Item 11.
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Executive Compensation
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COMPENSATION DISCUSSION AND ANALYSIS
In this section we detail the material components of the compensation awarded to and earned by the following executive officers (our
Named Executive Officers).
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Chief Executive Officer John R. Charman
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Chief Financial Officer Michael J. McGuire
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Chief Executive Officer, Global Insurance John A. Kuhn
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General Counsel John V. Del Col
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Chief Administrative Officer Brian W. Goshen
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We also describe our executive
compensation philosophy and objectives, and we explain how and why the Compensation Committee adopted the Companys current compensation policies and practices and approved the amounts set forth in the Summary Compensation Table.
Executive Summary
Assessment
of 2016 Performance
. In 2016, the Compensation Committee measured performance for purposes of the Named Executive Officers annual and long-term incentive compensation based on a combination of the Companys Operating ROE (which
excludes
after-tax
realized investment gains and losses, foreign exchange gains and losses and expenses associated with the Montpelier and Sompo transactions) and the Named Executive Officers individual
performance, including their contribution towards the Companys strategic objectives as established by the Board and the Compensation Committee at the commencement of the year. For 2016, the Compensation Committee established for the
Companys employees at the commencement of the year a 7.0% target Operating ROE, which was biased towards Company outperformance, taking into account the prevailing adverse market and interest rate conditions. The Companys actual 2016
Operating ROE of 6.6% was slightly lower than the 7.0% target Operating ROE established by the Compensation Committee. In addition, at the end of 2016, the Compensation Committee conducted an assessment of the Companys
5
performance in 2016 versus each of its previously established 2016 strategic objectives. For a more detailed description of the Companys financial results, please see
Managements Discussion and Analysis of Financial Conditions and Results of Operations in the Original Filing.
Determination of 2016 Annual and Long-Term Incentive Compensation
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The 6.6% Operating ROE achieved by the Company in 2016
resulted in an indicated performance adjustment slightly below the target annual incentive compensation of the Named Executive Officers. The Named Executive Officers individual performance, including their contribution towards the
Companys strategic objectives, resulted in an indicated average individual performance adjustment slightly above their target annual incentive compensation. The Operating ROE and individual performance adjustments were averaged with an equal
weight to determine the performance adjustments to the Named Executive Officers target levels of annual incentive compensation. The table below lists the 2016 annual incentive plan targets, the applicable performance multiplier and the
resulting 2016 annual incentive plan performance-adjusted targets for the Named Executive Officers:
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Name
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2016 Annual
Incentive Target
(1)
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2016 Performance
Adjustment
Percentage
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2016 Annual Incentive
Performance
Adjusted Target
(1)
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John R. Charman
(2)
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X
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=
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Michael J. McGuire
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110%
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X
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100%
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=
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110%
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John A. Kuhn
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120%
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X
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100%
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=
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120%
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John V. Del Col
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100%
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X
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100%
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=
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100%
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Brian W. Goshen
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100%
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X
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100%
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=
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100%
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(1)
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Targets and adjusted targets are expressed as percentages of the Named Executive Officers base salary.
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(2)
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Mr. Charman was not eligible to receive annual incentive compensation.
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Due to the
pending transaction between the Company and Sompo (which would result in the vesting and liquidation of any restricted shares granted), the long-term incentive compensation, which is normally delivered in the form of restricted shares, was delivered
to each Named Executive Officer in the form of cash (subject to the repayment obligation described below), with the target amount of the long-term incentive cash award adjusted for past performance at grant at a rate equal to one half of the
performance adjustment made to each Named Executive Officers annual incentive target. For 2016, both the annual incentive compensation and the long-term incentive compensation for the Named Executive Officers were at target.
The long-term incentive cash award granted to each Named Executive Officer in respect of the 2016 performance year vested upon grant, with a
repayment obligation should the Named Executive Officer depart the employment of the Company voluntarily or involuntarily for cause on or prior to February 28, 2018.
The Compensation Committee then reviewed the preliminary compensation amounts for the Named Executive Officers produced by the indicated
performance adjustments to determine whether the process had yielded appropriate annual and long-term incentive compensation in the context of events as they occurred during the year. Based upon the foregoing, the Compensation Committee determined
that the 2016 compensation of the Named Executive Officers would be as follows:
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Name
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Annual Base
Salary
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Annual
Incentive
Compensation
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Long-Term
Incentive Cash
Award
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Total
(1)
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John R. Charman
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$
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100
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$
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100
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Michael J. McGuire
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$
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575,000
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$
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632,500
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$
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920,000
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$
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2,127,500
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John A. Kuhn
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$
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800,000
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$
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960,000
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$
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1,440,000
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$
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3,200,000
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John V. Del Col
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$
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500,000
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$
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500,000
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$
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750,000
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$
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1,750,000
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Brian W. Goshen
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$
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500,000
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$
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500,000
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$
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750,000
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$
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1,750,000
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(1)
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The compensation information in the table above differs from the calculation of total compensation in the Summary Compensation Table below, primarily by not including (a) the value of restricted shares granted in
March of 2016 in recognition of performance during 2015 from the Stock Awards column in the Summary Compensation Table and (b) the value of compensation and perquisites from the All Other Compensation column in the
Summary Compensation Table.
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6
Objectives of the Companys Compensation Program
In order to accomplish the Companys goal of maximizing shareholder value over the long term in a manner consistent with the
Companys risk parameters, the Compensation Committee believed that the Company must attract, motivate and retain the most talented individuals at all levels of the organization needed to lead and grow the Companys businesses. To that
end, the Compensation Committee based the Companys compensation program for the Companys employees on the following principles:
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Compensation should reflect the value of the job in the marketplace
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To attract and retain a highly skilled work force, the Company must remain competitive with the pay of other employers who compete with
the Company for talent.
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Compensation should reward performance
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Compensation should parallel individual and Company performance. Where individual and/or Company performance does not meet Operating ROE or strategic objectives, the
compensation program should deliver lower-tier compensation. In addition, to improve effectiveness, the Companys compensation program should enable employees to easily understand how their efforts can affect their pay.
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Compensation should not motivate excessive risk taking
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The structure of the Companys compensation program, the selection of performance objectives and the evaluation of performance by the
Compensation Committee all take into account and seek to ameliorate excessive risk taking by the Companys employees.
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Compensation should reflect the means by which performance is achieved
. To ensure the Companys performance is attained by means encompassed by the Companys risk parameters, the Companys
compensation program permits downward adjustment in the amount of variable compensation to be delivered to executives at the discretion of the Compensation Committee, should the Compensation Committee determine that the Companys performance
indicators are not reflective of the Companys actual performance or the risks undertaken to attain such performance.
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Compensation policies should provide remedies for executive misconduct
. The Companys senior executives are subject to an executive compensation clawback policy that provides that in the event of a
restatement of the financial statements in which an executive officer engaged in misconduct that materially contributed to the need for the restatement, the Board in its discretion shall be entitled to seek recoupment of excess incentive
compensation paid or awarded to such executive officer within the 36 months prior to the restatement.
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Elements of Compensation
The Company had four principal elements of compensation: base salary, annual incentive compensation, long-term incentive
compensation and employee benefits/other compensation. The Compensation Committee believed that the majority of our Named Executive Officers compensation should be delivered in the form of variable compensation, which fluctuated based on the
performance measures within our incentive plans.
Base Salary
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Base salary was the guaranteed element of the Companys
compensation structure and was paid to its employees for ongoing performance throughout the year. The base salary for the Companys Chief Executive Officer was $100 per annum. Base salaries for the Companys other Named Executive Officers
were targeted at appropriate levels of base salaries paid for similar positions at a comparative group of companies referred to as the Peer Group, below. The base salaries of individual Named Executive Officers did vary from this salary benchmark
based on such factors as individual performance, potential for future advancement,
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specific job responsibilities and length of time in their current position. The annual base salary rates for the Named Executive Officers for the past three years were as follows:
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Name
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Year
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Annual Base
Rate Salary
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John R. Charman
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2016
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$
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100
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2015
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$
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100
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2014
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$
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100
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Michael J. McGuire
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2016
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$
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575,000
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2015
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$
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575,000
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2014
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$
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500,000
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John A. Kuhn
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2016
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$
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800,000
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2015
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$
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800,000
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2014
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$
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700,000
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John V. Del Col
(1)
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2016
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$
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500,000
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2015
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$
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500,000
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Brian W. Goshen
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2016
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$
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500,000
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2015
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$
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500,000
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2014
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$
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400,000
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(1)
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Annual base rate salary for Mr. Del Col is provided only for 2016 and 2015 because he was not a Named Executive Officer in 2014.
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Annual Incentive Compensation
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The Companys annual incentive compensation program supported the Companys strategy by
linking a significant portion of its employees total compensation to the achievement of critical business goals on an annual basis. All of the Companys employees, including the Named Executive Officers (other than Mr. Charman), were
eligible to earn annual incentive compensation.
The target annual incentive compensation opportunity for the Named Executive Officers was
established based upon the level of responsibility of the Named Executive Officer within the Company, as well as external market practices. The Compensation Committee sought to set target annual incentive compensation so that achieving target
financial and strategic performance would result in annual incentive compensation approximating the median for the Companys peer group, with corresponding above or below target performance resulting in annual incentive compensation that
averages above or below the peer group median. As a matter of practice, the Compensation Committee did not change target annual incentive compensation absent a promotion or a compensation adjustment reflecting a significant change in the level of
compensation being paid in the employment marketplace for a given position. The range of potential annual incentive compensation for each Named Executive Officer was between 0% of target and 200% of target. The target and range of annual incentive
opportunities for the Named Executive Officers (expressed as a percentage of base salary) were as follows:
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Target Annual Incentive
Compensation
(% of Base Salary)
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Range of Potential Annual
Incentive Compensation
(% of Base Salary)
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John R. Charman
(1)
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Michael J. McGuire
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110%
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0% to 220%
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John A. Kuhn
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120%
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0% to 240%
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John V. Del Col
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100%
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0% to 200%
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Brian W. Goshen
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100%
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0% to 200%
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(1)
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Mr. Charman was not eligible to receive annual incentive compensation.
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Annual incentive
compensation was paid in February or March for the prior years performance and was based upon the performance metrics described below, the Compensation Committees evaluation of the Companys performance and each Named Executive
Officers individual performance in the prior year.
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Long-Term Incentive Compensation
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The Compensation Committee believed the inclusion
of long-term incentive compensation in the Companys compensation structure fostered the appropriate perspective in management, given that the ultimate profitability of the insurance or reinsurance underwritten by the Company may not be fully
known for years. In addition, the Compensation Committee sought to align the interests of the Companys employees with the Companys shareholders to the greatest extent practicable. Finally, long-term incentive compensation, which
potentially was forfeited in the event of the departure of an employee from the Company, had the ability to retain valuable executive talent within the organization. Each of the Named Executive Officers (other than Mr. Charman) was eligible to
earn long-term incentive compensation.
The target long-term incentive compensation opportunity for the Named Executive Officers was
established based upon the level of responsibility of the Named Executive Officer within the Company, as well as external market practices. The Compensation Committee sought to set target long-term incentive compensation so that achieving target
financial and strategic performance would result in long-term incentive compensation approximating the median for the Companys peer group, with corresponding above or below target performance resulting in long-term incentive compensation that
averages above or below the peer group median. As a matter of practice, the Compensation Committee did not change target long-term incentive compensation absent a promotion or a compensation adjustment reflecting a significant change in the level of
compensation being paid in the employment marketplace for a given position. For the 2016 performance year, in light of the pending transaction between the Company and Sompo, the Compensation Committee delivered its long-term incentive compensation
in the form of cash (subject to the repayment obligation described below). The target and range of long-term incentive compensation for the Named Executive Officers (expressed as a percentage of base salary) was as follows:
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Target Long-Term
Incentive Compensation
(% of Base Salary)l
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Range of Potential
Long-Term Incentive
Compensation
(% of Base Salary)
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John R. Charman
(1)
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Michael J. McGuire
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160%
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80% to 240%
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John A. Kuhn
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180%
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90% to 270%
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John V. Del Col
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150%
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75% to 225%
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Brian W. Goshen
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150%
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75% to 225%
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(1)
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Mr. Charman was not eligible to receive long-term incentive compensation.
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The long-term
incentive cash award was adjusted from target at the time of grant based upon the Companys Operating ROE and the individual performance of each Named Executive Officer, including the Named Executive Officers contribution towards the
Companys strategic objectives. The value of the long-term incentive cash was adjusted for performance at a rate equal to one half of the performance adjustment made to each Named Executive Officers annual incentive target. For example,
if a Named Executive Officers annual incentive compensation performance adjustment was 40% above or below target, then his or her long-term incentive cash award would be adjusted to 20% above or below target. The long-term incentive cash award
granted to each Named Executive Officer in 2016 vested upon grant, with a repayment obligation should the Named Executive Officer depart the employment of the Company voluntarily or involuntarily for cause prior to February 28,
2018.
Long-term incentive compensation was delivered each March in respect of performance over the prior year. All grants of long-term
incentive compensation were approved by either the independent directors of the Board or the Compensation Committee.
