DEF 14A of NMI Holdings, Inc.
Filed Mar 28, 2024 · FY20230001547903-24-000091
DIRECTOR NOMINEES
DIRECTOR NOMINEES Please see below an overview of our director nominees. You can also find more information about each of our nine director nominees and their experiences on page 13.
DIRECTOR NOMINEES
| NAME & EXPERIENCE | AGE | DIRECTOR SINCE | INDEPENDENT | AC | GNC | RC | CC | OTHER PUBLIC COMPANY BOARDS | | Bradley M. Shuster Executive Chairman and Chairman of the Board, NMI Holdings, Inc. | 69 | 2012 | No | | | | | 2 | | Adam S. Pollitzer President and Chief Executive Officer, NMI Holdings, Inc. | 45 | 2022 | No | | | | | — | | Steven L. Scheid ⧫ Former Partner, Strategic Execution Group Former Chairman and Chief Executive Officer, Janus Capital Group Inc. | 70 | 2012 | Yes | | ● | | ● | — | | Michael Embler Former Chief Investment Officer, Franklin Mutual Advisers LLC | 59 | 2012 | Yes | ■ | | | ● | 2 | | John C. Erickson Former Chief Risk Officer and Chief Corporate Banking Officer, Union Bank, N.A. | 63 | 2023 | Yes | ● | | ● | | 1 | | Priya Huskins Partner, Senior Vice President and Board Member, Woodruff Sawyer | 52 | 2021 | Yes | | ● | | ● | 1 | | Lynn S. McCreary Chief Legal Officer, Sportradar Group AG | 64 | 2019 | Yes | | ■ | ● | | __ | | Michael Montgomery Former Chief Compliance Officer, Glendon Capital Management Former Chief Executive Officer, Barclays Group US, Inc. | 68 | 2012 | Yes | ● | | ● | | — | | Regina Muehlhauser Former President, Bank of America, San Francisco | 75 | 2017 | Yes | ● | | ■ | | — |
DIRECTOR NOMINEES
■ = Chair ● = Member ⧫ = Lead Independent Director AC = Audit Committee; GNC = Governance and Nominating Committee; RC = Risk Committee; CC = Compensation Committee James G. Jones has served on our Board since 2012. He is the Chair of the Board's Compensation Committee, and also a member of the Board's Governance and Nominating Committee and Risk Committee. On May 9, 2024 (when Mr. Jones' current one-year term of service expires), Mr. Jones will retire from the Board. Mr. Jones’ decision does not involve a disagreement on any matter relating the Company’s operations, policies or practices.
DIRECTOR NOMINEES
| NMI Holdings, Inc. (NMIH) | 4 | 2024 Proxy Statement |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE The Governance and Nominating Committee is responsible for recommending to the Board a slate of nominees for election as directors at the Company's annual meeting of stockholders and may obtain recommendations from director search firms engaged for the purpose of recruiting new directors. When using such search firms, we generally pay them a retainer to identify and screen candidates meeting specifications established by the Governance and Nominating Committee. The Board believes that the members of the Board, as a whole, should possess a diverse combination of skills, professional experience and backgrounds necessary to oversee our business. Accordingly, the Board and the Governance and Nominating Committee consider the qualifications of director candidates individually and in the broader context of the Board's overall composition and the Company's current and future needs. The Governance and Nominating Committee seeks a variety of occupational and personal backgrounds on the Board to obtain a range of viewpoints and perspectives and to enable the Board to have access to a diverse body of talent and expertise relevant to the Company's activities. Of the director nominees for our 2024 Annual Meeting, one-third are women and four of nine are from diverse demographic backgrounds. The Board and the Governance and Nominating Committee consider a variety of factors when reviewing the qualifications of each director nominee, which are set forth in our Corporate Governance Guidelines, posted on our website at https://ir.nationalmi.com/corporate-governance/board-documents. The Company believes that each director nominee should generally:
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | possess fundamental qualities of intelligence, honesty, perceptiveness, good judgment, maturity, high ethics and standards, integrity, fairness and responsibility; | | | have financial services or other relevant industry experience gained through senior management or board of director service; | | | have prior board experience, either as a director of a public company, or as an executive officer of a public company and a director of a privately held company; | | | maintain a genuine interest in the Company and recognize that as a member of the Board he or she is accountable to the stockholders of the Company and not to any particular interest group; | | | be compatible and able to work well with other directors and executives in a team effort with a view to a long-term relationship with the Company as a director; | | | possess independent opinions and be willing to express them in a constructive manner; | | | have the ability and be willing to spend the time required to function effectively as a director; | | | not serve on more than three other boards of directors of public companies; and | | | meet the independence requirements under NASDAQ listing requirements and the SEC (other than any management directors). |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| NMI Holdings, Inc. (NMIH) | 10 | 2024 Proxy Statement |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
OUR DIRECTOR NOMINEES 1 Our Governance and Nominating Committee believes it is critical to nominate a Board that is diverse in tenure, age, gender, skills, experiences, demographic, and backgrounds. We believe a diverse board enables the Board to effectively oversee our business while driving long-term value through various economic and operating environments. Our Board tenure of the nominees for election reflects an appropriate balance between engaging new talent and maintaining institutional knowledge of our business and the private MI market. Our Corporate Governance Guidelines provide that a majority of our directors must be independent. Seven out of our nine director nominees qualify as independent directors within the meanings of the standards established by NASDAQ and the SEC. 1.Mr. Jones, who will retire as of the 2024 Annual Meeting in May 2024, is not included in the list of board nominees.
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| NAME | AGE | DIRECTOR SINCE | CURRENT POSITION | INDEPENDENT | | Bradley M. Shuster | 69 | 2012 | Executive Chairman and Chairman of the Board | No | | Adam S. Pollitzer | 45 | 2022 | President and Chief Executive Officer | No | | Steven L. Scheid | 70 | 2012 | Lead Independent Director | Yes | | Michael Embler | 59 | 2012 | Director | Yes | | John C. Erickson | 63 | 2023 | Director | Yes | | Priya Huskins | 52 | 2021 | Director | Yes | | Lynn S. McCreary | 64 | 2019 | Director | Yes | | Michael Montgomery | 68 | 2012 | Director | Yes | | Regina Muehlhauser | 75 | 2017 | Director | Yes |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| Median Tenure: 6 Years | Median Age: 57 Years | 33% Female | 78% Independent |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| 2024 Proxy Statement | 11 | NMI Holdings, Inc. (NMIH) |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| BOARD DIVERSITY MATRIX (AS OF MARCH 28, 2024) | Total Number of Director Nominees: 9 | | | | FEMALE | MALE | | PART I: GENDER IDENTITY | | | | Directors | 3 | 6 | | PART II: DEMOGRAPHIC BACKGROUND | | | | Asian | 2 | 0 | | White | 1 | 6 | | LGBTQ+ | 0 | 1 | | Did Not Disclose Demographic Background | 0 | 0 |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
PERSONAL ATTRIBUTES AND SKILLS OF THE DIRECTOR NOMINEES The Board considers a wide range of attributes when selecting and recruiting candidates. Our nine director nominees have executive experience and skills that are aligned with our business and strategy as follows:
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| SKILL/EXPERIENCE | | NUMBER OF DIRECTORS (OUT OF 9) | | | | | | | SENIOR EXECUTIVE AND CORPORATE GOVERNANCE: Directors bring valuable senior executive experience on matters relating to corporate governance, management, operations and compensation. | | | | | | | | | | | | | 9 | | | PUBLIC COMPANY AND FINANCIAL REPORTING: Directors bring extensive knowledge of or experience in accounting, financial reporting, auditing processes and standards and public company reporting. | | | | | | | | | | | 7 | | | | | FINANCIAL SERVICES: Directors possess in-depth knowledge of the financial services industry, providing valuable expertise on issues facing the Company and its industry. | | | | | | | | | | | | | 9 | | | RISK MANAGEMENT AND COMPLIANCE: Directors have experience in risk management and compliance oversight relevant to exercising corporate and fiduciary responsibilities. | | | | | | | | | | | | 8 | | | | TECHNOLOGY: Directors possess experience in the development and adoption of new technology as well as leading innovation initiatives at companies. | | | | | | | | | | 5 | | | | | | REGULATED INDUSTRIES: Directors bring valuable experience with regulated businesses, operating under regulatory requirements and relationships with regulatory agencies. | | | | | | | | | | | | | 9 |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| NMI Holdings, Inc. (NMIH) | 12 | 2024 Proxy Statement |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
BIOGRAPHIES OF THE DIRECTOR NOMINEES The following provides information about each of our nine director nominees. James G. Jones has served on our Board and as Chair of the Board's Compensation Committee since 2012. On May 9, 2024 when Mr. Jones' current one-year term of service expires, Mr. Jones will retire from the Board. Please also see page 4 for a summary chart of the nominees. In reaching its determination to recommend each of the director nominees for election at this Annual Meeting, the Board and the Governance and Nominating Committee considered the qualifications of these nominees and determined that each nominee meets the criteria listed on page 12 and is highly skilled and qualified to serve as a member of the Board and to work with management to guide and develop the Company as an industry leader in the private MI industry.
