UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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UNITED INSURANCE HOLDINGS CORP.
________________________________(Name of Registrant as Specified in its Charter)____________________________
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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UNITED INSURANCE HOLDINGS CORP.
800 2nd Avenue S.
St. Petersburg, FL 33701
, 2021April 18, 2023
Dear Stockholder:
You are cordially invited to attend a Specialthe Annual Meeting of Stockholders of United Insurance Holdings Corp. (the("UPC Insurance", the "Company", "us", "our", and "we"), which will be held online at www.virtualshareholdermeeting.com/UIHC2021SMUIHC2023 at 1:00 p.m. Eastern Time on JulyFriday, June 2, 20212023 via live audio webcast. The meeting will only be conducted via a live webcast. Even though our meeting is being held virtually, stockholders will still have the ability to participate in, hear and ask questions during our meeting.
Important information about the matters to be acted upon at the meeting is included in the accompanying notice and proxy statement. Our 20202022 annual report, which iswe are making available at https://investors.upcinsurance.com/filings/annual-reports,to you along with the proxy statement, contains information about us and our performance.
Kind regards,
/s/ R. Daniel Peed
R. Daniel Peed
Chief Executive Officer and Chairman of the Board
NOTICE OF SPECIALANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULYJUNE 2, 20212023
WE HEREBY GIVE NOTICE that a Specialthe 2023 Annual Meeting of Stockholders ("SpecialAnnual Meeting") of United Insurance Holdings Corp. will be held online at www.virtualshareholdermeeting.com/UIHC2021SMUIHC2023 at 1:00 p.m., Eastern Time, on JulyFriday, June 2, 2021,2023, via live audio webcast, for the following purposes:
1.To approve an amendmentelect R. Daniel Peed, Gregory C. Branch, Michael R. Hogan, and Kent. G Whittemore to the United Insurance Holdings Corp. Second Amended and Restated Certificateserve as Class A directors of Incorporation to increase the authorized numberour Board of sharesDirectors until our 2025 annual meeting of common stock from 50,000,000 to 100,000,000.stockholders;
2.To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; and
3.To transact such other business as may properly come before the SpecialAnnual Meeting or any adjournmentsadjournment or postponements thereof.postponement of the Annual Meeting.
Our Board of Directors ("Board") recommends that our stockholders vote FOR the amendment toelection of each of the United Insurance Holdings Corp. Second AmendedClass A director nominees named above, and Restated CertificateFOR the ratification of Incorporation to increase the authorized numberappointment of shares of common stock from 50,000,000 to 100,000,000.Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023.
Holders of shares of our common stock at the close of business on June 8, 2021April 10, 2023 (the "Record Date") are entitled to notice of, and to vote at, the SpecialAnnual Meeting and at any adjournment or postponement that may take place. A list of stockholders entitled to vote at the Special Meetingmeeting will be made available for the examination of any stockholder for any purpose germane to the Special Meetingmeeting for ten days prior to the SpecialAnnual Meeting by email request to InvestorRelations@upcinsurance.com.
We cordially invite you to electronically attend the SpecialAnnual Meeting. This Special Meetingyear's virtual meeting will be held via live webcast on the Internet. You will be able to attend the SpecialAnnual Meeting, vote and submit questions during the meeting from any remote location that has Internet connectivity by visiting www.virtualshareholdermeeting.com/UIHC2021SM.UIHC2023.
Your vote is extremely important. We appreciate your taking the time to vote promptly. After reading the accompanying proxy statement, please vote at your earliest convenience by Internet or by mailing your completed proxy card. Instructions regarding the voting methods are described in the accompanying proxy statement.
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| Dated: | , 2021April 18, 2023 | | By order of the Board, |
| | | /s/ Brooke Adler |
| | | Corporate Secretary |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JULYJUNE 2, 2021.2023.
To access our Proxy Statement for the Special2023 Annual Meeting of
Stockholders and our 2022 Annual Report, please visit
http://www.proxyvote.com
TABLE OF CONTENTS
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| GENERAL INFORMATION | |
| Concerning the Annual Meeting and Voting | |
| Notice and Access | 4 |
| Attendance | |
| GOVERNANCE | |
| Corporate Governance and Board of Directors | |
Proposal One – Approval- Election of Directors | |
| Class A Director Nominees | 6 |
| Class B Directors Whose Terms Continue Until the 2024 Annual Meeting | 8 |
| Director Independence | 9 |
Board Leadership Structure and AdoptionBoard's Role in Risk Management and Oversight | 10 |
| Meetings and Meeting Attendance | |
| Communication with Directors | |
| Board Committees | |
| Director Compensation | |
| AUDIT | |
Proposal Two - Ratification of an Amendment toAppointment of Independent Registered Public Accounting Firm | |
Recommendation of the Company’s Certificate of Incorporation to Authorize a Total of 100 Million Shares of Common StockBoard | 4 |
| Audit Committee Report | |
| Audit Committee's Pre-Approval Policies and Procedures | |
| Audit and Related Fees | |
| INFORMATION ABOUT OUR EXECUTIVE OFFICERS | |
| COMPENSATION DISCUSSION AND ANALYSIS | |
| EXECUTIVE COMPENSATION | |
| CEO PAY RATIO | |
| BENEFICIAL OWNERSHIP | 6 |
| Stock Ownership of Our Directors, Executive Officers and Certain Beneficial Owners | 6 |
GENERAL MATTERSDelinquent Section 16(a) Reports | 7 |
| POLICIES AND PROCEDURES REGARDING RELATED PERSON TRANSACTIONS | |
| CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS | |
DEADLINE FOR THE SUBMISSION OF STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 20222023 ANNUAL MEETING OF STOCKHOLDERS | 7 |
| DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS | 7 |
OTHER MATTERSINFORMATION | 8 |
APPENDIX A - CERTIFICATE OF AMENDMENT OF SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF UNITED INSURANCE HOLDINGS CORP. | 9 |
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UNITED INSURANCE HOLDINGS CORP.
PROXY STATEMENT
FOR SPECIAL2023 ANNUAL MEETING OF STOCKHOLDERS
To be Held July 2, 2021GENERAL INFORMATION
CONCERNING THE ANNUAL MEETING AND VOTING
You are invited to attend the Special Meeting of United Insurance Holdings Corp. (the “Company”).UPC Insurance's Annual Meeting. This proxy statement ("Proxy Statement") and the enclosed form of proxy are being furnished to stockholders of the Company as of the close of business on June 8, 2021 (the “Record Date”), in connection with the solicitation on behalf of the Board of Directors of the Company (the “Board”) of proxies for use at the Special Meeting to be held at 1:00 p.m. local time, on July 2, 2021, in a virtual meeting, or at any adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of Special Meeting of Stockholders.
The Proxy Statement contains information about the SpecialAnnual Meeting, including meeting logistics, matters up for vote, how to vote and answers to other frequently asked questions. The Notice of SpecialAnnual Meeting of Stockholders this Proxy Statement and the accompanying proxy card, areis first being mailed to stockholders on or about , 2021.April 21, 2023. The Notice provides stockholders with instructions on how to access the proxy materials online or request a paper or email copy, the proposals to be voted on at the Annual Meeting of Stockholders should review the information provided herein in conjunction with the Company’s 2020 Annual Reportand instructions on Form 10-K for the fiscal year ended December 31, 2020 (the “Annual Report”). The Annual Report is currently available and this Proxy Statement will also be available beginning on or about , 2021 on the SEC’s website at www.sec.gov. The other information on our corporate website does not constitute part of this Proxy Statement.how to vote.
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| MEETING INFORMATION | | AGENDA |
| DATE | | AmendElect the Second Amended and Restated Certificate of Incorporation to authorize an additional 50 million shares of common stock4 Class A director nominees named in this Proxy Statement |
JulyJune 2, 2021 | |
| 2023 | |
| | Your Board recommends a vote FOR the amendmenteach Class A director nominee |
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| TIME | | Readread more on page 45 |
| 1:00 p.m. Eastern Time | | |
| | Ratify the appointment of Deloitte & Touche LLP (Deloitte) as our independent registered public accounting firm for fiscal 2023 |
| | |
| LOCATION | | Your Board and Audit Committee recommend a vote FOR this proposal |
| Virtually via live webcast at | | read more on page 14 |
www.virtualshareholdermeeting.com/UIHC2021SMUIHC2023 | | |
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| ATTENDING THE WEBCAST | | |
To attend our virtual SpecialAnnual Meeting and vote during the live webcast, please follow the instructions described in this Proxy Statement in the section entitled Outstanding Voting Stock and Voting Rights.Attendance. | |
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| CONTACTING THE COMPANY | | |
| Unless otherwise noted in the Proxy Statement, requests for documents and/or information, submissions of proposals or nominations, proxy revocations or other official communications should be submitted in writing to the following address: | | United Insurance Holdings Corp.
800 2nd Avenue S.
St. Petersburg, Florida 33701
Attention: Corporate Secretary |
VIRTUAL ANNUAL MEETING FAQs
May stockholders ask questions at the virtual Annual Meeting?
Yes. As part of the Annual Meeting, we will hold a live question and answer session, during which we intend to answer all questions submitted during the meeting that are pertinent to the Company and the meeting matters, in accordance with the Annual Meeting's Rules of Conduct, as time permits.
PURPOSES OF THE MEETING
At the Special Meeting, the Company’s stockholders will consider and vote upon the following matter:
1.Approval of an amendment to the United Insurance Holdings Corp. Second Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) to increase the authorized number of shares of common stock from 50,000,000 to 100,000,000.
2.Approval to transact such other business as may properly come before the Special MeetingWhat if I have technical difficulties or any adjournments or postponements thereof.
Unless contrary instructions are indicated on the proxy you submit, all shares represented by valid proxies received pursuant to this solicitation (and that have not been revoked in accordance with the procedures set forth below) will be voted in accordance with the recommendation of the Board as follows:
•“FOR” approval of an amendment to the Certificate of Incorporation to increase the authorized number of shares of common stock from 50,000,000 to 100,000,000.
In the event a stockholder specifies a different choice by means of a properly submitted proxy, such stockholder’s shares will be voted in accordance with the specification so made. In addition, your shares will be voted as the proxyholders may determine in their discretion upon any other proposals as may properly come before the Special Meeting.
OUTSTANDING VOTING STOCK AND VOTING RIGHTS
As of the close of business on the Record Date, the Company had 43,228,371 shares par value $.0001 per share of common stock (“Common Stock”) outstanding. Each stockholder of record on the Record Date is entitled to one vote on all matters presented at the Special Meeting for each share of Common Stock held by such stockholder. The presence, either in person or by properly executed proxy, of the holders of the majority of the shares of Common Stock entitled to vote at the Special Meeting is necessary to constitute a quorum at the Special Meeting. Virtual attendance at the Special Meeting will be limited to stockholders as of the Record Date, their authorized representatives, and guests of the Company.
To be admitted totrouble accessing the virtual Special Meeting at http://www.virtualshareholdermeeting.com/UIHC2021SM, you must enter the 16-digit control number that can be found on your proxy card. Online access to the Special Meeting will open at 12:45 p.m. Eastern Time on July 2, 2021 to allow time for stockholders to become familiar with the virtual platform and address any technical difficultiesAnnual Meeting?
Beginning 15 minutes prior to the start of and during the live audio webcast ofmeeting, we will have technicians ready to assist you with any technical difficulties you may have accessing the Specialvirtual Annual Meeting.
VOTING FAQs
The Special Meeting will begin promptly at 1:00 p.m. Eastern Time on July 2, 2021. Participants should ensure that they have a strong WiFi connection from wherever they intend to participate in the virtual Special Meeting.
If you are a stockholder of record, you may vote as follows:
•By Internet: You may vote via the Internet, by following the instructions on your proxy card. The proxyholders appointed by the Board will vote your shares in accordance with your instructions.
•By Telephone: Use any touch-tone telephone to transmit your voting instructions, by following the instruction on your proxy card. The proxyholders appointed by the Board will vote your shares in accordance with your instructions.
•By Mail: You may vote by mail by marking, dating and signing your proxy card and returning it in the pre-paid envelope provided. The proxyholders appointed by the Board will vote your shares in accordance with your instructions.
If you hold your shares beneficially in “street name,” through a broker, bank or other nominee, you may vote by following the instructions provided with the proxy materials.
Except as noted below, if you are a holder of record, you may use the Internet or any telephone to transmit your voting instructions or, if you received a printed set of the proxy materials, you may vote by mail by completing, signing, dating and returning the proxy card enclosed with the proxy materials you received before the polls close at the Special Meeting. If you
are a stockholder of record, you may revoke your proxy at any time before the vote at our Special Meeting by submitting written notice as described above under Contacting the Company, by delivering a proxy bearing a later date prior to the Special Meeting or by attending the Special Meeting and voting via the live webcast. If you hold your shares in “street name,” you must follow the instructions provided by your broker, bank or other nominee to revoke your proxy. Please note that virtual attendance at the Special Meeting will not by itself constitute revocation of a proxy. If you are a beneficial owner, please refer to the voting instructions provided by the bank, broker or other nominee that holds your shares for information about the deadline for voting and instructions on how to change or revoke any previously submitted voting instructions.
