DEF 14A of Bowhead Specialty Holdings Inc.
Filed Mar 19, 2025 · FY20240002002473-25-000017
PROPOSAL 1 – ELECTION OF DIRECTORS
PROPOSAL 1 – ELECTION OF DIRECTORS Our board of directors currently consists of ten members. In accordance with our amended and restated certificate of incorporation (“Certificate of Incorporation”), our board of directors is divided into three classes with staggered three-year terms. Only one class of directors is elected at each annual meeting of stockholders, with the other classes continuing for the remainder of their respective three-year terms. Our board of directors is designated as follows: •The Class I directors are Stephen Sills, Tom Baker, Matthew Botein and Troy Van Beek, and their terms will expire at the Annual Meeting; •The Class II directors are Zhak Cohen, David Foy and David Holman, and their terms will expire at the 2026 annual meeting of stockholders; and •The Class III directors are Angela Brock-Kyle, Fabian J. Fondriest and Dr. Ava Schnidman, and their terms will expire at the 2027 annual meeting of stockholders. At each annual meeting of stockholders, upon the expiration of the term of a class of directors, each director in the class, or the successor to each such director in the class, is elected to serve from the time of election and qualification until the third annual meeting following his or her election and until his or her successor is duly elected and qualified, in accordance with our Certificate of Incorporation. Any increase or decrease in the number of directors are distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. Our board of directors is responsible for nominating members for election to the board and for filling vacancies on the board that may occur between annual meetings of stockholders. The Compensation, Nominating and Corporate Governance Committee of the board (the “CNCG Committee”) is responsible for identifying, screening and recommending candidates to the board. When formulating its board membership recommendations, the CNCG Committee also considers recommendations from stockholders and others as it deems appropriate. The CNCG Committee periodically reviews and recommends for approval by the board criteria for membership on the board and the skills and characteristics required of board members. Among the qualifications considered in the selection of director candidates, the CNCG Committee considers, among others, experience, skills, expertise, diversity, personal and professional integrity, character, business judgment, time availability in light of other commitments, dedication, potential conflicts of interest and such other relevant factors that the CNCG Committee considers appropriate in the context of the needs of the board. When considering potential nominees recommended by stockholders, the CNCG Committee follows the same board membership qualifications evaluation and nomination procedures discussed in this section.
Class I Director Nominees for Election – Term Expiring 2028
Class I Director Nominees for Election – Term Expiring 2028 The current term of the Class I directors will expire at the Annual Meeting. Our board of directors nominated each of Stephen Sills, Tom Baker, Matthew Botein and Troy Van Beek for election at the Annual Meeting as a Class I director to hold office until the annual meeting of stockholders to be held in 2028 and until his or her successor is duly elected and qualified or until his or her earlier death, resignation, disqualification, or removal. The nominees have consented to serve a term as Class I directors if elected. Should any of the nominees become unable to serve for any reason prior to the Annual Meeting, subject to the terms of the Stockholders Agreement (as defined herein), the board of directors may designate a substitute nominee, in which event the persons named in the enclosed proxy will vote for the election of such substitute nominee. See “Certain Relationships and Related Person Transactions – Stockholders Agreement” for additional information regarding the Stockholders Agreement. Set forth below are biographies of each of the Class I directors standing for election at the Annual Meeting: Stephen Sills. Stephen Sills, 76, has served as our Chief Executive Officer, President and as a member of our board of directors since September 2020. Mr. Sills served as a member of the board of managers of Bowhead Insurance GP, LLC ("BGP"), the general partner of Bowhead Insurance Holdings LP (“BIHL”), the former soleshareholder of the Company, prior to its initial public offering, from October 2020 until December 2024. Mr. Sills founded Bowhead in September 2020. Prior to founding Bowhead, Mr. Sills was retired from 2019 to September 2020. From 2013 through 2019, Mr. Sills served as the Chairman and Chief Executive Officer of CapSpecialty and Professional Risk Management Services, Inc. Mr. Sills founded Darwin in 2003 and served as Chairman, President and Chief Executive Officer of Darwin from 