DEF 14A of HCI Group, Inc.
Filed Apr 29, 2024 · FY20230001193125-24-122310
Board of Directors
Board of Directors
Board of Directors
| Director | Independent | Age | Director Since | Primary Occupation | | Nominees for Election: | | | | | | Karin Coleman | No | 63 | 2021 | Chief Operating Officer, HCI Group Inc.; President, Homeowners Choice Property & Casualty Insurance Company, a subsidiary of HCI Group Inc. | | Eric Hoffman | Yes | 37 | 2021 | Senior Managing Director at Centerbridge Partners, L.P. | | Sue Watts | Yes | 62 | 2019 | President of Sapience Analytics Corporation | | Continuing in Office: | | | | | | Paresh Patel | No | 61 | 2007 | Chairman and Chief Executive Officer, HCI Group, Inc. | | Gregory Politis | Yes | 72 | 2007 | President, Xenia Management Corporation | | Lauren Valiente | Yes | 45 | 2021 | Lawyer; Of Counsel to Foley & Lardner LLP | | Wayne Burks | Yes | 76 | 2013 | Retired; Former Director and Chief Financial Officer, at Romark LC. | | Jay Madhu | No | 57 | 2007 | President and Chief Executive Officer, Oxbridge Re Holdings Ltd. | | Anthony Saravanos | No | 53 | 2007 | President, Greenleaf Capital, a subsidiary of HCI Group, Inc. | | Peter Politis | Yes | 45 | 2021 | Real Estate lawyer and principal at Xenia Management Corporation |
Biographies of Directors Standing for Election (Class A)
Biographies of Directors Standing for Election (Class A)
Biographies of Directors Standing for Election (Class A)
| Karin Coleman | | | Karin Coleman, age 63, has served as a director and the Chief Operating Officer of the Company since February 2021 and since 2019 as President of our insurance subsidiary, Homeowners Choice Property & Casualty Insurance Company. Ms. Coleman joined the Company in 2009 as Vice President of Corporate Services, overseeing strategic initiatives, human resources, regulatory and legislative affairs, vendor management and community relations. She gained the title Executive Vice President in December of 2017. Before joining HCI, Ms. Coleman served nine years as Vice President of Strategic Alliances of Take Stock in Children, located in Miami, Florida, the state’s largest public-private partnership providing college access and assistance to at-risk children. Before that, she served in various corporate roles over 13 years at Florida Progress Corporation (NYSE: FPC), a Fortune 500 diversified holding company operating electric, energy, and energy transportation companies, now part of Duke Energy. Ms. Coleman holds a Bachelor of Arts degree in International Studies from the University of South Florida and is a Certified Senior Professional in Human Resources. Skills/Qualifications: Ms. Coleman brings considerable business, marketing, legislative and human resources experience to the Board of Directors. Her knowledge and management experience enhances her oversight of the Company’s business performance, as she has an essential understanding of business operations. | Chief Operating Officer President of HCPCI Committees: - Sustainability |
Biographies of Directors Standing for Election (Class A)
| HCI Group, Inc. 2024 Proxy Statement | 13 |
Biographies of Directors Standing for Election (Class A)
| Eric Hoffman | | | Eric Hoffman, age 37, has been a member of our Board of Directors since February 26, 2021 and was a member the Board of Directors of our subsidiary TypTap Insurance Group, Inc., from that time until January 2023. Mr. Hoffman was appointed to those Boards pursuant to a 2021 agreement with Centerbridge Partners, L.P., a New York City-based private investment firm. Under that agreement, among other things, Centerbridge made a substantial investment in TypTap Insurance Group, Inc. Since 2010, Mr. Hoffman has served in various capacities at Centerbridge, including currently as a Senior Managing Director. From 2008 to 2010, he served as an analyst for The Blackstone Group, a New York Stock Exchange listed investment firm. Mr. Hoffman serves on the boards of several other organizations unaffiliated with HCI, including, since 2023, as a director for First National Bancshares, Inc., a bank holding company based in East Lansing, Michigan, since 2022, as a director of Fairstone Bank of Canada, since 2021, as a director of Martello Re, a life and annuity reinsurance company based in Bermuda, since 2021, as a director of Forbright, Inc., a bank holding company based in Maryland, and since 2014, as a director of Beginning with Children Foundation, an education-focused not-for-profit organization. Mr. Hoffman graduated summa cum laude with a Bachelor of Science in Economics (concentration in finance and insurance) from the Wharton School at the University of Pennsylvania. Skills/Qualifications: Mr. Hoffman brings considerable experience, knowledge and education to our Board. In his current position at Centerbridge, he focuses primarily on investments in the financial services sector. His investment experience encompasses financial institutions, insurance and specialty finance companies. In earning his degree from the Wharton School, he concentrated in finance and insurance. His skills at reading and analyzing financial information, and his knowledge of insurance and finance will enhance Board oversight of the Company’s performance and monitoring its financial disclosure and be particularly valuable when the Company considers financial transactions and business acquisitions. | Independent Committees: - Compensation - Governance & Nominating |
Biographies of Directors Standing for Election (Class A)
| 14 | HCI Group, Inc. 2024 Proxy Statement |
Biographies of Directors Standing for Election (Class A)
| Sue Watts | | | Sue Watts, age 62, joined our Board of directors in April of 2019 after participating in our Board Observer Program. Since December 2021, Ms. Watts has served as President of Sapience Analytics Corporation, an advanced workforce analytics firm headquartered in McKinney, Texas. From 2017 to 2021, she served as an Executive Vice President for Capgemini SE (EPA: CAP), a global technology services and digital transformation consulting firm. From 2014 to 2017, she served as Chief Operating Officer & Corporate Officer of Business Process Outsourcing for Xerox Corporation (NYSE: XRX). From 2010 to 2014, she served as Corporate Vice President of Application Services and as Chief Executive Officer of Americas Outsourcing for Capgemini. From 2009 to 2010, she served as Vice President of Americas Global Service for Orange Business Services, a global information technology and communications services provider. From 1985 to 2009, she served in many roles at Unisys Corporation (NYSE: UIS). Ms. Watts earned her Bachelor of Science in Business from Indiana University and her Master of Business Administration from the University of Notre Dame with a concentration in Finance. Skills/Qualifications: Ms. Watts brings to our Board of Directors more than three decades of experience in business operations, information technology and leadership. We believe her knowledge and experience enhance the Board’s oversight of our management, our business operations and the development and application of our technology. | Independent Committees: - Governance & Nominating - Audit |
Biographies of Directors Standing for Election (Class A)
| HCI Group, Inc. 2024 Proxy Statement | 15 |
Biographies of Directors Continuing in Office
Biographies of Directors Continuing in Office Directors whose present terms continue until 2025 (Class B)
Biographies of Directors Continuing in Office
| Paresh Patel | | | Paresh Patel, age 61, is a founder of the Company and currently serves as its chairman of the Board of Directors and Chief Executive Officer. He has been a director of the Company since its inception and has served as the Chairman of our Board of Directors since May 2007. He has served as Chief Executive Officer since 2011. In addition, Mr. Patel is Chief Executive Officer and Chairman of the Board of TypTap Insurance Group, Inc., our majority owned subsidiary formed in 2020 and the parent company of TypTap Insurance Company, a technology driven insurance company formed in January 2016, and Exzeo USA, Inc., an insurtech software development company formed in 2012. Mr. Patel has broad experience in technology and finance. He developed the Company’s initial policy administration systems and continues to oversee the Company’s insurtech software development. From 2011 to 2015, Mr. Patel served as Chairman of the Board of BayFirst Financial Corp. (formerly First Home Bancorp, Inc.), a bank holding company in St. Petersburg, Florida, and, from 2014 to December 31, 2017, served as Chairman of the Board of Directors of Oxbridge Re Holdings Limited, a Nasdaq listed Cayman Islands reinsurance holding company. He is a founder of NorthStar Bank in Tampa, Florida and from 2006 to 2010 served on the board of directors of its parent company, NorthStar Banking Corporation. Mr. Patel holds a bachelor and a master degree in electronic engineering from the University of Cambridge in the United Kingdom. Skills/Qualifications: Mr. Patel brings to the Board of Directors considerable experience in business, insurance, management, systems and technology, and because of those experiences and his education, he possesses knowledge and analytical and technology skills that are important to the operations of the Company, the oversight of its performance and the evaluation of its future growth opportunities. Furthermore, his performance as chief executive officer has indicated an in-depth understanding of the Company’s insurance business. He is a founder of the Company and has a substantial personal investment in the Company. | Chairman of the Board and Chief Executive Officer |
