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BOARD AND CORPORATE GOVERNANCE MATTERSBoard and Corporate Governance Matters

Director Nominee Selection Process

The Nominating/Corporate Governance Committee is responsible for identifying and evaluating director nominees and for recommending to the Board a slate of nominees for election at each Annual Meeting of Shareholders. The Committee has not established “minimum qualifications” for director nominees because it believes that rigid “minimum qualifications” might preclude the consideration of otherwise desirable candidates for election to the Board.

	1		The Committee evaluates director candidates based on a number of factors, including:	●the need or desirability of maintaining or expanding the size of the Board; ●independence; ●credentials, including, without limitation, business experience, experience within the insurance industry, educational background, professional training, designations and certifications; ●interest in, and willingness to serve on, the Board; ●ability to contribute by way of participation as a member of Board committees; ●financial expertise and sophistication; ●basic understanding of the Company’s principal operational and financial objectives, plans and strategies, results of operations and financial condition, and relative standing in relation to the Company’s competitors; and ●willingness to commit requisite time and attention to Board service, including preparation for and attendance at regular quarterly meetings, special meetings, committee meetings and periodic Board “retreats” and director education programs.
	2		Board diversity	With respect to diversity, while no formal policy has been proposed or adopted, heterogeneity of points of view, background, experience, credentials, gender, and ethnicity are considered desirable, and characterize the current composition of our Board.
	3		Sources for identifying potential Board members	The Committee and the Board consider a variety of sources when identifying individuals as potential Board members, including other enterprises with which current Board members are or have previously been involved and through which they have become acquainted with qualified candidates. The Company does not pay any third party a fee to assist in the identification or evaluation of candidates. The Committee will consider director nominations that are submitted in writing by shareholders in accordance with our procedures for shareholder proposals. See “Proposals of Shareholders” below. Such proposals must contain all information with respect to a proposed candidate as required by the SEC’s proxy rules, must address the manner in which the proposed candidate meets the criteria described above, and must be accompanied by the consent of such proposed candidate to serve as a director, if elected.

The Board’s Role and Responsibilities

Overview

The role of the Board of Directors is to oversee the affairs of the Company for the benefit of our shareholders and other constituencies, including our teammates, customers, suppliers, carrier partners, and the communities in which we do business. The Board strives to propel the success and continuity of the Company’s business through the selection of qualified management and through ongoing monitoring designed to assure the Company’s activities are conducted in a legal, responsible and ethical manner.

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BOARD AND CORPORATE GOVERNANCE MATTERSBoard and Corporate Governance Matters

Risk Oversight

The Board and its committees actively oversee management of the Company’s risks. They receive regular reports from senior management on areas of material risk to the Company, including operational, financial, strategic, acquisition-related, technological, competitive, reputational, legal, and regulatory risks.

Our Audit Committee Regularly reviews our financial statements, and our financial and other internal controls, and regularly receives reports from management, including the Company’s Senior Vice President of Technology, Innovation, and Digital Strategy and the Company’s Chief Information Security Officer, on the Company’s cybersecurity risks. Additionally, our Internal Audit Team and independent registered public accountants regularly identify and discuss with the Committee risks and related mitigation measures that may arise during their regular reviews of the Company’s financial statements and audit work, as applicable.			Our Compensation Committee Regularly reviews our executive compensation policies and practices, and other related employee benefits, and the risks associated with each. We believe our compensation policies and principles in conjunction with our internal oversight of those policies and principles reduce the possibility of imprudent risk-taking. We do not believe our compensation policies and principles are reasonably likely to have a material adverse effect on the Company.		Our Nominating/Corporate Governance Committee Considers issues associated with the independence of our Board, corporate governance and potential conflicts of interest.

While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors is regularly informed through attendance at committee meetings or through committee reports about such risks.

We believe the Board’s approach to risk oversight, as described above, helps assess various risks, make informed decisions, and evaluate emerging risks in a proactive manner for the Company.

