SCHEDULE 14A
(Rule14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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HCI GROUP, INC.
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Notice of and Proxy Statement
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April 30, 201929, 2020
TO OUR SHAREHOLDERS:Dear Fellow Shareholders,
On behalf of the HCI Board of Directors, you are cordially invitedJust as we continuously seek to attend the 2019 Annual Meeting of Shareholders, which will be held on Thursday, May 30, 2019 at 3 p.m., Eastern time, atimprove our headquarters: Cypress Commons, 5300 West Cypress Street, Suite 105, Tampa, Florida 33607. Shareholders will be admitted beginning at 2:30 p.m.
We are proud of the relationshipsbusiness operations, we have built withalso continuously seek to improve our shareholders and the frequent dialogue we have with them. In 2018, we continued our practice of engaging with shareholders to understand their perspectives and solicit their input on a variety of issues. Since the 2018 annual shareholders’ meeting, we have held conversations with shareholders representing nearly half of our outstanding shares. During these conversations, we discussed HCI’s business strategy, its board composition, its corporate governance policiespractices. And we do that with input from you. We routinely reach out to shareholders. We’ve heard from you and its executive compensation practices, as well as its policies on corporate social and environmental responsibility. Through these conversations, we gained a valuable understanding of shareholder perspectives. We appreciate the thoughtful and meaningful feedback we received.we’ve listened.
As a result, of shareholder input,in 2019 we have refreshed portions of our Proxy Statement to make it easier to read and understand. We have included, for example, a table of contents, a Proxy Statement Summary, and enhanced visuals and charts. We have provided also additional information on our executive compensation process and the peer group of companies we use for benchmarking executive pay. We also added a section describing our environmental, social and governance policies.
Most important, we recently added two new individuals to our Board of Directors: Loreen M. Spencer, a retired Audit Partnerformer audit partner with Deloitte & Touche LLP, and Sue Watts, Chief Operating Officer and Executive Vice President for Application Services, Infrastructure and Digital Servicesan executive at Capgemini SE, a global technology consulting firm. Both are accomplished business leaders who bring diversityMore recently, the board established a Chief Executive Officer Share Ownership Policy and a Sustainability Committee of thought, experiencethe Board of Directors. The Sustainability Committee looks at our environmental and skillssocial policies. You can read about our directors, the CEO Share Ownership Policy and the Sustainability Committee in the accompanying Proxy Statement.
It’s important that we hear from you in connection with the annual shareholders meeting. Please read the accompanying Proxy Statement and follow the voting instructions it contains so that your vote will contribute to our long-term strategy.be counted.
On behalf of the Board of Directors, I thank you for your continued investment and support. Your vote at the shareholder meeting is very important. Please sign and return the accompanying proxy card or follow the instructions on the card for voting by telephone or internet so your shares can be voted as you direct.in HCI.
Yours truly,Sincerely,
Paresh Patel
Paresh Patel
Chairman of the Board
Chief Executive Officer
5300 West Cypress Street, Suite 100
Tampa, Florida 33607
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Thursday, May 30, 2019June 4, 2020
3 p.m. Eastern time
Cypress Commons
5300 West Cypress Street, Suite 105
Tampa, Florida 33607
The Annual Meeting of Shareholders of HCI Group, Inc. will be held at 3 p.m. Eastern time on Thursday, May 30, 2019June 4, 2020 at Cypress Commons, located at 5300 West Cypress Street, Suite 105, Tampa, Florida 33607. Shareholders will be admitted beginning at 2:30 p.m. The principal purposes of the Annual Meeting will be to cover the following items of business:
1. | To elect Class |
2. | To ratify the appointment of Dixon Hughes Goodman, LLP as our independent registered public accounting firm for the year ending December 31, |
3. | To approve, on an advisory basis, the compensation of our named executive officers |
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To transact such other business that may properly come before the meeting or any adjournments or postponements thereof |
You may vote if you were a shareholder of record as of April 11, 2019.14, 2020.
Our 20182019 Annual Report to Shareholders, which is not a part of this Proxy Statement, is enclosed.
It is important that your shares be represented at the Annual Meeting and voted in accordance with your instructions. Please indicate your instructions by promptly signing and dating the enclosed proxy card and mailing it in the enclosed postage-paid,pre-addressed envelope, or by following the instructions on the proxy card for telephone or internet voting.
Please note thatCOVID-19 health concerns and related government orders may inhibit the ability of shareholders, directors, officers and others to convene and interact. Accordingly, our Annual Meeting may be shortened to focus solely on the formal agenda items described above.
By Order of the Board of Directors,
Andrew L. Graham
Secretary and General Counsel
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MATTER NO. 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||
MATTER NO. 3: APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | ||||
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This summary highlights information that can be found elsewhere in this Proxy Statement. It does not contain all the information that you should consider. You should read the entire Proxy Statement before voting.
Information About the Annual Meeting
Annual Meeting of Shareholders | ||
Time/Date | 3 p.m. Eastern time on Thursday, | |
Place | Cypress Commons, 5300 West Cypress Street, Suite 105, Tampa, Florida 33607 | |
Record Date | April | |
Mailing Date | We began mailing this Proxy Statement on or about April 29, 2020 |
Item | The Board’s Recommendation | Page | ||
1) To elect Class | Vote FOR All | |||
2) To ratify the appointment of Dixon Hughes Goodman, LLP as our independent registered public accounting firm for the year ending December 31, | Vote FOR | |||
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3) To approve, on an advisory basis, the compensation of our named executive officers | VoteFOR | |||
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We do not anticipate that any other business matters will be brought before the meeting for a vote. However, if any other matters are presented, it is the intention of the persons named in the proxy to vote the proxy as recommended by the Board of Directors or, if no recommendation is given, in their own discretion using their best judgment.
By Internet | By Phone | By Mail | In Person | |||
www.proxyvote.com | Call the phone number listed on your proxy card | Follow the instructions on your proxy card | Vote by ballot at our Annual Meeting |
Call the phone number listed on your proxy card or HCI’s proxy advisor, Alliance Advisors LLC, at 1866-613-3005 (toll free in the United States).
HCI Group, Inc. | 1 |
PROXY STATEMENT SUMMARY
Annual Meeting Rules of Conduct
To ensure fair, orderly and constructive meetings, the Board of Directors has adopted rules of conduct for shareholder meetings, including that only shareholders of record as of the record date or their duly authorized representatives are entitled to vote or address the meeting; no one may address the meeting unless called upon by the presiding officer of the meeting; and the use of cameras, audio or video recording equipment, communications devices or similar equipment is prohibited. Individuals who violate these rules may be removed. (See “About the Annual Meeting: Are there rules of Conduct?”)
Important Notice Regarding the Availability of Proxy Materials
for the Shareholder Meeting to be Held on May 30, 2019June 4, 2020
This Proxy Statement and the 20182019 Annual Report to Shareholders are available at
http://www.hcigroup.com/2019proxymaterials2020proxymaterials
Upon your written request, we will provide you with a copy of our 20182019 Annual Report on Form10-K, including exhibits, free of charge. Send your request to HCI Group, Inc., c/o Kevin Mitchell, Senior Vice President of Investor Relations,Rachel Swansiger, Staff Attorney, 5300 West Cypress Street, Suite 100, Tampa, Florida 33607.
PROXY STATEMENT SUMMARY
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PROXY STATEMENT SUMMARY
Forward-Looking Statements
This Proxy Statement may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as “project” and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. For example, the declaration and payment of dividends is at the discretion of our Board of Directors. Our ability to pay dividends depends upon many factors, including the Company’s operating results; financial condition and capital requirements; the availability of cash from our subsidiaries; legal and regulatory constraints and requirements on the payment of dividends and such other factors as our Board of Directors may deem relevant. HCI Group, Inc. (the “Company,” “HCI,” “we” or “us” or when possessive “our”) disclaims all obligations to update any forward-looking statements.
AddressingCOVID-19 Challenges As we finalized the 2020 Proxy Statement, the nation continued to experience the profound effects of theCOVID-19 pandemic. We continue to monitor the situation and assess its impact on our communities, our people and the economy and will provide timely updates as events warrant. Fortunately, our investments in technology over many years have put us in a strong position to weather external disruptions. Our operations, including underwriting and claims processing, are continuing without interruption, and we continue to work closely with our policyholders and insurance agent partners. Technology also enables our people to work remotely. Those who cannot do so because of health concerns, family obligations, or any other reasons are nonetheless continuing to be employed at full pay without risk of losing their job. We have exceptional people; they are vital to our success, and we are committed to supporting them at this critical time. We also remain committed to creating value for our shareholders in this challenging environment. On March 13, 2020 we announced a program to repurchase up to $20 million of the Company’s common shares through the end of the year, subject to market conditions. |
2 | HCI Group, Inc.2020 Proxy Statement |
PROXY STATEMENT SUMMARY
Our business performance in 2019 continued our long-term record of strong financial and operating results. Net income in 2019 was $26.6 million, or $3.31 diluted earnings per common share, up from $17.7 million in the previous year. We also maintained a strong balance sheet, paid $13.0 million in dividends, and returned an additional $18.8 million to shareholders in the form of share repurchases. TypTap Insurance Company, our technology-driven insurance subsidiary, increased gross written premium 315% compared with 2018.