2003 through 2008. Prior to founding Darwin, Mr. Sills founded Executive Risk in 1987, where he served as Chief Underwriting Officer and later as Chief Executive Officer until its sale to the Chubb Corporation (“Chubb”) in 1999, after which he was an Executive Vice President of Chubb until 2001. Mr. Sills currently serves on the board of directors of the Trusted Resource Underwriters, the attorney-in-fact for Trusted Resource Underwriters Exchange, a Florida reciprocal property and casualty insurer (“TRU”). Mr. Sills previously served as a member of the board of the Connecticut Children’s Medical Center. Mr. Sills also served as president of the Professional Liability Underwriting Society (“PLUS”) and was awarded its Founders’ Award. This award recognizes a member who has made a significant contribution to PLUS. Mr. Sills received a B.S. in Economics from the University of Tennessee. We believe Mr. Sills is qualified to serve as a member of our board of directors because of his experience building and leading our business, his insight into corporate matters as our Chief Executive Officer, his extensive leadership background and his extensive experience in the insurance industry. Tom Baker. Tom Baker, 66, has served as a member of our board of directors since May 2024. Mr. Baker has served as the William Maul Measey Professor at the University of Pennsylvania, where he teaches courses and conducts research related to insurance business, law and regulation, at the Carey School of Law and the Wharton School since July 2008. Mr. Baker co-founded Picwell, Inc., a health data analytics company, in 2012 and served as its Chief of Executive Officer from January 2013 to January 2014, and as a director from June 2014 to June 2018. In addition, Mr. Baker has run Tom Baker Consulting, an active insurance consulting business since 1994 and has served as the Reporter of the American Law Institute's Restatement of the Law Liability Insurance since 2000. Mr. Baker received a B.A. in Sociology from Harvard College and a J.D. from Harvard Law School. We believe that Mr. Baker is qualified to serve on our board of directors due to his extensive legal and business experience. Matthew Botein. Matthew B. Botein, 51, has served as the Chairperson of our board of directors since May 2024. Mr. Botein served as a member of the board of managers of BGP from October 2020 to December 2024. Mr. Botein is a co-founder of Gallatin Point, a private investment firm and has served as a Managing Partner of Gallatin Point since 2017. Prior to founding Gallatin Point, Mr. Botein served as co-head and Chief Investment Officer for Alternatives of BlackRock Alternative Investors (“BAI”) from 2009 until 2017 and as an advisor to BAI from 2017 through 2020. Prior to joining BAI, Mr. Botein served as a Managing Director and member of the Management Committee at Highfields Capital Management, a Boston-based private investment partnership. He also served as a member of the private equity departments at The Blackstone Group and Lazard Frères & Co. LLC. Mr. Botein currently serves on the board of directors of James River Group Holdings, Ltd. (Nasdaq: JRVR), IDB Bank New York, Tower Hill Risk Management, LLC, TRU, Insurance Supermarket, Inc., Fortuna Holdings Ltd. and Northeast Bancorp (Nasdaq: NBN). Mr. Botein previously served on the board of directors of PennyMac Financial Services (NYSE: PFSI), Aspen Insurance Holdings (NYSE: AHL), CoreLogic Inc. (NYSE: CLGX), First American Corporation (NYSE: FAF), PennyMac Mortgage Investment Trust (NYSE: PMT). Mr. Botein also serves on the Board of Managers of Beth Israel Lahey (formerly CareGroup/CJP). Mr. Botein received a B.A. (magna cum laude) from Harvard College and a M.B.A degree (with high distinction) from Harvard Business School, where he was awarded Baker and Loeb scholarships. We believe that Mr. Botein is qualified to serve on our board of directors due to his extensive financial leadership and management experience. Troy Van Beek. Troy Van Beek, 42, has served as a member of our board of directors since May 2024. Mr. Van Beek served as a member of the board of managers of BGP from March 2024 until December 2024. Mr. Van Beek has served as the Chief Financial Officer and Treasurer of American Family Mutual Insurance Company, S.I. (“AFMIC” and collectively with its subsidiaries “AmFam”) since January 2022. From July 2021 through December 2021, Mr. Van Beek served as the President of Homesite Insurance Inc. From March 2020 through December 2021, Mr. Van Beek also served as the Chief Financial Officer of Homesite Insurance Inc. and American Family Direct. Mr. Van Beek previously served as the Finance Vice President of AmFam from March 2015 through March 2020. Mr. Van Beek received a B.A. and an M.S. in Accounting from the University of Wisconsin – Madison. We believe that Mr. Van Beek is qualified to serve on our board of directors due to his extensive insurance, financial leadership and management experience.