The vote required for approval of Proposal I —approval of the amendment to the Certificate of Incorporation to increase the authorized number of shares of Common Stock from 50,000,000 to 100,000,000,Who is an affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Special Meeting. Each stockholder may vote for, vote against or abstain from voting on such proposal. Accordingly, Proposal I will be approved if the number of “for” votes cast on Proposal I represents at least a majority of the outstanding shares of Common Stock entitled to vote at the Special Meeting. Abstentions will be counted for purposes of determining whether a quorum is present at the meeting. Brokers, banks and other nominees may exercise discretionary authority to vote the beneficial holder’s shares on a “routine” matter at the Special Meeting. Proposal I is considered a “routine” matter under applicable stock exchange rules. If you hold your shares through a broker and do not provide voting instructions to the broker, then under applicable stock exchange rules governing your broker, the broker may vote your shares in its discretion with respect to Proposal I above. As a result, no broker non-votes are anticipated with respect to this proposal.
Mr. Peed is party to the Stockholders Agreement, dated as of August 17, 2016, among the Company and the stockholders named therein (the “Stockholders Agreement”), pursuant to which Mr. Peed is entitled to vote shares of Common Stock beneficially owned by Mr. Peed up to 25% of the outstanding Common Stock of the Company in his sole discretion and he must vote all other shares of Common Stock then beneficially owned by him in proportion to the votes cast with respect to the shares of Common Stock not beneficially owned by him or any of his affiliates with respect to any business or proposal on which the stockholders of the Company are entitled to vote, subject to certain exceptions, including Proposal I. Mr. Peed intends to vote for Proposal I with respect to the portion of his shares over which he may exercise his discretion. The remaining shares will be voted in proportion to the votes cast with respect to the shares of Common Stock not beneficially owned by Mr. Peed.
INFORMATION CONCERNING THE PROXY SOLICITATION
soliciting my proxy?
Our Board is soliciting the proxy accompanying this Proxy Statement. The cost of preparing and making available this Proxy Statement, the Notice of Special Meeting of Stockholders, and the proxy is borne by the Company. We will bear the entire cost of solicitation, including the preparation, assembly, printing, and mailing of this Proxy Statement, the proxy card and any additional information we furnish to our stockholders. We may solicit proxies through the mail, or our directors, executive officers and other employees may solicit proxies in person or by telephone. We will not pay any additional compensation to our directors, executive officers or other employees for their services with regard to proxy solicitation. We will also request brokers, banks and other holders of record to forward proxy materials, at our expense, to the beneficial owners of our shares.
Who can vote?
Our Board has fixed the record date for the determination of stockholders entitled to notice of, and to vote at, our Annual Meeting as the close of business on April 10, 2023 (the "Record Date"). As of the Record Date, there were 43,273,373 shares of our common stock outstanding and entitled to vote. Each share of our common stock is entitled to one vote on each of the matters to be voted on at the Annual Meeting.
How do I vote?
If you are a stockholder of record, you may vote as follows:
•By Internet: You may vote via the Internet, by following the instructions on your proxy card. The proxyholders appointed by the Board will vote your shares in accordance with your instructions.
•By mail: You may vote by mail by marking, dating and signing your proxy card and returning it in the pre-paid envelope provided. The proxyholders appointed by the Board will vote your shares in accordance with your instructions.
•By phone:Use any touch-tone telephone to transmit your voting instructions, by following the instruction on your proxy card. The proxyholders appointed by the Board will vote your shares in accordance with your instructions.
If you hold your shares beneficially in “street name,” through a broker, bank or other nominee, you may vote by following the instructions provided with the proxy materials.
Can I revoke my proxy?
If you are a stockholder of record, you may revoke your proxy at any time before the vote at our Annual Meeting by submitting written notice as described above under Contacting the Company, by delivering a proxy bearing a later date prior to the Annual Meeting or by attending the Annual Meeting and voting via the live webcast. If you hold your shares in street name, you must follow the instructions provided by your broker, bank or other nominee to revoke your proxy.
How many votes must be present to hold the Annual Meeting?
The presence of the holders of a majority of the outstanding shares of our common stock entitled to vote at the Annual Meeting, present via live webcast or represented by proxy, is necessary to constitute a quorum. Abstentions and “broker non-votes” are counted as present and entitled to vote for the purpose of determining whether a
quorum is present. A “broker non-vote” occurs when a broker, bank or other nominee, holding shares for a beneficial owner, does not vote on a particular proposal because that holder does not have discretionary voting power for that particular item and has not received instructions from the beneficial owner. If their clients do not provide voting instructions, brokers may not vote on behalf of their clients with respect to: (i) the election of directors (Proposal One). Brokers have discretionary voting power with respect to the ratification of the appointment of Deloitte as our independent registered accounting firm for the fiscal year ending December 31, 2023 (Proposal Two).
What is the required vote for each proposal?
Proposal One (Election of Directors): The nominees for Class A directors named in this Proxy Statement will be elected by a majority of the votes cast with respect to such director nominee's election. In 2019, the Company amended and restated its by-laws (the "By-Laws") to, among other things, provide for the election of directors by a majority of the votes cast, except in the case of contested elections. A "majority of votes cast" means that the number of shares voted "for" a director nominee must exceed the number of votes cast "against" that director nominee's election. Abstentions will not affect the outcome of the vote on Proposal One. Your broker is not permitted to vote your shares on this matter if no instructions are received from you, and broker non-votes will have no effect on the outcome of Proposal One.
Proposal Two (Ratification of the Appointment of our Independent Registered Public Accounting Firm): The appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2023 will be ratified if approved by the holders of a majority of common stock present via live webcast or represented by proxy, and entitled to vote at the Annual Meeting. Accordingly, Proposal Two will be approved if the number of “for” votes cast on Proposal Two exceeds the number of “against” and “abstain” votes. Abstentions will be included in the calculation of the number of shares represented and entitled to vote at the Annual Meeting and will therefore count as votes against the ratification of the appointment of Deloitte. Brokers will have discretionary authority to vote on Proposal Two.
Even if stockholders ratify the appointment of Deloitte, our Audit Committee in its discretion may appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the Company’s best interest and, thus, in our stockholders’ best interest.
What is the Board’s voting recommendation?
The Board recommends a vote FOR the election of each of the Class A director nominees named in this Proxy Statement (Proposal One), and FOR the ratification of the appointment of Deloitte as the Company’s independent registered public accounting firm for fiscal 2023 (Proposal Two).
Are there any other matters to be presented at the Annual Meeting?
The Company does not know of any other matter to be raised at the Annual Meeting. If any other matters are properly presented at the Annual Meeting for consideration and you authorize a proxy to vote your shares, the persons named in the proxy will have the discretion to vote on those matters for you in accordance with their best judgment.
What happens if I sign and return a blank proxy card or voting instruction card?
If you are a stockholder of record and you properly mark, date, sign and return a proxy card or use Internet voting procedures, as applicable, to authorize the named proxies to vote your shares, and your proxy card or other proxy authorization is received by the Company in time to be voted at the Annual Meeting, it will be voted as specified, unless it is properly revoked prior to the Annual Meeting.
If you are a stockholder of record and you date, sign and return a proxy card without giving specific voting instructions, your shares will be voted:
•“FOR” the election of each of the four Class A director nominees named in this Proxy Statement; and
PROPOSAL ONE – APPROVAL•"FOR” the ratification of the appointment of Deloitte as our independent registered public accounting firm for fiscal 2023; and
If you hold your shares in street name via a broker, bank, or other nominee and do not provide the broker, bank or other nominee with voting instructions (including by dating, signing and returning a blank voting instruction card), your shares:
•Will be voted in accordance with the broker’s discretion on “routine” matters, which includes only Proposal Two; and
•Will not be counted in connection with Proposal One.
INSPECTOR OF ELECTIONS AND ADOPTION OF AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION TO AUTHORIZE A TOTAL OF 100 MILLION SHARES OF COMMON STOCKSTOCKHOLDER LIST
We have appointed an Inspector of Elections for our Annual Meeting who will tabulate all of the votes at our Annual Meeting. For a period of ten (10) days prior to the Annual Meeting, any stockholder may send a request via email to InvestorRelations@upcinsurance.com to examine a list of our stockholders of record entitled to vote at our Annual Meeting for any purpose germane to the meeting.
NOTICE AND ACCESS
BACKGROUNDWe are using “notice and access” procedures to distribute our proxy materials to our stockholders. This method reduces the amount of paper used in producing proxy materials and lowers the costs associated with mailing the proxy materials to stockholders. We are mailing a Notice of Internet Availability of Proxy Materials (“Notice”) to stockholders. The Notice includes instructions on how to access the materials over the Internet and how to request a paper or e-mail copy. The Notice further provides instructions on how stockholders may elect to receive proxy materials in the future in printed form or by electronic mail. To select a method of delivery while voting is open, holders of record may follow the instructions when voting online at www.proxyvote.com. At any time, you may also choose your method of delivery of the Company’s proxy materials by visiting www.proxyvote.com. If you own shares of our common stock indirectly through a broker, bank or other intermediary, please contact the intermediary for additional information regarding delivery options.
Our CertificateHolders of Incorporation currently authorizes a total of 50,000,000 shares ofrecord will have the Company’s Common Stock. After careful consideration, for the reasons discussed below, our Board has adopted and approved and is recommendingNotice or proxy materials delivered directly to your mailing address or electronically if you have previously consented to that our stockholders approve and adopt a proposal to amend our Certificate of Incorporation to authorize an additional 50,000,000 shares of Common Stock, which would result in the total authorized shares of Common Stock under our Certificate of Incorporation being increased to 100,000,000 shares. The text of the proposed Certificate of Amendment to our Certificate of Incorporation, which we refer to as the Certificate of Amendment, is attached as Appendix A.delivery method.
ForHolders of shares of our common stock in street name will have the reasons discussed below,proxy materials or the Notice forwarded to you by the intermediary that holds the shares of our Board determined that the proposed amendment was advisable and in the best interests of the Company and its stockholders and approved and adopted the amendment, subject to stockholder approval at the Special Meeting. The adoption of the Certificate of Amendment is expressly conditioned upon the approval of the Certificate of Amendment by our stockholders. Accordingly, if we do not receive the required stockholder approval for the Certificate of Amendment, we will not adopt the Certificate of Amendment.common stock.
If stockholders approve and adopt the amendment, it will become effective upon the filing of a Certificate of Amendment with the Secretary of State of the State of Delaware, which the Company intends to file shortly after the Special Meeting.
ATTENDANCE
TEXT OF THE PROPOSED AMENDMENT
The following is the text of the proposed amendment to Certificate of Incorporation.
The first paragraph of ARTICLE FOURTH of the Certificate of Incorporation would be amended to read in its entiretyAll stockholders as follows:
“The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 101,000,000, of which 100,000,000 shares shall be Common Stock of the par value of $.0001 per share and 1,000,000 shares shall be Preferred Stock of the par value of $.0001 per share.”
REASONS FOR THE PROPOSED AMENDMENT
After careful consideration, our Board determined, subject to stockholder approval, to approve the amendment to the Certificate of Incorporation to authorize an additional 50,000,000 shares of Common Stock as described above. In making this decision, the Board considered it advisable and preferable to have a sufficient number of unissued and unreserved authorized shares of Common Stock to provide the Company with flexibility with respect to our authorized share capital as the Company considers strategic and financial alternatives to create capacity for expanding commercial specialty underwriting and general corporate purposes, including capital raising transactions, which may include public offerings for cash.
The amendment to our Certificate of Incorporation is intended to ensure that we will continue to have an adequate number of authorized and unissued shares of Common Stock available for future use. As is the case with the shares of Common Stock which are currently authorized but unissued, if this amendment to our Certificate of Incorporation is adopted by the Company’s stockholders, the Board will have authority to issue the additional shares of Common Stock from time to time without further action on the part of stockholders to the extent not prohibited by applicable law or by the rules of any stock exchange or market on which our securities may then be listed or authorized for quotation.
POSSIBLE EFFECTS OF THE PROPOSED AMENDMENT
If the proposed amendment to the Certificate of Incorporation to authorize an additional 50,000,000 shares of Common Stock described above is approved and adopted by our stockholders, we will have the authority under our Certificate of Incorporation to have up to 100,000,000 shares of Common Stock and 1,000,000 shares of preferred stock issued and outstanding. As of the close of business on the Record Date, we had 43,228,371 shares of Common Stockor their duly appointed proxy holders, may attend our virtual Annual Meeting.