Over the past decade, HCI has delivered solid results for shareholders. Our Return on Equity (ROE) has averaged 19% over this period, and we have reported strong levels of Earnings Before Interest and Taxes (EBIT), despite several hurricanes that had a material impact on our core homeowners insurance business. The Company has been profitable in 47 of the last 49 quarters and has paid dividends in 38 consecutive quarters.
2019 Net Income of $26.6 million, or $3.31 diluted earnings per share | 19% Return on Equity (10-year average) | Profitable in 47 of the last 49 quarters |
Share price to book value ratio of 1.96x for December 2019 | Dividends of $13.0 million paid in 2019 | 38 consecutive quarters of dividends |
Gross written premium for our technology-driven insurance subsidiary, TypTap Insurance Company, increased by 315% in 2019 compared with 2018 |
10% increase in book value, to $23.90 at December 31, 2019 from $21.71 at December 31, 2018 | $278 million returned to shareholders through dividends and share repurchases, inception through 2019 |
HCI Group, Inc.2020 Proxy Statement | 3 |
PROXY STATEMENT SUMMARY
4 | HCI Group, Inc. |
Since the 20182019 annual shareholders’ meeting, we have reached out to many of our largest shareholders. We focusedshareholders, focusing on our 2030 largest shareholders, representingwhich represent approximately 77.4%71% of our outstanding common stock. During the past 12 months, the ChairmanChair of the Compensation Committee and our Senior Vice President of Investor Relations spoke with 117 shareholders representing nearly 50%23.7% of the Company’s outstanding common stock. During these conversations, we heard from shareholders regarding our Board composition, corporate governance policies and executive compensation practices, as well as our policies on corporate social and environmental (E&S) responsibility. Of the shareholders who declined our request for a call, many stated the reason for doing so was satisfaction with HCI’s overall approach to governance, compensation and E&S matters.
HCI Group, Inc. | 5 |
SHAREHOLDER ENGAGEMENTGOVERNANCE HIGHLIGHTS
We are committed to maintaining a high standard of corporate governance to support the creation of shareholder value. We have a Lead Independent Director, a board comprised of a majority of independent directors and a director share ownership requirement. More recently, the board established a Share Ownership Policy for the Chief Executive Officer and created a Sustainability Committee to assist the board in its oversight of environmental and social policies.
What we heardHow we respondedGovernanceExecutive CompensationEnvironmental, Social & GovernanceShareholders provided feedback and wantedWe also took steps to hear our plans regarding board composition, including ethnic and gender diversity andimprove the structure of our classified board." Our Proxy Statement highlights the ethnic and gender diversity of our current Boardboard of Directorsdirectors. In 2019 we welcomed to the board Loreen Spencer, a retired former audit partner with Deloitte & Touche LLP, and disclosesSue Watts, an executive at Capgemini SE, a global technology consulting firm. Both new directors participated in our ongoing efforts to increase diversity on our Board." In 2018, we established a Board Observer Program, to train selected individualswhich was established in public company board operations, governance and law, among other things, and prepare them to serve on public company boards as well as provide for us a means2018 to identify future, exceptionally well qualified Boardhigh-potential director candidates. In selecting program participants, we plan
We have a Code of Conduct to emphasize segmentsensure that the conduct of our population thatemployees, officers and directors remains in compliance with laws, regulations and ethical principles. Employees, officers and directors are underrepresented on public company boards. The initial participants were Loreen Spencer and Sue Watts, bothprohibited from engaging in derivative trading or hedging of whom were recently appointed to our Board of Directors.We believe staggered, three-year terms and the resulting continuity enable directors, in particular independent directors, to focus assecurities. We do not have a group on the company's long-term performance for the benefit of the shareholders.Shareholders wanted to hear from us regarding our methodology and calculation ofshareholder rights plan (“poison pill”).
Our executive compensation particularly forprograms are designed to align the interests of our Chief Executive Officer." In 2016, we retained a nationally-recognized compensation consulting firm to review our Chief Executive Officer's annual compensation program, which at the time was made upexecutives with those of salary and a formula-based annual cash bonus. Based on feedback from our shareholders and the consulting firm, we shifted muchuse a balanced mix of the focus of the plan away from short-term cash-based compensation to long term compensation in the form of equity grants.cash and long-term equity-based incentives that is benchmarked against our industry peers. We believe the current plan balances short-term incentives with long-term incentives in the compensation plan of our Chief Executive Officer and better aligns the Chief Executive Officer's interests withhave a clawback policy that of the shareholders." Based upon advice from our compensation consulting firm, we provide our chiefprovides for pay reimbursement by an executive officer with annual grants of restricted shares, which vest over a period of time, and out-of-the-money stock purchase options." Benchmarking to competitors is one of the factors we use in making compensation decisions. The core peer group of Florida-based insurance companies we use for benchmarking our chief executive officer's compensation appears within the Compensation Discussion and Analysis section of this Proxy Statement. We believe this group best represents our direct competitors.Shareholders wanted us to describe how we contribute to our community, promote diversity in our Board and our workforce, and manage the environmental risks to the Company." We have added a section to our Proxy Statement describing our Environmental, Social and Governance policies and practices (See page 14)." Climate change is a long-term risk to our business. We mitigate the risks posed by climate change by issuing policies of one-year duration and by securing reinsurance that substantially covers our risks from catastrophic storms and floods." We offer competitive benefits to our employees including options for health coverage and short-term and long-term disability insurance at no cost to the employee. We award restricted stock to employees to align their interests with shareholder interests and ensure our employees share in our success. We have committed to paying a living wage to all of our full-time employees." Our Board of Directors oversees our cybersecurity efforts and receives ongoing reports on those efforts from management. We maintain policies designed to safeguard our data and the data of our customers. We have adopted a Cyber Incident Response Plan and engage in penetration testing, internal and external audits of our cybersecurity controls and simulated cyber attacks scenarios to gauge our preparedness for these situations.under appropriate circumstances.
6 | HCI Group, Inc. |
HCI Group, Inc. (the “Company,” “HCI,” “we” or “us” or when possessive “our”) conducts business through its officers and other employees, under the direction of the Chief Executive Officer and with the oversight of the Board of Directors, to enhance the long-term value of the Company for its shareholders. The members of Board of Directors are periodically elected by the shareholders to oversee management and to ensure that the long-term interests of the Company and the shareholders are being served. Each director is expected to perform as a director in good faith with the care an ordinarily prudent person in a like position would exercise under similar circumstances and in a manner the director reasonably believes to be in the best interests of the Company.
Board of Directors Leadership Structure
In our current Board leadership structure, Paresh Patel serves as Chairman of the Board and Chief Executive Officer. Mr. Patel’s role includes providing ongoing feedback on the direction and performance of the Company, serving as Chairman of regular meetings of the Board of Directors, setting the agenda of Board meetings and leading the Board of Directors in anticipating and responding to changes in our business. Mr. Patel also plays a significant role in formulating and executing the Company’s strategic plans, technology efforts and investment decisions. We believe Board oversight and planning is a collaborative effort among the directors, each of whom has unique skills, experience and education, and this structure facilitates collaboration and communication among the directors and management and makes best use of their respective skills.
The Board of Directors has established a Lead Independent Director position and adopted a Lead Independent Director Charter. The Lead Independent Director serves pursuant to that charter. Under the Lead Independent Director Charter, the Lead Independent Director is elected annually by the independent directors. Our current Lead Independent Director is Gregory Politis. He was elected to that position in 2017 andre-elected to the position in April 2018 and again in April 2019. A current copy of the Lead Independent Director Charter is available on our website:www.hcigroup.com. Select “Investor Information” and then “Corporate Governance.” The Board of Directors believes having a Lead Independent Director enhances management accountability to the Board of Directors.
Under the Lead Independent Director Charter, the Lead Independent Director has the following responsibilities:
To preside at all meetings of the Board of Directors at which the Chairman of the Board is not present, including executive sessions of the independent directors
To call meetings of the independent directors
To serve as the principal liaison between the Chairman of the Board and the independent directors, including providing the Chairman feedback after Board meetings
To be available, when appropriate, for consultation and direct communication with shareholders
To lead the independent directors’ evaluation of the Chief Executive Officer’s effectiveness as Chairman of the Board and Chief Executive Officer
The Lead Independent Director also functions as a channel of communication between the Board and the Company’s shareholders and may be reached as described under Communicating with the Board of Directors on page 11. The Board of Directors continually reviews the effectiveness of our Board leadership structure to evaluate whether the structure remains appropriate for the Company and may determine to alter this leadership structure any time based on existing circumstances at that time.
CORPORATE GOVERNANCE
The Board of Directors typically meets monthly, except in August, with additional meetings, as necessary, to review and discuss the performance of the Company, the Company’s plans and prospects, and any immediate issues facing the Company. In 2018, 11 Board meetings were held. Each director attended at least 75% of the Board and applicable committee meetings. Directors are expected to attend all Board meetings with only occasional absences and to prepare for the meetings by reading any materials presented to them in advance of the meetings. Directors are expected to participate fully in the activities of any Board committee to which they may be elected and likewise to attend and prepare for all committee meetings. In addition to its general oversight of management, the Board of Directors performs a number of specific functions, including:
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Independent directors and othernon-management directors meet and communicate regularly without management participation.Non-management directors include directors who are not executive officers of the Company or otherwise employed by the Company, but are not considered to be independent by virtue of a material relationship, former status, family membership or any other reason. The Lead Independent Director presides at meetings of independent directors.