Biographies of Directors Continuing in Office
| 16 | HCI Group, Inc. 2024 Proxy Statement |
Biographies of Directors Continuing in Office
| Gregory Politis | | | Gregory Politis, age 72, is a founder of the Company and has been a director since its inception. He has served also as the Board’s Lead Independent Director since 2017. Mr. Politis has been in the real estate business since 1974 and is President of Xenia Management Corporation, a real estate portfolio management company he established in 1988. Mr. Politis has interests in more than 50 real estate developments in the Miami-Dade County, Orlando and Greater Tampa Bay areas as well as in Montreal, Canada. Xenia Management Corporation is not affiliated with HCI Group, Inc. During his career, Mr. Politis has developed and retained ownership of retail, office and industrial spaces, with a primary focus on buildings housing federal and state government agencies. He is a founding member of the Hellenic American Board of Entrepreneurs and a recipient of the Building Owners and Managers Association (BOMA) Building of the Year Award. Mr. Politis has served as a director of NorthStar Bank and Florida Bank, both in Tampa, Florida. Gregory Politis is the father of Director Peter Politis. Skills/Qualifications: Mr. Politis brings considerable business, management and real estate experience to the Board of Directors. His business and management experience enhances his oversight of the Company’s business performance, as he has a fundamental understanding of business operations. Moreover, real estate experience has become increasingly important to the Company as it considers and makes significant real estate investments. Additionally, Mr. Politis has a substantial personal investment in the Company. | Independent Committees: - Compensation (Chair) |
Biographies of Directors Continuing in Office
| HCI Group, Inc. 2024 Proxy Statement | 17 |
Biographies of Directors Continuing in Office
| Lauren Valiente | | | Lauren Valiente, age 45, joined our Board of directors on June 21, 2021, after participating in our Board Observer Program from October 2019 to September 2020. Since 2006, Ms. Valiente has practiced law in Tampa, Florida with Foley & Lardner LLP, a large international law firm founded in 1842 and headquartered in Milwaukee, Wisconsin, where she currently holds the title Of Counsel. Her practice focuses on representing public companies and their officers and directors, audit firms and their partners, and private entities and individuals in investigations and proceedings involving the Securities and Exchange Commission, the Department of Justice, the Public Company Accounting Oversight Board, the Financial Industry Regulatory Authority, and other government and non-government agencies. Her clients have included several health insurance companies. From 2007 to 2019, Ms. Valiente served on the University of South Florida Latin Community Advisory Committee, which advises the university’s president on issues affecting Latino students and works to support the university’s Latino Scholarship Program. She served as chair of the committee from 2018 to 2019. Since 2017, Ms. Valiente has served on the Board of Directors of the Greater Tampa Chamber of Commerce (doing business as the Tampa Bay Chamber) and currently serves on its Executive Committee. Since 2015, Ms. Valiente has served on the Board of Directors of Stageworks Theatre, Tampa’s longest running professional theatre company, and served as President from 2019 to 2020. Ms. Valiente earned a Bachelor of Arts degree, with honors, from Harvard University in 2000 and a Juris Doctor degree, magna cum laude, from the University of Florida, Levin College of Law in 2006. Skills/Qualifications: Ms. Valiente brings considerable experience, knowledge and education to our Board, particularly in matters involving regulation of publicly held companies and insurance companies. She will enhance the Board’s oversight of the Company’s compliance with various laws, rules and regulations. | Independent Committees: - Sustainability (Chair) - Compensation |
Biographies of Directors Continuing in Office
| 18 | HCI Group, Inc. 2024 Proxy Statement |
Directors whose present terms continue until 2026 (Class C)
Directors whose present terms continue until 2026 (Class C)
Directors whose present terms continue until 2026 (Class C)
| Wayne Burks | | | Wayne Burks, age 76, has been a director of our Company since June 2013. From October 2019 to June 2021, Mr. Burks served as a director and chair of the Audit Committee for Romark LC, which is a vertically integrated multinational biopharmaceutical company, headquartered in Tampa, Florida. From 2016 until his retirement in July 2019, he served as Romark’s vice president and chief financial officer. From April 2012 to June 2016, he served as a director and the chief financial officer for WRB Enterprises, Inc., a Tampa, Florida based holding company with investments in Caribbean electric utilities, renewable energy development, cable television, real estate and financial institutions. From July 2010 to April 2012, he was a principal of Sterling Financial Consulting where he provided financial and operational consulting services for privately held and pre-initial public offering stage companies. From December 2008 to June 2010, Mr. Burks served as chief financial officer of Prepared Holdings, LLC, a Florida-based insurance holding company. Mr. Burks is a certified public accountant (inactive license). He is a former audit partner of Coopers & Lybrand, where he performed auditing services for approximately 23 years. None of the foregoing companies is an affiliate of HCI Group, Inc. Mr. Burks earned a Bachelor of Science degree in accounting and business administration at Troy University in Alabama. Skills/Qualifications: Mr. Burks brings considerable business, accounting and financial experience to the Board of Directors. We believe his knowledge and experience as the chief financial officer of a homeowners’ insurance company and as an auditor and his ability to analyze financial information enhances the Board’s oversight of the Company’s business operations, its financial disclosure, its external auditors and the effectiveness of our internal controls. Mr. Burks serves as chairman of the Company’s audit committee and has been identified by the Board of directors as an audit committee financial expert. | Independent Committees: - Audit (Chair) |
Directors whose present terms continue until 2026 (Class C)
| HCI Group, Inc. 2024 Proxy Statement | 19 |
Directors whose present terms continue until 2026 (Class C)
| Jay Madhu | | | Jay Madhu, age 57, has been a director of our Company since May 2007. From 2008 to 2013, Mr. Madhu served as President of our Real Estate Division and, from 2011 to 2013, he served as our Vice President of Marketing and Investor Relations. Since 2013, Mr. Madhu has been President and Chief Executive Officer of Oxbridge Re Holdings Limited (NASDAQ: OXBR), a Nasdaq-listed reinsurance holding company based in the Cayman Islands and he has served as Oxbridge Re’s Chairman of the Board of Directors since March 2018. From April 2021 to August 2023, Mr. Madhu served as Chairman of the Board, Chief Executive Officer and President of Oxbridge Acquisition Corp. (NASDAQ:OXAC), a Nasdaq-listed blank check company based in the Cayman Islands. Oxbridge Acquisition Corp. merged with Jet.AI Inc. in August 2023. From 2012 to 2014, he served on the Board of Directors for Wheeler Real Estate Investment Trust, Inc., (NASDAQ: WHLR), a Nasdaq-listed real estate investment trust. During 2013, Mr. Madhu served as a director of First Home Bank in Seminole, Florida. As an owner and manager of commercial properties, Mr. Madhu has been President of 5th Avenue Group LC since 2002 and President of Forrest Terrace LC since 1999. He has also been President of The Mortgage Corporation Network (correspondent lenders) since 1996. Prior to that, Mr. Madhu was Vice President, Mortgage Division at First Trust Mortgage & Finance from 1994 to 1996; Vice President, Residential First Mortgage Division at Continental Management Associates Limited, Inc. from 1993 to 1994; and President at S&S Development, Inc. from 1991 to 1993. None of the foregoing companies is an affiliate of HCI Group, Inc. He attended Northwest Missouri State University where he studied marketing and management. Skills/Qualifications: Mr. Madhu brings considerable business, capital markets, marketing, real estate and mortgage finance experience to the Board of Directors. Real estate experience has become increasingly important to the Company as it considers and makes significant real estate investments. Additionally, Mr. Madhu has a substantial personal investment in the Company. | Other Public Company Boards: - Oxbridge Re Holdings Ltd. - Oxbridge Acquisition Group |
Directors whose present terms continue until 2026 (Class C)
| 20 | HCI Group, Inc. 2024 Proxy Statement |
Directors whose present terms continue until 2026 (Class C)