To be admitted to the virtual Annual Meeting at www.virtualshareholdermeeting.com/UIHC2023, you must enter the 16-digit control number that can be found on your proxy card. Online access to the Annual Meeting will open at 12:45 p.m. Eastern Time on June 2, 2023 to allow time for stockholders to become familiar with the virtual platform and no shares of preferred stock issued and outstanding. If this proposal is approved,address any technical difficulties prior to the additional authorized shares of Common Stock may be issued at the discretionstart of the Company’slive audio webcast of the Annual Meeting.
The Annual Meeting will begin promptly at 1:00 p.m. Eastern Time on June 2, 2023. Participants should ensure that they have a strong WiFi connection from wherever they intend to participate in the virtual Annual Meeting.
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS INFORMATION
The Board without further stockholder action, except as may be required by law oroversees and monitors our management in the rulesinterest and for the benefit of Nasdaq.our stockholders. We have posted our Corporate Governance Guidelines on our website at investors.upcinsurance.com, under the "Governance Documents" tab. In addition to our Corporate Governance Guidelines, the Company has adopted a Code of Conduct and Ethics, which is applicable to our directors, officers and employees. The increase in authorized shares would not have any immediate dilutive effect on the proportionate voting power or other rightsCode of existing stockholders. However, any subsequent issuance of shares of Common Stock, otherConduct and
thanEthics is also posted under the "Governance Documents" tab of our website at investors.upcinsurance.com. Although the information contained on a pro-rata basisor connected to all stockholders, would reduce each stockholder’s proportionate interest in our company. Anywebsite is not part of this Proxy Statement, you can view additional information on our website, such as the additional shares of common stock issued in the future would have the same rights and privileges as attach to the Common Stock currently authorized and outstanding and the par value of the Common Stock would remain unchanged at $.0001 par value per share. Those rights do not include preemptive rights with respect to the future issuance of any additional shares.
We have not proposed the increase in the number of authorized shares of Common Stockreports that we file with the intentionSecurities and Exchange Commission ("SEC"). Copies of usingthese documents may also be obtained free of charge by contacting the additional authorized shares for anti-takeover purposes, but the Company would be able to use the additional shares to oppose a hostile takeover attempt or delay or prevent changes in control or managementCompany.
Our Board is currently comprised of the Company. Although this proposal to increase the authorized number of shares of Common Stock has been prompted by business and financial considerations, and not by the threat of any known or threatened hostile takeover attempt, stockholders should be aware that approval of this proposal could facilitate future attempts by the Company to oppose changes in control of the Company and perpetuate our management, including transactions in which the stockholders might otherwise receive a premium for their shares over then current market prices.
If the stockholders approve the proposal, the amendment will become effective upon the filing of the Certificate of Amendment as set out above and in Appendix Anine directors, divided into two classes. In accordance with the Secretary of State of the State of Delaware.
If Proposal I is not approved and adopted by our stockholders, our Certificate of Incorporation, each class of directors is elected for a two-year term. The term of office for our Class A directors will not be amended as set forth above and weexpire at our Annual Meeting. The term of office for our Class B directors will continue to have the authority underexpire at our Certificate2024 annual meeting of Incorporation to only have up to 50,000,000 shares of Common Stock and 1,000,000 shares of preferred stock issued and outstanding. We would encounter greater difficulty in carrying out our business strategy because we may be unable (1) to issue additional shares of Common Stock to attract new employees or to award current employees for future performance, (2) to raise capital by issuing sharesstockholders.
The following table provides information regarding each of our Common Stock, and (3) to acquire other businesses in exchange for shares of our Common Stock.current directors:
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS
No director or executive officer has any substantial interest, direct or indirect, by security holdings or otherwise, in the share increase proposed above that is not shared by all other stockholders.
VOTE REQUIRED
The affirmative vote of the holders of at least a majority of the Company’s issued and outstanding shares of Common Stock entitled to vote at the Special Meeting is required to approve and adopt the proposed amendment to the Certificate of Incorporation to authorize an additional 50,000,000 shares of Common Stock. | | | | | | | | | | | | | | | | | | | | | | | |
| AGE | | POSITION | | CURRENT TERM EXPIRES | | DIRECTOR SINCE |
| CLASS A | | | | | | | |
| R. Daniel Peed | 60 | | CEO and Chairman of the Board | | 2023 | | 2017 |
| Gregory C. Branch | 75 | | Chairman Emeritus | | 2023 | | 2008 |
| Michael R. Hogan | 73 | | Director | | 2023 | | 2017 |
| Kent G. Whittemore | 75 | | Director | | 2023 | | 2008 |
| | | | | | | |
| CLASS B | | | | | | | |
| Alec L. Poitevint, II | 75 | | Lead Director | | 2024 | | 2008 |
| Kern M. Davis, M.D. | 68 | | Director | | 2024 | | 2012 |
| William H. Hood, III | 62 | | Director | | 2024 | | 2012 |
| Sherrill W. Hudson | 80 | | Director | | 2024 | | 2013 |
| Patrick F. Maroney | 73 | | Director | | 2024 | | 2017 |
The following table provides information regarding the diversity of our Board of Directors:
| | | | | | | | | | | | | | |
| Board Diversity matrix as of April 18, 2023 |
| Total Number of Directors | 9 |
| | Female | | Male |
| Part I: Gender Identity | | | | |
| Directors | | 0 | | 9 |
| Part II: Demographic Background | | | | |
| White | | 0 | | 9 |
On or prior to December 31, 2023, the Company will be required to have at least one director that is considered “Diverse” pursuant to Rule 5605(f) of the NASDAQ Stock Market or disclose why it does not meet this requirement. Our Board has not yet identified, and may not identify by December 31, 2023, potential Board nominees that qualify as Diverse, possess the skillsets and other qualifications the Board seeks to bring to the Company, and that have an interest in serving on the Board. Our Board has not historically adhered to any specific targets or quotas in determining Board membership. However, the Board is committed to increasing diversity on the Board and realizes the potential benefits from new perspectives that could be gained through increasing diversity within the Board’s ranks provided we can locate the right candidate(s). Given our small size, the recent decline in our stock price and business challenges we face, the Company has struggled to attract viable candidates who possess the skillsets and other qualifications necessary to serve on our Board.
PROPOSAL ONE – ELECTION OF DIRECTORS
PROPOSAL
Our Board has nominated as Class A directors, for re-election at the Annual Meeting, R. Daniel Peed, Gregory C. Branch, Michael R. Hogan, and Kent. G Whittemore. Each director nominee elected as a Class A director at our Annual Meeting will serve a two-year term until his successor is elected and qualified at our 2025 annual meeting of stockholders or until his earlier death, resignation or removal.
Unless authority to vote for any of these nominees is withheld, the shares represented by the enclosed proxy will be voted “FOR” the election of each of R. Daniel Peed, Gregory C. Branch, Michael R. Hogan, and Kent. G Whittemore as Class A directors. All of these nominees have agreed to serve if elected and have consented to being named in this Proxy Statement. In the event that any nominee becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election of such other person as the Board may recommend in his place. We have no reason to believe that any nominee will be unable or unwilling to serve as a director.
Our By-Laws provide that, in an uncontested election whereby the number of nominees for director does not exceed the number of directors to be elected, directors will be elected by a majority of votes cast (rather than by a plurality vote). A majority of the votes cast means that each director nominee must receive more votes "for" his or her election than votes "against" his or her election in order to be elected. Our Corporate Governance Guidelines require an incumbent director who receives less than a majority of the votes cast to tender his or her resignation. The Nominating and Corporate Governance Committee will then consider, and recommend to the Board, whether to accept or reject the resignation. The Board will then consider such recommendation and publicly announce its decision regarding the tendered resignation within 120 days after the date the applicable election results are certified.
RECOMMENDATION OF THE BOARD
Our Board unanimously recommends that you vote FOR the approvalelection of each of R. Daniel Peed, Gregory C. Branch, Michael R. Hogan, and adoptionKent. G Whittemore as Class A directors, each to serve a two-year term ending on the date of the 2025 annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death, resignation or removal. Each of the nominees is currently a director of the Company. The Board's recommendation is based on the extent of each candidate's demonstrated excellence and success in his chosen career and the specific skills the candidate adds to the Board, as further described below.
CLASS A DIRECTOR NOMINEES
R. DANIEL PEED
CHAIRMAN OF THE BOARD
AGE: 60
DIRECTOR SINCE: 2017
R. Daniel Peed has served as our Chief Executive Officer and Chairman of the Board since July 2020. As previously disclosed, our subsidiary, United Property and Casualty Insurance Company (“UPC”), was placed into receivership on February 27, 2023, as a result of losses incurred from Hurricane Ian. Mr. Peed has served as a member of our Board since April 2017. Mr. Peed served on the board of ACIC from 2007 to 2017. Mr. Peed served as Non-Executive Vice Chairman of AmRisc, LLC (formerly known as "CRC Insurance Services, Inc.") ("AmRisc"), the managing general agent of ACIC, from December 2018 until December 2019. Previously, Mr. Peed served as the President and Chief Executive Officer of AmRisc from December 2000 to December 2018. From 1991 to 2000, Mr. Peed served as a senior vice president of SOREMA North America Reinsurance Company, Fulcrum Insurance. In addition, from 1985 to 1991, Mr. Peed was a supervisor at Factory Mutual Engineering Association. Mr. Peed has a B.S. in petroleum engineering from Texas A&M University and an M.B.A. with a concentration in insurance from the University of North Texas. In addition, Mr. Peed has the Chartered Property & Casualty Underwriter ("CPCU") and Associate in Reinsurance ("ARe") designations and a Professional Engineering designation in Fire Protection.
Mr. Peed brings to our Board his significant experience in management and the insurance industry.
GREGORY C. BRANCH
CHAIRMAN EMERITUS
AGE: 75
DIRECTOR SINCE: 2008
Gregory C. Branch has served as the Chairman Emeritus of the Board since July 2020. Previously Mr. Branch served as the Chairman of the Board from September 2008 to June 2020 and, prior to that, served as the Chairman and
Chief Executive Officer of our predecessor company, United Insurance Holdings, L.C. ("UIH"), from its inception in 1999 to 2008. Mr. Branch has served as the Chairman, President and owner of Branch Properties, Inc., a manufacturer and distributor of equine feed, since 1986. From 1994 to 1998, Mr. Branch served as Chairman of Summit Holding Southeast, Inc., an insurance holding company that completed its initial public offering in 1997 and was acquired by Liberty Mutual in 1998. Mr. Branch has served as a director of Prime Holdings, Inc. since 2001 and of Raffles Insurance Company since 2003. Mr. Branch was the founding Chairman of Sunz Insurance Holding, a Florida workers compensation company that was sold in 2008. Mr. Branch was a founding member and former Chairman of, and remains a director of, American Feed Industry Insurance Company RRG. Mr. Branch operated as an underwriting member of Lloyd’s of London from 1986 to 2004. Mr. Branch graduated from the University of Florida with a B.S. in Agriculture Economics and served at the rank of Captain in the U.S. Army.
Our Board selected Mr. Branch to serve on our Board based upon his substantial experience in the insurance industry and his broad entrepreneurial skills obtained by owning his own business.
MICHAEL R. HOGAN
DIRECTOR
AGE: 73
DIRECTOR SINCE: 2017
Michael R. Hogan has served as a member of our Board since April 2017. Mr. Hogan served on the board of directors of ACIC from 2015 to 2017. From 1994 to 1999, Mr. Hogan served on the national agency advisory board of The Travelers Insurance Company. In addition, from 2003 to 2008, Mr. Hogan served on the board of directors of The South Financial Corporation. Mr. Hogan has 44 years of experience as an independent insurance agent, specializing in wind, flood and earthquake insurance as the President and owner of Puckett, Sheets, and Hogan Insurance, which received a national Best Practices Award in 2006. Mr. Hogan graduated from Furman University in 1972 with a B.A. in business and economics.
Mr. Hogan brings to our Board his significant experience in management and the insurance industry.
KENT G. WHITTEMORE
DIRECTOR
AGE: 75
DIRECTOR SINCE: 2008
Kent G. Whittemore has served as a member of our Board since September 2008 and, prior to that, served as a director of our predecessor company, UIH, from 2001 to 2008. Mr. Whittemore has served as the President of, and is a shareholder of, The Whittemore Law Group, P.A., a law firm located in St. Petersburg, Florida that he co-founded in 1987. On January 1, 2023, he became Of Counsel at the St. Petersburg law firm of Englaner Fischer. His legal practice primarily focuses on personal injury, insurance litigation, and business and real estate litigation. Mr. Whittemore served as President of the St. Petersburg Bar Association from 1996 to 1997, and served as President of the Tampa Bay Trial Lawyers Association from 2003 to 2004. Mr. Whittemore currently serves as a director of the Southern Trial Lawyers Association and formerly served as a director of the Academy of Florida Trial Lawyers. He also served on St. Petersburg’s Charter Review Commission. Mr. Whittemore received a B.S. in Business Administration from the University of Florida and a J.D. from Stetson College of Law.