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | | Bradley M. Shuster Mr. Shuster has served as Executive Chairman of the Board since January 2012. Mr. Shuster served as our Chief Executive Officer from 2012 to 2018. From 2012 to 2014, Mr. Shuster also served as our President. From 2008 to 2011, Mr. Shuster held various consulting positions assisting private investors with evaluating opportunities in the insurance industry. Mr. Shuster was an executive of The PMI Group, Inc. (PMI) from 2003 to 2008, where he served as president of International and Strategic Investments and chief executive officer of PMI Capital Corporation. Prior to that, he served as PMI's executive vice president of Corporate Development and senior vice president, treasurer and chief investment officer. Before joining PMI in 1995, Mr. Shuster was a partner at Deloitte LLP, where he served as partner-in-charge of Deloitte's Northern California Insurance Practice and Mortgage Banking Practice. He holds a B.S. from the University of California, Berkeley and an M.B.A. from the University of California, Los Angeles. He is an independent director of McGrath RentCorp (NASDAQ: MGRC) (since 2017) and of WaFd, Inc. (NASDAQ: WAFD) (since 2024). Mr. Shuster also served on the board of Luther Burbank Corporation before its merger with WaFd, Inc. (1999-2024). Mr. Shuster completed the National Association of Corporate Directors Cyber-Risk Oversight Program, earning the CERT Certificate in Cybersecurity Oversight. Mr. Shuster's vision and status as our founder and the Executive Chairman of the Board, as well as his previous tenure as our Chief Executive Officer, bring unique and invaluable experience to our Board. Further, his extensive experience developing and operating mortgage insurance companies and his insurance industry background, as well as his service on the boards of other publicly held companies, supports our conclusion he has the necessary and desired skills, experience and perspectives to serve on our Board, and to serve as the Chairman of our Board. | | | EXECUTIVE CHAIRMAN AND CHAIRMAN OF THE BOARD (EXECUTIVE CHAIRMAN) | | | | AGE: 69 DIRECTOR SINCE: 2012 | |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| 2024 Proxy Statement | 13 | NMI Holdings, Inc. (NMIH) |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | | Adam S. Pollitzer Mr. Pollitzer serves as our President and Chief Executive Officer (CEO). As President and CEO, Mr. Pollitzer is responsible for the Company’s day-to-day management, financial performance, and long-term growth strategy. Mr. Pollitzer joined NMI in May 2017 and served as our Executive Vice President and Chief Financial Officer from 2017 to 2021. Before joining the Company in 2017, Mr. Pollitzer was a Managing Director in the corporate and investment banking division of J.P. Morgan Securities, LLC, where he led advisory and capital raising efforts on behalf of North American insurance companies. Before serving as a Managing Director, Mr. Pollitzer held other senior leadership positions with J.P. Morgan. He holds a bachelor’s degree in business administration from the Stephen M. Ross School of Business at the University of Michigan. A seasoned mortgage industry and finance executive, Mr. Pollitzer draws on over 20 years of broad mortgage insurance and industry knowledge, business development and financial expertise, and as our CEO, a day-to-day perspective on our Company’s strategy and operations. Mr. Pollitzer's extensive background, in addition to his experience in other senior positions, supports our conclusion Mr. Pollitzer has the necessary and desired skills, experience and perspective to serve on our Board. | | | PRESIDENT AND CHIEF EXECUTIVE OFFICER | | | | AGE: 45 DIRECTOR SINCE: 2022 | |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | | Steven L. Scheid Mr. Scheid has served as our Lead Independent Director since 2012. He served on the boards of Blue Nile Company, an online retailer of diamonds and fine jewelry (2007-2015); Janus Capital Group Inc., a global investment firm (2002-2012); and The PMI Group, Inc. (2002-2009). Mr. Scheid was previously a partner at Strategic Execution Group, a consulting firm, from 2007 to 2012. He served as the chairman of Janus Capital Group Inc. until 2012 and also served as the company's chief executive officer from 2004 to 2006. Mr. Scheid was an operating partner at Thoma Bravo, LLC, a private equity firm from 2008 to 2011. From 1996 to 2002, Mr. Scheid served in multiple senior executive positions for Charles Schwab Corporation. He was vice chairman of the Charles Schwab Corporation and president of the Schwab Retail Group. Prior to these roles, Mr. Scheid served as Schwab's chief financial officer and was the chief executive officer of Charles Schwab Investment Management. He served as the Federal Reserve Bank of San Francisco's representative on the Federal Advisory Council in Washington, D.C. from September 2000 to February 2002. Mr. Scheid is a certified public accountant and holds a B.S. in accounting from Michigan State University. A veteran financial industry executive with over 40 years of experience, Mr. Scheid's extensive and deep background in finance, retail strategies, risk management and investment services, supports our conclusion Mr. Scheid has the necessary and desired skills, experience and perspective to serve on our Board. | | | LEAD INDEPENDENT DIRECTOR | | | | AGE: 70 DIRECTOR SINCE: 2012 COMMITTEE(S): Governance and Nominating; Compensation | |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| NMI Holdings, Inc. (NMIH) | 14 | 2024 Proxy Statement |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | | Michael Embler Mr. Embler has over 25 years of experience in investments and financial markets. Mr. Embler also serves on the board of American Airlines Group (NASDAQ: AAL) (from 2013) and the board of Ventas, Inc. (NYSE: VTR) (from 2022). Previously, he was on the boards of Taubman Centers (2018-2020), Abovenet, Inc. (2003-2012), Dynegy Inc. (2011-2012), CIT Group (2009-2016), Kindred Healthcare (2001-2008) and Grand Union Company (1999-2000). Mr. Embler served as the chief investment officer of Franklin Mutual Advisers LLC, an asset management subsidiary of Franklin Resources, Inc., overseeing approximately $60 billion in assets and 25 investment professionals. He joined Franklin in 2001 and retired in 2009. Prior to serving as chief investment officer, he managed the firm's distressed investing strategy. Previously, from 1992 to 2001, he held various positions at Nomura Holdings America, culminating in a position as the managing director overseeing a team which invested a proprietary fund focused on distressed and other event-driven corporate investments. Mr. Embler received a B.S. in economics from the State University of New York at Albany and earned an M.B.A. in finance from George Washington University. Mr. Embler has also earned the CERT Certificate in Cybersecurity Oversight from the National Association of Corporate Directors Cyber-Risk Oversight Program, and a certificate in Environmental Conservation and Sustainability from The Earth Institute, Center for Environmental Research and Conservation at Columbia University. Mr. Embler's extensive financial industry background and commitment to board-level cyber-risk oversight and sound conservation and sustainability practices, as well as his service on the boards of other publicly held companies, supports our conclusion he has the necessary and desired skills, experience and perspectives to serve on our Board. | | | DIRECTOR | | | | AGE: 59 DIRECTOR SINCE: 2012 COMMITTEE(S): Audit (Chair); Compensation | |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | | John C. Erickson Mr. Erickson is a seasoned finance executive with four decades of experience in the financial services industry. Mr. Erickson served for over 30 years at Union Bank, N.A. where he held many executive roles, including two vice chairman positions of Chief Risk Officer and Chief Corporate Banking Officer between 2007 and 2014. Since 2019, Mr. Erickson has served on the board of Bank of Hawaii Corp. (NYSE: BOH), where he serves on the Nominating & Corporate Governance Committee and as Vice Chair of the Audit & Risk Committee. He was a director of Luther Burbank Corp. from 2017 to February 2024, where he served on the Audit & Risk Committee, and Compensation Committee. He was also a director of Zions Bancorporation NA from 2014 to 2016, and was chair of the Risk Oversight Committee as well as a member of the Audit Committee. He also served as President, Consumer Banking and President, California, for CIT Group, Inc. in 2016. Mr. Erickson received his bachelor’s degree with an emphasis in economics and his M.B.A. with an emphasis in finance from the University of Southern California. Mr. Erickson’s extensive experience and background in business, management and financial services, as well as his service on the boards of other publicly held companies, supports our conclusion he has the necessary and desired skills, experience and perspectives to serve on our Board. | | | DIRECTOR | | | | AGE: 63 DIRECTOR SINCE: 2023 COMMITTEE(S): Audit, Risk | |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| 2024 Proxy Statement | 15 | NMI Holdings, Inc. (NMIH) |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | | Priya Huskins Ms. Huskins has been an executive at Woodruff Sawyer & Co. (Woodruff Sawyer), a commercial insurance brokerage and consulting firm since 2003, serving as a partner and senior vice president since 2005 and a member of its board since 2016. Prior to joining Woodruff Sawyer, Ms. Huskins served as a corporate and securities attorney at the law firm of Wilson Sonsini Goodrich & Rosati from 1997 until 2003. Since 2007, Ms. Huskins has served as a director of the board of Realty Income Corporation (NYSE: O), a publicly traded REIT, currently serving as chair of its Compensation Committee and as a member of its Nominating and Corporate Governance Committee. Since 2022, Ms. Huskins has served as a director of the board of Long-Term Stock Exchange, an SEC-registered national securities exchange built to serve companies and investors who share a long-term vision. From 2021 to 2023, Ms. Huskins also served as a director of the board of Anzu Special Acquisition Corp I, a publicly traded special purpose acquisition corporation. She has served on the advisory board of the Stanford Rock Center for Corporate Governance since 2012. Ms. Huskins earned her undergraduate degree from Harvard College and J.D. from the University of Chicago Law School. Ms. Huskins' extensive financial, legal and insurance industry background, as well as her service on the boards of other publicly held companies, supports our conclusion she has the necessary and desired skills, experience and perspectives to serve on our Board. | | | DIRECTOR | | | | AGE: 52 DIRECTOR SINCE: 2021 COMMITTEE(S): Governance and Nominating; Compensation | |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | | Lynn S. McCreary Ms. McCreary is a seasoned executive with