Executive
Benefits and Other Compensation
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The Company offered a core set of employee benefits in order to provide its employees with a reasonable level of financial support in the event of illness or injury and enhance productivity and job
satisfaction through programs that focus on employees health and well-being.
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The benefits provided were similar for all of the Companys employees, subject to variations as a result of local market practices. The Companys basic benefits included medical, dental
and vision coverage, disability insurance and life insurance. The Company also offered all employees the opportunity to participate in the Companys defined contribution retirement savings plans. The Companys contributions under its U.S.
401(k) Plan consisted of a 4% safe harbor contribution, a maximum matching contribution of up to 3% and a
year-end
discretionary profit sharing contribution of up to 3%, all on eligible wages up to
the statutory wage maximum. Each of the Named Executive Officers (except Mr. Charman) participated in 2016 in the Companys U.S. 401(k) Plan.
In addition to the core set of employee benefits, the Company also provided customary additional benefits to senior executives of the Company,
in particular for expatriate employees working outside of their home country. These benefits were typical for the industry, as well as for Bermuda-based companies. The purpose of the expatriate employee benefits was to equalize a portion of the
income of expatriate employees, who experience additional taxation as a result of compensation for additional housing and transportation expenses, with the income such employees would earn as employees within their native countries. The additional
executive benefits provided by the Company included the following:
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Housing and Transportation Expenses
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The Company reimbursed expatriate employees for expenses related to housing required for the executives performance of their obligations to the Company and for
certain travel and transportation expenses between their homes and Company offices. For business-related safety and security reasons and logistical issues related to the location of the Companys headquarters in Bermuda, the Company owned a
fractional interest in a corporate aircraft for the use of the Chief Executive Officer and certain other senior executives. The corporate aircraft was used for business travel purposes and up to 12 round trip personal flights by the Chief Executive
Officer between Bermuda and the Eastern United States, as specified in the Chief Executive Officers employment contract. None of the Companys other senior executives were permitted to use corporate aircraft for personal flights.
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Tax Payments
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The Company reimbursed Mr. Charman, a
non-U.S.
citizen resident in Bermuda, for certain incremental tax expenses incurred as a result of required
travel to the U.S. for Company business, as approved by our Compensation Committee. The reimbursement of Mr. Charman was limited to the incremental tax expense incurred by Mr. Charman as a result of such Company travel in the U.S. and was
dependent upon Mr. Charmans business income for each year, which varied based upon tax realization events related to previously granted equity incentive compensation. Mr. Charmans reimbursement was not grossed up by the
Company. In order to accommodate the unique characteristics of the Bermuda expatriate employment market, including the need for travel to and from the island and the cost of living and maintaining a residence, to the extent the Companys
housing expense reimbursement, transportation expense reimbursement, certain tax preparation fees, or Bermuda payroll and social insurance tax payments were deemed to be taxable income to certain expatriate employees (other than Mr. Charman),
the Company grossed up such expatriate employees for any home country taxes payable on the additional income.
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Financial and Tax Planning Expenses
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Due to the additional complexities associated with the taxation of expatriate benefits and senior executive compensation, the Company reimbursed certain Named Executive
Officers for the cost of financial and tax planning assistance.
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Supplemental Defined Contribution Plan
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To the extent a Named Executive Officers eligible compensation exceeded the Internal Revenue Code compensation limits for contributions into the Companys
401(k) Plan in 2016, the Named Executive Officer could participate in the Companys Supplemental Defined Contribution Plan. If the Named Executive Officer was unable to participate in the Companys Supplemental Defined Contribution Plan
due to legal or tax restrictions, the Company made a payment to the Named Executive Officer equal to 125% of the additional contribution that would have been made on behalf of such Named Executive Officer to the Companys Supplemental Defined
Contribution Plan.
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The Compensation Committee annually reviewed the level of executive benefits provided to the
Named Executive Officers and believed that the executive benefits provided were reasonable and consistent with market practices in the jurisdictions in which the Company operated.
Peer Group
The Compensation
Committee regularly used a peer group of insurance and reinsurance companies (the Peer Group) to assess the Companys performance and the relative effectiveness and competitiveness of its compensation program. The Peer Group
consisted of companies that generally meet the following criteria:
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Gross premiums written comparable to the Company;
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Market capitalization comparable to the Company;
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Compete with the Company in the marketplace for business and investment capital; and
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Compete with the Company for executive talent.
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The Compensation Committee did not compare the
Company with other financial services companies engaged in banking, investment banking or investment management because the Compensation Committee believed the mix of pay elements and program structures were materially different in those areas of
the financial services industry.
Each year, the Compensation Committee evaluated and, if appropriate, updated the composition of the Peer
Group to ensure it remained relevant for the Companys comparative compensation purposes. Changes to the Peer Group were carefully considered to assure continuity from year to year. The 8 companies included in the Peer Group in 2016 were:
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Allied World Assurance Company Limited
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Arch Capital Group Ltd.
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Argo Group International Holdings, Ltd.
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Aspen Insurance Holdings Ltd.
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AXIS Capital Holdings Limited
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RenaissanceRe Holdings Ltd.
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Performance Metrics
The Compensation Committee set the performance metrics for the determination of annual and long-term incentive compensation at the commencement
of the 2016 performance year. Each year, the Compensation Committee evaluated the Companys performance metrics with a view towards closely aligning Named Executive Officers incentive compensation structure with the generation of
shareholder value. The relative weighting of the performance metrics was determined by the Compensation Committee in order to ensure a diverse and balanced measurement of the Companys performance.
The Compensation Committee calculated each of the Companys 2016 performance metrics as follows:
Return on Equity
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Operating return on equity, or Operating ROE, was determined by dividing the
Companys operating income by the arithmetic average of the Companys beginning and ending common equity balances for the four calendar quarters in a
given year. Operating income was calculated by excluding from the Companys net income any
after-tax
net realized capital gains or losses,
after-tax
net foreign
exchange gains or losses and expenses associated with the Montpelier and Sompo transactions. The Compensation Committee used operating income, as opposed to net income, as the measure of the Companys performance because the Compensation
Committee believed realized capital gains and losses, foreign exchange gains and losses and acquisition expenditures were largely independent of the Companys business and underwriting process and including them distorts the analysis of trends
in its operations.
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Each year, the Compensation Committee established the current year target Operating ROE goal for
the Company based upon the Companys budget, financial plan and risk tolerances reviewed and approved by the Board. In setting the Companys Operating ROE goal, the Board evaluated the expected underwriting and interest rate environments
for the upcoming year, as well as the Companys long-term strategic objectives. For 2016, the Compensation Committee considered the highly competitive insurance and reinsurance markets and historically low interest rate environment in
establishing the target Operating ROE. The Compensation Committee also undertook to establish an Operating ROE goal for 2016 biased towards Company outperformance, taking into account the previously mentioned adverse market and interest rate
conditions. Following consideration of the above factors, the Compensation Committee established for the Company in 2016 the following target Operating ROE goal:
2016 Company Target Operating ROE
7.0%
Strategic Objectives
.
In addition to an Operating ROE goal, the Compensation
Committee established the current year strategic objectives designed to elicit balanced revenue and profit growth by the Company in a manner consistent with the Companys risk profile. For 2016, the Compensation Committee established for the
Company the specific strategic objectives in the following categories:
2016 Company Strategic Objectives
Non-Financial
Objectives
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Targeted strategic acquisition goals
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Continued development of the Companys international insurance operations
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Completion of the integration of Montpeliers business and operations
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Financial
Objectives
Insurance Segment
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Pre G&A underwriting ratio
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Return on consumed capital
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Reinsurance Segment
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Targeted strategic acquisition goals
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Pre G&A underwriting ratio
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Return on consumed capital
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Investments
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Risk adjusted investment return
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Investment performance against the portfolio strategic benchmark
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Total investment return
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Capital
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Capital levels versus internal targets
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G&A Expenses
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Aggregate net G&A expenditures
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Individual Performance
. Each Named Executive
Officer had individual job objectives based upon the Company strategic objectives established by the Board for the Company. Individual job objectives varied by each Named Executive Officers functional role within the organization, but
generally included, in addition to the attainment of applicable Company strategic objectives, the following:
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achievement of the Companys strategic objectives within applicable risk management parameters;
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management of applicable risks within established guidelines;
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development of leadership and management capabilities of the Company; and
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compliance at a high level with applicable law, regulations and corporate governance standards.
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Employment Agreements and Severance Benefits
Employment Agreements
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In order to clarify the terms of employment for the Named Executive Officers and to gain the benefit of
post-employment
non-compete
and
non-solicitation
restrictions, the Company had entered into employment agreements with each of the Named Executive Officers. In
establishing the terms of the employment agreements with the Named Executive Officers, the Company considered various factors, including the changing market opportunities and challenges facing the insurance industry, competitive pressures from new
market entrants, and the enhanced roles of each of the Named Executive Officers as a result of the growth and development of the Company. The employment agreements with the Named Executive Officers as of December 31, 2016 are described below
under Post-Employment Benefits Employment Contracts.
Severance Benefits
.
The employment agreements with
the Named Executive Officers provided for the delivery of severance benefits upon termination of their employment under certain circumstances. Receipt of post-employment severance benefits is conditioned upon delivery by a Named Executive Officer to
the Company of a release and waiver of claims. For a description of the severance benefits available to each of the Named Executive Officers as of December 31, 2016, please see Post-Employment Benefits Potential Payments Upon
Termination of Employment or Change in Control.
The Companys Compensation Process
The Compensation Committee met in November 2015 and February 2016 to review and adopt the Companys 2016 Operating ROE goal and strategic
objectives. The Compensation Committee then met in executive session in November 2016 and February 2017 to review the Companys 2016 performance and the performance of the Chief Executive Officer, the other Named Executive Officers and the
Companys other senior executives. The Compensation Committee advised the Board with respect to all compensation determinations for these executives. Further, the Compensation Committee regularly updates the Board on key compensation matters.
The Compensation Committee established a number of processes to assist it in ensuring that the
Companys executive compensation program was achieving its objectives. Among those were:
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Establishment of Company and Individual Objectives
.
The Compensation Committee believed the establishment of clear and measurable objectives for the Company and its individual employees was of paramount
importance in the creation of a compensation program which met the goal of maximizing shareholder value over the long term in a manner which remained within the Companys risk tolerances. To that end, the Compensation Committee established at
the beginning of each year a set of financial and strategic targets, including an Operating ROE target, based upon the Companys budget and financial plan and risk tolerances presented to and approved by the Board.
|
In addition, the Compensation Committee created with the Chief Executive Officer a set of specific individual job objectives for the upcoming
year designed to facilitate the Company meeting its budgeted financial targets. In turn, the Chief Executive Officer utilized his individual job objectives established by the Compensation Committee for the purpose of creating the individual job
objectives for the executives who report to the Chief Executive Officer a process which was then repeated throughout the organization.
By linking compensation to clear and measurable Company and individual objectives shared by each employee in the Company, the Compensation
Committee endeavored to establish the Companys
13
compensation program as a forward-looking incentive program which elicited the desired and coordinated efforts of the Companys management and employees, rather than a backward-looking
rewards program, with no effective link to the desired behaviors of the Companys management and employees.
|
|
|
Assessment of Company Performance
.
At the conclusion of each year, the Compensation Committee assessed the Companys performance against its Operating ROE and strategic objectives. In order to assess
the Companys performance over the past year, the Compensation Committee reviewed both the Companys performance against Operating ROE and strategic objectives, measured against the Companys compliance with its established risk
parameters.
|
|
|
|
Assessment of Individual Performance
.
At the conclusion of each year, the
non-management
members of the Board assessed the Chief Executive Officers performance
for the past year. The assessment measured the Chief Executive Officers performance against his previously established performance objectives, as well as the Chief Executive Officers performance in respect of a set of core competencies
identified as essential for executives occupying senior leadership positions within the Company. The assessment also included an opportunity for director input on the Chief Executive Officers strengths and any areas that may warrant additional
focus in the future. The results of the assessment were shared by the Board with the Chief Executive Officer. A similar assessment was utilized by the Chief Executive Officer for the senior executives and by managers for each other employee
throughout the Company and the resulting performance ratings were used to determine the individual performance component of the employees annual and long-term incentive compensation.
|
|
|
|
Peer Compensation Comparison
.
The Compensation Committee reviewed publicly available Peer Group proxy data, as well as the data available from industry compensation surveys in order to compare the
Companys compensation program to peer practices. The Compensation Committee compared compensation programs generally, as well as the compensation of the Named Executive Officers to the extent sufficient data exists to make the comparison
meaningful. The Compensation Committee utilized Peer Group data primarily to ensure that the Companys compensation program as a whole was competitive, meaning approximating the median comparative pay of similarly situated executives at the
Companys peers for commensurate performance.
|
|
|
|
Pay for Performance
. The Compensation Committee reviewed the performance of the Company against its Operating ROE goals and strategic objectives and compared the levels of compensation delivered to the
Companys Named Executive Officers for the purpose of determining if the Companys compensation plan, practices and decisions appropriately reflected the Companys pay for performance philosophy with respect to the compensation of its
Named Executive Officers.
|
|
|
|
Total Compensation Review
.
