ASSURED GUARANTY LTD. 2004 LONG-TERM INCENTIVE PLAN
The 2004 Long-Term Incentive Plan, as amended, provides for the grant of
non-qualified and incentive stock options, stock appreciation rights, full value awards, which include awards such as restricted shares, RSUs or
performance share units,PSUs, and cash incentive awards to employees selected by
theour Compensation Committee.
TheOur Compensation Committee specifies the terms of the award, including the vesting period applicable to the award, at the time it grants the award to the employee, and includes the terms in an award agreement between the employee and our Company.
•PSUs were granted in 20182020 through 20212023 that will vest at the end of a three-year performance period if certain performance conditions are satisfied (for PSUs granted through 2018, based on the highest 40-day average share price during the last eighteen months of such period exceeding certain share price hurdles, and for PSUs granted in 2019, 2020 and 2021, based(based on growth in core adjusted book value per share relative to a target and on TSR relative to the Index) and if the participant continues to be employed through the end of such three-year period, with limited exceptions as described below.
77 Assured Guaranty 2023 Proxy Statement
The participant is entitled to
pro-rata vesting of the
performance share unitsPSUs in the event of termination prior to the end of the vesting period due to death or disability, an involuntary termination without cause, a voluntary termination for good reason or, a voluntary termination due to retirement, if certain requirements are met and if, and only to the extent that, the performance conditions are satisfied at the end of the applicable performance period. In the event of a change in control, the
performance share unitsPSUs vest only to the extent that the performance conditions are satisfied at the time of the change in control and only if the participant remains employed through the end of the three-year performance period, provided, however that the vesting of the
performance share unitsPSUs shall be accelerated following such change in control in the event of termination following the change in control but prior to the end of the vesting period due to death or disability, an involuntary termination without cause, a voluntary termination for good reason or in the event that the acquirer does not agree to continue such award following the change in control.
•RSUs were granted from 20182020 through 20212023 that will vest at the end of a three-year vesting period if the participant remains employed through the end of such period. Such vesting may be accelerated in the event of termination prior to the end of the vesting period due to death or disability or in the event of a change in control where the acquirer does not agree to continue such award following the change in control. Additionally, the participant may remain entitled to continued vesting of such RSUs following an involuntary termination without cause, a voluntary termination for good reason or a voluntary termination due to retirement during the vesting period if certain requirements are met, including the participant signing of a release of claims against our Company and continuing to comply with applicable restrictive covenants.
ASSURED GUARANTY LTD. PERFORMANCE RETENTION PLAN
CEO PAY RATIO
In 2022, the annual total compensation of Dominic J. Frederico, our President and Chief Executive Officer was $13,606,009. The
Performance Retention Planannual total compensation of our median employee was
established in 2006 to permit$310,148. As a result, the
grant of cash-based awards to selected employees and give to the Compensation Committee greater flexibility in establishing the terms of performance retention awards, including the ability to establish different performance periods and performance objectives. PRP awards may be treated as nonqualified deferred compensation subject to the rules of Section 409Aratio of the
Internal Revenue Code.From 2008 through 2014,annual total compensation of our Company integrated PRP awards into its long-term incentiveCEO to our median employee was 43.9 to 1.
We identified the median employee by examining the 2022 annual total compensation program for the executive officers and certain selected employees. The executive officers stopped receiving PRP awards beginning in 2015 and the last outstanding PRP award to anyoneall individuals, excluding our CEO, who was an executive officer as of December 31, 2017 vestedwere employed by us on December 31, 2017. However, Ms.2022. We included all employees, whether employed on a full-time or part-time basis, and including all employees resident outside of the U.S. We did not make any assumptions, adjustments or estimates with respect to annual total compensation. We annualized the compensation for any full-time employees who were not employed by us for all of 2022. We calculated the total compensation for our CEO and all of our employees excluding our CEO using the same methodology we use to calculate Total Annual Compensation for our named executive officers as set forth in the 2022 Summary Compensation table appearing earlier in this proxy statement.
