equal installments on March 1, 2018, 2019, 2020 and 2021. |
(3) |
Unvested portion remaining from an award of time-vested restricted shares granted under the 2016 LTI Plan that vests in four substantially equal installments on March 1, 2019, 2020, 2021 and 2022. |
70 |
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Table of Contents
(4) |
Unvested portion remaining from an award of time-vested restricted shares granted under the 2016 LTI Plan that vests in four substantially equal installments on March 1, 2020, 2021, 2022 and 2023. |
(5) |
Unvested portion remaining from an award of time-vested restricted shares granted under the 2016 LTI Plan that vests in four substantially equal installments on March 1, 2021, 2022, 2023 and 2024. |
(6) |
Performance shares granted under the 2016 LTI Plan which vested at the end of the service period on December 31, 2020 and following the Compensation and Governance Committee’s determination of total shareholder return for each calendar year performance period. Performance shares were earned in three substantially equal annual installments based upon total shareholder return relative to our performance share peer group during each calendar year performance period (2018, 2019 and 2020). Because all performance periods are complete, the number of shares earned are reported in the “Number of Shares or Units of Stock That Have Not Vested” column based on the actual total shareholder return for purposes of performance share awards during the performance period as follows: for 2018, total shareholder return of 5.9% resulted in the executive earning 81.3% of the target performance shares for 2018; for 2019, total shareholder return of 46.7% resulted in the executive earning 200% of the target performance shares for 2019; and for 2020, total shareholder return of negative 14.7% resulted in the executive earning 75% of the target performance shares for 2020. |
(7) |
Performance shares granted under the 2016 LTI Plan which vested at the end of the service period on December 31, 2020 and following the Compensation and Governance Committee’s determination of growth in tangible book value per common share plus change in accumulated dividends for each calendar year performance period. Performance shares were earned in three substantially equal annual installments based upon growth in tangible book value per common share plus change in accumulated dividends during each calendar year performance period (2018, 2019 and 2020). Because all performance periods are complete, the number of shares earned are reported in the “Number of Shares or Units of Stock That Have Not Vested” column based on the actual growth in tangible book value per common share plus change in accumulated dividends for purposes of performance share awards during performance period as follows: for 2018, growth in tangible book value per common share plus change in accumulated dividends of 6.4% resulted in the executive earning 88.3% of the target performance shares with respect to 2018; for 2019, growth in tangible book value per common share plus change in accumulated dividends of 17.9% resulted in the executive earning 200% of the target performance shares with respect to 2019; and for 2020, growth in tangible book value per common share plus change in accumulated dividends of 17.9% resulted in the executive earning 200% of the target performance shares with respect to 2020. |
(8) |
Performance shares granted under the 2016 LTI
Plan which vest at the end of the service period on December 31, 2021 and following the Compensation and Governance
Committee’s determination of growth in tangible book value per common share plus change in accumulated dividends for
each calendar year performance period. Performance shares are earned in three substantially equal annual installments based
upon growth in tangible book value per common share plus change in accumulated dividends during each calendar year
performance period (2019, 2020 and 2021). Because the 2019 and 2020 performance periods are complete, the number of shares
earned is reported in the “Number of Shares or Units of Stock That Have Not Vested” column based on the actual
growth in tangible book value per common share plus change in accumulated dividends for purposes of performance share awards
during the performance period as follows: for 2019, growth in tangible book value per common share plus change in accumulated
dividends of 17.9% resulted in the executive earning 200% of the target performance shares with respect to 2019; and for
2020, growth in tangible book value per common share plus change in accumulated dividends of 17.9% resulted in the executive
earning 200% of the target performance shares with respect to 2020. As a result of our above-target performance for the 2020 performance
period, in accordance with SEC rules, the number of unearned performance shares related to the 2021 performance period is reported
in the “Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested” column based on achieving the
maximum number of performance shares (200% of target) that may be earned for the performance period. |
|
|
(9) |
Performance shares granted under the 2016 LTI Plan
which vest at the end of the service period on December 31, 2022 and following the Compensation and Governance Committee’s
determination of average growth in book value per common share plus change in accumulated dividends over the three-year performance
period and three-year average underwriting expense ratio rank versus peers. As a result of our above-target performance for 2020,
in accordance with SEC rules, the number of unearned performance shares is reported in the “Equity Incentive Plan Awards:
Number of Unearned Shares That Have Not Vested” column based on achieving the maximum number of performance shares (200%
of target) that may be earned for the three-year performance period. |
Table of Contents
Equity Compensation Plan Information
The information set forth in the table below is as of December 31,
2020:
| |
| |
| |
Number of securities |
| |
| |
| |
remaining available for |
| |
| |
| |
future issuance under |
| |
Number of securities to | |
Weighted-average | |
equity compensation |
| |
be issued upon exercise | |
exercise price of | |
plans (excluding |
| |
of outstanding options, | |
outstanding options, | |
securities reflected in |
| |
warrants, and rights(1) | |
warrants, and rights | |
column (a)) |
Plan Category | |
(a) | |
(b) | |
(c) |
Equity
compensation plans approved by shareholders(2) | |
— | |
— | |
1,047,701 |
Equity compensation plans not approved by shareholders | |
— | |
— | |
— |
Total | |
— | |
— | |
1,047,701 |
(1) |
As of December 31, 2020, there were no outstanding options to purchase common shares. A total of 748,391 unvested restricted shares (including both time-vested restricted shares and performance shares) were excluded from column (a) as those shares are considered issued at the time of grant. Unvested restricted shares were also excluded from column (c) as they are no longer available for future issuance. |
(2) |
Plans previously approved by the shareholders include the 2016 LTI Plan. |
Potential Payments Upon Termination or Change
in Control
Severance Payments and Benefits
Pursuant to their employment agreements in effect on December 31,
2020, our named executive officers would have been entitled to certain payments and benefits upon certain qualifying terminations
of their employment relationships with us occurring on December 31, 2020. A named executive officer’s employment relationship
may be terminated for any of the following reasons: (i) the executive’s death or disability, (ii) by us with or without cause
(as defined in the applicable executive’s agreement), (iii) by the executive with or without good reason (as defined
in the applicable executive’s agreement), and (iv) after expiration of the term of employment following notice of non-extension
by us or by the executive. No benefits are payable upon a termination by us for cause.
Upon the termination of a named executive officer’s employment
by the Company occurring on December 31, 2020 (other than a termination by us for cause), and subject to the execution of
a mutual general release of claims (if requested by us), the executive would have become entitled to a combination of the
following benefits, as illustrated in the Components of Severance Benefits Table below:
1. |
an amount equal to a percent (the “Installment Percent”) of the executive’s annual salary and the greater of (x) their target bonus and (y) their actual bonus for the year of termination (the “Bonus Amount”), to be paid in installments over the 12-month period following the termination of employment; |
2. |
subject to the executive’s compliance with non-competition and other post-termination obligations, a lump-sum payment equal to a percent (the “Lump Sum Percent”) of their annual salary and the Bonus Amount to be paid at the end of the 12-month period following the termination of employment; |
3. |
a pro rata annual bonus (at target) based on the number of days elapsed in the year of termination through the date of termination; |
4. |
continuation of health benefits for the executive and their covered dependents for up to 12 months following termination of employment; and |
5. |
vesting of certain equity awards granted under our stock incentive plans. |
72 |
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The Installment Percent and Lump Sum Percent for Mr. O’Donnell
are 150% and 50%, respectively, while the Installment Percent and Lump Sum Percent for Messrs. Qutub, Curtis, Branagan and Weinstein
are 75% and 25%, respectively. In the event that a qualifying termination (e.g., a termination by us without cause or a termination
by the executive for good reason) occurs within 12 months following a change in control, the Installment Percent and Lump Sum Percent
are 150% and 50%, respectively, for each of the named executive officers.