The Compensation Committee reviewed the base pay, annual incentive compensation and long-term incentive compensation of the Companys Named Executive Officers. In addition,
the Compensation Committee reviewed all other compensation elements, including perquisites for the Companys Named Executive Officers. The Compensation Committee also reviewed the Companys contractual obligations to its Named Executive
Officers in the event of a change in control of the Company or an employment termination event.
|
Roles of the Participants in the
Companys Compensation Process
|
|
|
The Compensation Committee
.
The Compensation Committee was comprised exclusively of independent members of the Board, as determined in accordance with the Companys Director Nomination Policy and the
NYSE Corporate Governance Standards. The Compensation Committee set the Companys compensation policies and was charged with all compensation actions related to the Companys Chief Executive Officer and the other Named Executive Officers.
|
|
|
|
The Compensation Consultant
.
The Compensation Committee was authorized to retain and terminate any
consultant, as well as to approve the consultants fees and other terms of the consultants engagement. The Compensation Committee also had the authority to obtain advice and assistance
|
14
|
from external counsel or other advisors. The Compensation Committee retained F. W. Cook as its independent compensation consultant for 2016 in order to assist the Compensation Committee in
accomplishing its goals. The Compensation Committee determined that F. W. Cook was independent of the Company under the NYSE Corporate Governance Standards after taking into consideration the following factors:
|
|
|
|
The absence of other services being provided to the Company by F.W. Cook;
|
|
|
|
The amount of fees received from the Company by F.W. Cook representing a
non-material
percentage of the total revenue of F.W. Cook;
|
|
|
|
The policies and procedures of F.W. Cook that are designed to prevent conflicts of interest;
|
|
|
|
The absence of any business or personal relationship of any employee of F.W. Cook with a member of the Compensation Committee;
|
|
|
|
The absence of shares of the Company owned by F.W. Cook; and
|
|
|
|
The absence of any business or personal relationship of F.W. Cook with an executive officer of the Company.
|
The Compensation Committee did not engage any other advisor in 2016.
The Compensation Committee utilized F.W. Cook to assist the Compensation Committee in fulfilling the following responsibilities:
|
|
|
Advising on management compensation and benefit structure and levels;
|
|
|
|
Advising on appropriate executive performance goals and metrics;
|
|
|
|
Advising on the appropriate form and level of long-term incentive grants;
|
|
|
|
Providing the Compensation Committee with comparison group benchmarking data and information as to market practices and trends;
|
|
|
|
Reviewing the Companys compensation program to determine whether the Companys compensation practices encourage excessive and unnecessary risk taking that would be reasonably likely to have a material adverse
effect on the Company;
|
|
|
|
Reviewing the composition of the Companys Peer Group;
|
|
|
|
Reviewing the Compensation Discussion and Analysis, compensation tables and other compensation related disclosure and other communications with the Companys shareholders;
|
|
|
|
Advising on the Companys employment agreement and employee severance standards and practices;
|
|
|
|
Attending Compensation Committee meetings, as requested by the Compensation Committee;
|
|
|
|
Advising on compliance with applicable law and regulations governing compensation practices and procedures;
|
|
|
|
Advising on best-practices approaches for compensation program design and governance of executive and director compensation; and
|
|
|
|
Advising on director compensation levels.
|
|
|
|
Company Management
.
The Chief Executive Officer and the Chief Administrative Officer, working with internal resources, recommended the design of the Companys compensation programs to the Compensation
Committee and recommended modifications to existing or the adoption of new compensation plans and programs to the Compensation Committee. In addition, the Chief Executive Officer recommended to the Compensation Committee the performance metrics used
to determine payouts under the Companys annual and long-term incentive compensation programs. Each Named Executive Officers individual performance goals were jointly developed by the Named Executive Officer and the Chief Executive
Officer.
|
Before the Compensation Committee made compensation decisions, the Chief Executive Officer provided his assessment
of each Named Executive Officers performance, other than his own, addressing such factors as the executives achievement of individual goals, leadership accomplishments, contribution to the Companys performance and the achievement
of Company
15
goals, areas of strength and areas for development. The Chief Executive Officer then recommended a base salary adjustment, if any, and an individual performance adjustment on the executives
contribution towards the Companys strategic objectives. This performance adjustment, when combined with the Companys Operating ROE performance adjustment, was then used to determine the annual and long-term incentive compensation
recommendations for each Named Executive Officer. In preparing compensation recommendations for the Compensation Committee, the Chief Executive Officer and Chief Administrative Officer and other internal resources reviewed compensation and survey
data compiled for the Compensation Committee by F. W. Cook for similarly-situated executives at the Peer Group. The Chief Executive Officer attended Compensation Committee meetings but was not present for, and did not participate in, the discussions
concerning his own compensation. Decisions relating to the compensation of the Named Executive Officers were made solely by the Compensation Committee and reported to the full Board of Directors.
Share Ownership Guidelines
The
Company adopted share ownership guidelines intended to align the interests of the Companys nonemployee directors, Chief Executive Officer and other senior executive officers with the Companys shareholders by requiring such persons to
maintain a significant level of investment in the Company. Prior to the Sompo transaction, the required share ownership levels for the Chief Executive Officer, the Companys other senior executive officers and the Companys
non-employee
directors were as follows:
|
|
|
|
|
Role
|
|
Value of Shares Required to be Owned
|
|
|
Chief Executive Officer
|
|
5 times base salary
|
|
|
Senior Executive Officer
|
|
2 times base salary
|
|
|
Non-Employee
Director
|
|
5 times base retainer fee
|
|
|
Shares counted towards meeting the Companys share ownership guidelines included:
|
|
|
Shares owned outright by the
non-employee
director or executive or his or her immediate family members residing in the same household;
|
|
|
|
Shares held in the Company Employee Share Purchase Plan;
|
|
|
|
Restricted shares, restricted share units, share appreciation rights, share bonuses and phantom shares (collectively, Equity Incentives), including performance-based Equity Incentives counted assuming a
target level of performance, issued and held as part of a
non-employee
directors or executives long-term incentive compensation, that are scheduled to vest in the next 12 months;
|
|
|
|
The net cash value of outstanding vested options, divided by the Companys closing share price as of the date of measurement; and
|
|
|
|
Shares held in trust for the benefit of the
non-employee
director or executive, subject to the approval of the Compensation Committee.
|
There was no timeframe within which
non-employee
directors, the Chief Executive Officer and executive
officers had to attain the required levels of ownership; however, they were required to retain 50% of the
after-tax
shares received upon exercise or vesting of Company-delivered equity until they had attained
the applicable share ownership level. In the event of
non-compliance
with the Companys share ownership guidelines, the Compensation Committee could take such actions as it might determine to be
appropriate in order to achieve the purposes of the Companys share ownership guidelines.
Each of the Named Executive Officers owned
the number of shares required under the Companys share ownership guidelines as of March 1, 2017.
16
Trading Controls and Derivatives; Prohibition on Hedging and Pledging
Generally, trading by the Companys
non-employee
directors and employees in the Companys
shares was permitted only during announced trading periods.
Non-employee
directors and employees who were subject to trading restrictions, including the Named Executive Officers, could enter into a trading
plan under Rule
10b5-1
under the Securities Exchange Act of 1934. These trading plans could be entered into only during an open trading period and had to be approved in advance by the Company. The
Companys
non-employee
directors and employees, including the Named Executive Officers, could not engage in short sales of the Companys shares, purchase or sell options on the Companys shares
or trade in puts, calls, straddles, equity swaps or other derivative securities that were directly linked to the Companys shares. In addition, the Companys
non-employee
directors and employees
could not pledge the Companys shares to secure new or existing loans.
Compensation Determinations for 2016
Company Performance
.
In 2016, the Compensation Committee measured the Companys performance based on Operating ROE (which
excludes
after-tax
realized investment gains and losses, foreign exchange gains and losses and expenses associated with the Montpelier and Sompo transactions) and the achievement of the Companys
strategic objectives. The Companys performance relative to the 2016
non-financial
strategic objectives established by the Compensation Committees is set forth in the table below:
|
|
|
|
|
2016 Company Target Operating ROE
|
|
Actual
Operating
ROE
|
|
7.0%
|
|
|
6.6%
|
|
|
|
2016 Company Strategic Objectives
|
|
Status
|
|
Non-Financial
Objectives
|
|
|
|
|
- Targeted strategic acquisition goals
|
|
|
Ö
|
|
- Continued development of the Companys international insurance
operations
|
|
|
Ö
|
|
- Completion of the integration of Montpeliers business and operations
|
|
|
Ö
|
|
|
|
Financial Objectives
|
|
|
|
|
Insurance Segment
|
|
|
|
|
- Gross written premiums
|
|
|
≈
|
|
- Pre G&A underwriting ratio
|
|
|
≈
|
|
- Return on consumed capital
|
|
|
X
|
|
Reinsurance Segment
|
|
|
|
|
- Targeted strategic acquisition goals
|
|
|
≈
|
|
- Pre G&A underwriting ratio
|
|
|
Ö
|
|
- Return on consumed capital
|
|
|
Ö
|
|
Investments
|
|
|
|
|
- Risk adjusted investment return
|
|
|
≈
|
|
- Investment performance against the portfolio strategic benchmark
|
|
|
X
|
|
- Total investment return
|
|
|
≈
|
|
- Net investment income
|
|
|
X
|
|
Capital
|
|
|
|
|
- Capital levels versus internal targets
|
|
|
Ö
|
|
G&A Expenses
|
|
|
|
|
- Aggregate net G&A expenditures
|
|
|
Ö
|
|
|
|
Ö
signifies met or exceeded
|
|
|
|
|
≈ signifies partially attained
|
|
|
|
|
X signifies not attained
|
|
|
|
|
17
The Companys performance in 2016 was influenced by the higher level of catastrophe losses,
offset in part by the positive impact of the significant underwriting and strategic investments made by the Company. In evaluating the Companys performance, the Compensation Committee also took into account the Companys entry into the
transaction with Sompo. For a more detailed description of the Companys financial results, please see Managements Discussion and Analysis of Financial Conditions and Results of Operations.
Base Salaries
.
Base salaries for the Named Executive Officers were not increased by the Compensation Committee in 2016.
Annual Incentive Compensation
.
The 6.6% Operating ROE (which excludes
after-tax
realized
investment gains and losses, foreign exchange gains and losses and expenses associated with the Montpelier and Sompo transactions) achieved by the Company in 2016 resulted in an indicated performance adjustment slightly below the target annual
incentive compensation of the Named Executive Officers. The Named Executive Officers individual performance, including their contribution towards the Companys strategic objectives, resulted in an indicated average individual performance
adjustment slightly above their target annual incentive compensation. The Operating ROE and individual performance adjustments are averaged with an equal weight to determine the Named Executive Officers performance adjustments to their target
levels of annual incentive compensation. The table below lists the actual 2016 annual incentive compensation for the Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2016 Annual
Incentive
Target
(1)
|
|
|
|
2016 Performance
Adjustment
Percentage
|
|
|
|
2016 Annual
Incentive
Performance
Adjusted Target
|
|
2016 Annual
Incentive
Compensation
Amount
|
|
John R. Charman
(2)
|
|
|
|
X
|
|
|
|
=
|
|
|
|
|
|
|
Michael J. McGuire
|
|
110%
|
|
X
|
|
100%
|
|
=
|
|
110%
|
|
$
|
632,500
|
|
John A. Kuhn
|
|
120%
|
|
X
|
|
100%
|
|
=
|
|
120%
|
|
$
|
960,000
|
|
John V. Del Col
|
|
100%
|
|
X
|
|
100%
|
|
=
|
|
100%
|
|
$
|
500,000
|
|
Brian W. Goshen
|
|
100%
|
|
X
|
|
100%
|
|
=
|
|
100%
|
|
$
|
500,000
|
|
(1)
|
Targets and adjusted targets are expressed as percentages of the Named Executive Officers base salary.
|
(2)
|
Mr. Charman was not eligible to receive annual incentive compensation.
|
Long-Term Incentive Compensation
.
The 2016 target long-term incentive compensation delivered to each Named Executive Officer was
in the form of cash (subject to the repayment obligation described below), with the target amount of the long-term incentive cash award adjusted for past performance at a rate above or below target equal to one half of the performance adjustment
made to each Named Executive Officers annual incentive target. For 2016, both the annual incentive compensation and the long-term incentive compensation for the Named Executive Officers were at target.
The table below lists the long-term incentive plan performance adjusted compensation percentages and indicated long-term incentive cash award
value as it relates to the 2016 performance year for the Named Executive Officers:
|
|
|
|
|
|
|
|
|
2016 Long-Term
Incentive Cash
(Percentage of
Target)
|
|
2016 Long-Term
Incentive Cash
|
|
John R. Charman
(1)
|
|
|
|
|
|
|
Michael J. McGuire
|
|
100%
|
|
$
|
920,000
|
|
John A. Kuhn
|
|
100%
|
|
$
|
1,440,000
|
|
John V. Del Col
|
|
100%
|
|
$
|
750,000
|
|
Brian W. Goshen
|
|
100%
|
|
$
|
750,000
|
|
(1)
|
Mr. Charman was not eligible to receive long-term incentive compensation.
|
18
Due to the pending transaction between the Company and Sompo, the long-term incentive
compensation delivered to each Named Executive Officer in respect of the 2016 performance year was in the form of cash subject to a one year repayment obligation. The long-term incentive cash award granted to each Named Executive Officer vested upon
grant, with a repayment obligation should the Named Executive Officer depart the employment of the Company voluntarily or involuntarily for cause on or before February 28, 2018.