over 40 years of experience in business and management. She is the chief administrative officer, chief legal officer, corporate secretary and member of the management team of Sportradar Group AG (Sportradar), a multinational company that aggregates and analyzes sports data and provides services to a wide range of constituents in the sports and media worlds. Ms. McCreary leads the legal, enterprise risk, compliance and privacy functions, and is responsible for Sportradar's ESG/Sustainability program. Prior to joining Sportradar in June 2021, Ms. McCreary served as the chief legal officer, corporate secretary and a member of the executive committee of Fiserv, Inc., a fortune 500 global leader in payment and fintech where, from 2013-2021, she advised the CEO, board and business leaders on a broad array of business and legal matters. From 2010-2013, Ms. McCreary served as Fiserv's deputy general counsel. Prior to joining Fiserv, Ms. McCreary was a partner at Bryan Cave LLP where she represented commercial, retail, financial and insurance companies. She began her career in financial services in 1982, holding positions at Citicorp Person to Person and Metmor Financial, then a subsidiary of Metropolitan Life Insurance Company. Ms. McCreary earned a bachelor's degree from Western New England College and a J.D. from Washburn University School of Law. Ms. McCreary's extensive experience and background business, management, law and financial services supports our conclusion she has the necessary and desired skills, experience and perspectives to serve on our Board. | | | DIRECTOR | | | | AGE: 64 DIRECTOR SINCE: 2019 COMMITTEE(S): Governance and Nominating (Chair); Risk | |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| NMI Holdings, Inc. (NMIH) | 16 | 2024 Proxy Statement |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | | Michael Montgomery Mr. Montgomery has served on the boards of directors for numerous regulated entities, including FDIC-insured banks, mortgage origination companies, mortgage servicing companies, broker dealers and investment advisers. Mr. Montgomery was a member of the boards of directors of Barclays Bank Delaware from 2005 until 2012 and of Barclays Capital Inc. and Barclays Group US, Inc. from 2002 to 2012. From 2013 to 2018, Mr. Montgomery served as Glendon Capital Management's chief compliance officer. From 2010 to 2013, Mr. Montgomery served as chief compliance officer of Barclays Asset Management Group LLC (Barclays). Previously, Mr. Montgomery served as chief executive officer of Barclays Group US, Inc., the top-tier U.S. holding company for Barclays from 2003 to 2010, and he has significant experience as an audit committee member. From 2006 to 2010, he served as chief administrative officer of Mortgage Origination and Servicing at Barclays Capital, a position in which he managed mortgage origination and servicing activities and coordinated the underwriting, production, warehousing and servicing functions with its New York-based asset securitization business. From 1998 to 2000, Mr. Montgomery served as chief financial officer for Deutsche Bank Securities Inc. He served in various positions at Goldman Sachs & Co. (Goldman Sachs) from 1987 to 1998, including as vice-president of UK Regulatory Reporting, vice-president of Subsidiary Accounting, vice-president and director of Regulatory Reporting and chief financial officer of Goldman Sachs Canada. Mr. Montgomery has also previously held operating roles as chief financial officer and chief administrative officer and has served on several industry-wide committees for the Securities Industry Association, the Bond Market Association and the Public Securities Association. Mr. Montgomery earned a B.A. in economics and French literature from the University of Virginia and a J.D. from Georgetown University Law Center. Mr. Montgomery's extensive experience in financial services and the mortgage industry supports our conclusion he has the necessary and desired skills, experience and perspectives to serve on our Board. | | | DIRECTOR | | | | AGE: 68 DIRECTOR SINCE: 2012 COMMITTEE(S): Audit; Risk | |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| 2024 Proxy Statement | 17 | NMI Holdings, Inc. (NMIH) |
DIRECTOR CRITERIA, QUALIFICATIONS, EXPERIENCE AND TENURE
| | | Regina Muehlhauser Ms. Muehlhauser retired as president of Bank of America, San Francisco, a subsidiary of Bank of America Corporation (BAC), in 2004. Ms. Muehlhauser was a member of BAC's Global Management Operating Committee and was global treasury management executive, responsible for the sales and delivery of treasury management services to large corporations in 35 countries and approximately two million commercial and small business companies in the United States. From 1997 to 2004, Ms. Muehlhauser reported to the chairman & CEO as executive vice president, overseeing BAC's Client Focus Initiative, having joined Bank of America in 1991 as senior vice president. Ms. Muehlhauser began her career at Wells Fargo Bank where she held a variety of client management and organizational leadership responsibilities within the real estate industries group, rising to senior-vice president. In 2003, Treasury & Risk Management Magazine named her among the "100 Most Influential People in Finance" in the United States. In 2002, 2003 and 2004, Ms. Muehlhauser was named as one of the most influential women in the San Francisco Bay Area by the San Francisco Business Times. In 2002, she received the Woman of Honor award by the Chinese Historical Society of America for her impact on society as a business leader and was named 2006 Board Leader Volunteer of the Year for the San Francisco and San Mateo, California counties. Ms. Muehlhauser earned a bachelor's degree in political science from American University. Ms. Muehlhauser's extensive experience in the financial services industry supports our conclusion she has the necessary and desired skills, experience and perspectives to serve on our Board. | | | DIRECTOR | | | | AGE: 75 DIRECTOR SINCE: 2017 COMMITTEE(S): Audit; Risk (Chair) | |
2023 DIRECTOR COMPENSATION
2023 DIRECTOR COMPENSATION The independent directors annually review and determine the compensation of the non-employee directors after reviewing the Compensation Committee's recommendations, which take into account advice received from the Compensation Committee's independent compensation consultant. The annual compensation package of each non-employee director includes cash retainer and equity award, which makes up a substantial portion of each non-employee director's annual compensation.
2023 DIRECTOR COMPENSATION
| | NON-EMPLOYEE DIRECTORS | AUDIT COMMITTEE CHAIR | OTHER COMMITTEE CHAIR | LEAD INDEPENDENT DIRECTOR | | ANNUAL COMPENSATION PACKAGE | ($) | ($) | ($) | ($) | | Cash Retainer | 110,000 | 25,000 | 20,000 | 40,000 | | RSU Award | 140,000 | N/A | N/A | N/A |
2023 DIRECTOR COMPENSATION
We grant our non-employee directors annual RSU awards that vest on the first anniversary of the grant date for their board service (RSU annual retainer). We also grant any new director a sign-on RSU award with a target grant date fair value equal to the then applicable RSU annual retainer. The sign-on RSU award is eligible to vest equally on the second and third anniversaries of the grant date. We designed the three-year sign-on RSU award for our new non-employee director compensation package to strengthen the alignment between director pay and the long-term interest of our stockholders. We do not pay our directors additional monetary compensation for attending our Board or committee meetings. We do, however, pay or reimburse travel and other expenses incurred by our non-employee directors when they attend our Board meetings and/or directorship-related continuing education training. In 2023, Mr. Shuster and Mr. Pollitzer were named executive officers (NEOs) of the Company in addition to serving as directors. Both Mr. Shuster and Mr. Pollitzer receive compensation as our NEOs rather than as directors, as described below in "Compensation of Named Executive Officers."
2023 DIRECTOR COMPENSATION
| NMI Holdings, Inc. (NMIH) | 18 | 2024 Proxy Statement |
2023 DIRECTOR COMPENSATION
Compensation for our non-employee directors during 2023 was as follows:
2023 DIRECTOR COMPENSATION
| | FEES EARNED OR PAID IN CASH (1) | RSU AWARDS (2) | TOTAL COMPENSATION | | NAME | ($) | ($) | ($) | | Michael Embler3 | 131,401 | 139,977 | 271,378 | | John C. Erickson4 | 32,582 | 244,979 | 277,561 | | Priya Huskins | 106,401 | 139,977 | 246,378 | | James G. Jones5 | 124,602 | 139,977 | 264,579 | | Lynn S. McCreary6 | 124,602 | 139,977 | 264,579 | | Michael Montgomery | 106,401 | 139,977 | 246,378 | | Regina Muehlhauser7 | 124,602 | 139,977 | 264,579 | | Steven L. Scheid8 | 146,401 | 139,977 | 286,378 |
2023 DIRECTOR COMPENSATION
1.Amounts reflect the cash retainers we paid to our non-employee directors in 2023. 2.Amounts in this column represent the grant date fair value of the RSUs granted to our non-employee directors in fiscal year 2023, calculated in accordance with FASB ASC Topic 718 Compensation-Stock Compensation (ASC Topic 718). See Note 10, "Share-Based Compensation" of our consolidated financial statements filed with the SEC on Form 10-K for the fiscal year ended December 31, 2023 for an explanation of the assumptions made in valuing these awards. As of December 31, 2023, each of Mses. Muehlhauser and McCreary and Messrs. Scheid, Embler, Jones and Montgomery held 6,940 unvested RSUs, Ms. Huskins held 12,070 unvested RSUs (inclusive of her 2021 sign-on RSU award upon joining the Board), and Mr. Erickson held 8,715 unvested RSUs (inclusive of his 2023 sign-on RSU award upon joining the Board). 3.Fees earned includes additional cash retainer (in the amount of $25,000) Mr. Embler earned in 2023 as the chair of Audit Committee. 4.Mr. Erickson joined the Board in September 2023 and received prorated fees in 2023. RSU awards include Mr. Erickson's sign-on RSU grant in connection with joining the Board. 5.Fees earned includes additional cash retainer (in the amount of $20,000) Mr. Jones earned in 2023 as chair of the Compensation Committee. 6.Fees earned includes additional cash retainer (in the amount of $20,000) Ms. McCreary earned in 2023 as chair of the Governance and Nominating Committee. 7.Fees earned includes additional cash retainer (in the amount of $20,000) Ms. Muehlhauser earned in 2023 as chair of the Risk Committee. 8.Fees earned includes additional cash retainer (in the amount of $40,000) Mr. Scheid earned in 2023 as the Lead Independent Director. Minimum Stock Ownership and Holding Period (Directors) The Board has adopted a written Stock Ownership Policy applicable to the Company's executive officers and directors (other than any non-employee director who serves on the Board in fulfillment of his or her employment obligations to a non-affiliate of the Company and is required to transfer all or a portion of their equity awards granted by the Company to their employer). None of our directors is currently under any such obligation.
