DEF 14A of Universal Insurance Holdings, Inc.
Filed Apr 26, 2024 · FY20230001193125-24-118047
Director Nominees
Director Nominees The following table provides summary information regarding each of our Board’s nominees for election as director as well as their tenure and business experience.
Director Nominees
| | | | | Committee Membership | | | | | | Name | Age | Director Since | Principal Occupation | Nominating & Governance | Compensation | Audit | Investment | Risk | | Sean P. Downes (Executive Chairman) | 54 | 2005 | Executive Chairman, Universal Insurance Holdings, Inc. | | | | X | | | Carol G. Barton | 72 | Nominee | Founder and Former Chief Executive Officer of Strategem | | | | | | | Shannon A. Brown | 67 | 2022 | Former Senior Vice President, FedEx Corporation | | X | | | | | Scott P. Callahan | 70 | 2013 | President and Managing Member of SPC Global RE Advisors, LLC; Former EVP of Everest Reinsurance Holdings | Chair | | | X | | | Kimberly D. Campos | 46 | 2017 | Chief Information Officer and Chief Administrative Officer, Universal Insurance Holdings, Inc. | | | | | X | | Stephen J. Donaghy (CEO) | 59 | 2020 | Chief Executive Officer, Universal Insurance Holdings, Inc. | | | | | | | Marlene M. Gordon | 57 | 2020 | SVP and Chief Legal Officer, Panera, LLC | X | | | | | | Francis X. McCahill, III | 76 | 2021 | Founder of Homeowners Choice, Inc. | | | | X | | | Richard D. Peterson | 56 | 2014 | CFO of Turn Biotechnologies, Inc. | | X | Chair | | | | Michael A. Pietrangelo (Lead Independent Director) | 81 | 2010 | Former President and Managing Director of The Theraplex Company, LLC | X | Chair | | | | | Ozzie A. Schindler | 55 | 2007 | Lawyer with Greenberg Traurig, LLP | | | X | | Chair | | Jon W. Springer | 54 | 2013 | Director, Universal Insurance Holdings, Inc. | | | | Chair | X |
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS The Board, upon the recommendation of the Nominating and Governance Committee, has nominated director nominee Carol G. Barton and incumbent directors Shannon A. Brown, Scott P. Callahan, Kimberly D. Campos, Stephen J. Donaghy, Sean P. Downes, Marlene M. Gordon, Francis X. McCahill, III, Richard D. Peterson, Michael A. Pietrangelo, Ozzie A. Schindler and Jon W. Springer for election to the Board to serve as directors until the 2025 Annual Meeting of Shareholders or until each nominee’s successor is duly elected and qualified. The Board determined not to nominate incumbent director Joel M. Wilentz, M.D. for re-election at the Annual Meeting in view of his lengthy tenure on the Board. The Board thanks Dr. Wilentz for his service. Ms. Barton was initially recommended to the Nominating and Governance Committee, of which Scott Callahan is the Chair, by an executive search firm. The nominees have consented to be named in this Proxy Statement as director nominees and have indicated their intent to serve if re-elected. If any nominee becomes unavailable for any reason, or if any vacancy in the slate of directors to be elected at the meeting should occur before the election, the shares represented by the proxy will be voted for the person, if any, who is designated by the Board to replace the nominee or to fill such vacancy on the Board. A director nominee must receive the affirmative vote of the majority of votes cast at the annual meeting in order to be elected. If elected, each nominee is expected to serve for a one-year term until the 2025 Annual Meeting of Shareholders. Each director will hold office until his or her successor is duly elected and qualified or until such director’s earlier death, resignation or removal. Otherwise, if a director nominee fails to receive the affirmative vote of the majority of votes cast, then he or she shall promptly tender his or her resignation to the Board, and the Board, taking into account the recommendation of the Nominating and Governance Committee, shall subsequently determine whether to accept or reject the resignation, or whether other action should be taken. THE BOARD RECOMMENDS A VOTE FOR EACH OF ITS NOMINEES FOR ELECTION AS DIRECTORS.
Director Nominees
Director Nominees The director nominees are set forth below. If elected, each nominee is expected to serve for a one-year term until the 2025 Annual Meeting of Shareholders. Each director will hold office until his or her successor is duly elected and qualified or until such director’s earlier departure.
Director Nominees
| Name | Age | Position at the Company | Date of Joining the Board | | Carol G. Barton | 72 | N/A | Nominee | | Shannon A. Brown | 67 | Director | 2022 | | Scott P. Callahan | 70 | Director | 2013 | | Kimberly D. Campos | 46 | Director, Chief Information Officer and Chief Administrative Officer | 2017 | | Stephen J. Donaghy | 59 | Director and Chief Executive Officer | 2020 | | Sean P. Downes | 54 | Executive Chairman | 2005 | | Marlene M. Gordon | 57 | Director | 2020 | | Francis X. McCahill, III | 76 | Director | 2021 | | Richard D. Peterson | 56 | Director | 2014 | | Michael A. Pietrangelo | 81 | Director | 2010 | | Ozzie A. Schindler | 55 | Director | 2007 | | Jon W. Springer | 54 | Director | 2013 |
Director Nominees
| | Carol G. Barton became a director of the Company in 2024. Ms. Barton has more |
Director Nominees
than 35 years’ experience in the property and casualty insurance industry, including senior leadership positions at American International Group, Inc. (AIG) and FM Global. Ms. Barton previously served as President of AIG Multinational, where she was a member of the executive leadership team and responsible for the worldwide leadership and strategic direction of AIG’s multinational business operating in >200 territories. Prior to joining AIG in 2012, Ms. Barton served as Senior Vice President of Underwriting and Reinsurance at FM Global, a property insurance company, where she held global leadership responsibility for all underwriting and reinsurance activities across a multi-billion dollar portfolio. In 2019, Ms. Barton founded Strategem LLC, which provides consultation services for insurance organizations as well as executive coaching. Ms. Barton brings to the Board deep experience across global property and energy insurance, risk management, and multinational business.
Director Nominees
| | Shannon A. Brown became a director of the Company in 2022.In November 2022, |
Director Nominees
after a long and distinguished career, Mr. Brown retired from his position as Senior Vice President, Eastern Division U.S. Operations and Chief Diversity Officer at FedEx Corporation, the world’s largest express transportation company. From 2008 to 2018, Mr. Brown served as Senior Vice President and Chief Human Resources & Diversity Officer of FedEx; and prior to that, he held a series of leadership positions at FedEx. He is lauded as a business trailblazer and one of the most iconic executives in the company’s 50-year history. Mr. Brown brings extensive operational, human resources and diversity and inclusion expertise to the Board.