Total Compensation
. In February 2017, the Compensation Committee reviewed the preliminary
compensation amounts for the Named Executive Officers, other than the Chief Executive Officer, produced by the indicated performance adjustments to determine
whether the process had yielded appropriate annual and long-term incentive compensation in the context of events as they occurred during the year. In addition, the Compensation Committee reviewed the other compensation elements, including benefits
and perquisites, of the Named Executive Officers. Following its review of these compensation elements, the Compensation Committee determined that these elements of compensation were reasonable in the aggregate and no adjustments were necessary. As a
result, the total 2016 compensation of the Named Executive Officers was set by the Compensation Committee as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Annual Base
Salary
|
|
|
Annual
Incentive
Compensation
|
|
|
Long-Term
Incentive Cash
Award
|
|
|
Total
(2)
|
|
John R. Charman
(1)
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
$
|
100
|
|
Michael J. McGuire
|
|
$
|
575,000
|
|
|
$
|
632,500
|
|
|
$
|
920,000
|
|
|
$
|
2,127,500
|
|
John A. Kuhn
|
|
$
|
800,000
|
|
|
$
|
960,000
|
|
|
$
|
1,440,000
|
|
|
$
|
3,200,000
|
|
John V. Del Col
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
|
$
|
750,000
|
|
|
$
|
1,750,000
|
|
Brian W. Goshen
|
|
$
|
500,000
|
|
|
$
|
500,000
|
|
|
$
|
750,000
|
|
|
$
|
1,750,000
|
|
(1)
|
Mr. Charman was not eligible to receive annual or long-term incentive compensation.
|
(2)
|
The compensation information in the table above differs from the calculation of total compensation in the Summary Compensation Table below, primarily by not including (a) the value of restricted shares granted in
March of 2016 in recognition of performance during 2015 from the Stock Awards column in the Summary Compensation Table and (b) the value of compensation and perquisites from the All Other Compensation column in the
Summary Compensation Table.
|
U.S. Tax Considerations
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation in excess of
$1 million paid to certain executives, although performance based compensation arrangements may qualify for an exemption from the deduction limit if they satisfy various requirements under Section 162(m). For the Company, this rule has limited
effect because the Company is headquartered and operates in Bermuda. Therefore, although the Company is aware of and considered the impact of this rule when developing and implementing its executive compensation program, the requirements of Section
162(m) did not have a material impact on the operation of the Companys executive compensation program.
Shareholder Engagement
The Company had an active shareholder engagement program, and we regularly spoke with a broad spectrum of our shareholders on a variety of
topics throughout the year. This allowed us to provide perspective on Company policies and practices, stay attuned to shareholder sentiment on a variety of corporate governance and executive compensation topics and to incorporate shareholders
views into our policies where appropriate.
At our 2016 Annual General Meeting of Shareholders, our shareholders expressed their support
for our executive officer compensation practices, with approximately 71% of the votes cast in favor of our
say-on-pay
proposal.
19
Compensation Committee Report
Messrs. Norman Barham, Galen R. Barnes, Morgan W. Davis and Robert A. Spass and Dr. Susan S. Fleming served on the Compensation
Committee until the closing of the Sompo transaction on March 28, 2017. Mr. Barham served as Chairman of the Compensation Committee. Prior to the closing of the Sompo transaction, the Compensation Committee reviewed and discussed the
Compensation Discussion and Analysis with the management of the Company and, based upon this discussion, recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Amendment.
Respectfully submitted,
Norman Barham (Chairman)
Galen R. Barnes
Morgan W. Davis
Susan S. Fleming, PhD.
Robert A. Spass
March 27, 2017
Executive Compensation Tables
Summary Compensation Table
The
following Summary Compensation Table sets forth, for the three years ended December 31, 2016, 2015 and 2014, the compensation for services in all capacities earned by the Companys Chief Executive Officer, Chief Financial Officer and its
three most highly compensated executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
All Other
Compensation
|
|
|
Total
|
|
John R. Charman
|
|
2016
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
717,097
|
|
|
$
|
717,197
|
|
Chief Executive Officer
|
|
2015
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
924,543
|
|
|
$
|
924,643
|
|
|
|
2014
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
632,892
|
|
|
$
|
632,992
|
|
|
|
|
|
|
|
|
|
Michael J. McGuire
|
|
2016
|
|
$
|
575,000
|
|
|
|
|
|
|
$
|
1,126,606
|
|
|
$
|
1,552,500
|
|
|
$
|
304,722
|
|
|
$
|
3,558,828
|
|
Chief Financial Officer
|
|
2015
|
|
$
|
506,250
|
|
|
|
|
|
|
$
|
1,026,513
|
|
|
$
|
1,106,875
|
|
|
$
|
286,129
|
|
|
$
|
2,925,767
|
|
|
|
2014
|
|
$
|
500,000
|
|
|
|
|
|
|
$
|
525,468
|
|
|
$
|
883,438
|
|
|
$
|
237,414
|
|
|
$
|
2,146,320
|
|
|
|
|
|
|
|
|
|
John A. Kuhn
|
|
2016
|
|
$
|
800,000
|
|
|
|
|
|
|
$
|
1,763,353
|
|
|
$
|
2,400,000
|
|
|
$
|
321,378
|
|
|
$
|
5,284,731
|
|
Chief Executive Officer,
|
|
2015
|
|
$
|
708,333
|
|
|
|
|
|
|
$
|
1,473,826
|
|
|
$
|
1,680,000
|
|
|
$
|
317,959
|
|
|
$
|
4,180,118
|
|
Global Insurance
|
|
2014
|
|
$
|
700,000
|
|
|
|
|
|
|
$
|
683,077
|
|
|
$
|
1,333,063
|
|
|
$
|
166,129
|
|
|
$
|
2,882,269
|
|
|
|
|
|
|
|
|
|
John V. Del Col
|
|
2016
|
|
$
|
500,000
|
|
|
|
|
|
|
$
|
918,415
|
|
|
$
|
1,250,000
|
|
|
$
|
234,846
|
|
|
$
|
2,903,261
|
|
General Counsel
(1)
|
|
2015
|
|
$
|
500,000
|
|
|
|
|
|
|
$
|
801,959
|
|
|
$
|
875,000
|
|
|
$
|
232,359
|
|
|
$
|
2,409,318
|
|
|
|
|
|
|
|
|
|
Brian W. Goshen
|
|
2016
|
|
$
|
500,000
|
|
|
|
|
|
|
$
|
908,779
|
|
|
$
|
1,250,000
|
|
|
$
|
78,072
|
|
|
$
|
2,736,851
|
|
Chief Administrative Officer
|
|
2015
|
|
$
|
408,333
|
|
|
|
|
|
|
$
|
641,592
|
|
|
$
|
875,000
|
|
|
$
|
76,031
|
|
|
$
|
2,000,956
|
|
|
|
2014
|
|
$
|
341,026
|
|
|
$
|
1,128,500
|
|
|
$
|
208,440
|
|
|
$
|
514,000
|
|
|
$
|
38,279
|
|
|
$
|
2,230,245
|
|
(1)
|
Compensation for Mr. Del Col is provided only for 2016 and 2015 because he was not a Named Executive Officer in 2014.
|
Salary
. The amount of salary stated above differs from the annual base rate salary for each of the Named Executive Officers below due
to certain Named Executive Officers commencing employment with the Company after the start of the applicable calendar year and the effective date of salary increases applicable to certain Named Executive Officers falling during the calendar year
(rather than at
year-end).
The table below sets forth the annual base rate salary of the Named Executive Officers for the past three years.
20
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
|
Annual Base
Rate Salary
(1)
|
|
John R. Charman
|
|
|
2016
|
|
|
$
|
100
|
|
|
|
|
2015
|
|
|
$
|
100
|
|
|
|
|
2014
|
|
|
$
|
100
|
|
|
|
|
Michael J. McGuire
|
|
|
2016
|
|
|
$
|
575,000
|
|
|
|
|
2015
|
|
|
$
|
575,000
|
|
|
|
|
2014
|
|
|
$
|
500,000
|
|
|
|
|
John A. Kuhn
|
|
|
2016
|
|
|
$
|
800,000
|
|
|
|
|
2015
|
|
|
$
|
800,000
|
|
|
|
|
2014
|
|
|
$
|
700,000
|
|
|
|
|
John V. Del Col
|
|
|
2016
|
|
|
$
|
500,000
|
|
|
|
|
2015
|
|
|
$
|
500,000
|
|
|
|
|
Brian W Goshen
|
|
|
2016
|
|
|
$
|
500,000
|
|
|
|
|
2015
|
|
|
$
|
500,000
|
|
|
|
|
2014
|
|
|
$
|
400,000
|
|
(1)
|
The annual base salaries of Messrs. McGuire, Kuhn and Goshen were increased by the Compensation Committee on December 1, 2015 from $500,000, $700,000 and
$500,000 per annum, respectively, following a review by the Compensation Committee of a competitive market analysis that was conducted by F.W. Cook. Neither Mr. McGuire nor Mr. Kuhn received a salary increase during the prior three years.
|
Bonus
. In 2014, Mr. Goshen received a $1,000,000 cash payment upon joining the Company as compensation for
foregone unvested long-term compensation at his prior employer. In the event Mr. Goshens service with the Company was severed by the Company for cause or by Mr. Goshen without good reason on or prior to February 24, 2016,
Mr. Goshen would have had to repay to the Company the full amount of such cash payment. In addition, in 2014 Mr. Goshen received a $128,500 special bonus in recognition of his assumption of additional responsibilities as Chief
Administrative Officer of the Company. Other than as delivered to Mr. Goshen in 2014, the Company paid no discretionary bonuses, or bonuses based on performance metrics that were not
pre-established
and
communicated to the Named Executive Officers for 2016, 2015 and 2014. All annual incentive awards for 2016, 2015 and 2014 were performance based. These payments, which were made under the Companys annual performance based incentive program,
are reported in the
Non-Equity
Incentive Plan Compensation column.
Stock Awards
. The
amounts reported in the Stock Awards column reflect the aggregate grant date fair value, computed in accordance with FASB Accounting Standards Codification (ASC) Topic 718, of restricted shares granted during 2016, 2015 and 2014. The
amounts reported in the Stock Awards column are the sum of the values of the performance-based restricted shares granted and time-based restricted share granted. The value of the performance-based restricted shares is measured at the grant date
using a Monte Carlo simulation based on
pre-established
targets relating to certain performance based measures achieved by the Company. The values of the time-based restricted shares are determined by
multiplying the number of restricted shares granted by the closing price per share on the date of grant. The restricted share awards were granted as part of the Companys long-term incentive plan in March of the year listed in respect of the
performance of the Company and the Named Executive Officers in the previous year. The table below sets forth the amount that each of the restricted share grants comprised of the total amount reported in the Stock Awards column for each Named
Executive Officer.
21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
Value of
Performance-Based
Restricted Shares
Granted
|
|
|
Value of Time-
Based Restricted
Shares Granted
|
|
|
Total Reported in
Stock Awards Column
|
|
John R. Charman
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. McGuire
|
|
2016
|
|
$
|
470,232
|
|
|
$
|
656,374
|
|
|
$
|
1,126,606
|
|
|
|
2015
|
|
$
|
478,349
|
|
|
$
|
548,164
|
|
|
$
|
1,026,513
|
|
|
|
2014
|
|
|
|
|
|
$
|
525,468
|
|
|
$
|
525,468
|
|
|
|
|
|
|
John A. Kuhn
|
|
2016
|
|
$
|
735,982
|
|
|
$
|
1,027,371
|
|
|
$
|
1,763,353
|
|
|
|
2015
|
|
$
|
669,602
|
|
|
$
|
804,224
|
|
|
$
|
1,473,826
|
|
|
|
2014
|
|
|
|
|
|
$
|
683,077
|
|
|
$
|
683,077
|
|
|
|
|
|
|
John V. Del Col
|
|
2016
|
|
$
|
383,324
|
|
|
$
|
535,091
|
|
|
$
|
918,415
|
|
|
|
2015
|
|
$
|
373,688
|
|
|
$
|
428,271
|
|
|
$
|
801,959
|
|
|
|
|
|
|
Brian W. Goshen
|
|
2016
|
|
$
|
373,688
|
|
|
$
|
535,091
|
|
|
$
|
908,779
|
|
|
|
2015
|
|
$
|
298,950
|
|
|
$
|
342,642
|
|
|
$
|
641,592
|
|
|
|
2014
|
|
|
|
|
|
$
|
208,440
|
|
|
$
|
208,440
|
|
Additional information on all outstanding restricted shares is reflected in the 2016 Outstanding Equity Awards
at Fiscal
Year-End
table. For additional information regarding the stock awards, see Note 16 to Consolidated Financial Statements in this Form
10-K.
Option Awards
. The Company did not issue any option awards in 2016, 2015 or 2014.