For Messrs. O’Donnell, Branagan and Weinstein, a portion of
the contractually provided severance benefits described above in clauses (1) (Installment Percent of salary) and (2) (Lump Sum
Percent of salary), which we view as consideration for the restrictive covenants contained in the employment agreements (referred
to as “non-compete consideration”), was paid to each executive in the form of yearly pre-payments and a lump sum payment
made on December 31, 2017, pursuant to the terms of their employment agreements.
Messrs. O’Donnell’s, Branagan’s and Weinstein’s
employment agreements provide that all pre-payments received and the lump sum payment made on December 31, 2017 are subject to
clawback and forfeiture in the event the executive ceases to comply with the terms and conditions of his employment agreement,
including the non-competition and non-interference covenants described below, and also provide us with a right to set off against
other amounts owing to them should they engage in certain activities that are detrimental to us after the payment of any pre-payments
or the lump sum payment made on December 31, 2017.
Components of Severance Benefits
|
|
By
Us |
|
By
Executive |
|
|
|
|
|
By
Executive |
|
Our
Non- |
|
Executive’s |
|
|
Without |
|
for Good |
|
|
|
|
|
Without
Good |
|
Extension of |
|
Non-Extension |
|
|
Cause |
|
Reason |
|
Death(1) |
|
Disability |
|
Reason(2) |
|
Agreement |
|
of Agreement(2) |
Installment Percent of Salary |
|
x |
|
x |
|
|
|
x |
|
x |
|
x |
|
x |
Installment Percent of Bonus |
|
x |
|
x |
|
|
|
|
|
|
|
x |
|
|
Lump Sum Percent of Salary |
|
x |
|
x |
|
|
|
x |
|
x |
|
x |
|
x |
Lump Sum Percent of Bonus |
|
x |
|
x |
|
|
|
|
|
|
|
x |
|
|
Pro rata Bonus |
|
x |
|
x |
|
x |
|
x |
|
|
|
x |
|
|
Continuation of Benefits |
|
x |
|
x |
|
|
|
x |
|
x |
|
x |
|
x |
Vesting of Awards |
|
x |
(3) |
x |
(3) |
x |
|
x |
|
|
|
x |
(3) |
|
(1) |
In addition to the benefits above and as noted in the Summary Compensation Table above, we pay premiums on behalf of our named executive officers with respect to life insurance coverage under our health and benefits plans. The death benefit equals four times the named executive officer’s annual salary up to a maximum of $2.0 million for Bermuda-based employees and ten times the named executive officer’s annual salary for U.K.-based employees. |
(2) |
With respect to Messrs. Qutub and Curtis, these benefits will be provided only to the extent we elect to extend the non-competition covenant for up to 12 months beyond the termination date. |
(3) |
Accelerated vesting applies to all time-vested awards. See “—Treatment of Equity Awards Upon a Termination of Employment or Change in Control” below for a discussion relating to the accelerated vesting of performance-based awards. |
The estimated payments and benefits provided to each of our named
executive officers upon each type of termination or upon a change in control are summarized in the Estimated Payments and Benefits
Upon Termination or Change in Control Table below as if the termination or change in control, as applicable, had occurred on December
31, 2020 using the closing price of our common shares of $165.82 on December 31, 2020. In addition, because the estimated payments
are calculated by assuming a termination on December 31, 2020, the pro rata bonus amounts in the table reflect an accrual for a
full calendar year. Actual amounts payable following a termination or change in control could differ significantly from the amounts
shown and depending on the particular facts and circumstances.
Table of Contents
Upon the termination of his employment on December 31, 2020, Mr. Weinstein
became entitled to the separation payments and benefits provided pursuant to his employment agreement with the Company dated July
22, 2016 in connection with a termination for “good reason,” including a pro rata bonus for 2020 in the amount of $656,250,
non-compete payments payable over his 12-month non-compete period totaling $1,122,188, the value attributable to accelerated vesting
of restricted shares equal to $2,158,811 (valued at the closing price of $165.82 per common share on December 31, 2020), the
value attributable to continued vesting of performance shares equal to $2,099,447 (estimated using the target number of performance
shares granted and valued at the closing price of $165.82 per common share on December 31, 2020), and continued health benefits
at an estimated cost of $30,000. These payments did not exceed what we were contractually obligation to provide. He also agreed
to provide services to the Company through December 31, 2021, as a consultant to assist in his successor’s transition, for
which he will receive consulting fees of $262,500.
Treatment of Equity Awards Upon a Termination
of Employment or Change in Control
Pursuant to the named executive officers’ employment agreements,
all time-vested equity awards would vest in full upon the executive’s death, a termination due to the executive’s disability,
a voluntary termination by the executive for good reason, an involuntary termination of the executive without cause or a non-renewal
of the agreement by us. As a result of the Company’s move from “single-trigger” to “double-trigger”
vesting in our 2016 LTI Plan, awards granted under the 2016 LTI Plan that are assumed or substituted in connection with a change
in control will only accelerate if a participant experiences a qualifying termination within two years following the change in
control. In addition, performance shares granted under the 2016 LTI Plan on or after May 14, 2018 that are not assumed or substituted
in connection with a change in control will accelerate as set forth in the table below.
The following table sets forth the treatment of our outstanding performance
shares upon certain termination events and a change in control. Other than as set forth in the table, performance shares that remain
unvested as of any termination of employment will be forfeited.
|
|
Death; Disability; By Us Without
Cause; By Executive for Good
Reason; Retirement(1) |
|
Change in Control |
Shares
as to which the Performance Period Has Ended |
Performance Shares under 2016 LTI Plan |
|
Full vesting and waiver of remaining service condition. |
|
Remain outstanding until the completion of the remaining service period, subject to acceleration upon a qualifying termination within two years following a change in control. |
Shares Remaining Subject to Performance
Vesting |
Performance Shares under 2016 LTI Plan granted on March 1, 2018 |
|
Remain outstanding until the completion of the performance period, and vest based on the actual level of attainment of
the applicable performance goals. |
|
Remain outstanding until the completion of the performance and service periods, subject to acceleration upon a qualifying
termination within two years following a change in control, and vest based on the actual level of attainment of the applicable
performance goals. |
74 |
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|
|
Death; Disability; By Us Without
Cause; By Executive for Good
Reason; Retirement(1) |
|
Change in Control |
Performance Shares under 2016 LTI Plan granted on May 14, 2018 and March 1, 2019 |
|
Remain outstanding until the completion of the performance period, and vest based on the actual level of attainment of the applicable performance goals. |
|
Performance shares
that are assumed or substituted in connection with a change
in control remain outstanding until the completion of
the performance and service periods, subject to acceleration upon
a qualifying termination within two years following a change in
control, and vest based on the actual level of attainment of
the applicable performance goals. For performance shares that are
not assumed or substituted in connection with a change in control:
(i) shares for which the performance period has not yet commenced
are subject to acceleration assuming achievement of the target
level of the applicable performance goals and (ii) shares with a
performance period that includes the date of the change in
control are subject to acceleration based on the total shareholder
return achieved as of the date of the change in
control. |
Performance
Shares under 2016 LTI Plan granted on March
1, 2020 |
|
Remain outstanding until the completion of the performance period, and vest based on the actual level of attainment of the applicable performance goals. |
|
Performance shares that are assumed or substituted in connection with a change in control remain outstanding until the completion of the performance and service periods, subject to acceleration upon a qualifying termination within two years following a change in control, and vest based on the actual level of attainment of the applicable performance goals. Performance shares that are not assumed or substituted in connection with a change in control are subject to acceleration based on the total shareholder return achieved as of the date of a change in control. |
(1) |
A termination by the executive without “good reason” will qualify as a “retirement” if the executive’s employment is terminated by the executive following the later of the date on which (i) the sum of the executive’s age and years of service with the Company equals 65 and (ii) the executive has first completed five years of service with the Company. |
Restrictive Covenants
Under the named executive officers’ employment agreements, during
the term of employment and for 12 months following any termination of employment, each executive is subject to non-competition
and non-interference covenants; provided that, for Messrs. Qutub and Curtis only, the non-competition covenant will extend beyond
a termination without good reason or due to an employee non-renewal only to the extent that we elect to pay Messrs. Qutub and Curtis
the Installment Percent and Lump Sum Percent of salary (or prorated portion thereof for an extension for a period of less than
12 months). Generally, the non-competition covenant prevents the executive from engaging in activities competitive with our business
or the business of our affiliates, and the non-interference covenant prevents the executive from soliciting or hiring our employees
or those of our affiliates or service providers and from inducing any of our customers, suppliers, licensees or other business
relations or those of our affiliates, to cease doing business with, or reduce the amount of business conducted with, us or our
affiliates, or in any other manner interfering with our relationship with such parties. The named executive officers’ employment
agreements also contain standard confidentiality and invention assignment provisions as well as indemnification protection generally
to the fullest extent permitted by Bermuda law, except in certain limited circumstances.
