The Annual General Meeting of Shareholders of Everest Re Group, Ltd. (the "Company"“Company”), a Bermuda company, will be held at Fairmont Hamilton Princess, 76 Pitts Bay Road, Hamilton, Bermuda on May 18, 201615, 2019 at 10:00 a.m., local time, for the following purposes:
You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting in person, you are urged to sign and datevote by internet or telephone as directed on the enclosed proxy or by signing and returndating the proxy and returning it promptly in the postage prepaid envelope provided.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May 18, 201615, 2019 at Fairmont Hamilton Princess Hotel, 76 Pitts Bay Road, Hamilton, Bermuda at 10:00 a.m. local time.
The enclosed Proxy Card is being solicited on behalf of the Board of Directors (the "Board"“Board”) for use at the 20162019 Annual General Meeting of Shareholders of Everest Re Group, Ltd., a Bermuda company (the "Company"“Company”), to be held on May 18, 2016,15, 2019, and at any adjournment thereof. It may be revoked at any time before it is exercised by giving a later-dated proxy, notifying the Secretary of the Company in writing at the Company'sCompany’s registered office at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda, or by voting in person at the Annual General Meeting. All shares represented at the meeting by properly executed proxies will be voted as specified and, unless otherwise specified, will be voted: (1) for the election of Dominic J. Addesso, John J. Amore, John R. Dunne, William F. Galtney, Jr., John A. Graf, Gerri Losquadro, Roger M. Singer, Joseph V. Taranto and John A. Weber as directors of the Company; (2) for the appointment of PricewaterhouseCoopers LLP, as the Company'san independent registered public accounting firm, to act as the Company'sCompany’s independent auditor for 20162019 and for authorizing the Company'sCompany’s Board of Directors acting through its Audit Committee to retaindetermine the independent registered public accounting firm serving as the Company's auditor;auditor’s remuneration; and (3) for the re-approval of the Everest Re Group, Ltd. Executive Performance Annual Incentive Plan; and (4) for the approval, by non-binding advisory vote, of the 20152018 compensation paid to the Named Executive Officers (as defined herein).
The election of each nominee for director and the approval of all other matters to be voted upon at the Annual General Meeting require the affirmative vote of a majority of the votes cast at the Annual General Meeting, provided there is a quorum consisting of not less than two persons present in person or by proxy holding in excess of 50% of the issued and outstanding Common Shares entitled to attend and vote at the Annual General Meeting. The Company has appointed inspectors of election to count votes cast in person or by proxy. Common Shares owned by shareholders who are present in person or by proxy at the Annual General Meeting but who elect to abstain from voting will be counted towards the presence of a quorum. However, such Common Shares and Common Shares owned by shareholders and not voted in person or by proxy at the Annual General Meeting (including "broker non-votes"“broker non-votes”) will not be counted towards the majority needed to elect a director or approve any other matter before the shareholders and, thus, will have no effect on the outcome of those votes.
This Proxy Statement, the attached Notice of Annual General Meeting, the Annual Report of the Company for the year ended December 31, 20152018 (including financial statements) and the enclosed Proxy Card are first being mailed to the Company'sCompany’s shareholders on or about April 14, 2016.11, 2019.
The Company knows of no specific matter to be brought before the Annual General Meeting that is not referred to in the attached Notice of Annual General Meeting of Shareholders and this Proxy Statement. If any such matter comes before the meeting, including any shareholder proposal properly made, the proxy holders will vote proxies in accordance with their best judgment with respect to such matters. To be properly made, a shareholder proposal must comply with the Company'sCompany’s Bye-laws and, in order for any matter to come before the meeting, it must relate to matters referred to in the attached Notice of Annual General Meeting.
We are committed to operating our business consistent with sound corporate practices and strong corporate governance which promotesthat promote the long-term interests of our shareholders, strengthensstrengthen the accountability of the Board and management and helpshelp build trust in the Company. Our Board encourages and reviews management performance in the context of business practices that emphasize sustainability and best-in-class corporate governance. Our philosophy has always been to generate long-term value for our shareholders. This emphasis is reflected in our compensation philosophy, enterprise risk management, and business model. We further recognize the potential impact of such exogenous threats as climate change and natural resource depletion and strive to incorporate such risks, to the extent they can be quantified, into our risk management profile to preserve sustainability of our business.
Proxy Statement 3
Executive Summary
Board Diversity Update
As we advised shareholders in our 2018 proxy, the Board committed itself to increasing gender diversity of representation on the Board. To that end, the Board retained a search firm to assist in identifying female candidates for consideration to Board membership. Following an extensive process, we are pleased to report that the Board anticipates extending an invitation to a highly qualified female candidate to join our Board subsequent to this year’s Annual General Meeting.
Corporate Responsibility and Sustainability
We believe that our future is determined by actions taken today that go beyond just business strategy, but also encompass the values important to our employees and the communities in which we operate that define our corporate responsibility and maintain sustainability. Everest’s value commitments include: providing an inclusive work environment that offers employees the opportunity to further their development, supporting our communities through the donation of time and financial resources, maintaining our integrity across all aspects of the Company, and being an industry innovator to solve global complex risks.
Community Outreach
As a Company, we believe strongly in the importance of giving back to global communities and helping those in need. Our mission is to support education, health, social and environmental issues that impact our neighbors. Over the last year, our employees, with the support of the Company, volunteered thousands of hours to support a range of charitable causes including working with Habitat for Humanity to build houses; participating in United Way’s Tools for School program by donating backpacks filled with school supplies to students in need; supporting community food and clothing drives; remembering our military and their families during the holiday season; donating blood through the American Red Cross; partnering with Rise Against Hunger to pack nutritious meals for distribution to organizations around the world; partnering with Together We Rise to donate toys and necessities to foster children; and partnering with the American Cancer Society as a Relay for Life corporate sponsor.
Environmental Conscience
Policy
As a global (re)insurance organization, our business involves protecting clients through insurance and reinsurance from the impact of natural catastrophes, including weather events that are more frequent or severe. We recognize the potential impact of such exogenous threats as climate change and extreme natural perils and the fact that insurance is a critical component for economic and social recovery from the effects of extreme natural catastrophe events. Accordingly, it is the Company’s policy to remain committed to providing solutions that help our clients manage their environmental and climate change risks, and to continue to monitor, control and reduce where possible our own ecological impact, while at the same time, remaining pro-active and forward-looking in a changing climate and weather environment.
Memberships and Affiliations
The Company is active in various affiliations and memberships to help carry out its environmental policy. For instance, through our affiliation with the Geneva Association we provide financial support to study the impact of and possible solutions for these threats to our economies and the human condition. The Company has also been a long-time active and contributing member of the Reinsurance Association of America (RAA), whose advocacy work includes efforts to identify ways the insurance sector can minimize the effects of climate change along with a commitment to work with policymakers, regulators, and the scientific, academic and business communities to assist in promoting awareness and understanding of the risks associated with climate change. The Company’s participation in the RAA includes membership on the RAA’s Extreme Events Committee which focuses on catastrophe modeling improvements to reflect climate change. The RAA’s statement on climate change policy is located at www.reinsurance.org/Advocacy/RAA_Policy_Statements.
4 Everest Re Group, Ltd.
Risk Management Profile
We also strive to incorporate environmental risks, to the extent they can be quantified, into our risk management profile. We have a highly developed Enterprise Risk Management (“ERM”) practice that identifies key risks to which the Company is exposed and establishes tolerance levels and mitigation strategies to preserve the sustainability of our business. Environmental risks, including those directly related to climate change, feature prominently in the Company’s ERM system. Standard & Poor’s (“S&P”) rating of the Company’s ERM process as “Strong” in its June 2018 rating report places the Company among the top ratings of Bermuda and North American (re)insurers. The S&P report notes that Everest has “demonstrated a strong commitment to enhancing its ERM framework,” and that “we consider ERM to be of high importance to [Everest’s] overall rating.”
Operations
While Everest, as a (re)insurance organization, has a modest ecological footprint, the Company nonetheless strives to maintain an environmental conscience in its operations as part of its stance toward environmental policy. For instance, in light of expanding office space requirements occasioned by growth, Everest is focused on office properties that exhibit positive environmental features. This includes Everest’s core locations where a majority of employees are located, such as:
| · | Everest’s planned new U.S. operational headquarters in New Jersey which is expected to qualify for LEED status and contain such features as a green roof as part of the complex, charging stations for automobiles, and various other sustainability and energy savings features; |
| · | Everest’s Bermuda headquarters and offices which maintain such features as double glazed solar controlled glass, air conditioning which is water cooled using sea water from wells, and energy-conserving lighting; and |
| · | Everest’s New York City office building where Everest is now a major tenant following recent employee and business expansion which is LEED Gold and Energy Star certified. |
Everest also promotes flex hours and recently instituted an expanded work-from-home policy to help reduce congestion at any given office location at any given point in time.
Underwriting, Environmental Solutions and Claims
In 2018, the Company continued its efforts to assess and refine its pricing, modeling, and underwriting practices related to climate risks. Everest has been at the forefront in continuing to develop advanced insurance solutions and products related to environmental risk for our clients, including coverages for specialized environmental contractors as well as industrial and commercial component manufacturers, and has the capability to provide credits to clients for environmentally friendly actions and behaviors.
The Company’s pro-active approach to climate risks carries into our claims practices. As one example, in June 2018, the Company’s Insurance Division announced an agreement with Airware, a leading provider of drone analytics solutions, to add precision and efficiency to the Everest claims management process following environmental catastrophe events and help expedite the claims adjustment process by leveraging Airware’s aerial data analytics and machine learning capabilities. This partnership will also help clients of Everest proactively identify potentially hazardous conditions through aerial identification. Everest subsidiaries also offer loss control service capabilities to clients that take into account environmental concerns. Everest also maintains a paperless claims system across its insurance and reinsurance operations, significantly reducing the need for printing hard copies of claims files.
Shareholder Feedback
As part of our governance practices, we annually reach out to our top 20 institutional investors to gauge emerging best practices themes in governance and shareholder values. Because of the practical limitations in meeting with all of our shareholders, we augment such outreach with publications, seminars and other materials in order to continually assess our governance standards.
Proxy Statement 5
Highlights of our corporate governance and compensation best practices include:
Governance Profile Best Practice | Company Practice |
✓ | Size of Board | 8 |
✓ | Number of Independent Directors | 6 |
✓ | Board Independence Standards | The Board has adopted director independence standards stricter than the listing standards of the NYSE |
✓ | Director Independence on Key Committees | The Board'sBoard’s Audit, Compensation and Nominating and Governance Committees are composed entirely of independent directors |
✓ | Separate Chairman and CEO | Yes |
✓ | Independent Lead Director | Yes |
✓ | Annual Election of All Directors | Yes |
✓ | Majority Voting for Directors | Yes |
✓ | Board Meeting Attendance | Each director or appointed alternate director attended 100% of Board meetings in 20152018 |
✓ | Annual General Meeting Attendance | Director attendance expected at Annual General Meeting per Governance Guidelines, and 100% of directors attended the 20152018 Annual General Meeting |
✓ | No Over-Boarding | No directorsDirectors do not sit on the boards of other publicallypublicly traded companies.companies
Directors are prohibited from sitting on the boards of competitors |
✓ | Regular Executive Sessions of Non-Management Directors | Yes |
✓ | Shareholder Access | No minimum share ownership or holding thresholds necessary to nominate qualified director to boardBoard |
✓ | Policy Prohibiting Insider Pledging or Hedging of Company'sCompany’s Stock | Yes |
✓ | Annual Equity Grant to Non-Employee Directors | Yes |
✓ | Annual Board and Committee SelfIndividual Director Performance Evaluations | Yes |
✓ | Clawback Policy | Yes |
✓ | Code of Business Conduct and Ethics for Directors and Executive Officers | Yes |
Compensation Best Practice | Company Practice |
✓ | No Separate Change in Control Agreement for the CEO | CEO participates in the Senior Executive Change in Control Plan ("CIC Plan") along with the other Named Executive Officers |
✓ | No Automatic Accelerated Vesting of Equity Awards | Accelerated equity vesting provisions are not and will not be incorporated in the employment agreements of any Named Executive Officer |
✓ | Double Trigger for Change-in-Control | Yes |
✓ | No Excise Tax Assistance | No "gross-up" payments by the Company of any "golden parachute" excise taxes upon a change-in-control |
✓ | Say on Pay Frequency | Say on Pay Advisory Vote considered by Shareholders annually |
✓ | No Re-pricing of Options and SARs | The Board adheres to a strict policy of no re-pricing of Options and SARs |
✓ | Vesting Period of Options and Restricted Shares | 5-year vesting period for equity awards to executive officers except for performance shares which must meet goal over the course of 3 years prior to settlement
3-year vesting period for equity awards to Directors
|
✓ | Clawback Policy | Clawback Policy covering current and former employees, including Named Executive Officers, providing for forfeiture and repayment of any incentive based compensation granted or paid to an individual during the period in which he or she engaged in material willful misconduct including but not limited to fraudulent misconduct |
✓ | Code of Business Conduct and Ethics for Directors and Executive Officers | Yes |
✓ | No Separate Change in Control Agreement for the CEO | CEO participates in the Senior Executive Change in Control Plan (“CIC Plan”) along with the other Named Executive Officers |
6 Everest Re Group, Ltd.
Governance Profile Best Practice | Company Practice |
✓ | No Automatic Accelerated Vesting of Equity Awards | Accelerated equity vesting provisions are not and will not be incorporated in the employment agreements of any Named Executive Officer |
✓ | Double Trigger for Change-in-Control | Yes |
✓ | No Excise Tax Assistance | No “gross-up” payments by the Company of any “golden parachute” excise taxes upon a change-in-control |
✓ | Say on Pay Frequency | Say on Pay Advisory Vote considered by Shareholders annually |
✓ | No Re-pricing of Options and SARs | The Board adheres to a strict policy of no re-pricing of Options and SARs |
✓ | Minimum Vesting Period of Options and Restricted Shares | Minimum 1-year vesting period for equity awards However, the Board has always instituted a 5-year vesting period for equity awards to executive officers except for performance shares which must meet key performance metrics over the course of 3 years prior to settlement 3-year vesting period for equity awards to Directors |
✓ | Share Recycling | No liberal share recycling |
✓ | Stock Ownership Guidelines for Executive Officers | Six times base salary for CEO; three times base salary for other Named Executive Officers |
✓ | Stock Ownership Guidelines for Non-Management Directors | FiveSix times annual retainer |
✓ | Use of Performance Shares as Element of Long-Term Incentive Compensation | Yes |
Voting Matters and Board'sBoard’s Voting Recommendations
Proposal | Board'sBoard’s Voting Recommendations | Page |
Election of Director Nominees (Proposal 1) | FOR ALL DIRECTOR NOMINEES | 79
|
Appointment of PricewaterhouseCoopers LLP as Company Auditor (Proposal 2) | FOR | 60 81 |
Re-Approve the Everest Re Group, Ltd.Non-Binding Advisory Vote on Executive Performance Annual Incentive Plan Compensation (Proposal 3)
| FOR | 61 |
Non-Binding Advisory Vote on Executive Compensation
(Proposal 4)
| FOR | 6382
|
The Company's Bye-laws provide that all directors will be elected for one-year terms at each Annual General Meeting.
At the 20162019 Annual General Meeting, the nominees for director positions are to be elected to serve until the 20172020 Annual General Meeting of Shareholders or until their qualified successors are elected or until such director'sdirector’s office is otherwise vacated. At its regularly scheduled meeting on February 24, 2016,27, 2019, the Nominating and Governance Committee recommended to the Board the nominations of Dominic J. Addesso, John J. Amore, John R. Dunne, William F. Galtney, Jr., John A. Graf, Gerri Losquadro, Roger M. Singer, Joseph V. Taranto and John A. Weber, as directors, all of whom are currently directors of the Company and John A. Graf, who is a new nominee.
Company. The Board accepted the Nominating and Governance Committee recommendations, and each nominee accepted his or her nomination. It is not expected that any of the remaining nominees will become unavailable for election as a director, but if any nominee should become unavailable prior to the meeting, proxies will be voted for such persons as the Board shall recommend, unless the Board reduces the number of directors accordingly. There are no arrangements or understandings between any director or any nominee for election as a director, and any other person pursuant to which such person was selected as a director or nominee.
Important Factors in Assessing Board Composition
The Nominating and Governance Committee strives to maintain an engaged, independent Board with broad and diverse experience, skills, and judgment that is committed to representing the long-term interests of our shareholders. In evaluating director candidates and considering incumbent directors for nomination to the Board, the Committee considers each nominee’s character, independence, leadership, financial literacy, personal and professional accomplishments, industry knowledge and experience.
For incumbent directors, the factors also include attendance and past performance on the Board and its committees. Each director nominee has a demonstrated record of accomplishment in areas relevant to the Company’s business and qualifications that contribute to the Board’s ability to effectively function in its oversight role.
The Nominating and Governance Committee seeks current and potential directors who will collectively bring to the Board a variety of skills, including:
| · | Leadership: Demonstrated ability to hold significant leadership positions and effectively manage complex organizations is important to evaluating and developing key management talent. |
| · | Insurance and/or Reinsurance Industry Experience: Experience in the insurance and/or reinsurance markets is critical to strategic planning and oversight of our business operations. |
| · | Risk Management: Experience in identifying, assessing and managing risks is critical to oversight of current and emerging organizational and systemic risks in order to inform and adapt the Company’s strategic planning. |
| · | Regulatory: Understanding of the laws and regulations that impact our heavily regulated industry, as well as understanding the impact of government actions and public policy. Both areas are important to oversight of insurance operations. |
| · | Finance and Accounting: Financial experience and literacy are essential for understanding and overseeing our financial reporting, investment performance and internal controls to ensure transparency and accuracy. |
| · | Corporate Governance: Understanding of corporate governance matters is essential to ensuring effective governance of the Company and protecting shareholder interests. |
Proxy Statement 9
Proposal No. 1--Election of Directors
| · | Business Operations: A practical understanding of developing, implementing and assessing our business operations and processes, and experience making strategic decisions, are critical to the oversight of our business, including the assessment of our operating plan, risk management and long-term sustainability strategy. |
| · | Information Technology/Cybersecurity: A practical understanding of information systems and technology use in our business operations and processes, as well as a recognition of the risk management aspects of cyber risks and cyber security. |
| · | International: Experience and knowledge of global insurance and financial markets is especially important in understanding and reviewing our business and strategy. |
In addition to evaluating a candidate’s technical skills relevant to the success of a large, publicly traded company in today’s business environment, our Board considers additional intangible factors including an understanding of our business and technology; education and professional background; and geographic, gender, age and ethnic diversity. Each director must demonstrate critical thinking, clear business ethics, an appreciation for diversity and commitment to sustainability. The Nominating and Governance Committee’s objective is to recommend a group that can best perpetuate the success of our business and represent shareholder interests through the exercise of sound judgment using its diversity of experience and perspectives.
10 Everest Re Group, Ltd.
Proposal No. 1--Election of Directors
Information Concerning Director Nominees The following information has been furnished by the respective nominees for election as directors to serve forEach nominee’s biography below includes a one year term expiring in May, 2017.
Dominic J. Addesso, 62, a directorsummary of the key skills and experience of such nominee that contribute to the director’s ability to effectively oversee the Company sinceand act in the long-term best interests of shareholders.
