UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by Registrant    x

Filed by a Party other than the Registrant    ¨

Check the appropriate box:

Universal Insurance Holdings, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

- 2 -

April 30, 201224, 2013

Dear Shareholder:

On behalf of the Board of Directors, I invite you to attend the 20122013 Annual Meeting of Shareholders (“Annual Meeting”) of Universal Insurance Holdings, Inc. (“Company”Company,” “we” or “us”). The Annual Meeting will be held at 10:309:00 a.m., Eastern Daylight Time, on Thursday, June 8, 2012,6, 2013, at the Westin Fort Lauderdale, 400 Corporate Drive, Fort Lauderdale, Florida 33334.Omni Hilton Head Oceanfront Resort, 23 Ocean Lane, Hilton Head, South Carolina 29928.

The shareholders will be asked to (i) elect seveneight directors, each to hold office until the 20132014 annual meeting or until their successors have been elected and qualified; (ii) approve an amendment to the Second Amended and Restated 2009 Omnibus Incentive Plan andto add 3,000,000 shares of common stock to the reserve available for new awards; (iii) approve the material terms of the performance goals set forth therein;for performance bonuses in each of the employment agreements of the newly appointed President and (iii)Chief Executive Officer, Senior Vice President and Chief Operating Officer and Chief Administrative Officer of the Company; and (iv) ratify the appointment of Blackman Kallick, LLPPlante & Moran, PLLC as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2012.2013. The Board of Directors has unanimously approved these proposals and we urge you to vote in favor of these proposals and in accordance with the Board of Director’sDirectors’ recommendation on such other matters as may be submitted to you for a vote at the Annual Meeting.

We encourage you to vote, regardless of the number of shares you own. Please sign and return eachyour proxy card that you receive in the enclosed postage-paid envelope, which is provided for your convenience. The return of your proxy card will not prevent you from voting in person but will assureensure that your vote is counted if you are unable to attend the Annual Meeting. We look forward to seeing you on June 8, 2012.6, 2013.

In addition to the proxy materials, enclosed is the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011,2012, as filed with the Securities and Exchange Commission.

1110 West Commercial Boulevard, Fort Lauderdale, Florida 33309

(954) 958-1200

UNIVERSAL INSURANCE HOLDINGS, INC.

1110 West Commercial Boulevard

Fort Lauderdale, Florida 33309

NOTICE

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD JUNE 8, 20126, 2013

NOTICE IS HEREBY GIVEN that the 20122013 Annual Meeting of Shareholders (“Annual Meeting”) of Universal Insurance Holdings, Inc., a Delaware corporation (“Company”Company,” “we” or “us”), will be held at 10:309:00 a.m., Eastern Daylight Time, on Thursday, June 8, 2012,6, 2013, at the Westin Fort Lauderdale, 400 Corporate Drive, Fort Lauderdale, Florida 33334, for the following purposes:Omni Hilton Head Oceanfront Resort, 23 Ocean Lane, Hilton Head, South Carolina 29928.

1.          To elect seveneight directors, each to hold office until the 20132014 annual meeting or until their successors have been elected and qualified;

2.          To approve an amendment to the Second Amended and Restated 2009 Omnibus Incentive Plan (“Second Amended and Restated Plan”) andto add 3,000,000 shares of common stock to the reserve available for new awards;

3.          To approve the material terms for the performance goals set forth therein;for performance bonuses in each of the employment agreements of the newly appointed President and Executive Officer, Senior Vice President and Chief Operating Officer and Chief Administrative Officer of the Company;

3.4.          To ratify the appointment of Blackman Kallick, LLPPlante & Moran, PLLC as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2012;2013; and

4.5.          To transact any other business as may properly come before the Annual Meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on April 24, 201217, 2013 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting and at any adjournment thereof. A complete list of shareholders of record of the Company on the record date will be available for examination by any shareholder, for any purpose germane to the Annual Meeting, during ordinary business hours, for the ten-dayten (10) day period prior to the Annual Meeting, at the executive offices of the Company, 1110 West Commercial Boulevard, Fort Lauderdale, Florida 33309.

It is important that your shares be represented at the Annual Meeting. Whether or not you plan to attend, in order to assure proper representation of your shares at the Annual Meeting, we urge you to submit your proxy voting instructions to the Company by mail. By submitting your proxy voting instructions promptly, you can help the Company avoid the expense of follow-up mailings to ensure the presence of a quorum at the Annual Meeting. If you attend the Annual Meeting, you may, if so desired, revoke your prior proxy voting instructions and vote your shares in person.

In the event that there are not sufficient votes to approve any one of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned to permit further solicitation of proxies by the Company.

IN ORDER TO SUBMIT PROXY VOTING INSTRUCTIONS PRIOR TO THE ANNUAL MEETING, COMPLETE, SIGN AND DATE YOUR PROXY CARD AND RETURN IT PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED.

YOUR PROXY IS BEING SOLICITED BY THE BOARD.BOARD OF DIRECTORS. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSED ITEMS.

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Table of Contents

i

Table of Contents

(continued)

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UNIVERSAL INSURANCE HOLDINGS, INC.

1110 West Commercial Boulevard

Fort Lauderdale, Florida 33309

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors (“Board”) of Universal Insurance Holdings, Inc., a Delaware corporation (“Company”Company,” “we” or “us”), of proxies to be voted at the 2013 Annual Meeting of Shareholders (“Annual Meeting”) of the Company, (“Annual Meeting”), to be held at the Westin Fort Lauderdale, 400 Corporate Drive, Fort Lauderdale, Florida 33334,Omni Hilton Head Oceanfront Resort, 23 Ocean Lane, Hilton Head, South Carolina 29928, on Thursday, June 8, 20126, 2013 at 10:309:00 a.m., Eastern Daylight Time, and at any and all postponements or adjournments thereof, for the purposes set forth in the accompanying Notice of Annual Meeting.

A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011,2012, including financial statements audited by Blackman Kallick, LLP and Plante & Moran, PLLC, is included. This Proxy Statement, Notice of Annual Meeting, accompanying proxy card and Annual Report are first expected to be posted together to http://proxy.universalinsuranceholdings.comwww.universalinsuranceholdings.com/SEC-Filing on or about April 30, 2012.April24, 2013.

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

It is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. We have designated George R. De Heer as proxy for the 2012 Annual Meeting.

It is a document that Securities and Exchange Commission (“SEC”) regulations require us to give you when we ask you to sign a proxy card designating George R. De Heer as proxy to vote on your behalf.

If your shares are registered directly in your name with our registrar and transfer agent, Continental Stock Transfer & Trust Company, you are considered a shareholder of record with respect to those shares.

If your shares are held in a brokerage account or bank, you are considered the “beneficial owner” of those shares.

You need to bring a photo ID to gain admission.

If you are a beneficial owner, bring your most recent brokerage statement with you to the Annual Meeting. We can use that to verify your ownership of shares and admit you to the Annual Meeting; however, you will not be able to vote your shares at the Annual Meeting without a legal proxy, as described in response to question 5.

Please note that cameras and sound or video recording equipment will not be allowed in the meeting room.

You will need to ask your broker, bank or other intermediary to furnish you with a legal proxy. You will need to bring the legal proxy with you to the Annual Meeting and hand it in with a signed ballot that will be provided to you at the Annual Meeting. You will not be able to vote your shares at the Annual Meeting without a legal proxy.

Please note that if you request a legal proxy, any previously executed proxy will be revoked and your vote will not be counted unless you appear at the Annual Meeting and vote in person or legally appoint another proxy to vote on your behalf.

If you do not receive the legal proxy in time, you can follow the procedures described in the response to question 4 to gain admission to the Annual Meeting; however, you will not be able to vote your shares at the Annual Meeting.

By Written Proxy: All shareholders can vote by written proxy card. If you are a beneficial owner, you will receive a written proxy card or a voting instruction form from your broker, bank or broker.other intermediary.

In Person: All shareholders of record may vote in person at the Annual Meeting. Beneficial owners may vote in person at the Annual Meeting if they have a legal proxy, as described in response to question 5.

The record date for the Annual Meeting is April 24, 2012.17, 2013. The record date is established by the Board as required by the Delaware General Corporation Law and the Company’s bylaws. Owners of record at the close of business on the record date are entitled to:

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The securities to be voted at the Annual Meeting consist of (i) shares of common stock of the Company, $0.01 par value per share (“Common Stock”), with each share entitling its record owner to one vote, (ii) shares of Series M Preferred Stock of the Company, $0.01 par value per share (“Series M Preferred Stock”), with each share entitling its record owner to one vote and (iii) shares of Series A Preferred Stock of the Company, $0.01 par value per share (“Series A Preferred Stock”), with each share entitling its record owner to one vote. The holders of Series M Preferred Stock, voting separately as a series, are entitled to elect two directors. The holders of 90% of the outstanding shares of Series M Preferred Stock have advised us that they currently do not intend to exercise their right to elect two directors at the Annual Meeting. While the holders of the Series M Preferred Stock have not submitted any director nominees for inclusion in this Proxy Statement, such holders retain the right to elect two directors at the Annual Meeting. The holders of Common Stock, Series M Preferred Stock and Series A Preferred Stock, voting together as one class, are entitled to elect the remaining directors.

The table below sets forth the number and classes of Company stock entitled to vote at the Annual Meeting.

The Company had no other voting securities outstanding on the record date.

If you are a shareholderShareholders of Common Stock, and/or Series A Preferred Stock youand Series M Preferred Stock will receive one proxy card for all of the shares of Common Stock, and/or Series A Preferred Stock that you hold in certificate form and/or in book-entry form.

If you are a shareholder of Series M Preferred Stock, you will receive a proxy card for all of the shares ofand Series M Preferred Stock that youthey hold in certificate form and/or in book-entry form.

The presence, in person or by proxy, of at least a majority of the total number of outstanding shares of the Series M Preferred Stock entitled to vote at the Annual Meeting for those matters where a separate vote of the Series M Preferred Stock is required, and of at least a majority of the total number of outstanding shares of the Common Stock, Series M Preferred Stock and Series A Preferred Stock entitled to vote at the Annual Meeting for those matters where the Common Stock, Series M Preferred Stock and Series A Preferred Stock, voting together as a class, is required, is necessary to constitute a quorum at the Annual Meeting. If a quorum is not present at the Annual Meeting, a majority of the shares so represented may vote to adjourn the Annual Meeting from time to time without further notice.