Table of Contents
Estimated Payments and Benefits Upon Termination
or Change in Control
The estimated payments and benefits that would be provided to our
named executive officers in the circumstances described above in the event that such circumstances occurred on December 31, 2020
are set forth in the table below. Because the information in the table is as of December 31, 2020, it includes the accelerated
vesting of certain awards that vested following year-end and prior to the date of this proxy statement.
Name | |
Benefit | |
Before Change in Control Termination without Cause or for Good Reason or Non- Extension by the Company ($) | |
After Change in Control Termination without Cause or for Good Reason
or Non- Extension by the Company ($) | |
Non-
Extension by Executive ($) | |
Executive Resignation
without Good Reason ($) | |
Death ($) | |
Disability ($) |
Kevin J. O’Donnell | |
Salary(1) | |
1,200,000 | |
1,200,000 | |
— | |
— | |
— | |
1,200,000 |
| |
Bonus | |
7,672,500 | |
7,672,500 | |
2,475,000 | |
— | |
2,475,000 | |
2,475,000 |
| |
Accelerated Vesting of Awards(2) | |
14,195,353 | |
14,195,353 | |
— | |
— | |
14,195,353 | |
14,195,353 |
| |
Life Insurance | |
— | |
— | |
— | |
— | |
2,000,000 | |
— |
| |
Continuation of Health Benefits | |
44,220 | |
44,220 | |
29,480 | |
29,480 | |
— | |
29,480 |
| |
Total: | |
23,112,073 | |
23,112,073 | |
2,504,480 | |
29,480 | |
18,670,353 | |
17,899,833 |
Robert Qutub | |
Salary(1) | |
635,000 | |
1,270,000 | |
635,000 | |
635,000 | |
— | |
635,000 |
| |
Bonus | |
1,627,188 | |
2,460,625 | |
793,750 | |
— | |
793,750 | |
793,750 |
| |
Accelerated Vesting of Awards(2) | |
4,402,189 | |
4,402,189 | |
— | |
— | |
4,402,189 | |
4,402,189 |
| |
Life Insurance | |
— | |
— | |
— | |
— | |
710,000 | |
— |
| |
Continuation of Health Benefits | |
29,480 | |
29,480 | |
29,480 | |
29,480 | |
— | |
29,480 |
| |
Total: | |
6,693,857 | |
8,162,295 | |
1,458,230 | |
664,480 | |
5,905,939 | |
5,860,420 |
Ross A. Curtis | |
Salary(1) | |
675,000 | |
1,350,000 | |
675,000 | |
675,000 | |
— | |
675,000 |
| |
Bonus | |
1,729,688 | |
2,615,625 | |
843,750 | |
— | |
843,750 | |
843,750 |
| |
Accelerated Vesting of Awards(2) | |
4,721,890 | |
4,721,890 | |
— | |
— | |
4,721,890 | |
4,721,890 |
| |
Life Insurance | |
— | |
— | |
— | |
— | |
2,000,000 | |
— |
| |
Continuation of Health Benefits | |
29,480 | |
29,480 | |
29,480 | |
29,480 | |
— | |
29,480 |
| |
Total: | |
7,156,058 | |
8,716,995 | |
1,548,230 | |
704,480 | |
7,565,640 | |
6,270,120 |
Ian D. Branagan | |
Salary(1) | |
— | |
649,325 | |
— | |
— | |
— | |
— |
| |
Bonus | |
1,663,895 | |
2,516,134 | |
811,656 | |
— | |
811,656 | |
811,656 |
| |
Accelerated Vesting of Awards(2) | |
4,220,451 | |
4,220,451 | |
— | |
— | |
4,220,451 | |
4,220,451 |
| |
Life Insurance | |
— | |
— | |
— | |
— | |
6,493,250 | |
— |
| |
Continuation of Health Benefits | |
8,461 | |
8,461 | |
8,461 | |
8,461 | |
— | |
8,461 |
| |
Total: | |
5,892,807 | |
7,394,371 | |
820,117 | |
8,461 | |
11,525,357 | |
5,040,568 |
(1) |
Consistent with the termination provisions of the named executive officers’ employment agreements, amounts shown under “Salary” are based on multiples (as set forth in each of the named executive officers’ respective employment agreement) of the salaries in effect as of December 31, 2020, less the value of the non-compete consideration that was paid to Messrs. O’Donnell and Branagan on December 31, 2017 and certain yearly pre-payments that were paid to Messrs. O’Donnell, Branagan and |
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|
Weinstein previously. Please see the narrative discussion above for details on the payments and benefits to which the named executive officer would be entitled upon a termination of employment. In addition, Mr. Branagan’s December 31, 2020 salary has been converted from pounds sterling into U.S. dollars at the prevalent exchange rate of 1.37 on that date. |
(2) |
Please see the narrative discussion above
under “—Treatment of Equity Awards Upon a Termination of Employment or Change in Control” for more detail. The
amount shown for Accelerated Vesting of Awards represents the sum of: |
|
• |
the value of restricted share awards that had not yet vested as of December 31, 2020, based on the closing price of $165.82 per
common share value on December 31, 2020; and |
|
• |
the value of performance shares that had not yet vested as of December 31, 2020, based on the target number of performance shares
for performance periods beginning on or after January 1, 2021 and on the actual number of performance shares earned for performance
periods ending on or before December 31, 2020 and the closing price of $165.82 per common share on December 31, 2020. |
|
|
Pay Ratio Disclosure
To identify our median employee, we determined the sum of 2019 base
salary, target annual incentive bonus or spot bonus and target long-term cash or equity-based incentive award value for each individual,
excluding Mr. O’Donnell, who was employed by us on December 31, 2019. We are using the same median employee for our 2020
pay ratio calculation as we used in 2019, as we believe that there have been no changes to our employee population or employee
compensation arrangements that we reasonably believe would result in a significant change to our pay ratio disclosure. As of December
31, 2019, we employed 554 people worldwide. For our employees who were paid in currency other than U.S. dollars, these amounts
were converted into U.S. dollars at the applicable exchange rate on December 31, 2019. We included all employees, whether full-time
or part-time. We annualized the compensation for full-time and part-time employees that were not employed by us for all of 2019.