| Anthony Saravanos | | | Anthony Saravanos, age 53, has been a director of the Company since May 2007 and president of Greenleaf Capital, LLC, our real estate division, since 2013. Since 2015, Mr. Saravanos has served as Chairman of the Board of BayFirst Financial Corp. (NASDAQ: BAFN) (formerly First Home Bancorp, Inc.), a Nasdaq listed bank holding company headquartered in St. Petersburg, Florida and the parent company of First Home Bank, which provides Small Business Administration loans nationwide. Mr. Saravanos has served as a director of First Home Bank since 2011. Since 2001, he has been the managing partner of several commercial property entities with a combined total of 13 properties in Florida and New York. From 2005 to 2013, Mr. Saravanos served as vice president of The Boardwalk Company, a full-service commercial real estate company, located in Palm Harbor, Florida. From 1997 to 2001, he served as district manager, marketing and sales, for DaimlerChrysler Motors Corporation, Malvern, Pennsylvania. Mr. Saravanos graduated from Ursinus College, Collegeville, Pennsylvania, with a double major in Economics and Spanish. He earned a master’s degree in Business Administration with an emphasis in marketing from Villanova University, where he was inducted into the Beta Gama Sigma Honor Society. Mr. Saravanos also attended Quanaouac Institute, Cuernavaca, Mexico, for intensive Spanish studies and a cultural immersion program. A licensed real estate broker, Mr. Saravanos is a Certified Commercial Investment Member as well as a Certified Development Design and Construction Professional. He was named #1 Top Producer for 2010 by the Florida Gulfcoast Commercial Association of Realtors in the General Brokerage Category. From 2013 to 2020, Mr. Saravanos served as Vice President of Greek Children’s Fund of Florida. From 2018 to 2020, Mr. Saravanos served as a Trustee on the Johns Hopkins Hospital All Children’s Foundation board of directors. Skills/Qualifications: Mr. Saravanos brings considerable business, management, finance, marketing and real estate experience and business education to the Board of Directors. Real estate experience has become increasingly important to the Company as it makes and considers significant real estate investments. As a district manager for DaimlerChrysler Motors Corporation, he was required to read, understand and analyze financial information. His ability to analyze financial information is considered of importance in enhancing oversight of the Company’s performance, monitoring its financial disclosure, and evaluating growth opportunities. Important also, Mr. Saravanos has a substantial personal investment in the Company and he played a large role in bringing initial investors to the Company. | Director; President of Real Estate Division Committees: - Sustainability Other Public Company Boards: - BayFirst Financial Corp. |
Directors whose present terms continue until 2026 (Class C)
| HCI Group, Inc. 2024 Proxy Statement | 21 |
Directors whose present terms continue until 2026 (Class C)
| Peter Politis | | | Peter Politis, age 45, joined our Board of directors on June 21, 2021. Mr. Politis is a lawyer. He is the founder of and since 2007 has practiced law under Politis P.A., a boutique law firm located in Clearwater, Florida that focuses on real property acquisitions and financing, construction law, commercial leasing and choice of entity. He is also principal of Xenia Management Company, a real estate development, management and services company located in Clearwater, Florida that owns or manages over 45 properties in the United States, Canada and Greece. Since 2000, he has served in various capacities at Xenia, including as Vice president and General Counsel. Mr. Politis earned a Bachelor of Science degree with a major in Finance and a minor in Economics at the University of Florida in 2001. In addition, he earned a Master of Arts in International Business there in 2002. He earned a Juris Doctor at the University of Miami School of Law in 2004. Peter Politis is the son of Director Gregory Politis. Skills/Qualifications: Mr. Politis brings considerable business, management, legal, and real estate knowledge, education and experience to the Board of Directors. His business and management experience enhances the Board’s oversight of the Company’s business performance, as he has a fundamental understanding of business operations. Moreover, experience in handling legal, financing and business aspects of real estate transactions has become increasingly important to the Company as it considers and makes significant real estate investments | Independent Committees: - Governance & Nominating (Chair) - Audit |
Directors whose present terms continue until 2026 (Class C)
| 22 | HCI Group, Inc. 2024 Proxy Statement |
Director Compensation
Director Compensation Directors who are employees of the Company do not receive any additional compensation for their service as directors. Our director compensation plan aligns with shareholder interests and market practice. During 2023, each non-employee director received a cash payment of $25,000 per quarter and an annual stock award of 500 shares. Mr. Hoffman has waived his director compensation. The following table sets forth information with respect to compensation earned by each of our directors (other than employee directors) during the year ended December 31, 2023.
Director Compensation
| Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Non- qualified Deferred Compensation Earnings | All Other Compensation(3) | Total | | Wayne Burks | $100,000 | $29,325 | — | — | — | $800 | $130,125 | | Eric Hoffman(4) | — | — | — | — | — | — | — | | Jay Madhu | $100,000 | $29,325 | — | — | — | $800 | $130,125 | | Gregory Politis | $100,000 | $29,325 | — | — | — | $800 | $130,125 | | Peter Politis | $100,000 | $29,325 | — | — | — | $800 | $130,125 | | Lauren Valiente | $100,000 | $29,325 | — | — | — | $800 | $130,125 | | Sue Watts | $100,000 | $29,325 | — | — | — | $800 | $130,125 |
Director Compensation
| (1) Each director received a cash payment of $25,000 for service during each quarter or portion thereof that he or she served as a director, which includes attendance at Board and committee meetings held during 2023. |
Director Compensation
| (2) In accordance with SEC reporting requirements, the amounts reported in this column represent the grant-date fair value of the entire award and were calculated utilizing the fair value recognition provisions of Accounting Standards Codification Topic 718 – “Compensation – Stock Compensation,” which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors, including stock options and restricted stock issuances, based on estimated fair values. The assumptions used in calculating this amount are discussed in Note 23 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on March 8, 2024. The stock awards in this column are restricted stock grants which include only service conditions. The amounts reported in this column are based on the market value of the Company’s stock on the grant date. On June 8, 2023, each of the non-employee directors received a restricted stock grant of 500 shares. The restricted shares will vest on May 21, 2024. |
Director Compensation
| (3) All Other Compensation represents dividends paid on unvested restricted shares. |
Director Compensation
| (4) Eric Hoffman was appointed to the HCI Group, Inc. Board of Directors on February 26, 2021 and he waives any compensation from HCI Group, Inc. for serving on the Board of Directors. |
Director Compensation
| HCI Group, Inc. 2024 Proxy Statement | 23 |
Director Compensation
The aggregate number of stock awards outstanding for each non-employee director as of December 31, 2023 was as follows:
Director Compensation
| Name | Number of Options | Number of Restricted Shares | | Wayne Burks | — | 500(1) | | Eric Hoffman | — | — | | Jay Madhu | — | 500(1) | | Gregory Politis | — | 500(1) | | Peter Politis | — | 500(1) | | Lauren Valiente | — | 500(1) | | Sue Watts | — | 500(1) |
Director Compensation
| (1) On June 8, 2023, each of the non-employee directors received a restricted stock grant of 500 shares. The restricted shares will vest on May 21, 2024. |
Compensation Highlights
| • | Bonuses were based on several key metrics and we believe were commensurate with HCI’s financial performance during the year |
Elements of Executive Compensation
Elements of Executive Compensation The Compensation Committee uses a balanced set of pay elements to determine executive compensation levels, including base salaries, short-term cash performance bonuses and long-term equity incentives comprised of restricted stock awards and, in the case of the chief executive officer, stock purchase option awards. We believe these elements create appropriate incentives for driving strong corporate performance, align the interests of our executives with those of our shareholders, and enable us to retain and reward outstanding executive talent. Restricted stock awards may vest over time or if the Company stock price reaches certain target levels. In either case, the awards create a significant incentive for achieving long-term financial and strategic goals and serve to retain talented executives. When determining equity awards, the Committee considers competitive market dynamics, peer-group compensation levels and the Company’s overall financial performance. The Compensation Committee believes that reducing cash bonus compensation in favor of equity linked compensation further enhances alignment between our management team and our shareholders. The compensation program for our chief executive officer is designed to reward outstanding performance and align pay with the interests of shareholders. During 2023, our chief executive officer was paid a base salary and was granted a stock option award. Certain financial targets must be achieved for the stock option awards to vest. Additionally, the stock option awards include certain clawback provisions. The chief executive officer’s 2023 compensation was consistent with our long-term incentive program, which included one-time multi-year grants awarded in 2021, as well as a discretionary bonus tied to the overall profitability of HCI Group.