2023 DIRECTOR COMPENSATION
| TITLE | STOCK OWNERSHIP GUIDELINES | | Non-Employee directors | 5.0 x annual cash retainer |
2023 DIRECTOR COMPENSATION
Each director is required to hold 50% of shares delivered by the Company upon vesting or exercise of equity awards granted under the Company's equity plans until the applicable stock ownership threshold has been met. As of December 31, 2023, each of our directors, other than Mr. Erickson (who joined the Board in September 2023), met the stock ownership requirement. Mr. Erickson will have until September 2028 to meet the requirement. STOCKHOLDER VOTE REQUIRED Directors are elected by a plurality of the votes cast. Accordingly, the nine director nominees that receive the greatest number of votes at the Annual Meeting will be elected. In an uncontested election of directors, a director will be elected if he or she receives at least one vote.
2023 DIRECTOR COMPENSATION
| The Board unanimously recommends that you vote FOR each of the director nominees. |
2023 DIRECTOR COMPENSATION
| 2024 Proxy Statement | 19 | NMI Holdings, Inc. (NMIH) |
COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation Philosophy We have designed our compensation program to attract, retain and motivate talented and qualified executives, while maximizing stockholder value creation over the long-term by targeting compensation levels that are externally competitive when measured against other companies within our industry and geographic location. We are headquartered in the San Francisco Bay Area near Silicon Valley, and therefore compete for talent with other companies that offer competitive compensation packages. We structure our compensation program to include a portfolio of both cash and equity with an emphasis on performance based compensation. Our compensation programs provide a strong alignment between Company performance results and resulting payouts: •Our annual incentive program is entirely based on financial performance measures that are aligned with driving key business strategies for the year. •Our long-term incentive program is comprised of a mix of RSUs and PRSUs. •RSUs vest over three years and promote a long-term focus for our NEOs. •PRSUs are measured against strong cumulative book-value per share performance goals, which further ties our executive compensation to the Company's long-term performance and incentivizes our NEOs to achieve sustainable long-term returns. Stockholder Say-on-Pay Votes We are holding an annual say-on-pay advisory vote in this proxy statement as proposal Item 2. We value stockholder input and see Item 2 as giving our stockholders the opportunity to express their views on the design and effectiveness of our executive compensation program. The Compensation Committee takes into consideration stockholder input, including the outcome of the say-on-pay vote, when it reviews the Company's compensation philosophy and plan design. At our 2023 Annual Meeting, approximately 90.4% of the votes cast were in favor of the advisory vote to approve our executive compensation paid to our NEOs in 2022. We have a history of proactively engaging with and listening to our stockholders and other stakeholders throughout the year because we believe doing so is a fundamental aspect of good corporate governance and makes our business stronger. In 2023, we held over 110 meetings with stockholders and potential investors, including those representing an estimated 83% of shares outstanding as of December 31, 2023 to discuss various key corporate matters that included, among others, our executive compensation. See "Item 1 — Election of Directors — Corporate Governance and Board Matters — Stockholder Engagement" on page 29. Following our 2023 Annual Meeting, as it does following each of our annual meetings of stockholders, our Compensation Committee reviewed the vote results and our executive compensation programs and determined that the 2023 programs and compensation opportunity for the current NEOs are both appropriate and aligned with stockholder interests. Strong Executive Compensation Policies and Practices We maintain strong compensation-related governance policies and practices. Our compensation-related governance policies and practices align our executive compensation with long-term stockholder interests, as further described in "Compensation of Named Executive Officers — Compensation Discussion and Analysis — Elements of Executive Compensation Program — Other Important Governance and Executive Compensation Policies":
Compensation Consultant Performs No Additional Services for Us
Compensation Consultant Performs No Additional Services for Us The Compensation Consultant is retained by the Compensation Committee and performs no other services for the Company.
Change-in-Control Severance Plan (CIC Severance Plan) Provides Limited Benefits
Change-in-Control Severance Plan (CIC Severance Plan) Provides Limited Benefits A "double-trigger" (meaning both a change in control and severance qualifying termination of employment) is required before any severance benefits may be paid under the CIC Severance Plan.
No Tax Gross-Ups
Benchmarking Our executive compensation philosophy emphasizes competitive objectives for executive pay. The Compensation Committee does not benchmark to a specific percentile and prefers a flexible target range in order to be mindful of individual differences such as tenure and performance. Elements of compensation that are benchmarked, separately and in the aggregate, include base salary, cash-based annual incentive awards and long-term equity incentive awards. The Compensation Committee considers several factors when reviewing companies for inclusion in the compensation peer group: size (as measured by revenue and market capitalization), as well as IPO date, recent growth patterns, geographical scope, and the companies with which we compete for executive talent. While the Compensation Committee considers peer group data collectively, it focuses on the Company's direct pure-play competitors within the MI industry: Enact Holdings, Inc., Essent Group Ltd., MGIC Investment Corporation, and Radian Group, Inc. In addition to proxy disclosed data from the peer group, the Compensation Committee also uses relevant survey information from companies of similar size and geographic scope. These additional data points played a role in the Compensation Committee's competitive benchmarking approach given the Company's size and the limited number of direct business comparators within the MI industry. Our peer group for fiscal year 2023 (which has not changed since 2022) consists of the companies listed below:
No Tax Gross-Ups
| NMI 2023 PEER GROUP | MORTGAGE INSURER DIRECT COMPETITOR | CHOSE NMI AS PEER(1) | BROADER EXPOSURE TO INSURANCE AND REAL ESTATE | BUSINESS | | Ambac Financial Group, Inc. | | | ■ | Property & Casualty Insurance | | Assured Guaranty Ltd. | | | ■ | Financial Guaranty Insurer | | Enact Holdings, Inc. | ■ | ■ | ■ | Mortgage Insurer | | Essent Group Ltd. | ■ | ■ | ■ | Mortgage Insurer | | Investors Title Company | | | ■ | Property & Casualty Insurance | | Kinsale Capital Group, Inc. | | | ■ | Property & Casualty Insurance | | MGIC Investment Corporation | ■ | ■ | ■ | Mortgage Insurer | | Mr. Cooper Group Inc. | | | ■ | Mortgage Service & Lending | | Ocwen Financial Corporation | | | ■ | Mortgage Service & Lending | | PennyMac Financial Services | | | ■ | Mortgage Service & Lending | | Radian Group Inc. | ■ | ■ | ■ | Mortgage Insurer | | Redwood Trust | | ■ | ■ | Mortgage Banking & Investments | | RLI Corp. | | | ■ | Property & Casualty Insurance | | Stewart Information Services Corporation | | | ■ | Title Insurance & Underwriting |
No Tax Gross-Ups
| COMPENSATION ELEMENT | DESCRIPTION | ALIGNMENT WITH COMPENSATION PHILOSOPHY | | Annual Compensation: | | | | Annual Base Salary (p. 41) | •Fixed component of annual cash compensation that reflects expertise and scope of responsibilities, influenced by market pay levels, trends and individual performance | •Attract and retain key talent with market competitive salaries •Provide financial certainty and stability •Recognize individual performance | | Short-Term Incentive Program (p. 42) | •Cash-based annual bonus plan based 100% on meeting Company objectives •Requirement that executive be employed at the time the bonus is paid has a retentive effect | •Balance between short- and long-term corporate objectives that aligns with Company's pay-for-performance philosophy and stockholder interests •Short-term growth important in MI business, with each book year of business supporting the long-term growth of the Company | | Long-Term Compensation: | | | | Long-Term Incentive Program (p. 43) | •Equity-based, consisting of a 50:50 mix of time-based RSUs and PRSUs •RSUs vest over a three-year period •PRSUs are 100% earned based on achievement of cumulative book value per share (BVPS) growth targets over a three-year performance period | •RSUs align management and stockholder interests on increasing share value •PRSUs link realized compensation value to the Company's achievement of long-term financial performance | | Other Executive Benefits: | | | | Retirement Program | •Participation in 401(k) Plan, including a matching contribution by the Company of 100% of the executive's contribution up to 5% of the executive's eligible compensation, which was offered to all eligible employees who participated in the Company's 401(k) Plan in 2023 | •Attract and retain key talent •Provide income security for retirement | | Executive Cash Allowance Program | •Fixed cash amount to be used at the discretion of the executive, in lieu of individualized perquisite programs | •Attract and retain key talent •Provide total compensation package that is competitive in our market and geographic location |
No Tax Gross-Ups
In 2023, the Compensation Committee approved equity awards for each NEO, other than Mr. Shuster, consisting of a 50:50 mix of time-based RSUs and PRSUs. Mr. Shuster received 100% RSUs to align his compensation with stockholder value creation, while recognizing the direct impact of his role as Executive Chairman on the operational performance of the Company. Book Value Per Share (BVPS) The PRSUs granted in 2023, similar to prior years, are earned based on the achievement of a compound annual BVPS growth target over a three-year performance period. We base the performance assessment in our PRSUs on compound annual BVPS growth because we believe (i) it is an appropriate measure and key indicator of the Company's long-term performance and (ii) it correlates with management’s ability to drive long-term stockholder value creation. BVPS growth serves as a comprehensive indicator of our performance encompassing the scale of our new business production and insured portfolio development, effectiveness of our credit risk management strategy, consistency and yield of our investment portfolio returns, stability of our funding profile and regulatory capital position, and the efficiency of our operating platform. Growth in BVPS provides a more stable indication of financial performance than total shareholder return (TSR), which can be
No Tax Gross-Ups
The Compensation Committee increased Mr. Pollitzer's 2023 annual base salary to more closely align Mr. Pollitzer's base salary with competitive compensation practices, including those of his peers at other MI companies. In addition, the Compensation Committee increased each of Messrs. Mallela, Leatherberry's and Smith's 2023 annual base salaries to better align their compensation with executives holding similar positions with a focus on our MI peers; recognize the breadth of management oversight by them in various substantive functional areas of the Company, among them, finance and treasury, risk, legal, and industry and government relations, that report to or through them; and reward them for their individual contributions to the Company's growth and successful performance. Short-Term Incentive Program & Corporate Performance Objectives In order to appropriately motivate and reward our NEOs, and to further align their pay with Company performance, we offer a discretionary bonus program that provides for cash bonus awards based on the Compensation Committee's assessment of Company performance within a framework of financial and operational objectives that are set by the Compensation Committee at the beginning of each fiscal year. The Compensation Committee sets these objectives as reference points to monitor and evaluate our NEOs' progress toward, and alignment with, the Company's short- and long-term priorities. Each NEO's 2023 bonus opportunity was solely based on corporate performance. The 2023 target bonus opportunity for our CEO was set at 175% of his base salary, and for the other NEOs was set at 100% of their respective base salary. Generally, the Compensation Committee aims to design and implement our annual incentive plan to reward outstanding performance against our corporate objectives significantly above the targeted benchmark. Conversely, the Compensation Committee retains discretion and flexibility, as it determines appropriate, to make its final bonus payment decisions for our NEOs' awards, including to reduce any such amount to zero when individual or corporate performance is below expectations. To be eligible to receive any bonus, each executive must be employed with the Company at the time we pay such bonus. The following table sets forth the target awards established by the Compensation Committee for our NEOs for fiscal year 2023.