Further, our financialFinancial Internal Audit Team is responsible for the performance of the internal audit function and for testing compliance with policies and procedures relating to our financial reporting and control environment. Our Information Technology Review Team is responsible for testing our systems and data security, andas well as information technology controls. Our Insurance Operations Review Team is responsible for the testing of our operational internal controls. Our Team Resources Review Team tests compliance with internal guidelines and state and federal employment law requirements relating to compensation and human resources, and regularly assesses risks and potential risks associated with our operations. These departments support the integration of our acquisitions and report to our Audit Committee on a quarterly basis, unless more frequent reports are necessary.

Our General Counsel is primarily responsible for enterprise risk management for the Company. On a quarterly basis, our General Counsel presents an enterprise risk management analysis to our Board of Directors, which includes an assessment of overall risk, risk mitigation and elimination priorities, anonymous ethics hotline reports and claims liabilities. Also, our Chief Executive Officer and General Counsel annually deliver a detailed presentation to our Board of Directors about risks associated with our business. This presentation includes extensive discussion, analysis and categorization of risks with respect to likelihood of occurrence, severity and frequency, as well as consideration of mitigating factors that contribute to lessening the potential adverse consequences associated with such risks (which can never, in any business, be fully eliminated). This presentation is prepared with input from the Company’s executive officers, including our segment leaders and our Senior Vice President of Technology, Innovation, and Digital Strategy, as well as our Chief Information Security Officer.

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BOARD AND CORPORATE GOVERNANCE MATTERSBoard and Corporate Governance Matters

Talent Management and Succession Planning

The Chairman of the Board, as well as our Chief Executive Officer, routinely discuss with the Board, generally in executive sessions, the Company’s management development and succession activities.

Communication with Directors

Interested parties, including shareholders, may communicate with our Board of Directors, with specified members or committees of our Board, with non-management directors as a group or with the Lead Independent Director, Wendell S. Reilly,H. Palmer Proctor, Jr., by sending correspondence to our Corporate Secretary at 220 S. Ridgewood Ave., Daytona Beach, Florida 32114, and specifying in such correspondence that the message is for our Board or for one or more of its members or committees. Communications will be relayed to directors no later than the next regularly scheduled quarterly meeting of the Board and Board Committees.

Corporate Governance Principles; Code of Business Conduct and Ethics; Code of Ethics for Chief Executive Officer and Senior Financial Officers

The Board of Directors has adopted Corporate Governance Principles, a Code of Business Conduct and Ethics, and a Code of Ethics for Chief Executive Officer and Senior Financial Officers, the full text of each of which can be found in the “Corporate Governance” section of the “Investor Relations” tab, under “Key Documents” on our website (www.bbinsurance.com)(www.bbinsurance. com), and each of which is available in print to any shareholder who requests a copy by writing to our Corporate Secretary at 220 S. Ridgewood Ave., Daytona Beach, Florida 32114.

Related Party Transactions Policy

Under our Related Party Transactions Policy, our General Counsel (or our Chief Executive Officer if the related party is our General Counsel or an immediate family member of our General Counsel) will review any potential Related Party Transaction to determine if it is subject to the Policy. If so, the transaction will be referred to the Nominating/Corporate Governance Committee for approval or ratification. If, however, the General Counsel determines that it is not practical to wait until the next meeting of the Nominating/Corporate Governance Committee, the Chair of the Nominating/Corporate Governance Committee shall have the authority to act on behalf of the Nominating/Corporate Governance Committee on whether to approve or ratify a Related Party Transaction (unless the Chair of the Nominating/Corporate Governance Committee is a Related Party in the Related Party Transaction). In determining whether to approve or ratify a Related Party Transaction, the Nominating/Corporate Governance Committee (or, as applicable, the Chair of the Nominating/Corporate Governance Committee) will consider, among other things, the benefits of the transaction to the Company, the potential effect of entering into the transaction on a director’s independence, the availability of other sources for the products or services, the terms of the transaction and the terms available to unrelated third parties generally. The Nominating/Corporate Governance Committee has authority to administer the Policy and to amend it as appropriate from time to time.