We did not make cost-of-living adjustments or any other assumptions, adjustments or estimates. We believe we are using a consistently
applied compensation measure that reasonably reflects the annual compensation of our employees as base salary, annual incentive
bonus or spot bonus and long-term cash or equity-based incentive awards generally comprise nearly all of the annual compensation
of our employees.
Furthermore, a majority of our employees receive annual long-term
cash or equity-based incentive awards and participate in our bonus program, and the actual amount of the bonus paid is generally
determined using a formula applied consistently to each employee’s target bonus amount.
The following table sets forth the ratio of Mr. O’Donnell’s
annual total compensation as reported in the Summary Compensation Table to the annual total compensation of our median employee,
calculated in accordance with the Summary Compensation Table rules, for the 2020 fiscal year:
| Annual Total Compensation | |
Kevin J. O’Donnell | |
$ | 9,556,635 | |
President and Chief Executive Officer | |
| | |
Median Employee | |
$ | 186,148 | |
Ratio | |
| 51.3:1 | |
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Audit Matters
|
PROPOSAL
3 |
|
|
|
|
|
|
|
Approval
of the Appointment of Independent Registered Public Accounting Firm and Referral of the Determination of the
Auditor’s Remuneration to the Board of Directors
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The Board of Directors unanimously recommends that shareholders
vote FOR the approval of the appointment
of Ernst & Young Ltd. as our independent registered public accounting firm for the 2021 fiscal year and the referral
of the determination of the auditor’s remuneration to the board of directors.
|
|
The Audit Committee evaluates the performance of our independent registered public accounting
firm each year and determines whether to reengage them or consider other firms. In doing so, the Audit Committee considers
the auditor’s service quality and efficiency, capability, technical expertise and knowledge of our operations and
industry. In addition, the Audit Committee is involved in the selection of our independent registered public accounting
firm’s lead engagement partner and ensures that the mandated rotation of the lead partner occurs routinely. Upon
recommendation of the Audit Committee, the Board has appointed Ernst & Young Ltd. to serve as our independent registered
public accounting firm for the 2021 fiscal year. We have engaged Ernst & Young Ltd. in this capacity continuously
since 1993.
A representative of Ernst & Young Ltd. is expected to attend the Annual Meeting. The representative
will have an opportunity to make a statement if the representative so desires and will be available to respond to appropriate
questions from shareholders.
Recommendation
and Vote
In accordance with Bermuda law, our shareholders have the authority to approve the appointment
of our independent registered public accounting firm and a proposal will be submitted to the shareholders at the Annual
Meeting for approval of the nomination of Ernst & Young Ltd. Shareholders at the Annual Meeting will also be asked
to vote to refer the determination of the auditor’s remuneration to the Board. Ernst & Young Ltd. served as
our independent auditor for the 2020 fiscal year. Approval of this proposal requires the affirmative vote of a majority
of the votes cast at the Annual Meeting and entitled to vote thereon.
|
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Table of Contents
Independent Registered Public Accounting Firm Fees
The following table summarizes the aggregate fees billed by Ernst & Young Ltd. during our 2020 and 2019 fiscal years.
Type of Fees | |
Fiscal 2020 ($) | | |
Fiscal 2019 ($) | |
Audit Fees | |
| 5,761,117 | | |
| 5,704,450 | |
Audit-Related Fees | |
| 99,030 | | |
| 97,100 | |
Tax Fees | |
| — | | |
| — | |
All Other Fees | |
| — | | |
| — | |
Total | |
| 5,860,147 | | |
| 5,801,550 | |
Audit Fees. Audit fees for 2020 and 2019 consist of
fees for (a) the audit of our annual financial statements, (b) review of our quarterly financial statements, (c) statutory audits,
and (d) assistance with and review of documents filed with the SEC (including comfort letters and consents).
Audit-Related Fees. Audit-related fees for both 2020
and 2019 principally related to audits of our employee benefits plans.
Tax Fees. Ernst & Young Ltd. did not perform any
tax-related services for us during our 2020 and 2019 fiscal years.
All Other Fees. Ernst & Young Ltd. did not perform
any other services for us during our 2020 and 2019 fiscal years.
Pre-Approval Policies and Procedures
The Audit Committee is responsible for managing our relationship with
our independent auditor. The Audit Committee has the sole authority to appoint and engage our auditor, subject to approval and
ratification by the shareholders. The Audit Committee regularly reviews the auditor’s work plan, bills, and work product.
The Audit Committee must pre-approve all audit services and permitted
non-audit services performed for us by our auditor, subject to the de minimis exceptions for non-audit services described in Section
10A(i)(1)(B) of the Exchange Act that are approved by the Audit Committee prior to the completion of the audit. The Audit Committee
may delegate the authority to grant pre-approvals of audit and permitted non-audit services to a subcommittee of its members, provided
that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled
meeting. All engagements of Ernst & Young Ltd. to provide audit and audit-related services to us during 2019 and 2020 were
pre-approved by the Audit Committee.
Table of Contents
Audit Committee Report
The information contained in this report shall not be deemed to
be “soliciting material” or to be “filed” with the Commission, nor shall such information or report be
incorporated by reference into any future filing by us under the Securities Act, or the Exchange Act, except to the extent that
we specifically incorporate it by reference in such filing.
The Audit Committee oversees our financial reporting process on behalf
of the Board. Management has the primary responsibility for establishing and maintaining adequate internal financial controls,
for preparing our financial statements, and for the public reporting process. Ernst & Young Ltd., our independent auditor for
2020, is responsible for expressing opinions on the conformity of our audited financial statements with generally accepted accounting
principles in the United States and on the effectiveness of our internal control over financial reporting.
The Audit Committee is responsible for the appointment, compensation,
retention and oversight of the work of Ernst & Young Ltd., our independent auditor, for the purpose of preparing or issuing
an audit report. In fulfilling its oversight responsibilities, the Audit Committee reviewed (i) management’s assessment of
the effectiveness of our internal control over financial reporting and Ernst & Young Ltd.’s evaluation of our internal
control over financial reporting, and (ii) the audited financial statements in our Annual Report on Form 10-K for the year ended
December 31, 2020 with management, including a discussion of the quality, not just the acceptability, of the accounting principles,
the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee reviewed and discussed with Ernst & Young
Ltd. the matters that are required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board
and the Commission, including its judgments as to the quality, not just the acceptability, of our accounting principles, the reasonableness
of significant judgments, all critical accounting policies and practices to be used, material alternative accounting treatments
within generally accepted accounting principles discussed with management and other material written communications between Ernst & Young Ltd. and management. The Audit Committee has discussed with Ernst & Young Ltd. its independence from both management
and the Company and has received the written disclosures and the letter from the independent auditor required by the applicable
requirements of the Public Company Accounting Oversight Board.
The Audit Committee discussed with Ernst & Young Ltd. the overall
scope and plans for its audit. The Audit Committee met with the independent auditor, with and without management present, to discuss
the results of their examination, their evaluations of our internal controls and the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the
Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in the
Annual Report on Form 10-K for the year ended December 31, 2020, for filing with the Commission. The Audit Committee, pursuant
to its pre-approval policies and procedures, and the Board have also recommended, subject to shareholder approval, the selection
of Ernst & Young Ltd. as RenaissanceRe’s independent auditor for the 2021 fiscal year.