Director Nominees
| | Scott P. Callahan became a director of the Company in 2013. Mr. Callahan has |
Director Nominees
more than thirty years’ experience in the property and casualty reinsurance industry. Mr. Callahan currently serves as President and Managing Member of SPC Global RE Advisors, LLC, a consulting firm specializing in reinsurance matters, a position he has held since 2013. From 2002 to 2011, Mr. Callahan served as Executive Vice President of Everest Reinsurance Holdings, Inc. and Everest Reinsurance Company. Mr. Callahan also served as a director of Everest Reinsurance Company from 2001 to 2011, a director of Everest International Reinsurance, Ltd. from 2003 to 2007, and director of Everest Reinsurance (Bermuda), Ltd. from 2001 to 2007. Mr. Callahan’s broad knowledge of the reinsurance industry allows him to provide valuable perspective to the Board, particularly on matters related to the Company’s reinsurance program.
Director Nominees
| | Kimberly D. Campos became a director of the Company in 2017. Ms. Campos |
Director Nominees
joined the Company in 2007 and became Chief Administrative Officer in June 2015 and Chief Information Officer in February 2015. Prior to assuming these roles, Ms. Campos spent eight years in the Company’s internal audit department, serving as both IT Manager and then IT Audit Director. She managed IT general controls reviews and new application deployment and performed ongoing security and risk awareness training to improve operational efficiencies and address ongoing compliance with regulatory requirements. Ms. Campos brings to the Board significant experience in information technology, risk management, regulatory compliance and operational efficiency practices.
Director Nominees
| | Stephen J. Donaghy became a director of the Company in 2020. Mr. Donaghy |
Director Nominees
became Chief Executive Officer of the Company in 2019 and was previously the Chief Operating Officer of the Company from 2016 until his appointment as Chief Executive Officer. He also served as our Secretary from 2013 to 2019, Chief Marketing Officer from 2015 to 2016, Chief Administrative Officer from 2013 to 2015, Chief Information Officer from 2009 to 2015 and Executive Vice President since 2006. Before joining the Company, Mr. Donaghy held various executive positions at JM Family Enterprises, a private company, including Vice President of Strategic Initiatives, Vice President of Sales and Marketing and Senior Information Officer. As our Chief Executive Officer, Mr. Donaghy provides substantial insight on the Board regarding the operations of the Company.
Director Nominees
| | Sean P. Downes became Executive Chairman in 2019. Prior to being the |
Director Nominees
Executive Chairman, Mr. Downes was Chairman of the Board of Directors and Chief Executive Officer of the Company from 2013 to 2019. Mr. Downes also served as President of the Company from 2013 to 2016. Prior to becoming President and Chief Executive Officer, Mr. Downes served as Senior Vice President and Chief Operating Officer of the Company since 2005 and Chief Operating Officer of UPCIC, a wholly-owned subsidiary of the Company, since 2003. Mr. Downes has served as a director of the Company since 2005 and as a director of UPCIC since 2003. Prior to joining UPCIC, Mr. Downes was Chief Operating Officer of Alder Adjusting Corporation (formerly Universal Adjusting Corporation), a wholly-owned subsidiary of the Company, from 1999 to 2003. As an experienced financial and operational leader within the insurance industry, Mr. Downes brings to the Board a broad understanding of the strategic priorities and operational demands facing the Company.
Director Nominees
| | Marlene M. Gordon became a director of the Company in has more than 25 years |
Director Nominees
of experience serving as legal counsel within the consumables and service industries and championing women’s leadership in the workplace. Mrs. Gordon has served as Senior Vice President and Chief Legal Officer for Panera, LLC, comprised of Panera Bread®, Caribou Coffee® and Einstein Bros.® Bagels, since 2022. Mrs. Gordon previously served as Senior Vice President, Chief Administrative Officer, General Counsel and Secretary for Del Monte Fresh Produce Company, a global producer, marketer and distributor of fruit and vegetable products, from 2020 to 2022, and she previously served as Chief Legal, Compliance & Communications Officer and Secretary at Del Monte from 2018 to 2022. Prior experience includes approximately six years at Bacardi U.S.A., Inc., a spirits company, where she served most recently as Vice President, General Counsel for North America, in addition to serving as the Global Chair for Bacardi’s Women-In-Leadership Program, an initiative that was founded with the mission of unleashing the potential of current and future female leaders at Bacardi to drive sustainable top and bottom line business growth. Prior to Bacardi, Mrs. Gordon spent 14 years at Burger King Corporation, serving most recently as Vice President, Assistant General Counsel, Marketing and Intellectual Property, in addition to serving as chair of the company’s Women’s Leadership Forum. Mrs. Gordon brings to the Board substantial leadership experience along with compliance and corporate governance expertise.
Director Nominees
| | Francis X. McCahill, III became a director of the Company in 2021. Mr. McCahill |
Director Nominees
began his insurance career in 1972 with the Wall Street brokerage firm Frank B. Hall serving as junior account executive in the marine insurance department. He went on to manage the worldwide corporate risk management departments of three Fortune 500, multi-national corporations: Bristol Myers-Squibb, Norton Simon, Inc., and Harris Corporation. In 1989, he joined Johnson & Higgins, Inc. as a Vice President. From there he founded Cypress Underwriters, a regional property & casualty managing general agency. Ultimately, Mr. McCahill was a founder, President and CEO of Homeowners Choice, Inc. a Florida homeowners insurance company. Mr. McCahill’s broad knowledge of the homeowners insurance industry and of risk management allows him to provide valuable perspectives to the Board.
Director Nominees
| | Richard D. Peterson became a director of the Company in 2014. Mr. Peterson has |
Director Nominees
over 20 years of experience in the areas of executive management, finance and accounting. Since 2022, Mr. Peterson has served as Chief Financial Officer of Turn Biotechnologies, Inc., a private biotechnology company. Mr. Peterson previously served as the Chief Financial Officer of various biotech companies from 2015 to 2021, including the publicly traded Botanix Pharmaceuticals, Sienna Biopharmaceuticals, Inc. and Novan, Inc. Mr. Peterson served in various executive roles at Medicis Pharmaceutical Corporation, a New York Stock Exchange (“NYSE”) listed company, from 1995 to 2012, including as Executive Vice President, Chief Financial Officer and Treasurer from 2008 to 2012. Mr. Peterson has an understanding of corporate governance matters and experience with financial reporting and executive leadership that make him a valued member of our Board.
Director Nominees
| | Michael A. Pietrangelo became a director of the Company in 2010. Since 1998, |
Director Nominees
Mr. Pietrangelo has practiced law and has been of counsel to the firm of Pietrangelo Smith, PLC. Mr. Pietrangelo is admitted to the bars of the states of New York and Tennessee and the District of Columbia. He served on the board of directors of MRI Interventions Inc., a publicly traded research and development company, from 2010 to 2014. More recently, through 2020, Mr. Pietrangelo served as the President and Managing Director of The Theraplex Company, LLC, a privately held skin care company. He brings valuable experience to the Board in corporate governance, legal and financial matters as a result of his positions as a lawyer, executive and director of privately held and public companies, as well as nonprofit organizations.