Non-Equity
Incentive Plan Compensation
. The amounts reported in the
Non-Equity
Incentive Plan Compensation column reflect (a) the amounts earned and payable to each Named Executive Officer under the Companys annual incentive plan and (b) the long-term incentive cash
awards earned and payable to each Named Executive Officer for the 2016 performance year (subject to the repayment obligation described below). The table below sets forth the amount that each of the annual incentive compensation and long-term
incentive cash compensation comprised of the total amount reported in the
Non-Equity
Incentive Plan Compensation column for each Named Executive Officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
Annual Incentive
Compensation
|
|
|
Long-Term Incentive
Cash Compensation
|
|
|
Total Reported in Non-
Equity Incentive Plan
Column
|
|
John R. Charman
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. McGuire
|
|
2016
|
|
$
|
632,500
|
|
|
$
|
920,000
|
|
|
$
|
1,552,500
|
|
|
|
2015
|
|
$
|
1,106,875
|
|
|
|
|
|
|
$
|
1,106,875
|
|
|
|
2014
|
|
$
|
883,438
|
|
|
|
|
|
|
$
|
883,438
|
|
|
|
|
|
|
John A. Kuhn
|
|
2016
|
|
$
|
960,000
|
|
|
$
|
1,440,000
|
|
|
$
|
2,400,000
|
|
|
|
2015
|
|
$
|
1,680,000
|
|
|
|
|
|
|
$
|
1,680,000
|
|
|
|
2014
|
|
$
|
1,333,063
|
|
|
|
|
|
|
$
|
1,333,063
|
|
|
|
|
|
|
John V. Del Col
|
|
2016
|
|
$
|
500,000
|
|
|
$
|
750,000
|
|
|
$
|
1,250,000
|
|
|
|
2015
|
|
$
|
875,000
|
|
|
|
|
|
|
$
|
875,000
|
|
|
|
|
|
|
Brian W. Goshen
|
|
2016
|
|
$
|
500,000
|
|
|
$
|
750,000
|
|
|
$
|
1,250,000
|
|
|
|
2015
|
|
$
|
875,000
|
|
|
|
|
|
|
$
|
875,000
|
|
|
|
2014
|
|
$
|
514,000
|
|
|
|
|
|
|
$
|
514,000
|
|
22
The annual incentive compensation delivered to the Named Executive Officers was earned in the
year indicated and immediately available to the Named Executive Officers upon delivery in February or March of the following year. Due to the pending transaction between the Company and Sompo (which would result in the vesting and liquidation of any
restricted shares granted), the long-term incentive compensation for the 2016 performance year, which would normally be delivered in the form of restricted shares, was delivered to each Named Executive Officer was in the form of cash, subject to a
one year repayment obligation. The long-term incentive cash compensation was earned and immediately available to the Named Executive Officers upon delivery in March 2017, provided that in the event a Named Executive Officers service with the
Company is severed by the Company for cause or by the Named Executive Officer on or prior to February 28, 2018, the Named Executive Officer must repay to the Company the full amount of such long-term incentive cash payment. The annual incentive
compensation and long-term incentive cash compensation payments delivered to the Named Executive Officers in respect of the 2016 performance year were determined as described in Compensation Discussion and Analysis Elements of the
Companys Compensation Program.
Change in Pension Value and Nonqualified Deferred Compensation Earnings
.
The
Company does not have any defined benefit or actuarial pension plans (including supplemental plans), and did not provide above-market or preferential earnings on compensation that is deferred on a basis that is not
tax-qualified
(including earnings on nonqualified defined contribution plans) to any of the Named Executive Officers in 2016.
All Other Compensation
. The amounts reported in the All Other Compensation column reflect, for each Named Executive Officer, the sum of
the incremental cost to the Company of the (i) perquisites and other personal benefits and (ii) additional compensation required by the SEC rules to be separately quantified amounts. The following table and the narrative following the
table sets forth and describes each of the amounts included in the All Other Compensation column for the Named Executive Officers in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John R.
Charman
|
|
|
Michael J.
McGuire
|
|
|
John A.
Kuhn
|
|
|
John V.
Del Col
|
|
|
Brian W.
Goshen
|
|
Housing
|
|
|
|
|
|
$
|
132,000
|
|
|
$
|
198,000
|
|
|
$
|
74,400
|
|
|
|
|
|
Transportation
|
|
$
|
115,759
|
|
|
|
|
|
|
|
|
|
|
$
|
10,872
|
|
|
|
|
|
Financial & Tax Planning
|
|
$
|
9,324
|
|
|
$
|
29,100
|
|
|
$
|
25,000
|
|
|
$
|
4,000
|
|
|
$
|
25,000
|
|
Tax Reimbursement
|
|
$
|
567,573
|
|
|
$
|
63,942
|
|
|
$
|
2,087
|
|
|
$
|
85,849
|
|
|
|
|
|
Company Contributions to Defined Contribution Plan
|
|
|
|
|
|
$
|
26,500
|
|
|
$
|
26,500
|
|
|
$
|
26,500
|
|
|
$
|
26,500
|
|
Company Contributions to Supplemental Defined Contribution Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
23,500
|
|
Payments in Lieu of Company Contributions to Supplemental Defined Contribution Plan
|
|
|
|
|
|
$
|
38,750
|
|
|
$
|
66,875
|
|
|
$
|
29,375
|
|
|
|
|
|
Life Insurance Premiums
|
|
$
|
24,441
|
|
|
$
|
4,980
|
|
|
$
|
2,916
|
|
|
$
|
3,850
|
|
|
$
|
3,072
|
|
Club Dues
|
|
|
|
|
|
$
|
9,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
717,097
|
|
|
$
|
304,772
|
|
|
$
|
321,378
|
|
|
$
|
234,846
|
|
|
$
|
78,072
|
|
Housing Expenses
.
The Company reimbursed Messrs. McGuire, Kuhn and Del Col, each of whom is an
expatriate employee, for expenses related to housing required for the executives performance of their obligations to the Company.
Transportation Expenses
. The Company reimbursed Mr. Charman for the cost of corporate charter aircraft for up to 12 personal trips
between Bermuda and the east coast of the United States, as specified in Mr. Charmans employment contract. None of the Companys other senior executives used any corporate charter aircraft for personal flights. The Company reimbursed
Mr. Del Col for transportation expenses between his home in the United States and his Bermuda office.
23
Financial and Tax Planning Expenses
.
Due to the additional complexities associated
with the taxation of expatriate benefits and senior executive compensation, the Company reimbursed the Named Executive Officers for the cost of financial and tax planning assistance.
Tax Reimbursement Payments
.
The Company reimbursed Mr. Charman, a
non-U.S.
citizen
resident in Bermuda, for certain incremental tax expenses incurred as a result of required travel to the U.S. for Company business, as approved by our Compensation Committee. The reimbursement of Mr. Charman was limited to the incremental tax
expense incurred by Mr. Charman as a result of such Company travel in the U.S. and was dependent upon Mr. Charmans business income for each year, which varied based upon tax realization events related to previously granted equity
incentive compensation. Mr. Charmans reimbursement was not grossed up by the Company. In order to accommodate the unique characteristics of the Bermuda expatriate employment market, including the need for travel to and from the island and
the cost of living and maintaining a residence, to the extent the Companys housing expense reimbursement, transportation expense reimbursement, tax preparation fee, or Bermuda social insurance tax payments were deemed to be taxable income to
Messrs. McGuire, Kuhn and Del Col, the Company grossed the executive up for any home country taxes payable on the additional income.
Company Contributions to Defined Contribution Plan
.
The Company made contributions to certain Named Executive Officers
accounts under the Companys 401(k) Plan on the same terms and using the same formulas as other participating employees of the Company.
Company Contributions to Supplemental Defined Contribution Plan
.
The Company made contributions to Mr. Goshens
Supplemental Defined Contribution Plan account. The Supplemental Defined Contribution Plan permits eligible employees to accumulate additional retirement income through a
non-qualified
deferred compensation
plan that enables them to make salary and bonus contributions in excess of those allowed under the Companys 401(k) Plan and to receive discretionary employer contributions.
Payments in Lieu of Company Contributions to Supplemental Defined Contribution Plan
.
To the extent a Named Executive
Officers eligible compensation exceeded the Internal Revenue Code compensation limits for contributions into the Companys 401(k) Plan and the Named Executive Officer was ineligible to participate in the Companys Supplemental
Defined Contribution Plan, the Company made payments to the Named Executive Officer equal to 125% of the additional contribution that would have been made on behalf of such Named Executive Officer to the Companys 401(k) had such compensation
limits not existed.
Life Insurance Premiums
.
The Company provided life insurance to all employees, including the Named
Executive Officers, with coverage levels varying by income, level within the organization and the location (country) for which the employee worked.
Club Dues
. The Company reimbursed Mr. McGuire for a club membership in Bermuda.
Grants of Plan-Based Awards
The
following table sets forth the grants of plan-based awards to the Named Executive Officers during the year ended December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards
(1)
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
(2)
|
|
|
All Other
Stock
Awards:
Number
of
Shares of
Stock
or
Units
(#)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or
Base
Price of
Option
Awards
($/Sh)
|
|
|
Grant
Date Fair
Value of
Stock and
Option
Awards (3)
|
|
|
Grant
Date
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
John R. Charman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. McGuire
|
|
|
3/1/16
|
|
|
|
|
|
|
$
|
632,500
|
|
|
$
|
1,265,000
|
|
|
|
10,288
|
|
|
|
17,771
|
|
|
|
25,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,126,606
|
|
John A. Kuhn
|
|
|
3/1/16
|
|
|
|
|
|
|
$
|
960,000
|
|
|
$
|
1,920,000
|
|
|
|
16,103
|
|
|
|
27,815
|
|
|
|
39,527
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,763,353
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards
(1)
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
(2)
|
|
|
All Other
Stock
Awards:
Number
of
Shares of
Stock
or
Units
(#)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or
Base
Price of
Option
Awards
($/Sh)
|
|
|
Grant
Date Fair
Value of
Stock and
Option
Awards (3)
|
|
|
Grant
Date
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
John V. Del Col
|
|
|
3/1/16
|
|
|
|
|
|
|
$
|
500,000
|
|
|
$
|
1,000,000
|
|
|
|
8,387
|
|
|
|
14,487
|
|
|
|
20,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
918,415
|
|
Brian W. Goshen
|
|
|
3/1/16
|
|
|
|
|
|
|
$
|
500,000
|
|
|
$
|
1,000,000
|
|
|
|
8,387
|
|
|
|
14,487
|
|
|
|
20,587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
918,415
|
|
(1)
|
The amounts above represent the potential target and maximum payouts for the Named Executive Officers under the Companys annual incentive compensation plan during the year ended December 31, 2016. The
potential target and maximum annual incentive compensation payouts for certain of the Named Executive Officers were increased by the Compensation Committee in December 2015. Further discussion on the Companys annual incentive compensation plan
can be found in Compensation Discussion and Analysis Elements of the Companys Compensation Program
Annual Incentive Compensation.
The final 2016 payouts for the Named Executive Officers can be found under
Non-Equity
Incentive Plan Compensation in the Summary Compensation Table.
|
(2)
|
The amounts above represent the number of restricted shares granted to the Named Executive Officers in March 2016 that could vest upon satisfaction of the applicable conditions under the 2007 Equity Incentive Plan and
the associated restricted share agreement. The performance period for the performance-based restricted shares was from January 1, 2016 to December 31, 2018 or the date of the acquisition of 100% of the outstanding ordinary shares of the
Company by Sompo (the Merger), if earlier. Further discussion on the Companys 2016 long-term incentive compensation plan can be found in Compensation Discussion and Analysis Elements of the Companys Compensation
Program
Equity Incentive Compensation.
|
(3)
|
The grant date fair value amounts reported above represent the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of restricted shares granted in 2016. The amounts reported in this column
for restricted shares are: (a) with respect to performance-based restricted shares, the number of performance-based restricted shares granted to the Named Executive Officers during 2016 multiplied by value measured at the grant date using a
Monte Carlo simulation based on
pre-established
targets relating to certain performance based measures achieved by the Company; and (b) with respect to time-based restricted shares, the number of
time-based restricted shares granted to the Named Executive Officers during 2016 multiplied by the closing price per share on the date of grant. For additional information regarding the stock and option awards, see Note 16 to the Consolidated
Financial Statements in this Form
10-K.