No Tax Gross-Ups
In early 2023, the Compensation Committee approved corporate performance objectives for fiscal year 2023, with threshold, target and maximum achievement levels, which were developed by the executive management team consistent with the Company's 2023 operational plan and budget approved by the Board. With respect to our corporate performance objectives, the 2023 bonus plan included three achievement benchmarks: (i) a 75% payout for threshold achievement, (ii) 100% payout for target achievement, and (iii) 180% payout for maximum achievement. Bonus awards are interpolated linearly if actual results fall between the threshold and target measurement points, or between the target and maximum measurement points.
No Tax Gross-Ups
1.Adjusted Return on Equity (AROE), Adjusted Net Operating Income, and Adjusted Expense Ratio are non-GAAP measures. For a description of how we define these measures under the 2023 bonus plan, see Appendix B. When setting the 2023 corporate performance objectives, the Compensation Committee used a rigorous process to set challenging, yet reasonably attainable objectives intended to support and align with the Company's operating plan and strategic goals and to ensure an appropriate level of competitiveness within the marketplace, without encouraging unnecessary or excessive risk-taking. In setting the 2023 objectives, the Compensation Committee considered (i) the Company's 2023 operational plan and budget that included then-current economic conditions and expectations, (ii) the competitive landscape in the mortgage insurance (MI) industry, and (iii) prior years' results. When determining the final awards for our NEOs under the 2023 bonus plan, the Compensation Committee considered the Company's achievement against the 2023 corporate performance objectives. In 2023, the Company achieved a 18.9% AROE, $429.4 million Adjusted Net Operating Income, $40.5 billion NIW and a 20.26% Adjusted Expense Ratio. Accordingly, the Company exceeded the maximum performance level for three out of the four performance objectives of AROE, Adjusted Net Operating Income, and Adjusted Expense Ratio. After evaluating the Company's financial performance in 2023, achievement levels with respect to the 2023 performance objectives and the significant accomplishments of our executive team during 2023, the Compensation Committee approved payment of bonuses to our NEOs of 171.4% of total targeted bonus opportunity. Long-Term Incentive Program & BVPS Growth Targets Our NEOs may be awarded equity at the discretion of the Compensation Committee under the Company's equity plans. Equity awards are intended to: i.further align the interests of our NEOs with the interests of our stockholders; ii.emphasize long-term financial performance; iii.reward sustained share price appreciation; and iv.support the retention of our management team. In 2023, the Compensation Committee approved equity awards for each NEO (other than Mr. Shuster who was granted RSUs only) consisting of a 50:50 mix of RSUs and PRSUs. Our 2023 PRSUs directly link a significant component of our executive's realized compensation value to the Company's achievement of book value per share growth, incentivize the achievement of sustainable long-term returns and further align our long-term equity incentive with that of our peers' and the trends observed in the marketplace. See "Elements of Executive Compensation Program — Overview of Compensation Elements". The Compensation Committee granted our CEO and other NEOs the following 2023 equity awards as part of their target compensation package.
No Tax Gross-Ups
| NEO | FAIR VALUE OF RSUs ($) | FAIR VALUE OF PRSUs ($) | TOTAL GRANT DATE FAIR VALUE OF 2023 RSU AND PRSU AWARDS ($) | | Adam S. Pollitzer | 2,137,486 | 2,137,486 | 4,274,972 | | Bradley M. Shuster | 949,983 | 0 | 949,983 | | Ravi Mallela | 449,990 | 449,990 | 899,980 | | William J. Leatherberry | 584,491 | 584,491 | 1,168,982 | | Robert Smith | 446,494 | 446,494 | 892,988 |
No Tax Gross-Ups
2023 RSUs Granted: The 2023 RSU awards for each of our NEOs (other than Mr. Shuster) are eligible to vest 40% on each of the first and second anniversaries of the grant date, with the remaining 20% eligible to vest on the third anniversary of the grant date. Mr. Shuster's 2023 RSU award is eligible to vest in thirds over a three-year period from the grant date. 2023 PRSUs Granted: The PRSUs we granted to our NEOs in 2023 are earned based on achievement of cumulative BVPS growth targets (as described below) over a three-year performance period commencing on January 1, 2023 and ending on December 31, 2025 (Performance Period). With respect to the BVPS goals, the awards have a 50% payout for threshold achievement, 100% payout for target achievement, 150% for above target achievement, and 200% payout for maximum achievement, with linear interpolation between performance levels. The chart below illustrates the percentage of PRSUs eligible to vest (BVPS Vesting Percentage) if the Company achieves the corresponding BVPS growth target (BVPS Growth Percentage), rounded to the nearest tenth of a percent (0.1%), as determined by the Compensation Committee at the end of the Performance Period:
2023 Payouts Under Our 2021 PRSU Awards
2023 Payouts Under Our 2021 PRSU Awards In 2021, the Company granted PRSUs to our NEOs that are earned based on the achievement of cumulative BVPS growth targets over a three-year performance period commencing on January 1, 2021 and ending on December 31, 2023. In February 2024, the Compensation Committee determined the extent to which the fiscal year 2021 PRSUs had been earned: a 200% payout based on BVPS Growth Percentage of 21.2% over the three-year performance period. The terms of the fiscal year 2021 PRSUs, including the target performance and payout level, actual results and vesting schedule, are summarized in the following table:
2023 Payouts Under Our 2021 PRSU Awards
| NMI Holdings, Inc. (NMIH) | 44 | 2024 Proxy Statement |
2023 Payouts Under Our 2021 PRSU Awards
| 2023 PAYOUT UNDER OUR 2021 PRSU AWARDS | | | | | | 2021 CUMULATIVE BVPS GROWTH TARGETS | THRESHOLD | TARGET | ABOVE | MAXIMUM | | BVPS1 Growth Percentage2 | 7.5% | 13.5% | 15.0% | 17.5% | | BVPS Vesting Percentage | 50% | 100% | 150% | 200% |
2023 Payouts Under Our 2021 PRSU Awards
1.As defined for purposes of the 2021 PRSUs, BVPS, for any year during the Performance Period, is equal to the "Adjusted Book Value" for such year divided by the number of "Common Shares Outstanding." "Adjusted Book Value" is a non-GAAP measure, and means, for any year, the consolidated stockholder's equity of the Company computed in accordance with GAAP, adjusted to exclude the impact of (i) accumulated other comprehensive income (loss); (ii) the cumulative effect of cash dividends paid on the Company's common stock during the Performance Period, (iii) the cumulative effect of the repurchase of the Company's common stock during the Performance Period, (iv) the cumulative effect of changes in the fair value of the Company's warrant liability to the extent such warrants are not exercised, (v) the cumulative effect of changes in accounting principles under GAAP, and (vi) the cumulative effect of changes in tax law. 2.BVPS Growth Percentage means, for the Performance Period, the compounded annual growth rate in BVPS measured at the end of the Performance Period over the BVPS measured as of December 31, 2020. Retirement Savings Plan Since 2014, the Company has offered a tax-qualified defined contribution retirement savings plan (i.e., the 401(k) Plan), pursuant to which our employees, including our NEOs, are able to contribute a percentage of their annual compensation on a pre- and post-tax basis, up to the limits prescribed by the Internal Revenue Service. In 2023, we offered a 401(k) Company matching contribution for eligible employees who participated in the 401(k) Plan, including our NEOs, of up to 5% of an employee's eligible compensation. Generally, "eligible compensation" used for purposes of calculating contributions under the 401(k) Plan is the amount paid to the NEO as base salary, cash allowance and bonuses. Each of our NEOs was eligible to participate in the 401(k) Plan in 2023. The Company does not sponsor any nonqualified deferred compensation plans or pension plans. Executive Cash Allowance Program The Company includes in the annual compensation of each NEO a standardized, fixed cash amount to be used at the discretion of the executive officer, in lieu of individualized perquisite programs. In 2023, the additional compensation under this program was approximately $38,400 for Mr. Pollitzer and Mr. Shuster and approximately $30,000 for our other NEOs. OTHER IMPORTANT GOVERNANCE AND EXECUTIVE COMPENSATION POLICIES Minimum Stock Ownership and Holding Period (Executive Officers) Our Stock Ownership Policy, which is administered by the Compensation Committee, is applicable to the Company's executive officers, including our Executive Chairman and other NEOs, and non-employee directors. These guidelines were adopted to further underscore that management's interests should be aligned with those of our stockholders'. Stock considered owned under the policy includes (i) common shares owned outright by the executive or director; (ii) shares underlying unvested RSUs (but excluding all PRSUs); and (iii) "in-the-money" vested options. Under the policy, the total value of all shares of the Company's common stock held by each executive officer must equal or exceed the following multiples of their respective base salaries:
2023 Payouts Under Our 2021 PRSU Awards
| POSITION | BASE SALARY MULTIPLE | | Executive Chairman | 10.0x | | Chief Executive Officer | 5.0x | | Executive Vice Presidents, including Chief Financial Officer, Chief Administrative Officer and Chief Risk Officer | 3.0x |
2023 Payouts Under Our 2021 PRSU Awards
Each executive officer is required to hold 50% of shares delivered by the Company upon vesting or exercise of equity awards granted under the Company's equity plans, until the applicable stock ownership threshold has been met. Under the policy, each executive officer is expected to meet the guideline within five years of becoming a participant under the policy. As of December 31, 2023, each of our NEOs met the stock ownership requirement. Absolute Hedging and Pledging Prohibitions Our executive officers (including all of our NEOs) and directors are subject to the Company's Insider Trading and Information Policy, which includes a complete prohibition on engaging in any form of speculative hedging transaction involving the Company's equity securities. In addition, our executive officers and directors may not hold Company securities in a margin account or pledge such securities as collateral for a loan.
2023 Payouts Under Our 2021 PRSU Awards
| 2024 Proxy Statement | 45 | NMI Holdings, Inc. (NMIH) |
2023 Payouts Under Our 2021 PRSU Awards
Clawback Policy In 2023, the Compensation Committee adopted a new Clawback Policy, effective September 13, 2023, to comply with the SEC’s recently issued regulations on the recovery of erroneously awarded compensation and NASDAQ Rule 5608. The Clawback Policy provides for the recovery of excess incentive-based compensation paid to any executive officer that is based upon the achievement of financial results for which the Company is required to prepare an accounting restatement. A copy of the Clawback Policy is included as Exhibit 97.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Tax Considerations and Deductibility of Compensation In connection with fiscal year 2023 compensation decisions, while the Compensation Committee considered the potential tax deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, the Compensation Committee also considered delivering competitive levels and forms of compensation. The Compensation Committee reserves the right to establish compensation arrangements that may not be fully tax deductible under applicable tax laws. Severance Plan The Company's Severance Plan provides for payment of cash severance and continuation of healthcare coverage upon certain involuntary terminations of employment by the Company, as specified in the Severance Plan, including a workforce reduction, elimination of an eligible employee's position, lack of work or any other reason approved in the sole discretion of the Company (each, a Severance Termination). The Severance Plan applies to all of the Company's regular full- or part-time employees, including our NEOs. Upon a Severance Termination, subject to certain conditions, including the applicable executive's execution and non-revocation of a separation agreement and release, the Severance Plan provides that an eligible NEO would receive three months' base salary and three months' of health coverage contributions (paid at the active employee rate) for each full year of service, with a maximum benefit of 12 months' base salary and 12 months' of health coverage contributions. Based on their years of service as of December 31, 2023, each of Messrs. Pollitzer, Shuster, Leatherberry and Smith were eligible for 12 months of benefits, and Mr. Mallela was eligible for three months of benefits. As of January 10, 2024, Mr. Mallela was eligible for six months of benefits. See "Compensation of Named Executive Officers — Compensation Discussion and Analysis — Compensation and Related Tables— Potential Payments Upon Termination of Employment or Change in Control as of December 31, 2023 - Severance Termination". Change in Control Severance Plan (CIC Severance Plan) The Company's CIC Severance Plan contemplates that the Compensation Committee will designate from time-to-time, in its sole discretion, the executive officers who are eligible to receive benefits under the CIC Severance Plan. The Compensation Committee has designated each of the Company's NEOs as participants in the CIC Severance Plan. Each executive designated by the Compensation Committee to receive benefits under the CIC Severance Plan has received a "participation notice," confirming the terms of the executive's participation, including (i) a severance multiple for purposes of determining the participant's cash severance amount (the Severance Multiple) and (ii) the period of time during which the participant is eligible for medical insurance premium reimbursements (the COBRA Period). Participants in the CIC Severance Plan are also participants in the Severance Plan, but participants are not entitled to benefits under both plans, to avoid duplication of payments. The Compensation Committee has named each of the Company's NEOs as participants in the CIC Severance Plan at the following Severance Multiples and COBRA Periods:
2023 Payouts Under Our 2021 PRSU Awards
| NEO | SEVERANCE MULTIPLE | COBRA PERIOD | | Adam S. Pollitzer | 2.0x | 24 months | | Bradley M. Shuster | 2.0x | 24 months | | Ravi Mallela | 1.5x | 18 months | | William J. Leatherberry | 1.5x | 18 months | | Robert Smith | 1.5x | 18 months |
2023 Payouts Under Our 2021 PRSU Awards
The CIC Severance Plan requires a "double-trigger" to be eligible for benefits, meaning that upon a participant's termination of employment without "Cause" or for "Good Reason" (in each case as defined in the CIC Severance Plan) within 24 months after a "Change in Control" (as defined in the CIC Severance Plan), or six months before a Change in Control (if the termination within that six month period occurs after a definitive agreement that contemplates such Change in Control is executed and the Change in Control occurs), such participant shall be entitled to the following payments, subject to the participant's execution and non-revocation of a release of claims: •a lump sum cash payment equal to (A) the sum of the participant's base salary and target annual incentive bonus, in each case, as in effect immediately prior to the termination, multiplied by (B) the participant's Severance Multiple;
2023 Payouts Under Our 2021 PRSU Awards
| NMI Holdings, Inc. (NMIH) | 46 | 2024 Proxy Statement |
2023 Payouts Under Our 2021 PRSU Awards
•a lump sum cash payment equal to the cost of monthly healthcare premiums in effect as of the date of termination for the duration of the participant's COBRA Period; •a lump sum cash payment equal to the participant's target annual incentive bonus for the fiscal year in which the participant is terminated, pro-rated through the date of termination as described in the CIC Severance Plan; and •any other earned and vested amounts or benefits that the Company is required to pay or provide or which the participant is eligible to receive from the Company through the date of the termination, to the extent not yet paid or provided.
COMPENSATION AND RELATED TABLES
| NAME AND PRINCIPAL POSITION | YEAR | SALARY ($) | BONUS ($) | STOCK AWARDS ($)(1) | NON-EQUITY INCENTIVE PLAN COMPENSATION ($)(2) | ALL OTHER COMPENSATION ($)(3) | TOTAL ($) | | Adam S. Pollitzer, President and Chief Executive Officer(4) | 2023 | 900,000 | | 4,274,972 | 2,699,550 | 56,965 | 7,931,487 | | | 2022 | 800,000 | | 3,000,000 | 1,620,000 | 54,844 | 5,474,844 | | | 2021 | 591,000 | | 1,122,998 | 1,063,800 | 44,806 | 2,822,604 | | Bradley M. Shuster, Executive Chairman | 2023 | 650,000 | | 949,983 | 1,114,100 | 62,222 | 2,776,305 | | | 2022 | 650,000 | | 949,976 | 877,500 | 59,986 | 2,537,462 | | | 2021 | 650,000 | | 949,992 | 1,170,000 | 54,879 | 2,824,871 | | Ravi Mallela, Chief Financial Officer(5) | 2023 | 500,000 | | 899,980 | 857,000 | 48,565 | 2,305,545 | | | 2022 | 470,000 | | 3,089,991 | 632,022 | 44,908 | 4,236,921 | | William J. Leatherberry, Chief Administrative Officer, General Counsel | 2023 | 570,000 | | 1,168,982 | 976,980 | 48,565 | 2,764,527 | | | 2022 | 545,000 | | 1,267,194 | 735,750 | 45,581 | 2,593,525 | | | 2021 | 509,000 | | 966,966 | 916,200 | 44,806 | 2,436,972 | | Robert Smith, Chief Risk Officer(6) | 2023 | 470,000 | | 892,988 | 805,580 | 48,565 | 2,217,133 | | | 2022 | 450,000 | | 854,973 | 607,500 | 45,581 | 1,958,054 |
CEO PAY RATIO
CEO PAY RATIO Below is: (i) the 2023 annual total compensation of our CEO; (ii) the 2023 annual total compensation of our median employee; (iii) the ratio of the annual total compensation of our CEO to that of our median employee; and (iv) the methodology we used to calculate our CEO pay ratio.