DOMINIC J. ADDESSO, CEO & PRESIDENT
| Age: 65 Director Since: September 19, 2012 Non-Independent
Committees: ·Investment Policy ·Underwriting ·Executive |
Qualifications and Skills:
· | Executive Leadership | · | Corporate Governance |
· | Insurance/Reinsurance Industry Experience | · | International |
· | Finance and Accounting | · | Risk Management |
· | Business Operations | · | Regulatory |
· | Investments | · | Information Technology/Cyber Security |
· | Mergers & Acquisitions
| | |
Background:
Mr. Addesso became Chief Executive Officer of the Company, Everest Reinsurance Company ("(“Everest Re"Re”) and Everest Reinsurance Holdings, Inc. ("(“Everest Holdings"Holdings”) on January 1, 2014. He became President of the Company, Everest Holdings and Everest Re on June 16, 2011 and served as Chief Financial Officer of those companies from 2009 through the second quarter of 2012. In 2009, he became a director and Executive Vice President of Everest Re and Everest Holdings, and a director, Chairman and Chief Executive Officer of Everest Global Services, Inc. ("(“Everest Global"Global”). In 2009, he became a director of Everest Reinsurance (Bermuda), Ltd. ("(“Bermuda Re"Re”), where he has also served as Chairman since 2011 and Chairman and director of Everest Re Advisors, Ltd. ("(“Everest Re Advisors"Advisors”). From 2009 through February 2012,2014, he served asheld various director ofand management roles at the Company’s subsidiaries, including Everest Reinsurance Company (Ireland), Limited ("dac (“Ireland Re"Re”) and, Everest Underwriting Group (Ireland), Limited ("(“Ireland Underwriting"Underwriting”), both Irish subsidiaries of the Company. In 2009, he was appointed as a director of Everest Advisors (UK), Ltd. ("(“Advisors U.K."UK”), as a director of Mt. McKinley Insurance Company, which was sold during 2015 ("Mt. McKinley"Everest Insurance Company of Canada (“Everest Canada”), Everest National Insurance Company (“Everest National”), Everest Indemnity Insurance Company (“Everest Indemnity”), and Everest Security Insurance Company (“Everest Security”) as well as a director and Chairman of Everest International Reinsurance, Ltd., (" (“International Re"Re”), and as a director (until 2014) of Everest Insurance Company of Canada ("EVCAN"). Also in 2009, Mr. Addesso became a director of Everest National Insurance Company ("Everest National"), Everest Indemnity Insurance Company ("Everest Indemnity") and Everest Security Insurance Company (f/k/a Southeastern Security Insurance Company) ("Everest Security") and a director, Chairman and President of Mt. Whitney Securities, LLC (formerly known as Mt. Whitney Securities, Inc.), a subsidiary of Everest Re ("(“Mt. Whitney"Whitney”). Mr. Addesso serves as a voting representative of Mt. Whitney in relation to Mt. Whitney'sWhitney’s investment in Security First Insurance Holdings, LLC.
From 2008 until he joined the Company in May 2009, Mr. Addesso was President of Regional Clients of Munich Reinsurance America, Inc. From 2001 to 2009,2008, he served as President of Direct Treaty, Munich Reinsurance America, Inc. with profit and loss responsibility for direct treaty business covering all lines including surety, political risk and marine. From 1999 through 2001, he served in various underwriting and financial operations roles. From 1982 to 1995, he served as Executive Vice President and Chief Financial Officer of Selective Insurance Group, Inc. Prior to that, Mr. Addesso worked in public accounting for KPMG. Mr. Addesso was selected to serve on the Board because of his significant knowledge of the Company's operations as its Chief Executive Officer and his significant knowledge of the insurance and reinsurance industries.
Proxy Statement 711
Proposal No. 1—Election1--Election of Directors
JOHN J. AMORE
| Age: 70 Director Since: September 19, 2012 Independent
Committees: ·Audit ·Compensation (Chair) ·Nominating and Governance ·Underwriting |
Qualifications and Skills:
· | Insurance/Reinsurance Industry Experience |
John J. Amore,Background 67, became a director of the Company on September 19, 2012. :
Mr. Amore retired as a member of the Group Executive Committee of Zurich Financial Services Group, now known as Zurich Insurance Group, Ltd., in 2010, for which he continued to act as a consultant through 2012. From 2004 through 2010, he served as CEO of the Global General Insurance business segment after having served as CEO of the Zurich North America Corporate business division from 2001 through 2004. He became CEO of Zurich U.S. in 2000, having previously served as CEO of the Zurich U.S. Specialties business unit. Before joining Zurich in 1992, he was vice chairman of Commerce and Industry Insurance Company, a subsidiary of American International Group, Inc. (“AIG”). Mr. Amore served as a delegate for the Geneva Association, and is an Overseer Emeritus of the Board of Overseers for the School of Risk Management, Insurance and Actuarial Science at St. John'sJohn’s University in New York, a member of the Board of Directors of the W. F. Casey Foundation, Brooklyn, New York and a member of the Board of Trustees and Finance, Audit and Investment Committees of Embry-Riddle Aeronautical University. Mr. Amore was selected to serve on the Board because of his experience as an insurance industry executive and finance background.
John R. Dunne, 86, became a director of Everest Holdings on June 10, 1996 and served as a director of12 Everest Re from June 1996 to February 2000. Thereafter he became a directorGroup, Ltd.
Proposal No. 1--Election of the Company upon the restructuring of Everest Holdings. Directors
WILLIAM GALTNEY, INDEPENDENT LEAD DIRECTOR
| Age: 66 Director Since: March 12, 1996 Independent
Committees: ·Audit ·Compensation ·Executive ·Nominating and Governance (Chair) ·Underwriting |
Qualifications and Skills:
· | Insurance/Reinsurance Industry Experience |
Background:
Mr. Dunne is an attorney and member of the bars of New York and the District of Columbia. Since 1994 he has been counsel to the law firm of Whiteman Osterman & Hanna LLP in Albany, New York. From 1995 to 2007, Mr. Dunne served as a director of Aviva Life Insurance Company of New York. Mr. Dunne was a director of CGU Corporation, an insurance holding company, from 1993 until 2001. Mr. Dunne was counsel to the Washington, D.C. law firm of Bayh, Connaughton & Malone from 1993 to 1994. From 1990 to 1993, he served as an Assistant Attorney General at the United States Department of Justice. From 1966 to 1989, Mr. Dunne served as a New York State Senator while concurrently practicing law as a partner in New York law firms. Mr. Dunne was selected to serve on the Board because of his legal and governmental experience as well as his experience serving on the boards of insurance companies.
William F. Galtney Jr., 63, became a director of Everest Holdings on March 12, 1996 and served as a director of Everest Re from March 1996 to February 2000. Thereafter he became a director of the Company upon the restructuring of Everest Holdings. Since April 1, 2005 he has been President and CEO of Galtney Group, Inc. Since April 1, 2005, he has also served as Chairman of Oxford Insurance Services Limited, a managing general and surplus lines agency. Prior thereto, he was President (from June 2001 until December 31, 2004) and Chairman (until March 31, 2005) of Gallagher Healthcare Insurance Services, Inc. ("GHIS"(“GHIS”), a wholly-owned subsidiary of Arthur J. Gallagher & Co. ("Gallagher"(“Gallagher”). From 1983 until its acquisition by Gallagher in June 2001, Mr. Galtney was the Chairman and Chief Executive Officer of Healthcare Insurance Services, Inc. (predecessor to GHIS), a managing general and surplus lines agency previously indirectly owned by The Galtney Group, Inc. Mr. Galtney is also Managing Member, President and Director of Galtney Group, LLC and was a director of Mutual Risk Management Ltd. from 1988 to 2002. During 2007, Mr. Galtney assumed the directorship ofpositions at Intercare Holdings, Inc. and Intercare Solutions Holdings, Inc. During 2011, Mr. Galtney joined the board
Proxy Statement 13
Proposal No. 1--Election of directors of Houston Baseball Partners LLCDirectors
JOHN A. GRAF
| Age: 59 Director Since: May 18, 2016 Independent
Committees: ·Audit ·Compensation ·Nominating and Governance ·Investment Policy |
Qualifications and Healthcare Liability Solutions, Inc. Mr. Galtney was selected to serve on the Board because of his experience as an insurance industry executive and director.Skills:
John A. Graf, 56, is a candidate for election at the 2016 Annual General Meeting. · | Insurance/Reinsurance Industry Experience |
Background:
Mr. Graf serves as the Non-Executive Vice Chairman of Global Atlantic Financial Group ("(“Global Atlantic"Atlantic”) and joined the boardBoard of directorsDirectors upon Global Atlantic'sAtlantic’s acquisition of Forethought Financial Group ("(“Forethought Financial"Financial”) in 2014. He served as Chairman and CEO of Forethought Financial from 2006 to 2014. He serves on the Audit, Risk and Compliance Committees of Global Atlantic. Until December 2015, he served as a non-executive director of QBE Insurance Group Limited where he chaired the Investment and Personnel Committees. In 2005, he served as Chairman, CEO and President of AXA Financial, Inc. where he also served as Vice Chairman of the Board and President and Chief Operating Officer of its subsidiaries, AXA Equitable Life Insurance Company and MONY Life Insurance Company. From 2001 through 2004 he was the Executive Vice President of Retirement Savings, American International Group ("AIG")AIG as well as serving as Vice Chairman and member of the Board of Directors of AIG SunAmerica following AIG'sAIG’s acquisition of American General Corporation in 2001, where he served as Vice-Chairman. Mr. Graf was selected as a nominee by the Board based upon his broad experience in the financial and insurance industries.
814 Everest Re Group, Ltd.
Proposal No. 1—Election1--Election of Directors
GERRI LOSQUADRO
| Age: 68 Director Since: May 14, 2014 Independent
Committees: ·Audit ·Compensation ·Nominating and Governance ·Underwriting (Chair) |
Qualifications and Skills:
Gerri Losquadro, 65, became a director of the Company on May 14, 2014. · | Insurance/Reinsurance Industry Experience |
· | Information Technology/Cyber Security |
Background:
Ms. Losquadro retired in 2012 as Senior Vice President and head of Global Business Services at Marsh & McLennan Companies, ("MMC"Inc. (“MMC”) and served on the MMC Global Operating Committee. Prior to becoming a senior executive at MMC, Ms. Losquadro was a Managing Director and senior executive at Guy Carpenter responsible for brokerage of global reinsurance programs including all insurance lines and treaty and facultative and development and execution of Guy Carpenter'sCarpenter’s account management program. From 1986 to 1992, Ms. Losquadro held senior leadership positions at AIG'sAIG’s American Home Insurance Company and AIG Risk Management. From 1982 to 1986, she served as Manager of Special Accounts of Zurich Insurance Group. Ms. Losquadro was selected to serve on the Board because
Proxy Statement 15
Proposal No. 1--Election of the depthDirectors
ROGER M. SINGER
| Age: 72 DirectorSince: February 24, 2010 Independent
Committees: ·Audit (Chair) ·Compensation ·Nominating and Governance |
Qualifications and breadth of her knowledge of insurance operations and the insurance and reinsurance industries.Skills:
· | Insurance/Reinsurance Industry Experience |
Background:
Mr. Singer 69, became a director of the Company on February 24, 2010. He was elected as director of Bermuda Re and International Re, both Bermuda subsidiaries of the Company, on January 17, 2012. Mr. Singer, currently retired, was the Senior Vice President, General Counsel and Secretary to OneBeacon Insurance Group LLC (formerly known as CGU Corporation) and its predecessors, CGU Corporation and Commercial Union Corporation, from August of 1989 through December 2005. He continued to serve as director and consultant to OneBeacon Insurance Group LLC and its twelve subsidiary insurance companies through 2006. Mr. Singer served with the Commonwealth of Massachusetts as the Commissioner of Insurance from July 1987 through July 1989 and as First Deputy Commissioner of Insurance from February 1985 through July 1987. He has also held various positions in branches of thestate and federal government, including theAssistant Secretary, Office of Consumer Affairs and Business Regulation, Commonwealth of Massachusetts, Assistant Attorney General, Office of the Consumer Protection DivisionMassachusetts Attorney General and theStaff Attorney, Federal Trade Commission. Mr. Singer was selected to serve on the Board because of his legal experience and experience as an insurance industry regulator and insurance executive.
Joseph16 Everest Re Group, Ltd.
Proposal No. 1--Election of Directors
JOSEPH V. TARANTO, CHAIRMAN
| Age: 70 DirectorSince: March 12, 1996 Non-Independent
Committees: ·Executive ·Investment Policy |
Qualifications and Skills:
· | Insurance/Reinsurance Industry Experience |
Background:
Mr. Taranto 67, is a director and Chairman of the Board of the Company. He retired on December 31, 2013 as Chief Executive Officer of the Company and Chief Executive Officer and Chairman of the Board of Everest Holdings and Everest Re, in which capacity he had served since October 17, 1994. On February 24, 2000, he became Chairman of the Board and Chief Executive Officer of the Company upon the restructuring of Everest Holdings. Between 1986 and 1994, Mr. Taranto was a director and President of Transatlantic Holdings, Inc. and a director and President of Transatlantic Reinsurance Company and Putnam Reinsurance Company (both subsidiaries of Transatlantic Holdings, Inc.). Mr. Taranto was selected to serve on the Board because of his considerable experience as CEO of publicly traded international insurance and reinsurance companies, intimate knowledge of the Company'sCompany’s operations and significant insight into the insurance and reinsurance markets.
John A.Proxy Statement 17
Proposal No. 1--Election of Directors
JOHN WEBER
| Age: 74 DirectorSince: May 22, 2003 Independent
Committees: ·Audit ·Compensation ·Executive ·Investment Policy ·Nominating and Governance |
Qualifications and Skills:
· | Insurance/Reinsurance Industry Experience |
Background:
Mr. Weber 71, became a director on May 22, 2003. He was elected as director of Bermuda Re and International Re, both Bermuda subsidiaries of the Company, on January 17, 2012. Since December 2002, he has been the Managing Partner of Copley Square Capital Management, LLC, a private partnership which provides investment management and strategic advisory services to institutions.partnership. From 1990 through 2002, Mr. Weber was affiliated with OneBeacon Insurance Group LLC and its predecessor companies. During that affiliation, he became the Managing Director and Chief Investment Officer of the OneBeacon insurance companies and the President and CEO of OneBeacon Asset Management, Inc. (formerly known as CGU Asset Management, Inc.) with overall responsibility for the North American investment activities of the CGU companies (now Aviva plc). From 1988 through 1990, Mr. Weber was the Chief Investment Officer for Provident Life & Accident Insurance Company and a director of Provident National, and from 1972 through 1988 was associated with Connecticut Mutual Life Insurance Company ("(“Connecticut Mutual"Mutual”) and its affiliate, State House Capital Management Company ("(“State House"House”) (a pension and mutual fund pension advisor), eventually serving as Senior Vice President of Connecticut Mutual and President and CEO of State House. Mr. Weber was selected to serve on the Board because
18 Everest Re Group, Ltd.
Proposal No. 1--Election of his experience as an insurance industry executive and investment adviser.Directors
Information Concerning Executive Officers The following information has been furnished by the Company's executive officersCompany’s Named Executive Officers who are not also director nominees. Executive officers are elected by the Board following each Annual General Meeting and serve at the pleasure of the Board.
| Age: 55
Mr. Howie is the Executive Vice President, Chief Financial Officer and Treasurer of the Company, Everest Re, Everest Holdings and Everest Global. He joined the Company on March 26, 2012 as Executive Vice President of Everest Global and Everest Re. During 2016, he became the Executive Vice President, Chief Financial Officer and Treasurer of Everest Premier Insurance Company (“Everest Premier”) and Everest Denali Insurance Company (“Everest Denali”). During 2015, he assumed the position of Treasurer for Everest Global, Mt. Logan Re, Ltd. (“Mt. Logan”), Everest Security, Everest National, Everest Indemnity, Mt. Whitney Securities, LLC, SIG Sports, Leisure and Entertainment Risk Purchasing Group, LLC, Specialty Insurance Group, Inc., (“SIG”) and Premiere Underwriting Services, Inc. From 2015 to 2016, he served as Treasurer of Heartland Crop Insurance, Inc. (“Heartland”). In 2015, he became a director, Executive Vice President and Treasurer of Everest International Holdings (Bermuda), Ltd. (“Bermuda Holdings”) and Everest International Assurance, Ltd. (“International Assurance”), a director and Treasurer of Everest Preferred International Holdings, Ltd. (“Preferred Holdings”) and a director of Everest National and Everest Indemnity. In 2013, he became a director of Mt. Logan and Mt. Whitney and the Chief Financial Officer of Everest Indemnity, Everest National and Everest Security. He became a director of Everest Security during 2014. During 2012, he became a director of Everest Re, Bermuda Re, International Re, Everest Global and Everest Holdings. Mr. Howie serves as a director of Security First Insurance Company, a subsidiary of Security First Insurance Holdings, LLC, since 2014. |
Proposal No. 1—Election of Directors
Craig Howie, 52, the Executive Vice President and Chief Financial Officer of the Company, Everest Re, Everest Holdings and Everest Global, joined the Company on March 26, 2012 as Executive Vice President of Everest Global and Everest Re. During 2015, he assumed the position of Treasurer for Everest Global, Mt. Logan Re, Ltd., ("Mt. Logan"), Everest Security, Everest National, Everest Indemnity, Mt. Whitney Securities, LLC, SIG Sports, Leisure and Entertainment Risk Purchasing Group, LLC, Specialty Insurance Group, Inc., ("SIG"), Premiere Underwriting Services, Inc. and Heartland Crop Insurance, Inc. ("Heartland"). In 2015, he became a director, Executive Vice President and Treasurer of Everest International Holdings (Bermuda), Ltd. ("Bermuda Holdings") and Everest International Assurance, Ltd. ("International Assurance"), a director and Treasurer of Everest Preferred International Holdings, Ltd. ("Preferred Holdings") and a director of Everest National and Everest Indemnity. In 2013, he became a director of Mt. Logan and Mt. Whitney and the Chief Financial Officer of Everest Indemnity, Everest National and Everest Security. He became a director of Everest Security during 2014. During 2012, he became a director of Everest Re, Bermuda Re, International Re, Everest Global and Everest Re. Mr. Howie serves as a director of Security First Insurance Company, a subsidiary of Security First Insurance Holdings, LLC, since 2014. Prior to his joining the Company, heMr. Howie served as Vice President and Controller of Munich Reinsurance America, Inc. where, beginning in 2005, he managed the corporate financial reporting, corporate tax, investor relations, financial analysis and rating agency relationship groups. From 2003 to 2005, he was the Vice President of Financial Services and Operations and served as Vice President Corporate Tax beginning in 1998 and through 2003. He is a Certified Public Accountant.
Mark S. de Saram,Proxy Statement 19
60, announced his retirement effective April 6, 2016.
Proposal No. 1--Election of Directors
JOHN DOUCETTE
| Age: 53
Mr. Doucette is the President and CEO of the Reinsurance Division with oversight of all Reinsurance Operations worldwide. He formerly served as the Executive Vice President and Chief Underwriting Officer for Worldwide Reinsurance and Insurance for the Company, Everest Re, and Everest National. He became the Chief Underwriting Officer of the Company and Everest Re in 2012, after having assumed the title of Chief Underwriting Officer for Worldwide Reinsurance for those companies in 2011. In 2016, he became a director of International Re and in 2013 he became a director of Mt. Logan. Since 2011, he has served as a director of Bermuda Re and Everest Re. Upon joining the Company in 2008, he became Executive Vice President of the Company, Everest Global, and Everest Re.