Benchmarking
Benchmarking To attract and retain key executives, we carefully consider our market environment when setting pay levels for our executives, recognizing that we are in a highly competitive industry in which talented people are a significant driver of value. The Company’s incentive program was designed using two groups of peer companies representing the principal potential talent market: the property and casualty insurance industry and the software industry. While the Company’s primary business is property and casualty insurance, its success relies on the internal development and implementation of custom software. The two peer groups comprise the following companies:
Benchmarking
| Insurance Industry Amerisafe Inc. *Heritage Insurance Holding, Inc. Investors Title Company Kinsale Capital Group Lemonade, Inc. NI Holdings, Inc. Palomar Holdings, Inc. Protective Insurance Corporation *American Costal Insurance Corporation *Universal Insurance Holdings, Inc. |
Benchmarking
| Software Industry American Software, Inc. AppFolio, Inc. MicroStrategy Incorporated Q2 Holdings, Inc. Qualys, Inc. |
Benchmarking
| * Member of Core Peer Group. |
Benchmarking
| 30 | HCI Group, Inc. 2024 Proxy Statement |
Benchmarking
The companies within each peer group are all U.S.-based publicly held companies similar in size to our Company. While all companies in the above groups were used to design the compensation program, each year, the Compensation Committee benchmarks compensation using a core peer group of publicly held property and casualty insurance companies based in Florida (the Core Peer Group) because these companies are similar to us in terms of insurance services and market opportunity. The members of the Core Peer Group are indicated in the table above. The Committee reviews the compensation, financial performance and shareholder returns of these core peer companies when finalizing the total compensation award for our chief executive officer. The cash bonus and total compensation for our CEO may be higher or lower than the target reference point for chief executive officers in the Core Peer Group because of factors such as performance and retention, as well as size and complexity of the job. The following table shows the compensation of chief executive officers in our core peer group based on the disclosures in their proxy statements.
Benchmarking
| | (in $ thousands) | | | | | | | Company | Salary | Cash Bonus | Stock Awards | Equity Options Awards | Other | Total Compensation | | 2023 HCI | $950.0 | $800.0 | $— | $1,875.0 | $37.8 | $3,662.8 | | 2022 HCI | $950.0 | $— | $— | $— | $81.1 | $1,031.1 | | American Coastal Insurance Corporation – 2023 | $150.0 | $— | $26.3 | $— | $— | $176.3 | | Heritage Insurance Holdings, Inc. – 2022 | $1,023.4 | $— | $1,000 | $— | $342.1 | $2,365.5 | | Universal Insurance Holdings, Inc. – 2022 | $1,000.0 | $— | $750.0 | $307.8 | $1,520.6 | $3,578.4 |
Benchmarking
The following table summarizes the share price performance and dividend payouts of companies in our Core Peer Group based on the disclosures in their filings with the Securities and Exchange Commission.
Benchmarking
| Company | 12/31/2023 Market Cap (in $ millions) | 12/31/2022 Stock Price | 12/31/2023 Stock Price | % Change | 2023 Dividends per Share | | HCI Group, Inc. | $851.1 | $39.59 | $87.40 | 121% | $1.60 | | American Coastal Insurance Corporation | $442.5 | $1.06 | $9.46 | 792% | — | | Heritage Insurance Holdings, Inc. | $197.0 | $1.80 | $6.52 | 262% | — | | Universal Insurance Holdings, Inc. | $462.9 | $10.59 | $15.98 | 51% | $0.77 |
Benchmarking
The Company’s share price performance and record of consistent dividend payments have provided solid returns to shareholders, both in absolute terms and relative to the Company’s core peer group. The illustration below shows that the total shareholder return of HCI shares over the past five years was 99% compared with a negative return for the Company’s core peer group over the same period. The Compensation Committee views total shareholder return as highly indicative of Company performance over the long-term.
Benchmarking
| HCI Group, Inc. 2024 Proxy Statement | 31 |
Benchmarking
Comparison of HCI to its core peer group using total shareholder return for the last five years:
2023 Executive Pay Decisions
| Name and Office | Base Salary ($) | Cash Bonus ($) | Equity Grant(a) | | Paresh Patel, Chairman and Chief Executive Officer | 950,000 | 800,000 | 150,000 | | Karin Coleman, Chief Operating Officer; President, HCPCI | 400,000 | 100,000 | — | | Mark Harmsworth, Chief Financial Officer | 350,000 | 100,000 | — | | Andrew L. Graham, Vice President, General Counsel & Corporate Secretary | 300,000 | 100,000 | — | | Anthony Saravanos, Divisional President—Real Estate Division | 300,000 | 75,000 | — |
2023 Executive Pay Decisions
Mr. Patel’s annual base salary consists of $475,000 from each of HCI Group and TypTap Insurance Group. As stated above, the Compensation Committee uses a balanced set of pay elements to determine executive compensation levels, including base salaries, short-term cash performance bonuses and long-term equity incentives comprised of restricted stock awards and, in the case of the chief executive officer, stock purchase option awards. We believe these elements create appropriate incentives for driving strong corporate performance, align the interests of our executives with those of our shareholders, and enable us to retain and reward outstanding executive talent. In the interest of providing enhanced disclosure to our shareholders, the following will discuss the Company’s decisions and actions on each component of executive compensation. In September 2023, Mr. Patel was granted a stock option award of 150,000 shares of common stock, with the options vesting only when the shares traded above $80 per share for 20 consecutive days. The options were awarded when HCI shares were trading at approximately $52 per share.