PAY VERSUS PERFORMANCE
The following table provides compensation and performance information for 2022, 2021 and 2020 for our CEO and for our other named executive officers as a group.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(1)(2) | Average Summary Compensation Table Total for non-PEO Named Executive Officers(1) | Average Compensation Actually Paid to non-PEO Named Executive Officers(1)(2) | Value of Initial Fixed $100 Investment Based on: | Net Income (millions)(5) | ABV per Share(6) |
Total Shareholder Return(3) | Peer Group Total Shareholder Return(4) |
| 2022 | $13,606,009 | $28,885,520 | $3,662,609 | $6,060,272 | $135 | $113 | $137 | $142 |
| 2021 | $14,536,062 | $23,817,693 | $4,277,028 | $5,930,256 | $107 | $128 | $419 | $131 |
| 2020 | $10,876,524 | $4,540,198 | $3,346,954 | $2,208,833 | $66 | $99 | $368 | $115 |
(1) The PEO for each year reported is Dominic J. Frederico. The non-PEO named executive officers for each year reported are as follows:
•2022: Robert A. Bailenson, Ling Chow, was granted PRPDavid A. Buzen, Stephen Donnarumma
•2021: Robert A. Bailenson, Ling Chow, David A. Buzen, Russell B. Brewer II
•2020: Robert A. Bailenson, Ling Chow, David A. Buzen, Russell B. Brewer II
(2) SEC rules require certain adjustments be made to the "Summary Compensation Table" totals to determine "compensation actually paid" as reported in the "Pay versus Performance Table" above. For purposes of the equity award adjustments shown below, no equity awards before becoming anwere cancelled due to a failure to meet vesting conditions. The following table details the applicable adjustments that were made to determine "compensation actually paid" (all amounts are averages for the non-PEO named executive officer, includingofficers, who we refer to as Other NEOs in February 2017, so her last PRP award vested onthe following table):
Assured Guaranty 2023 Proxy Statement 78
| | | | | | | | | | | | | | | | | | | | | | | |
| Year | Executive(s) | "Summary Compensation Table" Total | Deduct Stock Award Included in "Summary Compensation Table" | Add Year-end Value of Unvested Equity Awards Granted in Year | Change in Value of Unvested Equity Awards Granted in Prior Years | Change in Value of Equity Awards Granted in Prior Years which Vested in Year | "Pay versus Performance Table" Compensation Actually Paid |
|
| 2022 | PEO | $13,606,009 | $(8,661,779) | $7,576,157 | $13,873,696 | $2,491,437 | $28,885,520 |
| Other NEOs | $3,662,609 | $(1,252,978) | $1,095,933 | $2,149,270 | $405,438 | $6,060,272 |
| 2021 | PEO | $14,536,062 | $(9,239,643) | $10,089,728 | $6,588,781 | $1,842,765 | $23,817,693 |
| Other NEOs | $4,277,028 | $(1,658,182) | $1,810,742 | $1,168,687 | $331,981 | $5,930,256 |
| 2020 | PEO | $10,876,524 | $(5,964,855) | $5,368,531 | $(5,219,036) | $(520,966) | $4,540,198 |
| Other NEOs | $3,346,954 | $(1,005,208) | $904,717 | $(956,798) | $(80,832) | $2,208,833 |
(3) Represents our Company's cumulative TSR for the measurement period December 31, 2020. Generally, for awards granted before 2020, each PRP award was divided into three installments, with 25%2019 through December 31 of the award allocated to a performanceyear indicated.
(4) Represents the cumulative TSR of the Russell Mid-Cap Financial Services Index for the measurement period that includesDecember 31, 2019 through December 31 of the year indicated. The Russell Mid-Cap Financial Services Index is the peer group used by our Company for purposes of Item 201(e) of Regulation S-K under the Exchange Act in our Annual Report on Form 10-K for the year ended December 31, 2022.