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Shareholders can revoke a proxy prior to the completion of voting at the Annual Meeting by:

12.	Are votes confidential? Who counts the votes?

We will continue our practice of holding the votes of all shareholders in confidence from directors, officers and employees except:

With respect to Proposal 1, you may either (i) vote in favor of all nominees; (ii) vote in favor of specific nominees; (iii) withhold your vote against all nominees; (iv) vote against specific nominees; (v) abstain from voting with respect to all nominees; or (vi) abstain from voting(iv) withhold your vote with respect to specific nominees.nominees;

With respect to Proposals 2, 3 and 3,4, you may vote “For” or “Against,” or “Abstain” from voting.

EachIf a quorum is present at the Annual Meeting, the eight (8) nominees for election as directors who receive the greatest number of affirmative “For” votes at the director nomineesmeeting will be elected as a director of the Company if a majority of the votes cast on his election are voted in favor of such electiondirectors (Item 1 on the Proxy Card).

A majority of the votes cast means that the votes cast “for” a director exceed the number of votes cast “against” that director.

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The favorable vote of a majority of the votes cast on the proposal will be required:

Shareholders should specify their choice for each matter on the enclosed proxy card. If no specific instructions are given, proxies which are signed and returned will be voted:

Abstentions and broker non-votes are included in determining whether a quorum is present. A broker non-vote occurs when a nominee holding shares for a beneficial owner (i.e., a broker) does not vote on a particular proposal because the nominee does not have discretionary voting power for that particular matter and has not received instructions from the beneficial owner.

Abstentions and broker non-votes are not considered “votes cast” and thus do not have an effect on the outcome of the vote as to any of the items presented in this Proxy Statement. Under the rules of the NYSE Amex EquitiesMKT LLC (“NYSE Amex”MKT”), on which shares of our Common Stock are traded, Item 34 is considered a routine matter on which brokers will be permitted to vote in their discretion even if the beneficial owners do not provide voting instructions. However, Items 1, 2 and 23 are not considered routine matters under NYSE AmexMKT rules, and brokers will not be permitted to vote on Items 1, 2 and 23 if the beneficial owners fail to provide voting instructions.

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We will bear the cost of soliciting proxies in the enclosed form. Officers and regular employees of the Company may solicit proxies by a further mailing or personal conversations or via telephone or facsimile, provided that they do not receive compensation for doing so. We will, upon request, reimburse brokerage firms and others for their reasonable expenses in forwarding solicitation material to the beneficial owners of stock.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY

MATERIALS FOR THE SHAREHOLDER MEETING OF UNIVERSAL

INSURANCE HOLDINGS, INC. TO BE HELD ON JUNE 8, 20126, 2013

The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 31, 20112012 are first expected to be posted together to http://proxy.universalinsurance holdings.comwww.universalinsuranceholdings.com/SEC-Filing on or about April 30, 2012.April24, 2013.

ELECTION OF DIRECTORS

(PROPOSAL 1)

Our Board has the ultimate authority for the management of the Company’s business, objectives and operations. The Board selects our executive officers, delegates responsibilities for the conduct of day-to-day operations to those officers and monitors the performance of the officers.

Meetings of the Board are held regularly each quarter and as required. The Board held fivefour (4) meetings during 2011.2012. All of our directors attended at least 75% of the meetings of the Board and the committees on which they served during 2011.2012.

We encourage our Board members to attend the Annual Meeting and expect that they will attend. All of our Board members attended the 2012 Annual Meeting of Shareholders.

Compensation of Directors

Effective June 1, 2011,In 2012, we paypaid an annual director’sdirectors’ fee equal toof $85,000, paid monthly, to each director except Bradley I. Meier and Sean P. Downes. Also effective June 1, 2011, we payWe also paid an annual fee equal toof $15,000, paid monthly, to each non-employee chairman of a committee of our Board except for Bradley I. Meier.Board. We also reimburse all directors for costs and expenses for attending Board meetings. We have entered into indemnification agreements with our executive officers and directors pursuant to which we have agreed to indemnify such individuals, to the fullest extent permitted by law, for claims made against them in connection with their positions as officers, directors or agents of the Company. Directors are also entitled to receive discretionary grants of non-qualified stock options under the Second Amended and Restated 2009 Omnibus Incentive Plan (“Amended and Restated Plan”).Plan.

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Director Summary Compensation Table

The table below summarizes the compensation paid to our non-executive directors for the fiscal year ended December 31, 2011.2012.

The Board, upon the recommendation of the Nominating and Governance Committee, has nominated Scott P. Callahan, Sean P. Downes, Bradley I. Meier, Norman M. Meier,Darryl L. Lewis, Michael A. Pietrangelo, Ozzie A. Schindler, Reed J. Slogoff, Jon W. Springer and Joel M. Wilentz, M.D., for election to the Board to serve as directors until the 20132014 Annual Meeting of Shareholders or until their successors are duly elected and qualified. The nominees have consented to be named and have indicated their intent to serve if elected. The Board has no reason to believe that the nominees will be unavailable or that any other vacancy on the Board will occur.unavailable. If any nominee becomes unavailable for any reason, or if any other vacancy in the slate of directors to be elected at the Annual Meeting should occur before the election, the shares represented by the proxy will be voted for the person, if any, who is designated by the Board to replace the nominee or to fill such other vacancy on the Board.

The holders of Series M Preferred Stock, voting separately as a series, are entitled to elect directors to fill thetwo director seats. Until February 22, 2013, these seats currentlywere held by Bradley I. Meier and Norman M. Meier, bothwho collectively own 90% of whom the Board recommends for reelection. Such directors shall be elected by a majority of votes in the affirmative of theoutstanding shares of Series M Preferred Stock castStock. Bradley I. Meier resigned as Chairman, President and Chief Executive Officer as of February 22, 2013 and Norman M. Meier resigned as Secretary and director of the Company as of February 22, 2013. Messrs. Bradley Meier and Norman Meier have advised us that they currently do not intend to exercise their right to elect two directors at the Annual Meeting. While the holders of Series M Preferred Stock have not submitted any director nominees for inclusion in this Proxy Statement, they retain the right to elect two directors at the Annual Meeting.

The holders of Common Stock, the holders of Series M Preferred Stock and the holders of Series A Preferred Stock, voting together as one class, are entitled to elect directors to fill the seats currently held by Sean P. Downes, Michael A. Pietrangelo, Ozzie A. Schindler, Reed J. Slogoff, Jon W. Springer and Joel M. Wilentz, M.D., and to elect two additional director nominees, Scott P. Callahan and Darryl L. Lewis, all of whom the Board recommends for reelection. Suchreelection or election to the Board. The eight (8) nominees for election as directors shall be elected by a majoritywho receive the greatest number of affirmative “For” votes in the affirmative of the shares of Common Stock, Series M Preferred Stock and Series A Preferred Stock, voting together as a class cast at the Annual Meeting.Meeting, will be elected as directors. If elected, all nominees are expected to serve until the 20132014 Annual Meeting of Shareholders or until their successors are duly elected and qualified.

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THE BOARD UNANIMOUSLY RECOMMENDS THAT THE NOMINEES

DESCRIBED ABOVE BE ELECTED AS DIRECTORS TO SERVE UNTIL THE 2013

2014 ANNUAL MEETING OF SHAREHOLDERS OR UNTIL THEIR SUCCESSORS ARE DULY ELECTED

AND QUALIFIED

Information Concerning the Board of Directors and Executive Officers

The current directors, new director nominees and executive officers of the Company are as follows:

Biographical Information

Biographical information regarding our current directors, new director nominees and executive officers is as follows:

Directors

Scott P. Callahanis a new director nominee in 2013. Until his retirement in 2011, Mr. Callahan served as Executive Vice President of Everest Reinsurance Holdings, Inc. and Everest Reinsurance Company since 2002. Mr. Callahan also served as a director of Everest Reinsurance Company from 2001 to 2011, a director of Everest International Reinsurance, Ltd. from 2003 to 2007 and director of Everest Reinsurance (Bermuda), Ltd. from 2001 to 2007. Each of these entities is a direct or indirect subsidiary of Everest Re Group, Ltd., a provider of reinsurance coverage in the property and casualty reinsurance industry. Dating back to 1979, Mr. Callahan held various positions with subsidiaries and affiliates of Everest Re Group, Ltd. and its predecessor, Prudential Reinsurance Company. Mr. Callahan’s broad knowledge of the reinsurance industry will allow him to provide valuable perspective to our Board, particularly on matters related to the Company’s reinsurance program.

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Sean P. Downeshas been President and Chief Executive Officer of the Company since February 22, 2013, when Bradley I. Meier resigned from such positions. Prior to becoming President and Chief Executive Officer, Mr. Downes had been the Senior Vice President and Chief Operating Officer and a director of the Company since January 2005. He has served as2005 and Chief Operating Officer and a director of Universal Property & Casualty Insurance Company (“UPCIC”), a wholly ownedwholly-owned subsidiary of the Company, since July 2003. Mr. Downes has served as a director of the Company since 2005 and as a director of UPCIC since 2003. Prior to joining UPCIC, Mr. Downes was Chief Operating Officer of Universal Adjusting Corporation, a wholly-owned subsidiary of the Company, from July 1999 to July 2003. During that time, Mr. Downes

created the Company’s claims operation. Before joining a subsidiary of the Company in July 1999, Mr. Downes was Vice President of Downes and Associates, a multi-line insurance adjustment corporation.

Mr. Downes has over 2324 years of experience in the insurance industry. As an experienced financial and operational leader within the insurance industry, Mr. Downes brings a broad understanding of the strategic priorities and operational demands facing the Company.

Bradley I. MeierDarryl L. Lewisis a new director nominee in 2013. Mr. Lewis is an established trial attorney in Florida and throughout the southeast region of the United States. Mr. Lewis has been President, Chief Executive Officer and a directorshareholder with the law firm of Searcy Denney Scarola Barnhart & Shipley, P.A. since 2003. Mr. Lewis was named in the Best Lawyers in America publication in connection with this litigation practice. Mr. Lewis has been recognized in Florida Trend magazine as one of the Company since its inception“legal elite” and named in November 1990. He hasthe South Florida Legal Guide as one of Florida’s top trial lawyers. Mr. Lewis proudly served in the U.S. Army Reserve as Presidenta Judge Advocate General (JAG) attorney. A native Kentuckian, Mr. Lewis earned a bachelor of UPCIC since its formationscience degree, summa cum laude, in April 1997. In 1990, Mr. Meier graduated with a B.S. in EconomicsPolitical Science from the Wharton School of Business atKentucky State University and his law degree from the University of Pennsylvania.