Prior to joining the Company, Mr. Doucette worked at Max Capital Group Ltd. (formerly Max Re Capital Ltd.) (“Max Capital”) from 2000 to 2008, serving in various capacities including President and Chief Underwriting Officer of the P&C Reinsurance division of Max Capital, where he was responsible for new products and geographic expansion. Prior to that, he was an Associate Director at Swiss Re New Markets, a division of Swiss Reinsurance Company, between 1997 and 2000, where he held various pricing, structuring and underwriting roles in connection with alternative risk transfer and structured products. He was an actuarial consultant at Tillinghast from 1989 to 1997. |
Mr. Doucette graduated with a Bachelor of Science degree in Statistics and Biometry from Cornell University. He is a Fellow of the Company on September 17, 2008, having served as Senior Vice President since October 13, 2004. In 2015, he becameCasualty Actuarial Society and is a director of International Assurance and Everest Corporate Member, Limited. Until his retirement date, he serves as a director, Deputy Chairman, Managing Director and Chief Executive Officer of Bermuda Re and as a director and Deputy Chairman of Everest Re Advisors and International Re. He serves as a director, and non-executive Chairmanmember of the BoardAmerican Academy of Advisors U.K. and as a director of Ireland Underwriting and of Ireland Re. Mr. de Saram joined Everest Re in 1995 as Vice President responsible for United Kingdom and European Operations. Prior to his joining Everest Re, Mr. de Saram accumulated 21 years of reinsurance industry experience working in various underwriting capacities in the United Kingdom and Canada.
John P. Doucette, 50, is the President and CEO of the Reinsurance Division with oversight of all reinsurance and claims operations worldwide. He formerly served as the Executive Vice President and Chief Underwriting Officer for Worldwide Reinsurance and Insurance for the Company, Everest Re, Everest National and International Assurance where he also continues to serve as a director. He became the Chief Underwriting Officer of the Company and Everest Re in 2012, after having assumed the title of Chief Underwriting Officer for Worldwide Reinsurance for those companies on June 16, 2011. In 2016, he became a director of International Re and in 2013 he became a director of Mt. Logan. In 2010, he became a director of Bermuda Re and in 2011, a director of Everest Re and Heartland, a subsidiary of Everest Holdings. Upon joining the Company in 2008, he became Executive Vice President of the Company, Everest Global, and Everest Re. From 2000 to 2008, Mr. Doucette worked at Max Capital Group Ltd. (formerly Max Re Capital Ltd.) ("Max Capital"), serving in various capacities including President and Chief Underwriting Officer of the P&C Reinsurance division of Max Capital, where he was responsible for new products and geographic expansion. Prior to that, he was an Associate Director at Swiss Re New Markets, a division of Swiss Reinsurance Company, between 1997 and 2000, where he held various pricing, structuring and underwriting roles in connection with alternative risk transfer and structured products. He was an actuarial consultant at Tillinghast from 1989 to 1997.Actuaries.
10
20 Everest Re Group, Ltd.
Proposal No. 1—Election1--Election of Directors
SANJOY MUKHERJEE
Sanjoy Mukherjee, 49, is Executive Vice President, Secretary and General Counsel of the Company and assumed the position of Managing Director and Chief Executive Officer of Bermuda Re on April 6, 2016 where he also serves as a director. Since 2006, he has served as Secretary, General Counsel and Chief Compliance Officer of the Company, Everest Global, Everest Holdings and Everest Re also serving as a director in the latter two. In 2015, he became a director, Chairman and CEO of Preferred Holdings and Bermuda Holdings, a director of Everest Service Company (UK), Ltd., Everest Corporate Member, Ltd. and International Assurance. During 2013, he became a director of Mt. Logan and SIG and Secretary and General Counsel of SIG Sports, Leisure and Entertainment Risk Purchasing Group LLC. Since 2009, he has served as Secretary of Ireland Re and Ireland Underwriting, where he also serves as director. Beginning in 2011, Mr. Mukherjee serves as a director, Secretary and General Counsel of Heartland. Since 2005, he has served as General Counsel of Everest National and Mt. McKinley Managers, L.L.C. and as Secretary of EVCAN, a director and Secretary of Everest National, Everest Indemnity, and Everest Security, where he also serves as Compliance Officer. Since 2008, he has been Secretary and a director of Mt. Whitney. He became a Vice President of Mt. McKinley in 2002 where he also served as Secretary and Compliance Officer since 2005 and as a director since 2011. From 2005 through 2007, he served as a director of Bermuda Re. He joined the Company in 2000 as an Associate General Counsel of Mt. McKinley. | Age: 52
Mr. Mukherjee is the Executive Vice President, Secretary and General Counsel of the Company, and the Managing Director and CEO of Bermuda Re where he also serves as a director. Since 2006, he has served as Secretary, General Counsel and Chief Compliance Officer of the Company, Everest Global, Everest Holdings and Everest Re, also serving as a director of the latter two. During 2016, he became a director of Everest Premier and Everest Denali. In 2015, he became a director, Chairman and CEO of Preferred Holdings and Bermuda Holdings, a director of Everest Service Company (UK), Ltd., Everest Corporate Member, Ltd. and International Assurance. During 2013, he became a director of Mt. Logan and SIG and Secretary and General Counsel of SIG Sports, Leisure and Entertainment Risk Purchasing Group LLC. From 2009 to 2015, he served as Secretary of Ireland Re and Ireland Underwriting, where he continues to serve as director. Between 2011 and 2016, Mr. Mukherjee served as a director, Secretary and General Counsel of Heartland. Since 2005, he has served as General Counsel of Everest National and Mt. McKinley Managers, L.L.C., a director and Secretary of Everest National, Everest Indemnity and Everest Security, and as Secretary of Everest Canada until 2015. Since 2008, he has been Secretary and a director of Mt. Whitney. He became a Vice President of Mt. McKinley in 2002, where he also served as Secretary and Compliance Officer since 2005 and as a director from 2011, until that company’s sale in 2015. In 2017, he became a director of Everest Dublin Insurance Holdings Limited. From 2005 through 2007, he served as a director of Bermuda Re. He joined the Company in 2000 as an Associate General Counsel. |
BeforePrior to joining the Company in 2000, Mr. Mukherjee developed an array of experience in the insurance and reinsurance industries including legal, claims management, contract wording, accounting and finance, regulatory compliance, and risk management. From 1994 to 2000, he was engaged in the private practice of law as a commercial litigator and corporate attorney specializing in the insurance and reinsurance coverage disputes and commercial litigation.industries. Prior to that, Mr. Mukherjee was a Senior Consultant with Andersen Consulting (n/k/a Accenture) specializing in the manufacturing and the financial services industries.industries and an auditor with the public accounting firm of Touche Ross.
The following table sets forth the beneficial ownership of Common Shares as of March 21, 201618, 2019 by the directors of the Company, by the director nominee, by the executive officers listed in the Summary Compensation Table and by all directors and executive officers of the Company as a group. Information in this table was furnished to the Company by the respective directors and Named Executive Officers. Unless otherwise indicated in a footnote, each person listed in the table possesses sole voting power and sole dispositive power with respect to the shares shown in the table as owned by that person.
| Amount and Nature of | Percent of
|
Name of Beneficial Owner | Beneficial Ownership | Class(13)
|
John J. Amore | 17,667 | (1) | * |
William F. Galtney, Jr. | 68,526 | (2) | * |
John A. Graf | 8,550 | (3) | * |
Gerri Losquadro | 10,267 | (4) | * |
Roger M. Singer | 13,432 | (5) | * |
Joseph V. Taranto | 339,008 | (6) | * |
John A. Weber | 13,595 | (7) | * |
Dominic J. Addesso | 100,818 | (8) | * |
John P. Doucette | 24,747 | (9) | * |
Craig Howie | 18,562 | (10) | * |
Sanjoy Mukherjee | 34,719 | (11) | * |
Jonathan Zaffino | 10,665 | (12) | * |
All directors, nominees and executive officers as a group (12 persons) | 660,556 | | 1.4 |
| | Amount and Nature of | | Percent of |
Name of Beneficial Owner | | Beneficial Ownership | | Class (13) |
John J. Amore | | 11,427 | | (1) | | * |
John R. Dunne | | 11,379 | | (2) | | * |
William F. Galtney, Jr. | | 62,126 | | (3) | | * |
John A. Graf | | 0 | | | | * |
Gerri Losquadro | | 5,267 | | (4) | | * |
Roger M. Singer | | 10,332 | | (5) | | * |
Joseph V. Taranto | | 334,008 | | (6) | | * |
John A. Weber | | 12,506 | | (7) | | * |
Dominic J. Addesso | | 78,092 | | (8) | | * |
Mark S. de Saram | | 21,862 | | (9) | | * |
John P. Doucette | | 25,105 | | (10) | | * |
Craig Howie | | 16,109 | | (11) | | * |
Sanjoy Mukherjee | | 30,379 | | (12) | | * |
All directors, nominees and executive officers as a group (12 persons) | | 618,592 | | | | 1.3 |
(1) | Includes 454 shares issuable upon the exercise of share options within 60 days of March 20, 2016.18, 2019. Also includes 3,9983,166 restricted shares issued to Mr. Amore under the Company'sCompany’s 2003 Non-Employee Director Equity Compensation Plan ("(“2003 Directors Plan"Plan”) which may not be sold or transferred until the vesting requirements are satisfied. |
(2) | Includes 3,998 restricted shares issued to Mr. Dunne under the 2003 Directors Plan which may not be sold or transferred until the vesting requirements are satisfied. |
(3) | Includes 34,75040,750 shares owned by Galtney Family Investors, Ltd., a limited partnershipvarious family related investments in which Mr. Galtney maintains a beneficial ownership and for which he serves as the General Partner, as well as various family legal entities.Partner. Also includes 3,9983,166 restricted shares issued to Mr. Galtney under the 2003 Directors Plan which may not be sold or transferred until the vesting requirements are satisfied. |
(3) | Includes 3,166 restricted shares issued to Mr. Graf under the 2003 Directors Plan and 343 restricted shares issued under the Company’s 2009 Non Employer Director Equity Compensation Plan (“2009 Directors Plan”) which may not be sold or transferred until the vesting requirements are satisfied. |
(4) | Includes 3,9653,166 restricted shares issued to Ms. Losquadro under the 2003 Directors Plan and 212 restricted shares issued under the Company's 2009 Non-Employee Director Equity Compensation Plan ("2009 Directors Plan") which may not be sold or transferred until the vesting requirements have been satisfied. |
(5) | Includes 3,9983,166 restricted shares issued to Mr. Singer under the 2003 Directors Plan which may not be sold or transferred until the vesting requirements are satisfied. |
(6) | Includes 3,9988,000 shares owned by the Taranto Family Foundation in which Mr. Taranto maintains a beneficial ownership. Also, includes 3,166 restricted shares issued to Mr. Taranto under the 2003 Directors Plan which may not be sold or transferred until the vesting requirements are satisfied. |
(7) | Includes 3,9986,596 shares owned through family investments in which Mr. Weber maintains a beneficial ownership. Also, includes 3,166 restricted shares issued to Mr. Weber under the 2003 Directors Plan which may not be sold or transferred until the vesting requirements are satisfied. |
(8) | Includes 42,3893,080 shares owned by the Addesso Family Trust in which Mr. Addesso maintains a beneficial ownership. Also includes 31,017 restricted shares issued to Mr. Addesso under the Company'sCompany’s 2010 Stock Incentive Plan which may not be sold or transferred until the vesting requirements have been satisfied. |
22 Everest Re Group, Ltd.
Common Share Ownership by Directors and Executive Officers
(9) | Includes 7,9198,493 restricted shares issued to Mr. de SaramDoucette under the Company'sCompany’s 2010 Stock Incentive Plan which may not be sold or transferred until the vesting requirements have been satisfied. |
(10) Includes 12,777 restricted shares issued to Mr. Doucette under the Company's 2010 Stock Incentive Plan which may not be sold or transferred until the vesting requirements have been satisfied.(11) Includes 10,757 restricted shares issued to Mr. Howie under the Company's(10) | Includes 5,973 restricted shares issued to Mr. Howie under the Company’s 2010 Stock Incentive Plan which may not be sold or transferred until the vesting requirements have been satisfied. |
(12) Includes 9,910 restricted shares issued to Mr. Mukherjee under the Company's 2010 Stock Incentive Plan which may not be sold or transferred until the vesting requirements have been satisfied.(13) Based on 47,517,722 total Common Shares outstanding and entitled to vote as of March 21, 2016. Also includes 454 shares issuable upon the exercise of share options exercisable within 60 days of March 21, 2016.(11) | Includes 5,639 restricted shares issued to Mr. Mukherjee under the Company’s 2010 Stock Incentive Plan which may not be sold or transferred until the vesting requirements have been satisfied. |
(12) | Includes 7,190 restricted shares issued to Mr. Zaffino under the Company’s 2010 Stock Incentive Plan which may not be sold or transferred until the vesting requirements have been satisfied. |
(13) | Based on 45,821,728 total Common Shares outstanding and entitled to vote as of March 18, 2019. |
38 Everest Re Group, Ltd.
Principal Beneficial Owners of Common Shares
PRINCIPAL BENEFICIAL OWNERS OF COMMON SHARES
PRINCIPAL BENEFICIAL OWNERS OF COMMON SHARES |
To the best of the Company'sCompany’s knowledge, the only beneficial owners of 5% or more of the outstanding Common Shares as of December 31, 20152018 are set forth below. This table is based on information provided in Schedule 13G Information Statements filed with the SEC by the parties listed in the table.
| | Number of Shares | | Percent of |
Name and Address of Beneficial Owner | | Beneficially Owned | | Class |
Everest International Reinsurance, Ltd. | | 9,719,971 | (1) | | 19.3% |
Seon Place, 141 Front Street, 4th Floor | | | | | |
Hamilton HM 19, Bermuda | | | | | |
The Vanguard Group | | 4,344,357 | (2) | | 10.7% |
100 Vanguard Boulevard | | | | | |
Malvern, Pennsylvania 19355 | | | | | |
BlackRock, Inc. | | 3,382,386 | (3) | | 8.3% |
55 East 52nd Street | | | | | |
New York, New York 10055 | | | | | |
Boston Partners | | 2,486,855 | (4) | | 6.1% |
One Beacon Street | | | | | |
30th Floor | | | | | |
Boston, Massachusetts 02108 | | | | | |
Alliance Bernstein L.P. | | 2,152,832 | (5) | | 5.3% |
1345 Avenue of the Americas | | | | | |
New York, New York 10105 | | | | | |
| | Number of Shares | | Percent of |
Name and Address of Beneficial Owner | | Beneficially Owned | | Class (5) |
Everest International Reinsurance, Ltd. | | 9,719,971 | (1) | | 18.5 |
Seon Place, 141 Front Street, 4th Floor | | | | | |
Hamilton HM 19, Bermuda | | | | | |
BlackRock, Inc. | | 3,924,421 | (2) | | 9.1 |
55 East 52nd Street | | | | | |
New York, New York 10022 | | | | | |
The Vanguard Group | | 2,754,684 | (3) | | 6.4 |
100 Vanguard Boulevard | | | | | |
Malvern, Pennsylvania 19355 | | | | | |
(1) | Everest International Reinsurance, Ltd. ("(“International Re"Re”) a direct wholly-owned subsidiary of the Company, obtained the Company'sCompany’s Common Shares from Everest Preferred International Holdings ("(“Preferred Holdings"Holdings”), a direct wholly owned subsidiary of the Company, in exchange for preferred stock issued by International Re. Preferred Holdings had obtained the Company'sCompany’s common shares from Everest Reinsurance Holdings Inc. in exchange for preferred stock issued by International Re. International Re had sole power to vote and direct the disposition of 9,719,971 Common Shares as of December 31, 2015.2018. According to the Company'sCompany’s Bye-laws, the total voting power of any Shareholder owning more than 9.9% of the Common Shares will be reduced to 9.9% of the total voting power of the Common Shares. |
(2) | BlackRock, Inc. reports in its Schedule 13G that it has sole power to vote 3,559,816 Common Shares and sole dispositive power with respect to 3,924,421 Common Shares. |
(3)(2) | The Vanguard Group reports in its Schedule 13G that it has sole power to vote 42,417or direct the vote of 48,144 Common Shares, shared voting power for 4,00014,724 Common Shares, sole dispositive power with respect to 2,709,1804,282,490 Common Shares and shared dispositive power with respect to 45,50461,867 Common Shares. |
(3) | BlackRock, Inc. reports in its Schedule 13G that it has sole power to vote or direct the vote of 3,012,703 Common Shares and sole dispositive power with respect to 3,382,386 Common Shares. |
(4) | The percentBoston Partners reports in its Schedule 13G that it has sole power to vote or direct the vote of class shown for International Re includes the2,171,399 Common Shares, held by International Re as part of the totalshared voting power for 2,676 Common Shares, outstanding. However, pursuantsole dispositive power with respect to Instruction 1, Item 403 of Regulation S-K, the percent of class shown for BlackRock, Inc. and the Vanguard Group exclude the2,486,855 Common Shares held by International Re fromand shared dispositive power with respect to no Common Shares. |
(5) | Alliance Bernstein L.P. reports in its Schedule 13G that it has sole power to vote or direct the totalvote of 1,910,511 Common Shares, outstanding. If such shares owned by International Re were included, the percent of class owned by BlackRock, Inc.shared voting power for no Common Shares, sole dispositive power with respect to 2,150,132 Common Shares and the Vanguard Group would be 7.5% and 5.3%, respectively.shared dispositive power with respect to 2,700 Common Shares. |
Proxy Statement 39
Each member of the Board who is not otherwise affiliated with the Company as an employee and/or officer (“Non-Employee Director” or “Non-Management Director”) was compensated in 2018 for services as a director and was also reimbursed for out-of-pocket expenses associated with each meeting attended. Each Non-Employee Director is compensated in the form of an annual retainer and a discretionary equity grant.
The Board reviews director compensation annually. In reviewing director compensation the Board considered several factors, including the need to recruit and retain quality director candidates with expertise relevant to the Company’s objectives and attuned to the increased regulatory and shareholder focus on Board governance and oversight. The Board also considered the amount of time spent by directors in attending all scheduled Board and Committee meetings, preparing for meetings, communicating with management throughout the year and attending various educational seminars. Directors do not receive any additional compensation for service as a Committee chair, attending regular Board and Committee meetings or special meetings of individual Committees or the Board.
Each Non-Employee Director attended the four scheduled meetings of the Board in 2018, as well as an annual informational meeting in January to review and discuss corporate governance matters and long-term strategic plans for the Company. Moreover, because we believe that a smaller board allows for greater exchange of ideas and more focused and efficient interaction with management, each Non-Employee Director frequently participates in every meeting of the Audit, Nominating and Governance, Compensation, Underwriting and Investment Policy Committees, irrespective of whether the director is a formal appointee to such Committee or an invitee of the Committee. Our directors believe they are at their most effective when working as a collective unit in sharing ideas, offering opinions and engaging in spirited debate at all Committee and Board meetings. Finally, various Non-Employee Directors attend and report back to the Board on educational seminars relating to changes in accounting rules and FASB pronouncements, tax regulations, enterprise risk management, governance best practices, information technology and cyber security.
Each Non-Employee Director received a standard retainer of $125,000 in 2018 payable in the form of cash or Common Shares at his or her election, and equity award of 1,500 shares. Giving Non-Employee Directors an opportunity to receive their standard retainer in the form of Common Shares is intended to further align their interests with those of the Company’s shareholders. The value of Common Shares issued is calculated based on the average of the highest and lowest sale prices of the Common Shares on each installment date or, if no sale is reported for that day, the preceding day for which there is a reported sale. In addition to the standard retainer, Mr. Taranto received an additional retainer payable in the form of cash pursuant to his December 31, 2013 Chairmanship Agreement, which expired under its terms and was renewed on January 1, 2017. As a non-independent Chairman of the Board, Mr. Taranto provides enhanced duties as a Board member including serving as the Board’s representative in consulting with the CEO to approve share buybacks; working with the CEO and the Corporate Secretary in scheduling, preparing agendas and ensuring information flow for Board meetings; recruitment and orientation of new directors; developing and maintaining business relationships beneficial to the Company at industry conferences and events as a Board representative; and providing support, advice and counsel on any special or extraordinary projects at the request of the CEO or Board.