|
25
Equity Holdings and Value Realization
Outstanding Equity Awards at Fiscal Year End
. The following table sets forth the outstanding option and stock awards held by the Named
Executive Officers as of December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number
of Shares
or Units
of Stock
That
Have
Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have
Not
Vested
($)(1)
|
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)(1)
|
|
John R. Charman
|
|
|
5/28/13
|
|
|
|
|
|
|
|
160,000
|
|
|
|
|
|
|
$
|
48.20
|
|
|
|
5/28/23
|
|
|
|
141,778
|
(2)
|
|
|
13,100,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. McGuire
|
|
|
3/1/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,618
|
(3)
|
|
|
241,903
|
|
|
|
|
|
|
|
|
|
|
|
|
3/3/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,076
|
(4)
|
|
|
469,022
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,468
|
(5)
|
|
|
597,643
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,618
|
(6)
|
|
|
611,503
|
|
|
|
|
3/1/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,288
|
(7)
|
|
|
950,611
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,483
|
(8)
|
|
|
691,429
|
|
|
|
|
|
|
|
|
|
|
|
|
John A. Kuhn
|
|
|
3/1/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,699
|
(3)
|
|
|
341,788
|
|
|
|
|
|
|
|
|
|
|
|
|
3/3/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,599
|
(4)
|
|
|
609,748
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,489
|
(5)
|
|
|
876,784
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,264
|
(6)
|
|
|
855,994
|
|
|
|
|
3/1/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,103
|
(7)
|
|
|
1,487,917
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,712
|
(8)
|
|
|
1,082,189
|
|
|
|
|
|
|
|
|
|
|
|
|
John V. Del Col
|
|
|
3/1/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,049
|
(3)
|
|
|
189,328
|
|
|
|
|
|
|
|
|
|
|
|
|
3/3/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,062
|
(4)
|
|
|
375,329
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,053
|
(5)
|
|
|
466,897
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,170
|
(6)
|
|
|
477,708
|
|
|
|
|
3/1/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,387
|
(7)
|
|
|
774,959
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,100
|
(8)
|
|
|
563,640
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian W. Goshen
|
|
|
2/24/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
(3)
|
|
|
92,400
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,043
|
(5)
|
|
|
373,573
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,136
|
(6)
|
|
|
382,166
|
|
|
|
|
3/1/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,387
|
(7)
|
|
|
774,959
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,100
|
(8
)
|
|
|
563,640
|
|
(1)
|
Market values of restricted shares were determined based on a closing price of the Companys ordinary shares of $92.40 on December 30, 2016.
|
26
(2)
|
Time-based restricted shares with one remaining vesting date, vesting 100% on May 28, 2017 or the date of the Merger, if earlier.
|
(3)
|
Time-based restricted shares with one remaining vesting date, vesting 100% on March 1, 2017.
|
(4)
|
Time-based restricted shares with two remaining vesting dates, vesting 50% on each of March 1, 2017 and March 1, 2018 or the date of the Merger, if earlier.
|
(5)
|
Time-based restricted shares with three remaining vesting dates, vesting 33% on each of March 1, 2017, March 1, 2018 and March 1, 2019 or the date of the Merger, if earlier.
|
(6)
|
Performance-based restricted shares which vest on March 1, 2018 or the date of the Merger, if earlier. The amounts shown above represent the number of performance-based restricted shares at the target award level
for the period from January 1, 2015 to December 31, 2016. The number of performance-based restricted shares ultimately vesting on March 1, 2018 is determined based upon the cumulative performance from January 1, 2015 to
December 31, 2017 or through the date of the Merger, if earlier.
|
(7)
|
Time-based restricted shares with four remaining vesting dates, vesting 25% on each of March 1, 2017, March 1, 2018, March 1, 2019 and March 1, 2020 or the date of the Merger, if earlier.
|
(8)
|
Performance-based restricted shares which vest on March 1, 2019 or the date of the Merger, if earlier. The amounts shown above represent the number of performance-based restricted shares at the target award level
for the period from January 1, 2016 to December 31, 2016. The number of performance-based restricted shares ultimately vesting on March 1, 2019 is determined based upon the cumulative performance from January 1, 2016 to
December 31, 2018 or through the date of the Merger, if earlier.
|
Option Exercises and Stock Vested
.
The
following tables set forth the stock awards vested by the Named Executive Officers during the year ended December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
(1) (#)
|
|
|
Value Realized on
Exercise (2) ($)
|
|
|
Number of
Shares
Acquired on
Vesting
(3) (#)
|
|
|
Value Realized on
Vesting
(4) ($)
|
|
John R. Charman
|
|
|
160,000
|
|
|
|
3,155,200
|
|
|
|
141,778
|
|
|
|
9,528,899
|
|
Michael J. McGuire
|
|
|
|
|
|
|
|
|
|
|
11,598
|
|
|
|
739,952
|
|
John A. Kuhn
|
|
|
|
|
|
|
|
|
|
|
13,562
|
|
|
|
865,256
|
|
John V. Del Col
|
|
|
|
|
|
|
|
|
|
|
9,096
|
|
|
|
580,325
|
|
Brian W. Goshen
|
|
|
|
|
|
|
|
|
|
|
2,347
|
|
|
|
149,739
|
|
(1)
|
Represents total number of options exercised during the period.
|
(2)
|
Represents the net dollar value of the total number of options that were exercised during the period based on the closing price of the ordinary shares on the date of exercise ($67.92 per share), less the exercise price
($48.20 per share).
|
(3)
|
Represents total number of restricted shares vested during the period.
|
(4)
|
Represents the dollar value of the total number of restricted shares that vested during the period based on the closing price of the ordinary shares on the date of vesting (or, if not a trading day, the trading day
immediately preceding the date of vesting).
|
Post-Employment Benefits
Pension Benefits
The Company did
not have or provide for any of its employees, including the Named Executive Officers, a plan that provides for specified retirement payments or benefits in 2016.
Nonqualified Deferred Compensation
In the United States, the Company maintains a Supplemental Defined Contribution Plan, which is designed to permit eligible participants to
accumulate additional retirement income through a nonqualified
27
deferred compensation plan that enables such participants to make salary deferrals of up to 100% of their salary in excess of deferrals allowed under the Companys 401(k) Plan, to make
additional deferrals from their bonus payments of up to 100% of their bonus and to receive discretionary employer contributions. Each year, the Company makes a discretionary contribution to all participants in the Supplemental Defined Contribution
Plan expressed as a percentage of such participants base salary that exceeds the Internal Revenue Code maximum under the Companys 401(k) Plan. For 2016, Mr. Goshen was the only Named Executive Officer eligible to participate in the
Supplemental Defined Contribution Plan. In lieu of participation in the Supplemental Defined Contribution Plan, the Company made payments to Messrs. McGuire, Kuhn and Del Col equal to 125% of the additional contribution that would have been made on
behalf of such Named Executive Officer to the Companys 401(k) had such compensation limits not existed. The additional contributions are listed in the Summary Compensation Table in the All Other Compensation category.
Employment Contracts
Chief
Executive Officer
. On May 28, 2013, the Company entered into an employment agreement (the Charman Employment Agreement) with Mr. Charman, in connection with his appointment to the positions of Chairman of the Board and
Chief Executive Officer. On October 5, 2016, in connection with its entry into the agreement and plan of merger for the acquisition of 100% of the outstanding ordinary shares of the Company by Sompo (the Merger Agreement), Sompo
required that Mr. Charman execute and deliver an amended and restated employment agreement, subject to and effective as of the closing of the Merger. As the Charman Employment Agreement remained in effect through the closing of the Merger and
was in effect as of December 31, 2016, the description below is for the Charman Employment Agreement prior to its amendment and restatement in conjunction with the Merger.
The Charman Employment Agreement was for a five year term, followed by automatic
one-year
renewals,
unless notice of separation from service was provided by the Company or Mr. Charman at least 90 days prior to the end of the term.
Non-renewal
of the Charman Employment Agreement by the Company was deemed
to be a separation of Mr. Charmans employment with the Company without cause, entitling Mr. Charman to any compensation accruing to him under such circumstances. The Charman Employment Agreement specified that Mr. Charman was to
receive a $100 annual base salary and was not eligible to earn annual incentive compensation or long-term incentive compensation during the initial five-year term of the Charman Employment Agreement. The Charman Employment Agreement provided for
reimbursement of business travel expenses for Mr. Charman and the reimbursement of certain limited personal travel expenses of Mr. Charman and his family between Bermuda and the East Coast of the United States.
Under the Charman Employment Agreement, the Company could separate Mr. Charmans service from the Company as a result of disability,
for cause or without cause. Mr. Charman could separate his service from the Company at any time, with or without good reason. Mr. Charmans service from the Company would automatically be severed upon his death.
Under the Charman Employment Agreement, in the event of separation of Mr. Charmans service from the Company (a) by the Company
without cause, (b) by the Company due to Mr. Charmans death or disability or (c) by Mr. Charman for good reason, Mr. Charman would be entitled to severance that includes acceleration of the vesting of 50% of his
unvested restricted shares and options, compensation for accrued and unpaid vacation days, reimbursement of prior business expenses and other employee benefits to which employees of the Company were generally entitled. The payments and benefits to
which Mr. Charman was entitled upon the severance of his service are further discussed below in the section captioned Potential Payments Upon Termination of Employment or a Change in Control.
To receive the severance described above, Mr. Charman was required to execute a general release of claims against the Company.
Mr. Charmans severance could be delayed for six months following his separation from service with the Company if such delay in payments was necessary to comply with U.S. Internal Revenue Code Section 409A. In addition,
Mr. Charmans severance could be reduced to the extent such severance was subject to any excise tax imposed under Internal Revenue Code Section 4999.
28
Under the Charman Employment Agreement, Mr. Charman was subject to
non-solicitation
provisions, as well as ongoing confidentiality, intellectual property and
non-disparagement
requirements. Mr. Charmans
non-solicitation
obligations extended for one year following his separation from service.
Chief
Financial Officer
. On January 6, 2016, the Company entered into an Amended and Restated Employment Agreement with Mr. McGuire (the McGuire Employment Agreement). The McGuire Employment Agreement was substantially the same
as the employment agreement it replaced, except for a lengthening of the executives notice period for a separation from service by the executive without good reason (and an elimination of post-employment compensation and
non-competition
obligations under such circumstances), an update to the financial planning reimbursement benefit, additional provisions regarding the interpretation of the McGuire Employment Agreement under Section
409A of the U.S. Internal Revenue Code and an update to Mr. McGuires base salary. On October 5, 2016, in connection with its entry into the Merger Agreement, Sompo required that Mr. McGuire execute and deliver an amended and
restated employment agreement, subject to and effective as of the closing of the Merger. As the McGuire Employment Agreement remained in effect through the closing of the Merger and was in effect as of December 31, 2016, the description below
is for the McGuire Employment Agreement prior to its amendment and restatement in conjunction with the Merger.
The McGuire Employment
Agreement was for a one year initial term, followed by automatic
one-year
renewals unless three months notice was provided by the Company or six months notice was provided by Mr. McGuire.
Termination by the Company of the McGuire Employment Agreement constituted separation from service by the Company without cause. The McGuire Employment Agreement specified for Mr. McGuire an annual base salary of $575,000, subject to increase
in the discretion of the Board of Directors of the Company. The McGuire Employment Agreement also provided Mr. McGuire with the opportunity to earn annual incentive compensation and long-term incentive compensation, each payable at the
discretion of the Board of Directors of the Company. The target annual incentive opportunity specified in the McGuire Employment Agreement was 110% of base salary and the long-term incentive opportunity specified in the McGuire Employment Agreement
was 160% of base salary. The McGuire Employment Agreement provided for reimbursement for Bermuda housing and travel expenses, as well as a
gross-up
on U.S. taxes arising from the housing and travel expense
reimbursements.
Under the McGuire Employment Agreement, the Company could separate the service of Mr. McGuire from the Company as a
result of disability, for cause or without cause. Mr. McGuire could separate his service from the Company at any time without good reason and with good reason during a period starting three months prior to and ending two years after a change in
control of the Company. The service of Mr. McGuire would automatically be severed upon the death of Mr. McGuire.
Under the
McGuire Employment Agreement, in the event of separation of the service of Mr. McGuire from the Company, Mr. McGuire would be entitled to severance that varied depending upon the circumstances of separation. Mr. McGuires
severance benefits under the McGuire Employment Agreement upon separation from service were as follows:
|
|
|
By the Company with Cause
|
|
By the Company without Cause
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
|
29
|
|
|
|
|
Nine months of base salary
Nine months continuation of medical, dental, vision and life
insurance
The value of 50% of unvested long-term incentive awards
|
|
|
By Mr.
McGuire with Good Reason
|
|
By Mr.
McGuire without Good Reason or
Upon
Mr.
McGuires Retirement
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
|
|
|
By the Company without Cause or by
Mr. McGuire with Good Reason following a
Change in Control
|
|
Upon Mr.
McGuires Death or
Disability
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
Nine months of base salary
Nine months continuation of medical, dental, vision and life
insurance
The value of 50% of unvested long-term incentive awards
The average of the annual incentive awards over the past three
years
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
|
The amount of the payments and benefits to which Mr. McGuire would be entitled if a severance of his
service occurred on December 31, 2016 are discussed below in the section captioned Potential Payments Upon Termination of Employment or a Change in Control.
To receive the severance described above, Mr. McGuire would be required to execute a general release of claims against the Company. The
severance of Mr. McGuire could be delayed for six months following a separation from service with the Company if such delay in payments was necessary to comply with U.S.
30
Internal Revenue Code Section 409A. In addition, the severance payments could be reduced to the extent such severance was subject to any excise tax imposed under Internal Revenue Code
Section 4999 as a result of the application of Internal Revenue Code Section 280G.