(5) Represents "Net Income (loss)" in our Company's Consolidated Income Statements included in our Annual Report on Form 10-K for each of the awardyears ended December 31, 2022, 2021 and the next year, 25% of the award allocated to a performance period that includes the year of the award and the next two years, and 50% of the award allocated to a performance period that includes the year of the award and the next three years. Each installment of an award vested if the participant remained employed through the end of the performance period for that installment (or vested on the date of the participant’s death, disability, or retirement if that occurred during the performance period). Payment for each performance period was made at the end of that performance period. One half of each installment was increased or decreased in proportion to the increase or decrease of core2020.
(6) Our Company-selected measure is ABV per share, which is described below.
The following graphs show the relationship between executive compensation actually paid and, respectively, ABV per share, TSR, and net income.
79 Assured Guaranty 2023 Proxy Statement
Given the methodology for calculating compensation actually paid and the large component of multi-year equity awards in our executive compensation program, the movement of the price of our Common Shares over the relevant year has a large impact on the calculation of compensation actually paid to our CEO and our other named executive officers as a group during that year. Additionally, we provide our CEO and our other named executive officers their short-term and long-term incentive awards in the February following the year for which their performance is measured in making those awards, further obscuring any relationship between the performance measures and calculated compensation actually paid in the graphs above.
ABV per share is a measure of the intrinsic value of our Company on a per share basis, so an increase in ABV per share reflects the building of value for our shareholders. TSR captures the view of the equity markets to our efforts. The graphs above demonstrate some correlation between these measures and the calculated compensation actually paid. On the other hand, as described in the Compensation Discussion and Analysis — Executive Compensation Program Structure and Process, the nature of the accounting
Assured Guaranty 2023 Proxy Statement 80
model for the financial guaranty business, where only approximately 2% of the premiums we earned in 2022 related to new financial guaranty policies we wrote in 2022, shows how little impact activity in our core insurance business has on our net income in a given year, and the graph above demonstrates little correlation between net income and calculated compensation actually paid.
The following non-ranked list shows the financial performance measures we view as the most important to link executive compensation actually paid during the most recent fiscal year to our performance period,during that same period:
•ABV per share
•Operating income per diluted share
•Operating ROE
•Operating shareholders’ equity per share
•PVP
•TSR
The first five of these measures are non-GAAP financial measures and
one halfare described under “Non-GAAP Financial Measures” in the Compensation Discussion and Analysis. The Compensation Discussion and Analysis also describes how we use these measures, in some instances with further adjustments, in the calculation or award of
each installment was increased or decreased in proportion to the core operating ROE during the performance period. However, if, during the performance period, a participant died or became permanently disabled while employed, the amount for any such incomplete performance period shall have equaled the portion of the award allocated to such performance period. Core operating ROE and core ABV are defined in each PRP award agreement.75
executive compensation. PROPOSAL NO. 3:
ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS Our shareholders have the opportunity to cast an advisory vote on how often we should include a say-on-pay proposal, such as Proposal No. 2, in our proxy materials for future shareholder meetings. Under this Proposal No. 3, shareholders may indicate whether they would prefer to have the say-on-pay vote every year, every two years, or every three years. This vote is being conducted in accordance with the requirements of Section 14A of the Exchange Act and the related rules of the SEC. Proposal No. 3 is Item 3 on the proxy card.
The advisory vote by the shareholders on frequency is distinct from the advisory vote on the compensation of our named executive officers. This proposal deals with the issue of how frequently an advisory vote on compensation should be presented to our shareholders and, in this regard, we are soliciting your advice on whether the compensation of our named executive officers be submitted to shareholders for an advisory vote every year, every two years, or every three years. You may vote for one of these three options or you may abstain from making a choice.
Our Board of Directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate option for the Company, and therefore our Board of Directors recommends that you vote for a one-year interval for the advisory vote on executive compensation.