Our Board selected Mr. Whittemore to serve on our Board based upon his insurance industry experience and his legal expertise.
CLASS B DIRECTORS WHOSE TERMS CONTINUE UNTIL THE 2024 ANNUAL MEETING
ALEC L. POITEVINT, II
LEAD DIRECTOR
AGE: 75
DIRECTOR SINCE: 2008
Alec L. Poitevint, II has served as a member of our Board since September 2008, and prior to that served as a director of our predecessor company, UIH, from 2001 to 2008. Mr. Poitevint has served as Chairman and President of Southeastern Minerals, Inc. ("Southeastern Minerals") and its affiliated companies, headquartered in Bainbridge, Georgia, since 1981. Southeastern Minerals manufactures and distributes mineral ingredients. He joined
Southeastern Minerals in 1970. Mr. Poitevint previously served as a director (from 1989 to 2010), Vice Chairman (from 1994 to 2010), and President (2006) of First Port City Bank of Bainbridge. Mr. Poitevint served as a director of Agri-Nutrition/Virbac Corporation from 1996 to 2006, and at various times during his tenure he held the positions of Chairman of the Board and Chairman of the Audit Committee. Mr. Poitevint has also served as the Chairman of American Feed Industry Insurance Company since 2002 and is the former Chairman of the American Feed Industry Association and National Feed Ingredients Association. Mr. Poitevint served on the Republican National Committee ("RNC") as Committeeman or Chairman for Georgia from 1989 to 2012 and served as RNC Treasurer from 1997 to 2001. Mr. Poitevint graduated from the University of Georgia, with a Bachelor of Arts in Economics.
Our Board selected Mr. Poitevint to serve on our Board based upon his experience in the insurance industry and his diverse management experience.
KERN M. DAVIS, M.D., NACD.DC
DIRECTOR
AGE: 68
DIRECTOR SINCE: 2012
Kern M. Davis, M.D., NACD.DC, is National Association of Corporate Directors (NACD) Directorship CertifiedTM and has served as a member of our Board since March 2012. Dr. Davis is an original investor of our predecessor company, UIH, and served as a director of UIH from 2006 to 2008. Dr. Davis earned a B.A. in Chemistry from the University of Florida in 1976, and a medical degree from the University of South Florida in 1980. He completed his medical residency at the University of Florida in 1985. In 1985, Dr. Davis joined Pathology Associates, P.A., an anatomic and clinical pathology professional services firm, and has served as its President since 1992. In 1993, Dr. Davis became a medical director for St. Anthony’s Hospital Laboratory, and currently holds this position. Dr. Davis received an M.B.A. from the University of South Florida in 1993.
Our Board selected Dr. Davis to serve on our Board based upon his prior experience with UIH and his educational and professional business experience.
WILLIAM H. HOOD, III
DIRECTOR
AGE: 62
DIRECTOR SINCE: 2012
William H. Hood, III has served as a member of our Board since March 2012 and, prior to that, served as a director of our predecessor company, UIH, from 2000 to 2008. Mr. Hood has over 30 years of business experience in numerous industries, including company start-ups, operations, sales/marketing and problem solving. In 1984, Mr. Hood formed Special Data Processing Corporation, a national partnership marketing company, and served as its Chief Executive Officer and Chairman from 1984 to 2006. Mr. Hood sold the company in 1999 to a private equity firm, and he continued to manage the company until he retired in 2006. Mr. Hood is Manager of Hall Capital Holdings LLC which manages his investments and entrepreneurial interests.
Our Board selected Mr. Hood to serve on our Board based upon his prior experience with UIH and his entrepreneurial experience in building and forming a national marketing company.
SHERRILL W. HUDSON
DIRECTOR
AGE: 80
DIRECTOR SINCE: 2013
Sherrill W. Hudson has served as a member of our Board since May 2013. Mr. Hudson served on the Board for TECO Energy, an energy-related holding company, from January 2003 to July 2016. Mr. Hudson served as TECO’s Chairman and CEO from July 2004 to August 2010, Executive Chairman from August 2010 to December 2012 and non-Executive Chairman from January 2013 to July 2016. Prior to his employment with TECO, Mr. Hudson worked for Deloitte & Touche LLP, an audit, financial advisory, tax and consulting firm. In August 2002, Mr. Hudson retired from Deloitte after having worked for the firm for over 37 years. Mr. Hudson currently serves on the board of directors of Lennar Corporation and CBIZ, Inc. He served as a Board member and Chairman of the Florida Chapter of the NACD until June 2020 when he became Chairman Emeritus. He also served on the board of directors of Publix Super Markets from January 2003 to April 2015. Mr. Hudson is a member of the Florida Institute of Certified
Public Accountants, which recognized him as the 2006 Outstanding CPA in Business and Industry. He received his B.A. and graduated cum laude from Ashland University in Ashland, Ohio.
Our Board selected Mr. Hudson to serve on our Board based upon his professional background in auditing and financial reporting and diverse business experience. Mr. Hudson serves as our Audit Committee's financial expert.
PATRICK F. MARONEY
DIRECTOR
AGE: 73
DIRECTOR SINCE: 2017
Patrick F. Maroney has served as a member of our Board since April 2017. Mr. Maroney served on the board of directors of American Coastal Insurance Company ("ACIC"), our wholly-owned subsidiary which we acquired as part of our acquisition of AmCo Holding Company ("AmCo"), from October 2015 to April 2017 and on the Board of the Academy of the National Alliance for Insurance Education and Research from 2013 to February 2019. Mr. Maroney was a professor in the Department of Risk Management and Insurance at Florida State University from 1981 to 2013. Upon retirement in 2013, he was awarded the title of Professor Emeritus at Florida State University College of Business, a title he continues to hold. He previously served as the Director of the Florida Catastrophic Storm Risk Management Center at the College of Business from 2008 through 2013. Mr. Maroney has a B.S. in risk management and insurance from Florida State University and a J.D. from the University of Florida.
Mr. Maroney brings to our Board his significant experience as an insurance attorney as well as his significant experience in management and the insurance industry.
DIRECTOR INDEPENDENCE
The following table shows the directors who are considered independent in accordance with Nasdaq rules as well as their committee assignments:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | COMMITTEES |
| INDEPENDENT DIRECTORS | | AUDIT | | COMPENSATION AND BENEFITS | | NOMINATING AND CORPORATE GOVERNANCE | | INVESTMENT |
| Branch | | | | | | | | |
| Davis | | ü | | | | ü* | | |
| Hood | | | | | | | | ü |
| Hogan | | | | | | ü | | |
| Hudson | | ü* | | ü | | | | |
| Maroney | | ü | | | | | | ü |
| Poitevint | | | | ü | | | | ü* |
| Whittemore | | | | ü* | | ü | | |
*Committee Chair
The Board considered all relevant facts and circumstances in assessing director independence. As described below, our Board has an Audit Committee, a Compensation and Benefits Committee, a Nominating and Corporate Governance Committee and an Investment Committee. All of the members of all of these committees qualify as independent directors. In addition, all of the committee members qualify as independent directors under the independence standards specific to their committees.
BOARD LEADERSHIP STRUCTURE
Our Board has an executive Chairman. The Chairman and CEO, R. Daniel Peed, sets the agendas for and presides over the Board meetings.
Our Board also has a Lead Director, Alec L. Poitevint II, who was appointed by the independent directors. The Lead Director provides additional leadership and organization in meetings of independent directors separately and apart from management and non-independent directors, including leading the executive sessions of independent directors. In the event of Mr. Poitevint's incapacity, unavailability or absence, the chair of the Nominating and Corporate Governance Committee would serve as the Lead Director until the independent directors selected a new Lead Director.
The Board believes that this leadership structure is appropriate for our Company at this time because it allows for non-executive oversight of management, increases management accountability and encourages an objective evaluation of management's performance.
BOARD'S ROLE IN RISK MANAGEMENT AND OVERSIGHT
The Board reviews and approves the Company's strategic plan as presented by management and monitors our performance throughout the year against the plan.
The Board regularly devotes time during its meetings to review and discuss the most significant risks we face and management’s processes for identifying, prioritizing, and responding to those risks. During these discussions, our CEO and our Chief Financial Officer ("CFO") present management’s processes for the assessment of risks, a description of the most significant risks we face and any mitigating factors, plans or policies in place to address those risks. The Board also receives an assessment of cybersecurity risks and the status of procedures to address these risks. Most recently, the Board has also received reports from management regarding the risks associated with COVID-19 and management's plans with regard to business continuity and employee communications during the pandemic. The Board also delegates certain of its risk oversight responsibilities to its committees.
The Audit Committee bears responsibility for oversight of our policies with respect to risk assessment and risk management. The Audit Committee members analyze major financial risk exposures which we face and the steps we have taken to monitor and control such exposures. The Audit Committee also oversees our compliance with legal and regulatory requirements, areas which generate many of the most significant risks we face.
The Compensation and Benefits Committee reviews our compensation structure, policies and practices to determine whether incentive compensation arrangements would be reasonably likely to have a material adverse effect on the Company and considers safeguards against incentives to take excessive risks. The Compensation and Benefits Committee reports these risks to the Board.
The Nominating and Corporate Governance Committee is responsible for considering and addressing risks relating to CEO succession planning and the director nomination and appointment process.
The Investment Committee bears responsibility for oversight of policy decisions about risk aggregation and minimization, including credit risk. The Investment Committee is also responsible for oversight of the capital structure and financing arrangements in support of our plans to ensure consistency with our risk tolerances and oversight of management's investment of our assets.
MEETINGS AND MEETING ATTENDANCE
Our Board held 11 meetings during 2022. Each of our directors attended at least 82% of all meetings of the Board and Board committees on which they served for the periods in which they served during 2022. We do not have a formal policy with respect to director attendance at annual meetings of stockholders; however, we encourage all of our directors to attend such meetings.
COMMUNICATION WITH DIRECTORS
Stockholders may contact an individual director, our Board as a group, our independent directors as a group or a specified Board committee by sending correspondence addressed to our Corporate Secretary to the address listed in the subsection entitled Contacting the Company or to InvestorRelations@upcinsurance.com. Each communication should specify the applicable addressee or addressees to which the communication is directed, as
well as the general topic of the communication. We will initially receive and process communications before forwarding them to the addressee. We also may refer communications to other departments as applicable. We generally will not forward to our directors a communication that is primarily commercial in nature, relates to an improper or irrelevant topic or is a request for general information.
BOARD COMMITTEES
AUDIT COMMITTEE. Our Audit Committee consists of Mr. Hudson (Chair), Dr. Davis and Mr. Maroney. Our Board has determined that Mr. Hudson is an audit committee financial expert. All members of our Audit Committee are “independent” under both the general independence standards and the audit committee independence standards set forth in the Nasdaq rules.
Our Audit Committee operates under a formal written charter adopted by our Board that governs its duties and conduct. The committee reviews its charter annually for appropriate revisions. Interested parties can obtain a copy of the charter free of charge on our website at investors.upcinsurance.com, under the "Governance Documents" tab.
Our Audit Committee assists our Board in its oversight of the quality and integrity of our accounting, auditing, and reporting practices. Our Audit Committee’s role includes overseeing:
•our accounting and financial reporting processes and the audit of financial statements,
•the integrity of our financial statements,
•our compliance with legal and regulatory requirements,
•the independent auditor’s qualifications and independence,
•the performance of our independent auditors,
•our business practices and ethical standards and
•our risk assessment and risk management policies.
Our Audit Committee met nine times during 2022.
COMPENSATION AND BENEFITS COMMITTEE. Our Compensation and Benefits Committee consists of Mr. Whittemore (Chair), Mr. Hudson and Mr. Poitevint.
All members of our Compensation and Benefits Committee are "independent" under both the general independence standards and the compensation committee independence standards set forth in the Nasdaq rules.
Our Compensation and Benefits Committee operates under a formal written charter adopted by our Board that governs its duties and conduct. The committee reviews its charter annually for appropriate revisions. Interested parties can obtain a copy of the charter free of charge on our website at investors.upcinsurance.comunder the "Governance Documents" tab.
Our Compensation and Benefits Committee assists our Board in its oversight of employee compensation, benefit plans and employee stock programs and the compensation of our senior management. Our Compensation and Benefits Committee’s responsibilities include the following:
•oversee our overall compensation structure, policies and programs,
•review and administer our Company’s equity and incentive-based compensation plans that require approval from our Board,
•review and approve (i) compensation programs and (ii) corporate goals and objectives relevant to the compensation of our senior management,
•oversee the evaluation of the other executive officers and set the compensation of other executive officers after considering the recommendation of the CEO,
•review and recommend employment agreements and severance and change of control arrangements for our executive officers,
•assist the Board in reviewing and preparing the Compensation Discussion and Analysis,
•assist the Board in reviewing the outcome of stockholder votes on say on pay and the frequency of say on pay,
•review and approve compensation for members of the Board and
•periodically assess the risks associated with our compensation policies and practices.