Kentucky. Mr. Meier, as the founderLewis’ legal experience and deep knowledge of the Company, hasFlorida business market will make him a deep understanding of our business and the Florida insurance market. He has navigated numerous challenges, including the global economic downturn and regulatory challenges in the Florida insurance market. As our Chairman, President and Chief Executive Officer, he is a keyvaluable member of our Board.

Norman M. Meierhas been a director of the Company since July 1992 and Secretary of the Company since January 1, 2008. Presently Mr. Meier serves as Executive Chairman of DermWorx Incorporated, a privately held dermatologic specialty pharmaceutical company. From February 2000 until January 2006, Mr. Meier was President and Chief Executive Officer of PharmaMatrix, Inc., a medical marketing and advertising company. From December 1986 until November 1999, Mr. Meier was President, Chief Executive Officer and a director of Columbia Laboratories, Inc., a publicly traded corporation in the pharmaceuticals business. From 1977 until 1986, Mr. Meier served as a consultant to Key Pharmaceuticals. From 1971 to 1977, Mr. Meier was Vice President of Sales and Marketing for Key Pharmaceuticals.

Mr. Meier is an experienced business leader with a broad understanding of the operational, financial and strategic issues facing public companies. This experience gives him valuable knowledge and perspective as a member of our Board.

Michael A. Pietrangelohas been a director of the Company since March 2010. Since 1998, Mr. Pietrangelo has practiced law atand has been of counsel to the firm of Pietrangelo Cook, PLC since 1998 andPLC. Mr. Pietrangelo is admitted to the bars of the states of New York and Tennessee and the District of Columbia bars.Columbia. He currently serves on the board of directors of Medicis Pharmaceutical Corporation, an independent specialty pharmaceuticalMRI Interventions Inc., a publicly traded research and development company, listed on the New York Stock Exchange (“NYSE”) and the American Parkinson Disease Association, a not-for-profit organization focused on serving the Parkinson’s community. Mr. Pietrangelo currentlyalso serves as the managing partner of The Theraplex Company, LLC, a privately held skin care company. Mr. Pietrangelo currently serves on the board of directors of Surgivision, Inc., a public company now known as MRI Interventions, Inc. From 1994 until 1998, Mr. Pietrangelo served as President of Johnson Products Company, a subsidiary of IVAX Corporation. From 1990 to 1994, Mr. Pietrangelo was the President and Chief Executive Officer of CLEO, Inc., a subsidiary of Gibson Greetings, Inc. and manufacturer of specialized paper products. From 1967 to 1989, he served in a variety of legal and management roles at the Federal Trade Commission, Pfizer, Inc., Schering-Plough Corporation and Western Publishing Group.

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Mr. Pietrangelo has valuable experience in corporate governance, legal and financial matters as a result of his participation as a lawyer, executive and director of privately held and public companies as well as non-profit organizations. This experience gives him perspective and knowledge as a member of our Board.

Ozzie A. Schindlerhas been a director of the Company since January 2007. Mr. Schindler serves as Chairman of the Company’s Audit Committee. Mr. Schindler is a shareholder with the law firm of Greenberg Traurig and specializes in international tax planning. He has an LL.M. in Taxation from New York University School of Law and graduated with honors from the University of Florida School of Law. Mr. Schindler graduated with high honors from the University of Florida Fisher School of Accounting. He is admitted to both the Florida and New York Bars.bars.

Mr. Schindler provides strong legal, regulatory, accounting, financial, risk analysis, internal audit, compliance, corporate governance and administrative skills and experience to our Board.

Reed J. Slogoffhas been a director of the Company since March 1997. Mr. Slogoff is currently a principal with Pearl Properties, LLC, a commercial real estate investment firm based in Philadelphia, Pennsylvania. Mr. Slogoff was formerly with Entercom Communications Corp., a publicly traded radio broadcasting company, and was previously a member of the corporate and real estate group of the law firm of Dilworth, Paxson, LLP. Mr. Slogoff received a B.A. with Honors from the University of Pennsylvania in 1990, and a J.D. from the University of Miami School of Law in 1993.

Mr. Slogoff provides valuable insight to our Board as a licensed attorney formerly engaged in private practice and as an experienced businessman in the commercial real estate industry. While practicing law, Mr. Slogoff advised clients on a variety of corporate, securities and finance matters and was involved in the public offering process, including an initial listing on the NYSE, and with other aspects of public company corporate matters.

Over the past approximately 1112 years, Mr. Slogoff has been actively engaged in commercial real estate through his ownership and management of Pearl Properties, LLC. His day-to-day responsibilities include a variety of functions such as financial analysis, arranging, negotiating and obtaining financing, sourcing and negotiating acquisitions and managing portfolio insurance coverage. Mr. Slogoff’s responsibility with respect to insurance matters is particularly relevant to our insurance operations. Mr. Slogoff’s experience in addressing complex issues including corporate, finance and insurance matters translates to valuable insight on matters facing growing companies today.

Jon W. Springer was elected to our Board on February 22, 2013 to fill the vacancy created by Mr. Bradley I. Meier’s resignation. Mr. Springer also became Senior Vice President and Chief Operating Officer of the Company on such date. Mr. Springer was Executive Vice President of Universal Risk Advisors, Inc., a wholly-owned subsidiary of the Company, from June 2006 through March 2008, and had been the Executive Vice President of Blue Atlantic Reinsurance Corporation, a wholly-owned subsidiary of the Company, since March 2008. Before joining Universal Risk Advisors, Inc., Mr. Springer was an Executive Vice President of Willis Re, Inc. and was responsible for managing property and casualty operations in its Minneapolis office. Mr. Springer earned his Bachelors of Arts degree from Hamline University in 1992 with a double major in economics and business management.

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Mr. Springer has extensive experience in the property and casualty insurance industry, including with respect to reinsurance arrangements. As an experienced leader in the industry, Mr. Springer has deep knowledge of the Company’s business and operational needs.

Joel M. Wilentz, M.D. has been a director of the Company since March 1997. Dr. Wilentz is one of the founding members of Dermatology Associates, founded in 1970, and of the Centers for Cosmetic Enhancement in Florida. He is a former member of the Board of Directors of the Neurological Injury Compensation Association (NICA) for the State of Florida. He is a former member of the Board of Directors of the Broward County, Florida Medical Association. He was the former President of the Broward County Dermatological Society. Dr. Wilentz is at present a member of the Board of Governors of Nova Southeastern University.

Dr. Wilentz’s general business acumen and deep understanding of the Florida business, professional and regulatory environment provides independent guidance to our Board on a wide variety of general corporate and strategic matters.

Officers are elected annually by the Board and serve at the discretion of the Board. All directors hold office until the next annual meeting of shareholders or the election and qualification of their successors. The Company has not received director candidate recommendations from the shareholders in the past and does not have a formal policy regarding consideration of such recommendations.

Certain Relationships

Norman M. Meier and Bradley I. Meier are father and son, respectively. There are no other family relationships among our executive officers and directors. Eric Meier, who is the brother of Bradley I. Meier, works for a subsidiary of the Company.

Executive Officers

Bradley I. Meier.Stephen J. DonaghyFor biographical information became the Secretary and Chief Administrative Officer of the Company on Bradley I. Meier, seeFebruary 22, 2013. Prior to taking on such roles, Mr. Donaghy served as the Company’s Executive Vice President since October 2006 and its Chief Information ConcerningOfficer since November 2009. Before joining the BoardCompany, Mr. Donaghy held various executive positions at JM Family Enterprises, a private company, including Vice President of DirectorsStrategic Initiatives, Vice President of Sales and Executive Officers, under “BiographicalMarketing and Senior Information - Directors.”Officer. Mr. Donaghy earned his undergraduate degree from Indiana University of Pennsylvania in 1986 with a major in finance, a concentration in monetary economics and a minor in accounting.

Sean P. Downes.For biographical information on Sean P. Downes, seeInformation Concerning the Board of Directors and Executive Officers, under “Biographical Information - Directors.”

George R. De Heerbecame Chief Financial Officer and Principal Accounting Officer of the Company and its wholly ownedwholly-owned insurance subsidiaries effective October 1, 2010. Prior to becoming Chief Financial Officer and Principal Accounting Officer, Mr. De Heer served as the Company’s Vice President —- Finance since October 2006. Mr. De Heer has more than 2021 years of experience in the property and casualty insurance industry. Prior to joining the Company, Mr. De Heer was employed for 15 years by Bristol West Insurance Group, a national property and casualty insurance company. Mr. De Heer held various financial positions with Bristol West Insurance Group, rising to become its Vice President of Finance and Controller. Mr. De Heer earned his Bachelor of Arts degree from Lewis University in 1982 with a major in accounting.

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Jon W. Springer.    For biographical information on Jon W. Springer, see “Biographical Information - Directors.”

We have entered into indemnification agreements with our executive officers and directors pursuant to which we have agreed to indemnify such individuals, to the fullest extent permitted by law, for claims made against them in connection with their positions as officers, directors or agents of the Company.

Committees and Corporate Governance

Board Leadership Structure

Our bylaws provide that the roles of Board Chairman and Chief Executive Officer may be filled by the same or different individuals, which provides the Board the flexibility to determine whether these roles should be combined or separated based on the Company’s circumstances and needs at any given time. The rolesDue to the resignation of Chairman and Chief Executive Officer of the Company are currently held by the same person, Bradley I. Meier. TheMeier on February 22, 2013, the Board believes that the Company and its shareholders are best served by having Mr. Meier serve in

both positions. As the founder of the Company, Mr. Meier is most familiar with the business and challenges the Company faces in the current environment. His experience and expertise make him the most appropriate person to set agendas for, and lead discussions of, strategic matters affecting our businessdoes not have a Chairman at this time. Moreover, this structure enables Mr. Meier to act as a bridge between management and the Board, and helps to promote unified leadership and direction.