2023 CEO Bonus Decision
2023 CEO Bonus Decision In 2023, the Compensation Committee established an incentive pay plan to outline the cash bonus available to be earned by Mr. Patel for 2023. Under the plan, a bonus would be awarded based on earnings before income taxes on a consolidated basis. The measurement period was the calendar year 2023. No cash bonus would be awarded under the plan unless 2023 earnings reach a $35 million threshold amount. The maximum cash bonus was set at $2.4 million. The cash bonus would be paid in three equal installments, on or about March 15, 2024, 2025 and 2026; provided, however that the 2025 and 2026 payments would be forfeited, if, during those respective years adverse development relating to insurance claims for the 2023 accident year materially exceeds the claims losses recorded with respect to the 2023 accident year. In 2023, the Company’s earnings before income taxes totaled $117.7 million, which resulted in an award to the chief executive officer of $2.4 million. As described above, this award will be paid in three equal installments. The first of such installments was paid on April 1, 2024, and the remaining amount will be paid on or about March 15, 2025 and 2026, subject to the remaining forfeiture condition described above. The Compensation Committee believes the chief executive officer’s total compensation recognizes his significant contributions to the Company’s success and creates strong incentives to achieve long-term strategic goals and increase shareholder value. Over the last several years, the chief executive officer’s total compensation has fluctuated with the Company’s financial performance, which is consistent with our pay-for-performance philosophy. The following graph shows his annual cash bonus compared with return on equity, a key performance measure.
2021 Multi-Year Award
2021 Multi-Year Award In February 2021, a fund associated with Centerbridge Partners, L.P. made a milestone investment of $100 million in our technology-driven insurance subsidiary, TypTap Insurance Group, Inc. A key item in Centerbridge’s interest in TypTap was the retention of the successful, tenured management team both at HCI Group and at TypTap. To this end, in connection with the Centerbridge transaction, the Company awarded restricted equity grants to our named executive officers as part of a one-time multi-year program. In addition to management retention, a main objective of this award was to incentivize our management team to achieve full realization of the value of our TypTap subsidiary as a standalone business. These grants were structured with input from our shareholders and were designed to cover a period of 6 years with both time and performance-based components. For the performance-based component of the grants, the compensation committee set challenging share price hurdles 81% and 142% above HCI’s share price at the date of the grant, with a one-year vesting period once the respective price target was reached. Furthermore, vesting was triggered only if share price hurdles were met on a sustained basis, for more than 30 days. Any restricted
2021 Multi-Year Award
| Named Officer | 2021 Awards | Vested during 2022 | Vested during 2023 | Unvested / Threshold | | Paresh Patel | 20,000 HCI Restricted shares(1) | 10,000 - $105 threshold | none | 10,000 - $140 threshold | | Paresh Patel | 1,480,935 TypTap Restricted shares(2) | 51,553 time-based | 51,553 time-based | 103,109 time-based; 642,060 - $15 threshold; 632,660 - $20 threshold | | Paresh Patel | 5,000,000 TypTap Options(3) | 1,250,000 time-based | 1,250,000 time-based | 2,500,000 time-based | | Karin Coleman | 71,000 Restricted shares(4) | 34,000 - $105 threshold; 750 time-based | 750 time-based | 34,000 - $140 threshold; 1,500 time-based | | Mark Harmsworth | 71,000 Restricted shares(4) | 34,000 - $105 threshold; 750 time-based | 750 time-based | 34,000 - $140 threshold; 1,500 time-based | | Andrew L. Graham | 71,000 Restricted shares(4) | 34,000 - $105 threshold; 750 time-based | 750 time-based | 34,000 - $140 threshold; 1,500 time-based | | Anthony Saravanos | 71,000 Restricted shares(4) | 34,000 - $105 threshold; 750 time-based | 750 time-based | 34,000 - $140 threshold; 1,500 time-based |
2021 Multi-Year Award
| (1) On February 26, 2021, Mr. Patel received a restricted stock grant of 20,000 shares, of which 10,000 shares vested on October 5, 2022, the first anniversary of the date on which applicable vesting conditions were met. Restrictions on the remaining 10,000 shares will vest, if ever, on the first anniversary of the date on which the Company stock value first equals or exceeds $140 for 30 consecutive trading days on the applicable exchange. The grantee has all the rights of a shareholder in connection with the restricted shares including the right to receive dividends at the same rate applicable to all common shareholders. |
2021 Multi-Year Award
| (2) On February 26, 2021, Mr. Patel received a restricted stock grant in a HCI subsidiary, TypTap Insurance Group, Inc., of 1,480,935 common shares. Restrictions on 206,215 shares will lapse in 51,553 share increments on February 26 of each year beginning in 2022. Restrictions on 642,060 will vest, if ever, on the first anniversary of the date on which the TypTap stock value first equals or exceeds $15 for 30 consecutive trading days on an exchange. Restrictions on the remaining 632,660 will vest, if ever, on the first anniversary of the date on which the TypTap stock value first equals or exceeds $20 for 30 consecutive trading days on an exchange. |
2021 Multi-Year Award
| (3) On October 1, 2021, Paresh Patel received a grant of 5,000,000 stock options in a HCI subsidiary, TypTap Insurance Group, Inc., at an exercise price of $23 per TypTap share. The stock options have a vesting term of four years, with one fourth of the of the total option shares vesting on the first anniversary the grant and one sixteenth of the total option shares on the first day of each January, April, July, and October, thereafter. |
2021 Multi-Year Award
| (4) On February 26, 2021, the named executive officer received a restricted stock grant of 71,000 shares. Restrictions on 3,000 shares will lapse in 750 share increments on February 26 of each year beginning in 2022. Restrictions on 34,000 shares vested on October 5, 2022, the first anniversary of the date on which applicable vesting conditions were met. Restrictions on the remaining 34,000 shares will vest, if ever, on the first anniversary of the date on which the Company stock value first equals or exceeds $140 for 30 consecutive trading days on the applicable exchange. Each grantee has all the rights of a shareholder in connection with the restricted shares including the right to receive dividends at the same rate applicable to all common shareholders. |
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control At December 31, 2023, Mark Harmsworth is the only named executive officer due cash compensation in the event of termination of employment. Under his employment agreement, in the event of termination without good cause, Mr. Harmsworth is entitled to accrued base salary, accrued vacation pay and other time off, each through the date of termination. He will also be entitled to severance compensation of his base salary for 12 months after the date of termination. If we terminate Mr. Harmsworth’s employment for good cause, he will be entitled to only accrued base salary and accrued paid time off, each through the date of termination. If Mr. Harmsworth chooses to terminate his employment, he will be entitled to accrued base salary and accrued paid time off, each through the date of termination. The agreement provides that during the time of Mr. Harmsworth’s employment and for a period of 12 months after termination of employment, he will not enter into, engage in, be employed or consult with any business that competes with HCI. Under our 2012 Omnibus Incentive Plan, restricted shares vest immediately upon a change of control unless the surviving entity assumes the obligation or issues replacement securities. Further, restricted shares vest immediately if the holder’s employment is terminated within 12 months after a change in control.
Summary Compensation Table
Summary Compensation Table The following table provides summary information concerning compensation for services rendered in all capacities awarded to, earned by or paid to our named executive officers during the years ended December 31, 2023, 2022, and 2021. Note that Securities and Exchange Commission rules require us to report stock awards at the grant-date fair value of the entire award in the year of the grant rather than reporting this expense over the service period as we do for financial reporting purposes. Fair value of stock and option awards is estimated in accordance with Accounting Standards Codification (ASC) Topic 718 Compensation—Stock Compensation. Hence, in the table below, each amount appearing under Stock Awards and Option Awards is an estimate of the award’s fair value at the grant date, regardless of whether vesting has occurred. Stock and option awards included in the summary compensation below may contain service-only or market-based vesting conditions. The fair value of awards with service-only vesting conditions is based on the value of the Company’s stock on the grant date. The fair value of awards with market-based vesting conditions requires the use of a Monte Carlo simulation model and the assistance of a third-party valuation specialist to estimate the fair value. The actual values on the vesting date will almost certainly differ from the estimated values.