As it deems appropriate, our Compensation and Benefits Committee may establish and delegate authority to subcommittees. The Compensation and Benefits Committee, to the extent permitted by applicable law, may also delegate to one or more executives of UPC Insurance the authority, within guidelines set by the Compensation and Benefits Committee, to approve equity compensation awards under established equity plans of the Company to employees other than those subject to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Compensation and Benefits Committee may also delegate non-discretionary administrative authority under Company compensation and benefit plans consistent with any limitations specified in the applicable plans.
Our Compensation and Benefits Committee met four times during 2022.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. Our Nominating and Corporate Governance Committee consists of Dr. Davis (Chair), Mr. Hogan and Mr. Whittemore. All members of our Nominating and Corporate Governance Committee are "independent" under the general independence standards set forth in the Nasdaq rules.
Our Nominating and Corporate Governance Committee operates under a formal written charter that governs its duties and conduct. The committee reviews its charter annually for appropriate revisions. Interested parties can obtain a copy of the charter free of charge on our website atinvestors.upcinsurance.com under the "Governance Documents" tab.
Our Nominating and Corporate Governance Committee assists our Board by, among other things:
•identifying and recommending to the Board qualified individuals to become directors,
•reviewing the independence of our Board members,
•determining membership of Board committees,
•recommending changes to our Corporate Governance Guidelines and other governing instruments,
•overseeing annual self-evaluations by our Board and committees,
•reporting annually to our Board regarding the CEO succession plan and
•overseeing risk management related to corporate governance and CEO succession.
As noted above, the Nominating and Corporate Governance Committee oversees the annual self-evaluation process for the Board and each of its committees. These self-evaluations are designed to assess whether the Board or the respective committee is functioning effectively and also to provide a mechanism for the Board or the respective committee to identify potential areas for improvement. Once completed, the results of the self evaluations and any appropriate recommendations or action plans are discussed among the members of the Board and each of its committees.
Our Nominating and Corporate Governance Committee met four times during 2022.
INVESTMENT COMMITTEE. Our Investment Committee consists of Mr. Poitevint (Chair), Mr. Hood and Mr. Maroney. All members of our Investment Committee are "independent" under the general independence standards set forth in the Nasdaq rules.
Our Investment Committee operates under a formal written charter that governs its duties and conduct. The committee reviews its charter annually for appropriate revisions. Interested parties can obtain a copy of the charter free of charge on our website atinvestors.upcinsurance.com under the "Governance Documents" tab.
Our Investment Committee assists our Board with the oversight of the Company’s investment policies and guidelines through the following activities:
•reviewing and approving policies and guidelines governing the Company’s investment portfolio and monitoring compliance with those policies,
•reviewing and approving periodically any investment benchmarks or other measurement devices employed by the Company to monitor the performance of our investment portfolio,
•monitoring the performance of our investment advisers and retaining and terminating such advisers as it deems appropriate and
•overseeing investment risk management exposure and guidelines.
Our Investment Committee met 11 times during 2022.
SELECTION OF DIRECTOR NOMINEES
Our Board selects the director nominees to stand for election at our annual stockholder meetings and to fill vacancies occurring on our Board based on the recommendations of the Nominating and Corporate Governance Committee. Our Nominating and Corporate Governance Committee selects nominees for director on the basis of experience, integrity, skills, the ability to make independent analytical inquiries, an understanding of our business environment and the willingness to devote adequate time to Board duties, all within the context of an assessment of the perceived needs of the Board at a given point in time. In addition to the individual attributes of our directors discussed above, we highly value the collective business experience and qualifications of the directors. We believe that the collective experiences, viewpoints and perspectives of our directors result in a Board with the commitment and energy to advance the interests of our stockholders.
Our Nominating and Corporate Governance Committee may consider current members of our Board for re-election unless they have notified our Board that they do not wish to stand for re-election. There is no mandatory retirement age for our directors. Our Nominating and Corporate Governance Committee may also consider candidates for our Board recommended by current members of our Board or members of management. In addition, our Nominating and Corporate Governance Committee will consider director candidates recommended by our stockholders in the same manner as it would consider any other recommended nominees. If our Nominating and Corporate Governance Committee determines that a stockholder-recommended candidate is suitable for Board membership, it will include the candidate in the pool of candidates under consideration for nomination upon the occurrence of the next Board vacancy or in connection with the next annual meeting of our stockholders.
Pursuant to the above procedures, once our Nominating and Corporate Governance Committee identifies prospective nominees, it will solicit background information on the candidates, then interview and evaluate the candidates. The Nominating and Corporate Governance Committee will then report its recommendations to the Board.
Our Nominating and Corporate Governance Committee recommended the four incumbent director nominees for election at our Annual Meeting, and our Board approved the recommendation.
DIRECTOR COMPENSATION
The following table describes the compensation received by each of our directors during the fiscal year ended December 31, 2022. Mr. Peed only receives compensation for his services as a director. His compensation is also disclosed under the subsection entitled Executive Compensation.
During fiscal year 2022, we offered the following compensation program for our directors: (i) an annual base retainer of $75,000 and an award of 5,000 shares of contingent restricted stock, (ii) an additional annual retainer of
$75,000 for the Chairman of the Board, (iii) an additional annual retainer of $50,000 for the Chairman Emeritus of the Board, (iv) an additional annual retainer of $20,000 to our Audit Committee Chairman, (v) an additional annual retainer of $12,500 to our Compensation and Benefits Committee Chairman and (vi) an additional annual retainer of $10,000 to the Chairmen of the Nominating and Corporate Governance Committee and the Investment Committee.
| | | | | | | | | | | | | | | | | | | | | | |
| | FEES EARNED OR PAID IN CASH | | STOCK AWARDS(1) | | | | TOTAL COMPENSATION |
R. Daniel Peed(2) | | $ | 150,000 | | | $ | 11,600 | | | | | $ | 161,600 | |
Gregory C. Branch(3) | | 125,000 | | | 11,600 | | | | | 136,600 | |
Alec L. Poitevint, II(4) | | 85,000 | | | 11,600 | | | | | 96,600 | |
Kern M. Davis, M.D.(4) | | 85,000 | | | 11,600 | | | | | 96,600 | |
| Michael R. Hogan | | 75,000 | | | 11,600 | | | | | 86,600 | |
| William H. Hood, III | | 75,000 | | | 11,600 | | | | | 86,600 | |
Sherrill W. Hudson(5) | | 95,000 | | | 11,600 | | | | | 106,600 | |
| Patrick F. Maroney | | 75,000 | | | 11,600 | | | | | 86,600 | |
Kent G. Whittemore(6) | | 87,500 | | | 11,600 | | | | | 99,100 | |
(1) Represents the grant date fair value of stock awarded to our directors on May 5, 2022. Includes a restricted stock award granted to each of Messrs. Peed, Branch, Poitevint, Davis, Hogan, Hood, Hudson, Maroney and Whittemore, which resulted in grants to each of these directors of 5,000 shares of our common stock in 2022, which will vest on the date of the Annual Meeting. The values of the stock awards were computed in accordance with Financial Accounting Standards Board Codification Topic 718, Compensation - Stock Compensation. See Note 19 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, for a discussion of the relevant assumptions used in calculating the value of the awards granted in 2022.
(2) Since July 1, 2020, Mr. Peed has also served as our CEO, although the only compensation he received from the Company during 2022 was for his services as a director. This compensation, which is also reported in the 2022 Summary Compensation Table, was comprised of $75,000 in annual director fees, $75,000 for his services as Chairman of the Board and a grant of stock awards as described above.
(3) Mr. Branch received $75,000 for his services as director and $50,000 for serving as Chairman Emeritus.
(4) Each of Messrs. Poitevint and Davis received $75,000 for their services as directors and $10,000 for serving as a Chairman of a Board committee.
(5) Mr. Hudson received $75,000 for his services as director and $20,000 for serving as the Chairman of the Audit Committee.
(6) Mr. Whittemore received $75,000 for his services as a director and $12,500 for serving as Chairman of the Compensation and Benefits Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As of December 31, 2022, the Compensation and Benefits Committee was comprised of the following three non-employee directors: Kent G. Whittemore (Chair), Sherrill W. Hudson and Alec L. Poitevint, II. During 2022, no executive officer of the Company served as a director or as a member of the compensation committee of a company (i) whose executive officer served as a director or as a member of the Compensation and Benefits Committee and (ii) which employed a director of the Company.
PROPOSAL TWO – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has approved the engagement of Deloitte as the independent registered public accounting firm to perform an audit of our consolidated financial statements for the fiscal year ending December 31, 2023. Deloitte has served as our auditor since 2018. Deloitte has advised our Audit Committee that neither it, nor any of its members, has any direct financial interest in UPC Insurance as a promoter, underwriter, voting trustee, director, officer or employee. Though we do not expect a representative of Deloitte to attend our Annual Meeting, if a Deloitte representative does attend, the representative will respond to appropriate questions and will have the opportunity to make a statement if the representative desires to do so.
The Board is asking our stockholders to ratify our Audit Committee’s appointment of Deloitte as our independent registered public accounting firm for the 2023 fiscal year. The appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2023 will be ratified if the number of “for” votes cast on Proposal TWO exceeds the number of “against” and “abstain” votes. Abstentions will be included in the calculation of the number of shares represented and entitled to vote at the Annual Meeting and will therefore
count as votes against the ratification of the appointment of Deloitte. Brokers will have discretionary authority to vote on Proposal Two.
Although none of our Certificate of AmendmentIncorporation, our Bylaws, or any other document or agreement requires ratification, the Board submits the appointment of Deloitte to authorizeour stockholders for ratification because we value our stockholders’ views on the appointment of our independent registered public accounting firm. If our stockholders do not ratify the appointment of Deloitte, we will consider such result as a direction from the stockholders to our Audit Committee to consider the appointment of a different firm and our Audit Committee will reconsider whether to retain Deloitte. In such event, our Audit Committee may retain Deloitte notwithstanding the fact that the stockholders did not ratify the appointment, or may appoint another accounting firm without re-submitting the matter to a stockholder vote. Even if stockholders ratify the appointment, our Audit Committee in its discretion may appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the Company’s best interest and, thus, in our stockholders’ best interest.
RECOMMENDATION OF THE BOARD
The Board and the Audit Committee recommend a vote FOR the ratification of the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2023.
AUDIT COMMITTEE REPORT
As part of its oversight responsibility, the Audit Committee reviewed and discussed the audited financial statements, the adequacy of financial controls and the effectiveness of UPC Insurance's internal control over financial reporting with management and Deloitte. The Audit Committee also has discussed with Deloitte the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. The Audit Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence. The Audit Committee also has discussed with Deloitte that firm’s independence.
Based on these reviews and discussions, the Audit Committee has recommended to the Board, and the Board has approved, the inclusion of the audited financial statements in UPC Insurance's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for filing with the SEC.
Sherrill W. Hudson, Chairman
Patrick F. Maroney
Kern M. Davis, M.D., NACD.DC
AUDIT COMMITTEE'S PRE-APPROVAL POLICIES AND PROCEDURES
Our Audit Committee requires that management obtain the prior approval of the Audit Committee for all audit and permissible non-audit services that our independent registered public accounting firm will provide. At regular meetings or as needed during the year, the Audit Committee reviews and approves proposals for such services, including the estimated fees the independent registered public accounting firm will charge. The Audit Committee Chairman may approve permissible non-audit services in an additional 50,000,000 sharesamount up to $10,000, and notifies the full Audit Committee of Common Stock as described in this Proposal I.such approvals at its next scheduled meeting.
AUDIT AND RELATED FEES
The following table summarizes the approximate fees our current auditor, Deloitte, billed us for services rendered during fiscal years 2022 and 2021, all of which were pre-approved by our Audit Committee in accordance with the procedures described above.
| | | | | | | | | | | |
(in thousands) | 2022 | | 2021 |
| Audit Fees | $ | 1,396 | | | $ | 1,539 | |
| Audit-Related Fees | — | | | 65 | |
| Tax Fees | 35 | | | — | |
| All Other Fees | 11 | | | 12 | |
| Total | $ | 1,442 | | | $ | 1,616 | |
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following individuals serve as our executive officers:
| | | | | | | | | | | | | | |
| | AGE | | POSITION |
| R. Daniel Peed | | 60 | | Chief Executive Officer and Chairman of the Board |
| B. Bradford Martz | | 51 | | President and Chief Financial Officer |
| Christopher Griffith | | 47 | | Chief Operating Officer and Chief Information Officer |
| Brooke Adler | | 46 | | General Counsel |
R. DANIEL PEED has served as our CEO and Chairman of the Board since July 2020. Mr. Peed has served as a member of the Board since 2017. Mr. Peed served on the board of ACIC, our wholly-owned subsidiary that we acquired as part of our acquisition of AmCo, from 2007 to 2017. Mr. Peed is the co-founder and served as Non-executive Vice Chairman of AmRisc, the managing general agent of ACIC, from December 2000 to December 2018. From 1991 to 2000, Mr. Peed served as Senior Vice President of SOREMA North America Reinsurance Company, Fulcrum Insurance. In addition, from 1985 to 1991, Mr. Peed was a supervisor at Factory Mutual Engineering Association. Mr. Peed has a B.S in petroleum engineering from Texas A&M University and an M.B.A with a concentration in insurance from the University of North Texas. Mr. Peed also holds the CPCU and ARe designations and a Professional Engineering designation in fire protection.