In formulating its recommendation, our Board of Directors considered that named executive officer compensation is evaluated, adjusted and approved on an annual basis, and that the Company has had an annual advisory vote on executive compensation since 2011. Our Board believes that the annual advisory vote has fostered communication with shareholders on compensation matters and that continuing to have an advisory vote on executive compensation annually will allow our shareholders to continue to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year. Additionally, an annual advisory vote on executive compensation is consistent with our policy of seeking input from, and engaging in discussions with, our shareholders on corporate governance matters and our executive compensation philosophy, policies and practices.
We understand that our shareholders may have different views as to what is the best approach for the Company, and we look forward to hearing from our shareholders on this Proposal.
The option of one year, two years or three years that receives the highest number of votes cast by shareholders will be the frequency for the advisory vote on executive compensation that has been selected by shareholders. Although the vote is non-binding, our Compensation Committee and our Board of Directors value the opinions of the shareholders and will consider the outcome of the vote carefully when determining the frequency of the shareholder vote on executive compensation.
| | | | | | | | |
| R | | The board of directors recommends a vote for a frequency of "one year" for future non-binding shareholder votes on compensation of our named executive officers. |
Assured Guaranty 2023 Proxy Statement 84
PROPOSAL NO. 4:
APPROVAL OF EMPLOYEE STOCK PURCHASE PLAN AS AMENDED
We will present a proposal at the Annual General Meeting to approve the Assured Guaranty Ltd. Employee Stock Purchase Plan (which, as amended from time to time, we refer to as the ESPP), as amended through the fourth amendment to the ESPP, which we refer to as the Fourth Amendment. Proposal No. 4 is Item 4 on the proxy card.
On February 22, 2023, our Board of Directors adopted the Fourth Amendment, subject to our shareholders' approval. The Fourth Amendment will increase the number of Assured Guaranty Ltd. Common Shares reserved for delivery under the ESPP by 350,000 Common Shares, for a total of 1,200,000 Common Shares, and will become effective if the shareholders approve it. A summary of the material provisions of the ESPP is set forth below. A copy of the ESPP, as amended through the Fourth Amendment, is set forth in Exhibit A.
The ESPP was established in January 2005 with 100,000 Common Shares. Previous amendments in each of May 2009, May 2013 and May 2019 increased the Common Shares available under the plan by 250,000. As of February 22, 2023, under the current plan limit of 850,000 Common Shares, approximately 65,000 shares remained available for future issuance under the ESPP.
The ESPP is a broad-based plan that gives our eligible employees who elect to participate the right to purchase our Common Shares using amounts deducted from their pay during consecutive “subscription periods.” The ESPP is intended to qualify as an “employee stock purchase plan” under Internal Revenue Code Section 423, which we refer to as IRC Section 423, and therefore offers favorable tax treatment for certain purchases of our Common Shares made under the ESPP. For more information, see “United States Income Tax Considerations” below in this section. The first subscription period began January 1, 2005.
If our shareholders do not approve the ESPP as amended through the Fourth Amendment, the increase in shares will not take effect, and only a limited number of our Common Shares will be available for purchase under the ESPP in 2023 and beyond.
PURPOSE
The purpose of the ESPP is to provide our eligible employees with an opportunity to purchase our Common Shares through accumulated payroll deductions. Because our Board of Directors believes it is important for our employees to have an equity interest in our Company, our Board of Directors has approved the Fourth Amendment in order to increase the number of our Common Shares available for purchase under the ESPP, and is recommending it to shareholders for approval.
GENERAL DESCRIPTION
The ESPP provides that it will be administered by a committee of two or more members of our Board of Directors of our Company who are selected by our Board. Our Board has designated the Compensation Committee to serve as the committee administering the ESPP. The Compensation Committee has the authority to manage and control the operation and administration of the ESPP, including the authority to interpret the ESPP and to establish, amend and rescind rules and regulations relating to the ESPP. The Compensation Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers under the ESPP to any person or persons selected by it, subject to certain limitations. Any such allocation or delegation may be revoked by the Compensation Committee at any time.