40 Everest Re Group, Ltd.
DIRECTORS' COMPENSATION
Each member of the Board who is not otherwise affiliated with the Company as an employee and/or officer ("Non-Employee Director" or "Non-Management Director") was compensated in 2015 for services as a director and was also reimbursed for out-of-pocket expenses associated with each meeting attended. Each Non-Employee Director is compensated in the form of an annual retainer and a discretionary equity grant.
Each Non-Employee Director received a standard retainer payable in the form of cash or Common Shares at the Director's election. In addition to the standard retainer, Mr. Taranto received an additional retainer payable in the form of cash pursuant to his December 31, 2013 Chairmanship Agreement. Giving Non-Employee Directors an opportunity to receive their standard retainer in the form of Common Shares is intended to further align their interests with those of the Company's shareholders. The value of Common Shares issued is calculated based on the average of the highest and lowest sale prices of the Common Shares on each installment date or, if no sale is reported for that day, the preceding day for which there is a reported sale. During 2015, each of the Non-Employee Directors elected to receive their retainers in the form of cash except for Mr. Amore who elected to receive his in the form of Common Shares paid in quarterly installments.
The table below summarizes the compensation paid by the Company to Non-Employee Directors for the fiscal year ended December 31, 2015.2018.
2015
2018 DIRECTOR COMPENSATION TABLE | | | | | | | | | | | | | | Change in | | | | | | | | | | | Change in | |
| | | | | | | | | | | | | | Pension Value | | | | | | | | | | | Pension Value | |
| | | | | | | | | | | | | | and Nonqualified | | | | | | | | | | | and Nonqualified | |
| | Fees | | | | | | | | | Non-Equity | | | Deferred | | | | | | | | Fees | | | Non-Equity | Deferred | |
| | Earned or | | | Share | | | Option | | | Incentive Plan | | | Compensation | | | All Other | | | | | Earned or | Share | Option | Incentive Plan | Compensation | All Other | |
Name | | Paid in Cash (1) | | | Awards (2) | | | Awards (3) | | | Compensation | | | Earnings | | | Compensation (4) | | | Total | | Paid in Cash(1) | Awards(2) | Awards(3) | Compensation | Earnings | Compensation(4) | Total |
John J. Amore | | $ | 75,000 | | | $ | 357,680 | | | $ | — | | | $ | — | | | $ | — | | | $ | 17,286 | | | | 449,966 | | $ 125,000 | $ 363,585 | $ — | $ — | $ — | $ 18,545 | $ 507,130 |
John R. Dunne | | | 75,000 | | | | 357,680 | | | | — | | | | — | | | | — | | | | 15,992 | | | | 448,672 | | |
William F. Galtney, Jr. | | | 75,000 | | | | 357,680 | | | | — | | | | — | | | | — | | | | 15,992 | | | | 448,672 | | 125,000 | 363,585 | — | — | — | 18,545 | 507,130 |
John A. Graf | | 125,000 | 363,585 | — | — | — | 18,174 | 506,759 |
Gerri Losquadro | | | 75,000 | | | | 357,680 | | | | — | | | | — | | | | — | | | | 11,781 | | | | 444,461 | | 125,000 | 363,585 | — | — | — | 18,545 | 507,130 |
Roger M. Singer | | | 75,000 | | | | 357,680 | | | | — | | | | — | | | | — | | | | 23,492 | | | | 456,172 | | 125,000 | 363,585 | — | — | — | 28,545 | 517,130 |
Joseph V. Taranto | | | 1,575,000 | | | | 357,680 | | | | — | | | | — | | | | — | | | | 13,328 | | | | 1,946,008 | | 1,625,000 | 363,585 | — | — | — | 18,545 | 2,007,130 |
John A. Weber | | | 75,000 | | | | 357,680 | | | | — | | | | — | | | | — | | | | 23,492 | | | | 456,172 | | 125,000 | 363,585 | — | — | — | 28,545 | 517,130 |
(1) | During 2015,2018, all of the directors elected to receive their compensation in cash except for Mr. Amore, who received 426541 shares in compensation for his serviceservices during 2015.2018. Pursuant to his Chairmanship Agreement, Mr. Taranto received $1.5 million in addition to the standard annual retainer. |
(2) | The amount shown is the aggregate grant date fair value of the 20152018 grant computed in accordance with Financial Accounting Standards Board Statement Accounting Standards Codification Topic 718 ("(“FASB ASC Topic 718"718”) calculated by multiplying the number of shares by the fair market value (the average of the high and low of the Company'sCompany’s stock price on the NYSE on the date of grant) ("FMV"(“FMV”). Each of the Non-Employee Directors was awarded 2,0001,500 restricted shares on February 25, 201521, 2018 at FMV of $178.84.$242.39. The aggregate number of restricted stock outstanding at year-end 20152018 was 3,9983,499 for all directors, except Ms. Losquadro,for John A. Graf who has 4,177had 3,176 shares. |
(3) | As of December 31, 2015,2018, Mr. Amore has outstanding options to purchase 454 shares all of which are exercisable. This grant was awarded upon his appointment to the Board on September 19, 2012. |
(4) | Dividends paid on each director'sdirector’s restricted shares. For Messrs. Singer and Weber, also includes $7,500$10,000 in director fees for meetings attended as directors of both Bermuda Re and International Re. |
As part of prior annual outreach, several shareholders indicated that the director compensation program was not in line with that of our peer group, primarily as a consequence of the heightened performance of the Company’s share price as a result of our exceptional long-term performance. While the Board’s oversight directly contributed to achieving the long-term value generation for shareholders, the Board took notice of our shareholders’ observations. Accordingly, for fiscal year 2018, and then again in 2019, the Board reduced the number of shares awarded to the directors to 1,500 shares and increased the annual cash retainer to $125,000. We believe that these revisions to the director compensation structure will bring total compensation per independent director more in line with our peers while preserving the Board’s alignment of interest with our shareholders.
THE COMPANY'S COMPENSATION PHILOSOPHY AND OBJECTIVES
THE COMPANY’S COMPENSATION PHILOSOPHY AND OBJECTIVES |
The Company'sCompany’s executive compensation program is designed to attract, motivate and retain highly talented individuals whose abilities are critical to the ongoing success of the Company. In this regard, the Company'sCompany’s executive compensation program utilizes a dual approach. In the first instance, the program has a short-term component consisting of a base salary and a performance basedperformance-based cash bonus predominantly tied to a Company financial metric. Secondly, the Compensation Committee rewards long-term performance through the use of discretionary time-based, as well as performance-based, equity awards tied to specific financial performance factors designed to closely align the interests of key executives with the longer termlonger-term interests of the Company'sCompany’s shareholders.
The Compensation Committee is guided by the following principles when making compensation decisions individually and collectively with respect to our executives:
· | Compensation of executive officers is based on the level of job responsibility, contribution to the performance of the Company, individual performance in light of general economic and industry conditions, teamwork, resourcefulness and ability to manage our business. |
· | Compensation awards and levels are intended to be reasonably competitive with compensation paid by organizations of similar stature to both motivate the Company'sCompany’s key employees and minimize the potential for disruptive and costly key employee turnover. |
· | Compensation is intended to align the interests of the executive officers with those of the Company'sCompany’s shareholders by basing a significant part of total compensation on our executives'executives’ contributions over time to the generation of shareholder value. |
Components of the Company'sCompany’s Compensation Program
The Compensation Committee meets each February to review and approve compensation for each Named Executive Officer including any adjustments to base salary, bonus awards and equity grants in consideration of the officer'sofficer’s prior year'sfiscal year’s performance as well as performance over time. In addition, from time to time, the Compensation Committee may make separate salary adjustments to Named Executive Officers during the course of the year to recognize mid-year promotions, changes in job functions and responsibilities, or other circumstances.
For 2015, the maximum potential bonus was tied to the Company ROE. Final awards also consider achievement of individual non-financial
The components of our executive compensation program and their respective key features are shown in the table below:
Components of Executive Compensation
COMPONENT | FORM | | | KEY FEATURES |
Base Salary | Cash | · | | Intended to attract and retain top talent |
| | · | | Generally positioned near the median of our pay level peer group, but varies with individual skills, experience, responsibilities and |
performance |
| | · | | Represents approximately 14.5%19% of CEO'sCEO’s total compensation for 20152018 |
Annual BonusNon-Equity Incentive Compensation | Cash | · | | For 2015,2018, the maximum potential bonus was tied to the Company Adjusted ROE. Final awards also consider achievement of individual non-financial goals |
non-financial | | goals· |
·
| All NEOsNamed Executive Officers (“NEOs”) were selected as participants in the Executive Performance Annual Incentive Plan ("Plan"(“Executive Incentive Plan”) for 20152018 with the |
maximum bonus potential available for award to any participant in the Plan being no more than 0.5% of FY 2015 Operating |
Income, not to exceed $3.5 million |
46 Everest Re Group, Ltd.
The Company's Compensation DiscussionPhilosophy and AnalysisObjectives
COMPONENT | FORM | KEY FEATURES |
Non-Equity Incentive
| Cash | · | | · Performance goals established at the beginning of each fiscal year
|
Compensation (continued) | | · | | · No guaranteed minimum award
|
| | · | | · Intended to motivate annual performance with respect to key financial measures, coupled with individual performance factors
|
| | · | | Represents approximately 42%20% of CEO'sCEO’s total compensation for 20152018 |
Performance SharesShare Units | Equity | · | | Tied to the rate of annual operating ROE and cumulative growth in book value per share relative to our peer group over a three-year period |
| | · | | · Payouts range from 0% of target payout to 175% of target payout, depending on performance after 3 years
|
| | · | | Intended to motivate long termlong-term performance with respect to key financial measures and align our NEOs'NEOs’ interests with those of our shareholders |
shareholders |
| · | | Represents approximately 14.5%30.5% of CEO'sCEO’s total compensation for 20152018 |
Restricted Shares | Equity | · | | Vests at the rate of 20% per year after anniversary of grant over a five year period |
| | · | | · Intended to motivate long-term performance, promote appropriate risk-taking, align our NEOs'NEOs’ interests with shareholders'
|
shareholders’ interests and promote retention |
| | · | | Represents approximately 29%30.5% of CEO'sCEO’s total compensation for 20152018 |
| | | | |
Further, as a result of the Company’s continued examination of executive compensation program best practices, the Compensation Committee determined in 2018 to clarify the 2010 Stock Incentive Plan to provide that equity awards shall have a minimum vesting period of one year and to disallow share recycling. Notwithstanding these enhanced governance protocols, it has always been our practice to impose a five year vesting period on all equity awards issued to eligible employees.
Proxy Statement 47
The Company's Compensation Philosophy and Objectives
As shown in the chart below, the Compensation Committee manages the pay mix for our executive officers such that a substantial portion is "at risk"“at risk” compensation so as to better align the interestinterests of our Named Executive Officers with the Company'sCompany’s shareholders. Our CEO's 2015CEO’s 2018 at risk compensation was 86.7%,81% of his total compensation, and the average of all other Named Executive Officers'Officers’ at risk compensation was 73%65%. The amounts above and in the chart below do not include the amounts set forth in the columns labeled "Pension“Change in Pension Value and Nonqualified Deferred Compensation Earnings"Earnings” and "All“All Other Compensation"Compensation” in the Summary Compensation Table on page 48.68.
In addition, all employees including executive officers received other compensation in the form of benefits. Such other compensation included Company-paid term life insurance, partially subsidized medical and dental plans, Company-paid disability insurance, and participation in a Company-sponsored 401(k) employee savings plan. Certain executives also participated in a Supplemental Savings Plan whose purpose is principally to restore benefits that would otherwise have been limited by U.S. benefit plan rules applicable to the 401(k) employee savings plan.
Compensation Consultant
48 Everest Re Group, Ltd.
The Committee engaged an independent consulting firm to provide advice about competitive compensation practicesCompany's Compensation Philosophy and analyze how our executive compensation compares to that of other similarly situated companies, including comparable publicly held property and casualty insurance and reinsurance companies. In 2015, the Compensation Committee engaged Frederic W. Cook & Co. ("Cook") as an independent advisor to advise and assist with decisions relating to our executive compensation program including reviewing our annual and long-term incentive plans, assisting in identifying our pay level peer group as well as conducting a competitive marketplace assessment of our Named Executive Officer compensation, and offering advice on compensation best practices.
Cook provides no other services to the Company or its affiliates, and worked with the Company's management only on matters for which the Compensation Committee is responsible. The Compensation Committee reviewed its relationship with Cook, considered Cook's independence and the existence of potential conflicts of interest, and determined that the engagement of Cook did not raise any conflict of interest. In reaching this conclusion, the Compensation Committee considered various factors, including the six factors set forth in the SEC and NYSE rules regarding compensation advisor independence. The total amount of fees paid to Cook in 2015 was $75,939. Cook received no other fees or compensation from the Company.Objectives
The Role of Peer Companies and Benchmarking
The Compensation Committee identified a peer group comprised of companies that are similar to us in industry and size for purposes of benchmarking and evaluating the competitiveness of our pay levels and compensation packages for our Named Executive Officers. In determining the final peer group, the Compensation Committee selected publicly traded insurers and reinsurers that directly compete with the Company for business and talent. The Compensation Committee reviews both compensation and performance at peer companies as a benchmark when setting compensation levels that it believes are commensurate with the Company'sCompany’s performance. Although the Committee did not set compensation components to meet specific benchmarks, such as targeting salaries "above“above the median"median” or equity compensation "at“at the 75th percentile"percentile” of peer companies at the outset of 2015,2018, it did utilize the peer group compensation benchmark data provided by Cook in determining appropriate incentive compensation amounts relative to individual and Company performance awarded to our Named Executive Officers for the 20152018 fiscal year. Further, the Committee utilized such peer group metrics in setting Named Executive Officer targets and benchmarks for the 20152018 fiscal year.
For 2015,2018, the Committee selected the following companies to serve as our pay level peer group:
ACE Limited(1) | Alleghany Corporation | Allied World Assurance
Company Holdings, AG
|
Arch Capital Group, Ltd. | Aspen Insurance Holdings, Limited |
AXIS Capital Holdings, Limited |
Endurance Specialty
Holdings Ltd. Chubb Limited | Markel Corporation | Partner Re Ltd. |
Platinum Underwriters RenaissanceRe Holdings Ltd. Ltd | RenaissanceRe
Holdings Ltd.
| Validus Holdings, Ltd.4 |
W.R. Berkley Corporation |
| XL Group, plc5 | |
| | |
(1) Upon closing its acquisition of The Chubb Corporation on January 14, 2016, ACE Limited changed its name to Chubb Limited.
Proxy Statement 31
Compensation Discussion and Analysis
Base Salary and Bonus Determinations
The base salaries for all executive officers are determined by the Compensation Committee, established upon hire or assignment date and reconsidered annually or as responsibilities change. In setting an executive'sexecutive’s initial base salary, the Compensation Committee considers the executive'sexecutive’s abilities, qualifications, accomplishments and prior experience. The Compensation Committee also considers base salaries of similarly situated executive officers in its identified peer companies when assessing competitive conditions in the industry. Subsequent adjustments to the executive'sexecutive’s base salary in the form of annual raises or upon renewal of an employment agreement take into account the executive'sexecutive’s prior performance, the financial performance of the Company and the executive'sexecutive’s contribution to the Company'sCompany’s performance over time, as well as competitive conditions in the industry.
Incentive Based Bonus Plans
In connection with fiscal year 20152018 performance, the Company awarded annual performance-based cash bonuses to the Named Executive Officers pursuant to the Executive Performance Annual Incentive Plan, which is a shareholder-approved bonus plan.
2015 INCENTIVE-BASED BONUS TARGETS AND AWARDS | |
Named Executive Officer | | Target Incentive Bonus (% Base Salary) | | | Target Incentive Bonus | | | Potential Maximum Incentive Bonus | | | Actual Bonus Award | |
Dominic J. Addesso (CEO) | | | 125% | | $ | 1,250,000 | | | $ | 3,500,000 | | | $ | 2,900,000 | |
Craig W. Howie (CFO) | | | 100% | | $ | 515,000 | | | $ | 1,030,000 | | | $ | 760,000 | |
John P. Doucette (CUO) | | | 100% | | $ | 675,000 | | | $ | 1,350,000 | | | $ | 1,150,000 | |
Mark S. de Saram CEO of Bermuda Re | | | 100% | | $ | 620,000 | | | $ | 1,240,000 | | | $ | 775,000 | |
Sanjoy Mukherjee (GC) | | | 100% | | $ | 470,000 | | | $ | 940,000 | | | $ | 700,000 | |
TOTAL | | | | | | $ | 3,530,000 | | | $ | 8,060,000 | | | $ | 6,285,000 | |
% Net After-Tax Operating Income | | | | | | | .3 | % | | | .7 | % | | | .57 | % |
4 The American International Group, Inc. acquisition of Validus Holdings, Ltd. was completed in July 2018, resulting in the delisting of Validus from the NYSE.
5 The AXA Group acquisition of XL Group, Ltd. was completed in September 2018, resulting in the delisting of XL from the NYSE.
The Company's Compensation Philosophy and Objectives
Executive Performance Annual Incentive Plan
The Compensation Committee identifies the executive officers eligible to participate in the Executive Performance Annual Incentive Plan (the "Executive“Executive Incentive Plan"Plan”). The purpose of the Executive Incentive Plan isIn addition to define and limit the amounts that may be awarded to eligible executives of the Company so that the awards will qualify as performance-based compensation under Section 162(m) of the Code. Section 162(m) of the Code limits the ability of a publicly-held company to take a tax deduction for annual compensation in excess of $1 million paid to its chief executive officer or to any of its four other most highly compensated officers. However, compensation is exempt from this limit if it qualifies as "performance-based compensation." To preserve the tax deductibility of cash bonuses paid under the Executive Incentive Plan, those bonuses are designed to qualify as "performance-based compensation" that is not counted toward the $1 million limit. In accordance with the Code and applicable regulations, the Executive Incentive Plan is a shareholder approved plan that is presented for shareholder approval every five years.4 Among other things,criteria, the Executive Incentive Plan provides that the total amount of awards granted to all participants in any one year may not exceed 10% of the Company'sCompany’s average annual income before taxes for the preceding five years.
4 The current Executive Incentive Plan was approved by shareholders in 2011, and is being resubmitted for shareholder approval at the 2016 Annual General Meeting (See Proposal 3).
Pursuant to the terms of the Executive Incentive Plan, the Compensation Committee, within 90 days after the beginning of the fiscal year, selects those executive officers of the Company and its subsidiaries who will participate in the Executive Incentive Plan for that year. The Compensation Committee sets maximum potential bonus amounts for each participant based on achievement of specific performance criteria, chosen from among the performance criteria set forth in the Executive Incentive Plan, that most closely align Company financial performance to long-term shareholder value creation. Because the amounts represent only the maximum potential award if the Company achieves the predefined performance metrics for purposes of 162(m) of the Code, theThe Compensation Committee may exercise discretion and award an amount that is less than the potential maximum amount to reflect actual corporate, business unit and individual performance.
For purposes of satisfying Section 162(m) and Executive Incentive Plan requirements that a participant's bonus be based on the achievement of specific performance criteria, theThe Compensation Committee established the maximum potential bonus for any participant in the Executive Incentive Plan in 2015 to be no more than 0.5% of fiscal year 2015 operating income, and in no event can such bonus exceed $3.5 million.
Subject to the foregoing maximum, the Board determined that the maximum potential bonus for Mr. Addesso would beand any participant in the Executive Incentive Plan cannot exceed $3.5 million or 350% of his base salary.million. For Messrs. Doucette, de Saram, Howie, Mukherjee and Mukherjee,Zaffino, their maximum potential bonus would beis further limited to 200% of their respective base salary.salaries, subject to the foregoing $3.5 million cap.