B. BRADFORD MARTZ has served as our CFO since October 2012. He also assumed the role of President in July 2020. From 2001 until his appointment as CFO, Mr. Martz held a series of financial roles with progressively responsible leadership experience leading to becoming CFO in 2007 of Bankers Financial Corporation, a Florida-based diversified holding company system with operations in the property and casualty insurance, life/annuity insurance, warranty, insurance agency, insurance business process outsourcing and real estate markets. From 1996 to 2001, Mr. Martz was the CFO of Bonded Builders Service Corporation, a Florida domiciled specialty insurer focused on new home warranty offerings nationwide. Mr. Martz is a Certified Public Accountant licensed in Florida and also holds the Global Certified Management Accountant designation from the American Institute of Certified Public Accountants. Mr. Martz obtained a B.S. in Finance from the University of Colorado at Boulder and an M.B.A. from Northeastern University.
CHRISTOPHER GRIFFITH has served as our Chief Information Officer since October 2018. He has over 24 years of technology-related experience, with over 16 in the insurance industry. Prior to his time at UPC Insurance, Mr. Griffith served as the Vice President and Chief Information Officer of Safety National Casualty Corp ("Safety National"), a specialty insurance and reinsurance provider (from April 2013 to September 2018). While at Safety National, Mr. Griffith was responsible for the data and digital initiatives of the company, as well as oversight and development of over 200 IT professionals. Previously, Mr. Griffith has served in various executive-level IT positions across multiple industries. Mr. Griffith holds a B.S. in Computer Science from the University of South Carolina, as well as an Executive M.B.A. from the University of Missouri-Columbia.
BROOKE ADLER has served as General Counsel since April 2021 and joined as our Assistant General Counsel in 2020. Prior to joining our Company, Ms. Adler served as General Counsel to a multi-state property insurance company, and has held a variety of roles with other insurance groups in the domestic Florida market. Her experience includes regulatory compliance, mergers and corporate formations, licensing, and claims litigation. A member of the Florida Bar, Ms. Adler holds a Bachelor of Arts degree from the University of South Florida and a Juris Doctorate from Seton Hall University.
As previously disclosed, our subsidiary, United Property and Casualty Insurance Company (“UPC”), was placed into receivership on February 27, 2023, as a result of losses incurred from Hurricane Ian. All of our executive officers were officers of UPC.
COMPENSATION DISCUSSION AND ANALYSIS
Our Compensation Discussion and Analysis describes our executive compensation program and philosophy and reviews the actions taken by our Compensation and Benefits Committee ("Committee") concerning the
compensation of our Named Executive Officers ("NEOs"), who are listed below, for the fiscal year ending December 31, 2022:
•R. Daniel Peed - CEO and Chairman of the Board
•B. Bradford Martz - President and CFO
•Christopher Griffith - Chief Operating Officer & Chief Information Officer
•Brooke Adler - General Counsel
•Brooke Shirazi - Former Chief Underwriting Officer
2022 MANAGEMENT CHANGES
There were three changes in 2022 with respect to our senior leadership team.
Effective July 8, 2022, Mr. Scott St. John, our former Chief Claims Officer, resigned from his position. Effective August 2, 2022, Ms. Alycia Weigley, our former Chief Talent Officer, resigned from her position. Effective October 24, 2022, Mrs. Brooke Shirazi, our former Chief Underwriting Officer, resigned from her position. The responsibilities of these individuals were assumed internally with additional support from third-party vendors.
2022 COMPANY PERFORMANCE HIGHLIGHTS
FINANCIAL HIGHLIGHTS. We decreased our total operating expenses year over year as a result of a 11.2% decrease in policy acquisition costs and 22.4% decrease in operating and underwriting costs, reflecting our decision to reduce our personal lines property insurance business through renewal rights agreements and underwriting actions. However, personal lines gross written premiums decreased 32.1% as a result of this decision. Commercial lines gross written premiums increased 20.4% as we focus on becoming a specialty commercial lines underwriter. Net losses attributable to United Insurance Holdings Corp. (UIHC) increased compared to the prior year as a result of Hurricane Ian, which made landfall in Florida as a category four hurricane and drove a 51.1% increase in loss and loss adjustment expenses. We retained current year catastrophe losses of $283,190,000 during 2022.
| | | | | | | | | | | | | | |
| ($ in thousands, except per share, ratios and policies in-force) | | Year Ended December 31, |
| | 2022 | | 2021 |
| | | | |
| Total net revenues | | $ | 455,422 | | | $ | 634,527 | |
| Consolidated net loss attributable to UIHC | | $ | (469,855) | | | $ | (57,919) | |
| | | | |
| Net loss attributable to UIHC per diluted share | | $ | (10.91) | | | $ | (1.35) | |
| | | | |
Combined ratio(1) | | 194.7 | % | | 120.3 | % |
| Return on average equity, trailing twelve months | | (307.4) | % | | (16.9) | % |
| | | | |
| Policies in-force | | 254,275 | | | 471,724 | |
(1) Calculated as operating expenses less interest expense relative to net premiums earned.
| | | | | | | | | | | | | | | | | |
| ($ in thousands, except per share and ratios) | December 31, 2022 | | December 31, 2021 | | % Change |
| Investment and Cash holdings | $ | 715,721 | | | $ | 964,844 | | | (25.8) | % |
| | | | | |
| Book value per share | $ | (4.21) | | | $ | 7.20 | | | (158.5) | % |
See the sections titled RESULTS OF OPERATIONS, GEOGRAPHIC MARKETS and ANALYSIS OF FINANCIAL CONDITION as well as the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, for additional information about the financial highlights included herein.
STRATEGIC HIGHLIGHTS. During 2022, we achieved several goals which were consistent with our strategy to become a specialty commercial lines underwriter and are optimistic about future performance for the following reasons:
•Improvements in operating expenses: Our operating expenses decreased $24.0 million year-over-year, as we focus on cost cutting and execute our plans to reduce our personal lines property insurance business and transition to a specialty commercial lines underwriter.
•Focus on risk selection: During 2022, we continued to work to restrict new business through the adjustment of underwriting guidelines as needed. In addition, we have implemented initiatives to ensure adequate coverage levels for our policies to combat rising construction costs.
•Significant underwriting actions: During 2022, we continued to take rate increases on both our commercial and personal lines portfolios, where actuarial results indicate, increasing premiums while reducing exposure.
•Portfolio Realignment: During 2022, we filed plans of withdrawal in Louisiana, Texas, and Florida. While Interboro Insurance Company, one of our insurance subsidiaries will continue to write personal lines business in the state of New York, the withdrawal allows us to focus our capacity on our commercial residential business.
Role of the Compensation and Benefits Committee and Management in the Compensation-Setting Process. Our Committee’s role in reviewing and approving executive compensation includes the annual review and approval of goals, risks and objectives relevant to senior management compensation and approval of equity-based awards for the CEO and other senior management. The Committee's duties and responsibilities are further set forth in the Committee’s charter as described under the section entitled Board Committees above. The Committee's charter can also be found at the following url: http://investors.upcinsurance.com/govdocs.
Compensation for our CEO is reviewed and approved by the Committee following consultation and input from its independent compensation consultant, Pay Governance LLC. During 2022 (like 2021 & 2020), Mr. Peed declined all base salary and incentive compensation beyond what he would receive as Chairman of the Board.
For our other executives, our CEO makes recommendations to the Committee for base salaries and Annual Incentive Plan targets. The Committee considers those recommendations and other relevant factors in making its final compensation decisions. The incentive compensation plans are described in more detail under the Incentive Compensation subsection of the section titled Elements of Executive Compensation.
The Chairs of the Audit and Investment Committees serve on the Committee. These directors bring information and perspective from the work of other committees to provide insight to assist the Committee in executing its role, including its role in risk management oversight and fulfilling its obligations under the Committee charter.
The Committee has the authority to engage consultants and advisors pursuant to its charter. For fiscal 2022, the Committee continued to rely on Pay Governance LLC, which provided assistance to the Committee in competitive trends in executive compensation, marketplace data on executive pay levels and on the implementation of the Company’s incentive plans. Pursuant to regulatory requirements, the Committee assessed Pay Governance LLC's independence in 2022 and concluded that Pay Governance LLC's work did not raise any conflicts of interest.
Summary of 2022 Compensation Actions. In 2022, our Committee continued its focus on managing our compensation program consistent with our compensation philosophy, which is described below under Overview of our Executive Compensation Philosophy and Objectives. Actions taken or approved by our Committee relative to the compensation programs for our executive officers for 2022 included the following:
•Reviewed the performance of our executive officers, including our NEOs but excluding our CEO, with assistance from our CEO and determined the structure and amount of base salary and bonus compensation for our executive officers for 2022 as seen in the Elements of Executive Compensation and Executive Compensation subsections, respectively.
•Reviewed the Annual Incentive Plan, which includes both quantitative corporate financial performance targets and an individual qualitative executive performance metric, with seventy percent (70%) of the annual target weighted toward corporate financial performance. The composition and design of our Annual Incentive Plan program is described in more detail in the Elements of Executive Compensation section.
•Reviewed our Long-Term Incentive Plan grants, which include performance units, as well as time-vested restricted stock units and stock options for senior management and restricted stock awards for our CEO in his capacity as Chairman of the Board. The design of our Long-term Incentive Plan is described in more detail in the Elements of Executive Compensation section.
•Reaffirmed our group of peer companies pursuant to which executive compensation can be measured, both for base salary and incentive-based compensation.
Overview of our Executive Compensation Philosophy and Objectives. We believe that a skilled, experienced and dedicated senior management team is essential to the future success of our Company and to building stockholder value. In order to attract and retain talented executives with these qualities as well as to motivate management to maximize performance while building stockholder value, we have sought to establish compensation programs that we believe are competitive in the marketplace. We also have a “pay-for-performance” philosophy, meaning that our compensation program is intended to pay above market compensation to our NEOs other than our CEO if the performance of the Company delivers higher value to the stockholders, and below-market compensation if the Company's financial performance delivers below market-median value to its stockholders.
Three long-term objectives drive the Committee’s decisions regarding the executive compensation elements, including incentive plan design and award levels. These objectives are as follows:
Build long-term stockholder value - We provide a significant portion of executive compensation through long-term incentive compensation and stock-based opportunities to emphasize compensation programs that we believe are linked to maximizing stockholder value over the long term;
Drive sustained, strong business and financial results - We provide a significant portion of executive compensation through incentive compensation programs that are linked to our Company achieving targeted increases in earnings per share, return on equity and gross premiums earned; and
Attract, motivate, and retain a highly qualified and effective executive team - The attraction, motivation, and retention of top executive talent is critical to our continued success. Therefore, the Committee considers broad-based surveys that reveal executive compensation levels in the industry to gain a general understanding of compensation practices.
Pay Mix. The key components of our compensation program for our NEOs for 2022 were base salary, annual cash incentive awards under our Annual Incentive Plan, time-vesting restricted stock awards, performance stock units and stock options under our Long-Term Incentive Plan, Retention Payments, and other compensation consisting primarily of matching 401(k) contributions and health and welfare benefits (excluding our CEO who declined all compensation other than his compensation for services as Chairman of the Board). Each component of our compensation program has an important role in creating compensation arrangements that motivate and reward strong performance and in retaining the NEOs who deliver robust results.
The Committee prioritizes incentive-based "pay-for-performance" compensation programs when developing annual total compensation for our NEOs.
As shown in the chart below, 62.4% of the total target compensation was linked to annual and long-term performance-based incentives for all NEOs (excluding the CEO) who were eligible for the AIP and LTIP compensation.
Peer Group. To ensure that our NEO compensation program is competitive and will allow us to meet our objective of attracting and retaining talented executives, the Committee, with the assistance of Pay Governance LLC, established a group of peer companies on which to compare compensation for the executives with compensation received by the executives of our competitors. In fiscal 2021, the Committee updated our designated comparison group of twelve publicly-listed companies of varying sizes within the insurance industry which primarily was used to compare Return on Average Equity under our Long-Term Incentive Plan grants, but which was also used for benchmarking executive compensation. The designated comparison group for 2022 consisted of the following companies:
| | | | | | | | | | | | | | | | | | | | |
| Company | | Ticker | | Company | | Ticker |
| Global Indemnity | | GBLI | | Hippo Holdings, Inc. | | HIPO |
| HCI Group | | HCI | | United Fire Group, Inc. | | UFCS |
| Palomar | | PLMR | | Universal Insurance Holdings, Inc. | | UVE |
| Kingstone Companies | | KINS | | Donegal Group | | DGICA |
| National Security Group | | NSEC | | Federated National Holding Company | | FNHC |
| Lemonade | | LMND | | Heritage Insurance Holdings | | HRTG |
Elements of Executive Compensation.