Director Nominees
| | Ozzie A. Schindler became a director of the Company in 2007. Mr. Schindler has |
Director Nominees
been a shareholder with the law firm of Greenberg Traurig, LLP since 2005, specializing in all aspects of international tax planning. He is admitted to both the Florida and New York state bars. Mr. Schindler provides strong regulatory, accounting, financial, risk analysis, internal audit, compliance, corporate governance and administrative skills and experience to the Board.
Director Nominees
| | Jon W. Springer became a director of the Company in 2013 and was an executive |
Director Nominees
with the Company from 2006 until his retirement in January 2021. Mr. Springer served as President and Chief Risk Officer of the Company from March 2016 until his retirement on January 31, 2021. Prior to taking on such role, he served as an Executive Vice President and Chief Operating Officer of the Company since 2013. Mr. Springer was an Executive Vice President of Evolution Risk Advisors, Inc. (formerly Universal Risk Advisors, Inc.), a wholly-owned subsidiary of the Company, from 2006 through 2008, and an Executive Vice President of Blue Atlantic Reinsurance Corporation (“Blue Atlantic”), a wholly-owned subsidiary of the Company, from 2008 to 2013. Before joining Evolution Risk Advisors, Inc. in 2006, Mr. Springer was an Executive Vice President of Willis Re, Inc. and was responsible for managing property and casualty operations in its Minneapolis office. Mr. Springer brings to the Board extensive experience in the property and casualty insurance industry, including with respect to reinsurance arrangements.
Personal and professional attributes and skills of the nominees
Personal and professional attributes and skills of the nominees Our nominees have executive experience and skills that are aligned with our business and strategy as follows:
Out of 12 board nominees
Out of 12 board nominees
Corporate Governance Framework
Corporate Governance Framework The Board’s leadership structure is designed so that authority and responsibility are effectively allocated between the Board and management. In addition to our strong corporate governance practices and the key oversight roles of our lead independent director and committee chairs, each as described below, all directors share equally in their responsibilities as members of the Board and take seriously the charge of leading the Company on behalf of our shareholders. Our corporate governance framework reflects our commitment to independence, corporate responsibility and accomplishing our financial goals through responsible development and execution of corporate strategy. Our governance framework enables independent and skilled directors to provide oversight, advice and counsel to promote the interests of the Company and our shareholders. Our governance framework is established and evidenced by our Corporate Governance Guidelines (“Governance Guidelines”), Code of Business Conduct and Ethics (“Code of Conduct”), Whistleblower Policy (“Whistleblower Policy”), our enterprise risk management program and our commitment to transparent financial reporting. Our Governance Guidelines, Code of Conduct, Whistleblower Policy and the charters of each Board committee are available www.universalinsuranceholdings.com. The Board, along with management, regularly reviews our policies and procedures, charters, policies and practices in order to provide appropriate standards of corporate governance.
Governance Highlights
Governance Highlights The following chart highlights our corporate governance practices and principles.
Governance Highlights
| Board Independence | • | Nine of our 12 director nominees are independent. | | | • | Messrs. Downes and Donaghy and Ms. Campos are the members of management who serve as directors. | | Board Composition | • | The Nominating and Governance Committee regularly reviews Board performance, assesses gaps in skills or experience on the Board and periodically recommends new directors to add a fresh perspective to the Board while maintaining continuity and valuable historic knowledge. | | Lead Independent Director | • | Our independent directors appoint our lead independent director. | | | • | Our lead independent director chairs regularly-scheduled executive sessions at which our independent directors discuss matters without management present, including management’s performance, succession planning and Board effectiveness. | | Board Committees | • | We have five Board committees: Audit Committee, Compensation Committee, Nominating and Governance Committee, Investment Committee and Risk Committee. | | | • | Our Audit Committee, Compensation Committee and Nominating and Governance Committee are each comprised exclusively of independent directors. | | | • | Chairs of the Board committees shape the agenda and information presented to their committees. | | Board Oversight of Risk Management | • | The Board seeks to facilitate the identification and appropriate management of material risks, and the Board and its committees regularly review material operational, financial, compensation, environmental and social risks and compliance risks with senior management. | | Accountability | • | Our directors are elected annually. | | | • | We have outreach and engagement with our largest shareholders and have established a mechanism to allow shareholders to communicate any concerns anonymously to our independent directors. | | Open Communications | • | Our committees report to the Board regularly. | | | • | The Board promotes open and frank discussions with management. | | | • | Our directors have free access to members of management and other employees and are authorized to hire outside consultants or experts at the Company’s expense. |
Governance Highlights
| Director Education | • | The Board focuses on continuing director education for all directors and Board orientation for new directors. | | Self-Evaluations | • | The Board and each committee conduct annual evaluations of their performance. | | Succession Planning | • | Senior management succession planning is a top Board priority. The Board devotes significant attention to identifying and developing talented senior leaders. | | Director Stock Ownership | • | Within five years of joining the Board, each non-employee director is expected to own shares of our common stock having a value of at least three times the annual cash retainer. The Executive Chairman and Chief Executive Officer are each expected to own shares of our common stock having a value of at least three times their respective annual base salaries. | | Clawback Policy; No Hedging or Pledging | • | We have a compensation clawback policy designed to mitigate risk in connection with executive compensation, that will be triggered by certain restatements of our financial statements in accordance with applicable SEC rules and NYSE listing standards. | | | • | Our directors, executive officers and senior accounting, finance and legal personnel may not hedge or short shares of our common stock, engage in options trading, trade on margin or pledge shares of our common stock as collateral for a loan or other indebtedness. |
Board and Committee Meetings
Board and Committee Meetings Meetings of the Board are held regularly each quarter and as may otherwise be required. The Board held 4 meetings during 2023. We encourage directors to attend the annual meeting of shareholders and expect that they will attend. All of our directors then in office were present at the 2023 Annual Meeting of Shareholders. In addition, all of our directors attended at least 75% of the meetings of the Board and the committees on which they served during 2023.