Committees of the Board of Directors
The Board of Directors has established three committees to assist the Board in performing its functions: the Audit Committee, the Compensation Committee, and the Governance and Nominating Committee. The current charters of these committees are published on the Company’s website,www.hcigroup.com, and are mailed to shareholders on written request. The members and the chairmen of the Board committees are elected annually by the Board of Directors.
Audit Committee
The Company has a separately designated standing Audit Committee established in accordance with the Securities and Exchange Act of 1934. The Audit Committee’s responsibilities include the following:
Assisting our Board of Directors in its oversight of the quality and integrity of our accounting, auditing and reporting practices
Overseeing the work of our internal accounting and auditing processes
Discussing with management our processes to manage business and financial risk
Making appointment, compensation and retention decisions regarding the independent registered public accounting firm engaged by the Company, and overseeing their efforts to prepare or issue audit reports on our financial statements
CORPORATE GOVERNANCE
Establishing and reviewing the adequacy of procedures for the receipt, retention and treatment of complaints received by our Company regarding accounting, internal accounting controls or auditing matters, as well as addressing confidential, anonymous submissions of concern by employees regarding questionable accounting or auditing matters
Reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures
The Audit Committee is composed of three members: Wayne Burks, Chairman, George Apostolou and Harish M. Patel. Since our common shares are listed on the New York Stock Exchange, we are governed by its listing standards. Accordingly, each member of the Audit Committee meets the independence tests set forth in Section 303A.02 of the New York Stock Exchange Listing Manual and the criteria for independence set forth inRule 10A-3(b)(1) of the Securities and Exchange Commission. The Board of Directors has determined that Mr. Burks is an Audit Committee financial expert. The Audit Committee met formally four times during 2018 and otherwise acted by unanimous written consent. The Board of Directors has adopted a written Audit Committee Charter. A current copy of the charter is available on our websitewww.hcigroup.com. Click “Investor Information” and then “Corporate Governance.”
Compensation Committee
The Compensation Committee’s responsibilities include the following:
Reviewing and approving the compensation programs applicable to our executive officers
Recommending to the Board of Directors the executive compensation programs and periodically reviewing administration policies for the programs
Reviewing and approving the corporate goals and objectives relevant to the compensation of the executive officers; evaluating the performance of the executive officers in light of those goals, objectives and strategies; and setting the compensation level of the executive officers based on this evaluation
Reviewing on a periodic basis the operation of our executive compensation programs to determine whether they are properly coordinated and achieving their intended purposes
Administering and making awards under the Company’s 2012 Omnibus Incentive Plan, and monitoring and supervising the administration of any other benefit plans the Company may have
Reviewing and approving compensation of outside directors
The Compensation Committee has the authority to determine the compensation of the named executive officers and thenon-employee directors and to make equity awards under the Company’s 2012 Omnibus Incentive Plan. At least annually the Compensation Committee considers the results of the Company’s operations and its financial position and makes compensation determinations. The Compensation Committee is currently composed of the following three directors: James Macchiarola, Chairman, Wayne Burks and Harish Patel, each of whom meets the independence tests set forth in Section 303A.02 of the New York Stock Exchange Listing Manual. The Compensation Committee met formally three times during 2018 and otherwise acted by unanimous written consent. The Board of Directors has adopted a formal Compensation Committee Charter. A current copy of the charter is available on our website,www.hcigroup.com. Click “Investor Information” and then “Corporate Governance.” The Compensation Committee is committed to apay-for-performance focus and open communications with shareholders.
Governance and Nominating Committee
The functions of the Governance and Nominating Committee include the following:
Establishing criteria for selection of potential directors, taking into account all factors it considers appropriate
Identifying and selecting individuals believed to be qualified as candidates to serve on the Board and recommending candidates to the Board to stand for election as directors at the Annual Meeting of Shareholders or, if applicable, at a special meeting of the shareholders
CORPORATE GOVERNANCE
Recommending members of the Board to serve on the committees of the Board
Evaluating and ensuring the independence of each member of a Board committee that is required to be composed of independent directors
Developing and recommending to the Board a set of corporate governance principles appropriate for our Company and consistent with the applicable laws, regulations and listing requirements
Developing and recommending to the Board a code of conduct for our Company’s directors, officers and employees
Ensuring that the Company makes all appropriate disclosures regarding the process for nominating candidates for election to the Board, including any process for shareholder nominations, the criteria established by the committee in evaluating candidates for nomination for election to the Board, and any other disclosures required by applicable laws, regulations or listing standards
Reporting regularly to the Board regarding meetings of the Committee, other matters relevant to the Committee’s discharge of its responsibilities, and recommendations as the Committee may deem appropriate
The Governance and Nominating Committee is composed of three members: Harish Patel, Chairman, James Macchiarola and George Apostolou, each of whom meets the independence tests set forth in Section 303A.02 of the New York Stock Exchange Listing Manual. The Governance and Nominating Committee held two meetings in 2018. The Board of Directors has adopted a written Governance and Nominating Committee Charter. A current copy of the charter is available on our website atwww.hcigroup.com. Click “Investor Information” and then “Corporate Governance.”
Each of the proposed director nominees was recommended by the Governance and Nominating Committee to the Board of Directors.
The Governance and Nominating Committee identifies director candidates in numerous ways. Generally, the candidates are known to and recommended by members of the Board of Directors or management. In evaluating director candidates, the Governance and Nominating Committee considers a variety of attributes, criteria and factors, including experience, skills, expertise, diversity, personal and professional integrity, character, temperament, business judgment, time availability, dedication and conflicts of interest. At a minimum, director candidates must be at least 18 years of age and have such business, financial, technological or legal experience or education to enable them to make informed decisions on behalf of the Company. The Governance and Nominating Committee has not adopted a specific policy on diversity. However, in practice it has identified and recommended individuals of diverse ethnic, cultural and business backgrounds.
The Governance and Nominating Committee will consider director candidates recommended by shareholders. Any shareholder wishing to recommend one or more director candidates should send the recommendations before November 1 of the year preceding the next Annual Meeting of Shareholders to the Secretary of the Corporation, Andrew L. Graham, 5300 West Cypress Street, Suite 100, Tampa, Florida 33607. Each recommendation should set forth the candidate’s name, age, business address, business telephone number, residence address, and principal occupation or employment and any other attributes or factors the shareholder wishes the Committee to consider, as well as the shareholder’s name, address and telephone number and the class and number of shares held. The Committee may require the recommended candidate to furnish additional information. The secretary will forward recommendations of qualified candidates to the Governance and Nominating Committee, and those candidates will be given the same consideration as all other candidates.
A shareholder wishing to nominate an individual for election to the Board of Directors at the Annual Meeting of the Shareholders rather than recommend a candidate to the Governance and Nominating Committee, must comply with the advance notice requirements set forth in our bylaws. See Shareholder Proposals for Presentation at the 2020 Annual Meeting in Appendix C for further information.
CORPORATE GOVERNANCE
Access to Independent Advisors
The Board and its committees have the authority at any time to retain outside accounting, financial, compensation, recruiting, legal or other advisors. The Company will provide appropriate funding, as determined by the Board or any committee, to compensate such independent outside advisors, as well as to cover the ordinary administrative expenses incurred by the Board and its committees in carrying out their duties.
Director Attendance at Annual Meeting of Shareholders
Board members are encouraged, but not required, to attend the Annual Meeting of the Shareholders. All eight of our directors sitting forre-election or continuing in office attended the 2018 Annual Meeting of the Shareholders.
Board of Directors Role in Risk Oversight
The Board of Directors plays a significant role in monitoring risks to the Company and directly reviews matters involving major risks. For example, the Board annually reviews the level and design of our reinsurance programs. Reinsurance is insurance we buy from other insurance companies to cover hurricanes and other catastrophes. The Board of Directors also oversees our cybersecurity plans and efforts and typically approves strategic initiatives and large or unusual investments or expenditures of the Company’s resources.
The Audit Committee, the Compensation Committee, and the Governance and Nominating Committee were established by the Board to assist in ensuring that material risks are identified and managed appropriately. The Board and its committees regularly review material operational, financial, compensation and compliance risks with executive management. The Audit Committee is responsible for assisting the Board of Directors in its oversight of the quality and integrity of our accounting, auditing and reporting practices, and discussing with management our processes to manage business and financial risk. The Compensation Committee considers risk in connection with its design of our compensation programs for our executives. The Governance and Nominating Committee regularly reviews the Company’s corporate governance structure and Board committee assignments. Each committee regularly reports to the full Board of Directors.
Communicating with the Board of Directors
We have established procedures by which shareholders may communicate with members of the Board of Directors, individually or as a group. Shareholders wishing to communicate with the Board of Directors or a specific member of the Board may send written communications addressed to: Board of Directors, HCI Group, Inc., c/o Andrew L. Graham, Secretary of the Corporation, 5300 West Cypress Street, Suite 100, Tampa, Florida 33607. The mailing envelope should clearly specify the intended recipient or recipients, which may be the Board of Directors as a group or an individual member of the Board. The communication should include the shareholder’s name and the number of shares owned. Communications that are not racially, ethically or religiously offensive, commercial, pornographic, obscene, vulgar, profane, defamatory, abusive, harassing, threatening, malicious, false or frivolous in nature will be promptly forwarded to the specified members of the Board of Directors. We have also established procedures by which all interested parties (not just shareholders) may communicate directly with ournon-management or independent directors as a group. Any interested party wishing to communicate with ournon-management or independent directors as a group may send written communications addressed to: Board of Directors, HCI Group, Inc., c/o Andrew L. Graham, Secretary of the Corporation, 5300 West Cypress Street, Suite 100, Tampa, Florida 33607. The mailing envelope should clearly specify the intended recipients, which may be thenon-management directors or the independent directors as a group. The Secretary will promptly forward the envelope for distribution to the intended recipients.