BASE SALARY. In general, the base salary of each executive is initially established through arm's-length negotiations at the time the individual is hired, including consideration of the individual's qualifications, experience, level of responsibility, as well as internal pay equity considerations. Employment agreements of the NEOs (other than our CEO who does not have an employment agreement) provide that the individual NEO shall receive an annual base salary. These agreements permit base salary to be increased on an annual basis at the discretion of the Committee during the term of employment. Pursuant to each employment agreement, base salaries may not be decreased during the individual's term of employment.
We believe base salaries should be competitive based upon an executive officer’s scope of responsibilities, the market compensation of similarly situated executives, and the relative talent of the individual executive. When establishing base salary for an executive, we also consider other factors such as internal consistency, and for new hires, salary paid by a former employer. Based on the foregoing considerations, in 2022 the Committee approved the salaries for each of the NEOs. Our NEOs' base salaries for 2022 were as follows:
| | | | | | | | |
| Named Executive Officer | | 2022
Base Salary |
R. Daniel Peed(1) | | $ | — | |
| B. Bradford Martz | | 498,750 | |
| Christopher Griffith | | 430,500 | |
| Brooke Shirazi | | 367,500 | |
| Brooke Adler | | 341,250 | |
(1) R. Daniel Peed, our CEO, has declined any compensation other than what he receives for serving as Chairman of the Board and thus did not receive a base salary in fiscal 2022.
In addition, the Committee approved the following salary increases for our NEOs that became effective March 1, 2023:
| | | | | | | | |
Named Executive Officer (1) | | 2023 Base Salary (as of 3/1/23) |
| B. Bradford Martz | | 523,688 | |
| Christopher Griffith | | 452,025 | |
| Brooke Adler | | 370,125 | |
| | |
(1) R. Daniel Peed, our CEO, has declined any compensation other than what he receives for serving as Chairman of the Board and thus did not receive a base salary in fiscal 2022. In addition, Brooke Shirazi is no longer employed by the Company.
INCENTIVE COMPENSATION. The award of incentive compensation for our NEOs under our Annual Incentive Plan and performance-based compensation under our long-term incentive plan is based on achieving certain annual corporate performance goals included in our 2020 Omnibus Incentive Plan (our "Long-Term Incentive Plan"). As to each performance goal, the relevant measurement of performance will be computed in accordance with generally accepted accounting principles to the extent applicable, but, unless otherwise determined by the Committee, will exclude the effect of various items set forth in the "Performance Goals" section in the 2020 Omnibus Incentive Plan.
Annual Incentive Plan - Our NEOs as well as certain other management employees, participate in the Annual Incentive Plan, which provides participants an opportunity to earn a cash bonus upon achievement of key financial performance objectives approved by the Committee. Within the overall context of our compensation philosophy and culture, the Annual Incentive Plan:
•provides competitive levels of total cash compensation;
•aligns pay with organization and individual performance; and
•focuses executive attention on key business metrics.
In setting the performance goals under the Annual Incentive Plan, our intention is to provide for challenging and ambitious targets to further our overall goal of increasing stockholder value. Though challenging, we believe the goals are attainable through a collaborative effort by our NEOs. The Committee reviews and approves payouts made under the Annual Incentive Plan. The 2022 Annual Incentive Plan was designed with three metrics:
•Financial Goals: Represent 70% of target award value equally weighted between average increase in personal line renewal rates and core income after-tax return on equity;
•Individual Qualitative Performance: Represents 30% of target award value.
Core income is a non-GAAP measure reported by UIHC that excludes from net income the effect of non-cash amortization of intangible assets, unrealized gains and losses on the Company's equity security investments and realized gains and losses on the Company's investment portfolio. For the purposes of incentive compensation goal calculations, the core income after tax return on equity shall be further adjusted to remove the after-tax effect of losses from named or numbered tropical windstorms as designated by the National Hurricane Center and earthquakes.
The range of potential payouts under the Fiscal 2022 Annual Incentive Plan is described in the table below:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Performance Metric | | Weighting | | Threshold
(Earns 50%) | | Target
(Earns 100%) | | Maximum
(Earns 150%) |
| | | | | | | | |
| Renewal Rate Increases | | 35% | | 2% | | 6% | | 10% |
| | | | | | | | |
| Core income after-tax return on beginning equity | | 35% | | 5% | | 7.5% | | 15% |
| | | | | | | | |
| Qualitative Performance | | 30% | | | | Discretionary Evaluation | | |
Fiscal 2022 renewal rate increases were approximately 19.4%, 13.4% above target rate increases. Fiscal 2022 core income after-tax return on equity was 73.9% below target. The Committee also determined, in consultation with Pay Governance LLC, that each of the NEO's individual performance warranted full target payment of the qualitative metric. Taking into consideration these outcomes, as well as the NEO's respective contributions to our strategic goals, the Committee approved payment under the Annual Incentive Plan to our NEOs for 2022 described below and as further detailed in the 2022 Summary Compensation Table under the column titled Non-Equity Incentive Plan Compensation. R. Daniel Peed, our CEO, has declined any compensation other than what he receives for serving as Chairman of the Board. The following table sets forth the calculation of annual incentive award payments to each of our NEOs for fiscal 2022 after applying the performance metrics and individual performance objectives evaluations:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NEO | | Target Award | Weighted Average (rate increases and core return on equity) | | Weighted Qualitative Performance | | AIP Payout % of Target | | AIP Payout |
| R. Daniel Peed | | $0 | —% | | —% | | —% | | $0 |
| B. Bradford Martz | | $300,000 | 52.5% | | 30.0% | | 82.5% | | $247,500 |
| Christopher Griffith | | $220,000 | 52.5% | | 30.0% | | 82.5% | | $181,500 |
| Brooke Adler | | $180,000 | 52.5% | | 30.0% | | 82.5% | | $148,500 |
Brooke Shirazi (1) | | $150,000 | 52.5% | | 30.0% | | 82.5% | | $0 |
(1) Brooke Shirazi is no longer employed by the Company and thus was not eligible for payment under our Annual Incentive Plan.
Long-Term Incentive Plan - The Committee implemented our Long-Term Incentive Plan because it believes that long-term incentives are an essential part of our total compensation package, which is intended to promote ownership, higher performance and ultimately higher stockholder return. Additionally, the Committee intends for the Long-Term Incentive Plan to further the following four key objectives that fit within the overall context of our compensation philosophy and culture:
•Pay for Performance: Emphasize variable compensation that is linked to our performance to generate and reward superior corporate performance;
•Alignment of Interests: Incorporate performance metrics that link executives' incentive goals with the interests of our stockholders;
•Long-Term Success: Support and reward executives for consistent performance over time and achievement of our long-term strategic goals; and
•Retention: Attract and retain highly qualified executives whose abilities are critical to our success and competitive advantage.
Under our long-term incentive program, we historically made annual grants of time-vesting restricted stock to our executive officers if predetermined corporate performance targets were achieved. Generally, if the performance targets were hit in year one, time-based restricted stock was granted in year two. Restricted stock awards for our NEOs vested ratably over the three years following the grant date, contingent on continued employment, unless the executive was terminated by us other than for cause. The number of shares of time-
vesting restricted stock granted was based on the target dollar value of the award divided by the closing price of our stock on the date of grant.
Since fiscal 2018, on the advice of Pay Governance LLC, the Committee has incorporated both performance and time-based awards in our long-term incentive program. The Committee believes this plan design remains consistent with the goal of attracting and retaining highly qualified executives, while rewarding company performance aligned with the interests of our stakeholders.
In fiscal 2022, we granted restricted stock units, performance stock units and stock options to our NEOs (other than our CEO) which vest ratably over the three years following the grant date, also contingent on continued employment and meeting performance goals. The program design is described below:
| | | | | | | | | | | | | | |
| Vehicle | | Percentage of Target Award | | Key Metrics |
| Options | | 25% | | Granted at fair value under the Black-Scholes Model Vest ratably over three years Exercise price set at fair market value on the date of grant
|
| | | | |
| Restricted Stock Units ("RSUs") | | 25% | | Granted at fair market value on the date of grant Vest ratably over three years
|
| | | | |
| Performance Stock Units ("PSUs") | | 50% | | Granted at fair value on the date of grant One third of award will vest each April subject to performance against the peer group Allows for vesting between 50% Threshold and 150% of target award (Maximum)
|
Each PSU grant consists of three annual tranches that individually are eligible to vest based on the applicable year's performance against target. For the fiscal 2022 PSUs, the Committee utilized the Company's GAAP Return on Average Equity ("GAAP ROAE") versus that of its peers as the performance metric. The Committee set a target goal for PSUs that is challenging, but capable of being achieved with significant performance. Failure to achieve threshold performance of 750 basis points below the peer group median in any fiscal year will result in failure of vesting of that tranche of the award. The award of each tranche of PSUs is capped at 150% of target if the Company's performance is 750 basis points above the peer group median. Based on fiscal 2022 financial results, the Company's GAAP ROAE was below the peer group median and below the threshold, resulting in a forfeiture of the third tranche of the fiscal 2020 PSUs, the second tranche of the fiscal 2021 PSUs and the first tranche of the fiscal 2022 PSUs. As a result, no PSUs of our NEOs vested in fiscal 2022.
| | | | | | | | | | | | | | | | | | | | |
| NEO | | Fiscal 2022 PSU Grant | | PSUs Eligible for Vesting in 2023 | | First Tranche Earned PSUs |
| R. Daniel Peed | | — | | — | | — |
| B. Bradford Martz | | 117,647 | | 39,216 | | — |
| Christopher Griffith | | 64,706 | | 21,569 | | — |
| Brooke Adler | | 49,019 | | 16,340 | | — |
| Brooke Shirazi | | 58,824 | | — | | — |
(1) Brooke Shirazi is no longer employed by the Company and thus has no PSUs eligible for vesting in 2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| NEO | | Fiscal 2021 PSU Grant | | PSUs Eligible for Vesting in 2023 | | First Tranche Earned PSUs | | Second Tranche Earned PSUs |
| R. Daniel Peed | | — | | — | | — | | — |
| B. Bradford Martz | | 33,279 | | 11,093 | | — | | — |
| Christopher Griffith | | 12,175 | | 4,058 | | — | | — |
| Brooke Adler | | — | | — | | — | | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| NEO | | Fiscal 2020 PSU Grant | | PSUs Eligible for Vesting in 2023 | | First Tranche Earned PSUs | | Second Tranche Earned PSUs | | Third Tranche Earned PSUs |
| R. Daniel Peed | | — | | — | | — | | — | | |
| B. Bradford Martz | | 20,160 | | 6,720 | | — | | — | | |
| Christopher Griffith | | 8,552 | | 2,851 | | — | | — | | |
OTHER COMPENSATION. We have a 401(k) plan that generally covers all of our employees who have completed 90 days of service. Pursuant to our 401(k) plan, participants may elect to make pre-tax contributions up to the statutorily prescribed annual limits. Our NEOs who participate in the 401(k) plan receive matching contributions under our 401(k) plan in the same manner as all of our employees who participate in the plan. During 2022, we matched 100% of each participant's pre-tax contributions up to the first 5% of such participant's base salary up to the maximum allowed by the plan. Our CEO does not participate in the 401(k) plan.
Our executive officers receive health and welfare benefits, such as group medical, group life, group dental and short-term and long-term disability coverage. We believe that our executives should be able to provide for their retirement needs from the total annual compensation they earn based on our Company's performance. Accordingly, other than employer matching contributions to the accounts of our NEOs (other than our CEO) under our 401(k) Plan (at the same matching contribution rate that we provide to all eligible full-time employees), we do not offer executives participation in any qualified or non-qualified pension plans, supplemental executive retirement plans, deferred compensation plans or other forms of compensation for retirement.
During the year ended December 31, 2022, Messrs. Martz and Griffith and Ms. Adler were granted a retention payment in connection with their continued service at the Company. These payments are fully subject to clawback in the event the recipient departs from the Company prior to December 31, 2023 for any reason other than a resignation for "good reason" or termination by the Company without "cause" (as such terms are defined in their employment agreements). In the event that any of Mr. Martz, Mr. Griffith or Ms. Adler resign for "good reason," the resigning individual will be required to repay (x) 100% of their retention payments if such resignation is prior to May 31, 2023 or (y) 50% of their retention payment if such resignation is between June 1, 2023 and December 31, 2023.