Required Vote
Required Vote Each director will be elected by a plurality of the votes cast by the shares present in person, or represented by proxy, and entitled to vote. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE ABOVE NOMINEES FOR ELECTION AS CLASS I DIRECTORS TO THE BOARD.
Class II and III Directors Continuing in Office
Class II and III Directors Continuing in Office Set forth below are biographies of the other directors continuing in office: Angela Brock-Kyle. Angela Brock-Kyle, 65, has served as a member of our board of directors since May 2024. Ms. Brock-Kyle served as a member of the board of managers of the General Partner from December 2020 until December 2024. Ms. Brock-Kyle has served as a member of the board of directors of Hunt Companies Inc. since February 2019 and as a trustee on the board of the Guggenheim Funds since 2016 where she chaired the risk and compliance committee. Ms. Brock-Kyle previously served as a member of the board of directors and chair of the audit committee of Infinity Property & Casualty Corporation. Ms. Brock-Kyle received a B.S. in finance and marketing from California State University, East Bay and J.D. and M.B.A. degrees from the University of California, Los Angeles. We believe that Ms. Brock-Kyle is qualified to serve on our board of directors due to her extensive financial, accounting and business leadership experience. Zhak Cohen. Zhak Cohen, 40, has served as a member of our board of directors since May 2024. Mr. Cohen has served as a member of the board of managers of BGP from October 2020 until December 2024. Mr. Cohen is a Managing Director and as a member of the investment committee at Gallatin Point, and has worked at the firm since December 2017. Prior to joining Gallatin Point, Mr. Cohen served as a Vice President in the Alternative Capital Team at XL Group from May 2014 to December 2017. Mr. Cohen has served on the board of Victor Insurance Exchange since June 2023, and TRU since January 2024. From November 2018 until October 2024, Mr. Cohen served on the board of Phoenix Holdings Ltd. (TLV: PHOE) and its affiliate, The Phoenix Insurance Company Ltd. Mr. Cohen received a B.A. (summa cum laude, phi beta kappa) in Philosophy from Brandeis University and a J.D. from the University of Pennsylvania Law School. We believe that Mr. Cohen is qualified to serve on our board of directors due to his extensive investment and management experience. Fabian J. Fondriest. Fabian J. Fondriest, 63, has served as a member of our board of directors since May 2024. Mr. Fondriest served as a member of the board of managers of BGP from October 2020 to March 2024. Mr. Fondriest served on the board of directors of American Family Insurance Mutual Holding Company from 2017 through 2023. Mr. Fondriest retired as President of American Family Insurance Direct as of January 2022. Prior to his retirement, Mr. Fondriest served in various roles at AmFam since 2013, including as President of American Family Insurance Direct from 2016 to January 2022 and Chief Operating Officer of American Family Insurance Direct from 2014 to 2015. Mr. Fondriest also served as the Chief Executive Officer at Homesite Group Incorporated from 2001 to January 2022. Mr. Fondriest currently serves as the Chairman of the board of directors of TRU. Mr. Fondriest received a B.A. in Economics from Harvard College and an M.B.A. from Harvard Business School. We believe that Mr. Fondriest is qualified to serve on our board of directors due to his extensive financial leadership and management experience. David Foy. David Foy, 58, has served as a member of our board of directors since May 2024. Mr. Foy has served as a member of the board of managers of BGP from September 2022 until December 2024. Mr. Foy has served as a senior advisor to Bain Capital Insurance since October 2021. From May 2017 to October 2021, Mr. Foy served as an independent consultant for the insurance industry. Prior to this, Mr. Foy served as Executive Vice President and Chief Financial Officer of White Mountains Insurance Group from March 2003 to May 2017. Mr. Foy also serves as a director on the boards of Federal Life Insurance Company and Enhance Health. Mr. Foy received a B.S. in applied statistics from the Rochester Institute