Board Leadership Structure
Board Leadership Structure The Board believes that it is important to retain flexibility in determining the best leadership structure for the Company as our needs may change over time. Currently, our Board leadership structure consists of a lead independent director, an Executive Chairman (who was our former CEO), and strong committee chairs. The Board believes that our current structure provides necessary independent leadership and engagement while maintaining the benefit of having our former CEO chair regular Board meetings as important strategic and business matters are discussed. In addition, our Chief Executive Officer, who is the individual primarily responsible for management of our Company, is also an active and engaged member of our Board. The roles of Board Chairman and Chief Executive Officer may be filled by the same or different individuals, which provides the Board the flexibility to determine whether these roles should be combined or separated based on the Company’s circumstances and needs at any given time. In 2019, we separated the Chairman and Chief Executive Officer roles; Sean P. Downes assumed the role of Executive Chairman, and Stephen J. Donaghy was appointed as the Company’s Chief Executive Officer. The Board believes that our shareholders are best served at this time by having Mr. Downes continue his role as Chairman of the Board, in view of his tenure and experience with the Company. As Executive Chairman, Mr. Downes continues to set agendas for, and to lead Board discussions of, strategic matters affecting our business at the time. Our Executive Chairman is appointed annually by all the directors. The Executive Chairman’s responsibilities, in addition to providing general leadership to the Board, include calling and presiding at Board and shareholder meetings and preparing meeting schedules, agendas and materials.
Independence of Our Directors and Director Nominee
Independence of Our Directors and Director Nominee NYSE rules require that at least a majority of our directors be independent of the Company and management. The Board has determined that each of our directors and director nominee, other than Messrs. Downes and Donaghy and Ms. Campos, is an “independent director,” as such term is defined by NYSE rules.
Director Compensation
Director Compensation Each independent director currently receives an annual cash retainer of $85,000. In light of the workload and broad responsibilities of their positions, the chairs of our Compensation Committee, Investment Committee, Nominating and Governance Committee and Risk Committee each receive an additional annual cash retainer of $15,000, while the chair of our Audit Committee and our Lead Independent Director each receive an additional cash retainer of $20,000. In addition, the Company maintains a non-employee director compensation policy pursuant to which, on the date of each annual meeting of shareholders, each continuing non-employee director is to be granted shares of restricted stock or restricted stock units with a grant date fair market value of $65,000. In 2023, Messrs. Downes and Donaghy and Ms. Campos were employees of the Company and did not receive additional compensation for their Board service.
Director Summary Compensation Table
| Name | Fees Paid in Cash ($) | Stock Awards ($) (1) | All Other Compensation (2) | Total ($) | | Shannon A. Brown | $85,000 | $65,001 | $— | $150,001 | | Scott P. Callahan | $100,000 | $65,001 | $— | $165,001 | | Marlene M. Gordon | $85,000 | $65,001 | $— | $150,001 | | Francis X. McCahill, III | $85,000 | $65,001 | $— | $150,001 | | Richard D. Peterson | $105,000 | $65,001 | $— | $170,001 | | Michael A. Pietrangelo | $120,000 | $65,001 | $— | $185,001 | | Ozzie A. Schindler | $100,000 | $65,001 | $— | $165,001 | | Jon W. Springer | $100,000 | $65,001 | $38,104 | $203,105 | | Joel M. Wilentz, M.D. | $85,000 | $65,001 | $— | $150,001 |
Limits on Non-Employee Director Compensation
Limits on Non-Employee Director Compensation The A&R 2021 Plan limits the aggregate value of equity-based and cash compensation paid to each non-employee director during any calendar year for his or her service on the Board to $600,000; however, this limit is increased to $1,200,000 for any calendar year in which a non-employee director is designated as Chairman or Lead Director or first joins the Board.
2023 Say on Pay Vote and Shareholder Engagement
| What We Heard | How We Responded | | Shareholders we spoke with expressed concern that a significant portion of the CEO’s fiscal 2022 option award, made pursuant to the terms of his 2020 employment agreement, was paid in cash. | The Compensation Committee understands shareholder concerns with respect to the CEO’s fiscal 2022 option award. The Committee will no longer replace NEOs’ long term equity incentive compensation with cash awards, which lack shareholder alignment and the underlying time- and/or performance-based vesting criteria applicable under our equity awards. | | Most shareholders expressed concern that for our CFO and CIO, the annual cash incentive is discretionary and not subject to specified performance criteria and equity awards are only subject to time-based vesting. | In late 2023, the Compensation Committee restructured the CFO and CIO’s compensation packages as part of the negotiation of new employment agreements with these officers. All NEOs are now under the same performance-based short-term cash incentive structure (with threshold, target and maximum levels of achievement of applicable performance goals) and all NEOs will receive 50% of their long-term equity incentive compensation in the form of Performance Stock Units (PSUs) with a three-year performance period (with threshold, target and maximum levels of achievement of applicable performance goals). As a result, the CFO and CIO will be subject to the same short-term cash incentive and long-term PSU criteria as the CEO and Executive Chairman. | | Some shareholders noted a lack of understanding regarding the role of our CEO and Executive Chairman and that we provided minimal disclosure regarding Executive Chairman’s role | The Executive Chairman is critical to the Company and its performance. Relative to Florida homeowners insurance peers, the vast majority of which are private, Universal’s structure is far more complex and vertically integrated. In addition to running two homeowners insurance subsidiaries, Universal’s enterprise also includes a full-service claims adjusting operation, one of the largest captive property insurance law firms in Florida, a full-fledged reinsurance brokerage subsidiary and a digital insurance agency (including a direct-to-consumer sales platform). This unique structure serves to significantly enhance returns on equity, while also providing a meaningful buffer in challenging underwriting periods. | | | While the CEO oversees the core homeowners insurance subsidiaries and has overall responsibility for the consolidated entity, the Executive Chairman oversees the aforementioned claims adjusting, legal and reinsurance brokerage subsidiaries, which are critical to Universal’s long-term success and ability to create sustainable, long-term value for shareholders. The Executive Chairman specifically is well positioned to lead these areas, as he built Universal’s claims adjusting, legal and reinsurance brokerage departments from the ground up and was the visionary behind the Company’s vertically integrated structure. Additionally, his experience, unique skill set, industry relationships and Florida homeowners insurance market expertise are invaluable to the Company, as he has over 25 years of executive level experience in Universal’s core market and product segment. | | | This partnership approach between the CEO and Executive Chairman has allowed Universal to thrive relative to Florida homeowners insurance peers both during challenging and successful periods for the industry, and it provides the CEO with additional time to effectively lead the overall organization and concentrate on strategic priorities. We firmly believe this partnership approach best serves both the interests of the Company and our shareholders. | | | In setting the Executive Chairman’s compensation, the Compensation Committee took into account the need to both retain and motivate someone of Mr. Downes’ caliber, tenure and skill set, the criticality of his role specific to the Company and its ability to execute on its strategic objectives, his prior role as CEO of the Company, his performance and his impact on driving long-term shareholder value creation. |
Compensation Philosophy and Key Considerations in Setting Compensation
| • | drive long-term, sustainable value creation for shareholders; |
Compensation Philosophy and Key Considerations in Setting Compensation
| • | balance both short- and long-term focus; |
Compensation Philosophy and Key Considerations in Setting Compensation
| • | the terms of applicable employment agreements with the Named Executive Officers; and |
Compensation Philosophy and Key Considerations in Setting Compensation
| • | the advice of the Compensation Committee’s independent compensation consultant and outside legal counsel. |
Corporate Governance Best Practices
| What We Do | What We Don’t Do | | ✓ Emphasize at-risk pay and pay for performance | × Significant perquisites | | ✓ Maintain a clawback policy applicable to all NEOs | × Supplemental pension or retirement plans for our NEOs | | ✓ Engage an independent compensation consultant | × Hedging or pledging of Company shares by executives | | ✓ Perform annual risk assessments of compensation programs | × Current dividends paid on unearned or unvested equity awards | | ✓ Provide at least 50% of long-term incentive awards as performance-based (beginning with FY2024) | × Single-trigger cash payments or tax gross-ups upon a change in control | | ✓ Maintain stock ownership guidelines for our CEO and Executive Chairman | × Repricing or exchange of underwater stock options without stockholder approval |
Annual Cash Incentive Award
Annual Cash Incentive Award For 2023, Messrs. Donaghy and Downes were each eligible to receive an annual cash incentive award based on achievement of three performance metrics – net operating ratio, gross premiums written, and a qualitative assessment of job performance – each weighted and defined as set forth below. Cash incentive award payouts are capped at the “target” level, unless the Company’s stock price performance for the year ranks in the top third of the Russell 3000.