For purposes of our Policy, “Related Party Transactions” are transactions in which the Company is a participant, the amount involved exceeds $120,000 when all such transactions are aggregated with respect to an individual, and a “related party” had, has or will have a direct or indirect material interest. “Related parties” are our directors (including any nominees for election as directors), our executive officers, any shareholder who beneficially owns more than five percent (5%) of our outstanding common stock, and any firm, corporation, charitable organization or other entity in which any of the persons listed above is an officer, general partner or principal or in a similar position or in which the person has a beneficial ownership interest of ten percent (10%) or more.

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Board and Corporate Governance Matters

Relationships and Transactions with Affiliated Parties

J. Hyatt Brown, who is one of our directors and the father of J. Powell Brown, a director and President and Chief Executive Officer of the Company, and P. Barrett Brown, an Executive Vice President and President – Retail Segment, received compensation of $208,850,$211,219, consisting of $180,000 for services rendered to the Company in 2018,2019, including assistance with acquisitions and recruitment, $6,480 in matching contributions made by the Company to his 401(k) Plan account, $17,642$20,566 for reimbursement of amounts earned by the Company for personal lines insurance he purchased through the Company or its subsidiaries, $3,833and $4,173 for the cost of certain club membership dues, and $895 for car service expenses.dues. Mr. Hyatt Brown serves as Chairman of the Board of the Company.

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P. Barrett Brown, who is the son of Mr. Hyatt Brown and the brother of Mr. Powell Brown, serveswas named an Executive Vice President and President of the Company’s Retail Segment, effective January 6, 2020, and most recently served as a Senior Vice President of the Company and as a Regional President of the Company’s Retail Segment. He received compensation of $1,169,367$1,456,601, consisting of $1,414,154 for services rendered to the Company in 2018, as well as grants2019, $31,247 in cash dividends paid on granted PSP and 2010 SIP shares for which conditions of vesting other than time-based conditions have been satisfied, $11,200 in matching contributions made by the Company to his 401(k) Plan account. In addition, Mr. Barrett Brown received a grant under our 2010 Stock Incentive Plan (”(“2010 SIP”) in February 20182019 and a grant under our 2019 Stock Incentive Plan (“2019 SIP”) in February 20192020 with grant date fair values of $391,466$299,969 and $299,969,$499,944, respectively. In connection with his promotion and relocation in 2014, Mr. Barrett Brown received a loan of $500,000 from the Company in November 2014, which iswas subject to the terms of a Promissory Note providing that the principal and interest amounts of such loan are forgivable in increments of one-seventh each year, so long as Mr. Barrett Brown remainsremained employed by the Company and/or its affiliates. Mr. Barrett Brown is not an executive officerEffective December 31, 2019, in anticipation of his promotion to the position of Executive Vice President and President of the Company’s Retail Segment, the remaining principal balance of $214,285.72 and imputed interest of $3,393 under the Promissory Note were forgiven by the Company.

Carrie Brown, who is married to P. Barrett Brown, was employed by the Company as Corporate Counsel until February 2016. Effective February 1, 2016, Ms. Brown entered into a Consulting Agreement (the “Consulting Agreement”) with the Company to provide legal services to us as an independent contractor. In 2018,2019, Ms. Brown received payments of $236,389$182,000 for services rendered in 20182019 pursuant to the Consulting Agreement.