CEO PAY RATIO
| Mr. Pollitzer's 2023 Annual Total Compensation* | $7,931,487 | | Median Employee's 2023 Annual Total Compensation | $163,684 | | CEO to Median Employee Pay Ratio | 48:1 |
CEO PAY RATIO
* Our CEO's 2023 annual total compensation is the same amount disclosed above in the 2023 Summary Compensation Table. METHODOLOGY Our CEO pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules. We explain below our methodology and process for identifying our median employee and calculating our CEO to median employee pay ratio: Determined Employee Population. Our employee population consisted of all full- and part-time employees (other than Mr. Pollitzer) who were employed by the Company on December 31, 2023, the date we selected to identify our employees for purposes of the pay ratio calculation (2023 Population). As of December 31, 2023, our 2023 Population, excluding Mr. Pollitzer, consisted of 237 individuals employed in the United States. Identified the Median Employee. Consistent with Instruction 2 to Item 402(u) of Regulation S-K, we may identify the median employee for purposes of providing pay ratio disclosure once every three years and calculate and disclose total compensation for that employee each year; provided that, during the last completed fiscal year, there has been no change in the employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our 2023 CEO pay ratio disclosure. We reviewed the changes in our employee population and employee compensatory arrangements and determined there has been no change in our employee population or employee compensatory arrangements that would significantly impact the 2023 CEO pay ratio disclosure and ultimately require us to identify a new median employee for 2023. Accordingly, the Company is permitted to use the same median employee as was used in fiscal 2022. Our methodology to confirm the median employee is consistent with last year's. We compiled compensation information for each employee in the 2023 Population for full fiscal year 2023 using a consistently applied compensation measure in accordance with SEC rules. To confirm the median employee, we used the following elements of compensation: 2023 annual cash compensation (i.e., salary, or wages, as applicable); cash bonuses and commissions earned and/or paid in 2023 and the grant date fair value of equity awards granted in
CEO PAY RATIO
| 2024 Proxy Statement | 55 | NMI Holdings, Inc. (NMIH) |
CEO PAY RATIO
2023. We included bonuses, commissions, equity grants and the value of other benefits in our calculation, as these compensation components are widely distributed across our workforce. Calculated CEO Pay Ratio. We calculated our median employee's 2023 annual total compensation according to the SEC's instructions for preparing the Summary Compensation Table, including the value of all other compensation earned. We then calculated our CEO's 2023 annual total compensation using the same approach to determine the pay ratio shown above. COMPARABILITY We believe the ratio above is a reasonable estimate, based on the methodology we have described. Given the different methodologies, exclusions, estimates and assumptions other companies may use to calculate their respective CEO pay ratios, as well as differences in employment and compensation practices between companies, the estimated ratio reported above may not be comparable to that reported by other companies. PAY VERSUS PERFORMANCE TABLE
CEO PAY RATIO
| Year (1) | Summary Compensation Table Total for PEO (2) | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs (2) | Average Compensation Actually Paid to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based On: | | Net Income (millions) | Book Value per Share (4) | | | | | | | Total Shareholder Return | Peer Group Total Shareholder Return (3) | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | $7,931,487 | $12,238,436 | $2,515,877 | $3,829,745 | $89 | $112 | $322.1 | $25.54 | | 2022 | $5,474,844 | $5,004,886 | $2,831,491 | $2,750,584 | $63 | $80 | $292.9 | $21.76 | | 2021 | $4,970,949 | $4,032,083 | $2,605,661 | $2,534,488 | $66 | $91 | $231.1 | $18.23 | | 2020 | $3,877,097 | $2,139,912 | $2,286,214 | $508,046 | $68 | $86 | $171.6 | $15.45 |
CEO PAY RATIO
1.Our PEO and Non-PEO NEOs for each applicable year were as follows: •2023: Mr. Pollitzer served as our PEO and Messrs. Shuster, Mallela, Leatherberry and Smith served as our non-PEO NEOs. •2022: Mr. Pollitzer served as our PEO and Messrs. Shuster, Mallela, Leatherberry and Smith served as our non-PEO NEOs. •2021: Ms. Claudia Merkle served as our PEO and Messrs. Shuster, Pollitzer (as our Chief Financial Officer), Leatherberry, and Patrick Mathis served as our non-PEO NEOs. •2020: Ms. Merkle served as our PEO and Messrs. Shuster, Pollitzer (as our Chief Financial Officer), Leatherberry, and Patrick Mathis served as our non-PEO NEOs. 2.The "2023 Summary Compensation Table" totals reported for the PEO and the average of the Non-PEO NEOs for each year were subject to the following adjustments as set forth in the below table, per Item 402(v)(2)(iii) of Regulation S-K to calculate “compensation actually paid”. We did not make any assumptions in valuation that differs materially from those disclosed as of the grant date of such equity awards with respect to the amounts added relative to stock and option awards.
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| Adjustments to Determine "Compensation Actually Paid” | | | | | | | | | | | 2023 | | 2022 | | 2021 | | 2020 | | | | PEO (Mr. Pollitzer) ($) | Average for Non-PEO NEOs ($) | PEO (Mr. Pollitzer) ($) | Average for Non-PEO NEOs ($) | PEO (Ms. Merkle) ($) | Average for Non-PEO NEOs ($) | PEO (Ms. Merkle) ($) | Average for Non-PEO NEOs ($) | | Summary Compensation Table Total | 7,931,487 | 2,515,877 | 5,474,844 | 2,831,491 | 4,970,949 | 2,605,661 | 3,877,097 | 2,286,214 | | Adjustments | | | | | | | | | | Deduction for Grant Date Fair Value of Awards Granted During Year | (4,274,972) | (977,983) | (3,000,000) | (1,540,534) | (2,315,962) | (991,737) | (2,099,940) | (1,012,344) | | Adjustment for Fair Value of Equity Calculated Using SEC Methodology (a) | | | | | | | | | | (i) Year-End Fair Value of Outstanding and Unvested Equity Awards Granted in the Applicable Year | 5,480,828 | 1,253,846 | 2,427,410 | 1,246,502 | 1,100,082 | 942,150 | 1,534,311 | 739,664 | | (ii) Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | 2,582,252 | 818,534 | 13,051 | 72,727 | 258,291 | 22,031 | (715,470) | (588,813) | | (iii) Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | 518,841 | 219,471 | 89,581 | 140,398 | 18,723 | (43,617) | (456,086) | (916,675) | | Compensation Actually Paid | 12,238,436 | 3,829,745 | 5,004,886 | 2,750,584 | 4,032,083 | 2,534,488 | 2,139,912 | 508,046 |
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a.Compensation Actually Paid excludes the Stock Awards column from the relevant fiscal year’s "Summary Compensation Table" total. The Rule 402(v) Equity Values instead reflect the aggregate of the following components, where applicable to us: (i) the fair value as of the end of the listed fiscal year of unvested equity awards granted in that year; (ii) the change in fair value during the listed fiscal year of equity awards granted in prior years that remained outstanding and unvested at the end of the listed fiscal year; and (iii) the change in fair value during the listed fiscal year through the vesting date of equity awards granted in prior years that vested during the listed fiscal year. Equity values are calculated in accordance with ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant. The Company does not maintain, nor do the NEOs participate in, any defined benefit or actuarial pension plans for which adjustments were required pursuant to Item 402(v). 3.The peer group used by the Company consists of the companies, including Essent Group Ltd., MGIC Investment Corporation, and Radian Group Inc., used in the Company’s performance graph as required by Item 201(e) of Regulation S-K and reported in Part II, Item 5 of its annual report on Form 10-K for the fiscal year ended December 31, 2023. 4.BVPS (excluding net unrealized gains and losses) is a non-GAAP measure, and is defined as total shareholder's equity, excluding the after-tax effects of unrealized gains and losses on investments, divided by shares outstanding. For more detail, please see Appendix B.
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Relationship Between "Compensation Actually Paid" and Performance The following graphs show the relationship between compensation actually paid to our executives in the last four years from 2020 through the end of 2023 as disclosed in the Pay vs. Performance table, and each of the following: the Company's cumulative TSR, the peer group cumulative TSR, the Company's net income, and the BVPS.
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Tabular List of Most Important Financial Performance Measures Below are the financial performance measures that we believe are the most important financial performance measures used to link NEO compensation to Company performance. For more information, please see “Compensation of Named Executive Officers – Compensation Discussion and Analysis” and Appendix B in this proxy statement for a reconciliation of the below financial measures to the most directly comparable GAAP measure.