Annual Cash Incentive Award
| 2023 Cash Incentive Award Performance Metrics | | | | | | Weighting | Performance Metric | Threshold | Target | Max | | 50% | Net operating ratio* | 100% | 95% | 90% | | 30% | GPW** growth | 4% | 8% | 15% | | 20% | Qualitative | Qualitative | | |
Annual Cash Incentive Award
| * Net operating ratio’s numerator is calculated as the sum of losses & LAE, policy acquisition costs and other operating expenses, less net investment income, commission revenue, policy fees and other revenues, while the denominator reflects net premiums earned. |
Annual Cash Incentive Award
| ** GPW reflects gross premiums written. |
Annual Cash Incentive Award
Mr. Donaghy’s target cash incentive opportunity is 150% of his base salary (with a threshold opportunity of 50% of target and a maximum opportunity of 200% of target) and Mr. Downes’ target cash incentive opportunity is 100% of his base salary (with a threshold opportunity of 50% of target and a maximum opportunity of 200% of target). In 2023, the net operating ratio for the year was 93.3%. As a result, this component of the cash incentive award paid out between target and max. The Company’s gross premiums written growth was 4.1% in 2023, which was just above the “threshold” level of 4%. The Company’s stock price performance in 2023 was in the top third of the Russell 3000. Finally, the Compensation Committee determined that Messrs. Donaghy and Downes fully met the Committee’s expectations on the qualitative criteria of the award and determined this portion of the annual incentive to be achieved at target. The committee considered several factors, including each executive’s strong leadership in a challenging Florida homeowners insurance environment, strong execution of Universal’s claims response to Hurricane Idalia and successful placement of Universal’s 2023-2024 catastrophe reinsurance program. Accordingly, the annual cash incentive award paid out at the 97.8% level. As Mr. Donaghy’s target cash incentive amount was $1,500,000, Mr. Donaghy received $1,467,418 for his 2023 cash incentive award. As Mr. Downes’s target cash incentive amount was $1,000,000, Mr. Downes received $978,278 for his 2023 cash incentive award.
Annual Cash Bonus
Annual Cash Bonus For Mr. Wilcox and Ms. Campos, based on Mr. Donaghy’s recommendation, the Compensation Committee awarded discretionary bonuses in the amounts of $300,000 and $100,000, respectively. Mr. Donaghy’s recommendation was based primarily on Mr. Wilcox’s leadership of the Company’s finance and accounting functions and on Ms. Campos’s continued leadership in the areas of information technology and risk management. In approving Mr. Wilcox’s bonus, the Compensation Committee also took into account input from the Audit Committee. As noted above, commencing in 2024, Mr. Wilcox and Ms. Campos will participate in the Company’s annual cash incentive plan and will be subject to the same performance-based short-term cash incentive structure and criteria as the CEO and Executive Chairman (with threshold, target and maximum levels of achievement of applicable performance goals).
Equity Incentive Compensation
Equity Incentive Compensation In general, the Company uses equity awards to align executives’ interests with shareholders’ interests, to focus executives on delivering long-term value to shareholders and to retain executives. Restricted stock units (“RSUs”) are generally settled in common stock upon vesting (but may be cash settled to the extent that such is determined appropriate in the Compensation Committee’s discretion) and are subject to time-based vesting requirements. Performance stock units (“PSUs”) are also settled in common stock upon vesting (but may be cash settled to the extent that such is determined appropriate in the Compensation Committee’s discretion) and are subject to both time-based and performance-based vesting requirements. Dividend equivalents are accrued on both RSUs and PSUs and are paid out in cash at the time that the award vests and shares are delivered to the executive in settlement of the award. In 2023, Messrs. Donaghy and Downes each received an annual equity grant comprised 50% of RSUs and 50% of PSUs. Mr. Donaghy received $875,000 in RSUs and $875,000 in PSUs; Mr. Downes received $500,000 in RSUs and $500,000 in PSUs. The RSUs vest ratably over a three-year period, and the PSUs will vest following the conclusion of a three-year performance period that runs through the end of fiscal 2025, but only to the extent that the performance criteria in the table below are met, with no vesting for performance below threshold:
Equity Incentive Compensation
| 2023 PSU Equity Vesting Criteria | | | | | Criteria | Threshold | Target | Max | | 3-year adjusted* book value per share growth | 5% | 10% | 25% |
Equity Incentive Compensation
| * Excludes cumulative dividends declared and accumulated other comprehensive income. |
Equity Incentive Compensation
These PSUs will vest at 50% for threshold performance, 100% for target performance and 200% for maximum performance. Mr. Wilcox and Ms. Campos did not receive any equity grants in 2023. As noted above, commencing with fiscal 2024, Mr. Wilcox and Ms. Campos will participate in the company’s long-term equity incentive plan, will receive 50% of their long-term equity incentive compensation in the form of PSUs with a three-year performance period (with threshold, target and maximum levels of achievement of applicable performance goals) and will be subject to the same PSU criteria as the CEO and Executive Chairman.
Compensation Risk Assessment
| • | a significant portion of total compensation is linked to the Company’s long-term performance, which encourages the creation of shareholder value and achievement of key operational and business development goals; and |
2023 Summary Compensation Table
2023 Summary Compensation Table The following table sets forth the compensation paid to or earned by the Named Executive Officers during each of the last three years.