In addition, and subject to the foregoing maximums, the total bonus determination for a participant in 20152018 is arrived at by application of two independent components: components based upon a 70% and 30% weighting, respectively:
(1) Company financial performance criteria and (2) subjective evaluation of individual performance.performance criteria.
For each Named Executive Officer, the Compensation Committee established full yearfull-year operating plan ROE targets for the Company as the additional objective financial performance criteria to be applied in connection with a portion of their bonus compensation. The Compensation Committee considers 70% of the potential maximum bonus eligible to be earned based on tiered Company Adjusted ROE results.results above and below the set operating plan ROE target. In determining that only 70% of the maximum bonus should be tied to achievement of these additional financial performance metrics, the Committee desired to preserve financial metrics as being the predominant determinant of whether a participant had earned the maximum bonus potential.
The Compensation Committee separately considers the remaining 30% of the potential maximum bonus eligible to be earned by a participant based upon successful achievement of individual non-financial goals established for each participant. Consideration of individual performance is done to acknowledge that the property and casualty (re)insurance business is a risk-based endeavor where a company'scompany’s financial results in any one financial year may be impacted by exogenous factors beyond human control such as an unexpected severe hurricane season or other natural peril catastrophe activity. Implicit in such a determination is the recognition that our financial success over the long term is not dependent on any one financial year'syear’s results.
This balanced approach allows the Company to remain competitive and foster retention of successfully performing Named Executive Officers.
The Further, the Committee is not bound to any minimum bonus amount and retains discretion to scale the payments below the potential maximum bonus and to award no cash bonus to any Named Executive Officer.
50 Everest Re Group, Ltd.
The Company's Compensation Philosophy and Objectives
At its February 2018 meeting, the Compensation Committee selected Messrs. Addesso, Doucette, Howie, Mukherjee and de SaramZaffino to participate in the Executive Incentive Plan for fiscal year 2015,2018, which tied their maximum potential bonus awards to the performance criteria as described in more detail below.
At its February 2016 meeting, the Compensation Committee selected Messrs. Addesso, Doucette, Howie, Mukherjee and Jonathan Zaffino as Executive Incentive Plan participants for the 2016 fiscal year.
2018 INCENTIVE-BASED BONUS TARGETS AND AWARDS | |
Named Executive Officer | | Target Incentive Bonus (% Base Salary) | | Target Incentive Bonus | | Potential Maximum Incentive Bonus | | Actual Bonus Award | |
Dominic J. Addesso (CEO) | | | 125% | | $ | 1,562,500 | | $ | 3,500,000 | | $ | 1,300,000 | |
John P. Doucette President and CEO of the Reinsurance Division | | | 100% | | $ | 850,000 | | $ | 1,700,000 | | $ | 400,000 | |
Craig W. Howie (CFO) | | | 100% | | $ | 560,000 | | $ | 1,120,000 | | $ | 250,000 | |
Sanjoy Mukherjee GC and CEO of Bermuda Re | | | 100% | | $ | 575,000 | | $ | 1,150,000 | | $ | 400,000 | |
Jonathan M. Zaffino President and CEO of the Everest Insurance® Division | | | 100% | | $ | 600,000 | | $ | 1,200,000 | | $ | 550,000 | |
TOTAL | | | | | $ | 4,147,500 | | $ | 8,670,000 | | $ | 2,900,000 | |
Long-Term Compensation Determinations
The second component of the Company'sCompany’s executive compensation plan is premised on a strategic view of compensation. This long-term compensation component is achieved through the Everest Re Group, Ltd. 2010 Stock Incentive Plan ("2010 Stock Incentive Plan").Plan. Awards under the 2010 Stock Incentive Plan are generally intended to reinforce management'smanagement’s long-term emphasis on corporate performance, provide an incentive for key executives to remain with the Company for the long term, and provide a strong incentive for employees to work to increase shareholder value by aligning employees'employees’ interests with those of the shareholders.
Equity awards may take the form of share options, share appreciation rights, restricted shares, performance share units or share awards. Until 2015, the Committee had only awarded restricted shares and non-qualified share options. Commencing in 2015, the Compensation Committee awarded performance share units. Options and restricted shares are awarded on the day that they are granted by the Compensation Committee and valued as of the grant date. Options are issued with an exercise price equal to the fair market value of the Company'sCompany’s stock on the grant date. The Company determines fair market value by averaging the high and low market price on the grant date.
With respect to the equity award process, the CEO makes recommendations to the Compensation Committee for each eligible executive officer, and the proposed awards are discussed with and reviewed by the Compensation Committee. While the Compensation Committee takes into account management'smanagement’s input on award recommendations, all final determinations are in the subjective judgment and discretion of the Compensation Committee. In determining the final award amounts, the Compensation Committee reviewedreviews each recipient'srecipient’s demonstrated past and expected future individual performance as well as his/her contribution to the financial performance of the Company over time, the recipient'srecipient’s level of responsibility within the Company, his/her ability to affect shareholder value, and the value of past share awards. Finally, the Compensation Committee also considers the value of equity awards granted to similarly situated executive officers by our pay level peer group in order to ensure a competitively attractive overall compensation package.
Equity grants are made at the Compensation Committee'sCommittee’s February meeting. There is no plan or practice to grant equity awards in coordination with the release of material non-public information. Additionally, the Company'sCompany’s Ethics Guidelines and Insider Trading Policy prohibit our executive officers, directors and other employees from trading in options in the Company'sCompany’s shares. Prohibited options include options awarded under the 2010 Stock Incentive Plan, as well as any expired stock incentive plans, "put"“put” options and "call"“call” options. The Company'sCompany’s anti-hedging policy prohibits its officers, directors or other employees from engaging in transactions geared toward "shorting"“shorting” the Company'sCompany’s stock or trading in straddles, equity swaps or other derivative securities that are directly linked to the Company'sCompany’s common shares. In February 2015, theThe Board has adopted stock ownership and retention guidelines for all senior officers with the title of Executive Vice President or above, in order to further align the personal interests of these executives with those of our shareholders.
Proxy Statement 51
The Company's Compensation Philosophy and Objectives
Time-Vested Share Awards
We believe that restricted shares, share options and performance share optionunit awards encourage employee retention and reward consistent long-term shareholder value creation, because such awards vest over a five year period at the rate of 20% per year and are generally forfeited if the recipient leaves the Company before vesting. Furthermore, the expiration of share options ten years after they are granted is designed to encourage recipients to work towards maximizing the Company'sCompany’s growth over the long-term and not simply cater to short-term profits.
2015 Performance Share Units
In February 2015, theThe Compensation Committee issuedgrants annual performance-based equity awards to Named Executive Officers in the form of performance share units ("PSUs"(“PSU”) that can only be earned upon the achievement of certain Company financial metrics measured over a three-year performance period. At fiscal year-end 2018, we completed the third and final year of the PSU performance period for our 2016 awards, the second year of the PSU performance period for our 2017 awards, and the first year of the PSU performance period for our 2018 awards. For the 2016, 2017 and 2018 PSU, the performance periods are January 1, 20152016 through December 31, 2017.
34 Everest Re Group, Ltd.
Compensation Discussion2018, January 1, 2017 through December 31, 2019, and Analysis
January 1, 2018 through December 31, 2020, respectively.Each PSU gives the participant the right to receive up to 1.75 shares upon settlement at the end of the three-year performance period based upon satisfaction of certain financial performance targets. The shares represented by the PSUsPSU may only be earned upon the satisfactory achievement of two financial performance metrics, each weighted 50%: cumulative Book Value Per Share (“BVPS”) growth and Operating Return on Equity.
The Compensation Committee elected to use BVPS as one of the financial metrics for the PSU because this metric correlates with long-term shareholder value. Book Value Per Share is defined as the book value of a share as determined under GAAP, and as reported onadjusted for dividends paid to shareholders during the Company's Form 10-K. The Committee determined to use BVPS as one of the financial metrics for the PSUs because this metric correlates with long-term shareholder value.performance period.
Operating Return on Equity ("ROE"(“ROE”), for purposes of performance share unit awards, is defined as operating income divided by average adjusted shareholders'shareholders’ equity. For this purpose,In setting the target metric for the 2018 performance year, operating income equals net income income/(loss) attributable to the Company and excluding after-tax net realized capital gains gains/(losses). Average adjusted shareholders'shareholders’ equity equals the average of beginning-of-period and end-of-period shareholders'shareholders’ equity, excluding the after-tax net unrealized appreciation appreciation/(depreciation) on investments recorded in accumulated other comprehensive income. The Compensation Committee determined to useselected ROE as one of the financial metrics for the PSUsPSU because this metric correlates closely with shareholder value over both intermediate and longer-term periods and is a widely-used financial metric in the insurance and reinsurance industry for assessing company performance. The tables below set forth the 20152016, 2017 and 2018 PSU target awardawards for each NEO and performance measures:
Target Award | NAMED EXECUTIVE OFFICERS |
Dom Addesso | John Doucette | Mark DeSaram | Craig Howie | Sanjoy Mukherjee |
5,595 | 1,510 | 1,390 | 1,155 | 1,055 |
| NAMED EXECUTIVE OFFICERS |
Target Award | Dominic Addesso | John Doucette | Craig Howie | Sanjoy Mukherjee | Jonathan Zaffino |
2016 PSU | 6,455 | 1,485 | 1,140 | 1,080 | 970 |
2017 PSU | 6,410 | 1,285 | 930 | 880 | 855 |
2018 PSU | 6,190 | 1,825 | 925 | 1,140 | 995 |
TARGET MEASURES |
| | | | Award Multiplier |
| Weight | Performance Year | Target | 0% | 25% | 100% | 175% |
Operating ROE | 50.0% | | | | | | |
| | 2015 | 11.0% | <4.0% | 4% | 11% | >=17% |
| | 2016 | — | — | — | — | — |
| | 2017 | — | — | — | — | — |
| | | | Award Multiplier |
| Weight | Performance Period | Target | 0.0% | 25% | 100% | 175% |
3Yr Relative Change in BVPS to Peers | 50.0% | 2015 - 2017 | Median | <26th %tile | 26th %tile | Median | >=75th %tile |
52 Everest Re Group, Ltd.
The Company's Compensation Philosophy and Objectives
2016 PSU TARGET MEASURES |
| | | | Award Multiplier |
| Weight | Performance Year | Target ROE | 0% | 25% | 100% | 175% |
Operating ROE | 50.0% | | | | | | |
| | 2016 | 10.5% | <3.5% | 3.5% | 10.5% | >=16.5% |
| | 2017 | 10% | <3% | 3% | 10% | >=15% |
| | 2018 | 11% | <4% | 4% | 11% | >=16% |
| | | | Award Multiplier |
| Weight | Performance Period | Target | 0.0% | 25% | 100% | 175% |
3Yr Relative Change in BVPS to Peers | 50.0% | 2016 - 2018 | Median | <26th %tile | 26th %tile | Median | >=75th %tile |
2017 PSU TARGET MEASURES |
| | | | Award Multiplier |
| Weight | Performance Year | Target ROE | 0% | 25% | 100% | 175% |
Operating ROE | 50.0% | | | | | | |
| | 2017 | 10% | <3% | 3% | 10% | >=15% |
| | 2018 | 11% | <4% | 4% | 11% | >=16% |
| | | | Award Multiplier |
| Weight | Performance Period | Target | 0.0% | 25% | 100% | 175% |
3Yr Relative Change in BVPS to Peers | 50.0% | 2017 - 2019 | Median | <26th %tile | 26th %tile | Median | >=75th %tile |
2018 PSU TARGET MEASURES |
| | | | Award Multiplier |
| Weight | Performance Year | Target ROE | 0% | 25% | 100% | 175% |
Operating ROE | 50.0% | | | | | | |
| | 2018 | 11% | <4% | 4% | 11% | >=16% |
| | | | Award Multiplier |
| Weight | Performance Period | Target | 0.0% | 25% | 100% | 175% |
3Yr Relative Change in BVPS to Peers | 50.0% | 2018 - 2020 | Median | <26th %tile | 26th %tile | Median | >=75th %tile |
| | | | | | | |
As displayed above, the PSUsportions of the 2016, 2017 and 2018 PSU grants that are subject to the ROE financial metric (50% of the total target award) are eligible to be earned annually in one-third tranches over the three-year performance period based upon target ROE figures determined by the Committee annually at its regularly scheduled February meeting.annually. In setting the annual2018 ROE target, the Committee considered the Company’s 2018 operating business plan reflecting management’s view of market conditions, modeled expected results, business mix and product diversification.
Proxy Statement 53
The Company's average ROE achieved over several market cycles as well as the publicly available ROE targets set by the pay level peer group companies for both long-Compensation Philosophy and short-term compensation, which ranged from 6.5% to 10.6%.Objectives
For the 20152018 annual performance period, the Committee set a target ROE of 11% with one-third of the Named Executive Officers' PSUs based upon ROEOfficers’ 2016, 2017 and 2018 PSU eligible to be earned as measured by the Company'sCompany’s full year performance from January 1, 20152018 through December 31, 2015.2018. Earn-outs between the performance levels are determined by straight-line interpolation.
Proxy Statement 35
Compensation Discussion and Analysis
The tabletables below setsset forth the amount of PSUs2016, 2017 and 2018 PSU eligible to be earned to date by each NEO based upon ROE. The earn-out reflects the Company's 2015 fiscalpercentage of the total target award that can be earned in any one performance period which, as noted above, is one third of 50% (i.e. 16.7%) of the NEO’s total PSU target award. The amount of shares actually earned is calculated by applying the target award multiplier based upon the Company’s full year ROE result as compared to the 2015 ROE target of 11%:performance:
2015 OPERATING ROE | Dominic Addesso | John Doucette | Mark DeSaram | Craig Howie | Sanjoy Mukherjee |
Target Award | Target Award | Target Award | Target Award | Target Award |
Target | Actual | 2015 Earn Out % | Target Multiplier | 5595 | 1510 | 1390 | 1155 | 1055 |
| Earned PSU | Earned PSU | Earned PSU | Earned PSU | Earned PSU |
|
11.0% | 15.0% | 16.7% | 150.0% | 1399 | 378 | 348 | 289 | 264 |
|
2016 PSU Grant
OPERATING ROE | Dominic Addesso | John Doucette | Craig Howie | Sanjoy Mukherjee | Jonathan Zaffino |
Target Award | Target Award | Target Award | Target Award | Target Award |
| | | | | 6,455 | 1,485 | 1,140 | 1,080 | 970 |
| Target | Actual6 | Earn Out % | Target Multiplier | Earned PSU | Earned PSU | Earned PSU | Earned PSU | Earned PSU |
2016 Period | 10.5% | 12.8% | 16.7% | 128.8% | 1,389 | 320 | 246 | 233 | 209 |
2017 Period | 10% | 4.6% | 16.7% | 42.1% | 454 | 105 | 81 | 77 | 69 |
2018 Period | 11% | 2.3% | 16.7% | 0% | 0 | 0 | 0 | 0 | 0 |
| | | | | | | | | |
2017 PSU Grant
OPERATING ROE | Dominic Addesso | John Doucette | Craig Howie | Sanjoy Mukherjee | Jonathan Zaffino |
Target Award | Target Award | Target Award | Target Award | Target Award |
| 6,410 | 1,285 | 930 | 880 | 855 |
| Target | Actual7 | Earn Out % | Target Multiplier | Earned PSU | Earned PSU | Earned PSU | Earned PSU | Earned PSU |
2017 Period | 10% | 4.6% | 16.7% | 42.1% | 451 | 91 | 66 | 62 | 61 |
2018 Period | 11% | 2.3% | 16.7% | 0% | 0 | 0 | 0 | 0 | 0 |
| | | | | | | | | |
2018 PSU Grant
OPERATING ROE | Dominic Addesso | John Doucette | Craig Howie | Sanjoy Mukherjee | Jonathan Zaffino |
Target Award | Target Award | Target Award | Target Award | Target Award |
| 6,190 | 1,825 | 925 | 1,140 | 995 |
| Target | Actual | Earn Out % | Target Multiplier | Earned PSU | Earned PSU | Earned PSU | Earned PSU | Earned PSU |
2018 Period | 11% | 2.3% | 16.7% | 0% | 0 | 0 | 0 | 0 | 0 |
| | | | | | | | | |
All earned shares resulting from achievement of the metrics are delivered to the participant upon certification by the CommitteeCommittee’s confirmation of the final earned amounts at the end of each of the PSUs'2016, 2017 and 2018 PSU respective three-year performance period.periods.
6 As previously noted, starting in first quarter 2018, the Company adjusted operating income calculations to exclude foreign gains and losses, which is reflected in the 2018 period actual ROE calculation of 2.3%. Had this foreign exchange adjustment also been reflected for purposes of PSU calculations in 2016 and 2017 in this table, then the actual ROE would have been increased from 12.8% to 12.9% for 2016, and from 4.6% to 5.1% in 2017, respectively.
7 As stated above, starting in first quarter 2018, the Company adjusted operating income calculations to exclude foreign gains and losses, which is reflected in the 2018 period actual ROE calculation of 2.3%. Had this foreign exchange adjustment also been reflected for purposes of PSU calculations in 2017 in this table, then the actual ROE would have been increased from 4.6% to 5.1% in 2017.
54 Everest Re Group, Ltd.
The PSUsCompany's Compensation Philosophy and Objectives
The PSU subject to the BVPS growth metric and eligible to be earned based upon the relative BVPS growth are benchmarked against a selected peer group, as measured cumulatively from January 1, 20152016 through December 31, 2017. The2018 for the 2016 PSU, January 1, 2017 through December 31, 2019 for the 2017 PSU, and January 1, 2018 through December 31, 2020 for the 2018 PSU. For the 2018 PSU awards, the Committee determined that the following companies shall serve as the peer group for purposes of determining the BVPS growth achievement:
ACE Limited | Alleghany Corporation | Allied World Assurance
Company Holdings, AG
|
Arch Capital Group, Ltd. | Aspen Insurance Holdings, Limited |
AXIS Capital Holdings, Limited |
Endurance Specialty
Holdings Ltd. Chubb Limited | Markel Corporation | Partner Re Ltd. |
Platinum Underwriters RenaissanceRe Holdings Ltd. Ltd | RenaissanceRe
Holdings Ltd.
| Validus Holdings, Ltd.8 |
W.R. Berkley Corporation |
| XL Group, plc9 | |
| | |
Companies that are no longer listed on a public exchange (e.g. due to acquisition or merger) during the January 1, 2015 through December 31, 2017 measurement periodperiods are omitted from the cumulative relative BVPS growth benchmarking from inception of the measurement period. Accordingly, Platinum Underwriters Holdings, Ltd., which was acquired by RenaissanceRe Holdings Ltd. and ceased trading on the NYSE as of the market close on March 2, 2015, will not be included in the BVPS peer benchmarking analysis performed at the end of the measurement periods. Upon closing its acquisition of the Chubb Corporation on January 14, 2016, ACE Limited changed its name to Chubb Limited.
Earn-outs between target levels for the PSUsPSU subject to the BVPS growth metric are also determined by straight-line interpolation, and will be certified by the Committee for eligibility at the end of the 2016, 2017 and 2018 PSU three-year performance period, but onperiods (on or before March 15, 2018.2020, and March 15, 2021, respectively, with respect to the 2017 and 2018 PSU).