Independence of Our Directors

SEC and NYSE AmexMKT rules require that at least a majority of our directors be independent of the Company and management. The Board has determined that each of the following current directors is an “independent director,” as such term is defined by SEC and NYSE AmexMKT rules: Michael A. Pietrangelo, Ozzie A. Schindler, Reed J. Slogoff and Joel M. Wilentz, M.D. The Board has also determined that our new director nominees, Scott P. Callahan and Darryl L. Lewis, will be “independent directors” should they be elected at the Annual Meeting. The Board does not have a lead independent directors met in one executive session during fiscal year 2011.director.

In addition, each of the Compensation Committee, Audit Committee and Nominating and Governance Committee is composed exclusively of non-employee directors that meet the relevant independence requirements established by the NYSE Amex.MKT.

The Board’s Role in Risk Oversight

The Board is responsible for ensuring that material risks are identified and managed appropriately. The Board and its committees regularly review material operational, financial, compensation and compliance risks with senior management. As part of its responsibilities as set forth in its charter, the Audit Committee is responsible for discussing with management our Company policies and guidelines to govern the process by which risk assessment and risk management are undertaken by management, including guidelines and policies to identify major financial risk exposures, and the steps management has taken to monitor and control such exposures. The Audit Committee also performs a central oversight role with respect to financial and compliance risks, and reports on its findings at each regularly scheduled meeting of the Board. The Compensation Committee considers risk in connection with its design of compensation programs for our executives. The Nominating and Governance Committee assists in managing risk by annually reviewing the composition of the Board and its committees, including with regard to director independence, by assessing the adequacy of our corporate governance policies and procedures and by making recommendations to the Board, as appropriate, regarding modifications to such policies and procedures. The Investment Committee considers risks related to the investment of the Company’s securities portfolio and reviews the performance of the portfolio, compliance with applicable state investment codes and regulations and adherence to the Company’s investment strategy. Each committee regularly reports to the Board. In addition, each year the Board reviews our reinsurance program by which we cede insurance risk to reinsurers.

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Audit Committee

The Board has a separately designated Audit Committee, whose members are Ozzie A. Schindler, Reed J. Slogoff and Joel M. Wilentz, M.D., each of whom was determined by the Board to be independent under the applicable rules of the SEC and NYSE Amex.MKT. Mr. Schindler serves as chairman of the Audit Committee. The Board has determined that Ozzie A. Schindler is an “audit committee financial expert” as defined by Item 407(d)(5) of Regulation S-K promulgated by the SEC.

The Audit Committee (i) recommends the firm to be appointed as the independent registered public accounting firm of the Company to audit the Company’s financial statements and to perform services related to the audit, (ii) reviews the scope and results of the audit with the independent registered public accounting firm, (iii) reviews the Company’s year-end operating results with management and the independent registered public accounting firm, the Company’s year-end operating results, and (iv) considers the adequacy of the internal accounting procedures.

The Audit Committee met separately four (4) times during 2011,2012, in addition to eightseven (7) telephonic meetings, and the full Board, including the members of the Audit Committee, met four (4) times during the year to discuss the financial position of the Company, provide recommendations and guidance to management and evaluate strategies and financial opportunities and initiatives.

The Audit Committee operates under a written charter that was adopted by the Board on January 9, 2007. The Audit Committee Charter is publicly available at our headquarters in Fort Lauderdale, Florida and also on our website at www.universalinsuranceholdings.com. The Audit Committee annually reviews its charter for changes, as appropriate.

Audit Committee Report

The Audit Committee reviews and makes recommendations to the Board concerning the reliability and integrity of the Company’s financial statements and the adequacy of its system of internal controls and processes to assure compliance with the Company’s policies and procedures, Code of Business Conduct and Ethics (“Code of Conduct”) and applicable laws and regulations. The Audit Committee annually nominatesrecommends the Company’s independent auditor for appointment by the shareownersBoard and ratification by the shareholders and evaluates the independence, qualifications and performance of the Company’s independent auditors.auditor. The Audit Committee also discusses with management the Company’s policies and procedures regarding risk assessment and risk management, the Company’s major financial risk exposures and the steps management has taken to monitor and manage such exposures to be within the Company’s risk tolerance. The Audit Committee establishes procedures for and oversees receipt, retention, and treatment of complaints received by the Company regarding accounting, internal control or auditing matters and the confidential, anonymous submission by the Company’s employees of concerns regarding questionable accounting or auditing matters.

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The following is the report of the Audit Committee with respect to the Company’s audited financial statements for the fiscal year ended December 31, 2011,2012, which include the balance sheets of the Company as of December 31, 20112012 and 2010,2011, and the related statements of income, stockholders’shareholders’ equity and cash flows for the years ended December 31, 2012, 2011 2010 and 20092010 and the notes thereto (collectively, “Audited Financial Statements”). The information contained in this report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (“Exchange Act”), except to the extent specifically incorporated by reference in such filing.

The Audit Committee of the Board is composed of the three directors named below. Each member of the Audit Committee meets the independence and financial experience requirements under the applicable rules of the SEC and NYSE Amex.MKT.

The Audit Committee has reviewed and discussed the Company’s Audited Financial Statements with management. The Audit Committee has discussed with Blackman Kallick, LLP,Plante & Moran, PLLC, our independent registered public accounting firm for 2011,2012, the matters required to be discussed in accordance with the Statement on Auditing Standards No. 61,Communicating with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board, and matters related to the conduct of the audit of the Audited Financial Statements. The Company’s former accounting firm, Blackman Kallick, LLP, merged with and into Plante & Moran, PLLC effective July 1, 2012, with Plante & Moran, PLLC being the surviving entity. For the purposes of this Audit Report, “Plante & Moran, PLLC” refers to the surviving entity for the time period on and after July 1, 2012 and Blackman Kallick, LLP for the time period prior to such date.

The Audit Committee has received written disclosures and the letter from Blackman Kallick, LLPPlante & Moran, PLLC required by Independence Standards Board Standard No. 1 (which relates to the accountant’s independence from the Company and its related entities) and has discussed with Blackman Kallick, LLPPlante & Moran, PLLC its independence from the Company.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the Company’s Audited Financial Statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.2012.

SUBMITTED BY THE AUDIT COMMITTEE OF

THE BOARD OF DIRECTORS

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Compensation Committee

The Board has a separately designated Compensation Committee to assist the Board in executive compensation matters. The Compensation Committee consists of Reed J. Slogoff, Michael A. Pietrangelo and Joel M. Wilentz, M.D., each of whom was determined by the Board to be independent under the applicable rules of the SEC and NYSE Amex.MKT. Mr. Slogoff serves as chairman of the Compensation Committee. Among its duties, the Compensation Committee assists the Board in discharging its responsibilities relating to corporate goals and objectives relevant to the compensation of our executive officers, evaluating the performance of executive officers in light of those goals and objectives and determining compensation based on such evaluation. The Compensation Committee met separately four (4) times during 2012, in addition to three (3) telephonic meetings. The Compensation Committee operates under a written charter that was adopted by the Board on March 13, 2007. The Compensation Committee Charter is publicly available at our headquarters in Fort Lauderdale, Florida and also on our website at www.universalinsuranceholdings.com. The Compensation Committee annually reviews its charter for changes, as appropriate.

Nominating and Governance Committee

The Board has a separately designated Nominating and Governance Committee, whose members are Michael A. Pietrangelo, Ozzie A. Schindler and Joel M. Wilentz, M.D., each of whom was determined by the Board to be independent under the applicable rules of the SEC and NYSE Amex.MKT. Mr. Pietrangelo serves as chairman of the Nominating and Governance Committee. The Nominating and Governance Committee is appointed annually by the Board to: (i) assistassists the Board by identifying individuals qualified to become Board members and to recommendrecommends to the Board nominees for the next annual meeting of shareholders and to fill vacancies in membership of the Board as they occur, (ii) recommendrecommends to the Board nominees for each committee of the Board, and (iii) considerconsiders matters relating to corporate governance generally, including assessing the adequacy of our corporate governance policies and procedures and making recommendations to the Board, as appropriate, regarding modifications to such policies and procedures and our certificate of incorporation and bylaws. The Nominating and Governance Committee also oversees the director self-evaluation process.

The Nominating and Governance Committee and the Board maintain no formal policy regarding Board membership but view diversity expansively and consider, among other things, functional areas of experience, educational background, employment experience and leadership performance as well as those intangible factors that may be deemed appropriate to develop a heterogeneous and cohesive Board such as integrity, achievements, judgment, intelligence, personal character, the interplay of the candidate’s relevant experience with the experience of other Board members, the willingness of the candidate to devote adequate time to Board duties, and likelihood that he or she will be willing and able to serve on the Board for a sustained period.

The Nominating and Governance Committee has not established a set process for shareholders to recommend director candidates to the Nominating and Governance Committee. Given the size of our Company, the Nominating and Governance Committee believes that this is appropriate.

The Nominating and Governance Committee met separately one (1) time during 2012, in addition to one (1) telephonic meeting. The Nominating and Governance Committee operates under a written charter that was adopted by the Board on May 11, 2011. The Nominating and Governance Committee Charter is publicly available at our headquarters in Fort Lauderdale, Florida and also on our website at www.universalinsuranceholdings.com. The Nominating and Governance Committee annually reviews its charter for changes, as appropriate.

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Investment Committee

The Board has a separately designated Investment Committee to assist in reviewing investment strategies and transactions made in connection with the Company’s investment portfolio. The Investment Committee members are Bradley I. Meier, Sean P. Downes, Michael A. Pietrangelo and Reed J. Slogoff. Mr.Bradley I. Meier servesresigned as a member and chairman of the Investment Committee.Committee effective February 22, 2013. The Investment Committee does not currently have a chairman. The Investment Committee’s responsibilities include monitoring:monitoring (i) whether the Company has adopted and adheres to a rational and prudent investment strategy;strategy, (ii) whether management’s investment actions are consistent with the Company’s investment strategy, financial objectives and business goals;goals, (iii) compliance with legal and regulatory requirements pertaining to investment and capital management;management, (iv) the competence and performance of the Company’s internalthird-party investment advisors, and external investment advisors; and(v) such other matters as the Board or the Investment Committee deems appropriate. The Investment Committee does not make operating decisions about external investment advisor selection or compensation, market timing, sector rotation or security selection, which are the responsibilities of management.management and the Company’s third-party investment advisors.