of Technology and is a Fellow in the Society of Actuaries. We believe that Mr. Foy is qualified to serve on our board of directors due to his extensive insurance, financial leadership and management experience. David Holman. David Holman, 64, has served as a member of our board of directors since May 2024. Since 2024, Mr. Holman has served as a corporate governance consultant. Mr. Holman served as a member of the board of managers of BGP from October 2020 until December 2024. Mr. Holman retired from AFMIC effective April 3, 2024. From October 2021 through December 2023, Mr. Holman served as the Chief Administration Officer and Corporate Secretary of AFMIC. From January 2014 through October 2021, Mr. Holman served as Chief Strategy Officer and Corporate Secretary of AFMIC. From November 2011 to January 2014, Mr. Holman served as Chief Legal Officer of AFMIC. Mr. Holman received a B.A. in Economics and Political Science from St. Olaf College and a J.D. from Hamline University. We believe that Mr. Holman is qualified to serve on our board of directors due to his extensive insurance, financial leadership and management experience. Dr. Ava Schnidman. Dr. Ava Schnidman, 73, has served as a member of our board of directors since October 2024. Dr. Schnidman founded and has served as President of Schnidman Partners Inc. since 2014. Schnidman Partners is a consulting firm that provides executive leadership consulting services to Fortune 500 companies. Prior to founding Schnidman Partners Inc., Dr. Schnidman founded and served as a founding partner at Deltech Consulting Group LTD from 1983 to 2014. Deltech Consulting Group LTD was a consulting firm that provided consulting services to large corporations on large organizational change, mergers and acquisitions and an array of organization development issues. Dr. Schnidman received a B.A. in English from the University of Rochester, an M.B.A. from the University of Connecticut, and her Ph.D. in Organizational Psychology from Columbia University.
Director Compensation
Director Compensation On May 22, 2024, the Company adopted the Bowhead Specialty Holdings Inc., Non-Employee Director Compensation Policy (the “NED Compensation Policy”), which provides for an annual compensation package pursuant to which, the non-employee director may elect to receive either (i) $80,000 in cash and restricted stock units (“RSUs”) with a grant date value of $80,000, or (ii) RSUs with a grant date value of $160,000. Additionally, the Audit Committee Chair will receive an annual cash retainer of $50,000. The annual RSU award will vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of shareholders, and directors are required to hold such interests for the duration of their service on the board. Members of the board of directors who are employed by the Company or who are nominated by AFMIC and GPC Fund are not eligible to receive any cash fees or other form of compensation in connection with their service on the board. The following table provides the compensation paid to the non-employee directors of the Company for the year ended December 31, 2024:
Director Compensation
| Name | Fees Earned or Paid in Cash | Stock Awards(8) | All Other Compensation | Total | | Tom Baker(1) | $80,000 | $79,985 | $— | $159,985 | | Troy Van Beek | $— | $— | $— | $— | | Matthew Botein | $— | $— | $— | $— | | Angela Brock-Kyle(2) | $— | $159,987 | $— | $159,987 | | Zhak Cohen | $— | $— | $— | $— | | Fabian J. Fondriest(3) | $— | $459,986 | $— | $459,986 | | David Foy(4) | $130,000 | $79,985 | $— | $209,985 | | David Holman | $— | $— | $— | $— | | Dr. Ava Schnidman(5) | $80,000 | $— | $— | $80,000 | | Jack Stein(6) | $— | $— | $— | $— |
Director Compensation