Under the McGuire Employment Agreement,
Mr. McGuire was subject to
non-competition
and
non-solicitation
provisions during Mr. McGuires notice period and for a period of six months after
separation from service (other than as a result of Mr. McGuires death or Mr. McGuires separation from service without good reason), and ongoing confidentiality, intellectual property and
non-disparagement
requirements.
Chief Executive Officer, Global Insurance
. On
January 27, 2016, the Company entered into an Amended and Restated Employment Agreement with Mr. Kuhn (the Kuhn Employment Agreement). The Kuhn Employment Agreement was substantially the same as the employment agreement it
replaced, except for a lengthening of the executives notice period for a separation from service by the executive without good reason (and an elimination of post-employment compensation and
non-competition
obligations under such circumstances), an update to the financial planning reimbursement and housing allowance benefits, additional provisions regarding the interpretation of the Kuhn
Employment Agreement under Section 409A of the U.S. Internal Revenue Code and updates to Mr. Kuhns base salary, target annual incentive compensation opportunity and long-term incentive compensation opportunity. On October 5, 2016, in
connection with its entry into the Merger Agreement, Sompo required that Mr. Kuhn execute and deliver an amended and restated employment agreement, subject to and effective as of the closing of the Merger. As the Kuhn Employment Agreement
remained in effect through the closing of the Merger and was in effect as of December 31, 2016, the description below is for the Kuhn Employment Agreement prior to its amendment and restatement in conjunction with the Merger.
The Kuhn Employment Agreement was for a one year initial term, followed by automatic
one-year
renewals
unless three months notice was provided by the Company or twelve months notice was provided by Mr. Kuhn. Termination by the Company of the Kuhn Employment Agreement constituted separation from service by the Company without cause.
The Kuhn Employment Agreement specified for Mr. Kuhn an annual base salary of $800,000, subject to increase in the discretion of the Board of Directors of the Company. The Kuhn Employment Agreement also provided Mr. Kuhn with the
opportunity to earn annual incentive compensation and long-term incentive compensation, each payable at the discretion of the Board of Directors of the Company. The target annual incentive opportunity specified in the Kuhn Employment Agreement was
120% of base salary and the long-term incentive opportunity specified in the Kuhn Employment Agreement was 180% of base salary. The Kuhn Employment Agreement provided for reimbursement for housing and travel expenses, as well as a
gross-up
on U.S. taxes arising from certain housing and travel expense reimbursements.
Under the Kuhn
Employment Agreement, the Company could separate Mr. Kuhns service from the Company as a result of disability, for cause or without cause. Mr. Kuhn could separate his service from the Company at any time with or without good reason.
Mr. Kuhns service from the Company would automatically be severed upon his death.
Under the Kuhn Employment Agreement, in the
event of separation of the service of Mr. Kuhn from the Company, Mr. Kuhn would be entitled to severance that varied depending upon the circumstances of separation. Mr. Kuhns severance benefits under the Kuhn Employment
Agreement upon separation from service were as follows:
|
|
|
By the Company with Cause
|
|
By the Company without Cause
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
|
31
|
|
|
|
|
Any fully earned but unpaid annual incentive
compensation for the previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
Nine months of base salary
Nine months continuation of medical, dental, vision and life
insurance
The value of the greater of (a) unvested long-term incentive
awards vesting over the 24 months following the date of separation from service or (b) 50% of unvested long-term incentive awards
|
|
|
By Mr.
Kuhn with Good Reason
|
|
By Mr.
Kuhn without Good Reason or
Upon
Mr.
Kuhns Retirement
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
Nine months of base salary
Nine months continuation of medical, dental, vision and life
insurance
The value of the greater of (a) unvested long-term incentive
awards vesting over the 24 months following the date of separation from service or (b) 50% of unvested long-term incentive awards
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
|
|
|
By the Company without Cause or by Mr. Kuhn
with Good Reason following a
Change in Control
|
|
Upon Mr. Kuhns Death
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
|
32
|
|
|
A prorated portion of annual incentive
compensation, calculated at target, for the current calendar year
Nine months of base salary
Nine months continuation of medical, dental, vision and life
insurance
The value of the greater of (a) unvested long-term incentive
awards vesting over the 24 months following the date of separation from service or (b) 50% of unvested long-term incentive awards
The average of the annual incentive awards over the past three
years
|
|
A prorated portion of annual incentive
compensation, calculated at target, for the current calendar year
|
|
|
Upon Mr. Kuhns Disability
|
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
Six months of base salary (less any long-term disability
benefits)
|
|
|
The amount of the payments and benefits to which Mr. Kuhn would be entitled if a severance of his service
occurred on December 31, 2016 are discussed below in the section captioned Potential Payments Upon Termination of Employment or a Change in Control.
To receive the severance described above, Mr. Kuhn would be required to execute a general release of claims against the Company. The
severance of Mr. Kuhn could be delayed for six months following a separation from service with the Company if such delay in payments was necessary to comply with U.S. Internal Revenue Code Section 409A. In addition, the severance payments could
be reduced to the extent such severance was subject to any excise tax imposed under Internal Revenue Code Section 4999 as a result of the application of Internal Revenue Code Section 280G.
Under the Kuhn Employment Agreement, Mr. Kuhn was subject to
non-competition
and
non-solicitation
provisions during Mr. Kuhns notice period and for a period of six months after separation from service (other than as a result of Mr. Kuhns death or Mr. Kuhns
separation from service without good reason), and ongoing confidentiality, intellectual property and
non-disparagement
requirements.
General Counsel
. On January 6, 2016, the Company entered into an Amended and Restated Employment Agreement with Mr. Del Col
(the Del Col Employment Agreement). The Del Col Employment Agreement was substantially the same as the employment agreement it replaced, except for a lengthening of the executives notice period for a separation from service by the
executive without good reason (and an elimination of post-employment compensation and
non-competition
obligations under such circumstances), an update to the financial planning reimbursement benefit,
additional provisions regarding the interpretation of
33
the Del Col Employment Agreement under Section 409A of the U.S. Internal Revenue Code and updates to Mr. Del Cols target annual incentive compensation opportunity and long-term
incentive compensation opportunity. On October 5, 2016, in connection with its entry into the Merger Agreement, Sompo required that Mr. Del Col execute and deliver an amended and restated employment agreement, subject to and effective as
of the closing of the Merger. As the Del Col Employment Agreement remained in effect through the closing of the Merger and was in effect as of December 31, 2016, the description below is for the Del Col Employment Agreement prior to its
amendment and restatement in conjunction with the Merger.
The Del Col Employment Agreement was for a one year initial term, followed by
automatic
one-year
renewals unless three months notice was provided by the Company or six months notice was provided by Mr. Del Col. Termination by the Company of the Del Col Employment
Agreement constituted separation from service by the Company without cause. The Del Col Employment Agreement specified for Mr. Del Col an annual base salary of $500,000, subject to increase in the discretion of the Board of Directors of the
Company. The Del Col Employment Agreement also provided Mr. Del Col with the opportunity to earn annual incentive compensation and long-term incentive compensation, each payable at the discretion of the Board of Directors of the Company. The
target annual incentive opportunity specified in the Del Col Employment Agreement was 100% of base salary and the long-term incentive opportunity specified in the Del Col Employment Agreement was 150% of base salary. The Del Col Employment Agreement
provided for reimbursement for Bermuda housing and travel expenses, as well as a
gross-up
on U.S. taxes arising from the housing and travel expense reimbursements.
Under the Del Col Employment Agreement, the Company could separate the service of Mr. Del Col from the Company as a result of disability,
for cause or without cause. Mr. Del Col could separate his service from the Company at any time without good reason and with good reason during a period starting three months prior to and ending two years after a change in control of the
Company. The service of Mr. Del Col would automatically be severed upon the death of Mr. Del Col.
Under the Del Col Employment
Agreement, in the event of separation of the service of Mr. Del Col from the Company, Mr. Del Col would be entitled to severance that varied depending upon the circumstances of separation. Mr. Del Cols severance benefits under
the Del Col Employment Agreement upon separation from service were as follows:
|
|
|
By the Company with Cause
|
|
By the Company without Cause
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
Nine months of base salary
Nine months continuation of medical, dental, vision and life
insurance
The value of 50% of unvested long-term incentive awards
|
34
|
|
|
By Mr. Del Col with Good Reason
|
|
By Mr.
Del Col without Good Reason or
Upon
Mr.
Del Cols Retirement
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
|
|
|
By the Company without Cause or by Mr. Del
Col
with Good Reason following a
Change in Control
|
|
Upon Mr.
Del Cols Death or
Disability
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
Nine months of base salary
Nine months continuation of medical, dental, vision and life
insurance
The value of 50% of unvested long-term incentive awards
The average of the annual incentive awards over the past three
years
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Up to three months housing expense reimbursement
Relocation expenses from Bermuda
Reimbursement of one year of tax preparation expenses
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
|
The amount of the payments and benefits to which Mr. Del Col would be entitled if a severance of his
service occurred on December 31, 2016 are discussed below in the section captioned Potential Payments Upon Termination of Employment or a Change in Control.
To receive the severance described above, Mr. Del Col would be required to execute a general release of claims against the Company. The
severance of Mr. Del Col could be delayed for six months following a separation from service with the Company if such delay in payments was necessary to comply with U.S. Internal Revenue Code Section 409A. In addition, the severance payments
could be reduced to the extent such severance was subject to any excise tax imposed under Internal Revenue Code Section 4999 as a result of the application of Internal Revenue Code Section 280G.
Under the Del Col Employment Agreement, Mr. Del Col was subject to
non-competition
and
non-solicitation
provisions during Mr. Del Cols notice period and for a period of six months after separation from service (other than as a result of Mr. Del Cols death or Mr. Del
Cols separation from service without good reason), and ongoing confidentiality, intellectual property and
non-disparagement
requirements.
Chief Administrative Officer
. On January 6, 2016, the Company entered into an Amended and Restated Employment Agreement with
Mr. Goshen (the Goshen Employment Agreement). The Goshen
35
Employment Agreement was substantially the same as the employment agreement it replaced, except for a lengthening of the executives notice period for a separation from service by the
executive without good reason (and an elimination of post-employment compensation and
non-competition
obligations under such circumstances), an update to the financial planning reimbursement benefit,
additional provisions regarding the interpretation of the Goshen Employment Agreement under Section 409A of the U.S. Internal Revenue Code and an update to Mr. Goshens base salary, target annual incentive compensation opportunity and
long-term incentive compensation opportunity. On October 5, 2016, in connection with its entry into the Merger Agreement, Sompo required that Mr. Goshen execute and deliver an amended and restated employment agreement, subject to and
effective as of the closing of the Merger. As the Goshen Employment Agreement remained in effect through the closing of the Merger and was in effect as of December 31, 2016, the description below is for the Goshen Employment Agreement prior to
its amendment and restatement in conjunction with the Merger.
The Goshen Employment Agreement was for a one year initial term, followed
by automatic
one-year
renewals unless three months notice was provided by the Company or six months notice was provided by Mr. Goshen. Termination by the Company of the Goshen Employment
Agreement constituted separation from service by the Company without cause. The Goshen Employment Agreement specified for Mr. Goshen an annual base salary of $500,000, subject to increase in the discretion of the Board of Directors of the
Company. The Goshen Employment Agreement also provided Mr. Goshen with the opportunity to earn annual incentive compensation and long-term incentive compensation, each payable at the discretion of the Board of Directors of the Company. The
target annual incentive opportunity specified in the Goshen Employment Agreement was 100% of base salary and the long-term incentive opportunity specified in the Goshen Employment Agreement was 150% of base salary.
Under the Goshen Employment Agreement, the Company could separate the service of Mr. Goshen from the Company as a result of disability,
for cause or without cause. Mr. Goshen could separate his service from the Company at any time without good reason and with good reason during a period starting three months prior to and ending two years after a change in control of the
Company. The service of Mr. Goshen would automatically be severed upon the death of Mr. Goshen.
Under the Goshen Employment
Agreement, in the event of separation of the service of Mr. Goshen from the Company, Mr. Goshen would be entitled to severance that varied depending upon the circumstances of separation. Mr. Goshens severance benefits under the
Goshen Employment Agreement upon separation from service were as follows:
|
|
|
By the Company with Cause
|
|
By the Company without Cause
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
Nine months of base salary
Nine months continuation of medical, dental, vision and life
insurance
The value of 50% of unvested long-term incentive awards
|
|
|
By Mr. Goshen with Good Reason
|
|
By Mr.
Goshen without Good Reason or
Upon
Mr. Goshens Retirement
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
|
36
|
|
|
By the Company without Cause or by
Mr. Goshen
with Good Reason following a
Change in Control
|
|
Upon Mr.
Goshens Death or
Disability
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
Nine months of base salary
Nine months continuation of medical, dental, vision and life
insurance
The value of 50% of unvested long-term incentive awards
The average of the annual incentive awards over the past three
years
|
|
Accrued base salary through the date of
separation
Unreimbursed business expenses
Accrued and unpaid vacation days
Any fully earned but unpaid annual incentive compensation for the
previously completed calendar year
A prorated portion of annual incentive compensation, calculated at
target, for the current calendar year
|
The amount of the payments and benefits to which Mr. Goshen would be entitled if a severance of his
service occurred on December 31, 2016 are discussed below in the section captioned Potential Payments Upon Termination of Employment or a Change in Control.
