Welfare Benefits and
Perquisites. Our named executive officers are provided
welfare benefits that are generally the same as our other
employees, such as Company-paid life insurance, contributions to
the Company’s 401(k) Plan, medical, dental and vision plan coverage
and long and short-term disability insurance.
In
addition to the above benefits, Mr. Heinlein and
Ms. Doran are entitled to receive benefits based upon their
required work for the Company in Bermuda, and Mr. Myron was
entitled to such benefits prior to his retirement. The Company
implemented these benefits for its executive officers in 2008, when
the Company formed its holding and reinsurance company in Bermuda.
These benefits are:
•
payment
of certain housing expenses in Bermuda for Mr. Heinlein and
formerly for Mr. Myron;
•
payment
of travel costs for Mr. Heinlein and formerly Mr. Myron;
and
•
tax equalization gross-up payments or other Bermuda tax payments
(collectively, “Tax Equalization Payments”) to which any of
Mr. Heinlein, Ms. Doran, and formerly Mr. Myron, may
be subject with respect to payments or benefits that such named
executive officer receives under his or her employment
agreement.
We make
the above housing, travel and tax benefits available to the
specified named executive officers employed by the Company or its
Bermuda subsidiary based upon the unique challenges of performing
work in the Bermuda market, including the cost of living and
maintaining a residence, travel to and from the island and
additional tax expenses primarily resulting from the housing and
travel benefits. We believe that providing these benefits is common
practice for other Bermuda based insurers, and is consistent with
our goal to attract and retain talented executive officers.
The
Company also paid for Mr. Myron’s family to occasionally
travel to Bermuda. Any incremental costs to the Company associated
with such travel was charged to Mr. Myron.
Leadership
Recognition Program. In addition to the other benefits paid
to our named executive officers, Mr. Schmitzer receives an
annual retention payment under the James River Management Company,
Inc. Leadership Recognition Program (the “Recognition Program”).
The Recognition Program was adopted by James River Management
Company, Inc., one of the Company’s subsidiaries, effective
September 30, 2011, to help attract and retain key employees
of our excess and surplus lines business. Under the Recognition
Program, the Chief Executive Officer of our U.S. holding company,
or in the case of executive officers of the Company, our Board of
Directors, upon recommendation of the Compensation Committee,
selects the employees who participate in the Recognition Program
and determines the annual dollar amount to be credited to each
participant’s account under the Recognition Program. The dollar
amount credited to a participant’s account under the Recognition
Program each year is paid to the participant in five equal annual
installments, commencing as of the end of the second plan year
beginning after the year in which the amount was credited to the
participant’s account. Participants must be employed at the time of
payment of an installment to be entitled to receive the payment,
subject to certain exceptions described under “Potential Payments
upon Termination or Change of Control”.
All
amounts credited to a participant’s account remain unvested until
paid and may be reduced, modified or terminated at the sole
discretion of the Company. The Company may amend, modify or
terminate the Recognition Program at any time, including, without
limitation, to comply with the provisions of Section 409A of
the Internal Revenue Code of 1986, as amended, so as not to trigger
any unintended tax consequences prior to the distribution of
benefits under the program. There are no vested rights to amounts
under the Recognition Program at any time prior to the payment of
such amounts, and all amounts under the Recognition Program are at
all times discretionary obligations of the Company, which may be
reduced or terminated by the Company at any time. Except as
otherwise stated above, the Recognition Program is administered by
the board of directors of our U.S. holding company.
In
2017, we determined to cease making new dollar credits to accounts
under the Recognition Program. The determination was made in
recognition of the fact that following our 2014 initial public
offering, we were able to make regular equity awards to our
executives. All amounts previously credited to Mr. Schmitzer’s
account will continue to be paid in accordance with the terms of
the Recognition Program.
Mr. Schmitzer received a payout under the terms of the
Recognition Program in 2021 of $147,000 based on amounts credited
to his account in prior years. Mr. Schmitzer’s last
payment under the program will be in 2023.
Share Ownership
Guidelines
In July
2022, the Board, at the recommendation of the Committee, adopted
share ownership guidelines (the “Guidelines”) to more closely align
the financial interests of the Company’s directors and executive
and other senior officers with those of the Company’s shareholders.
Pursuant to the Guidelines, within five years of becoming
subject to the Guidelines, (i) non-employee directors are
required to beneficially own common shares with a fair market value
equivalent to three times their annual cash retainer, (ii) the
Company’s Chief Executive Officer is required to beneficially own
common shares with a fair market value equivalent to five times his
annual base salary, and (iii) other executive officers and
designated members of the senior management team of the Company are
required to beneficially own common shares with a fair market value
equivalent to three times their annual base salary. In calculating
ownership under the Guidelines, common shares subject to restricted
share units with time-based vesting requirements are counted
as owned shares (but shares subject to performance restricted
share units will not be).
For
purposes of the Guidelines, the fair market value of the common
shares will be established using the greater of (i) the
average closing price of the common shares on the Nasdaq Stock
Market for the 30 trading day period immediately prior to the
applicable determination date (the “Market Price”) or (ii) the
price paid at the time of purchase, or, if the shares were not
purchased (for example, if the shares were acquired on exercise of
an equity award), the closing price of the common shares on the
Nasdaq Stock Market on the date of acquisition.