For the 2016 PSU, the BVPS growth metrics determined by the Committee in February 2019 are as follows:
2016 PSU (BVPS) | Dominic Addesso | John Doucette | Craig Howie | Sanjoy Mukherjee | Jonathan Zaffino |
Target Award | Target Award | Target Award | Target Award | Target Award |
| 6,455 | 1,485 | 1,140 | 1,080 | 970 |
| | Weight | | Award Multiplier | Earned PSU | Earned PSU | Earned PSU | Earned PSU | Earned PSU |
2016-2018 Period | | 50.0% | | 139% | 4,487 | 1,033 | 793 | 751 | 675 |
| | | | | | | | | |
As a result, the total 2016 PSU earned, taking into account satisfactory achievement of the two financial performance metrics, each weighted 50%, is as follows:
| Dominic Addesso | John Doucette | Craig Howie | Sanjoy Mukherjee | Jonathan Zaffino |
2016 PSU Target Award | 6,455 | 1,485 | 1,140 | 1,080 | 970 |
Total 2016 Operating ROE PSU Earned | 1,843 | 425 | 327 | 310 | 278 |
Total 2016 BVPS PSU Earned | 4,487 | 1,033 | 793 | 751 | 675 |
Total PSU Earned | 6,330 | 1,458 | 1,120 | 1,061 | 953 |
| | | | | |
PSU shares not earned because of failure to achieve the set metrics are forfeited. All earned shares resulting from achievement of the metrics are delivered to the participant upon certificationconfirmation by the Committee of the final earned amounts at the end of the PSU'sPSU three-year performance period.
8 The American International Group, Inc. acquisition of Validus Holdings, Ltd. was completed in July 2018, resulting in the delisting of Validus from the New York Stock Exchange.
36 Everest Re9 The AXA Group acquisition of XL Group, Ltd. was completed in September 2018, resulting in the delisting of XL from the New York Stock Exchange.
Proxy Statement 55
The Company's Compensation DiscussionPhilosophy and Analysis
Objectives
Named Executive Officer Compensation
The final amounts and factors considered by the Compensation Committee in making its decisions with regard to the 20152018 performance year for each Named Executive Officer are described more fully below. Although the Compensation Committee establishes certain Company performance metrics, targets and ceilings on cash bonuses for each Named Executive Officer, the Compensation Committee feels that an effective compensation program must be linked to the Company'sCompany’s performance and value generated for shareholders over the long term. In this regard, performance-measuring metrics are limited to those measurements that are deemed especially important to creating shareholder value, while retaining the flexibility to also make awards based on subjective criteria.
The Compensation Committee'sCommittee’s philosophy is to encourage management to act in the best interests of the Company and our shareholders even when such actions may temporarily reduce short-term profitability, for example:
Ø
| · | investments in our business in the form of human capital and intellectual resources; |
Ø
| full disclosure on · | reserving methodologies and reserve positions without fear of penalty in the short term because of some pre-defined metric relating to reserving decisions;positions; |
Ø
| · | diversification of risk within our insurance and reinsurance portfolios; |
Ø
| · | capital management strategies; |
Ø
| · | long-term strategic growth initiatives; and |
Ø
| · | creativity in the development of new products. |
Furthermore, the Committee recognizes that the (re)insurance industry is cyclical and often volatile and susceptible to uncontrollable exogenous factors beyond human control. Consequently, although the Compensation Committee places greater weight on actual financial performance factors and targets when evaluating an individual executive'sexecutive’s performance, it also identifies certain non-financial goals tailored to an individual'sindividual’s role and responsibilities when assessing the overall performance of Named Executive Officers.
Company Financial Performance Assessment
The Compensation Committee assesses the financial performance of the Company in the context of the business environment in which it operates, the performance of competitors with reasonably comparable operations and against management'smanagement’s operating business plan for the period under review. The Compensation Committee also considers management'smanagement’s decisions and strategies deployed in positioning the Company for future growth and profitability. Our compensation program is designed to reward executive officers for developing and achieving a business strategy that emphasizes creation of longer-term shareholder value.
The Compensation Committee attaches significant importance to our executives'executives’ ability to generate shareholder value over time by achieving an attractive increase in dividend-adjusted book value per common share and in the achievement of returns that provide an attractive compound growth rate in shareholder return. Through fiscal year 2015,2018, the Company has returned on average 12%generated compound annual growth rate of over 11% per annum over the last 10 years, and 12.5% per annum to shareholdersyear since going public in 1995.1995, and achieved total return over the S&P 500 of 807 points.
56 Everest Re Group, Ltd.
Proxy Statement 37
Compensation Discussion and Analysis
The Company's Compensation Philosophy and Objectives
This attractive long-term performance has been achieved during a period of significant natural catastrophe activity, a protracted period of very low interest rates as well as repeated periods of soft market conditions. Our compensation practices over that time period correlate to that performance.
Individual Performance Assessment Factors
In evaluating individual performance, the Compensation Committee subjectively considers the following qualitative individual factors:
| · | executive officer'sofficer’s performance against individual goals; |
| · | individual effort in achieving company goals; |
| · | effectiveness in fostering and working within a team-oriented approach; |
| · | creativity, demonstrated leadership traits and future potential; |
| · | areas of responsibility; and |
| · | total compensation relative to the executive'sexecutive’s internal peers. |
No single individual performance factor is given materially more weight than another, although all are considered in the context of an executive'sexecutive’s overall performance. Rather, these factors are representative of the qualities that we believe make an effective executive.
Summary of Direct Compensation Awarded in 20162019
The cash and equity compensation components for each Named Executive Officer relating to fiscal year 20152018 performance are highlighted in the table below. This table is provided to better assist shareholders in understanding the Compensation Committee'sCommittee’s specific decisions on individual performance based compensation relating to the 20152018 fiscal year, exclusive of any benefits or pension or retirement related deferred compensation that is not performance related. This charttable differs from the SEC disclosure rules reflected in the "Summary“Summary Compensation Table"Table” primarily by disclosing equity awards granted at the Board'sBoard’s February 2016 meeting relating2019 meeting.
Name | | Title/ Business Unit | | Annual Base Salary | | Annual Cash Bonus | | Annual Time-Vested Equity Award | | Annual Performance- Based Equity Award | | Total Direct Compensation | |
Dominic J. Addesso | | CEO and President | | $ | 1,250,000 | | $ | 1,300,000 | | $ | 2,000,000 | | $ | 2,000,000 | | $ | 6,550,000 | |
John P. Doucette | | Executive Vice President and President and CEO of the Reinsurance Division | | | 850,000 | | | 400,000 | | | 663,000 | | | 442,000 | | | 2,355,000 | |
Craig Howie | | Executive Vice President and Chief Financial Officer | | | 560,000 | | | 250,000 | | | 448,000 | | | 224,000 | | | 1,482,000 | |
Sanjoy Mukherjee | | Executive Vice President and General Counsel, Secretary and Managing Director and CEO of Bermuda Re | | | 575,000 | | | 400,000 | | | 432,000 | | | 288,000 | | | 1,695,000 | |
Jonathan Zaffino | | Executive Vice President and President and CEO of the Everest Insurance® Division | | | 600,000 | | | 550,000 | | | 560,300 | | | 279,700 | | | 1,990,000 | |
| | | | | | | | | | | | | | | | | | |
Proxy Statement 57
The Company's Compensation Philosophy and Objectives
Incentive Cash Bonus
As previously stated, all the NEOs were selected to participate in the Executive Incentive Plan for fiscal year 2015 performance.2018. Under the Executive Incentive Plan, total bonus determination for a participant is arrived at by application of two independent components based upon a 70% and 30% weighting, respectively: (1) Company financial performance criteria, and (2) individual performance criteria. For 2018, the Compensation Committee adopted the 2018 operating plan ROE as the target financial performance metric.
Name | Title/ Business Unit | | Annual Base Salary | | | Annual Cash Bonus | | | Annual Time-Vested Equity Award | | | Annual Performance- Based Equity Award | | | Total Direct Compensation | |
Dominic J. Addesso | CEO and President | | $ | 1,000,000 | | | $ | 2,900,000 | | | $ | 2,400,000 | | | $ | 1,200,000 | | | $ | 7,500,00 | |
Mark S. de Saram | Executive Vice President and Managing Director and CEO of Bermuda Re | | | 620,000 | | | | 775,000 | | | | 0 | | | | 0 | | | | 1,395,000 | |
| | | | |
| | | | |
John P. Doucette | Executive Vice President and Chief Underwriting Officer | | | 675,000 | | | | 1,150,000 | | | | 552,000 | | | | 276,000 | | | | 2,653,000 | |
| | | | |
Craig Howie | Executive Vice President and Chief Financial Officer | | | 500,000 | | | | 760,000 | | | | 425,000 | | | | 212,000 | | | | 1,897,000 | |
| | | | |
Sanjoy Mukherjee | Executive Vice President and General Counsel and Secretary | | | 450,000 | | | | 700,000 | | | | 400,000 | | | | 200,000 | | | | 1,750,000 | |
| | | | |
In setting the ROE financial performance criteria for the non-equity incentive compensation, the Compensation Committee determined that the targets were fair yet demanding in consideration of:
| · | the 2018 operating plan, |
| · | the average operating return on equity achieved over several market cycles, |
| · | the average operating return on equity among the Company peer group, and |
| · | the fact that the Company operates in an increasingly competitive and challenging market cycle, highlighted by non-traditional capital providers and a historically low interest rate environment. |
In measuring the NEOs’ performance against the target operating plan ROE, the Compensation Committee calculates an Adjusted ROE. For purposes of this calculation, the Committee employs a formulaic approach to more accurately reflect a normalized catastrophe risk management measure over time and evaluate the management’s risk mitigation strategies. The formula adjusts actual operating ROE by limiting catastrophe activity to 50% of anticipated catastrophe losses in the annual operating plan and 50% of actual catastrophe losses for the current fiscal year. Our annual operating plan assumes a “normalized” level of natural catastrophe losses as derived from a 10,000 year simulation of potential modeled events. Such a “normalized” catastrophe loss level translates to a net after-tax operating ROE that can range widely from low single digit to mid-teens return for a given year based on such competitive market factors as interest rate changes, business mix, market capacity and the impact of alternative capital. Utilizing an adjusted catastrophe loss load in any one year will reflect, over the long term, the performance of the portfolio relative to expected and does not overly benefit compensation during benign years of catastrophe activity nor unduly penalize during extreme years. This method contemplates the fact that due to the nature of catastrophe events any one year has inherent volatility and that the catastrophe load used in setting targets is an average annualized amount expected over the long term. Consequently, over time the long term performance of the portfolio relative to expected will be reflected in the calculation of incentive compensation.
58 Everest Re Group, Ltd.
The Company's Compensation Philosophy and Objectives
Mr. Addesso'sAddesso’s Annual Cash Incentive Goals and Compensation
Mr. Addesso served as the Company'sCompany’s President and CEO in 2015,2018, with a base salary of $1$1.25 million. For the 20152018 fiscal year, the Compensation Committee established the following separate financial and individual performance-based criteria for purposes of establishing the bonus award amount for Mr. Addesso under the Executive Incentive Plan.
Financial Performance Goal
Performance Level | Financial Performance Measure (ROE) | Potential Maximum Bonus |
Maximum | >=17.0%16% | 350% of Base Salary$3.5 million |
Target | 11.0%11% | 125% of Base Salary |
Threshold | 4.0%4% | 50% of Base Salary |
Below Threshold | <4.0%4% | Zero |
In setting the ROE financial performance criteria, the Compensation Committee determined that the targets were fair yet demanding in consideration of
· | the average operating return on equity achieved over several market cycles, | |
· | the average operating return on equity among the Company peer group, |
· | the fact that the Company benefited from a period of unusually benign natural catastrophe loss events activity, and |
· | the fact that the Company operates in an increasingly competitive and challenging market cycle, highlighted by non-traditional capital providers and a historically low interest rate environment. |
Our annual operating plan assumes a "normalized" level of natural catastrophe losses that would equate to approximately 11 to 12 points of our operating plan net earned premium. This "normalized" level of catastrophe losses is the average annual catastrophe loss as derived from a 10,000 year simulation of potential modeled events. Such a "normalized" catastrophe loss level typically translates to a net-after tax
Proxy Statement 39
Compensation Discussion and Analysis
operating ROE in the range of 10% - 12% for a given year, depending on other competitive market factors. Thus, the recent unusual period of benign catastrophe losses has been a contributing factor to the extraordinary operating ROEs enjoyed by many property and casualty (re)insurers over the past three years. The Compensation Committee does not seek to incent our management to focus on short-term volatility and presume that a limited period of outsized returns is the norm when risking our shareholders' capital.
Accordingly, when setting appropriate levels of financial performance targets, the Compensation Committee looks to the historical results of the Company over time to emphasize our focus on consistent long-term value to our shareholders commensurate with our corporate risk profile.
As described above under the section entitled "Executive“Executive Performance Annual Incentive Plan"Plan”, the Compensation Committee considers 70% of Mr. Addesso'sAddesso’s potential maximum bonus to be independently determined based on the above tiered Company ROE results.results above and below a set target. After comparing the Company's 2015Company’s 2018 fiscal year audited results to the performance measures established for Mr. Addesso, the Compensation Committee concluded that based on the actualAdjusted ROE of 15%7.5%, Mr. Addesso'sAddesso’s maximum potential cash bonus in consideration of the financial performance goalas compared to target, was $1,925,000.$765,625.
Performance Measure | | 2015 ROE Planned Results (Target) | | 2015 Actual Results | | Tiered Base Salary Amount | | | Percentage of Base Salary Maximum Bonus | | | Resulting Maximum Bonus Potential | | 2018 Plan ROE (Target) | 2018 Adjusted ROE | Percentage of Base Salary Maximum Bonus | Resulting Maximum Bonus Potential |
Operating ROE | | 11% | | 15% ROE | | $ | 2,750,000 | | | | 70 | % | | $ | 1,925,000 | | 11% | 7.5% | 70% | $ 765,625 |
| | | | | |
The Compensation Committee separately considered the 30% portion of the maximum bonus eligible to be earned based upon successful achievement of individual non-financial goals.
Non-Financial Performance Measure | | Maximum Bonus Potential | |
30% of 350% Base Salary Bonus Maximum | | $ | 1,050,000 | |
Non-Financial Performance Measure | Maximum Bonus Potential |
30% of 350% Base Salary Bonus Maximum | $ 1,312,500 |
| |
Mr. Addesso' sAddesso’s total resulting maximum potential cash bonus potential in consideration of both the financial and non-financial performance measures was $2,975,000.as follows.
Performance Measure | | 2015 ROE Planned Results (Target) | | 2015 Actual Results | | Resulting Maximum Bonus Potential | |
Operating ROE | | | 11% | 15% ROE | | $ | 1,925,000 | |
Non-Financial | | | | | | | $ | 1,050,000 | |
Total | | | | | | | $ | 2,975,000 | |
Mr. Addesso's Compensation
Performance Measure | 2018 Plan ROE (Target) | 2018 Adjusted ROE | Resulting Maximum Bonus Potential |
Operating ROE | 11% | 7.5% | $ 765,625 |
Non-Financial | | | $ 1,312,500 |
Total Potential Cash Bonus | | | $ 2,078,125 |
| | | |
In evaluating the amount ofdetermining the final bonus and equity award, the Compensation Committee took note of the fact that the Company's financial results benefited from an unusually benign natural catastrophe year. The Compensation Committee also reviewedCompany’s strong risk management strategy under Mr. Addesso's performance taking into considerationAddesso’s guidance in conjunction with his execution of responsibilities as CEO. The Committee gives particular consideration to Mr. Addesso’s strategic initiatives to enhance diversity throughout the Company and its worldwide affiliates.
Proxy Statement 59
The Company's Compensation Philosophy and Objectives
In arriving atawarding Mr. Addesso a finalcash bonus award of $2.9 million, restricted share awards valued at $2.4 million and PSU award target valued at $1.2 million,$1,300,000, the Compensation Committee recognized Mr. Addesso’s leadership and guidance in managing the Company’s potential maximum loss exposure and protecting our capital base by employing intelligent capital protection measures against unplanned and outsized natural perils and deploying a strategic vision emphasizing diversification of our business portfolio. The Committee further noted Mr. Addesso’s leadership in maintaining an industry leading 5.4% expense ratio while significantly investing in and expanding the Company’s insurance operations. Such strategies contributed to the Company's positive financial results in a year of historic natural catastrophe losses incurred by the industry. The Compensation Committee further considered Mr. Addesso'sAddesso’s success in achieving his individual non-financial goals:goals in awarding restricted share awards valued at $2,000,000, and 2019 PSU award target valued at $2,000,000:
Accomplishments |
Demonstrated leadership as CEO including active oversight of Company'sthe Company’s day-to-day operations across all business segments |
Oversaw continued expansion of Company'sthe Company’s insurance operations executive team and diversification of business lines and growth |
Integrated alternative capital markets as part ofSuccessfully managed the Company’s natural peril catastrophe exposure within the Board’s Risk Appetite Statement |
Oversaw overall strategy to diversify risk portfolio expand internationally and fundincorporate new productproducts |
Oversaw development and implementation of succession plan process at senior executive level for the Company and the Company’s affiliates |
Achieved annual budget objectives and oversaw coordination of all business units in putting together the 20152018 operating plan |
Continued to build relationships with the Company'sCompany’s long-term shareholders while expanding our investor base to include new supporters |
Maintained professional relationships with Company'sCompany’s regulators and rating agencies |
ContinuedOversaw continued modernization of Company'sCompany’s information technology systems |
Oversaw leadership team on establishment and successful launch of Lloyd's syndicateimprovements in underwriting analytics and business processes |
Oversaw investment portfolio and provided guidance on executing on an investment strategy to optimize full year investment results during period of continued low interest ratesthat returned above benchmark yield |
|
60 Everest Re Group, Ltd.
The Company's Compensation Philosophy and ObjectivesCompensation Discussion and Analysis
Other Named Executive Officers'Officers’ Annual Cash Incentive Goals and Compensation
For the 20152018 fiscal year, the Compensation Committee established the following separate financial and individual performance-based criteria for purposes of establishing the incentive cash bonus award amount for all NEOs other than Mr. Addesso under the Executive Incentive Plan.