(1)Mr. Baker elected to receive an annual compensation package of $80,000 in cash and RSUs with a grant date value of $80,000. (2)Ms.Brock-Kyle elected to receive an annual compensation package of RSUs only with a grant date value of $160,000. (3)On May 22, 2024, Mr. Fondriest received a one-time grant of RSUs with a grant date value equal to $300,000 in consideration of his past and future services. The RSUs will vest over four years, with 20% of such RSUs vesting on each of the first, second and third anniversaries of the grant date and the remaining 40% vesting on the fourth anniversary of the grant date. Mr. Fondriest will be required to hold such interests for the duration of his service on the board. In addition, Mr.Fondriest elected to receive an annual compensation package of RSUs only with a grant date value of $160,000. (4)Mr. Foy received an annual cash retainer of $50,000 for his position as Audit Committee Chair and elected to receive an annual compensation package of $80,000 in cash and RSUs with a grant date value of $80,000. (5)Dr. Ava Schnidman was appointed to the Board on October 30, 2024. Dr. Schnidman did not receive her compensation for service on the Board for fiscal year 2024 under the Bowhead Specialty Holdings Inc. NED Compensation Policy, and in lieu of such compensation, was provided a lump sum cash payment of $80,000 payable in advance for her service on the Board for the period between October 30, 2024 through the first annual meeting of stockholders of the Company. Following the 2025 annual meeting, Dr. Schnidman will receive the annual cash and equity compensation as set forth in the NED Compensation Policy. (6)Jack Stein served as a member of the Board through October 25, 2024. (7)Amounts reflect the grant date fair value of restricted stock units, determined in accordance with ASC Topic 718. The following table provides information regarding the aggregate number of equity awards granted to our non-employee directors that were outstanding as of December 31, 2024:
Director Compensation
| Name | Restricted Stock Units at Year-End | | Tom Baker | 4,705 | | Troy Van Beek | — | | Matthew Botein | — | | Angela Brock-Kyle | 9,411 | | Zhak Cohen | — | | Fabian J. Fondriest | 27,058 | | David Foy | 4,705 | | David Holman | — | | Ava Schnidman | — | | Jack Stein | — |
Summary Compensation Table for 2024
Summary Compensation Table for 2024 The following table provides information regarding the compensation earned by our named executive officers for the years ended December 31, 2024 and December 31, 2023.
Summary Compensation Table for 2024
| Name and Principal Position | Year | Salary ($) | Bonus ($)(2) | Stock Awards ($)(3) | All Other Compensation ($)(6) | | Total ($) | | | Stephen Sills | 2024 | $669,153 | $605,168 | $3,369,274(4) | | 35,338 | | 4,678,933 | | Chief Executive Officer | 2023 | $643,750 | $713,790 | $— | | 35,407 | | 1,392,947 | | Brad Mulcahey | 2024 | $312,386 | $282,519 | $297,993 | | 39,617 | | 932,515 | | Chief Financial Officer | 2023 | $303,973 | $251,432 | $117,251(5) | | 39,605 | | 712,261 | | David Newman | 2024 | $522,902 | $449,688 | $382,993 | | 13,936 | | 1,369,519 | | Chief Underwriting Officer | 2023 | $522,820(1) | $533,610 | $— | | — | | 1,056,430 |
Summary Compensation Table for 2024
__________________ (1)Mr. Newman served as a consultant during 2023 and his salary figure represents monthly consulting fees he received during such time. (2)Represents a discretionary bonus awarded to each named executive officer at their respective target bonus amounts. (3)Amounts for 2024 reflect the grant date fair value of restricted stock units (“RSUs”), and for Mr. Sills, both RSUs and PSUs, in accordance with ASC Topic 718. For additional information regarding assumptions used to calculate the value of such awards, please refer to Note 10 to our consolidated financial statements for the fiscal year ended December 31 2024, included in our Annual Report on Form 10-K as filed with the SEC on February 27, 2025. (4)For Mr. Sills, the 2024 stock award includes the grant date fair value of PSUs at target level of achievement. Assuming the maximum level of achievement under the PSUs, the grant date fair value of such award would be $1.6 million. (5)For Mr. Mulcahey, the amount for 2023 reflects the grant date fair value of Class P Interests in BIHL, granted on May 16, 2023, in accordance with ASC Topic 718. Such Class P Interests were canceled in connection with the dissolution of BIHL and are no longer outstanding. (6)The following table sets forth the amount of each other item of compensation paid to, or on behalf of, our named executive officers in 2024 reported in the “All Other Compensation” column. Amounts for each other item of compensation are valued based on the aggregate incremental cost.