In 2018, we established a Board Observer Program to train selected individuals in public company board operations, governance and law, among other things, and prepare them to serve on public company boards and provide for us a
CORPORATE GOVERNANCE
means to identify future, exceptionally well qualified Board candidates. With limited exceptions, participants received all board materials and are invited to attend and participate in all Board meetings. They do not have voting privileges. In selecting program participants, we plan to emphasize segments of our population that may be underrepresented on public company boards. The initial participants were Loreen Spencer and Sue Watts, both of whom were recently appointed to our Board of Directors. (See their biographies on page 26.)
We engage in ongoing efforts to educate our directors on matters important to their service as directors. Our General Counsel advises each new director on fiduciary duties and securities-reporting requirements. When a director is appointed to a new committee of the Board, the General Counsel advises the committee on the role of that particular committee under law, rules and the committee’s charter.
The Board of Directors conducts an annual evaluation to determine if the Board and its committees are functioning effectively. Likewise, each Board committee conducts an annual self-evaluation to determine if it is functioning effectively.
Directors who are employees of the Company do not receive any additional compensation for their service as directors. The Compensation Committee determines the compensation of ournon-employee directors, each of whom receives a cash payment of $25,000 for every calendar quarter they serve as a director.
The following table sets forth information with respect to compensation earned by each of our directors (other than employee directors) during the year ended December 31, 2018.
Name | Fees Earned or Paid in Cash(1) | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Non- qualified Deferred Compensation Earnings | All Other Compensation(2) | Total | ||||||||||||||||||||||||||||
George Apostolou | $ | 100,000 | — | — | — | — | $ | 17,700 | $ | 117,700 | |||||||||||||||||||||||||
Wayne Burks | $ | 100,000 | — | — | — | — | $ | 17,700 | $ | 117,700 | |||||||||||||||||||||||||
James Macchiarola | $ | 100,000 | — | — | — | — | $ | 17,700 | $ | 117,700 | |||||||||||||||||||||||||
Jay Madhu | $ | 100,000 | — | — | — | — | $ | 17,700 | $ | 117,700 | |||||||||||||||||||||||||
Harish Patel | $ | 100,000 | — | — | — | — | $ | 17,700 | $ | 117,700 | |||||||||||||||||||||||||
Gregory Politis | $ | 100,000 | — | — | — | — | $ | 17,700 | $ | 117,700 | |||||||||||||||||||||||||
Martin A. Traber(3) | $ | 65,100 | — | — | — | — | $ | 8,700 | $ | 73,800 |
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CORPORATE GOVERNANCE
There were no stock awards granted tonon-employee directors in 2018. The aggregate number of stock awards outstanding for eachnon-employee director as of December 31, 2018 was as follows:
Name | Number of Options | Number of Restricted Shares | ||||||||
George Apostolou | — | 12,000 | (1) | |||||||
Wayne Burks | — | 12,000 | (2) | |||||||
James Macchiarola | — | 12,000 | (2) | |||||||
Jay Madhu | — | 12,000 | (1) | |||||||
Gregory Politis | — | 12,000 | (1) | |||||||
Harish Patel | 20,000 | (3) | 12,000 | (1) |
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Director Share Ownership Policy
We have a director share ownership policy that generally requires new directors to acquire $200,000 of the Company’s shares within five years of their initial election to the Board of Directors and then hold those shares until retirement from the Board.
Transactions with Related Persons
Oxbridge Reinsurance Limited
Claddaugh Casualty Insurance Company, Ltd., HCI’s Bermuda-domiciled reinsurance subsidiary, had a reinsurance agreement with Oxbridge Reinsurance Limited whereby Claddaugh ceded to Oxbridge a portion of the business it assumed from HCI’s insurance subsidiary, Homeowners Choice Property & Casualty Insurance Company. From June 1, 2017 through May 31, 2018, Oxbridge assumed $7,400,000 of the total covered exposure for approximately $3,400,000 in premiums. The premiums Oxbridge charged were at rates management believed to be competitive with market rates available to Claddaugh at the time. Because of claims it paid resulting from Hurricane Irma in September 2017, Oxbridge realized no financial benefit from the agreement. On May 28, 2018, Claddaugh terminated its multi-year reinsurance contract with Oxbridge effective June 1, 2018 and agreed to pay a settlement fee of $600,000. During the term of the agreement, Oxbridge had deposited funds into trust accounts to satisfy certain collateral requirements under its reinsurance contract with Claddaugh. Trust assets could be withdrawn by Claddaugh, the trust beneficiary, in the event amounts were due under the Oxbridge reinsurance agreement. Among the Oxbridge shareholders are Paresh Patel, the Company’s Chief Executive Officer, members of his immediate family and three of the Company’snon-employee directors including Jay Madhu who serves as Oxbridge’s Chairman and Chief Executive Officer. Claddaugh and Oxbridge are not currently engaged in any business relationship.
CORPORATE GOVERNANCE
First Home Bank
During the first quarter of 2018, the Company purchasedsix-month certificates of deposit totaling approximately $15 million from First Home Bank in Seminole, Florida. Our directors, Anthony Saravanos and George Apostolou, are also directors of First Home Bank and its holding company. The deposits earned interest at the bank’s customary rates, which were competitive with other banks in the region. At March 31, 2019, the Company’s deposits consisted of approximately $6.4 million in a money market account.
Policies for Approval or Ratification of Transactions with Related Persons
Our policy for approval or ratification of transactions with related persons is for those transactions to be reviewed and approved by a majority of disinterested directors. That policy is set forth in both our Code of Conduct (See Code of Ethics below) and our Corporate Governance Guidelines, which can be found atwww.hcigroup.com. Select “Investor Information,” “Corporate Governance,” and then “Corporate Governance Guidelines.” The policy provides no standards for approval. Directors apply individual judgment and discretion in deciding such matters.
We are not aware of any material proceedings in which an executive officer or director is a party adverse to the Company or has a material interest adverse to the Company.
To ensure the interests of our employees, officers and directors are aligned with the long-term interests of our shareholders, the Company has an anti-hedging policy that prohibits employees, officers and directors from directly or indirectly engaging in hedging transactions related to HCI’s securities. This includes the use of financial instruments such as exchange funds, prepaid variable forwards, equity swaps, puts, calls, collars, forwards and other derivative instruments, as well as the establishment of a short position in the Company’s securities. The Board may waive this requirement when it deems appropriate.
We have adopted a Code of Ethics applicable to all employees and directors, including our Chief Executive Officer and Chief Financial Officer. The Code of Ethics is available on our website atwww.hcigroup.com. Select “Investor Information” at the top, then select “Corporate Governance” and then “Code of Conduct.” We intend to disclose any change to or waiver from our Code of Ethics by posting such change or waiver to our website in the same section described above.
Corporate Governance Guidelines
To promote effective governance of the Company, we have adopted Corporate Governance Guidelines. A current copy of our Corporate Governance Guidelines is available on our website:www.hcigroup.com. Select “Investor Information” at the top, then select “Corporate Governance” and then “Corporate Governance Guidelines.”
Environmental, Social and Governance (ESG) Policies
HCI Group, Inc. is committed to operating with integrity, contributing to our community, promoting diversity in our Board and our workforce, and managing the environmental risks to the Company. In addition, we take proactive steps to secure our data and safeguard our customers’ data.
We believe ESG oversight begins at the top. Our Board of Directors is involved in ESG policymaking and works closely with management to achieve our goals in these areas. Management ensures implementation of ESG policies at all levels of the Company and regularly reports to the Board regarding the status of ESG initiatives. Our integrated approach ensures that we achieve our ESG goals.
CORPORATE GOVERNANCE
Following is a summary of our Environmental, Social and Governance policies and activities.
Environmental
The most material environmental risk to the Company is that of extreme weather. Notably, climate change may cause an increase in the number and intensity of extreme weather events that may affect our profitability. We work to mitigate this risk by offering insurance policies with only aone-year duration and securing reinsurance from other insurance companies that indemnify us against losses we might incur as the result of catastrophic events impacting our policyholders.
Social
Community Contribution
We believe in enriching our community through charitable work, including volunteer opportunities for our management and employees. The HCI Group Foundation contributes to charitable causes throughout our community, and our employees participate in dozens of local charities. Some examples include Paint Your Heart Out Tampa, Hope Children’s Home, Metropolitan Ministries of Tampa, One Blood Florida Blood Services, Be the Match Marrow Donor Program, Habitat for Humanity and the Clearwater Jazz Foundation.
Work Environment
We adhere to a harassment prevention policy which details how to report and respond to harassment issues and prohibits any form of retaliation. This includes mandatory harassment prevention training for all employees.
We are committed to paying a living wage to all of our full-time employees. We offer competitive benefits to our employees including options for health coverage and short-term and long-term disability insurance at no cost to the employee. We also award restricted stock to employees to align their interests with shareholder interests.