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards (1) | Options Awards | Non-Equity Incentive Plan Compensation | All Other Compensation (2) | Total | | Stephen J. Donaghy, Chief Executive Officer and Director | 2023 | $1,000,000 | — | $1,750,002 | — | $1,467,418 | $70,534 | $4,287,954 | | | 2022 | $1,000,000 | — | $750,002 | $307,827 | $750,000 | $770,564 | $3,578,393 | | | 2021 | $1,000,000 | — | $1,468,000 | $1,000,000 | — | $72,457 | $3,540,457 | | Sean P. Downes, Executive Chairman | 2023 | $1,000,000 | — | $999,990 | — | $978,278 | $464,831 | $3,443,099 | | | 2022 | $1,000,000 | — | $999,994 | $511,222 | $500,000 | $74,984 | $3,086,200 | | | 2021 | $1,000,000 | — | — | — | — | $72,143 | $1,072,143 | | Frank C. Wilcox, Chief Financial Officer | 2023 | $500,000 | $300,000 | — | — | — | $60,035 | $860,035 | | | 2022 | $500,000 | $300,000 | $95,800 | — | — | $48,864 | $944,664 | | | 2021 | $462,500 | $325,000 | — | — | — | $63,280 | $850,780 | | Kimberly D. Campos, Chief Admin. Officer, Chief Information Officer and Director | 2023 | $340,000 | $100,000 | — | — | — | $74,611 | $514,611 | | | 2022 | $315,000 | $100,000 | $47,900 | — | — | $27,294 | $490,194 | | | 2021 | $300,000 | $100,000 | $84,550 | — | — | $34,352 | $518,902 |
2023 Summary Compensation Table
| (1) The amounts reported in this column represent the aggregate grant date fair value related to the PSUs and RSUs granted to Messrs. Donaghy and Downes (see the “2023 Grants of Plan-Based Awards” table below for further details regarding the PSUs and RSUs granted). Grant date fair value is computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“FASB ASC Topic 718”) without regard to forfeitures related to service-based vesting conditions. PSUs are reflected based on the probable outcome of the performance conditions at grant. For awards granted in 2023, assuming the maximum potential payouts, the amounts attributable to the PSUs in this column would be $1,750,002 for Mr. Donaghy and $999,991 for Mr. Downes. For additional information on the assumptions used in our equity award valuations, see Note 9 to our Financial Statements in our 2023 Annual Report filed with the SEC on February 28, 2024. |
2023 Summary Compensation Table
| (2) For further details regarding all other compensation contained in this column, see the “2023 All Other Compensation” table below. |
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The following table sets forth certain information with respect to grants of executive compensation plan-based awards to the Named Executive Officers during the year ended December 31, 2023. Mr. Wilcox and Ms. Campos did not receive any incentive plan awards for fiscal 2023, but as noted above they will participate in the short-term and long-term incentive compensation programs commencing with fiscal 2024.
2023 Grants of Plan-Based Awards
| Name | Grant Date | Estimated Future Payouts under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (2) | Grant Date Fair Value of Stock Awards (3) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) (1) | Maximum (#) | | | | Stephen J. Donaghy | — | $750,000 | $1,500,000 | $3,000,000 | — | — | — | — | $— | | | 3/30/2023 | — | — | — | 23,960 | 47,919 | 95,838 | — | $875,001 | | | 3/30/2023 | — | — | — | — | — | — | 47,919 | $875,001 | | Sean P. Downes | — | $500,000 | $1,000,000 | $2,000,000 | — | — | — | — | — | | | 3/30/2023 | — | — | — | 13,691 | 27,382 | 54,764 | — | $499,995 | | | 3/30/2023 | — | — | — | — | — | — | 27,382 | $499,995 | | Frank C. Wilcox | — | — | — | — | — | — | — | — | — | | Kimberly D. Campos | — | — | — | — | — | — | — | — | — |
2023 Grants of Plan-Based Awards
| (1) These PSUs vest based upon the level of achievement of pre-established annual company performance objectives during a three-year performance award cycle, with 50% vesting for threshold performance, 100% vesting for target performance and 200% vesting for maximum performance. See note (1) of the 2023 Summary Compensation Table for additional information about these awards. |
2023 Grants of Plan-Based Awards
| (2) These RSUs vest ratably on March 30, 2024, 2025 and 2026. |
2023 Grants of Plan-Based Awards
| (3) The amounts shown in this column are valued based on the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See note (1) of the 2023 Summary Compensation Table above for a discussion of the relevant assumptions used in calculating these amounts. |
2023 Outstanding Equity Awards at Year-End
2023 Outstanding Equity Awards at Year-End The following table sets forth certain information regarding unexercised options, RSUs and PSUs held by the Named Executive Officers that had not vested as of December 31, 2023.