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | All Other Compensation(1) | Total | | Paresh Patel Chief Executive Officer | 2023 | $950,000 | $800,000 | — | $1,875,000 | $37,846 | $3,662,846 | | | 2022 | $950,000 | — | — | — | $81,115 | $1,031,115 | | | 2021 | $734,616 | — | $1,323,468(2) | $5,550,000(3) | $128,615 | $7,736,699 | | Karin Coleman Chief Operating Officer; President of HCPCI | 2023 | $400,000 | $100,000 | — | — | $70,500 | $570,500 | | | 2022 | $400,000 | — | — | — | $116,000 | $516,000 | | | 2021 | $373,077 | — | $2,392,760(2) | — | $105,500 | $2,871,337 | | Mark Harmsworth Chief Financial Officer | 2023 | $350,000 | $100,000 | — | — | $67,977 | $517,977 | | | 2022 | $350,000 | — | — | — | $112,938 | $462,938 | | | 2021 | $345,385 | — | $2,392,760(2) | — | $101,565 | $2,839,710 | | Andrew L. Graham Vice President, General Counsel, and Corporate Secretary | 2023 | $300,000 | $100,000 | — | — | $70,500 | $470,500 | | | 2022 | $300,000 | — | — | — | $116,000 | $416,000 | | | 2021 | $292,308 | — | $2,392,760(2) | — | $105,500 | $2,790,568 | | Anthony Saravanos Divisional President, Real Estate Division | 2023 | $300,000 | $75,000 | — | — | $59,900 | $434,900 | | | 2022 | $300,000 | — | — | — | $105,400 | $405,400 | | | 2021 | $288,462 | — | $2,392,760(2) | — | $94,900 | $2,776,122 |
Summary Compensation Table
| (1) In 2023, Mr. Patel received $32,000 in cash dividends on unvested restricted stock and $5,846 in Company contributions to our 401(k) Plan, Mr. Harmsworth received $59,900 in cash dividends on unvested restricted stock and $8,077 in Company contributions to our 401(k) Plan, |
Summary Compensation Table
| HCI Group, Inc. 2024 Proxy Statement | 39 |
Summary Compensation Table
| Mr. Graham received $59,900 in cash dividends on unvested restricted stock and $10,600 in Company contributions to our 401(K) Plan, Mr. Saravanos received $59,900 in cash dividends on unvested restricted stock, and Ms. Coleman received $59,900 in cash dividends on unvested restricted stock and $10,600 in Company contributions to our 401(k) Plan. In 2022, Mr. Patel received $76,000 in cash dividends on unvested restricted stock and $5,115 in Company contributions to our 401(k) Plan, Mr. Harmsworth received $105,400 in cash dividends on unvested restricted stock and $7,538 in Company contributions to our 401(k) Plan, Mr. Graham received $105,400 in cash dividends on unvested restricted stock and $10,600 in Company contributions to our 401(K) Plan, Mr. Saravanos received $105,400 in cash dividends on unvested restricted stock, and Ms. Coleman received $105,400 in cash dividends on unvested restricted stock and $10,600 in Company contributions to our 401(k) Plan. In 2021, Mr. Patel received $120,000 in cash dividends on unvested restricted stock and $8,615 in Company contributions to our 401(k) Plan, Mr. Harmsworth received $94,750 in cash dividends on unvested restricted stock and $6,815 in Company contributions to our 401(k) Plan, Mr. Graham received $94,900 in cash dividends on unvested restricted stock and $10,600 in Company contributions to our 401(K) Plan, Mr. Saravanos received $94,900 in cash dividends on unvested restricted stock, and Ms. Coleman received $94,900 in cash dividends on unvested restricted stock and $10,600 in Company contributions to our 401(k) Plan. |
Summary Compensation Table
| (2) See the description, table and footnotes under Outstanding Equity Awards at December 31, 2023 below, which include details of each of these 2022 and 2021 grants. |
Summary Compensation Table
| (3) This amount was calculated in accordance with ASC Topic 718. The assumptions used in calculating the amount are discussed at Note 21 Stock-Based Compensation of the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission on March 8, 2024. |
Grants of Plan-Based Awards for 2023
Grants of Plan-Based Awards for 2023 The following table sets forth information regarding all Plan-Based Awards granted to our named executive officers during the year ended December 31, 2023.
Grants of Plan-Based Awards for 2023
| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards | Grant Date Fair Value of Stock and Option Awards | | Name | Grant Date | Date Authorized | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | (#) | (#) | ($/share) | ($)(1) | | Paresh Patel | 9/15/23 | 9/15/23 | — | — | — | — | — | — | — | 150,000(2) | $70 | 1,875,000 |
Grants of Plan-Based Awards for 2023
No Plan-Based Awards were granted to any other named executive officer.
Grants of Plan-Based Awards for 2023
| (1) Represents the aggregate grant date fair value, calculated in accordance with ASC Topic 718, of the option award granted in 2023. For option awards with market-based conditions, the fair value is determined using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome. |
Grants of Plan-Based Awards for 2023
| (2) On September 15, 2023, Paresh Patel received a grant of 150,000 stock options at an exercise price of $70 per share. The stock options will vest on the date on which the HCI stock value first equals or exceeds $80 per share for 20 consecutive days on the applicable exchange. The options vested on December 14, 2023. |
Grants of Plan-Based Awards for 2023
| 40 | HCI Group, Inc. 2024 Proxy Statement |
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023 The following table sets forth information regarding outstanding stock option and restricted stock awards held by our named executive officers at December 31, 2023, including the number of shares underlying both exercisable and unexercisable portions of each option as well as the exercise price and expiration date of each outstanding option.