Summary Compensation Table for 2024
| Name | Company 401(k) Contribution ($) | Health Disability and Basic Life Insurance ($) | Cell Phone and Internet ($) | Spousal Travel ($) | Total ($) | | Stephen Sills | $13,800 | $17,450 | $4,088 | $— | $35,338 | | Brad Mulcahey | $12,972 | $25,805 | $840 | $— | $39,617 | | David Newman | $— | $5,960 | $— | $7,976 | $13,936 |
Outstanding Equity Awards at 2024 Fiscal Year-End
Outstanding Equity Awards at 2024 Fiscal Year-End The following table shows all outstanding equity awards held by NEOs as of December 31, 2024.
Outstanding Equity Awards at 2024 Fiscal Year-End
| Stock Awards | | | | | | | Name | Date of Grant | Number of Shares or Units of Stock That Have Not Vested(1) (#) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | Equity Incentive Plan Awards: # of Unearned Shares or Units that Have Not Vested(3) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Units of Stock That Have Not Vested(2) ($) | | Stephen Sills | 5/22/2024 | 121,764 | $4,325,057 | — | $— | | | 5/22/2024 | — | $— | 129,411 | $4,596,679 | | Brad Mulcahey | 5/22/2024 | 17,529 | $622,630 | — | $— | | David Newman | 5/22/2024 | 22,529 | $800,230 | — | $— |
Outstanding Equity Awards at 2024 Fiscal Year-End
(1)This column reflects information regarding RSUs held by our named executive officers that were outstanding and unvested as of December 31, 2024. Restricted stock units generally vest over four years with 20% vesting on the first, second and third year anniversary of the date of grant and 40% vesting on the fourth anniversary of the date of grant, subject to the employee’s continued employment through each such vesting date. Refer to “Potential Payments Upon Termination or Change in Control” below for circumstances under which the terms of the vesting of equity awards would be accelerated. (2)Determined with reference to $35.52, the closing price of a share of the Company's common stock on December 31, 2024. (3)This column reflects information regarding PSUs held by Mr. Sills that were outstanding and unvested as of December 31, 2024. The PSUs generally vest subject to achieving certain stock price growth goals over a three-year period starting on May 23, 2024 (the date of the Company’s initial public offering) and ending on May 22, 2027.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Messrs. Mulcahey and Newman As of December 31, 2024, Mr. Mulcahey and Mr. Newman were not entitled to any cash payments upon a qualifying termination or a change in control. As of February 21, 2025, Mr. Mulcahey and Mr. Newman are participants in the Bowhead Specialty Holdings Inc. Change in Control Severance Plan (the “CIC Severance Plan”). See “2025 Change in Control Severance Plan” below for additional details on the CIC Severance Plan. Mr. Sills Pursuant to the Sills Agreement, if Mr. Sills is terminated without cause or he resigns for good reason (as such terms are defined in the Sills Agreement), Mr. Sills will be entitled to the following severance benefits upon his execution and nonrevocation of a general release of claims in favor of the company and continued compliance with restrictive covenant obligations: (i) continued payment of base salary for a period of thirty months, (ii) target annual bonus for the year in which the termination occurs payable at such time other officers receive bonus payments in respect of such year, (iii) payment of any earned but unpaid annual bonus, (iv) a lump sum payment equal to twelve months’ monthly health coverage premium and (v) 100% vesting acceleration of all time-based equity awards and waiver of any continued employment requirements for any performance-based awards. Either party may provide the other thirty days’ advance notice of such termination, provided that the company may accelerate such termination if it provides payment of base salary in lieu of such notice. In the event of a change in control, the amounts described above will become payable in a