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| 2023 Most Important Performance Metrics | | BVPS | | Return on Equity | | Net Operating Income |
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| 2024 Proxy Statement | 59 | NMI Holdings, Inc. (NMIH) |
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| Item 2 Advisory Approval of Our Executive Compensation |
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Under Section 14A of the Exchange Act, this "say-on-pay" proposal gives our stockholders the opportunity to approve on a non-binding, advisory basis, the compensation of our NEOs as described in detail above under the heading "Compensation of Named Executive Officers." We have implemented strong governance and compensation practices. As described in this proxy statement, our executive compensation programs are designed to attract, retain and motivate our NEOs, who are critical to our success, while maximizing stockholder value creation over the long-term. In addition to weighting NEO compensation towards performance-based, variable compensation, we also (i) utilize a fully independent compensation committee and compensation consultant in overseeing our NEOs' compensation; (ii) prohibit hedging or other speculative transactions in our stock; (iii) impose a compensation clawback policy; (iv) impose stock ownership and share retention requirements; and (v) encourage and solicit feedback regarding our executive compensation program. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described above. Accordingly, we strongly believe you should approve our NEOs' compensation paid in 2023. Although the say-on-pay vote is advisory, we value stockholder input, and the Compensation Committee will review and consider the voting results when making future decisions regarding the Company's compensation philosophy and plan design. STOCKHOLDER VOTE REQUIRED Advisory approval of the compensation of our NEOs requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote at the Annual Meeting.
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| The Board unanimously recommends that you vote FOR the advisory approval of our executive compensation. |
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| Item 3 Ratification of Appointment of Independent Auditors |
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The Audit Committee has appointed the accounting firm of BDO USA, P.C. (BDO) as our independent registered public accounting firm for the year ending December 31, 2024. As a matter of good corporate governance, the Board is seeking stockholder ratification of the appointment even though ratification is not legally required. If stockholders do not ratify this appointment, the Audit Committee will take this into consideration in its future selection of an independent registered public accounting firm. A representative of BDO is expected to attend the Annual Meeting and will be given an opportunity to make a statement and respond to appropriate questions. AUDIT AND OTHER FEES For the years ended December 31, 2023 and December 31, 2022, BDO billed us fees for services of the following types:
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| AUDIT AND OTHER FEES | 2023 ($) | 2022 ($) | | Audit Fees | 1,046,620 | 1,000,437 | | Audit-Related Fees | — | 13,000 | | Tax Fees | — | — | | All Other Fees | — | — | | Total Audit and Other Fees | 1,046,620 | 1,013,437 |
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Audit Fees for 2023 and 2022 include BDO's review of our quarterly GAAP financial statements, audit of our year-end financial statements on a GAAP and statutory basis, review of SEC filings and expenses incurred by BDO in connection with providing services to NMI under the terms of the engagement. Audit-Related Fees are generally fees for assurance and related services (e.g., due diligence services) that are reasonably related to the performance of the audit or review of the financial statements and which are not reported under "Audit Fees." Audit-Related Fees for 2022 also included professional services rendered in connection with reinsurance transactions. The Audit Committee is responsible for pre-approving audit services and all permitted non-audit services to be performed by the independent auditor that will cost in excess of $30,000. The Audit Committee is also responsible for establishing policies and procedures for the engagement of the independent auditor to provide permitted audit and non-audit services. If we desire the independent auditor to provide an audit or non-audit service that has not been pre-approved, the service may be presented for pre-approval by the Audit Committee at its next meeting, or for services that arise between Audit Committee meetings, such pre-approval may be delegated to the Chair of the Audit Committee or a sub-committee of the Audit Committee, with any such delegated approval reported to the Audit Committee at its next meeting. The Audit Committee pre-approved all of the services that BDO provided in 2023. STOCKHOLDER VOTE REQUIRED The ratification of the appointment of BDO USA, P.C. as our independent registered public accounting firm for the year ending December 31, 2024 requires the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote at the Annual Meeting.
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| The Board unanimously recommends that you vote FOR the ratification of the appointment of BDO USA, P.C. as the Company's independent registered public accounting firm for the year ending December 31, 2024. |
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| Item 4 Approval of an Amendment and Restatement of our Certificate of Incorporation to Provide Exculpation for Certain Officers |
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The Board has approved an amendment and restatement of our Second Amended and Restated Certificate of Incorporation (Current Certificate) and is submitting a proposal for approval of the Third Amended and Restated Certificate (Amended Certificate) by our stockholders. We are asking you to approve of the Amended Certificate, which would provide for exculpation of our officers to the fullest extent permitted under Delaware law, as well as other immaterial changes to the Current Certificate described below, including to eliminate inoperative or historical provisions and to update certain other miscellaneous provisions. BACKGROUND Effective August 1, 2022, the state of Delaware, our state of incorporation, enacted legislation that enables Delaware corporations, including us, to limit the liability of certain of their officers in limited circumstances. Specifically, Section 102(b)(7) of the Delaware General Corporation Law (DGCL) was amended to permit Delaware corporations to include in their certificates of incorporation limitations of monetary liability for certain officers. Previously, Section 102(b)(7) of the DGCL only permitted exculpation of directors for breach of the fiduciary duty of care. Article X, Section 1 of the Current Certificate currently provides for the exculpation of directors but does not include a provision for the exculpation of officers. Consistent with Section 102(b)(7) of the DGCL, as amended, our proposed officer exculpation provision of the Amended Certificate: •authorizes us to provide for exculpation of the following officers: (i) our president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer, (ii) “named executive officers” identified in our SEC filings, and (iii) other individuals who have agreed to be identified as officers of the Company; •only permits limiting the liability for breaches of the fiduciary duty of care for direct claims (including class actions); •does not eliminate our officers’ monetary liability for breach of fiduciary duty claims brought by us or for derivative claims brought by stockholders in our name; and •does not permit the elimination of liability of officers for: (i) any breach of the duty of loyalty to us or our stockholders; (ii) any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; or (iii) any transaction from which the officer derived an improper personal benefit. The Current Certificate also contains certain inoperative and historical provisions, and contains certain other related miscellaneous provisions, which our Board is proposing to remove in the Amended Certificate, as it believes such provisions and their removal do not substantively affect stockholder rights. Specifically, •Article III is being amended to remove historical provisions that apply only if we did not receive GSE approval. We received GSE approval in 2013. •Article IV is being amended to remove provisions relating to the Class B Non-Voting Common Stock (the Class B Stock) and make related conforming changes. We have not issued, nor do we intend to issue, such Class B Stock, and accordingly we intend to retire the Class B Stock prior to the filing of the Amended Certificate. •Article V is being amended to remove provisions which terminated upon our receiving GSE approval in 2013. •Article XI is being removed as its provisions terminated as of the date of the public offering of our Class A common stock on a national exchange in 2013.
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RATIONALE FOR THE AMENDED CERTIFICATE Our Board desires to streamline the Current Certificate, provide exculpation from liability for our officers to the extent permitted by the DGCL, remove historical provisions that are no longer applicable, and update certain other related miscellaneous provisions related to such revisions. With respect to officer exculpation, our Board believes that such protection would better position us to attract and retain qualified and experienced officers. Officers must regularly navigate important decisions, often in reaction to time-sensitive situations and opportunities. These decisions may carry the potential for investigations, claims, lawsuits, or other legal actions seeking to assign blame after the fact, particularly given the current litigious landscape, regardless of their validity. Restricting the financial repercussions of such litigation to our Company would enable officers to exercise their business judgment effectively in advancing the interests of stockholders. In the absence of such protection, such individuals might be deterred from serving as officers due to exposure to personal liability and the risk of incurring substantial expense in defending lawsuits, regardless of merit. Accordingly, aligning the protections available to our officers with those available to our directors to the extent such protections are available under the DGCL empowers our officers to exercise their business judgment in furtherance of stockholder interests without the potential for distraction posed by the risk of personal liability. Taking into account the narrow class and type of claims for which officers would be exculpated, and the benefits our Board believes would accrue to us and our stockholders—enhancing our ability to attract and retain talented officers and potentially reducing future litigation costs associated with frivolous lawsuits—our Board determined that the Amended Certificate is in our best interests and of our stockholders. The aforementioned description is a summary only and is qualified in its entirety by reference to the Amended Certificate, which is attached as Appendix A to this proxy statement and is marked to show the changes described above. ADDITIONAL INFORMATION If this Item 4 is not approved by stockholders representing a majority of the shares of our common stock outstanding as of the record date, then the Amended Certificate will not be approved and will not be implemented or become effective. The vote on the Amended Certificate is binding. Approval of Item 4 will constitute approval for all purposes under the DGCL of the Amended Certificate, as set forth in Appendix A to this proxy statement. If this Item 4 is approved, we intend to file the Amended Certificate with the Secretary of State of the State of Delaware as soon as practicable following stockholder approval of the Amended Certificate, which will become effective at the time of that filing. The Board may, at any time prior to the effectiveness of the Amended Certificate, abandon it without further action by the stockholders or the Board (even if the requisite stockholder vote is obtained). STOCKHOLDER VOTE REQUIRED The approval of the amendment and restatement of our Current Certificate requires the affirmative vote of a majority of the shares outstanding as of the record date.
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| The Board unanimously recommends that you vote FOR the approval of the Amended Certificate to streamline the Current Certificate, incorporate new Delaware law provisions regarding officer exculpation, remove historical provisions that are no longer applicable, and update certain other related miscellaneous provisions related to such changes. |
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| 2024 Proxy Statement | 63 | NMI Holdings, Inc. (NMIH) |
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| Appendix A |