To receive the severance described above, Mr. Goshen would be required to execute a general release of claims against the Company. The
severance of Mr. Goshen could be delayed for six months following a separation from service with the Company if such delay in payments was necessary to comply with U.S. Internal Revenue Code Section 409A. In addition, the severance payments
could be reduced to the extent such severance was subject to any excise tax imposed under Internal Revenue Code Section 4999 as a result of the application of Internal Revenue Code Section 280G.
Under the Goshen Employment Agreement, Mr. Goshen was subject to
non-competition
and
non-solicitation
provisions during Mr. Goshens notice period and for a period of six months after separation from service (other than as a result of Mr. Goshens death or Mr. Goshens
separation from service without good reason), and ongoing confidentiality, intellectual property and
non-disparagement
requirements.
Potential Payments Upon Termination of Employment or Change in Control
Termination of Employment
. In connection with the employment agreements as described above, the Named Executive Officers are entitled to
payments and benefits upon certain qualifying terminations of their employment relationships with us. The Named Executive Officers employment relationships with the Company may be terminated for any of the following reasons: (i) the Named
Executive Officers death or disability, (ii) by the Company with or without cause, (iii) by the Named Executive Officer with or without good reason or (iv) as a result of the Named Executive Officers retirement. With
respect to each Named Executive Officer with an employment agreement, disability, cause, and good reason are defined in the applicable employment agreement. To receive the payments described below, the Named
Executive Officers would be required to execute a general release of claims against the Company. Those Named Executive Officers with employment agreements are subject to post-employment
non-competition
and
non-solicitation
provisions, as well as ongoing confidentiality, intellectual property and
non-disparagement
requirements.
37
The estimated payments and benefits provided upon each type of termination are summarized in the
following table as if the termination had occurred on December 31, 2016, using the closing price of $92.40 on December 30, 2016 and the employment agreements in effect on that date. Base salary payments and the continuation of health
insurance benefits are made over time in accordance with the Companys normal payroll schedule, while the other payments and benefits are typically delivered in a lump sum following the date of termination. In addition, with the assumption of a
December 31 termination of employment, the estimated pro rata bonus calculations provided in the following table reflect an accrual for a full calendar year. Actual amounts payable following a termination or change in control would differ from
the amounts shown, perhaps significantly, and would depend on the particular facts and circumstances pertaining at the time.
John R.
Charman
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
By Company
with Cause
($)
|
|
|
By Company
without
Cause ($)
|
|
|
By Executive
with Good
Reason ($)
|
|
|
By Executive
without
Good Reason
or Retirement
($)
|
|
|
Without
Cause or with
Good Reason
Following a
Change in
Control ($)
|
|
|
Death or
Disability ($)
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
10,086,144
|
|
|
|
10,086,144
|
|
|
|
|
|
|
|
20,172,287
|
|
|
|
10,086,144
|
|
Housing Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation of Health Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
Tax Preparation Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation Days (1)
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
|
|
2
|
|
Relocation Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2
|
|
|
|
10,086,146
|
|
|
|
10,086,146
|
|
|
|
2
|
|
|
|
20,172,289
|
|
|
|
10,086,146
|
|
38
Michael J. McGuire
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
By Company
with Cause
($)
|
|
|
By Company
without
Cause ($)
|
|
|
By Executive
with Good
Reason ($)
|
|
|
By Executive
without
Good Reason
or Retirement
($)
|
|
|
Without
Cause or with
Good Reason
Following a
Change in
Control ($)
|
|
|
Death or
Disability ($)
|
|
Salary
|
|
|
|
|
|
|
431,250
|
|
|
|
|
|
|
|
|
|
|
|
431,250
|
|
|
|
|
|
Annual Incentive
|
|
|
|
|
|
|
632,500
|
|
|
|
|
|
|
|
|
|
|
|
1,479,271
|
|
|
|
632,500
|
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
1,781,056
|
|
|
|
|
|
|
|
|
|
|
|
3,562,112
|
|
|
|
3,562,112
|
|
Housing Expenses
|
|
|
33,000
|
|
|
|
33,000
|
|
|
|
33,000
|
|
|
|
33,000
|
|
|
|
33,000
|
|
|
|
33,000
|
|
Continuation of Health Benefits
|
|
|
|
|
|
|
30,577
|
|
|
|
|
|
|
|
|
|
|
|
30,577
|
|
|
|
|
|
Tax Preparation Expenses
(2)
|
|
|
3,600
|
|
|
|
3,600
|
|
|
|
3,600
|
|
|
|
3,600
|
|
|
|
3,600
|
|
|
|
3,600
|
|
Vacation Days
(1)
|
|
|
11,058
|
|
|
|
11,058
|
|
|
|
11,058
|
|
|
|
11,058
|
|
|
|
11,058
|
|
|
|
11,058
|
|
Relocation Expenses
(3)
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
67,389
|
|
|
|
2,942,772
|
|
|
|
67,389
|
|
|
|
67,389
|
|
|
|
5,570,599
|
|
|
|
4,262,001
|
|
John A. Kuhn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
By Company
with Cause
($)
|
|
|
By Company
without
Cause ($)
|
|
|
By Executive
with Good
Reason ($)
|
|
|
By Executive
without
Good Reason
or Retirement
($)
|
|
|
Without
Cause or with
Good Reason
Following a
Change in
Control ($)
|
|
|
Death or
Disability
(4)
($)
|
|
Salary
|
|
|
|
|
|
|
600,000
|
|
|
|
600,000
|
|
|
|
|
|
|
|
600,000
|
|
|
|
400,000
|
|
Annual Incentive
|
|
|
|
|
|
|
960,000
|
|
|
|
960,000
|
|
|
|
|
|
|
|
2,267,688
|
|
|
|
960,000
|
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
3,135,871
|
|
|
|
3,135,871
|
|
|
|
|
|
|
|
5,254,418
|
|
|
|
5,254,418
|
|
Housing Expenses
|
|
|
49,500
|
|
|
|
49,500
|
|
|
|
49,500
|
|
|
|
49,500
|
|
|
|
49,500
|
|
|
|
49,500
|
|
Continuation of Health Benefits
|
|
|
|
|
|
|
31,196
|
|
|
|
31,196
|
|
|
|
31,196
|
|
|
|
31,196
|
|
|
|
|
|
Tax Preparation Expenses
(2)
|
|
|
|
|
|
|
3,600
|
|
|
|
3,600
|
|
|
|
|
|
|
|
3,600
|
|
|
|
3,600
|
|
Vacation Days
(1)
|
|
|
15,385
|
|
|
|
15,385
|
|
|
|
15,385
|
|
|
|
15,385
|
|
|
|
15,385
|
|
|
|
15,385
|
|
Relocation Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
64,885
|
|
|
|
4,795,552
|
|
|
|
4,795,552
|
|
|
|
96,081
|
|
|
|
8,221,787
|
|
|
|
6,682,903
|
|
39
John V. Del Col
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
By Company
with Cause
($)
|
|
|
By Company
without
Cause ($)
|
|
|
By Executive
with Good
Reason ($)
|
|
|
By Executive
without
Good Reason
or Retirement
($)
|
|
|
Without
Cause or with
Good Reason
Following a
Change in
Control ($)
|
|
|
Death or
Disability ($)
|
|
Salary
|
|
|
|
|
|
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
375,000
|
|
|
|
|
|
Annual Incentive
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
1,155,833
|
|
|
|
500,000
|
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
1,423,930
|
|
|
|
|
|
|
|
|
|
|
|
2,847,860
|
|
|
|
2,847,860
|
|
Housing Expenses
|
|
|
18,802
|
|
|
|
18,802
|
|
|
|
18,802
|
|
|
|
18,802
|
|
|
|
18,802
|
|
|
|
18,802
|
|
Continuation of Health Benefits
|
|
|
|
|
|
|
30,071
|
|
|
|
|
|
|
|
|
|
|
|
30,071
|
|
|
|
|
|
Tax Preparation Expenses
(2)
|
|
|
3,600
|
|
|
|
3,600
|
|
|
|
3,600
|
|
|
|
3,600
|
|
|
|
3,600
|
|
|
|
3,600
|
|
Vacation Days
(1)
|
|
|
9,615
|
|
|
|
9,615
|
|
|
|
9,615
|
|
|
|
9,615
|
|
|
|
9,615
|
|
|
|
9,615
|
|
Relocation Expenses
(3)
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
19,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
51,748
|
|
|
|
2,380,749
|
|
|
|
51,748
|
|
|
|
51,748
|
|
|
|
4,460,512
|
|
|
|
3,399,608
|
|
Brian W. Goshen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefit
|
|
By Company
with Cause
($)
|
|
|
By Company
without
Cause ($)
|
|
|
By Executive
with Good
Reason ($)
|
|
|
By Executive
without
Good Reason
or Retirement
($)
|
|
|
Without
Cause or with
Good Reason
Following a
Change in
Control ($)
|
|
|
Death or
Disability ($)
|
|
Salary
|
|
|
|
|
|
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
375,000
|
|
|
|
|
|
Annual Incentive
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
|
|
|
|
|
|
1,258,750
|
|
|
|
500,000
|
|
Long-Term Incentive Awards
|
|
|
|
|
|
|
1,093,369
|
|
|
|
|
|
|
|
|
|
|
|
2,186,738
|
|
|
|
2,186,738
|
|
Housing Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation of Health Benefits
|
|
|
|
|
|
|
19,289
|
|
|
|
|
|
|
|
|
|
|
|
19,289
|
|
|
|
|
|
Tax Preparation Expenses
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation Days
(1)
|
|
|
9,615
|
|
|
|
9,615
|
|
|
|
9,615
|
|
|
|
9,615
|
|
|
|
9,615
|
|
|
|
9,615
|
|
Relocation Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,615
|
|
|
|
1,997,273
|
|
|
|
9,615
|
|
|
|
10,096
|
|
|
|
3,849,392
|
|
|
|
2,696,353
|
|
(1)
|
Estimated vacation day payment based upon an assumed five accrued and unused vacation days and a year of 260 working days.
|
(2)
|
Estimated tax preparation payment based upon an assumed $3,600 reimbursable payment.
|
40
(3)
|
Estimated relocation expense payment based upon average cost to the Company of relocations of similarly situated employees.
|
(4)
|
Salary is payable to Mr. Kuhn only upon disability and is reduced to the extent Mr. Kuhn receives long-term disability insurance payments.
|
Change in Control
. Upon the occurrence of a change in control and termination of employment within 24 months of the change in control
under the Companys 2007 Equity Incentive Plan (the Plan) outstanding long-term incentive awards become fully vested. Under the Plan, a change in control occurs if any one of the following events occurs:
|
|
|
A person, entity or group unaffiliated with the Company acquires the beneficial ownership of 50% or more of the outstanding ordinary shares of the Company or the combined voting power of the then outstanding securities
of the Company.
|
|
|
|
The composition of a majority of the Companys Board is comprised of directors who were not recommended for election to the shareholders of the Company by a majority of the incumbent board.
|
|
|
|
The Company reorganizes, amalgamates, merges, consolidates or sells or otherwise disposes of all or substantially all of its assets, other than in a transaction in which (i) the ordinary shareholders immediately
prior to the transaction beneficially own more than 60% of the outstanding shares of common stock, and the combined voting power of the entity resulting from the transaction in substantially the same proportions as immediately prior to the
transaction, (ii) no person, entity or group unaffiliated with the Company acquires the beneficial ownership of 50% or more of the outstanding ordinary shares of the Company or the combined voting power of the then outstanding securities of the
Company and (iii) individuals who were members of the Companys Board of Directors constitute at least a majority of the members of the board of directors of the resulting entity.
|
|
|
|
The Company liquidates or dissolves.
|
If a change in control occurred on December 31,
2016 and the employment of each of the Named Executive Officers was terminated, the Named Executive Officers would have become entitled to receive the following amounts in the form of cash or ordinary shares of the Company. The following amounts
represent the dollar value of the Named Executive Officers unvested restricted shares and options as of December 31, 2016, based upon the closing price on December 30, 2016 of the Companys ordinary shares of $92.40. These
amounts have also been reflected in the tables listed under
Termination of Employment
above, in the row in each table captioned
Accelerated Vesting of Awards
.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Restricted
Shares
($)
|
|
|
Options ($)
|
|
|
Total
($)
|
|
John R. Charman
|
|
|
13,100,287
|
|
|
|
7,072,000
|
|
|
|
20,172,287
|
|
Michael J. McGuire
|
|
|
3,562,112
|
|
|
|
|
|
|
|
3,562,112
|
|
John A. Kuhn
|
|
|
5,254,418
|
|
|
|
|
|
|
|
5,254,418
|
|
John V. Del Col
|
|
|
2,847,860
|
|
|
|
|
|
|
|
2,847,860
|
|
Brian W. Goshen
|
|
|
2,186,738
|
|
|
|
|
|
|
|
2,186,738
|
|
Compensation Committee Interlocks and Insider Participation
None of the directors who served on the Compensation Committee during 2016 has ever served as an employee or officer of the Company or has any
other relationship with the Company that would be required to be disclosed under any paragraph of Item 404 of Regulation
S-K.
41