The Investment Committee met separately three (3) times during 2012. The Investment Committee operates under a written charter that was adopted by the Board of Directors on March 9, 2012. The Investment Committee Charter is publicly available at our headquarters in Fort Lauderdale, Florida and also on our website at www.universalinsuranceholdings.com. The Investment Committee annually reviews its charter for changes, as appropriate.

Code of Business Conduct and Ethics

We adopted the Code of Conduct on December 5, 2008 that is applicable to all of our directors, officers and employees. The Code of Conduct is publicly available at our headquarters in Fort Lauderdale, Florida and also on our website at www.universalinsuranceholdings.com. The Code of Conduct will be reviewed annually for changes, as appropriate.

Shareholder Communications

We have not established a set process for shareholders to send communications to the Board. Given the size of our Company, the Board believes that this is appropriate.

Compensation Committee Interlocks and Insider Participation

Michael A. Pietrangelo, Reed J. Slogoff and Joel M. Wilentz, M.D. served as members of the Compensation Committee during calendar year 2011. Michael A. Pietrangelo joined the Compensation Committee in December 2011.2012. There are no Compensation Committee interlocks.

Certain Relationships and Related Party Transactions

Our Code of Conduct addresses related party transactions, including transactions between the Company and our directors or executive officers, or their respective family members.

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Pursuant to the Code of Conduct, directors, officers and employees must notify the Chairman of the Audit Committee and the Chairman of the Board in writing of the existence of any relationship or transaction that may pose an actual or potential conflict of interest. Transactions between the Company and any of our executive officers or directors, and their respective family members, require the approval of a majority of disinterested directors. With respect to all other employees, outside legal counsel, acting independently, or the Board may determine whether a conflict exists. Any waivers of this policy as to an officer or director may only be approved by the Board.

The following discussion sets forth the relationships and transactions known by management at this time to involve the Company or its subsidiaries and our directors or executive officers, or their respective family members.members, or the beneficial owners of more than 5% of any class of our outstanding stock. In each case, pursuant to the Code of Conduct, these relationships and transactions have been disclosed to the Board and a disinterested majority of the Board has approved the transaction or, in the case of an ongoing relationship that was presented to the Board, permitted the continuation and renewal of such relationship.

Downes and Associates, a multi-line insurance adjustment corporation based in Deerfield Beach, Florida, performs certain claims adjusting work for UPCIC. Downes and Associates is owned by Dennis Downes, who is the father of Sean P. Downes, President and Chief OperatingExecutive Officer of the Company. During 2012, 2011 and Senior Vice President of UPCIC. During 2011, 2010, and 2009, we paid claims adjusting fees of $623,000, $753,000 $480,000 and $605,000,$480,000, respectively, to Downes and Associates. All such amounts paid to Downes and Associates are no less favorable to the Company than can be obtained from third parties on an arm’s-length basis.

Norman M. Meier, former director and Secretary, and Bradley I. Meier, former Chairman, President and Chief Executive Officer, are father and son, respectively. There are no other family relationships among our current or former executive officers and directors.

On February 22, 2013, Bradley I. Meier resigned as Chairman, President and Chief Executive Officer of the Company. Mr. Meier is the beneficial owner of more than 5% of the outstanding shares of each of our Common Stock and Series M Preferred Stock. Effective as of February 22, 2013, Mr. Meier and the Company entered into a Founder and Adviser Agreement (“Adviser Agreement”) pursuant to which Mr. Meier will provide advisory and consulting services to the Company. Pursuant to the Adviser Agreement, Mr. Meier will be paid an annual base salary of $575,000 and will receive health and welfare benefits, an automobile allowance and reimbursement for travel, entertainment, mobile phone and related expenses. In addition, Mr. Meier will receive payment of his accrued vacation time in two installments, but will not accrue any additional vacation time in his new role. The Adviser Agreement contains nondisparagement, noncompete, nonsolicitation and confidentiality provisions and is effective through December 31, 2015.

On April 1, 2013, the Company entered into a repurchase agreement with Mr. Meier, as a principal shareholder of the Company (“Repurchase Agreement”). Pursuant to the Repurchase Agreement, the Company agreed to repurchase an aggregate of 4,000,000 shares of Common Stock owned by Mr. Meier. The initial repurchase of 2,000,000 of Mr. Meier’s shares occurred on April 1, 2013 for a repurchase price of $4.02 per share, representing a discount from the current market price of the Common Stock on such date. The Company has agreed to repurchase an additional 2,000,000 of Mr. Meier’s shares on or before June 1, 2013 for the same repurchase price of $4.02 per share. Mr. Meier also granted the Company a right of first refusal on any future sale or transfer for value of his shares of Common Stock to a third party through December 31, 2014.

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On February 22, 2013, Norman M. Meier resigned as Secretary and director of the Company. Mr. Meier is the beneficial owner of more than 5% of the outstanding shares of each of our Series A Preferred Stock and Series M Preferred Stock. The Company and Mr. Meier entered into an employment agreement dated as of February 22, 2013 (“Norman Meier Employment Agreement”) pursuant to which Mr. Meier will provide marketing advisor services to the Company on a part-time basis.Pursuant to the Norman Meier Employment Agreement, Mr. Meier is entitled to receive an annual base salary of $85,000 and an annual bonus to be determined by the Company in its sole discretion, to participate in the Company’s health benefits plans and equity incentive plans and to receive reimbursement for certain business expenses. The Norman Meier Employment Agreement contains nondisparagement, noncompete, nonsolicitation and confidentiality provisions. The Norman Meier Employment Agreement is effective through December 31, 2017 and is renewable annually thereafter upon the mutual agreement of Mr. Meier and the Company until December 31, 2022.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes the Company’s executive compensation program and reviews actions taken by the Compensation Committee concerning the 20112012 compensation of our President and Chief Executive Officer (“Chief Executive Officer”), Senior Vice President and Chief Operating Officer (“Chief Operating Officer”) and Chief Financial Officer and Principal Accounting Officer (“Chief Financial Officer”) (collectively, the “Named Executive Officers”). We also discuss the transition of Sean P. Downes from Chief Operating Officer to Chief Executive Officer and the appointments of Jon W. Springer as Chief Operating Officer and Stephen J. Donaghy as Chief Administrative Officer, each effective as of February 22, 2013.

The Compensation Committee determinesoversees our compensation program for our Chief Executive Officer, and the Chief Operating Officer and Chief Administrative Officer. The Compensation Committee also provides guidance regardingto the Chief Executive Officer’sOfficer regarding his recommendations for the compensation of all other executive officers. In making its decisions, the Compensation Committee takes into account, among other things, the Company’s performance, shareholder alignment, and individual employee performance and has identified The Delves Group (“Delves”) as an independent consultant available to the Compensation Committee to assess applicable market practices forCompany’s executive talent. Delves provides no other services to the Companysuccession and we believe that there is no potential conflict of interest in retaining Delves to assist in periodically providing reports on market practices and compensation-related data.retention needs.

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Objectives and Overview

The objectives of our compensation programs are to:

Drive superior performance — Encourage the Chief Executive Officer and Chief Operating Officerour executive officers to achieve sound, profitable growth through prudent but effective execution of the elements of the Company’s growth strategy;

Focus on long-term success — Provide a significant portion of Named Executive Officers’executive compensation through programs linked to the Company’s long-term success as incentives to help maximize shareholder return; and

Attract and retain key executives — Attract and retain talented executivesRetain key existing talent whose continued employment iswe judge to be crucial to ourthe Company’s success and growth.growth and to attract and retain new talent.

The following table outlines the major elements of compensation in fiscal year 20112012 for the then Chief Executive Officer, Bradley I. Meier, and the Chief Operating Officer, Sean P. Downes:Downes, and for 2013 for the current Chief Executive Officer, Mr. Downes, Chief Operating Officer, Mr. Springer, and Chief Administrative Officer, Mr. Donaghy:

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Determination of Compensation Levels ofOriginal Employment Agreements with the Chief Executive Officer and Chief Operating Officer

The Company entered into employment agreements with Mr. Meier, as Chief Executive Officer, and Mr. Downes, as Chief Operating Officer, several years ago, that establishwhich agreements have been amended from time to time (“Original Employment Agreements”). The Original Employment Agreements were effective through February 22, 2013. The Original Employment Agreements established the base salary and annual performance incentives applicable to each executive. These employment agreementsexecutive and provided the principal framework for the cash compensation paid to Messrs. Meier and Downes for 2011.2012. The employment agreementsOriginal Employment Agreements are more fully described below at “Employment Agreements and Potential Payments uponUpon Termination of Employment or Change in Control.” Each year

At the Compensation Committee evaluates whethertime the terms and conditions of the employment agreements continue to advance the Company’s interests and, if not, whether to provide notice to Mr. Meier, under the automatic renewal provision of his employment agreement, and to Mr. Downes that the employment agreements will expire at their respective expiration dates. For 2011, the Compensation Committee determined that the terms and conditions of the employment agreements continue to advance the Company’s compensation interests.

The Company entered into the employment agreementsOriginal Employment Agreements with Mr. Meier and Mr. Downes, while it was creating and developing internal capabilities for underwriting, claims processing, premium setting, investing and reinsurance placement rather than using third-party contractors for such services.placement. The Company has continued to improve and refine those processes and, over the past few years, has expanded the states in which it writes homeowners’ insurance policies. Messrs. Meier and Downes are the individuals responsible for continued development of these capabilities and accomplishments and they perform tasks usually performed by subordinates. In addition, as the Company’s operations expand,expanded, Messrs. Meier and Downes tackleassumed more diverse functions each year. Accordingly,within the Company. During 2012, in our judgment, Mr. Meier and Mr. Downes were the individuals most responsible for 2011, the Compensation Committee believes that the increases in base compensation provided for in the employment agreements continued to serve the Company’s interests.

Similarly, the Company believes that continuing to focus the annual cash incentive program on pretax income was appropriate for 2011 because pretax income reflects the synthesis of the elements necessary to successfully operatedevelopment and grow the Company’s business and is the measure most used by shareholders to evaluate our operational success.

Overall Compensation Principles

The Compensation Committee has established the following principles for compensating management:

Pay for performance — Compensation should reflect the Company’s performance over the last fiscal year (the short-term) as well as over a longer period. In the short-term, incentive compensation will reflect the extent to which the Company has pretax income. For the longer term, stock options, granted at fair market value, measure the value our performance returns to shareholders.