2023 Outstanding Equity Awards at Year-End
| | Options Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (Exercisable) | Number of Securities Underlying Unexercised Options (Unexercisable) | 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) | | Stephen J. Donaghy | 286,046 | — | $16.92 | 4/7/2030 | — | — | — | — | | | 250,196 | 125,098(2) | $14.75 | 3/1/2031 | — | — | — | — | | | 83,334 | 166,666(3) | $11.80 | 3/2/2032 | — | — | — | — | | | — | — | — | — | — | — | 123,052(4) | $1,966,371 | | | — | — | — | — | — | — | 95,838(5) | $1,531,491 | | | — | — | — | — | 47,919(6) | $765,746 | — | — | | Sean P. Downes | 66,666 | — | $19.52 | 2/28/2026 | — | — | — | — | | | 150,000 | — | $19.52 | 2/28/2026 | — | — | — | — | | | 433,334 | — | $27.20 | 1/20/2027 | — | — | — | — | | | 463,047 | —(7) | $32.80 | 3/19/2028 | — | — | — | — | | | 100,991 | — | $31.64 | 3/14/2029 | — | — | — | — | | | 221,294 | — | $18.23 | 4/30/2030 | — | — | — | — | | | 83,334 | 166,666(8) | $13.19 | 4/7/2032 | — | — | — | — | | | — | — | — | — | — | — | 82,034(4) | $1,310,903 | | | — | — | — | — | — | — | 54,764(5) | $875,129 | | | — | — | — | — | 27,382(6) | $437,564 | — | — | | | — | — | — | — | 13,672(9) | $218,479 | — | — | | Frank C. Wilcox | 25,000 | — | $31.64 | 3/14/2029 | — | — | — | — | | | 104,138 | — | $18.23 | 4/30/2030 | — | — | — | — | | | — | — | — | — | 3,333(10) | $53,261 | — | — | | | — | — | — | — | 6,666(11) | $106,523 | — | — | | Kimberly D. Campos | — | — | — | — | 1,666(10) | $26,623 | — | — | | | — | — | — | — | 3,333(11) | $53,261 | — | — |
2023 Outstanding Equity Awards at Year-End
| (1) Calculated based on closing stock price of $15.98 on December 29, 2023, the last trading day of fiscal 2023. |
2023 Outstanding Equity Awards at Year-End
| (2) The options held by Mr. Donaghy with an exercise price of $14.75 vest on March 1, 2024. |
2023 Outstanding Equity Awards at Year-End
| (3) The options held by Mr. Donaghy with an exercise price of $11.80 ratably vest on March 2, 2024 and 2025. |
2023 Outstanding Equity Awards at Year-End
| (4) The 2022 PSUs granted to Messrs. Donaghy and Downes. on June 14, 2022 are earned based upon the level of achievement of pre-established annual company performance objectives during a three-year performance award cycle, with 50% of performance shares vesting for threshold performance, 100% vesting for target performance and 200% vesting for maximum performance. The value above reflects maximum performance, pursuant to SEC requirements. |
2023 Outstanding Equity Awards at Year-End
| (5) The 2023 PSUs granted to Messrs. Donaghy and Downes. on March 30, 2023 are earned based upon the level of achievement of pre-established annual company performance objectives during a three-year performance award cycle, with 50% of performance shares vesting for threshold performance, 100% vesting for target performance and 200% vesting for maximum performance. The value above reflects maximum performance, pursuant to SEC requirements. |
2023 Outstanding Equity Awards at Year-End
| (6) The RSUs granted to Messrs. Donaghy and Downes on March 30, 2023 are subject to time-based vesting conditions, and ratably vest on March 30, 2024, 2025 and 2026. |
2023 Outstanding Equity Awards at Year-End
| (7) The options held by Mr. Downes with an exercise price of $32.80 were voluntary forfeited subsequent to December 31, 2023. |
2023 Outstanding Equity Awards at Year-End
| (8) The options held by Mr. Downes with an exercise price of $13.19 ratably vest on April 7, 2024 and 2025. |
2023 Outstanding Equity Awards at Year-End
| (9) The RSUs held by Mr. Downes are subject to time-based vesting conditions, and vest on December 15, 2024. |
2023 Outstanding Equity Awards at Year-End
| (10) The RSUs held by Mr. Wilcox and Ms. Campos are subject to time-based vesting conditions and vest on December 17, 2024. |
2023 Outstanding Equity Awards at Year-End
| (11) The RSUs held by Mr. Wilcox and Ms. Campos are subject to time-based vesting conditions and ratably vest on December 16, 2024, and 2025. |
Options Exercised and Stock Vested
Options Exercised and Stock Vested The following table sets forth information regarding stock awards held by the Named Executive Officers that vested during the year ended December 31, 2023. The amounts shown reflect the number of units vesting multiplied by the closing price per share on the applicable vesting date. No Named Executive Officers exercised any stock options during 2023.
Options Exercised and Stock Vested
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting | Value Realized on Vesting | | Stephen J. Donaghy | 41,000 | $419,430 | | Sean P. Downes (1) | 13,672 | $218,342 | | Frank C. Wilcox (1) | 6,667 | $107,539 | | Kimberly D. Campos (1) | 3,334 | $53,777 |
Options Exercised and Stock Vested
| (1) These RSUs were cash settled for Mr. Downes based on the closing market price per share of $15.97 on December 15, 2023. With respect to Mr. Wilcox and Ms. Campos, these RSUs were cash settled based on the closing market price per share of $16.13 on December 18, 2023. |
Employment Agreements and Potential Payments Upon Termination or Change in Control
Employment Agreements and Potential Payments Upon Termination or Change in Control The following summaries describe the material terms of each NEO’s employment agreement in effect in 2023.
2023 Potential Payments Upon Termination or Change in Control Table(1)
2023 Potential Payments Upon Termination or Change in Control Table(1) The following table presents the potential payments to which our NEOs would have been entitled assuming a termination or change in control had occurred as of December 31, 2023.
2023 Potential Payments Upon Termination or Change in Control Table(1)
| Name | Benefit (1) | Termination Without Cause or for Good Reason (2) | Upon Change in Control (3) | Upon Death (4) | Upon Disability (4) | | Stephen J. Donaghy | Base Salary | $1,000,000 | $2,000,000 | — | — | | | Annual Incentive Award | $1,467,418 | $1,500,000 | $1,467,418 | $1,467,418 | | | Equity Compensation(5) | $3,016,879 | $3,365,211 | $3,016,879 | $3,016,879 | | | COBRA Payments | $20,695(6) | — | — | — | | Sean P. Downes | Base Salary | $1,000,000 | $2,000,000 | — | — | | | Annual Incentive Award | $978,278 | $1,000,000 | $978,278 | $978,278 | | | Equity Compensation(5) | $1,981,558 | $2,214,057 | $1,763,078 | $1,763,078 | | | COBRA Payments | $37,607(6) | — | — | — | | Frank C. Wilcox | Base Salary | — | — | — | — | | | Equity Compensation(5) | $159,784 | $159,784 | — | — | | Kimberly D. Campos | Base Salary | — | — | — | — | | | Equity Compensation(5) | $79,884 | $79,884 | — | — |
2023 Potential Payments Upon Termination or Change in Control Table(1)
| (1) If the payments and benefits to a Named Executive Officer under his or her respective employment agreement or another plan, arrangement or agreement would subject the Named Executive Officer to the excise tax imposed by Section 4999 of the Code, then such payments will be reduced by the minimum amount necessary to avoid such excise tax, if such reduction would result in the Named Executive Officer receiving a higher net after-tax amount. The amounts reflected in this table do not reflect the application of any reduction in compensation or benefits pursuant to the terms of their employment agreements. |
2023 Potential Payments Upon Termination or Change in Control Table(1)
| (2) For each of Messrs. Donaghy and Downes, the amounts in this column assume a termination of employment without “cause” or for “good reason” on December 31, 2023, and no prior change in control, and represent (i) a lump-sum cash amount equal to 12 months’ base salary and 12 months of COBRA coverage (which amounts are included separately), (ii) a pro rata portion of his annual incentive award for the year of termination, calculated on the basis of the Company’s actual performance for such year, each of (i) and (ii) subject to his execution of a general release of claims in favor of the Company, and (iii) the value of any stock options that would have vested had he been continuously employed through the end of the one-year period following the termination date, and the value of any unvested RSUs and PSUs, which will fully vest as of the termination date. The PSUs will be deemed earned at the target level. For Mr. Wilcox and Ms. Campos, the amounts in this column assume a termination of employment without “cause” and represent a lump-sum cash payment equal to his or her base salary for a period equal to the remaining term of his or her 2022 Employment Agreement, which expired on December 31, 2023. |