If our shareholders approve the Fourth Amendment, the maximum number of our Common Shares available for sale under the ESPP will be 1,200,000. The Common Shares with respect to which awards may be made under the ESPP will be:
•shares currently authorized but unissued or
•shares purchased in the open market by one of our direct or indirect wholly-owned subsidiaries (as determined by the President, Chief Financial Officer or General Counsel of our Company). We may contribute to the subsidiary an amount sufficient to accomplish the purchase in the open market of the Common Shares to be acquired (as determined by the Chairman or any Executive Vice President of our Company).
85 Assured Guaranty 2023 Proxy Statement
Subject to the requirements of IRC Section 423, the Compensation Committee will adjust the number of shares available under the ESPP for any subdivision or consolidation of shares or other capital readjustment, payment of stock dividend, stock split, combination of shares or recapitalization or any other increase or reduction of the number of Common Shares outstanding that is effected without receiving compensation therefor in money, services or property.
If our shareholders receive any Common Shares or other securities or property pursuant to any reorganization, merger, consolidation or plan of exchange with another corporation, or if we distribute securities of another corporation to our shareholders, then, subject to the requirements of IRC Section 423, an appropriate number of shares of each class of stock or amount of other securities or property which were distributed to our shareholders in respect of such shares will be substituted for the shares subject to outstanding rights to purchase Common Shares under the ESPP.
Except as otherwise permitted under Internal Revenue Code Section 424 and SEC Rule 16b-3, neither the amount of any payroll deductions made with respect to a participant's compensation nor any participant's rights to purchase Common Shares under the ESPP may be pledged or hypothecated, nor may they be assigned or transferred other than by will and the laws of descent and distribution. During the lifetime of the participant, the rights provided to the participant under the ESPP may be exercised only by the participant.
The ESPP is not subject to the Employee Retirement Income Security Act of 1974, as amended or qualified under Internal Revenue Code Section 401(a).
DURATION, AMENDMENT AND TERMINATION
The ESPP will be unlimited in duration unless it is terminated pursuant to its provisions, which provide that our Board may amend or terminate the ESPP at any time. With limited exceptions specified in the ESPP, no amendment or termination of the ESPP may adversely affect the rights of a participant with respect to Common Shares that have been purchased before such amendment is adopted by our Board. No amendment of the ESPP may be made without approval of the shareholders of the Company to the extent that such approval is required to maintain compliance with the requirements of IRC Section 423.
ELIGIBILITY
All employees of our Company and each of our subsidiaries that, with our consent, adopts the ESPP for the benefit of its eligible employees (which we refer to collectively as the Employers) who have been employed for more than 500 hours and for longer than six months, and whose customary employment is greater than 20 hours per week and more than five months in any calendar year, are eligible to participate in the ESPP. However, only those individuals employed by the Employers on the first day of a subscription period may participate in the ESPP during that subscription period. In addition, certain restrictions apply to employees who own, or who would own upon the exercise of any rights extended under the ESPP and the exercise of any other options (whether qualified or non-qualified), shares possessing 5% or more of the total combined voting power or value of all classes of our stock or of any parent or subsidiary corporation. Certain restrictions also apply to employees whose rights to purchase Common Shares under all employee stock purchase programs the Employers maintain would accrue at a rate that exceeds $25,000 of fair market value (determined at the time the purchase rights are granted) for each calendar year in which the purchase rights are outstanding. As of February 22, 2023, our Company and our subsidiaries had approximately 414 employees eligible to participate in the ESPP.
PARTICIPATION
The ESPP gives participants the right to purchase our Common Shares using amounts deducted from their pay during consecutive “subscription periods.” Our Compensation Committee, with the approval of our Board, has established six-month subscription periods that will begin on January 1 and July 1 of each year. The Compensation Committee has the authority to change the length and/or frequency of the subscription periods, but the periods may not extend beyond one year.
Eligible employees can become participants in the ESPP for any subscription period by filing a written payroll deduction authorization (referred to as a “subscription agreement” or an “enrollment form”) with the Compensation Committee. The subscription agreements authorize payroll deductions from the employees' pay for contributions to the ESPP for that subscription period.