Diversity
We value a diverse and inclusive work environment. Our workforce is comprised of men and women of many races, religions, and national origins, and we forbid any form of discrimination based upon these factors.
Our Board is highly diverse in terms of gender, ethnicity, culture, education and business backgrounds, and our U.S.-based workforce is more than 50% female and approximately 28%non-white. The below graphics do not account for our international workforce, which consists of 98 employees located in Noida, India.
CORPORATE GOVERNANCE
Governance
HCI has adopted the following policies and programs to promote effective corporate governance.
We prohibit derivative trading or hedging of our securities by our employees, officers, and Board members
We have no poison pill
Our Code of Conduct ensures the conduct of employees, officers and directors remains in compliance with laws, regulations and ethical principles
Through our Board Observer Program, we prepare individuals to serve on public company boards, particularly individuals from under-represented communities
Board-related Governance Practices
We have a strong Lead Independent Director position with a publicly available charter
A majority of our directors are independent
Within five years of joining the Board, each new director is expected to own at least $200,000 of our common stock
We are improving gender-diversity on our Board: In 2019, we appointed two new directors, both of whom are women. In addition, our Board Observer Program aims to broaden the pool of available Board candidates.
Data Security
Our Board of Directors oversees our cybersecurity efforts and receives ongoing reports on those efforts from management. We maintain policies designed to safeguard our data and the data of our customers. We have adopted a Cyber Incident Response Plan and engage in penetration testing, internal and external audits of our cybersecurity controls, and simulated cyberattack scenarios to gauge our preparedness for these situations. We also provide mandatory cybersecurity training for all employees.
We carry Cyber Insurance which includes access to a Cyber Incident Response team in the case of a cyber event.
MATTER NO. 1ELECTION OF DIRECTORS
Three directors are to be elected at the Annual Meeting. In accordance with the Company’s articles of incorporation, the Board of Directors is divided into three classes. All directors within a class have the same three-year term of office. The class terms expire at successive annual meetings so that each year a class of directors is elected. The current terms of director classes expire in 2019 (Class B directors), 2020 (Class C directors) and, 2021 (Class A directors) and 2022 (Class B directors). Each of the Class BC directors elected at the 20192020 Annual Meeting will be elected to serve a three-year term.
With the recommendation of the Governance and Nominating Committee, the Board of Directors has nominated the following persons to stand forre-election as Class BC directors at the 20192020 Annual Meeting of Shareholders, with terms expiring in 2022:2023:
George ApostolouWayne Burks
Paresh PatelJay Madhu
Gregory PolitisAnthony Saravanos
Each of the nominees for election as a director has consented to serve if elected. If, as a result of circumstances not now known or foreseen, one or more of the nominees should be unavailable or unwilling to serve as a director, proxies may be voted for the election of such other persons as the Board of Directors may select. The Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve.
The persons named in the enclosed proxy card intend, unless otherwise directed, to vote such proxy “FOR” the election of George Apostolou, Paresh PatelWayne Burks, Jay Madhu and Gregory PolitisAnthony Saravanos as Class BC directors of HCI Group, Inc. The nominees receiving the three highest “FOR” vote totals will be elected as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR ELECTION OF EACH OF THE NOMINEES AS DIRECTORS OF THE COMPANY — ITEM 1 ON YOUR PROXY CARD. |
Full Board met
times in
| 70% of the Board contributes to gender or ethnic diversity
| 7 out of 10 directors are independent
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HCI Group, Inc. |
MATTER NO. 1 ELECTION OF DIRECTORS
Director | Age | Primary Occupation | Director Since | Committee Memberships | Committee Chair | Independent | Age | Director Since | Primary Occupation | |||||||||||||||
Nominees for Election: | Nominees for Election: | Nominees for Election: | ||||||||||||||||||||||
Wayne Burks | Yes | 72 | 2013 | Director and Former Chief Financial Officer, Romark LC. | ||||||||||||||||||||
Jay Madhu | No | 53 | 2007 | President and Chief Executive Officer, Oxbridge Re Holdings Ltd. | ||||||||||||||||||||
Anthony Saravanos | No | 49 | 2007 | President, Greenleaf Capital, a subsidiary of HCI Group, Inc. | ||||||||||||||||||||
Continuing in Office: | Continuing in Office: | |||||||||||||||||||||||
Paresh Patel | No | 57 | 2007 | Chairman and Chief Executive Officer, HCI Group, Inc. | ||||||||||||||||||||
James Macchiarola | Yes | 71 | 2013 | Retired Vice President, Orange Business Services | ||||||||||||||||||||
Gregory Politis | Yes | 68 | 2007 | President, Xenia Management Corporation | ||||||||||||||||||||
George Apostolou | 68 | Founder, Apostolou Construction | 2007 |
| Yes | 69 | 2007 | Founder, Apostolou Construction | ||||||||||||||||
Paresh Patel | 56 | Chairman and Chief Executive Officer, HCI Group, Inc. | 2007 | |||||||||||||||||||||
Gregory Politis | 67 | President, Xenia Management Corporation | 2007 | |||||||||||||||||||||
Continuing in Office: | ||||||||||||||||||||||||
Wayne Burks | 71 | Vice President and Former Chief Financial Officer, Romark LC. | 2013 | |||||||||||||||||||||
James Macchiarola | 70 | Retired Vice President, Orange Business Services | 2013 | |||||||||||||||||||||
Jay Madhu | 52 | President and Chief Executive Officer, Oxbridge Re Holdings Ltd. | 2007 | |||||||||||||||||||||
Harish Patel | 62 | Director, Medenet, Inc. | 2011 | Yes | 63 | 2011 | Director, Medenet, Inc. | |||||||||||||||||
Anthony Saravanos | 48 | President, Greenleaf Capital | 2007 | |||||||||||||||||||||
Loreen Spencer | 53 | Retired Audit Partner, Deloitte & Touche, LLP | 2019 | Yes | 54 | 2019 | Retired Audit Partner, Deloitte & Touche LLP | |||||||||||||||||
Sue Watts | 57 | Chief Operations Officer and Executive Vice President, Capgemini SE | 2019 | Yes | 58 | 2019 | Executive Vice President, Capgemini SE |
Audit: Governance & Nominating: Compensation:Board Committee Memberships
Director | Audit | Compensation | Governance & Nominating | Sustainability | ||||
George Apostolou | Member | |||||||
Wayne Burks | Chair | |||||||
James Macchiarola | Chair | Member | ||||||
Jay Madhu | Chair | |||||||
Harish Patel | Member | Member | ||||||
Paresh Patel | ||||||||
Gregory Politis | ||||||||
Anthony Saravanos | Member | |||||||
Loreen Spencer | Member | Member | ||||||
Sue Watts | Chair |
HCI Group, Inc. |
MATTER NO. 1 ELECTION OF DIRECTORS
In accordance with the Company’s articles of incorporation, the Board of Directors is divided into three classes. Each class consists of three or four directors. All directors within a class have the same three-year terms of office. The class terms expire at successive annual shareholders’ meetings so that each year one class of directors is elected at the Annual Meeting of Shareholders.Meeting. The Board does not believe arbitrary term limits on a director’s service are appropriate, nor does it believe that directors should expect to bere-nominated upon expiration of a three-year term. Each year the Board of Directors proposes a slate of nominees for election at the Annual Meeting of Shareholders. Meeting.
The Governance and Nominating Committee is tasked with identifying and selecting individuals believed to be qualified as candidates to serve on the Board and recommending to the Board candidates to stand for election as directors at the Annual Meeting of Shareholders or, if applicable, at a special meeting of the shareholders. The Governance and Nominating Committee identifies director candidates in numerous ways. Generally, the candidates are known to and recommended by members of the Board of Directors or management. The Governance and Nominating Committee also considers director candidates recommended by shareholders. Shareholders may submit recommendations for
HCI Group, Inc. |
MATTER NO. 1 ELECTION OF DIRECTORS
recommendations for Board nominees directly to the Board or at the Annual Meeting of Shareholders. See page 1052 for information on submitting director nominations to the Board. A shareholder wishing to nominate an individual for election to the Board of Directors at the Annual Meeting of Shareholders, rather than recommend a candidate to the Governance and Nominating Committee must comply with the advance notice requirements set forth in the Company’s bylaws, a copy of which can be found on the Company’s website,www.hcigroup.com, by selecting the “Investor Information” tab followed by “Corporate Governance.”
Qualifications of Board Members
In selecting individuals for Board membership, the Board of Directors considers a variety of attributes, criteria and factors, including experience, skills, expertise, diversity, personal and professional integrity, character, temperament, business judgment, time availability, dedication and conflicts of interest. At a minimum, director candidates must be at least 18 years of age, have sufficient time to devote to their Board duties and have such business, financial, technological or legal experience or education to enable them to make informed decisions on behalf of the Company. A majority of the Board members must be independent, as determined by the Board of Directors, in accordance with the listing standards of the New York Stock Exchange. In general, the Board affirmatively determines whether a director has any direct or indirect material relationship with the Company. All members of the Audit Committee, Compensation Committee, and Governance and Nominating Committee must be independent, with members of the Audit Committee and the Compensation Committee meeting higher levels of independence.independence as required by the rules of the Securities and Exchange Commission. Members of the Audit Committee must be financially literate as determined by the Board and at least one member must be an Audit Committee Financial Expert as described in the rules of the U.S. Securities and Exchange Commission.