Support business strategy — Compensation programs should be aligned with business strategies focused on long-term growth and the creation of value for shareholders. The Compensation Committee believes these goals are reflected by using pretax income as a unit of measurement in the annual bonus program and awarding stock options in the longer term.

Pay competitively but with a recognition of retention needs— Our compensation structure recognizes the unique skill setsimplementation of our two principal executive officersbusiness strategy and is geared to retaining thesewere the individuals for the long-term.

Focus on a total compensation perspective — All components of pay should be considered when making compensation decisions. These components include base salary, short-term incentives, long-term incentives, benefits and perquisites.

We believe our approach helps us to attract, develop and retain talented executives who are committed to our success and to achieving superior performance.

Determination of Executive Pay

For 2011, the Compensation Committee did not target any particular percentile among comparator groups or other companies and did not consider market data provided by Delves in making compensation decisionsmost responsible for our named executive officers. As noted above,accomplishments.

Our rationale for Messrs. Meiers and Downes,entering into the Compensation Committee’s decisions on compensation for 2011 were largely guided by the terms of the existing employment agreement with each such executive officer. The Committee is currently in discussions with Mr. Meier regarding the terms of his employment agreement, and as of the date of this proxy statement, those discussions are ongoing.

In accordance with the terms of the employment agreementsOriginal Employment Agreements with Messrs. Meier and Downes and their continuation includes the Compensation Committee uses pretax income as the determinant of incentive cash bonus payments because it is the measure that best serves the Company’s goals. By using a variable performance measure, incentive cash bonus compensation will and does vary year to year directly with achievement. Subject to the terms of the existing employment agreement, the Compensation Committee’s focus is on a broader and more flexible orientation in setting pay levels, which allows the Compensation Committee to address the specific business conditions relevant to the Company, including:following:

For the purpose of its evaluation, the Compensation Committee takes into account the size, scope, and complexity of the Company’s business, including the complexity of and demands placed on our Chief Executive Officer and Chief Operating Officer by our growth and geographic expansion strategies. These are among the factors the Compensation Committee considers and are not based on a formula or tied to a comparator group.2012.

Elements of2012 Compensation Provided to Named Executive OfficersBased on the Original Employment Agreements

The principal components of compensation for our executive officers were:

Base Salary

The Company pays a base salary to our Named Executive Officers. As noted above, pursuant to employment agreements entered into between the Company andOriginal Employment Agreements with each of the Chief Executive OfficerMr. Meier and Chief Operating Officer, each such executive receivesMr. Downes contemplated an annual base salary that automatically increasesincrease of 20% each year. TheIn 2012, Mr. Meier agreed to limit his annual salary increases to 7.25% for 2012, 2013 and 2014, and Mr. Downes agreed to limit his annual salary increases to 7.25% for years after 2012. These provisions in the Original Employment Agreements formed the basis for the salary increases for 2012 for each of Mr. Meier and Mr. Downes reported in the Summary Compensation Committee from time to time reviews the base salaries that the Company pays the Named Executive Officers. In doing so, the Compensation Committee considers a number of factors, including the individual performance of the executive.Table below.

Incentive Bonus Compensation

As noted above, our Chief Executive OfficerThe Original Employment Agreements entitle each of Mr. Meier and Chief Operating Officer alsoMr. Downes to receive an annual incentive performance bonus equal to a specified percentage of the Company’s pretaxpre-tax income. We continue toThe Original Employment Agreements use this approach to compensate our executivespre-tax income because we believe that successful performance by management ispre-tax income reflects the primary driversynthesis of the elements necessary to successfully operate and grow the Company’s pretax incomebusiness and that management should have significant portions of compensation at riskis a measure commonly used by investors to evaluate our operational success. The annual cash incentives paid to Mr. Meier and Mr. Downes for achieving market-oriented results. The Compensation Committee also has the discretion to increase a bonus beyond the compensation contained in an executive’s employment agreement.2012 were $2,229,494 and $1,709,621, respectively.

Long-Term Equity Incentive Compensation

The Compensation Committee does not use a specific formula to calculate the number of options or restricted shares awardedthat it awards to executives nor does it explicitly set future award levels or opportunities on the basis of what the executives earned from prior awards. While the

Compensation Committee takes past awards into account, it does not base future awards solely in view of those past awards. In determining the specific amounts to be granted to each employee, the Compensation Committee will consider factors such as the executive’s position, his or her contribution to the Company’s performance, and the overall package of cash and equity compensation for the executive.

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The Compensation Committee did not award any long-term incentive compensation to Mr. Meier or to Mr. De Heer for 2012. In 2012, the Compensation Committee awarded Mr. Downes two long-term incentive grants under the Second Amended and Restated Plan: a restricted stock grant in August 2012 covering 650,000 shares of Common Stock, and an option grant in September 2012 covering 500,000 shares of Common Stock. These grants are reported in the Summary Compensation Table below. These grants were intended to provide Mr. Downes with a greater equity ownership in the Company and, in part, to replace the 20% automatic increases in his base compensation contemplated by his Original Employment Agreement.

Perquisites and Fringe Benefits

Our executive officers receive health and welfare benefits, such as group medical, group life and long-term disability coverage. The Company providesWe provided an automobile allowance of $7,500 per annum to each of Mr. Meier and Mr. Downes.Downes during 2012. We believe that our executives should be able to provide for their retirement needs from the total annual compensation they earn based on the Company’s performance. Accordingly, other than an employer matching contribution to the accounts of thecertain Named Executive Officers under the Company’s 401(k) Plan (as defined herein), which is the same matching contribution rate that the Company provides all eligible full timefull-time employees, the Company does not offer executives any qualified or nonqualified pension plans, supplemental executive retirement plans, deferred compensation plans or other forms of compensation for retirement.

The Compensation Committee set overall compensation for Messrs. Meier and Downes for 2012 based upon the framework established by each executive’s Original Employment Agreement and, therefore, did not utilize comparator groups or bench-marking data in making compensation decisions for these executives. During 2012, the Compensation Committee did not retain the services of a compensation consultant.

New Employment Agreements with the Chief Executive Officer, Chief Operating Officer and Chief Administrative Officer

TheEffective February 22, 2013, Mr. Meier resigned from his positions as Chairman, President and Chief Executive Officer of the Company to pursue opportunities outside the residential homeowners’ insurance industry. Also effective February 22, 2013, the Board appointed Mr. Downes as Chief Executive Officer of the Company, Mr. Springer as Chief Operating Officer of the Company and Mr. Donaghy as Chief Administrative Officer of the Company. Mr. Downes has been employed in an executive capacity by the Company or its insurance affiliates since 2003 and had been the Company’s Senior Vice President, Chief Operating Officer and a director since 2005. Mr. Springer had been Executive Vice President of Blue Atlantic Reinsurance Corporation since 2008 and from 2006 through 2008 was the Executive Vice President of Universal Risk Advisors, Inc., each a wholly-owned subsidiary of the Company. Mr. Donaghy served as Executive Vice President of the Company since October 2006 and since November 2009 served as the Company’s Chief Information Officer.

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Effective February 22, 2013, the Company entered into an amended and restated employment agreementsagreement with Mr. Downes (“Downes New Employment Agreement”) which provides for continuity in leadership and leadership transition and forms the framework for his compensation with the Company through 2015. Effective February 22, 2013, the Company entered into a new employment agreement with Mr. Springer (“Springer Employment Agreement”) which provides the framework for his compensation through the end of 2014. Each of the Downes New Employment Agreement and the Springer Employment Agreement was filed in its entirety with the SEC as an exhibit to the Company’s Form 8-K, dated as of February 22, 2013. Effective February 22, 2013, the Company entered into a new employment agreement with Mr. Donaghy (“Donaghy Employment Agreement”) which provides the framework for his compensation through the end of 2014. The Donaghy Employment Agreement was filed in its entirety with the SEC as an exhibit to the Company’s Form 8-K, dated as of March 21, 2013. The Downes New Employment Agreement, Springer Employment Agreement and Donaghy Employment Agreement are collectively referred to in this Proxy Statement as the “New Employment Agreements.”

In negotiating the New Employment Agreements, the Compensation Committee was guided by the following principles and limitations:

Content of Each Executive’s Prior Employment Agreements. The principles underlying each executive’s prior employment agreement with the Company formed the basis for the New Employment Agreements, as the Compensation Committee was mindful of each executive’s critical importance to the ongoing success of our Named Executive Officers. These agreementsbusiness and potential postthe rights and entitlements of each executive under his prior employment payments are described belowagreement.

Limited Term. Given the continuing evolution of our business and the changing roles of Messrs. Downes, Springer and Donaghy in “Employmenthelping the Company to achieve its goals, the Committee wanted to enter into only fixed-term contracts (three years for Mr. Downes; two years for Messrs. Springer and Donaghy) that did not obligate the Company to pay severance in the event of non-renewal of the contract at the expiration of the term.

Pay for Performance.The New Employment Agreements and Potential Payments Upon Terminationcontemplate that a substantial portion of each executive’s compensation is performance based either in the form of annual incentives based on pre-tax income or after-tax profit or through long-term restricted stock grants whose value to the executive is directly tied to share price. The New Employment orAgreements also limit annual salary increases to 7.25%.

Double-Trigger Change in Control.”Control Protections. The Compensation Committee required that the New Employment Agreements provide for severance protections in the context of a change in control only if the executive’s employment is terminated following the change in control. This is a substantial change from the Original Employment Agreement with Mr. Downes. The New Employment Agreements also continue the Compensation Committee’s past practice of not providing tax gross-ups.

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Advisory Votes on Compensation

The Board recognizes the fundamental interest that our shareholders have in the compensation of our executive officers. At the 2011 Annual Meeting of Shareholders, our shareholders approved, on an advisory basis, the compensation of our Named Executive Officers (a “say-on-pay proposal”) as disclosed in the proxy statement for such meeting. Our shareholders approved the say-on-pay proposal by the affirmative vote of 80% of the shares cast on that proposal. The Compensation Committee believes that this affirms our shareholders’ support of the Company’s approach to executive compensation, and did not change its approach in fiscal year 2011.2012. The Compensation Committee will continue to consider the outcome of the Company’s say-on-pay proposals when making future compensation decisions for the Named Executive Officers.our executive officers.