When participants file subscription agreements, their participation in the ESPP generally begins on the first day of the subscription period to which their subscription agreements relate and continues until the end of the subscription period or, if earlier, until the participants elect to terminate participation as described below or until the ESPP is terminated. At the time participation begins for a subscription period, participants are granted an “option” to purchase our Common Shares on the exercise date for that subscription period. The amount of Common Shares to be purchased is determined based on the accumulated payroll deductions and the purchase price applicable to the option. The participants have no interest in our Common Shares covered by the subscription agreement until the
Assured Guaranty 2023 Proxy Statement 86
shares are delivered. Neither the ESPP nor any contract in connection with the ESPP gives any person a right to a lien on the funds deducted from participants' pay pursuant to the ESPP.
PAYROLL DEDUCTIONS
At the time participants file subscription agreements, they elect to have payroll deductions made on each pay day during the applicable subscription period. Participants may choose a reduction of either a full percentage of their compensation or a specified whole dollar amount. Whether they elect a dollar amount or a percentage, the total amount of the payroll deductions for the subscription period cannot exceed 10% of their compensation for that subscription period. For this purpose, “compensation” means salary, except that if a participant does not receive salary, compensation is based on such other amount of basic compensation as determined by the Compensation Committee. Participants do not earn interest on amounts deducted from their paychecks and, prior to the time they are used to buy Common Shares under the ESPP, the funds are available for general use by the Employers and may be subject to the claims of the Employers' creditors.
After the subscription period begins, participants may not increase or decrease the rate of their payroll deductions for that subscription period, unless their participation terminates, as described below.
TERMINATION OF PARTICIPATION
Participants may discontinue participation in the ESPP for any subscription period. If a participant chooses to terminate participation, the total amount that has been deducted during that subscription period will be returned, without interest (to the extent the amount has not been used to exercise options under the ESPP). If deductions are withdrawn, the option for that subscription period will be terminated and no further payroll deductions will be made for that subscription period.
If a participant's employment with the Employers terminates, the total amount that has been deducted during that subscription period will be returned, without interest (to the extent the amount has not been used to exercise options under the ESPP), and the option will be terminated.
PURCHASE OF SHARES
The amounts that have been deducted from participants' paychecks during a subscription period will be used on the “exercise date” to purchase full Common Shares. An exercise date is generally the last trading day of a subscription period. The number of shares purchased will be equal to the total amount, as of the exercise date, that has been deducted from the participants' paychecks for that subscription period, divided by the purchase price, rounded down to the next full share (subject to any limits on the number of Common Shares that may be purchased with respect to a subscription period as may be imposed by the Compensation Committee).
The “purchase price” is 85% of the lower of
•the fair market value of a Common Share on the first day of the subscription period or
•the fair market value of a Common Share on the exercise date (or such higher price as the Compensation Committee may determine from time to time).
The closing price with respect to a Common Share on March 10, 2023 was $53.51 per share. In no event will the purchase price be less than the par value of a Common Share. Limitations may apply with respect to the amount and value of Common Shares that a participant may purchase under the ESPP for any subscription period. No participant may purchase Common Shares with a value in excess of $25,000 under the ESPP (and any other employee stock purchase plan) in any calendar year.
If a participant decides he or she does not wish to purchase Common Shares during a subscription period, the participant may notify us prior to the exercise date (or at such other time as the Compensation Committee may establish) that the participant elects not to purchase the Common Shares he or she is entitled to purchase. To the extent the amounts deducted from the participant's paychecks are not used to purchase full Common Shares, those amounts will be returned without interest. The options expire on the last day of the subscription period.