2023 Potential Payments Upon Termination or Change in Control Table(1)
| (3) The amounts in this column assume a termination of employment without “cause” or for “good reason” on December 31, 2023, upon or within 24 months after a change in control. With respect to each of Messrs. Donaghy and Downes, the amounts represent (i) two times his then-annual rate of base salary, (ii) two times any annual cash incentive paid for the calendar year prior to the change in control, each of (i) and (ii) subject to his execution of a general release of claims in favor of the Company, and (iii) the value of all of his unvested equity compensation (stock options RSUs and PSUs), which would immediately vest (the PSUs would vest at the target level) and/or become exercisable with options remaining outstanding for up to one year following termination. |
2023 Potential Payments Upon Termination or Change in Control Table(1)
| (4) The amounts in these columns represent the annual incentive award and the intrinsic value of outstanding PSUs, which will fully vest and be deemed earned at target level, and the intrinsic value of outstanding stock options and RSUs that would have vested had the Named Executive Officer been continuously employed through the end of the one-year period following the termination date. |
2023 Potential Payments Upon Termination or Change in Control Table(1)
| (5) Includes the “intrinsic value” as of December 31, 2023 (that is, the value based upon the last reported sales price of our common stock on the NYSE on December 29, 2023, the last trading day of fiscal 2023, of $15.98, and in the case of stock options, minus the exercise price) of equity awards that would become exercisable or vested in the event of a termination of employment and change-in-control assuming the awards are not assumed or substituted. For all outstanding equity awards owned by our Named Executive Officers as of December 31, 2023, see the 2023 Outstanding Equity Awards at Year-End table above. |
2023 Potential Payments Upon Termination or Change in Control Table(1)
| (6) Messrs. Donaghy and Downes are also entitled to up to 12 months of COBRA payments in the event of a termination of employment without “cause” or for “good reason.” |
CEO Pay Ratio
CEO Pay Ratio For 2023:
CEO Pay Ratio
| • | the annual total compensation of the median compensated of all employees of our Company (other than our CEO) was $90,719; and |
CEO Pay Ratio
| • | the annual total compensation of our CEO, as reported in the Summary Compensation Table included in this Proxy Statement, was $4,287,954. |
CEO Pay Ratio
Based on this information, for 2023, the ratio of the annual total compensation of Mr. Donaghy, our Chief Executive Officer, to the annual total compensation of the median compensated of all Company employees (other than Mr. Donaghy), calculated in a manner consistent with Item 402(u) of Regulation S-K, was 47 to 1. To identify the median employee, we reviewed our employee population as of December 31, 2023 and compensation for the period of January through December 31, 2023 as reported to the Internal Revenue Service on Form W-2 in Box 1, which we determined reasonably reflects the compensation of our employees. Once we identified our median employee, we combined all of the elements of such employee’s compensation for the full 2023 year in accordance with the requirements of Item 402 of Regulation S-K. SEC rules for identifying the median employee and calculating the pay ratio allow companies to use various methodologies and assumptions. As a result, the pay ratio reported by the Company may not be comparable to the pay ratio reported by other companies.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid to our NEOs and certain financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the “Compensation Discussion and Analysis” section of this Proxy Statement. “Compensation actually paid” does not represent the value of cash and shares of the company’s common stock received by named executive officers during the year, but rather is an amount calculated under SEC rules and includes, among other things, year-over-year changes in the value of unvested equity-based awards. As a result of the calculation methodology required by the SEC, “Compensation actually paid” amounts below differ from compensation actually received by the individuals described in the “Compensation Discussion and Analysis” section of this Proxy Statement. Due to inadvertent calculation errors, one NEO and certain equity grants were omitted from the 2022 Pay versus Performance table in our 2023 Proxy Statement, but the calculations have been corrected as shown below.
2023 Pay Versus Performance Table
2023 Pay Versus Performance Table
2023 Pay Versus Performance Table
| | | | Average Summary Compensation Table Total for Other NEOs | Average Compensation Actually Paid to Other NEOs | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for CEO | Compensation Actually Paid to CEO | | | Company TSR | Peer Group TSR | Net Income (Loss) | Net Operating Ratio | | | (1) | (2) | (1) | (2) | (3) | (3) | | (4) | | 2023 | $4,287,954 | $6,963,419 | $1,605,915 | $2,153,239 | $70.32 | $139.85 | $66,823,000 | 93.3% | | 2022 | $3,578,393 | $1,931,609 | $1,507,019 | $1,215,004 | $44.47 | $124.27 | $(22,257,000) | 100.7% | | 2021 | $3,540,457 | $3,233,166 | $723,930 | $579,709 | $66.89 | $119.69 | $20,407,000 | 97.4% | | 2020 | $3,322,914 | $2,691,333 | $2,196,691 | $1,238,143 | $56.50 | $97.20 | $19,105,000 | 104.2% |
2023 Pay Versus Performance Table
| (1) The CEO for each year reported was Stephen J. Donaghy. The NEOs other than the CEO (the “Other NEOs”), for each year reported are as follows: (i) for 2023 and 2022, Sean P. Downes (Executive Chairman), Frank C. Wilcox (CFO) and Kimberly D. Campos (CIO and CAO); and (ii) for 2021 and 2020, Sean P. Downes (Executive Chairman), Jon W. Springer (CRO), Frank C. Wilcox (CFO) and Kimberly D. Campos (CIO and CAO). |
2023 Pay Versus Performance Table
| (2) SEC rules require certain adjustments be made to the “Summary Compensation Table” totals to determine “compensation actually paid” as reported in the “Pay versus Performance table” above. The following table outlines the applicable adjustments that were made to determine “compensation actually paid” (all amounts are averages for the Other NEOs): |
Relationship between “compensation actually paid” and performance measures
Relationship between “compensation actually paid” and performance measures As described in the “Compensation Discussion and Analysis” section of this Proxy Statement, we believe that the compensation provided to the NEOs for 2023 is aligned with our pay-for-performance philosophy and our overall business performance, and that our executive compensation program reflects a variable philosophy. While we utilize several performance measures to align executive compensation with our performance, all of those measures are not presented in the Pay versus Performance table. Moreover, we generally seek to incentivize long-term performance, and therefore do not specifically align our performance measures with “compensation actually paid” (as computed in accordance with SEC rules) for a particular year. In accordance with SEC rules, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
Compensation Actually Paid, Cumulative TSR and Peer Gro
Compensation Actually Paid, Cumulative TSR and Peer Gro
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Income
Compensation Actually Paid and Net Operating Ratio
Compensation Actually Paid and Net Operating Ratio