David C. Bushnell, Chair
Valerie Rahmani
Carol P. Sanders
James L. Gibbons
Brian G. J. Gray
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Security Ownership
Security Ownership of Certain Beneficial Owners
The following table sets forth information with respect to the beneficial
ownership of our common shares as of March 9, 2021 for each person known by us to own beneficially 5% or more of our outstanding
common shares.
Name and Address of Beneficial Owner | |
Number of
Common Shares | | |
Percentage
of Class(1) | |
BlackRock, Inc.(2) | |
| 6,142,894 | | |
| 12.3% | |
40 East 52nd Street | |
| | | |
| | |
New York, NY 10022 | |
| | | |
| | |
The Vanguard Group(3) | |
| 4,961,722 | | |
| 10.0% | |
100 Vanguard Blvd. | |
| | | |
| | |
Malvern, PA 19355 | |
| | | |
| | |
(1) |
The percentage of class shown is based on the common shares reported as beneficially owned on Schedule
13G or Schedule 13G/A and 49,761,397 common shares outstanding as of March 9, 2021. |
|
|
(2) |
According to a Statement on Schedule 13G/A filed on January 27, 2021 by BlackRock, BlackRock was the beneficial owner
of 6,142,894 common shares as of December 31, 2020. BlackRock has the sole power to vote or to direct the voting of 5,805,784
common shares and sole power to dispose of or to direct the disposition of 6,142,894 common shares. On November 15, 2016,
we granted BlackRock a limited waiver from the restrictions on the acquisition of share ownership set forth in our Bye-laws,
up to a maximum amount of shares representing 15% of our shares outstanding. BlackRock has agreed that, in accordance with
our Bye-laws, the voting rights attributable to shares owned or controlled by BlackRock will not exceed 9.9% of the voting
rights attached to all of our issued and outstanding capital shares. |
|
|
(3) |
According to a Statement on Schedule 13G/A filed on February 10, 2021 by The Vanguard Group (“Vanguard”),
Vanguard was the beneficial owner of 4,961,722 common shares as of December 31, 2020. Vanguard has the shared power to vote
or direct the vote of 59,880 common shares, sole power to dispose of or to direct the disposition of 4,833,229 common shares
and shared power to dispose or direct the disposition of 128,493 common shares. On May 11, 2018, we granted Vanguard a limited
waiver from the restrictions on the acquisition of share ownership set forth in our Bye-laws, up to a maximum amount of shares
representing 15% of our shares outstanding. Vanguard has agreed that, in accordance with our Bye-laws, the voting rights attributable
to shares owned or controlled by Vanguard will not exceed 9.9% of the voting rights attached to all of our issued and outstanding
capital shares. |
Table of Contents
Security Ownership of Management
The following table sets forth information with respect to the beneficial
ownership of our common shares as of March 9, 2021 for each of our named executive officers, directors and director nominees and
all of our executive officers and directors as a group. Unless otherwise noted below, each of these individuals had sole voting
and dispositive power with respect to the common shares beneficially owned by him or her.
Name of Beneficial Owner |
|
Number of
Common Shares |
|
Percentage
of Class(1) |
Kevin J. O’Donnell(2) |
|
229,998 |
|
* |
Robert Qutub(3) |
|
53,346 |
|
* |
Ross A. Curtis(4) |
|
123,501 |
|
* |
Ian D. Branagan(5) |
|
60,845 |
|
* |
Stephen H. Weinstein(6) |
|
93,055 |
|
* |
David C. Bushnell(7) |
|
19,449 |
|
* |
James L. Gibbons(7) |
|
25,107 |
|
* |
Brian G. J. Gray(7) |
|
15,056 |
|
* |
Jean D. Hamilton(7) |
|
25,625 |
|
* |
Duncan P. Hennes(7) |
|
4,862 |
|
* |
Henry Klehm III(7) |
|
20,192 |
|
* |
Valerie Rahmani(7) |
|
4,862 |
|
* |
Carol P. Sanders(7) |
|
6,079 |
|
* |
Anthony M. Santomero(7) |
|
19,449 |
|
* |
Cynthia Trudell(7) |
|
2,700 |
|
* |
All of our executive officers and directors (17
persons)(8) |
|
643,476 |
|
1.3% |
* |
Less than 1% |
|
|
(1) |
The percentage of class shown is based on 49,761,397 common shares outstanding as of March 9, 2021. |
|
|
(2) |
Includes (i) 37,258 time-vested restricted shares that have not yet vested, (ii) 21,332 performance shares for which the
performance period has been completed but the shares remain unvested until the completion of the relevant service period and
(iii) 66,848 performance shares, for which the performance period has not yet been completed, that are eligible to be earned
if maximum performance is attained. Also includes 1,079 shares held by a limited partnership for the benefit of Mr. O’Donnell’s
family. |
|
|
(3) |
Includes (i) 13,185 time-vested restricted shares that have not yet vested and (ii) 4,563 performance shares for which
the performance period has been completed but the shares remain unvested until the completion of the relevant service period
and (iii) 20,918 performance shares, for which the performance period has not yet been completed, that are eligible to be
earned if maximum performance is attained. |
|
|
(4) |
Includes (i) 13,998 time-vested restricted shares that have not yet vested, (ii) 4,850 performance shares for which the
performance period has been completed but the shares remain unvested until the completion of the relevant service period and
(iii) 22,142 performance shares, for which the performance period has not yet been completed, that are eligible to be earned
if maximum performance is attained. |
|
|
(5) |
Includes (i) 12,907 time-vested restricted shares that have not yet vested, (ii) 4,181 performance shares for which the
performance period has been completed but the shares remain unvested until the completion of the relevant service period and
(iii) 20,875 performance shares, for which the performance period has not yet been completed, that are eligible to be earned
if maximum performance is attained. Also includes 4,000 common shares held by trusts for the benefit of Mr. Branagan’s
children. |
|
|
(6) |
Includes 78,998 fully vested shares as of December 31, 2020, the date of Mr. Weinstein’s departure from RenaissanceRe,
including 3,688 common shares held by trusts for the benefit of Mr. Weinstein’s minor children. Includes (i) 3,772 performance
shares for which the performance period has been completed but the shares remain unvested until the completion of the relevant
service period and (ii) 10,285 performance shares, for which the performance period has not yet been completed, that are eligible
to be earned if maximum performance is attained as of March 9, 2021. |
|
|
(7) |
Includes the following number of restricted shares granted in payment of directors’ fees that have not yet vested:
1,879 restricted shares for Messrs. Bushnell, Gray, Hennes, Klehm and Santomero and Messes. Hamilton and Sanders and Dr. Rahmani;
3,730 restricted shares for Mr. Gibbons; and 1,839 restricted shares for Ms. Trudell. |
|
|
(8) |
Includes 114,297 time-vested restricted shares that have not yet vested. Does not include Mr. Weinstein, who departed
the Company on December 31, 2020. |
82 |
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Table of Contents
General Information
About the Proxy Materials and the Annual Meeting
This proxy statement summarizes the information you need to know to
vote at the Annual Meeting. The notice regarding the availability of proxy materials, this proxy statement, the Notice of Annual
General Meeting of Shareholders and the proxy card are first being made available to shareholders on or about March 23, 2021, concurrently
with the distribution of our 2020 Annual Report to Shareholders. Our Annual Report shall not be deemed to be part of this proxy
statement.
Record Date
The Board has set March 9, 2021 as the record date for the Annual
Meeting. On the record date, there were 49,761,397 shares of our common stock outstanding and entitled to vote.