Outstanding Equity Awards at December 31, 2023
| Name | Number of Securities Underlying Unexercised Options - Exercisable | Number of Securities Underlying Unexercised Options - Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares of Stock That Have Not Vested ($)(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 ($) | | Paresh Patel | 110,000 | —(2) | — | $40 | 1/7/2027 | — | — | — | — | | | 110,000 | —(2) | — | $40 | 2/8/2028 | — | — | — | — | | | 110,000 | —(2) | — | $53 | 1/15/2029 | — | — | — | — | | | 82,500 | 27,500(2) | — | $48 | 1/16/2030 | — | — | — | — | | | 150,000 | —(2) | — | $70 | 9/15/2033 | — | — | — | — | | | 2,500,000 | 2,500,000(2) | — | $23 | 10/1/2031 | — | — | — | — | | | — | — | — | — | — | 10,000(3) | $874,000 | — | — | | | — | — | — | — | — | 10,000(3) | $564,000 | — | — | | | — | — | — | — | — | 103,109(3) | $150,539 | — | — | | | — | — | — | — | — | 642,060(3) | $32,103 | — | — | | | — | — | — | — | — | 632,660(3) | $12,653 | — | | | Karin Coleman | — | — | — | — | — | 875(4) | $76,475 | — | — | | | — | — | — | — | — | 1,500(5) | $131,100 | — | — | | | — | — | — | — | — | 34,000(6) | $1,917,600 | — | — | | Mark Harmsworth | — | — | — | — | — | 875(4) | $76,475 | — | — | | | — | — | — | — | — | 1,500(5) | $131,100 | — | — | | | — | — | — | — | — | 34,000(6) | $1,917,600 | — | — | | Andrew L. Graham | — | — | — | — | — | 875(4) | $76,475 | — | — | | | — | — | — | — | — | 1,500(5) | $131,100 | — | — | | | — | — | — | — | — | 34,000(6) | $1,917,600 | — | — | | Anthony Saravanos | — | — | — | — | — | 875(4) | $76,475 | — | — | | | — | — | — | — | — | 1,500(5) | $131,100 | — | — | | | — | — | — | — | — | 34,000(6) | $1,917,600 | — | — |
Outstanding Equity Awards at December 31, 2023
| (1) The market value for the service-based shares of stock that have not yet vested was determined using the closing market price of our common stock on December 31, 2023. The closing market price on December 31, 2023 was $87.40 per share. The market value of shares with market-based vesting conditions that have not yet vested was determined by using a Monte Carlo simulation method, which calculates many potential outcomes for an award and then establishes fair value based on the most likely outcome. The fair value calculated for shares with a market-based vesting threshold of $140 was $56.40 per share. |
Outstanding Equity Awards at December 31, 2023
| (2) On January 7, 2017, Mr. Patel was granted 110,000 stock options with an exercise price of $40 and an expiration date of January 7, 2027. On February 8, 2018, Mr. Patel was granted 110,000 stock options with an exercise price of $40 and an expiration date of February 8, 2028. On January 15, 2019, Mr. Patel was granted 110,000 stock options with an exercise price of $53 and an expiration date of January 15, 2029. On January 16, 2020, Mr. Patel was granted 110,000 stock options with an exercise price of $48 and an expiration date of January 16, 2030. On September 15, 2023, Mr. Patel was granted 150,000 stock options with an exercise price of $70 and an expiration date of September 15, 2033. On October 1, 2021, Mr. Patel was granted 5,000,000 stock options in a HCI subsidiary, TypTap Insurance Group, Inc., with an exercise price of $23 and an expiration date of October 1, 2031.The options will vest in equal installments over four years, so long as Mr. Patel remains employed by the Company. |
Outstanding Equity Awards at December 31, 2023
| HCI Group, Inc. 2024 Proxy Statement | 41 |
Outstanding Equity Awards at December 31, 2023
| (3) On January 16, 2020, Mr. Patel was granted 40,000 shares of restricted stock. Restrictions on 10,000 shares lapse on January 16 of each year following the year of the grant. On February 26, 2021, Mr. Patel was granted 10,000 shares of restricted stock which will vest, if ever, on the first anniversary of the date on which the Company stock value first equals or exceeds $140 for 30 consecutive trading days on the applicable exchange. Mr. Patel has all the rights of a shareholder in connection with the restricted shares including the right to receive dividends at the same rate applicable to all common shareholders. On February 26, 2021, Mr. Patel received a restricted stock grant in a HCI subsidiary, TypTap Insurance Group, Inc. of 1,480,935 shares. Restrictions on 206,215 shares will lapse in 51,553 share increments on February 26 of each year following the year of the grant. Restrictions on 642,060 will vest, if ever, on the first anniversary of the date on which the TypTap stock value first equals or exceeds $15 for 30 consecutive trading days on an exchange. Restrictions on the remaining 632,660 will vest, if ever, on the first anniversary of the date on which the TypTap stock value first equals or exceeds $20 for 30 consecutive trading days on an exchange. |
Outstanding Equity Awards at December 31, 2023
| (4) On May 26, 2020, 3,500 restricted shares were granted to the named executive officer. Restrictions on 875 shares will lapse on May 20 of each year beginning on May 20, 2021. The officer has all the rights of a shareholder in connection with the restricted shares including the right to receive dividends at the same rate applicable to all common shareholders. |
Outstanding Equity Awards at December 31, 2023
| (5) On February 26, 2021, 3,000 restricted shares were granted to the named executive officer. Restrictions on 750 shares will lapse on February 25 of each year beginning on February 25, 2022. The officer has all the rights of a shareholder in connection with the restricted shares including the right to receive dividends at the same rate applicable to all common shareholders. |
Outstanding Equity Awards at December 31, 2023
| (6) On February 26, 2021, 34,000 restricted shares were granted to the named executive officer. Restricted shares will vest, if ever, on the first anniversary of the date on which the company stock value first equals or exceeds $140 for 30 consecutive trading days on an exchange. The officer has all the rights of a shareholder in connection with the restricted shares including the right to receive dividends at the same rate applicable to all Common shareholders. |
Option Exercises and Stock Vested in 2023
Option Exercises and Stock Vested in 2023 The following table sets forth information regarding option exercises and stock vested by our named executive officers during the year ended December 31, 2023.
Option Exercises and Stock Vested in 2023
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Paresh Patel | — | — | 71,553(1) | 933,397 | | Karin Coleman | — | — | 2,500(2) | 136,225 | | Mark Harmsworth | — | — | 2,500(3) | 136,225 | | Andrew L. Graham | — | — | 2,500 | 136,225 | | Anthony Saravanos | — | — | 2,500(4) | 136,225 |
Option Exercises and Stock Vested in 2023
| (1) Mr. Patel’s quantity of shares acquired on vesting consists of 20,000 from HCI and 51,553 from TypTap Insurance Group. Mr. Patel’s value on vesting consists of $863,800 from HCI and $69,597 from TypTap Insurance Group. |
Option Exercises and Stock Vested in 2023
| (2) 650 of these shares were surrendered to cover Ms. Coleman’s federal income tax liability, for a net issuance of 1,850 shares. The market value of the shares surrendered was approximately $35,309. |
Option Exercises and Stock Vested in 2023
| (3) 648 of these shares were surrendered to cover Mr. Harmsworth’s federal income tax liability, for a net issuance of 1,852 shares. The market value of the shares surrendered was approximately $35,198. |
Option Exercises and Stock Vested in 2023
| (4) 643 of these shares were surrendered to cover Mr. Saravanos’s federal income tax liability, for a net issuance of 1,857 shares. The market value of the shares surrendered was approximately $34,920. |
CEO Pay Ratio
CEO Pay Ratio In accordance with Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the ratio of the total annual compensation of our Chief Executive Officer, Paresh Patel, to the total annual compensation of our median employee. For 2023, our last completed fiscal year:
CEO Pay Ratio
| • | The median employee total annual compensation (excluding our chief executive officer) was $65,649 |
CEO Pay Ratio
| • | Our chief executive officer’s total annual compensation as reported in our 2023 Summary Compensation Table was $3,662,846 |
CEO Pay Ratio
| • | The ratio of chief executive officer to median employee total annual compensation was 56 to 1 |
CEO Pay Ratio
In determining the median employee, we prepared a list of employees as of December 31, 2022 which consisted of a total of 635 employees with 533 located in the United States and 102 (16%) located in India. We then identified our median employee based on total annual compensation calculated with the same methodology used for our named executive officers as set forth in our Summary Compensation Table. The components used to determine total annual compensation were annualized for those employees who were not employed for the full year of 2022. We did not adjust for the difference in cost of living between India and the Tampa Bay area. The median employee is based in the United States. We have elected to disclose a supplemental ratio that includes the value of health care benefits paid by the Company. Because these benefits are provided on a broad, non-discretionary basis, the value is not required to be reported in the 2023 Summary Compensation Table. However, if we include the value of these benefits, the median employee total annual compensation would be $73,311 and the total annual compensation of our chief executive officer would increase by $8,103, resulting in a ratio of our chief executive officer’s annual total compensation to the annual total compensation of our median employee of 50 to 1. We believe that the pay ratio presented above is a reasonable estimate. Because the Securities and Exchange Commission rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, this pay ratio may not be comparable to the pay ratio reported by other companies.
CEO Pay Ratio
| HCI Group, Inc. 2024 Proxy Statement | 43 |
Pay Versus Performance
Pay Versus Performance Under rules adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are required to calculate and disclose the “Compensation Actually Paid (“CAP”) to our named executive officers (NEOs) for the purpose of comparison to our Company financial performance. The disclosure covers our four most recent fiscal years and will expand to a rolling five years in 2024. These amounts are calculated in accordance with applicable SEC rules, and do not reflect the actual amount of compensation earned by or paid to our named executive officers during each applicable year. Compensation decisions at HCI Group are made in accordance with the philosophy and process described in the “Compensation Discussion and Analysis” appearing previously in this document and are not replaced by CAP, a supplemental measure.