Zambezi, LLC (“Zambezi”), a Florida limited liability company whose Members and Managers are J. Hyatt Brown and his wife, Cici Brown, owns a Cessna Citation Sovereign aircraft (the “Aircraft”), which the Company leases pursuant to an Aircraft Dry Lease Agreement (the “Agreement”) with Zambezi. In 2018,2019, the Company paid Zambezi $315,020$472,397 under the Agreement to lease the Aircraft. Pursuant to the Agreement, subject to availability of the Aircraft and other specified conditions, Mr. Hyatt Brown has the right to use the Aircraft for personal use, subject to reimbursement paid to the Company at the maximum rate permitted by law. Mr. Hyatt Brown paid $132,922$86,768 to the Company for such personal use of the Aircraft in 2018.2019. The Company and Zambezi also are party to an Airside Sub-Lease Agreement and Services Agreement, pursuant to which Zambezi leases hangar space from the Company and pursuant to which pilots and mechanics employed by the Company are available to pilot and service the Aircraft as provided therein. In 2018,2019, Zambezi paid the Company $19,708$19,937 for the lease of hangar space for the Aircraft, and $233,478$361,773 for the services of pilots and mechanics employed by the Company and for parts, equipment, and supplies related to the Aircraft’s maintenance and operation.

On November 15, 2018, the Company and its wholly owned subsidiary BBHG, Inc (“Buyer”) completed the acquisition of certain assets and assumption of certain liabilities (the “Acquisition”) of The Hays Group, Inc., a Minnesota corporation (“THG”), The Hays Group Of Wisconsin LLC, a Minnesota limited liability company (“THGW”), The Hays Benefits Group, LLC, a Minnesota limited liability company (“THBG”), PlanIT, LLC, a Minnesota limited liability company (“PlanIT”), The Hays Benefits Group of Wisconsin, LLC, a Minnesota limited liability company (“THBGW”), The Hays Group of Illinois, LLC, a Minnesota limited liability company (“THGI”), and Claims Management of Missouri, LLC, a Missouri limited liability company (dba MMMA Claims Management) (“MMMA,” and together with THG, THGW, THBG and PlanIT, each a “Seller” and collectively, the “Sellers”) pursuant to the terms of the asset purchase agreement entered into between the Company, the Buyer, the Sellers, and THG, as the Sellers’ Representative, dated as of October 22, 2018. In connection with the Acquisition, James C. Hays, received cash consideration in the amountwho is one of approximately $247 millionour directors and 337,610 shares of common stock, par value $0.10,who also serves as Vice Chairman of the Company. In addition, Mr. Hays directedCompany, received compensation of $1,218,258, consisting of $1,207,058 for services rendered to the Company in 2019 and $11,200 in matching contributions made by the Company to issue an additional 1,668,049 shareshis 401(k) Plan account. Mr. James Hays serves as Vice Chairman of common stock, par value $0.10,the Company.

Jessica Whinnery, who is the daughter of Mr. James Hays, is employed by a subsidiary of the Company as a Benefits Consultant in the Company’s Minneapolis, Minnesota office and received compensation of $145,904 for services rendered in 2019.

Jeffrey L. Hays, who is the son of Mr. James Hays, is the majority owner of RLA Insurance Intermediaries, LLC, a wholesale insurance brokerage firm headquartered in Boston, Massachusetts (“RLA”) that Mr. Hays would have otherwiseoccasionally places insurance products or services on behalf of certain offices within our Retail Segment. During 2019, we received net agency commissions of $1,608,959 in connection with the Acquisitionplacement of insurance products or services placed by RLA on behalf of offices within our Retail Segment.

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Board and Corporate Governance Matters

In March 2020, Peachtree Special Risk Brokers, LLC, a wholly owned subsidiary of the Company (“Peachtree”), acquired substantially all of the assets, and assumed certain liabilities, of RLA, pursuant to that certain asset purchase agreement, effective March 1, 2020 (the “Asset Purchase Agreement”), by and among the Company, Peachtree, RLA, and RLA’s individual owners. Pursuant to the Asset Purchase Agreement, Peachtree paid to RLA an irrevocable trustinitial purchase price of which$50,725,000 at the closing of the transaction, and an additional amount of up to $22,500,000 may be paid based on the performance of the acquired assets during the three-year period following the effective date of the transaction. The Asset Purchase Agreement includes certain five-year non-competition and non-solicitation covenants applicable to Mr. Hays’ children and grandchildren are beneficiaries.Jeffrey Hays.