Shareholders Entitled to Vote
If you were the beneficial owner of common shares held in street name,
or a shareholder of record with respect to our common shares at the close of business on the record date, you are entitled to notice
of, and may vote at, the Annual Meeting. The common shares are our only class of equity securities outstanding and entitled to
vote at the Annual Meeting.
Each of our common shares entitles its holder to one vote on each
matter that is voted upon at the Annual Meeting or any postponements or adjournments thereof, subject to certain provisions of
our Bye-laws that reduce the total voting power of any shareholder owning, directly or indirectly, beneficially or otherwise, as
described in our Bye-laws, more than 9.9% of the common shares to not more than 9.9% of the total voting power of our capital stock
unless otherwise waived at the discretion of the Board. In addition, the Board may limit a shareholder’s voting rights where
the Board deems it necessary to do so to avoid adverse tax, legal or regulatory consequences. The reduction of such voting power
may have the effect of increasing another shareholder’s voting power to more than 9.9%, thereby requiring a corresponding
reduction in such other shareholder’s voting power.
Because the applicability of the voting power reduction provisions
to any particular shareholder depends on facts and circumstances that may be known only to the shareholder or related persons,
we request that any holder of common shares with reason to believe that it is a shareholder whose common shares carry more than
9.9% of the voting power of RenaissanceRe contact us promptly so that we may determine whether the voting power of such holder’s
common shares should be reduced. The Board is empowered to require any shareholder to provide information as to that shareholder’s
beneficial ownership of common shares, the names of persons having beneficial ownership of the shareholder’s common shares,
relationships with other shareholders or any other facts the directors may consider relevant to the determination of the number
of common shares attributable to any person. The Board may disregard the votes attached to common shares of any holder who fails
to respond to such a request or who, in the Board’s judgment, submits incomplete or inaccurate information. The Board retains
the discretion to make such final adjustments that it considers fair and reasonable in all circumstances as to the aggregate number
of votes attaching to the common shares of any shareholder to ensure that no shareholder’s voting power is more than 9.9%
of the total voting power of our capital stock at any time.
These voting power restrictions may be waived by the Board in its
sole discretion. To date, the Board has consistently enforced these voting power restrictions.
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Quorum
Two persons present in person and throughout the Annual Meeting representing
in person or by proxy more than 50% of the issued common shares entitled to vote on the matters to be considered at the Annual
Meeting form a quorum for the transaction of business at the Annual Meeting. Withheld votes for the election of directors, abstentions
and “broker non-votes” (shares held by a broker or nominee that does not have discretionary authority to vote on a
particular matter and has not received voting instructions from its client) will be counted for purposes of determining whether
a quorum is present.
Vote Required
The Board has adopted a majority vote standard in uncontested director
elections, which means that director nominees for whom the number of votes cast FOR that director’s election exceeds the
number of votes cast AGAINST that director’s election (with abstentions and broker non-votes not counted as a vote cast either
FOR or AGAINST a director’s election) will be elected as a director at the Annual Meeting. In the event that a nominee for
election fails to receive a majority of the votes cast at an election which is uncontested, such nominee will tender an irrevocable
resignation, and the Board will decide whether to accept or reject the resignation no later than ninety (90) days following certification
of the election results. Because we did not receive proper advance notice in accordance with our Bye-laws of any shareholder nominees
for director, the election of directors solicited hereby is an uncontested election.
Your bank, broker or other nominee is not permitted to vote your shares
on any proposal that is considered to be non-routine under the rules of the NYSE unless it has received your specific voting instructions
with respect to that proposal. For routine matters, unless your proxy indicates otherwise, the persons named as your proxies will
vote your shares according to the recommendation of the Board.
A hand vote will be taken unless a poll is requested pursuant to our
Bye-laws.
The following table summarizes the voting options, vote required for
approval and effect of abstentions and broker non-votes for each proposal to be considered at the Annual Meeting:
Proposal |
|
Board
Recommendation |
|
Voting
Options |
|
Voting
Approval
Standard |
|
Effect
of
Abstentions |
|
Broker
Discretionary
Voting
Allowed? |
|
Effect
of
Broker
Non-Votes |
|
Election of three Class II director nominees |
|
FOR each nominee |
|
FOR, AGAINST or ABSTAIN for each director nominee |
|
The number of votes cast FOR that director’s election exceeds the number of votes cast AGAINST that director’s election
as a director at the Annual Meeting |
|
No effect |
|
No |
|
No effect |
|
Advisory vote on the compensation of our named executive officers |
|
FOR |
|
FOR, AGAINST or ABSTAIN |
|
Majority of the votes cast at the Annual Meeting |
|
No effect |
|
No |
|
No effect |
|
Approval of the appointment of Ernst & Young Ltd. as our independent registered public accounting firm for the 2021
fiscal year and the referral of the auditor’s remuneration to the Board |
|
FOR |
|
FOR, AGAINST or ABSTAIN |
|
Majority of the votes cast at the Annual Meeting |
|
No effect |
|
Yes |
|
Not applicable |
|
84 |
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Table of Contents
How to Vote
Shareholder of Record
If your common shares are registered directly in your name with our
transfer agent, Computershare Trust Company, N.A., you are considered the shareholder of record with respect to those shares, and
the notice regarding the availability of proxy materials was sent directly to you by Broadridge Financial Solutions, Inc. (“Broadridge”),
our tabulation agent and inspector of election.
If you are a shareholder of record, you may vote in person at the
Annual Meeting, in which case we will give you a ballot when you arrive. If you do not wish to vote in person or if you will not
be attending the Annual Meeting, you may vote (1) by proxy over the Internet by following the instructions provided in the notice;
or (2) if you requested printed copies of the proxy materials by mail, you must either (a) fill out the enclosed proxy card, date
and sign it and return it in the enclosed postage paid envelope; or (b) vote using the Internet (instructions are on the proxy
card).
Beneficial Owner of Common Shares Held in Street Name
If your common shares are held in an account at a brokerage firm,
bank, broker-dealer or similar organization, then you are the beneficial owner of common shares held in street name, and the notice
regarding the availability of proxy materials should have been forwarded to you by that organization. The organization holding
your account is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner of common
shares held in street name, you have the right to direct that organization on how to vote the common shares held in your account.
If you are a beneficial owner of common shares held in street name
and you wish to vote in person at the Annual Meeting, you must obtain and produce at the Annual Meeting a valid proxy from the
organization that holds your common shares along with valid identification. We will give you a ballot when you arrive.
If you do not wish to vote in person or you will not be attending
the Annual Meeting, you have the right to direct your brokerage firm, bank, broker-dealer or similar organization on how to vote
the common shares held in your account. Please refer to the voting instructions provided by such organization for directions as
to how to vote the common shares that you beneficially own.
Revoking Your Proxy
You may change your vote or revoke your proxy at any time before your
proxy is voted at the Annual Meeting. You may vote again on a later date by following the same procedures by which you submitted
your original vote, or by attending the Annual Meeting and voting in person. However, your attendance at the Annual Meeting will
not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request in writing that your prior
proxy be revoked. Your latest vote or proxy, however submitted, will be counted. If you wish to change your vote or revoke your
proxy, you must do so in sufficient time to permit the necessary examination and tabulation of the subsequent proxy or revocation
before the vote is taken.
Effect of Not Voting
Shareholder of Record
If you are a shareholder of record and you indicate when voting on
the Internet that you wish to vote as recommended by our Board or sign and return a proxy card without giving specific voting instructions,
then the proxies will vote your shares in the manner recommended by our Board on all matters presented in this proxy statement
and as the proxies may determine in their discretion with respect to any other matters properly presented for a vote at the Annual
Meeting. Withheld votes for election of directors and proxies marked as abstentions to a proposal will not be counted except for
purposes of determining whether a quorum is present.