Pay versus Performance Table
Pay versus Performance Table
Pay versus Performance Table
| | | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | | | Year | Summary Compensation Table Total for CEO (1) | Compensation Actually Paid to CEO (2) | | Average Summary Compensation Table Total for Non-CEO NEOs | Average Compensation Actually Paid to Non-CEO NEOs (3) | | HCI Group Total Share- holder Return (4) | Core Peer Group Total Share- holder Return (5) | Net Income (in thousands) (6) | | Relative Total Shareholder Return (percentile) (7) | | | 2023 | $3,662,846 | | 8,450,193 | $498,469 | | 2,040,888 | $214 | $70 | | 89,257 | 100 | th | | 2022 | $1,031,115 | ($ | 23,921,916) | $450,085 | ($ | 2,249,190) | $94 | $31 | ($ | 54,603) | 100 | th | | 2021 | 7,736,699 | | 29,124,167 | 2,819,434 | | 5,193,003 | 193 | 51 | | 7,242 | 100 | th | | 2020 | 5,229,467 | | 6,847,494 | 541,296 | | 613,826 | 118 | 56 | | 27,580 | 100 | th |
Pay versus Performance Table
| 1) | Paresh Patel was our Chief Executive Officer in all years reported. |
Pay versus Performance Table
| 2) | Compensation Actually Paid was calculated by beginning with the total amount reported in the Summary Compensation Table (the “SCT”) for the applicable year and (i) subtracting the grant date fair value of stock awards reported in the Stock Awards column of the SCT, (ii) subtracting the grant date fair value of option awards reported in the Option Awards column of the SCT, (iii) adding or subtracting the change in fair value of stock awards for the applicable year, and (iv) adding or subtracting the change in fair value of option awards for the applicable year. Fair value amounts were computed in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements under GAAP. |
Pay versus Performance Table
| 3) | CAP for the other named executive officers was calculated in the same manner as described above for the CEO, except the amounts were averaged for each year. The names of each of our named executive officers (excluding Mr. Patel) included for the purpose of calculating the average amounts for each applicable year are Karin Coleman, Mark Harmsworth, Andrew Graham, and Anthony Saravanos. |
Pay versus Performance Table
| 4) | HCI Group Total Shareholder Return (“TSR”) represents the cumulative investment return of an initial fixed $100 investment in our common stock on December 31, 2019, assuming reinvestment of all dividends, through the end of the covered fiscal year. The HCI Group TSR reflected in the table above may not be indicative of future performance. |
Pay versus Performance Table
| 5) | Core Peer Group TSR represents the combined cumulative investment return of an initial fixed $100 investment in each of the companies comprising our core peer group, weighted by market capitalization at the beginning of each year. For the years 2020 to 2022, our core peer group consisted of Universal Insurance Holdings, Inc., Heritage Insurance Holdings, Inc., United Insurance Holdings Corporation, and FedNat Holding Company. For 2023, Universal Insurance Holdings, Inc., Heritage Insurance Holdings, Inc., and American Coastal Insurance Corporation comprised our core peer group. |
Pay versus Performance Table
| 6) | Reflects net income before non-controlling interests as reported in our Form 10-K for the applicable year. |
Pay versus Performance Table
| 7) | Total Shareholder Return, relative to our core peer group, is our Company selected financial performance measure that we believe is most important in influencing NEO pay. |
Pay versus Performance Table
The CAP for the CEO and average CAP for the non-CEO NEOs for 2023 is higher due primarily to the change in the fair value of vested and unvested equity awards granted in prior years. The value of these awards is dependent on the HCI Group stock price, which increased 121% during 2023. Conversely, for 2022, CAP is negative due to a 53% decline in HCI’s stock price and an 81% decrease in the estimated stock price of HCI subsidiary, TypTap Insurance Group.
Pay versus Performance Table
| 44 | HCI Group, Inc. 2024 Proxy Statement |
Pay versus Performance Table
Reconciliation of SCT Total for CEO to Compensation Actually Paid to CEO:
Pay versus Performance Table
| | 2023 | 2022 | 2021 | 2020 | | SCT Total | $3,662,846 | $1,031,115 | $7,736,699 | $5,229,467 | | Subtract: grant date fair value of stock and option awards granted as disclosed in the SCT | (1,875,000) | 0 | (6,873,468) | (3,072,698) | | Add: year-end fair value of stock and option awards granted in the covered year that remained unvested at the end of the covered year | 0 | 0 | 21,882,036 | 3,634,200 | | Add or subtract: change in fair value of stock and option awards granted in prior years that remained unvested at the end of the covered year | (1,711,638) | (19,815,803) | 6,065,125 | 1,084,575 | | Add or subtract: change in fair value of stock awards and option awards granted in prior years that vested in the covered year | (185,208) | (5,137,228) | 313,775 | (28,050) | | Add: fair value on vesting date of stock or option awards granted and vested in the covered year | 4,765,500 | 0 | 0 | 0 | | Subtract: fair value of stock or option awards at the end of the prior year that were forfeited during the covered year | 0 | 0 | 0 | 0 | | CAP | $8,450,193 | $(23,921,916) | $29,124,167 | $6,847,494 |
Pay versus Performance Table
Reconciliation of average SCT total for other NEOs to Compensation Actually Paid to other NEOs:
Pay versus Performance Table
| | 2023 | 2022 | 2021 | 2020 | | SCT Total | $498,469 | $450,085 | $2,819,434 | $541,296 | | Subtract: grant date fair value of stock and option awards granted as disclosed in the SCT | 0 | 0 | (2,392,760) | (159,355) | | Add: year-end fair value of stock and option awards granted in the covered year that remained unvested at the end of the covered year | 0 | 0 | 4,525,780 | 183,050 | | Add or subtract: change in fair value of stock and option awards granted in prior years that remained unvested at the end of the covered year | 1,505,169 | (1,632,056) | 164,010 | 32,627 | | Add or subtract: change in fair value of stock awards and option awards granted in prior years that vested in the covered year | 37,250 | (1,067,219) | 76,539 | 16,208 | | Add or subtract: fair value on vesting date of stock or option awards granted and vested in the covered year | 0 | 0 | 0 | 0 | | Subtract: fair value of stock or option awards at the end of the prior year that were forfeited during the covered year | 0 | 0 | 0 | 0 | | CAP | $2,040,888 | $(2,249,190) | $5,193,003 | $613,826 |
Pay versus Performance Table
| HCI Group, Inc. 2024 Proxy Statement | 45 |
Financial Performance Measures Used to Link Company Performance and Compensation Actually Paid
Financial Performance Measures Used to Link Company Performance and Compensation Actually Paid The following is a list of financial performance measures which in our assessment represent the most important performance measures that influence compensation actually paid to the NEOs for 2023.
Financial Performance Measures Used to Link Company Performance and Compensation Actually Paid
| • | Relative Total Shareholder Return |
Financial Performance Measures Used to Link Company Performance and Compensation Actually Paid
| • | Return on Equity |
Financial Performance Measures Used to Link Company Performance and Compensation Actually Paid
| • | Earnings before interest and taxes |
Financial Performance Measures Used to Link Company Performance and Compensation Actually Paid
| • | Gross Premiums Earned |
Board of Directors
Board of Directors HCI Group, Inc. conducts business through its officers and other employees under the direction of the chief executive officer and with the oversight of the Board of Directors to enhance the long-term value of the Company for its shareholders. The members of the Board of Directors are periodically elected by the shareholders to oversee management and to ensure that the long-term interests of the Company and its shareholders are being served. Each director is expected to perform as a director in good faith with the care an ordinarily prudent person in a like position would exercise under similar circumstances and in a manner the director reasonably believes to be in the best interests of the Company.
Compensation Committee
| • | Reviewing and approving compensation of outside directors |