Performance Level | | Financial Performance Measure(ROE) | | Potential Maximum Bonus | | JOHN DOUCETTE | | | CRAIG HOWIE | | | MARK DeSARAM | | | SANJOY MUKHERJEE | | Financial Performance Measure(ROE) | Potential Maximum Bonus | JOHN DOUCETTE | CRAIG HOWIE | SANJOY MUKHERJEE | JONATHAN ZAFFINO |
Maximum | | >=17.0% | | 200% Base Salary | | $ | 1,350,000 | | | $ | 1,030,000 | | | $ | 1,240,000 | | | $ | 940,000 | | >=16% | 200% Base Salary | $ | 1,700,000 | $ | 1,120,000 | $ | 1,150,000 | $ | 1,200,000 |
Target | | 11.0% | | 100% Base Salary | | $ | 675,000 | | | $ | 515,000 | | | $ | 620,000 | | | $ | 470,000 | | 11% | 100% Base Salary | $ | 850,000 | $ | 560,000 | $ | 575,000 | $ | 600,000 |
Threshold | | 4.0% | | 25% Base Salary | | $ | 168,750 | | | $ | 128,750 | | | $ | 155,000 | | | $ | 117,500 | | 4% | 25% Base Salary | $ | 212,500 | $ | 140,000 | $ | 143,750 | $ | 150,000 |
Below Threshold | | <4.0% | | Zero | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | <4% | Zero | $ | 0 | $ | 0 | $ | 0 | $ | 0 |
| | | | | | | | | | |
The Compensation Committee considers 70% of each NEO'sNEO’s potential maximum bonus to be independently determined based on the above tiered Company ROE results. After comparing the Company's 2015Company’s 2018 fiscal year audited results to the performance measures established, the Compensation Committee concluded that based on the actualAdjusted ROE of 15%7.5%, the NEO seach NEO’s maximum potential cash bonus in consideration of the financial performance goal was as shown in the table below:
| | | | JOHN DOUCETTE | | | CRAIG HOWIE | | | MARK DeSARAM | | | SANJOY MUKHERJEE | |
| Financial Performance Measure (ROE) | | | 2015 ROE Planned Results (Target) | | | 2015 Actual Results | | | Resulting Maximum Bonus Potential | | | Resulting Maximum Bonus Potential | | | Resulting Maximum Bonus Potential | | | Resulting Maximum Bonus Potential | |
| 70.0% | | | | 11.0% | | | | 15.0% | | | $ | 787,500 | | | $ | 600,833 | | | $ | 723,333 | | | $ | 548,333 | |
| JOHN DOUCETTE | CRAIG HOWIE | SANJOY MUKHERJEE | JONATHAN ZAFFINO |
Financial Performance Measure (ROE) | 2018 Plan ROE (Target) | 2018 Adjusted ROE | Resulting Maximum Bonus Potential | Resulting Maximum Bonus Potential | Resulting Maximum Bonus Potential | Resulting Maximum Bonus Potential |
70.0% | 11% | 7.5% | $371,875 | $245,000 | $251,563 | $262,500 |
| | | | | | |
The Compensation Committee separately considered the 30% portion of the maximum bonus eligible to be earned based upon successful achievement of individual non-financial goals:
Non Financial Performance Measure | | JOHN DOUCETTE | | | CRAIG HOWIE | | | MARK DeSARAM | | | SANJOY MUKHERJEE | |
30% of 200% Base Salary Bonus Maximum | | $ | 405,000 | | | $ | 309,000 | | | $ | 372,000 | | | $ | 282,000 | |
Non-Financial Performance Measure | JOHN DOUCETTE | CRAIG HOWIE | SANJOY MUKHERJEE | JONATHAN ZAFFINO |
30% of 200% Base Salary Bonus Maximum | $510,000 | $336,000 | $345,000 | $360,000 |
| | | | |
The NEOs total resulting maximum cash bonus in consideration of both the financial and non-financial performance measures was as follows:
| | | | JOHN DOUCETTE | | | CRAIG HOWIE | | | MARK DeSARAM | | | SANJOY MUKHERJEE | | | JOHN DOUCETTE | CRAIG HOWIE | SANJOY MUKHERJEE | JONATHAN ZAFFINO |
Performance Measure | | 2015 ROE Planned Results (Target) | | | 2015 Actual Results | | | Resulting Maximum Bonus Potential | | | Resulting Maximum Bonus Potential | | | Resulting Maximum Bonus Potential | | | Resulting Maximum Bonus Potential | | 2018 Plan ROE (Target) | 2018 Adjusted ROE | Resulting Maximum Bonus Potential | Resulting Maximum Bonus Potential | Resulting Maximum Bonus Potential | Resulting Maximum Bonus Potential |
Operating ROE | | | 11.0% | | | 15.0% | | | $ | 787,500 | | | $ | 600,833 | | | $ | 723,333 | | | $ | 548,333 | | 11% | 7.5% | $371,875 | $245,000 | $251,563 | $262,500 |
Non-Financial | | | | | | | | | | $ | 405,000 | | | $ | 309,000 | | | $ | 372,000 | | | $ | 282,000 | | | | $510,000 | $336,000 | $345,000 | $360,000 |
Total Maximum Bonus | | | | | | | | | | $ | 1,192,500 | | | $ | 909,833 | | | $ | 1,095,333 | | | $ | 830,333 | | | | $881,875 | $581,000 | $596,563 | $622,500 |
| | | | | | | |
Proxy Statement 61
The Company's Compensation DiscussionPhilosophy and Analysis
Objectives
Mr. Doucette'sDoucette’s Compensation
Mr. Doucette served as the Company's Chief Underwriting OfficerCompany’s President & CEO of Reinsurance Division in 2015,2018, with a base salary of $675,000.$850,000. In arriving atawarding Mr. Doucette's finalDoucette a cash bonus of $1,150,000 million, restricted share award valued at $552,000, PSU award with a target value of $276,000, as well as increasing his base salary for 2016 to $690,000,$400,000, the Compensation Committee recognized Mr. Doucette’s leadership in promulgating risk management across the reinsurance portfolio by executing on a strategy maintaining a diversified business portfolio, spread by line and geography, and effectively managing risk through the utilization of third party capital. The Committee further noted Mr. Doucette’s successful execution of a hedging strategy designed to protect the Company’s capital against the catastrophe losses incurred by the industry. The Compensation Committee also considered Mr. Doucette's contribution toward the Company's actual ROE exceeding planned ROE by 4%, the recommendation of the CEO and Mr. Doucette'sDoucette’s success in achieving his individual goals:non-financial goals in awarding restricted share awards valued at $663,000, and 2019 PSU award target valued at $442,000:
Accomplishments |
Demonstrated leadership in oversight of Company'sleading the Company’s worldwide reinsurance underwriting and claim teams and philosophies as Chief Underwriting Officerresulting in respectable reinsurance underwriting results for 2018 in the face of unprecedented catastrophe losses |
Repositioning of the Company's insurance portfolios to reflect greater diversityDemonstrated leadership in riskidentifying, developing and business mix while adhering to the Company's core philosophy of maximizingmarketing new product opportunities and distribution strategies resulting in increased underwriting profit rather than merely top-line volume growthmargin |
Continued strategic utilization of Mt. Logan Re to address competitive pressures of alternative reinsurance capital markets in traditional reinsurance space |
Successful execution onManaged aggressive renewal strategy post-2017 catastrophe losses resulting in reduced property lines with improved expected margin for expanding top-line growth while adhering to the Board's Risk Appetite Statement through use of catastrophe bonds, ILWs and retrocession covers |
Leading the Company's underwriting teams in developing new product offerings to meet clients' unique needs2018 property book |
Proactive leadership in identifying analytic improvements for increased business volume |
Identification of Heartland Crop diversification and expansion requirements andtechnology advances resulting profitability of crop book |
Executive team participation on strategic expansion of insurance operation and identification ofin analytic and operationalbusiness process improvements |
Establishment and oversight of effective price-to-risk underwriting and accumulation controls |
Participation in strategic direction and development of Lloyd's syndicate |
Mr. de Saram's Compensation
Mr. de Saram served as the CEO and Managing Director of Bermuda Re in 2015, with a base salary of $620,000. Mr. de Saram did not receive equity awards in light of his impending retirement. In arriving at Mr. de Saram's bonus award of $775,000, the Compensation Committee considered Mr. de Saram's contribution toward the Company's actual ROE exceeding planned ROE by 4%, the recommendation of the CEO, and Mr. de Saram's success in achieving his individual goals:
Accomplishments |
Demonstrated leadership as CEO of Bermuda Re and overseeing the Company's European and Asian operations |
Achieved annual budgets for the business units under his direction and outstanding operational results |
Continued expansion of the Company's market presence in Europe and Asia |
Establishment of successful succession plan and identification of leaders for Bermuda operations |
Overseeing and implementation of Singapore branch portfolio shift to more favorable markets and products |
Maintenance of client relationships over large international footprint through frequent travel and meetings |
Provision of valuable European market insights for development of strategy and direction of Lloyd's syndicate |
Oversight of establishment of Zurich branch |
The amount of shares that would be delivered in the event of an executive'sexecutive’s retirement at age 65 or death or disability is valued as of December 31, 20152018 in the table below.
Name | | PSUs | | | Restricted Shares | | | Total | | PSU | Restricted Shares | Total |
Dominic J. Addesso | | $ | 1,024,389 | | | $ | 7,564,546 | | | $ | 8,588,935 | | $ 3,529,999 | $ 7,360,506 | $ 10,890,505 |
Mark S. de Saram | | | 254,495 | | | | 2,341,721 | | | | 2,596,216 | | |
John P. Doucette | | | 276,466 | | | | 2,733,534 | | | | 3,010,000 | | 854,476 | 1,902,134 | 2,756,610 |
Craig W. Howie | | | 211,469 | | | | 1,911,093 | | | | 2,122,562 | | 560,699 | 1,373,630 | 1,934,329 |
Sanjoy Mukherjee | | | 193,160 | | | | 2,024,060 | | | | 2,217,220 | | 578,927 | 1,276,509 | 1,855,436 |
Jonathan Zaffino | | 524,985 | 1,366,444 | 1,891,429 |
Termination or Change of Control
As described above, each of the Named Executive Officers is a participant in the Company'sCompany’s Senior Executive Change of Control Plan. Payments are made under the plan to the respective Named Executive Officer if he suffers a covered termination of employment within two years following a change in control. The table below gives a reasonable estimate of what might be paid to each Named Executive Officer in the event of a covered termination of his employment on December 31, 20152018 based on the plan terms in effect at that time.
Messrs. Addesso, de Saram, Doucette, Howie, Mukherjee and Mukherjee'sZaffino’s employment agreements separately address payments that may be made and benefits continued in the event of a termination without due cause or resignation for good reason, outside of a change in control, as defined in the respective agreements.
| | Termination Without | | Termination | |
| | Cause or Resignation | | Following | |
Name | Incremental Benefit | for Good Reason | | Change in Control | |
Dominic J. Addesso | Cash Payment | $ | 3,800,000 | (1) | $ | 8,652,243 | (5) |
| Restricted Stock Value | | 4,520,044 | (2) | | 7,360,506 | (6) |
| PSU Value | | 3,529,999 | (3) | | 3,529,999 | (7) |
| Benefits Continuation | | 44,834 | (4) | | 25,000 | |
| Pension Enhancement | | — | | | — | |
| Total Value | $ | 11,894,877 | | $ | 19,567,748 | (8) |
John P. Doucette | Cash Payment | $ | 2,100,000 | (1) | $ | 3,528,974 | (5) |
| Restricted Stock Value | | 699,445 | (2) | | 1,902,134 | (6) |
| PSU Value | | 854,476 | (3) | | 854,476 | (7) |
| Benefits Continuation | | 32,520 | (4) | | 34,000 | |
| Pension Enhancement | | — | | | 566,000 | |
| Total Value | $ | 3,686,441 | | $ | 6,885,584 | (8) |
Craig Howie | Cash Payment | $ | 1,370,000 | (1) | $ | 2,436,974 | (5) |
| Restricted Stock Value | | 509,558 | (2) | | 1,373,630 | (6) |
| PSU Value | | 560,699 | (3) | | 560,699 | (7) |
| Benefits Continuation | | 32,520 | (4) | | 34,000 | |
| Saving Plan Enhancement | | — | | | 372,000 | |
| Total Value | $ | 2,472,777 | | $ | 4,777,303 | (8) |
Sanjoy Mukherjee | Cash Payment | $ | 1,550,000 | (1) | $ | 2,356,591 | (5) |
| Restricted Stock Value | | 469,926 | (2) | | 1,276,509 | (6) |
| PSU Value | | 578,927 | (3) | | 578,927 | (7) |
| Benefits Continuation | | 22,433 | (4) | | 23,000 | |
| Pension Enhancement | | — | | | 382,000 | |
| Total Value | $ | 2,621,286 | | $ | 4,617,027 | (8) |
| | | Termination Without | | | | Termination | | |
| | | Cause or Resignation | | | | Following | | |
Name | Incremental Benefit | | for Good Reason | | | | Change in Control | | |
Dominic J. Addesso | Cash Payment | | $ | 4,900,000 | | (1) | | $ | 7,374,439 | | (7) |
| Restricted Stock Value | | | 4,881,729 | | (2) | | | 7,564,546 | | (8) |
| PSU Value | | | 1,109,800 | | (3) | | | 1,109,800 | | (9) |
| Benefits Continuation | | $ | 45,892 | | (4) | | | 31,000 | | |
| Pension Enhancement | | | — | | | | | 4,192,000 | | |
| Benefits Cutback | | | N/A | | | | | N/A | | |
| Total Value | | $ | 10,937421 | | | | $ | 20,271,785 | | (10) |
Mark S. de Saram | Cash Payment | | $ | 620,000 | | (5) | | $ | 2,582,565 | | (7) |
| Restricted Stock Value | | | 891,831 | | (2) | | | 2,341,721 | | (8) |
| PSU Value | | | 63,715 | | (6) | | | 275,795 | | (9) |
| Benefits Continuation | | | 15,521 | | | | | 54,474 | | |
| Total Value | | $ | 1,591,067 | | | | $ | 5,071,798 | | |
John P. Doucette | Cash Payment | | $ | 2,500,000 | | (1) | | $ | 3,205,128 | | (7) |
| Restricted Stock Value | | | 1,084,442 | | (2) | | | 2,733,534 | | (8) |
| PSU Value | | | 69,208 | | (6) | | | 299,596 | | (9) |
| Benefits Continuation | | | 32,187 | | (4) | | | 44,000 | | |
| Pension Enhancement | | | — | | | | | 1,076,000 | | |
| Benefits Cutback | | | N/A | | | | | (1,525,476 | ) | |
| Total Value | | $ | 3,685,837 | | | | $ | 5,832,782 | | (10) |
Craig Howie | Cash Payment | | $ | — | | | | $ | 2,033,333 | | (7) |
| Restricted Stock Value | | | — | | | | | 1, 911,093 | | (8) |
| PSU Value | | | 52,913 | | (6) | | | 229,137 | | (9) |
| Benefits Continuation | | | — | | | | | 44,000 | | |
| Saving Plan Enhancement | | | — | | | | | 294,000 | | |
| Benefits Cutback | | | — | | | | | N/A | | |
| Total Value | | $ | 52,913 | | | | $ | 4,327,461 | | (10) |
78 Everest Re Group, Ltd.
Employment, Change of Control and Other Agreements
| | Termination Without | | Termination | |
| | Cause or Resignation | | Following | |
Name | Incremental Benefit | for Good Reason | | Change in Control | |
Jonathan Zaffino | Cash Payment | $ | 1,750,000 | (1) | $ | 1,916,795 | (5) |
| Restricted Stock Value | | 390,879 | (2) | | 1,366,444 | (6) |
| PSU Value | | 524,985 | (3) | | 524,985 | (7) |
| Benefits Continuation | | 35,635 | (4) | | 35,000 | |
| Saving Plan Enhancement | | — | | | 232,000 | |
| Total Value | $ | 2,701,499 | | $ | 4,075,224 | (8) |
| | | | | | | |
| | | Termination Without | | | | Termination | | |
| | | Cause or Resignation | | | | Following | | |
Name | Incremental Benefit | | for Good Reason | | | | Change in Control | | |
Sanjoy Mukherjee | Cash Payment | | $ | 1,600,000 | | (1) | | $ | 1,849,231 | | (7) |
| Restricted Stock Value | | | 732,360 | | (2) | | | 2,024,060 | | (8) |
| PSU Value | | | 48,336 | | (6) | | | 209,302 | | (9) |
| Benefits Continuation | | | 32,187 | | (4) | | | 44,000 | | |
| Pension Enhancement | | | — | | | | | 1,437,000 | | |
| Benefits Cutback | | | — | | | | | N/A | | |
| Total Value | | $ | 2,412,883 | | | | $ | 5,563,593 | | (10) |
(1) | Pursuant to the terms of the Mr. Addesso'sAddesso’s employment agreement, he would be paid a separation allowance in equal installments over a 24 month period equal to two times his base salary. Mr.Messrs. Doucette, Mukherjee, Howie and Mr. MukherjeeZaffino would each be paid two times his base salary over a 12 month period. All would receive any annual incentive bonus earned but not yet paid for the completed full fiscal year prior to termination. |
(2) | Pursuant to the terms of the Named Executive Officer'sOfficer’s employment agreement, unvested restricted stock will continue to vest in accordance with its terms in the 12 month period following termination for Mr. de Saram, Mr.Messrs. Doucette, Mukherjee, Howie and Mr. Mukherjee.Zaffino, For Mr. Addesso, unvested stock would continue to vest for 24 months in accordance with its terms. |
(3) | Under the terms of histheir respective employment agreement, Mr.agreements, Messrs. Addesso, Howie, Doucette, Mukherjee and Zaffino would receive the first PSU installmentinstallments pursuant to achieved performance goals. The remaining PSU installments will vest pursuant to the Performance Stock Unit Award Agreement terms and are valued at the target performance (100%) for purposespurpose of this table. |
(4) | Pursuant to the terms of the Named Executive Officer'sOfficer’s employment agreement, he shall continue to participate in the disability and life insurance programs until the earlier of a certain number of months or his eligibility to be covered by comparable benefits of a subsequent employer and he will receive a cash payment to enable him to pay for medical and dental coverage for a certain number of months. For Mr. Addesso, the number is 24 months, for Mr.Messrs. Doucette, Howie, Mukherjee, and Mr. Mukherjee,Zaffino, it is 12.12 months. |
(5) | Pursuant to the terms of his employment agreement, Mr. de Saram would receive one year's salary plus reasonable moving expenses, if terminated for reasons other than misconduct or a breach of Company policies. Continued vesting of restricted stock would occur as described in footnote (2) and the Company would continue to pay for the reasonable cost of medical insurance for 6 months. |
(6) | As per the Performance Stock Unit Award Agreement, only those PSU installments whose performance period concluded on or before December 31, 2015 are included. These PSUs would only be settled upon the Named Executive Officer's signing a general release and any non-competitive agreement required by an Employment Agreement. |
(7) | The Senior Executive Change of Control Agreement provides for a cash payment that equals the average of the executive'sexecutive’s salary and bonus for the previous three years times a factor assigned by the Board. The factor is 2.0 for Messrs. de Saram, Doucette, Howie, Mukherjee and MukherjeeZaffino and 2.5 for Mr. Addesso. |
(8)(6) | The unvested restricted stockequity awards for each Named Executive Officer are valued at the NYSE closing price of $183.09$217.76 at 20152018 year end as if all vested on December 31, 2015.2018. |
(9)(7) | In the event of a Change in Control, the Company may elect to continue the Performance Stock Awards subject to the 2010 Stock Incentive Plan and Performance Stock Unit Award Agreement. According to the award agreement, the first installment iscompleted installments are valued according to the actual achievement factor, and the remaining installments are valued at the target performance (100%). |
(10) The Senior Executive Change of Control Plan was recently revised to include a "Best Net" provision regarding the determination and treatment of parachute payments. Under the new plan provision, in lieu of an automatic reduction in benefits in the event of an excess parachute payment that triggers the excise tax, benefits are reduced to avoid an excess parachute payment only if doing so results in a higher after-tax benefit to the participant. The number shown reflects the higher benefit to the participant pursuant to the "Best Net" calculation. For Messrs. Addesso, Howie and Mukherjee, the "Best Net" result did not necessitate an automatic reduction in benefits to avoid payment of the excise tax. For Mr. Doucette, the "Best Net" result would be realized by reducing his benefits to one dollar less than three times his annualized compensation for the five most recent years. This is for illustrative purposes only and the actual calculations would be done by a firm of accountants agreed to by the participant and the Company.(8) | The Senior Executive Change of Control Plan includes a “Best Net” provision regarding the determination and treatment of parachute payments that could potentially result in a reduced figure based on each participant’s relevant circumstances as calculated by an accounting firm agreed to by the participant and the Company. Under the provision, in lieu of an automatic reduction in benefits in the event of an excess parachute payment that triggers the excise tax, benefits are reduced to avoid an excess parachute payment only if doing so results in a higher after-tax benefit to the participant. |
Proxy Statement 79
58 Everest Re Group, Ltd.
Compensation Committee Interlocks and Insider Participation
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION |
During 2015,2018, the Compensation Committee was comprised of John J. Amore, John R. Dunne, William F. Galtney, Jr., John A. Graf, Gerri Losquadro, Roger M. Singer and John A. Weber, all of whom are Non-Employee Directors of the Company and none of whom is or has been an officer of the Company. No Compensation Committee interlocks existed during 2015.