Diversity of Skills and Experience of Directors
Experience & Expertise | Operations Management | Gender/ Ethnic Diversity | CEO Leadership | Industry | Public Company Board Service | Financial | Experience | |||||||||||||||
Paresh Patel | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Anthony Saravanos | ✓ | ✓ | ✓ | |||||||||||||||||||
George Apostolou | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||
Wayne Burks | ✓ | ✓ | ✓ | |||||||||||||||||||
James Macchiarola | ✓ | ✓ | ✓ | |||||||||||||||||||
Jay Madhu | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Harish Patel | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||
Gregory Politis | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||
Loreen Spencer | ✓ | ✓ | ✓ | |||||||||||||||||||
Sue Watts | ✓ | ✓ | ✓ | ✓ |
*Includes experience in the areas of insurance, technology and real estate.
Diversity and Board Tenure
We believe that a variety of perspectives, opinions and backgrounds among the Board members is important to the Board’s ability to perform its duties. Our Board is diverse in terms of gender, ethnicity, culture, education and business backgrounds.
Board tenure diversity is equally important, as we seek to achieve thean appropriate balance of years of service among Board members. Our senior directors have deep knowledge of our Company and business operations, while new directors provide fresh perspectives. Our current Board of Directors has an average tenure of 7.99.1 years.
MATTER NO. 1 ELECTION OF DIRECTORS
Arrangements as to Selection and Nomination of Directors
We are not aware of any arrangements as to the selection and nomination of directors.
10 | HCI Group, Inc.2020 Proxy Statement |
MATTER NO. 1 ELECTION OF DIRECTORS
Based upon recommendations of our Governance and Nominating Committee, the Board of Directors has determined that current directors George Apostolou, Wayne Burks, James Macchiarola, Harish M. Patel, Gregory Politis, Loreen Spencer, and Sue Watts are “independent directors” meeting the independence tests set forth in Section 303A.02 of the New York Stock Exchange Listing Manual, including having no material relationship with the Company (eithereither directly or as a partner, shareholder or officer of an organization that has a relationship with the Company).Company. In the case of Mr. Apostolou, the Board considered his role as a director of First Home Bank, where the Company had during 20182019 as much as approximately $15$13 million on deposit. In the view of the Boarddeposit, and concluded that the amount of the deposits iswas not material to the Company or the bank.
Shareholder Votes at 2018Director Election Results
At our 2019 Annual Meeting of Shareholders,
At our 2018 Annual Meeting of Shareholders, James Macchiarola George Apostolou, Paresh Patel and Harish PatelGregory Politis werere-elected to the Board with vote totals detailed below.
Director Nominee | For | Withheld | ||||||
James Macchiarola | 3,960,258 | 3,426,288 | ||||||
Harish Patel | 4,448,580 | 2,937,966 | ||||||
2019 | ||||||||
Director Nominee | For | Withheld | ||||||
George Apostolou | 96.7 | % | 3.3 | % | ||||
Paresh Patel | 98.4 | % | 1.6 | % | ||||
Gregory Politis | 96.4 | % | 3.6 | % |
While we view these results as a significant improvement from previous years, we strive for continuous improvement and intend to continue our shareholder outreach and other efforts.
Biographies of Directors Standing for Election (Class B)
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2018 | ||||||||
Director Nominee | For | Withheld | ||||||
James Macchiarola | 53.6 | % | 46.4 | % | ||||
Harish Patel | 60.2 | % | 39.8 | % |
HCI Group, Inc. |
MATTER NO. 1 ELECTION OF DIRECTORS
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MATTER NO. 1 ELECTION OF DIRECTORS
Biographies of Directors Continuing in Office
Directors whose present terms continue until 2020Standing for Election (Class C):
Wayne Burks | ||||||
Wayne Burks,age
Skills/Qualifications: Mr. Burks brings considerable business, accounting and financial experience to the Board of Directors. We believe his knowledge and experience as the Chief Financial Officer of a homeowners insurance company and also as an auditor with the ability to analyze financial information enhances the Board’s oversight of the Company’s business operations, financial disclosure, external auditors and the effectiveness of our internal controls. Mr. Burks serves as |
Independent
Committees: - Audit
Other Public Company Boards: - None |
Jay Madhu | ||||||
Jay Madhu, age
Skills/Qualifications: Mr. Madhu brings considerable business, marketing, real estate and mortgage finance experience to the Board of Directors. Real estate experience has become increasingly important to the Company as it considers and makes significant real estate investments. Additionally, Mr. Madhu has a substantial personal investment in the Company. |
Committees: -
Other Public Company Boards: - Oxbridge Re Holdings Ltd. |
12 | HCI Group, Inc. |
MATTER NO. 1 ELECTION OF DIRECTORS
Anthony Saravanos | ||||||
Anthony Saravanos, age
Skills/Qualifications: Mr. Saravanos brings considerable business, management, finance, marketing and real estate experience and knowledge to the Board of Directors. Real estate experience has become increasingly important to the Company as it considers and makes significant real estate investments. As a District Manager for DaimlerChrysler Motors Corporation he was required to read, understand and analyze financial information, and this skill set is considered of importance in enhancing oversight of the Company’s performance, monitoring its financial disclosure and evaluating growth opportunities. Additionally, Mr. Saravanos has a substantial personal investment in the Company, and he played a large role in bringing initial investors to the Company. |
Director; President of Real Estate Division Committees: - Sustainability |
HCI Group, Inc. | 13 |
MATTER NO. 1 ELECTION OF DIRECTORS
Biographies of Directors Continuing in Office
Directors whose present terms continue until 2021 (Class A):
James Macchiarola | ||||
James Macchiarola,age
Skills/Qualifications: Mr. Macchiarola brings considerable business, management, marketing, and systems experience to the Board of Directors. Information technology and systems knowledge has become increasingly important to the Company as the growth of technology in the market becomes more sophisticated. In addition, the Company expects that Mr. Macchiarola will provide guidance and oversight to the Company’s information technology division. Additionally, the marketing and sales experience gained by Mr. Macchiarola at Orange Business Services as Vice President and Head of North American Equipment Resales and Integration Services will prove valuable as HCI Group Inc. continues to grow and expand into new products and territories. Mr. Macchiarola serves as |
Independent
Committees: - Compensation - Governance & Nominating
Other Public Company Boards: - None |
Harish M. Patel | ||||
Harish M. Patel, age
Skills/Qualifications: Mr. Patel brings a wide range of business and management experience to the Board of Directors. We expect that Mr. Patel’s |
Independent
Committees: - Audit - Compensation
Other Public Company Boards: - None |
14 | HCI Group, Inc. |
MATTER NO. 1 ELECTION OF DIRECTORS
Loreen Spencer | ||||
Loreen Spencer, age
Skills/Qualifications:Ms. Spencer bringsconsiderable business, accounting and financial experience to the Board of Directors. Her education, knowledge and experience as an auditor and her ability to analyze financial information enhances the Board’s oversight of the Company’s business operations, financial disclosure, external auditors and the effectiveness of our internal controls. |
Independent Committees: - Audit - Compensation
Other Public Company Boards: - None |
Sue Watts | ||||
Sue Watts, age
Skills/Qualifications:Ms. Wattsbrings to our Board of Directors more than three decades of experience in business operations, information technology and leadership. Her knowledge and experience enhance the Board’s oversight of our management, our business operations and the development and application of our technology. She serves as Chair of our Governance and Nominating Committee. | Independent Committees: - Governance & Nominating (Chair) Other Public Company Boards: - None |
HCI Group, Inc.2020 Proxy Statement | 15 |
MATTER NO. 1 ELECTION OF DIRECTORS
Directors whose present terms continue until 2022 (Class B)
George Apostolou | ||||
George Apostolou, age 69, has been a director of the Company since May 2007. Born in Erithri-Attikis, Greece, Mr. Apostolou moved to the United States in 1971 and earned his State of Florida Contractors License in 1983. In 1987, he established George Apostolou Construction Corporation and has since built more than 200 commercial buildings, including government services buildings, churches, office buildings and retail centers. George Apostolou Construction Corporation is not affiliated with HCI Group, Inc. In addition to contracting, Mr. Apostolou has been involved in the development of and investment in many commercial projects and now owns more than 20 properties in the Tampa Bay area. Since 2013, Mr. Apostolou has served on the Board of Directors of First Home Bank in Seminole, Florida and since 2014 has served as a director of the bank’s holding company, First Home Bancorp, Inc. Skills/Qualifications: Mr. Apostolou brings considerable business, management and real estate experience to the Board of Directors. His business and management experience enhances his oversight of the Company’s business performance as he has a fundamental understanding of financial statements and business operations. Moreover, real estate experience has become increasingly important to the Company as it considers and makes significant real estate investments. Additionally, Mr. Apostolou has a substantial personal investment in HCI Group Inc., having played a large role in bringing initial investors to the Company. Mr. Apostolou also serves on our Audit Committee and our Governance and Nominating Committee. | Independent Committees: - Governance & Nominating Other Public Company Boards: - None |