In addition, effective as of November 16, 2018,March 1, 2020, Mr. Jeffrey Hays became employed by the CompanyPeachtree as an Executive Vice Chairman,President and profit center leader of our new “RLA Insurance Intermediaries” profit center, and he entered into an Employment Agreement with the CompanyPeachtree that provides for payment of the following compensation for a three-year term of employment: (i) an annual base salary of $517,000 for a three-year term$400,000, (ii) an annual bonus based upon the performance of employment, after which time this amount will be as mutually agreedthe RLA Insurance Intermediaries profit center, and (iii) additional commissions based upon between Mr. Hays and the Company, and which provides that the Company will terminate the agreement only “with cause” duringgrowth of his individual book of business. During the initial three-year term. Pursuant to hisemployment term, Peachtree may only terminate the Employment Agreement “with cause.” Mr. Hays is also eligible during the initial three-year term to participate in the Company’s Senior Leader Bonus Program in effect from time to time, and his bonus target under the Senior Leader Bonus Program is $700,000. The Company has determined that Mr. Hays is not an executive officer. During 2018, Mr. Hays received compensation of $139,200, consisting of pro rated 2018 base salary of $51,700 and a pro rated 2018 cash incentive of $87,500.

Mr. Hays also entered into a Non-Competition, Non-Solicitation, Confidentiality and Non-Disclosure Agreement which includes five-year non-competition and non-solicitation covenants. In addition, Mr.Jeffrey Hays’ Employment Agreement includes a prohibition on directly or indirectly soliciting or servicing our clients or soliciting our employees to leave their employment with us.

Jessica Whinnery, who is the daughter of Mr. Hays, became employed in November 2018 by a subsidiary of the Company as a Benefits Consultant in the Company’s Minneapolis, Minnesota office. Her total annual compensation is expected to be approximately $161,000, consisting of a base salary of approximately $127,000 and an expected bonus of approximately of $34,000.

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Board Structure and Process

Board Leadership

Our Board has the flexibility to determine whether the roles of Chairman of the Board and Chief Executive Officer should be separated or combined. The Board makes this decision based on its evaluation of the circumstances and the specific needs of the Company. Mr. Hyatt Brown, who retired from the position of Chief Executive Officer in 2009, continues to serve as Chairman of the Board, while Mr. Powell Brown serves as Chief Executive Officer.

We believe our leadership structure is desirable because it allows Mr. Powell Brown to focus his efforts on running our business and managing the Company in the best interests of our shareholders, while we continue to realize the benefits of Mr. Hyatt Brown’s extensive business and industry experience, knowledge of our company, current and past service on boards of other publicly traded companies and proven leadership ability.

The Board conducts executive sessions of non-management directors in connection with each regularly scheduled meeting of the Board. Our Lead Independent Director, Wendell S. Reilly,H. Palmer Proctor, Jr., presides over these executive sessions.

Board and Board Committee Matters

Our Board of Directors has an Audit Committee, Compensation Committee, and Nominating/Corporate Governance Committee. The charters of each of these Board committees are available in the “Corporate Governance” section of the “Investor Relations” tab, under “Key Documents” on our website (www.bbinsurance.com)(www.bbinsurance.com) and are also available in print to any shareholder who requests a copy from the Corporate Secretary at 220 S. Ridgewood Ave., Daytona Beach, Florida 32114. Our committee meetings are generally attended by all Board members, subject to the availability of each director, which we believe enables our Board to function in a more collaborative, transparent, and effective manner, and which we believe promotes collegiality among the Board.

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