Table of Contents
Beneficial Owner of Common Shares Held in Street Name
If you are a beneficial owner of common shares held in street name
and the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine
matter at least 10 days before the Annual Meeting, the organization that holds your shares will inform our inspector of election
that it does not have the authority to vote on this matter with respect to your shares. When our inspector of election tabulates
the votes for any particular non-routine matter, broker non-votes (like abstentions) will be counted for purposes of determining
whether a quorum is present, but will not otherwise be counted. We encourage you to provide voting instructions to the organization
that holds your shares by carefully following the instructions provided by that organization.
Proxy Solicitation
Your proxy is being solicited by the Board. We have engaged the firm
of MacKenzie Partners to act as the solicitation agent on behalf of the Board to assist in the solicitation of proxies for a fee
of $15,000, plus the reimbursement of certain expenses. The persons named in the proxy card have been designated as proxies by
the Board and are officers of RenaissanceRe.
Further solicitation may be made by our directors, officers and employees
personally, by telephone, Internet or otherwise, but such persons will not be specifically compensated for such services. We may
also solicit, through bankers, brokers, or other persons, proxies from beneficial holders of the common shares. Upon request, we
will reimburse brokers, dealers, banks, or similar entities for reasonable expenses incurred in forwarding copies of the proxy
materials relating to the Annual Meeting to the beneficial owners of common shares that such persons hold of record.
Notice and Access
Pursuant to rules adopted by the Commission and applicable Bermuda
law, we are providing access to our proxy materials over the Internet, which will save costs and paper. On or about March 23, 2021,
we mailed a notice regarding the availability of proxy materials, which contains basic information about the Annual Meeting and
instructions on how to view all proxy materials on a website referred to in the notice or to request to receive a printed set of
the proxy materials.
The notice regarding availability of proxy materials will also provide
you with instructions on how to request that we send our future proxy materials to you electronically by e-mail or to request to
receive printed copies of future proxy materials by mail.
Multiple Notices or Sets of Printed Proxy Materials
If you receive multiple notices or sets of printed proxy materials,
it generally means that you hold common shares registered in more than one account. To ensure that all of your shares are voted,
please vote in the manner described above with respect to each notice or in the proxy card accompanying the proxy materials.
Appraisal Rights
The Board has not proposed for consideration at the Annual Meeting
any transaction for which the laws of Bermuda grant appraisal rights to shareholders.
Voting Results
Preliminary voting results will be announced at the Annual Meeting.
Final voting results will be tallied by our inspector of election and filed with the SEC on a Current Report on Form 8-K within
four business days following the Annual Meeting.
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Additional Information
Other Action at the Annual Meeting
Our Annual Report to Shareholders for the year ended December 31,
2020, including financial statements for the year ended December 31, 2020, and the auditor’s report thereon, has been made
available to all shareholders. The financial statements and auditor’s report will be formally presented at the Annual Meeting,
but no shareholder action is required thereon.
As of the date of this proxy statement, we have no knowledge of any
business, other than that which we have described herein, that will be presented for consideration at the Annual Meeting. In the
event any other business is properly presented at the Annual Meeting, it is intended that the persons named in the accompanying
proxy will have authority to vote such proxy in accordance with their judgment on such business. In addition, such persons may
vote such proxy to adjourn the Annual Meeting if necessary, for example due to the impact of COVID-19. Our Board also has the authority
to postpone the Annual Meeting in such circumstances. In the event it is advisable to adjourn, postpone or change location of the
Annual Meeting, we will announce our decision as promptly as practicable.
Shareholder Proposals for 2022 Annual General Meeting of Shareholders
In accordance with SEC Rule 14a-8, shareholder proposals intended
for inclusion in our 2022 proxy statement and to be presented at the 2022 Annual General Meeting of Shareholders must be received
in writing by us no later than November 23, 2021 and must comply with the requirements of the Commission and our Bye-laws. Such
proposals should be directed to the attention of the Corporate Secretary, RenaissanceRe Holdings Ltd., P.O. Box HM 2527, Hamilton,
HM GX, Bermuda. Shareholders who intend to nominate persons for election as directors at our annual general meetings of shareholders
must comply with the advance notice procedures and other provisions set forth in our Bye-laws in order for such nominations to
be properly brought before that annual general meeting of shareholders. These provisions require, among other things, that written
notice from no fewer than 20 shareholders holding in the aggregate not less than 10% of the outstanding paid-up share capital of
RenaissanceRe be received by the Corporate Secretary of RenaissanceRe not less than 60 days prior to the annual general meeting
of shareholders.
If a shareholder intends to present a proposal at the 2022 Annual
General Meeting of Shareholders without any discussion of the proposal in our proxy statement, and the shareholder does not notify
us of such proposal on or before February 6, 2022 as required by SEC Rule 14a-4(c)(1), then proxies received by us for the 2022
Annual General Meeting of Shareholders will be voted by the persons named as such proxies in their discretion with respect to such
proposal. Notice of any such proposal is to be sent to the above address.
Table of Contents
Householding of Annual Meeting Materials
The SEC has enacted a rule that allows multiple investors residing
at the same address the convenience of receiving a single copy of annual reports, proxy statements, prospectuses and other disclosure
documents if they consent to do so. This is known as “householding.” We will allow householding only upon certain conditions.
Some of those conditions are:
• | You
agree to, or do not object to, the householding of your materials; and |
• | You
have the same last name and exact address as another investor(s). |
If these conditions are met, and SEC regulations allow, your household
will receive a single copy of annual reports, proxy statements, prospectuses and other disclosure documents.
You may revoke a prior householding consent at any time by contacting
Broadridge, either by calling toll-free at 1-866-540-7095, or by writing to Broadridge, Householding Department, 51 Mercedes Way,
Edgewood, New York 11717. We will remove you from the householding program within 30 days of receipt of your response, following
which you will receive an individual copy of our disclosure document. Shareholders sharing an address and wishing to receive a
single set of reports may do so by contacting their banks or brokers, if they are beneficial holders, or by contacting Broadridge
at the address set forth above if they are record holders.
Website
We maintain a website at www.renre.com.
The information on this website, including but not limited to the information on the webpage titled “ESG at RenaissanceRe,”
is not incorporated by reference in this proxy statement.
88 |
|
Table of Contents
Appendix A: Reconciliation of Non-GAAP Financial Measures
We have included certain non-GAAP financial measures within the meaning
of Regulation G in this proxy statement. We have provided these financial measurements in previous investor communications and
our management believes that these measurements are important to investors and other interested persons and that investors and
such other persons benefit from having a consistent basis for comparison between periods and for the comparison with other companies
within the industry. These measures may not, however, be comparable to similarly titled measures used by companies outside of the
insurance industry. Investors are cautioned not to place undue reliance on these non-GAAP measures in assessing our overall financial
performance.