2018.
80 Everest Re Group, Ltd.
Proposal No. 2—Appointment2--Appointment of Independent Auditors
PROPOSAL NO. 2—APPOINTMENT OF INDEPENDENT AUDITORS |
PROPOSAL NO. 2—APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends that you vote FOR the appointment of PricewaterhouseCoopers LLP, as the Company'san independent registered public accounting firm, to serve as the Company'sCompany’s independent auditor for the year ending December 31, 20162019 and the authorization of the Board of Directors acting by the Audit Committee of the Board of Directors to set the fees fordetermine the independent registered public accounting firm serving as the Company's auditor.auditor’s remuneration. Proxies will be so voted unless shareholders specify otherwise in their proxies.The Company's independent registered public accounting firmPricewaterhouseCoopers LLP has been appointed to serve as the Company'sCompany’s auditor each year at the Annual General Meeting of Shareholders pursuant to the Board'sBoard’s recommendation, which is based on the recommendation of the Audit Committee. For the 20162019 Annual General Meeting, and in accordance with the Sarbanes-Oxley Act of 2002 ("(“Sarbanes Oxley"Oxley”), the Audit Committee has evaluated the performance and independence of PricewaterhouseCoopers LLP and has recommended their appointment as the Company'sCompany’s independent registered public accounting firm to serve as auditor for the year ending December 31, 2016.2019. In making its recommendation, the Audit Committee reviews both the audit scope and estimated fees for professional services for the coming year. Representatives of PricewaterhouseCoopers LLP will be present at the 20162019 Annual General Meeting, will have the opportunity to make a statement if they so desire and will be available to respond to appropriate questions from shareholders.
PROPOSAL NO. 3—RE-APPROVE THE EVEREST RE GROUP, LTD. EXECUTIVE PERFORMANCE ANNUAL INCENTIVE PLAN
The Board of Directors recommends that you vote FOR the re-approval of the Everest Re Group Ltd. Executive Performance Annual Incentive Plan. Proxies will be so voted unless the shareholders specify otherwise in their proxies. Proxies given by beneficial holders to shareholders of record may not be so voted unless beneficial holders specify a vote for approval in their proxies.Background and Reasons for Proposal
We are asking our shareholders to re-approve the Company's Executive Performance Annual Incentive Plan ("Plan"). The Plan was originally approved by the Company's Board of Directors effective May 20, 1999, and was last approved by shareholders in May of 2011. The Plan defines and limits amounts which may be awarded to eligible executives of the Company so that the awards will qualify as performance-based compensation under Section 162(m) of the Code. This proposal does not seek approval of any amendment of the existing provisions of, or performance goals contained within the Plan. Rather, this proposal is being presented to shareholders solely to address the periodic approval requirements of Section 162(m) discussed below.
Section 162(m) of the Code generally does not allow a publicly-held corporation to deduct from U.S. federal taxable income compensation above $1,000,000 that is paid in any taxable year to its CEO or to any of its four other most highly compensated officers. Compensation above $1,000,000 may be deducted if, among other things, it is payable upon the attainment of performance goals whose material terms are approved by the Company's shareholders at least once every five years.
Shareholder approval of this proposal is intended to constitute re-approval of the Plan for purposes of the approval requirements of Section 162(m) to provide us with the ability to continue to deduct the performance-based compensation that we structure to comply with Section 162(m) and we pay to our participating executive officers.
The purpose of the Plan is to provide an incentive for executives who are in a position to contribute materially to the success of the Company and its subsidiaries, reward their accomplishments, motivate future accomplishments, and aid in attracting and retaining executives of the caliber necessary for the continued success of the Company and its subsidiaries.
Description of the Plan
The Plan is set forth in full in Exhibit A and the description of the Plan which appears below is qualified in its entirety by reference to that Exhibit.
Administration
The Plan is administered by a committee appointed by the Board to administer the Plan (the "Committee"), consisting of no fewer than two members of the Board. Each member of the Committee qualifies as an "outside director" within the meaning of Code Section 162(m). The Committee has all discretion and authority necessary or appropriate to administer the Plan and to interpret the provisions of the Plan consistent with qualification of the Plan as performance-based compensation under Code Section 162(m). The Board has designated the Compensation Committee to perform the functions of the Committee with respect to the Plan.
Eligibility
Within 90 days after the beginning of each year, the Committee, in its sole discretion, selects corporate officers of the Company and its subsidiaries who will be eligible that year to participate in the Plan (the "Participants").
81Proposal No. 3—Re-Approve the Everest Re Group, Ltd. Executive Performance Annual Incentive Plan
Awards and Performance Measures
Within 90 days of the beginning of each year, the Committee establishes in writing, objective performance goals for each Participant, which, if attained, shall entitle such Participant to specific award amounts that will be paid to each Participant. The Participants' performance shall be measured by any of the following performance criteria: net income before or after taxes, operating income before or after taxes, premiums earned, earnings per share, return on stockholders' equity, return on assets, appreciation in and/or maintenance of the price of the common stock or any other publicly traded securities of the Company, comparisons with various stock market indices, market share, statutory combined ratio, expense ratio, reductions in costs and expense growth, or gross or net premium growth.
The Committee establishes an objective method by which maximum award amounts will be calculated under the Plan. The maximum award amount any one Participant may be awarded in one year is $3.5 million. The Committee, in its sole discretion, may eliminate or reduce but not increase, any award determination. The Plan provides that the total amount of awards granted to all Participants in any one year will not exceed 10% of the Company's average annual income before taxes for the preceding five years.
Other Terms and Conditions
The Plan provides that no award shall be assignable or transferable other than by will or by laws of descent and distribution. The Plan further provides that the Board may at any time and without notice to any corporate officer of the Company or a subsidiary suspend, discontinue, revise, amend or terminate the Plan, provided that any such revision, or amendment which requires shareholder approval in order to maintain the qualification of awards as performance-based compensation pursuant to Code Section 162(m) shall not be made without such approval. Because payments under the Plan are determined by comparing actual performance to the annual performance goals established by the Committee, it is not possible to conclusively state the amount of benefits which will be paid under the Plan.
For 2016, the Committee has determined that Messrs. Addesso, Doucette, Howie, Mukherjee and Zaffino will be Participants in the Plan. Further, if the Plan as submitted, is approved by shareholders, any award cannot exceed $3.5 million, can qualify for tax deductibility under §162(m) if subject to U.S. taxation, and the Committee retains sole discretion under the Plan to reduce or eliminate the award as it deems appropriate.
Proposal No. 4—Non-Binding3--Non-Binding Advisory Vote on Executive Compensation
PROPOSAL NO. 3—NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION |
PROPOSAL NO. 4—NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Board of Directors recommends that you vote FOR the non-binding advisory approval of the Named Executive Officers'Officers’ compensation. Proxies will be so voted unless shareholders specify otherwise in their proxies. Proxies given by beneficial holders to shareholders of record may not be so voted unless beneficial holders specify a vote for approval in their proxies.The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables shareholders to vote to approve, on an advisory (nonbinding) basis, the compensation of the Company'sCompany’s Named Executive Officers as disclosed in this Proxy Statement in accordance with the rules of the SEC.
As described in detail under the heading "Executive“Executive Compensation – Compensation Discussion and Analysis"Analysis”, the Company'sCompany’s executive compensation program is designed to attract, reward, and retain talented executives whose abilities are critical to the success of the Company and its long term goals of profitability and strong shareholder returns. Please read the "Compensation“Compensation Discussion and Analysis"Analysis” discussion for additional details about our executive compensation programs, including information about the fiscal year 20152018 compensation of our Named Executive Officers.
Shareholders are being asked to indicate their support for the Company'sCompany’s Named Executive Officer compensation as described in this Proxy Statement, which includes the "Compensation“Compensation Discussion and Analysis"Analysis” section and the compensation tables and related narrative disclosure. This proposal, commonly known as a "say-on-pay"“say-on-pay” proposal, gives shareholders the opportunity to express their views on our Named Executive Officers'Officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company'sCompany’s Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, the Board recommends that you vote "FOR"“FOR” the following resolution at the Annual General Meeting:
"Resolved,“Resolved, that the shareholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and related narrative discussion."”
The say-on-pay vote is advisory and, therefore, not binding on the Company, the Compensation Committee or the Board of Directors. However, the Board of Directors and the Compensation Committee value the opinions of the Company'sCompany’s shareholders, will review the voting results, and will consider shareholder concerns.
82 Everest Re Group, Ltd.
MISCELLANEOUS—GENERAL MATTERS
Miscellaneous--General Matters
MISCELLANEOUS—GENERAL MATTERS |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company'sCompany’s executive officers, and directors and persons who own more than ten percent of a registered class of the Company'sCompany’s equity securities, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC. Executive officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company'sCompany’s review of the copies of the forms it has received and representations that no other reports were required, the Company believes that all of its executive officers and directors have filed with the SEC on a timely basis all required Forms 3, 4 and 5 with respect to transactions during fiscal year 2015.2018.
Shareholder Proposals for the 20162020 Annual General Meeting of Shareholders
To be considered for inclusion in the Company'sCompany’s Proxy Statement and Proxy Card relating to the 20162020 Annual General Meeting of Shareholders, a shareholder proposal must be received by the Secretary of the Company in proper form at the Company'sCompany’s registered office at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda, no later than December 15, 2016.13, 2019. If the shareholder proposal relates to a nomination for director, then the proposal must be made in accordance with the procedures set forth in Bye-law 12 and discussed in the section titled "Nominating“Nominating and Governance Committee."” This Bye-law is available on the Company'sCompany’s website or by mail from the Corporate Secretary'sSecretary’s office.
Proxy Solicitations
The expense of this proxy solicitation will be borne by the Company. In addition to solicitation by mail, proxies may be solicited in person or by telephone, facsimile or mail by directors or officers who are employees of the Company without additional compensation. Georgeson LLC will provide solicitation services to the Company for a fee not to exceed $6,500 plus out-of-pocket expenses. The firm will solicit proxies by personal interview, telephone, facsimile and mail. The Company will, on request, reimburse shareholders of record who are brokers, dealers, banks or voting trustees, or their nominees, for their reasonable expenses in sending proxy materials and annual reports to the beneficial owners of the shares they hold of record.
Proxy Statement 83
64 Everest Re Group, Ltd.
Miscellaneous—General
Miscellaneous--General Matters
Transfer Agent and Registrar
The Company has appointed Computershare Trust Company, N.A. (formerly known as Equiserve Trust Company, N.A.) to serve as transfer agent, registrar and dividend paying agent for the Common Shares. Correspondence relating to any share accounts or dividends should be addressed to:
Computershare
Investor Services
P.O. BOX 30170505000
Louisville, KY 40233
College Station, TX 77842-3170
Overnight correspondence should be sent to:
Computershare
211 Quality Circle, Investor Services
462 South 4th Street, Suite 210
College Station, TX 77845
1600
Louisville, KY 40202
(877) 373-6374 (Shareholder Services – Toll Free)
(781) 575-2725 (Shareholder Services)
All transfers of certificates for Common Shares should also be mailed to the above address.
| |
| By Order of the Board of Directors |
| |
| |
| Sanjoy Mukherjee |
| Executive Vice President,
|
| General Counsel and Secretary |
| |
April 11, 2019 | |
April 14, 2016
Everest Re Group, Ltd.
Executive Performance Annual Incentive Plan
1.PURPOSE
The purpose of the Everest Re Group, Ltd. Executive Performance Annual Incentive Plan (the "Plan") is to provide incentive for executives who are in a position to contribute materially to the success of the Company and its Subsidiaries; to reward their accomplishments; to motivate future accomplishments; and to aid in attracting and retaining executives of the caliber necessary for the continued success of the Company and its Subsidiaries.
2.DEFINITIONS
The following terms as used herein shall have the meaning specified:
| (a) | "Award" means a performance incentive bonus paid pursuant to the Plan. |
| (b) | "Board" means the Board of Directors of the Company. |
| (c) | "Code" means the Internal Revenue Code of 1986 as amended. Reference to a specific section of the Code shall include such section, any valid regulation promulgated thereunder, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation. |
| (d) | "Committee" means the Committee appointed by the Board to administer the Plan. The Committee shall consist of no fewer than two members of the Board. The members of the Committee shall be appointed by, and serve at the pleasure of, the Board. Each member of the Committee shall qualify as an "outside director" under Code Section 162 (m). |
| (e) | "Company" means Everest Re Group, Ltd. or any successor corporation. |
| (f) | "Participant" means a corporate officer of the Company or a Subsidiary selected by the Committee in its sole discretion to participate in the Plan. |
| (g) | "Performance Criteria" means the following measures of performance: |
net income, before or after taxes
operating income, before or after taxes
return on stockholders' equity
appreciation in and/or maintenance of the price of the common stock or any other publicly traded securities of the Company
comparisons with various stock market indices
reductions in costs and expense growth
gross or net premium growth
A performance criteria may be applied by the Committee as a measure of the performance of any, all, or any combination of the Company or a Subsidiary.
6684 Everest Re Group, Ltd.
Appendix A
| (h) | "Performance Goal" means the goal or goals established for a Participant by the Committee in accordance with paragraph 4 (a). |
| (i) | Subsidiary" means any corporation in which the Company, directly or indirectly, controls 50% or more of the total combined voting power of all classes of such corporation's stock. |
| (j) | "Target Awards" means the amount of the target award established for each Participant by the Committee in accordance with paragraph 4 (a). |
3.TERM
The Plan shall be effective as of January 1, 1999, subject to approval by a vote of the shareholders at the 1999 Annual Meeting of Shareholders, and such shareholder approval shall be a condition to the right of any Participant to receive any benefits hereunder. As long as the Plan remains in effect, it shall be resubmitted to shareholders as necessary to enable the Plan to continue to qualify as performance-based compensation under Section 162(m) of the Code.
4.AWARDS
| (a) | Within ninety (90) days after the beginning of each year, the Committee, in its sole discretion, shall select Participants for the year and establish in writing (i) objective Performance Goal or Goals for each Participant for that year based on one or more of the Performance Criteria (ii) the specific award amounts that will be paid to each Participant if the Performance Goal or Goals are achieved (the "Target Award") and (iii) an objective method by which such amounts will be calculated, which calculation will be based upon a comparison of actual performance to the Performance Goal or Goals. The calculation of the amount of an Award shall be objectively determinable. The maximum Award that may be paid to any Participant under the Plan for any year will be $3.5 million. The selection of a Participant for any given year does not mean that the Participant will be selected or will be entitled to be selected as a Participant in any subsequent year. |
| (b) | The Committee, in its sole discretion, may eliminate or reduce, but not increase, any Award calculated under the methodology established in accordance with paragraph 4 (a). |
| (c) | As soon as practicable following each year while the Plan is in effect, the Committee shall determine and certify in writing the extent to which the Performance Goal or Goals applicable to each Participant for the year were achieved and the amount of the Award, if any, to be made. Awards will be paid to the Participants in cash following such certification by the Committee and no later than ninety (90) days following the close of the year with respect to which the Awards are made, unless a Participant has elected to defer all or a portion of such payment pursuant to the Company's or a Subsidiary's Deferred Compensation Plan, in which event, payment of the amount deferred will be made in accordance with the terms of the Deferred Compensation Plan. |
| (d) | No Award will be paid to any Participant who is not an employee of the Company on the last day of the year, except that if during the last eight (8) months of the year, the Participant retires, dies, or is involuntarily terminated, the Participant may be entitled to a prorated Award as and to the extent determined by the Committee in its sole discretion. If a Participant is on disability for more than four (4) months of the year, the Participant will be entitled to a prorated Award. Participants, who resign voluntarily after the end of the year, but before Award payments are payments are actually made, will be eligible for an Award as and to the extent determined by the Committee in its sole discretion. The provisions of this subparagraph are subject to the terms of any written agreement between a Participant and the Company. |
| (e) | In no event shall the total amount of Awards granted to the Participants in any one year exceed ten percent (10%) of the Company's average annual income before taxes for the preceding five years. |
5.ADMINISTRATION
| (a) | The Plan shall be administered by the Committee. The Committee shall have all discretion and authority necessary or appropriate to administer the Plan and to interpret the provisions of the Plan, consistent with qualification of the Plan as performance-based compensation under Code Section 162(m). Any determination, decision or action of the Committee in connection with the construction, interpretation, administration or application of the Plan shall be final, conclusive and binding upon all persons. |
| (b) | No member of the Committee or the Board shall be liable for any action taken or determination made in good faith with respect to the Plan or any Award thereunder, and the Company shall defend and indemnify Committee and Board members for any actions taken or decisions made in good faith under the Plan. |
6.MISCELLANEOUS
| (a) | NON-ASSIGNABILITY. No Award shall be assignable or transferable (including pursuant to a pledge or security interest) other than by will or by laws of descent and distribution. |
| (b) | WITHHOLDING TAXES. Whenever payments under the Plan are to be made, the Company and/or the Subsidiary shall withhold therefrom an amount sufficient to satisfy any applicable governmental withholding tax requirements related thereto. |
| (c) | AMENDMENT OR TERMINATION OF THE PLAN. The Board may at any time and without notice to any corporate officer of the Company or a Subsidiary suspend, discontinue, revise, amend or terminate the Plan; provided, that any such revision, or amendment which requires approval of the Company's shareholders in order to maintain the qualification of Awards as performance-based compensation pursuant to Code Section 162(m) shall not be made without such approval. |
| (d) | NON-UNIFORM DETERMINATIONS. The Committee's determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations and to establish non-uniform and selective Performance Goals. |
| (e) | OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company, its Subsidiaries, or the Committee from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect. |
| (f) | PAYMENTS TO OTHER PERSONS. If payments are legally required to be made to any person other than the person to whom any amount is available under the Plan, payments shall be made accordingly. Any such payment shall be a complete discharge of the liability of the Company, its Subsidiaries, and the Committee. |
| (g) | UNFUNDED PLAN. A Participant shall have no interest in any fund or specified asset of the Company or a Subsidiary. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company or its Subsidiaries and any Participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company and its Subsidiaries under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company and its Subsidiaries. All payments to be made hereunder shall be paid from the general funds of the Company and its Subsidiaries and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts. The Plan is not intended to be an employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended. |
68 Everest Re Group, Ltd.
Appendix A
| (h) | LIMITS OF LIABILITY. Neither the Company, its Subsidiaries, nor any member of the Board or of the Committee, nor any other person participating in any determination of any question under the Plan, or in the interpretation, administration or application of the Plan, shall have any liability to any party for any good faith action taken or not taken under the Plan. |
| (i) | NO RIGHT TO EMPLOYMENT. Nothing contained in this Plan shall confer upon any Participant any right to continue in the employ or other service of the Company or a Subsidiary, or constitute any contract or limit in any way the right of the Company or a Subsidiary to change such person's compensation or other benefits or to terminate the employment or other service of such person with or without cause. |
| (j) | INVALIDITY. If any term or provision contained herein shall to any extent be invalid or unenforceable, such term or provision shall be reformed so that it is valid and such invalidity or unenforceability shall not affect any other provision or part hereof. |
| (k) | APPLICABLE LAW. The Plan shall be governed by the laws of the State of Delaware as determined without regard to the conflict of law principles thereof. |
| (l) | CODE SECTION 162 (M). It is the intent of the Company that all Awards under the Plan qualify as performance-based compensation for purposes of Code Section 162 (m) so that the Company's tax deduction for such Awards is not disallowed in whole or in part under Code Section 162 (m). The Plan is to be applied and interpreted accordingly. |
| (m) | SUCCESSORS. The obligations of the Company and its Subsidiaries under this Plan shall be binding upon any organization that shall succeed to all or substantially all of the Company's or a Subsidiary's assets. |