16 | HCI Group, Inc.2020 Proxy Statement |
MATTER NO. 1 ELECTION OF DIRECTORS
Paresh Patel | ||||
Paresh Patel, age 57, is a founder of the Company and currently serves as Chairman of the Board of Directors and Chief Executive Officer. He has been a director of the Company since its inception and has served as the Chairman of our Board of Directors since May 2007. He has served as Chief Executive Officer since 2011. From 2015 to 2019, he served as President of our insurance subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., a position he also held from 2011 to 2012. In addition, Mr. Patel is Chairman of the Board of TypTap Insurance Company, our technology-based homeowners and flood insurance subsidiary corporation formed in January 2016. Mr. Patel has broad experience in technology and finance. He developed and continues to oversee development of the Company’s policy administration systems. From 2011 to 2015, he served as Chairman of the Board of First Home Bancorp, Inc., a bank holding company in Seminole, Florida and from 2014 to December 2017 he served as Chairman of the Board of Directors of Oxbridge Re Holdings Limited, a NASDAQ-listed Cayman Islands reinsurance holding company. He was a founder of NorthStar Bank in Tampa, Florida and from 2006 to 2010 served on the Board of Directors of its parent company, NorthStar Banking Corporation. From 1998 to 2000, he was Director of Customer Care and Billing with Global Crossing. In that position, Mr. Patel defined business processes and systems, hired and trained department staff and led the integration of the customer care and billing systems with the systems of companies that Global Crossing acquired. As an independent software and systems consultant from 1991 to 1998, Mr. Patel worked with large international telephone companies. Mr. Patel holds a Bachelor’s and a Master’s degree in Electronic Engineering from the University of Cambridge in the United Kingdom. Skills/Qualifications: Mr. Patel brings to the Board of Directors considerable experience in business, insurance, management, systems and technology, and because of those experiences and his education, he possesses knowledge and analytical and technology skills that are important to the operations of the Company, the oversight of its performance and the evaluation of its future growth opportunities. Furthermore, his performance as Chief Executive Officer has demonstrated anin-depth understanding of the Company’s insurance business. He is a founder of the Company and has a substantial personal investment in the Company. | Chairman of the Board |
Gregory Politis | ||||
Gregory Politis, age 68, is a founder of the Company and has been a director since its inception. He has served also as the Board’s Lead Independent Director since 2017. Mr. Politis has been in the real estate business since 1974 and is President of Xenia Management Corporation, a real estate portfolio management company he established in 1988. Mr. Politis has interests in more than 50 real estate developments in the Miami-Dade County, Orlando and Greater Tampa Bay areas as well as in Montreal, Canada. Xenia Management Corporation is not affiliated with HCI Group, Inc. During his career, Mr. Politis has developed and retained ownership of retail, office and industrial spaces, with a primary focus on buildings housing federal and state government agencies. He is a founding member of the Hellenic American Board of Entrepreneurs and a recipient of the Building Owners and Managers Association (BOMA) Building of the Year Award. Mr. Politis has served as a director of NorthStar Bank and Florida Bank. Skills/Qualifications: Mr. Politis brings considerable business, management and real estate experience to the Board of Directors. His business and management experience enhances his oversight of the Company’s business performance, as he has a fundamental understanding of business operations. Moreover, real estate experience has become increasingly important to the Company as it considers and makes significant real estate investments. Additionally, Mr. Politis has a substantial personal investment in the Company. |
Independent
Other Public Company Boards: - None |
HCI Group, Inc.2020 Proxy Statement |
MATTER NO. 1 ELECTION OF DIRECTORS
Directors who are employees of the Company do not receive any additional compensation for their service as directors. During 2019, the Compensation Committee reviewed and redesigned the compensation program fornon-employee directors with the assistance of Pearl Meyer, a leading compensation firm, and input from our shareholders. The plan established in September 2019 provides better alignment with shareholder interests and market practice while placing overall compensation at the 50% percentile of the Company’s insurance industry peers. Eachnon-employee director receives a cash payment of $25,000 per quarter and an annual stock award of $25,000.
The following table sets forth information with respect to compensation earned by each of our directors (other than employee directors) during the year ended December 31, 2019.
Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Non- qualified Deferred Compensation Earnings | All Other Compensation(3) | Total | ||||||||||||||||||||||||||||
George Apostolou | $ | 100,000 | $ | 24,995 | — | — | — | $ | 9,837 | $ | 134,832 | ||||||||||||||||||||||||
Wayne Burks | $ | 100,000 | $ | 24,995 | — | — | — | $ | 14,637 | $ | 139,632 | ||||||||||||||||||||||||
James Macchiarola | $ | 100,000 | $ | 24,995 | — | — | — | $ | 14,637 | $ | 139,632 | ||||||||||||||||||||||||
Jay Madhu | $ | 100,000 | $ | 24,995 | — | — | — | $ | 9,837 | $ | 134,832 | ||||||||||||||||||||||||
Harish Patel | $ | 100,000 | $ | 24,995 | — | — | — | $ | 9,837 | $ | 134,832 | ||||||||||||||||||||||||
Gregory Politis | $ | 100,000 | $ | 24,995 | — | — | — | $ | 9,837 | $ | 134,832 | ||||||||||||||||||||||||
Loreen Spencer | $ | 74,028 | $ | 24,995 | — | — | — | $ | 237 | $ | 99,260 | ||||||||||||||||||||||||
Sue Watts | $ | 74,028 | $ | 24,995 | — | — | — | $ | 237 | $ | 99,260 |
(1) | Each director received a cash payment of $25,000 for service during each quarter or portion thereof that he or she served as a director, which includes attendance at Board and committee meetings held during 2019. |
(2) | In accordance with SEC reporting requirements, the amounts reported in this column represent the grant-date fair value of the entire award and were calculated utilizing the fair value recognition provisions of Accounting Standards Codification Topic 718 – “Compensation – Stock Compensation,” which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors, including stock options and restricted stock issuances, based on estimated fair values. The assumptions used in calculating this amount are discussed in Note 21 to our consolidated financial statements included in our Annual Report on Form10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 6, 2020. The stock awards in this column are restricted stock grants which include only service conditions. The amounts reported in this column are based on the market value of the Company’s stock on the grant date. On September 9, 2019, each of thenon-employee directors received a restricted stock grant of 593 shares. The restricted shares will vest on June 1, 2020. |
(3) | All Other Compensation represents dividends paid on unvested restricted shares. |
The aggregate number of stock awards outstanding for eachnon-employee director as of December 31, 2019 was as follows:
Name | Number of Options | Number of Restricted Shares | ||||||||
George Apostolou | — | 593 | (1) | |||||||
Wayne Burks | — | 593 | (1) | |||||||
James Macchiarola | — | 593 | (1) | |||||||
Jay Madhu | — | 593 | (1) | |||||||
Gregory Politis | — | 593 | (1) | |||||||
Harish Patel | 10,000 | (2) | 593 | (1) | ||||||
Loreen Spencer | — | 593 | (1) | |||||||
Sue Watts | — | 593 | (1) |
18 | HCI Group, Inc. 2020 Proxy Statement |
MATTER NO. 1 ELECTION OF DIRECTORS
(1) | On September 9, 2019, each of thenon-employee directors received a restricted stock grant of 593 shares. The restricted shares will vest on June 1, 2020. |
(2) | On August 26, 2011, newly elected director Harish Patel was awarded the right to purchase 30,000 shares at $6.30 per share. His options vested in three equal annual installments beginning April 20, 2012 and will expire on August 25, 2021. As of December 31, 2019, there were 10,000 options unexercised. |
The following table sets forth information regarding the beneficial ownership of our common stock as of April 10, 2020 by:
Each person who is known by us to beneficially own more than 5% of our outstanding common stock
Each of our directors and named executive officers
All directors and named executive officers as a group
The number and percentage of shares beneficially owned are based on 7,912,649 common shares outstanding as of April 10, 2020. Information with respect to beneficial ownership has been furnished by each director, officer or beneficial owner of more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission, which generally require that the individual have voting or investment power with respect to the shares. In computing the number of shares beneficially owned by an individual listed below and the percentage ownership of that individual, shares underlying options, warrants and convertible securities held by each individual that are exercisable or convertible within 60 days of April 10, 2020, are deemed owned and outstanding, but are not deemed outstanding for computing the percentage ownership of any other individual. Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all individuals listed have sole voting and investment power for all shares shown as beneficially owned by them. Unless otherwise indicated in the footnotes, the address for each principal shareholder is HCI Group, Inc., 5300 West Cypress Street, Suite 100, Tampa, Florida 33607.