Also at the 2011 Annual Meeting of Shareholders, our shareholders had the opportunity to cast an advisory vote (a “say-on-frequency proposal”) on how often the Company should include a say-on-pay proposal in its proxy statement. Based on our shareholders’ vote on the say-on-frequency proposal, the Board determined that we will hold shareholder say-on-pay advisory votes on executive compensation once every three years, with the next say-on-pay advisory vote to be held at the 2014 Annual Meeting of Shareholders.

Tax Considerations

Under Section 162(m) of the Internal Revenue Code, of 1986, as amended (“Code”), the federal income tax deductibility of compensation paid to Messrs. Meier and Downesour executive officers may

be limited to the extent that it exceeds $1.0 million in any one (1) year. The Company can deduct compensation in excess of that amount if it qualifies as “performance-based compensation” under Section 162(m). For the performance bonuses of Messrs. MeierDownes, Springer and DownesDonaghy, as set forth in the New Employment Agreements, to qualify as “performance-based compensation,” the performance-based formulas used to determine them must be approved by our shareholders.shareholders, which approval is requested pursuant to Proposal 3 contained in this Proxy Statement. We attempt to have the compensation paid to our executive officers be deductible for purposes of Section

162(m) of the Code, but reserve the right to pay compensation that is not deductible. A substantial portion of the compensation paid or awarded to Messrs. Meier and Downes in 2012 and under the Downes New Employment Agreement is not deductible by operation of Section 162(m). For 2011,2012, the Company paid approximately $1$1.7 million in compensation to Mr. Meier under his employment agreement and approximately $400 thousand$1.2 million in compensation to Mr. Downes under his employment agreementtheir respective Original Employment Agreements that was not deductible by operation of Section 162(m) of the Code.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

The Compensation Committee

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Summary Compensation Table

The following table sets forth the compensation paid to or earned by the Named Executive Officers during each of the Company’s last three fiscal years.

Salary

Salary includes wages and paid time off, such as vacation and company holidays.

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Bonus

Mr. De Heer, our Chief Financial Officer and Principal Accounting Officer, is entitled to an annual performance bonus determined at the Company’s discretion.

Option and Stock Awards

Option and stock awards are reported at grant date fair value.

Non-Equity Incentive Plan Compensation

Per the Original Employment Agreement with Mr. Meier’s employment agreement,Meier, he iswas entitled to an annual performance bonus equal to 3% of the pretaxpre-tax income of the Company up to $5 million and 4% of the pretaxpre-tax income of the Company in excess of $5 million. Per the Original Employment Agreement with Mr. Downes’ employment agreement,Downes, he iswas entitled to an annual performance bonus equal to 3% of the pretaxpre-tax income of the Company.

All Other Compensation

All other compensation for the fiscal year ended December 31, 20112012 consisted of the following:

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Grants of Plan-Based Awards

The following table sets forth certain information with respect to grants of executive compensation plan-based awards to the Named Executive Officers during the fiscal year ended December 31, 2011.2012.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth certain information with respect to the Named Executive Officers concerning unexercised options, stock that has not vested and equity incentive plan awards outstanding as of December 31, 2011.2012.

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Options Exercised and Stock Vested

The following table sets forth certain information with respect to the Named Executive Officers concerning options exercised and stock vested during the calendarfiscal year 2011.

Pension Benefits

The Company does not provide any employees with a defined benefit pension plan.

Effective January 1, 2009, theThe Company adoptedsupports the “Universal Property & Casualty 401(k) Profit Sharing Plan and Trust” (“401(k) Plan”). The Company makes a matching contribution in cash to the accounts of the participants equal to 100% of the employee’s deferral up to 5% of that employee’s compensation subject to limitations of the 401(k) Plan.

Nonqualified Deferred Compensation

The Company does not provide any employees with any nonqualified deferred compensation plans.

Equity Compensation Plan Information

The following table sets forth certain information with respect to all of our equity compensation plans in effect as of the fiscal year ended December 31, 2011.2012.

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Employment Agreements and Potential Payments Upon Termination of Employment or Change in Control

The following summaries describe the employment agreementsOriginal Employment Agreements between the Company and Messrs. Meier and Downes and the Named Executive Officersemployment agreement between the Company and Mr. De Heer and set forth potential amounts payable to theeach Named Executive OfficersOfficer upon termination of employment or a change in control under their current employmentsuch agreements.

Meier Employment Agreement with Mr. Meier

The Company’s employment agreementOriginal Employment Agreement with Mr. Meier is dated as of August 11, 1999. The Company and Mr. Meier have amended the employment agreement,Mr. Meier’s Original Employment Agreement, with the most recent amendment effective as of December 6, 2010August 23, 2012 (the employment agreement and the amendments are collectively referred to as the “Meier Original Employment Agreement”). Under the terms of the Meier Original Employment Agreement, Mr. Meier will serveserved as the Company’s President and Chief Executive Officer. Mr. Meier received a base salary of $1,999,225$2,144,169 in 2011,2012, and he iswas entitled to a 20%7.25% increase in base salary each year.year beginning in 2012. Additionally, pursuant to the Meier Original Employment Agreement, Mr. Meier iswas entitled to an annual performance bonus equal to 3% of the pretax income of the Company up to $5 million, and 4% of the pretax income of the Company in excess of $5 million; provided, however, that any such bonus iswas contingent upon our shareholders approving such bonus formula, which they have done.

Mr. Meier iswas also eligible to receive health and welfare benefits, such as group medical, group life and long-term disability coverage. The Meier Original Employment Agreement containscontained noncompete, nonsolicitation and nondisclosureconfidentiality provisions.

In the event that the Company terminatesterminated the Meier Original Employment Agreement, the Company shallwas obligated to pay Mr. Meier 24 month’smonths’ total compensation. In addition, in the event of a change in control of the Company, the Company shallwas obligated to pay Mr. Meier an amount equal to 48 monthsmonths’ base salary, plus two (2) times any bonus paid for the preceding fiscal year, including any taxes resulting from such payment in accordance with applicable U.S. tax laws. Further, in the event of a change in control, all options held by Mr. Meier would vest and become immediately exercisable. However, if it iswas determined by an independent accounting firm that any of the amounts payable to Mr. Meier upon a change in control would be subject to an excise tax under Section 4999 of the Code, then the value of the payments which constitute “parachute payments” will bewould have been reduced to an amount equal to 2.99 times Mr. Meier’s “base amount,” as those terms are defined under Section 280G(b)(2) of the Code. Generally, the “base amount” equals the average of the taxable compensation paid during the preceding five taxable years. For purposes of the Meier Original Employment Agreement, a change in control shall bewould have been deemed to have occurredoccur if, at any time, substantially all the assets of the Company shall have beenwere sold or transferred by sale, merger or otherwise, or if any person becomesbecame the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the then-existing outstanding securities of the Company.

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If Mr. Meier diesdied during the term of his employment, the Company shallwould have been obligated to pay to his estate compensation which would otherwise be payable to Mr. Meier for the shorter of (i) three (3) years from the date of his death, or (ii) through the termination date of his employment agreement. If Mr. Meier becomesbecame disabled during the term of his employment for a consecutive period of 365 days, the Company maywould have been entitled to terminate the officership held. In the event of such termination, Mr. Meier shall remainwould have remained an employee of the Company and receivereceived 70% of his compensation and all of his fringe benefits.

The Meier Original Employment Agreement expiresprovided that such agreement would expire on December 31, 2013; however, the agreement is2012 but automatically extendedrenew each year thereafter unless the Company or Mr. Meier providesprovided written notice that the agreement iswas being terminated 60 days in advance of the anniversary date of the Meier Original Employment Agreement.

On February 22, 2013, Mr. Meier resigned as President and Chief Executive Officer of the Company. No severance or other payments were paid to Mr. Meier in connection with his resignation. However, the Company entered into the Adviser Agreement described in “Certain Relationships and Related Party Transactions” pursuant to which Mr. Meier provides advisory and consulting services to the successor Chief Executive Officer, Mr. Downes, and to the Board and its committees. Under the Adviser Agreement, Mr. Meier will receive a base salary of $575,000 and will also be entitled to health and welfare benefits, an automobile allowance and a mobile phone allowance. In addition, Mr. Meier will receive payment of his accrued vacation time in two installments, but will not accrue any additional vacation time in his new role. The Adviser Agreement includes nondisparagement, noncompete, nonsolicitation and confidentiality provisions and other customary terms. Pursuant to the Adviser Agreement, Mr. Meier will not seek or have access to material nonpublic information not otherwise known to him as of February 22, 2013. The Adviser Agreement expires on December 31, 2015, unless earlier terminated in accordance with its terms.

Downes Employment Agreement with Mr. Downes

The Company’s employment agreementOriginal Employment Agreement with Mr. Downes is dated as of January 1, 2005, and providesprovided that Mr. Downes willwould serve as the Company’s Senior Vice President and Chief Operating Officer and Senior Vice President.Officer. The Company and Mr. Downes have amended the employment agreement, with the most recent amendment dated February 4, 2010August 23, 2012 (the employment agreement and the amendments are collectively referred to as the “Downes Original Employment Agreement”). Mr. Downes received a base salary of $1,409,250$1,702,011 in 2011,2012, and he iswas entitled to a 20%7.25% increase in base salary each year.on January 1, 2013 and 2014. Additionally, pursuant to the Downes Original Employment Agreement, Mr. Downes iswas entitled to an annual performance bonus equal to 3% of the pretaxpre-tax income of the Company;Company, provided, however, that any such bonus iswas contingent upon our shareholders approving such bonus formula, which they have done. Under the Downes Original Employment Agreement, the Company mayhad the option to grant Mr. Downes options or warrants to purchase Common Stock.

Mr. Downes iswas also eligible to receive health and welfare benefits, such as group medical, group life and long-term disability coverage. The Downes Original Employment Agreement containscontained noncompete, nonsolicitation and nondisclosureconfidentiality provisions.