We use “operating (loss) income (attributable) available to
RenaissanceRe common shareholders” as a measure to evaluate the underlying fundamentals of our operations and we believe
it to be a useful measure of our corporate performance. “Operating (loss) income (attributable) available to RenaissanceRe
common shareholders” as used herein differs from “net income available to RenaissanceRe common shareholders,”
which the Company believes is the most directly comparable GAAP measure, by the exclusion of net realized and unrealized gains
and losses on investments, excluding other investments - catastrophe bonds, net foreign exchange gains and losses, corporate expenses
associated with the acquisition of TMR and the subsequent sale of RenaissanceRe (UK) Limited (“RenaissanceRe UK”),
the income tax expense or benefit associated with these adjustments and the portion of these adjustments attributable to the Company’s
redeemable noncontrolling interests. Our management believes that “operating (loss) income (attributable) available to RenaissanceRe
common shareholders” is useful to investors because it more accurately measures and predicts our results of operations by
removing the variability arising from: fluctuations in the fair value of our fixed maturity investment portfolio, equity investments
trading, other investments (excluding catastrophe bonds) and investments-related derivatives; fluctuations in foreign exchange
rates; corporate expenses associated with the acquisition of TMR and the subsequent sale of RenaissanceRe UK; the associated income
tax expense or benefit of these adjustments; and the portion of these adjustments attributable to our redeemable noncontrolling
interests. We also use “operating (loss) income (attributable) available to RenaissanceRe common shareholders” to calculate
“operating (loss) income (attributable) available to RenaissanceRe common shareholders per common share - diluted”
and “operating return on average common equity - annualized.”
Table of Contents
The following table is a reconciliation of: (1) net income available
to RenaissanceRe common shareholders to “operating (loss) income (attributable) available to RenaissanceRe common shareholders”;
(2) net income available to RenaissanceRe common shareholders per common share - diluted to “operating (loss) income (attributable)
available to RenaissanceRe common shareholders per common share - diluted”; and (3) return on average common equity - annualized
to “operating return on average common equity - annualized.” Comparative information for all prior periods has been
updated to conform to the current methodology and presentation.
(in
thousands of U.S. dollars, except per | |
Year Ended
December 31, |
share amounts and percentages) |
|
2020 | |
|
2019 | |
Net income available to RenaissanceRe common shareholders | |
$ | 731,482 | | |
$ | 712,042 | |
Adjustment for net realized and unrealized gains on investments, excluding other investments–catastrophe bonds | |
| (827,667 | ) | |
| (423,501 | ) |
Adjustment for net foreign exchange (gains) losses | |
| (27,773 | ) | |
| 2,938 | |
Adjustment for corporate expenses associated with the acquisition of TMR and the subsequent sale of RenaissanceRe UK(1) | |
| 47,964 | | |
| 49,725 | |
Adjustment for income tax expense (benefit)(2) | |
| 29,863 | | |
| 20,367 | |
Adjustment for net income (loss) attributable to redeemable noncontrolling interests(3) | |
| 60,771 | | |
| 36,180 | |
Operating (loss) income (attributable) available to RenaissanceRe common shareholders | |
$ | 14,640 | | |
$ | 397,751 | |
Net income available to RenaissanceRe common shareholders per common share–diluted | |
$ | 15.31 | | |
$ | 16.29 | |
Adjustment for net realized and unrealized gains on investments, excluding other investments–catastrophe bonds | |
| (17.54 | ) | |
| (9.81 | ) |
Adjustment for net foreign exchange (gains) losses | |
| (0.59 | ) | |
| 0.07 | |
Adjustment for corporate expenses associated with the acquisition of TMR and the subsequent sale of RenaissanceRe UK(1) | |
| 1.02 | | |
| 1.15 | |
Adjustment for income tax expense (benefit)(2) | |
| 0.63 | | |
| 0.47 | |
Adjustment for net income (loss) attributable to redeemable noncontrolling interests(3) | |
| 1.29 | | |
| 0.84 | |
Operating (loss) income (attributable) available to RenaissanceRe common shareholders per common share–diluted | |
$ | 0.12 | | |
$ | 9.01 | |
Return on average common equity–annualized | |
| 11.7 | % | |
| 14.1 | % |
Adjustment for net realized and unrealized gains on investments, excluding other investments–catastrophe bonds | |
| (13.4 | )% | |
| (8.4 | )% |
Adjustment for net foreign exchange (gains) losses | |
| (0.4 | )% | |
| 0.1 | % |
Adjustment for corporate expenses associated with the acquisition of TMR and the subsequent sale of RenaissanceRe UK(1) | |
| 0.8 | % | |
| 1.0 | % |
Adjustment for income tax expense (benefit)(2) | |
| 0.5 | % | |
| 0.4 | % |
Adjustment for net income (loss) attributable to redeemable noncontrolling interests(3) | |
| 1.0 | % | |
| 0.7 | % |
Operating return on average common equity–annualized | |
| 0.2 | % | |
| 7.9 | % |
(1) |
Included in the twelve months ended December 31, 2020 is the loss on sale of RenaissanceRe UK of $30.2
million. |
(2) |
Adjustment for income tax expense (benefit) represents the income tax (expense) benefit associated with the adjustments
to net income available to RenaissanceRe common shareholders. The income tax impact is estimated by applying the statutory
rates of applicable jurisdictions, after consideration of other relevant factors. |
(3) |
Represents the portion of these adjustments that are attributable to the Company’s redeemable noncontrolling interests,
including the income tax impact of those adjustments. Adjustment for net realized and unrealized (gains) losses on investments
attributable to RenaissanceRe common shareholders represents: net realized and unrealized gains (losses) on investments as
set forth in the Company’s consolidated statement of operations less net realized and unrealized gains (losses) attributable
to redeemable noncontrolling interests, which is included in net loss (income) attributable to redeemable noncontrolling interests
in the Company’s consolidated statement of operations. Comparative information for all prior periods has been updated
to conform to the current methodology and presentation. |
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We have also included “tangible book value per common share”
and “tangible book value per common share plus accumulated dividends.” “Tangible book value per common share”
is defined as book value per common share excluding goodwill and intangible assets per common share. “Tangible book value
per common share plus accumulated dividends” is defined as book value per common share excluding goodwill and intangible
assets per common share, plus accumulated dividends. Our management believes “tangible book value per common share”
and “tangible book value per common share plus accumulated dividends” are useful to investors because they provide
a more accurate measure of the realizable value of shareholder returns, excluding the impact of goodwill and intangible assets.
The following table is a reconciliation of book value per common share
to “tangible book value per common share” and “tangible book value per common share plus accumulated dividends.”
(in thousands of U.S. dollars, except per | |
Year
Ended
December 31, | |
share amounts and percentages) | |
2020 | |
|
2019 |
|
Book value per common share | |
$ | 138.46 | | |
$ | 120.53 | |
Adjustment for goodwill and other intangibles(1) | |
| (5.37 | ) | |
| (6.50 | ) |
Tangible book value per common share | |
| 133.09 | | |
| 114.03 | |
Adjustment for accumulated dividends | |
| 22.08 | | |
| 20.68 | |
Tangible book value per common share plus accumulated dividends | |
$ | 155.17 | | |
$ | 134.71 | |
Quarterly change in book value per common share | |
| 2.5 | % | |
| 0.4 | % |
Quarterly change in tangible book value per common share plus change in accumulated dividends | |
| 3.0 | % | |
| 0.7 | % |
Year-to-date change in book value per common share | |
| 14.9 | % | |
| 15.7 | % |
Year-to-date change in tangible book value per common share plus change in accumulated dividends | |
| 17.9 | % | |
| 17.9 | % |
(1) |
As of December 31, 2020 and December 31, 2019, goodwill and other intangibles included $23.0 million
and $24.9 million, respectively, of goodwill and other intangibles included in investments in other ventures, under equity
method. |
Table of Contents
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RenaissanceRe Holdings
Ltd. |
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Renaissance House |
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12 Crow Lane |
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Pembroke HM 19 |
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Bermuda |
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Tel: +1 441 295 4513 |
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renre.com |