lump sum. If Mr. Sills provides notice of non-renewal of the Sills Agreement and continues employment until, and terminates employment upon, the last scheduled day of the term of employment (“retirement”), then subject to Mr. Sills’ execution and nonrevocation of a release of claims against the company and continued compliance with restrictive covenant obligations (i) any then outstanding equity awards will accelerate and vest and (ii) Mr. Sills will be entitled to a pro-rata portion of his annual bonus in respect of the year of such retirement. In the event of Mr. Sills’ termination by reason of death or disability, Mr. Sills (or his beneficiary) will be entitled to receive the following severance benefits upon his (or his estate) execution of a general release of claims in favor of the company (i) payment of any earned but unpaid annual bonus, (ii) a lump sum payment equal to twelve months’ monthly health coverage premium (only in the event of disability) and (iii) 100% vesting acceleration of all time-based equity awards and waiver of any continued employment requirements for any performance-based awards. Upon a change in control, all time-based equity awards held by Mr. Sills at such time will fully vest and settle in cash, provided that the buyer in any such transaction may elect to defer and fund with a rabbi trust (or other vehicle acceptable to Mr. Sills) the payment of such amounts until the one year anniversary of the change in control, subject to Mr. Sills’ continued employment. If the buyer elects to defer payment, and Mr. Sills does not remain employed until the one year anniversary of the change in control, then the deferred amount will be forfeited, unless Mr. Sills is terminated by the company without cause, he resigns for good reason, or upon his death or disability, then any such deferred amounts will immediately vest and become payable within five business days of the date of such termination. In the event Mr. Sills becomes entitled to any benefit in connection with a change in control that occurs within the initial employment term, and any such payments become subject to the excise tax imposed by Section 4999 of the Code, then Mr. Sills will be entitled to receive a gross-up payment up to an aggregate of $3,000,000. 2025 Change in Control Severance Plan In February of 2025, the Company adopted the CIC Severance Plan, pursuant to which select employees of the Company (including each of its executive officers, but excluding Mr. Sills), may become eligible to receive the following severance payments and benefits upon a qualifying termination within twenty-four months following the date of a change in control (each of qualifying termination and change in control as defined in the CIC Severance Plan): (i) a cash payment payable in a lump sum equal to the sum of (x) one and one-half times the participant’s base salary and (y) pro-rata target annual bonus, and (ii) an additional cash payment payable in a lump sum equal to the product of twelve multiplied by the cost incurred by the Company for providing group health, dental and vision benefits to the participant and the participant’s eligible dependents in the month immediately prior to the month in which the qualifying termination date occurred. The provision of payments and benefits described above is conditioned upon the participant’s execution and non-revocation of a release of claims in favor of the Company. The CIC Severance Plan provides that if a participant receives any amount, whether under the CIC Severance Plan or otherwise, that is subject to the excise tax imposed pursuant to Section 4999 of the Internal Revenue Code, the amount of the payments to be made to the participant will be reduced to the extent necessary to avoid imposition of the excise tax, but only if the net amount of the reduced payments exceeds the net amount that the participant would receive following imposition of the excise tax and all income and related taxes.