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In the event of a change in control of the Company, the Company shallwas obligated to pay Mr. Downes an amount equal to 48 monthsmonths’ base salary, plus an amount equal to two (2) times any bonuses paid for the preceding fiscal year. However, if it iswas determined by an independent accounting firm that any of the amounts payable to Mr. Downes upon a change in control would be subject to an excise tax under Section 4999 of the Code, then the value of the payments which constitute “parachute payments” will bewould have been reduced to an amount equal to 2.99 times Mr. Downes’ “base amount,” as those terms are defined under Section 280G(b)(2) of the Code. Generally, the “base amount” equals the average of the taxable compensation paid during the preceding five taxable years. Further, in the event of a change in control, all options held by Mr. Downes would vest and become immediately exercisable. For purposes of the Downes Original Employment Agreement, a change in control shall bewould have been deemed to have occurredoccur if, at any time, substantially all the assets of the Company shall have beenwere sold or transferred by sale, merger or otherwise, or if any person becomesbecame the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the then-existing outstanding securities of the Company.

If Mr. Downes diesdied during the term of his employment, the Company shallwould have been obligated to pay to his estate compensation which would otherwise be payable to Mr. Downes for the shorter of (i) one (1) year from the date of his death, or (ii) through the termination date of his employment agreement. If Mr. Downes becomesbecame disabled during the term of his employment for a consecutive period of 90 days, the Company maywould have had the option to terminate the officership held. In the event of such termination, Mr. Downes shall remainwould have remained an employee of the Company and receivereceived 50% of his compensation and all of his fringe benefits for a period ending on the next December 31st31^st or 270 days, whichever iswas longer.

The Downes Original Employment Agreement expiresprovided that such agreement would expire on December 31, 2013 unless extended in writing by the Company.

On February 22, 2013, Mr. Downes succeeded Mr. Meier as President and Chief Executive Officer of the Company. In connection with the succession, the Company entered into the Downes New Employment Agreement which supersedes the Downes Original Employment Agreement. Under the Downes New Employment Agreement, Mr. Downes will receive an annual base salary of $2,000,000, which will increase by 7.25% on each of January 1, 2014 and January 1, 2015 over the rate then in effect. Mr. Downes will also receive an annual performance bonus of 3% of the Company’s pre-tax income up to $5,000,000 and 4% of the Company’s pre-tax income over $5,000,000, subject to the Company’s shareholders approving the material terms of the performance goals for such bonus pursuant to Proposal 3. Should the Company’s shareholders fail to approve the material terms of the performance goals for such bonus, Mr. Downes will receive an annual performance bonus equal to 3% of the Company’s pre-tax income, as provided in Mr. Downes’ Original Employment Agreement. Mr. Downes will also receive a total of 1,500,000 restricted shares of Common Stock in three separate grants. The shares will vest over a period of three years, with 500,000 of the shares also subject to the achievement of performance-based vesting standards. Mr. Downes’ receipt of such shares is subject to his continued employment through the applicable vesting date.

Mr. Downes is also entitled to receive the health and welfare benefits to which he was entitled under the Downes Original Employment Agreement.

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In the event of a change in control of the Company during the term of the Downes New Employment Agreement, and Mr. Downes is involuntarily terminated without cause or resigns for good reason within 24 months after such change in control, the Company will be obligated to pay Mr. Downes a lump sum cash amount equal to 48 months’ base salary, plus two (2) times any bonuses paid for the preceding fiscal year. Such amounts are subject to adjustment pursuant to certain sections of the Code. Further, in the event of a change in control, all options held by Mr. Downes vest and become immediately exercisable.

The Downes New Employment Agreement contains noncompete, nonsolicitation and confidentiality provisions. The Downes New Employment Agreement is effective through December 31, 2015, unless earlier terminated in accordance with its terms.

Employment Agreement with Mr. De Heer Employment Agreement

The Company’s employment agreement with Mr. De Heer is effectivedated as of September 30, 2010, and provides that Mr. De Heer will serve as the Company’s Chief Financial Officer and Principal Accounting Officer (“De Heer Employment Agreement”). Mr. De Heer received a base salary of $300,000 in 2011.2012. Additionally, pursuant to the De Heer Employment Agreement, Mr. De Heer is entitled to an annual performance bonus as determined by the Company in its sole discretion.

Mr. De Heer is eligible to participate in the benefit plans generally available to Company employees in similar positions and in the Company’s equity incentive plans at the Company’s sole discretion.

The De Heer Employment Agreement also contains nondisparagement, noncompete, nonsolicitation and nondisclosureconfidentiality provisions.

Generally, Mr. De Heer is entitled to severance only if we terminate his employment without “cause” or if he terminates his employment for “good reason.” “Cause” is generally defined as (i) a material breach by him of his obligations or representations under the The De Heer Employment Agreement (ii) an arrest for, conviction of or plea of nolo contendere to a felony, (iii) acts of dishonesty resulting or intending to result in personal gain or enrichment at the Company’s expense, (iv) fraudulent, unlawful or grossly negligent conduct in connection with his duties under the De Heer Employment Agreement, (v) engaging in personal conduct which seriously discredits or damages the Company, (vi) contravention of the Company’s specific lawful directions or continuing inattention to or continuing failure to adequately perform the duties described in the De Heer Employment Agreement, (vii) a material breach of the Company’s manuals, written policies, codes or procedures, (viii) initiation of a regulatory inquiry, investigation or proceeding regarding his performance of dutiesexpires on the Company’s behalf if independent counsel, taking into account the relevant circumstances, concludes and advises the Company that such termination is in the best interests ofSeptember 30, 2013 but it automatically renews each year thereafter unless the Company or (ix) breach of any covenants set forth in the De Heer Employment Agreement before termination of employment. “Good reason” is generally defined as the Company’s material breach of the De Heer Employment Agreement without Mr. De Heer’s consent.

In the event of a termination of employment without cause, Mr. De Heer provide written notice that the agreement is entitled, subject to executing a release of claims, to a lump-sum cash payment equal to base salary for a period equal to the remaining termbeing terminated 60 days in advance of the De Heer Employment Agreement and a lump-sum cash payment calculated to be sufficient to reimburse out-of-pocket costs of COBRA insurance coverage for a period of up to 12 months from theanniversary date of such termination. In the event of a termination of employment for good reason, Mr. De Heer is entitled, subject to executing a release of claims, to a lump-sum cash payment equal to base salary for a period equal to the remaining term of the De Heer Employment Agreement.

If Mr. De Heer dies during the term of his employment, his legal representatives will receive a lump-sum cash payment equal to unpaid base salary through the last day of the month in which death occurred in addition to accrued vacation and employee benefits through such period.

The following table presents the potential payments to which the NamedChief Executive OfficersOfficer, Bradley I. Meier, and the Chief Operating Officer, Sean P. Downes, would be entitled under their Original Employment Agreements and to which the Chief Financial Officer, George R. De Heer, would be entitled under his employment agreementsagreement and assumes that the triggering event took place on December 31, 2011.2012.

Name		Benefit		Upon Termination by the Company (3)				Upon Termination without Cause or for Good Reason (4)				Upon Change in Control  (5)				Upon Death (6)				Upon Disability (7)
Bradley I. Meier		Base Salary		$	3,998,452				—			$	7,996,904			$	5,277,957			$	3,694,570
		Bonus(1)		$	2,823,178				—			$	2,823,178			$	2,823,178			$	1,976,225
		Other Post-Employment Obligations(2)			—				—				—			$	98,842			$	98,842
Sean P. Downes		Base Salary			—				—			$	5,637,000			$	1,691,100			$	845,550
		Bonus(1)			—				—			$	2,192,382			$	1,096,191			$	548,096
		Other Post- Employment Obligations(2)			—				—				—			$	83,461			$	83,461
		Equity Compensation			—				—			$	371,642				—				—
George R. De Heer		Base Salary			—			$	525,205				—				—				—
		Other Post- Employment Obligations(2)			—			$	58,296				—				—				—

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Compensation Clawbacks

The NYSE Amex is expected to revise its listing standards in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act to require listed issuers to adopt and disclose clawback policies. Under such policies, an accounting restatement due to material noncompliance with any financial reporting requirements under the securities laws will trigger a clawback of previously paid executive compensation. We will be required to recover any erroneously awarded compensation payments that would not have been made had the restated accounting numbers been used. Any payments made to current or former executive officers during the three-year period preceding the date of a restatement will be subject to the policy. In advance of the expected listing standard revision, in connection with part of Proposal 2, we are asking our shareholders to approve amendments to the Company’s Amended and Restated Plan at our Annual Meeting. Among other things, these amendments would provide that if the Board determines that the Company must restate its financial statements due to material noncompliance with any financial reporting requirement under the law, whether such noncompliance is the result of misconduct or other circumstances, an executive officer must reimburse the Company for any amounts earned or payable with respect to an equity award to the extent required by and otherwise in accordance with applicable law and any policies adopted or implemented by the Board or Compensation Committee from time to time.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED SHAREHOLDER MATTERS

The following tables set forth certain information as of April 24, 201217, 2013 relating to the beneficial ownership of the Series M Preferred Stock, Series A Preferred Stock and Common Stock by (i) all persons that we know beneficially own more than 5% of any class of the Company’s outstanding stock, (ii) each of our Named Executive Officers and directors, and (iii) all of our Named Executive Officers and directors as a group. Knowledge of the beneficial ownership of the Common Stock is drawn from statements filed with the SEC pursuant to Section 13(d) or 13(g) of the Securities Exchange Act.Act of 1934 (“Exchange Act”). Except as otherwise indicated, to our knowledge, each shareholder listed below has sole voting and investment power with respect to the shares beneficially owned by the shareholder.

Series M Preferred Stock OwnedHeld by Directors and ManagementOur Named Executive Officers

As of April 24, 2012, directors17, 2013, the following table sets forth information regarding the number and Named Executive Officers, individually and as a group, beneficially ownedpercentage of shares of Series M Preferred Stock as follows:held by our Named Executive Officers:

Series M Preferred Stock Held by Certain Beneficial Owners

As of April 17, 2013, the following table sets forth information regarding the number and percentage of shares of Series M Preferred Stock held by all persons, other than the person listed immediately above, who are known by the Company to beneficially own or exercise voting or dispositive control over 5% or more of the Company’s outstanding Series M Preferred Stock:

Series M Preferred Stock Held by Certain Beneficial Owners

As of April 24, 2012, the following table sets forth information regarding the number and percentage of Series M Preferred Stock held by all persons, other than those persons listed immediately above, who are known by the Company to beneficially own or exercise voting or dispositive control over 5% or more of the Company’s outstanding Series M Preferred Stock:

Series A Preferred Stock Owned by Directors and Management

As of April 24, 2012, directors and Named Executive Officers, individually and as a group, beneficially owned Series A Preferred Stock as follows:34