UNITED STATES INCOME TAX CONSIDERATIONS
The following is a brief description of the U.S. federal income tax treatment that will generally apply with respect to purchases under the ESPP by participants who are subject to U.S. income tax. This discussion is based on U.S. federal tax laws and regulations presently in effect, which are subject to change, and the discussion does not purport to be a complete description of the U.S. federal income tax
87 Assured Guaranty 2023 Proxy Statement
aspects of the ESPP. Participants may also be subject to foreign, state and/or local taxes in connection with purchases under the ESPP, which could differ significantly from U.S. federal tax consequences. The Company suggests that participants consult with their individual tax advisors to determine the applicability of the tax aspects of purchases to their personal circumstances.
The ESPP is intended to qualify under IRC Section 423. Under this section, a participant will not be required to recognize taxable income at the time shares are purchased under the ESPP. The participant may, however, become liable for tax upon the disposition of the Common Shares acquired, as described below.
In the event that shares acquired pursuant to the ESPP are not sold or disposed of (including by way of gift) prior to two years after the first day of a subscription period or one year after the relevant exercise date, the lesser of
•the excess of the fair market value of the shares at the time of such disposition over the purchase price or
•the excess of the fair market value of the shares at the date of grant over an amount equal to what the purchase price would have been if it had been computed as of the date of the grant
will be treated as ordinary income to the participant. Any further gain on disposition will be treated as long-term capital gain and any loss will be treated as a capital loss.
In the event the participant sells or disposes of the shares before the expiration of the holding periods described above, the excess of the fair market value of the shares on the exercise date over the purchase price will be treated as ordinary income to the participant. This excess will constitute ordinary income in the year of sale or other disposition even if no gain is realized on the sale or a gratuitous transfer of the shares is made. The balance of any gain will be treated as a capital gain and will be treated as a long-term capital gain if the shares have been held for more than one year. If the shares are sold for less than their fair market value on the exercise date, the participant may recognize a capital loss equal to the difference between the sales price and the value of the shares on the exercise date.
Our Company is not currently subject to U.S. corporate income taxes. However, if a sale or disposition is made before the expiration of the holding periods described above, by a participant employed by a subsidiary that is a U.S. taxpayer, the subsidiary will be entitled to a deduction for its taxable year in which such sale or disposition occurs equal to the amount of income includible in the participant's gross income as ordinary income.
ESPP BENEFITS
The benefits to be derived under the ESPP by any individual are currently undeterminable. Participation in the ESPP is entirely voluntary and benefits will only be realized for those employees who choose to allocate a portion of their compensation to the purchase of our Common Shares. The total number of shares to be purchased during each subscription period cannot be determined in advance, as it will vary based on individual elections and the price of the Common Shares at the exercise date.
| | | | | |
| Name and Principal Position | Number of Common Shares Purchased during 2022 |
| Dominic J. Frederico, President and Chief Executive Officer | 489 |
| Robert A. Bailenson, Chief Financial Officer | – |
David Buzen,Chief Investment Officer and Head of Asset Management | 492 |
| Ling Chow, General Counsel and Secretary | – |
| Stephen Donnarumma, Chief Credit Officer | 332 |
| Executive Officers as a group (7 persons) | 1,805 |
| Non-Executive Directors as a group | – |
| Non-Executive Employees as a group | 51,648 |
| | | | | | | | |
| R | | Our board of directors recommends approval of the Assured Guaranty Ltd. Employee Stock Purchase Plan as amended through the Fourth Amendment. |
Assured Guaranty 2023 Proxy Statement 88
PROPOSAL NO. 5:
APPOINTMENT OF INDEPENDENT AUDITOR The appointment of our independent auditor is approved annually by our shareholders, who also annually authorize
theour Board of Directors, acting through its Audit Committee, to set the remuneration for our independent auditor. Proposal No.
35 is Item
35 on the proxy card.
At the recommendation of the Audit Committee,
theour Board of Directors recommends that shareholders appoint PricewaterhouseCoopers LLP as our independent auditor for the year ending December 31,
2021,2023, and that shareholders authorize
theour Board of Directors, acting through its Audit Committee, to set the fees for our independent auditor. In making its recommendation with respect to the engagement of our independent auditor, the Audit Committee reviewed both the audit scope and estimated fees for professional services for the coming year.