Beneficially owned | ||||||||
Name and Address of Beneficial Owner | Number of Shares | Percent | ||||||
Blackrock, Inc.(1) | 1,107,166 | 13.99 | % | |||||
Dimensional Fund Advisors LP(2) | 697,884 | 8.82 | % | |||||
The Vanguard Group, Inc.(3) | 469,998 | 5.94 | % | |||||
Executive Officers and Directors | ||||||||
George Apostolou(4) | 106,673 | 1.35 | % | |||||
Wayne Burks(5) | 5,343 | * | ||||||
Karin Coleman(6) | 23,732 | * | ||||||
Andrew L. Graham(7) | 36,937 | * | ||||||
Mark Harmsworth(8) | 32,070 | * | ||||||
James Macchiarola(5) | 9,593 | * | ||||||
Jay Madhu(9) | 86,769 | 1.10 | % | |||||
Harish M. Patel(10) | 101,888 | 1.29 | % | |||||
Paresh Patel(11) | 980,000 | 12.13 | % | |||||
Gregory Politis(12) | 406,593 | 5.14 | % | |||||
Anthony Saravanos(13) | 132,110 | 1.67 | % | |||||
Loreen Spencer(5) | 1,543 | * | ||||||
Susan Watts(5) | 2,567 | * | ||||||
All Executive Officers and Directors as a Group (13 individuals) | 1,925,818 | 24.10 | % |
HCI Group, Inc.2020 Proxy Statement | 19 |
MATTER NO. 1 ELECTION OF DIRECTORS
* | Less than 1.0%. |
(1) | This information is based on Schedule 13G/A filed with the Securities and Exchange Commission on February 4, 2020 by Blackrock, Inc., 55 East 52nd Street, New York, New York 10055. |
(2) | This information is based on Schedule 13G/A filed with the Securities and Exchange Commission on February 12, 2020 by Dimensional Fund Advisors LP, 6300 Bee Cave Road, Building One, Austin, Texas 78746. |
(3) | This information is based on Schedule 13G/A filed with the Securities and Exchange Commission on February 12, 2020 by The Vanguard Group, Inc., PO Box 2600, V26, Valley Forge, Pennsylvania 19482-2600. |
(4) | Includes 106,080 shares held by George & Poppe Apostolou and 593 restricted shares. |
(5) | Includes 593 restricted shares. |
(6) | Includes 8,000 restricted shares. |
(7) | Includes 3,025 shares held in Mr. Graham’s individual retirement account and 8,000 restricted shares. Of total shares held, 19,264 are pledged as security. |
(8) | Includes 16,625 restricted shares. |
(9) | Includes 75,000 shares held by Universal Finance & Investments, LLC, voting and investment power over which is held by Mr. Madhu; 2,803 shares held in Mr. Madhu’s individual retirement account; 593 restricted shares; and 267 shares held by Mr. Madhu’s son. Of the shares held, 73,880 are pledged as security. |
(10) | Includes 91,295 shares held by Harish and Khyati Patel and 593 restricted shares. Of total shares held, 74,080 are pledged as security. |
(11) | Includes 447,000 shares held by Paresh & Neha Patel; 35,000 shares held in Mr. Patel’s individual retirement account; 165,000 shares issuable pursuant to options that are currently exercisable or become exercisable within 60 days; and 100,000 restricted shares. Excludes 275,000 shares issuable pursuant to options that are not currently exercisable or become exercisable within 60 days. |
(12) | Includes 200,000 shares held by Gregory & Rena Politis and 593 restricted shares. Of total shares held, 196,000 are pledged as security. |
(13) | Includes 80,000 shares held by HC Investment LLC, voting and investment power over which is held by Mr. Saravanos; 1,200 shares held by Anthony & Maria Saravanos as custodian for their son, Kostos Anthony Saravanos; 1,200 shares held by Mr. Saravanos as custodian for his niece, Elliana Tuite; 1,200 shares held by Mr. Saravanos as custodian for his nephew, Nolan Tuite; and 8,000 restricted shares. |
20 | HCI Group, Inc.2020 Proxy Statement |
MATTER NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Company’s Audit Committee has appointed Dixon Hughes Goodman, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019. At the Annual Meeting,2020, and shareholders will be asked to ratify the Audit Committee’s appointment of Dixon Hughes Goodman, LLP asat the Company’s independent registered public accounting firm.Annual Meeting. Regardless of the outcome of this vote, the Audit Committee will retain the sole authority to appoint the Company’s independent registered public accounting firm. If the appointment is not ratified, then the Audit Committee will reconsider its appointment. Even if the appointment is ratified, the Audit Committee may appoint a different independent registered public accounting firm for the Company.
Representatives from Dixon Hughes Goodman, LLP will be present at the Annual Meeting. The representativesThey will have an opportunity to make a statement and will be available to respond to appropriate questions.
The persons named in the enclosed proxy card intend, unless otherwise directed, to vote such proxy “FOR” ratification of the appointment of Dixon Hughes Goodman, LLP as the Company’s independent registered public accounting firm. This proposal will be approved if the number of votes for the proposal exceeds the number of votes against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTEFOR RATIFICATION OF THE APPOINTMENT OF DIXON HUGHES GOODMAN, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM — ITEM 2 ON YOUR PROXY CARD. |
The following table sets forth the aggregate fees for services related to the years ended December 31, 2018 and 2017 provided by Dixon Hughes Goodman, LLP, our principal accountant:accountant, related to the years ended December 31, 2019 and 2018:
2019 | 2018 | |||||||||||||||
2018 | 2017 | |||||||||||||||
Audit Fees(1) | $ | 385,000 | $ | 370,000 | $ | 390,000 | $ | 385,000 | ||||||||
All Other Fees(2) | 9,000 | 75,000 | — | 9,000 | ||||||||||||
Total | $ | 394,000 | $ | 445,000 | $ | 390,000 | $ | 394,000 |
(1) | Audit Fees represent fees billed for professional services rendered for the audit of our annual financial statements, review of our quarterly financial statements included in our quarterly reports on Form10-Q, and audit services provided in connection with other statutory and regulatory filings. |
(2) | All Other Fees represent fees billed for services provided to us not otherwise included in the category above. |
HCI Group, Inc.2020 Proxy Statement | 21 |
MATTER NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
All auditing services andnon-auditing services arepre-approved by the Audit Committee. The Audit Committee delegates this authority to the ChairmanChair of the Audit Committee for situations whenpre-approval by the full Audit Committee is not convenient. Any decisions made by the ChairmanChair of the Audit Committee must be disclosed at the next Audit Committee meeting.
To the Board of Directors of HCI Group, Inc. The Audit Committee oversees the financial reporting processes of HCI Group, Inc. on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee has reviewed the audited financial statements in the Annual Report with management and discussed with management the quality, in addition to the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee has reviewed with representatives of Dixon Hughes Goodman, LLP, the Company’s independent registered public accounting firm responsible for auditing the Company’s financial statements and expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States of America, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed under auditing standards adopted by the Public Company Accounting Oversight Board. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence. The Audit Committee has discussed with representatives of Dixon Hughes Goodman, LLP the overall scope and plans for their audit. The Audit Committee met with representatives of Dixon Hughes Goodman, LLP, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors the inclusion of the audited financial statements in the Company’s Annual Report on Form10-K for the year ended December 31, 2019 |
MATTER NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMfor filing with the Securities and Exchange Commission.
The Audit Committee has appointed Dixon Hughes Goodman, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020.
To The Board of Directors of HCI Group, Inc.
The Audit Committee oversees the financial reporting processes of HCI Group, Inc. on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee has reviewed the audited financial statements in the Annual Report with management and discussed with management the quality, in addition to the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.
The Audit Committee has reviewed with representatives of Dixon Hughes Goodman, LLP, the Company’s independent registered public accounting firm responsible for auditing the Company’s financial statements and expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States of America, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed under auditing standards adopted by the Public Company Accounting Oversight Board. The Audit Committee has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence.
The Audit Committee has discussed with representatives of Dixon Hughes Goodman, LLP the overall scope and plans for their audit. The Audit Committee met with representatives of Dixon Hughes Goodman, LLP, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors the inclusion of the audited financial statements in the Company’s Annual Report on Form10-K for the year ended December 31, 2018 for filing with the Securities and Exchange Commission.
The Audit Committee has appointed Dixon Hughes Goodman, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019.
AUDIT COMMITTEE
Wayne Burks, Chairman
George ApostolouChair
Harish M. Patel
Loreen Spencer
22 | HCI Group, Inc.2020 Proxy Statement |
MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
We are seeking an advisory vote to approve the compensation of our named executive officers for 2019.
Thissay-on-pay vote is advisory andnon-binding on our Board, but our Compensation Committee will take into consideration the outcome of the vote when making future compensation decisions. At the 2019 Annual Meeting of Shareholders, 94.16% of the votes cast favored oursay-on-pay proposal and 76.35% of the votes cast approved the Board recommendation to hold thesay-on-pay vote annually.
Our Board believes that our current executive compensation program appropriately links the compensation realized by our executive officers to performance and properly aligns the interests of executive officers with those of our shareholders. A description of our executive compensation programs and a discussion of the pay decisions for 2019 for the Chief Executive Officer and our other named executive officers are included in Compensation Discussion and Analysis below.
Our Board recommends that our shareholders vote in favor of the following resolution:
“RESOLVED” that the shareholders approve compensation paid to the Company’s named executive officers as disclosed in the Company’s Proxy Statement with respect to the Company’s 2020 Annual Meeting of Shareholders pursuant to Item 402 of RegulationS-K including the Compensation Discussion and Analysis section, the Summary Compensation Table and other compensation tables and related discussion and disclosure.
Our engagement with shareholders continued over the past twelve months, when the Chairman of our Compensation Committee had discussions with 11 of our 20 largest shareholders, representing nearly 50% of our outstanding shares.
Our Board believes that our current executive compensation program appropriately links compensation realized by our executive officers to our performance and properly aligns the interests of our executive officers with those of our shareholders. A description of our executive compensation programs and a discussion of the pay decisions for 2018 for the chief executive officer and our other named executive officers are included in Compensation Discussion and Analysis below.
Our Board recommends that our shareholders vote in favor of the following resolution:
“RESOLVED” that the shareholders approve compensation paid to the Company’s named executive officers as disclosed in the Company’s