PwC served as our independent auditor for the year ended December 31,
2020.2022. Our audited financial statements for the year ended December 31,
20202022 will be presented at the Annual General Meeting. Representatives of PwC will attend the Annual General Meeting and will have an opportunity to make a statement if they wish. They will also be available to answer questions at the meeting.
INDEPENDENT AUDITOR FEE INFORMATION
The following table presents fees for professional audit services rendered by PwC for the audit of our annual consolidated financial statements for
20202022 and
20192021 and fees for other services rendered by PwC in
20202022 and
2019. | | | | | | | | |
| | | |
| | | 2020 | | | 2019 | |
| | |
Audit fees(1) | | $ | 9,212,000 | | | $ | 7,906,500 | |
| | |
Audit-related fees(2) | | $ | 1,428,000 | | | $ | 2,285,000 | |
| | |
Tax fees(3) | | $ | 250,000 | | | $ | 250,000 | |
| | |
All other fees(4) | | $ | 4,000 | | | $ | 494,000 | |
(1) | We paid audit fees, including costs, for the years ended December 31, 2020, and December 31, 2019, for professional services rendered in connection with:
|
2021. | | | | | | | | |
| 2022 | 2021 |
Audit fees(1) | $9,146,500 | $9,064,000 |
Audit-related fees(2) | $723,000 | $855,000 |
Tax fees(3) | $332,000 | $332,000 |
| All other fees | $5,000 | $4,000 |
(1) We paid audit fees, including costs, for the years ended December 31, 2022, and December 31, 2021, for professional services rendered in connection with:
•the audits of our consolidated financial statements, of management’s assessment of internal controls over financial reporting and of the effectiveness of these controls
•the statutory and GAAP audits of various subsidiaries
•review of quarterly financial statements
(2) | Audit-related fees for the years ended December 31, 2020 and December 31, 2019 related to due diligence services for potential acquisitions and potential investments by funds managed by the Company, audits of our employee benefit plans, audit procedures not required by statute or regulation, agreed upon procedures related to our proxy statement, and agreed upon procedures related to collateralized loan obligations.
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(3) | Of the total amount of tax fees for 2020 and 2019, all fees related to tax compliance. Compliance-related tax fees for 2020 and 2019 were for professional services rendered in connection with the preparation of the 2019 and 2018 federal tax returns.
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(4) | Fees for 2020 were not significant, while fees for 2019 primarily related to advice and consultations regarding laws, rules and regulations in global jurisdictions.
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•SEC registration statements
(2) Audit-related fees for the years ended December 31, 2022 and December 31, 2021 related to due diligence services for potential strategic transactions, audits of our employee benefit plans, audit procedures not required by statute or regulation, agreed upon procedures related to our proxy statement, and agreed upon procedures related to collateralized loan obligations.
(3) Tax fees for the years ended December 31, 2022 and December 31, 2021 related to both tax compliance and tax consulting services. Compliance-related tax fees for 2022 and 2021 were primarily for professional services rendered in connection with the preparation of the 2021 and 2020 federal tax returns. Compliance-related tax fees for 2022 also included a tax general & administrative expenses capitalization analysis and tax depreciation services. Tax consulting fees for 2022 and 2021 related to transfer pricing services and other professional services.
PwC also provides audit services to certain unconsolidated funds managed and advised by Assured Guaranty Ltd. subsidiaries. Fees related to these audits were
$4.1$4.5 million in
20202022 and are not reflected in the table above.
89 Assured Guaranty 2023 Proxy Statement
PRE-APPROVAL POLICY OF AUDIT AND NON-AUDIT SERVICES The Audit Committee
pre-approved all of the fees described above. The Audit Committee has adopted policies and procedures for the
pre-approval of all audit and permissible
non-audit services provided by our independent auditor, PwC. The Audit Committee provides a general
pre-approval of certain audit and
non-audit services on an annual basis. The types of services that may be covered by a
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