Other Highlights of Our Compensation Programs. We periodically review best practices in the area of executive compensation and update our compensation policies and practices to reflect those that we believe are appropriate for our company. In addition to the short- and long-term performance compensation described in the Elements of Executive Compensation section above, our program also includes the following:
•We pay for performance, offering our NEOs the opportunity to earn a substantial amount of variable compensation based on our Company achieving certain performance targets.
•We encourage long-term decision making, as our annual Long-Term Incentive Plan awards span a three-year time period, and the ultimate value of the options granted, restricted stock units granted and performance stock units earned are determined by our performance over the three years (due to three-year vesting periods, with PSUs eligible to vest in three ratable tranches).
•We do not provide heightened change of control severance benefits for any NEOs under their employment agreements.
•Our equity compensation plan does not permit repricing of stock options without stockholder approval.
•We do not guarantee salary increases or bonuses for our executive officers.
Stock Ownership Guidelines. In 2019, the Board adopted stock ownership guidelines ("Ownership Guidelines") for our CEO, CFO, other Section 16 officers and members of our Board. The Ownership Guidelines were adopted to demonstrate the Company’s commitment to stockholders and employees, customers and vendors.
The following ownership target amount categories will remain in place until changed by the Compensation and Benefits Committee:
| | | | | |
| Non-Employee Board members | 4 X Annual Cash Retainer |
| Chief Executive Officer | 5 X Annual Base Salary |
| Chief Financial Officer | 3 X Annual Base Salary |
| Other Section 16 Officers | 2 X Annual Base Salary |
The salary threshold for our CEO takes into account his annual cash retainer as Chairman of the Board. In any event, he has significant equity ownership in the Company as described below under Beneficial Ownership.
Securities eligible to meet the targets include the following:
•Stock held individually or jointly with a spouse or held in trust for others, whether purchased on the open market, received upon vesting of restricted stock or restricted stock units, received upon the exercise of stock options, or otherwise
•Unvested restricted stock or units, unless vesting is performance-based; and
•Any Company stock held within a 401(k) account
Stock options (vested or unvested), performance stock or units (unearned) and pledged securities are not eligible securities for purposes of complying with these ownership targets.
Covered individuals employed or serving as non-employee Board members as of August 1, 2019 will have until December 31, 2024 to meet the ownership targets above, except that any covered individuals hired, promoted or elected to the Board within twelve months preceding August 1, 2019 shall have until December 31, 2025 to meet these ownership targets. Covered individuals hired, promoted or elected after August 1, 2019 have five years from the date of hiring, promotion or election, as applicable, to reach the applicable ownership target.
Compensation Clawback Policy. On March 21, 2019, the Committee adopted the Compensation Clawback and Recoupment Policy (“Clawback Policy”), which provides for the recoupment of bonus or incentive-based compensation paid or to be paid to the Company’s Section 16 officers in the event of a restatement of financial results or similar revisions of performance indicators upon which incentive compensation is based.
In November 2022, the SEC issued a final rule requiring public companies to recover certain erroneously awarded incentive-based compensation in the event of an accounting restatement. We are evaluating the final rule and Nasdaq's associated proposed listing standards to determine if any changes will be needed to our Clawback Policy.
Anti-Hedging Policy. On July 31, 2019, our Board adopted an anti-hedging policy. Under the Anti-Hedging Policy, all Company employees, officers and directors are prohibited from engaging in transactions that are designed to or that may reasonably be expected to have the effect of hedging of any securities of the Company, either through transactions in the Company’s securities or through the use of financial instruments designed for such purposes, such as prepaid variable forward contracts, short sale instruments, puts, calls, equity swaps, collars, units of exchangeable funds or other derivative instruments.
Severance and Change of Control Arrangements. We offer severance benefits because we compete for executive talent in a highly competitive market in which companies routinely offer similar benefits to NEOs. We have entered into employment agreements with each of our NEOs, excluding our CEO, which provide for severance benefits if we terminate the NEO without cause. These severance benefits consist of base salary continuation, paid COBRA coverage for a period of time specified in the employment agreements and a prorated portion of the executive’s annual incentive bonus. Additionally, under the terms of restricted stock awards granted to our NEOs pursuant to the fiscal 2022 awards, accelerated vesting of any unvested restricted stock and option awards granted in fiscal 2022 will only be accelerated in the event of a termination without cause or for "good reason" within two years following a change in control. Please refer to the discussion below under Potential Payments upon Termination or Change of Control for a more detailed discussion of our severance and change of control arrangements.
Advisory Votes on Compensation. The Board recognizes the fundamental interest that our stockholders have in the compensation of our executive officers. At the 2022 Annual Meeting of Shareholders, approximately 98% of the votes cast were in support of the compensation of the Company's executive officers. This vote has not resulted in any changes to our compensation program or philosophy. At the 2022 Annual Meeting of Shareholders, the shareholders voted in favor of an advisory vote on compensation to occur on a three-year basis. Accordingly, the next advisory vote on compensation will occur at our 2025 Annual Meeting of Shareholders.
Future advisory votes on executive compensation will serve as an additional tool to guide the Committee in evaluating the alignment of the Company's executive compensation program with the interests of the Company and its stakeholders.
Tax Considerations. The Committee has considered the impact of Section 162(m) of the Code with respect to the compensation paid to our NEOs. As relevant to fiscal 2022 compensation, Section 162(m) places a limit of $1 million on the amount of compensation that a publicly held corporation may deduct in any one year with respect to any person who is or at any time after December 31, 2016 was its CEO, CFO or one of its three other most highly compensated executive officers, with certain exceptions for agreements that were in effect as of November 17, 2017. No NEO exceeded the amount deductible in 2022. The Committee recognizes the need to retain flexibility to make compensation decisions that may result in the payment of compensation that is not deductible and accordingly reserves the authority to approve potentially non-deductible compensation when deemed appropriate.
Compensation and Benefits Committee Report. Our Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management, and based on such review and discussions, our Committee recommended to our Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Kent G. Whittemore, Chair
Sherrill W. Hudson
Alec L. Poitevint, II
EXECUTIVE COMPENSATION
2022 SUMMARY COMPENSATION TABLE
The following Summary Compensation Table displays the compensation received by each of our NEOs during the years ended December 31, 2022, 2021 and 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year | | Salary(1) | | Bonus | | Stock Awards(2) | | Option Awards (3) | | Non-Equity Incentive Compensation Plan(4) | | All Other Compensation(5) | | Total |
| R. Daniel Peed | | 2022 | | $ | 150,000 | | | $ | — | | | $ | 11,600 | | | $ | — | | | $ | — | | | $ | 300 | | | $ | 161,900 | |
| CEO and Chairman of Board | | 2021 | | 150,000 | | | — | | | 29,400 | | | — | | | — | | | 1,200 | | | 180,600 | |
| | 2020 | | 112,500 | | | — | | | 43,850 | | | — | | | — | | | 900 | | | 157,250 | |
| | | | | | | | | | | | | | | | |
| B. Bradford Martz | | 2022 | | 494,792 | | | — | | | 350,000 | | | 150,000 | | | 495,000 | | | 58,583 | | | 1,548,375 | |
| President and CFO | | 2021 | | 470,833 | | | — | | | 307,500 | | | 289,888 | | | 283,500 | | | 34,122 | | | 1,385,843 | |
| | 2020 | | 427,417 | | | — | | | 265,200 | | | 88,400 | | | 275,924 | | | 27,091 | | | 1,084,032 | |
| | | | | | | | | | | | | | | | |
| Christopher Griffith | | 2022 | | 427,083 | | | — | | | 192,500 | | | 82,500 | | | 363,000 | | | 45,856 | | | 1,110,939 | |
Chief Operating Officer & Chief Information
Officer | | 2021 | | 396,098 | | | — | | | 112,500 | | | 178,221 | | | 207,900 | | | 23,436 | | | 918,155 | |
| | 2020 | | 317,750 | | | — | | | 112,500 | | | 37,500 | | | 150,504 | | | 20,213 | | | 638,467 | |
| | | | | | | | | | | | | | | | |
| Brooke Adler | | 2022 | | 325,128 | | | — | | | 145,833 | | | 62,500 | | | 297,000 | | | 39,020 | | | 869,481 | |
| General Counsel | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Brooke Shirazi | | 2022 | | 296,373 | | | — | | | 175,000 | | | 75,000 | | | — | | | 17,430 | | | 563,803 | |
| Chief Underwriting Officer | | | | | | | | | | | | | | | | |
(1) Represents director fees paid in cash to Mr. Peed for his services as a member of the Board. He received $75,000 in cash in 2022, 2021 and 2020, for his services as director. In 2022 & 2021, he also received $75,000 for his services as Chairman of the Board. In 2020, he received an additional $37,500 in cash for his services as Chairman of the Board from July 1, 2020 through December 31, 2020. For the remaining NEOs, this column represents the base salary earned during each fiscal year.
(2) Represents aggregate grant date fair value of the restricted stock awards, restricted stock units and/or performance units awarded to Messrs. Peed, Martz, Griffith, and Mses. Adler and Shirazi. Includes restricted stock awards and restricted stock units and/or performance units granted to Messrs. Peed, Martz, Griffith, Ms. Adler, as applicable, pursuant to our Long-Term Incentive Plan as well as outside of our Long-Term Incentive Plan, which resulted in grants to each of these executives of the aggregate number of shares of restricted stock awards, restricted stock units and performance units shown in the table below (for Mr. Peed the table below reflects the restricted stock awards received for his service as a member of the board):
| | | | | | | | | | | | | | | | | |
| 2022 | | 2021 | | 2020 |
| R. Daniel Peed | 5,000 | | | 5,000 | | | 5,000 | |
| B. Bradford Martz | 205,882 | | | 49,919 | | | 30,240 | |
| Christopher Griffith | 113,235 | | | 18,263 | | | 12,828 | |
| Brooke Adler | 85,784 | | | — | | | — | |
| Brooke Shirazi | 102,941 | | | — | | | — | |
The value of the stock awards was computed in accordance with Financial Accounting Standards Board Codification Topic 718, Compensation - Stock Compensation. The amounts included in this column for the performance units granted during 2022 are calculated based on the probable satisfaction of the performance conditions for such awards as of the date of grant. Assuming the highest level of performance is achieved for the performance units granted in 2022, the maximum value of such performance units would be as follows: Mr. Martz - $300,000; Mr. Griffith - $165,000; Ms. Adler - $125,000; and Mrs. Shirazi - $150,000. See Note 19 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, for a discussion of the relevant assumptions used in calculating the value of the awards granted prior to December 31, 2022. PSU tranches that were eligible to be earned
in fiscal 2022 were forfeited due to the targets not being achieved, as described above, under Elements of Executive Compensation - Long Term Incentives.
The restricted stock awards granted to Mr. Peed are for services performed as a Director of our Board for 2020 through 2022. In 2022, 2021 and 2020, 5,000 shares of our common stock were issued in each year which have or will fully vest on the dates of the 2023, 2022, and 2021 Annual Meetings, respectively.
(3) Represents aggregate grant date fair value of the stock options awarded to Messrs. Martz and Griffith, and Mses. Adler and Shirazi, computed in accordance with Financial Accounting Standards Board Codification Topic 718, Compensation - Stock Compensation. See Note 19 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, for a discussion of the relevant assumptions used in calculating the value of the awards granted prior to December 31, 2022.
(4) Represents the amounts earned under our Annual Incentive Plan for fiscal years 2022, 2021, and 2020.
(5) Represents Company match under our 401(k) plan, group term life insurance, employer contributions to health savings accounts, dividend equivalent units, dividends paid on unvested shares of restricted stock awards and retention agreement payments. For the year ended December 31, 2022, Messrs. Peed, Martz, Griffith, and Mses. Adler and Shirazi received the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 401 K Employer Match | | Group Term Life Insurance | | Gym Reimbursement | | Health Savings Account Employer Contribution | | Dividend Equivalent Units (DEUs) | | Dividend Payments |
| R. Daniel Peed | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 300 | |
| B. Bradford Martz | 15,250 | | | 552 | | | — | | | 2,000 | | | 4,781 | | | — | |
| Christopher Griffith | 15,250 | | | 360 | | | — | | | 2,000 | | | 1,846 | | | — | |
| Brooke Adler | 15,250 | | | 360 | | | 210 | | | 1,000 | | | — | | | 300 | |
| Brooke Shirazi | 15,250 | | | 180 | | | — | | | 2,000 | | | — | | | — | |
2022 GRANTS OF PLAN-BASED AWARDS TABLE
The following table contains information concerning the plan-based equity and non-equity awards that were granted to our NEOs in 2022. The amounts shown in the columns under the heading "Estimated Future Payouts Under Non-Equity Incentive Plan Awards" represent potential future payments at the time of the grant only. At the time of the grant, whether these amounts (or any portion thereof) would ultimately be received by the NEOs was uncertain because the awards were contingent on the achievement of performance goals and the NEOs' continued employment. The awards in the columns under the heading "Estimated Future Payouts Under Non-Equity Incentive Plan Awards" were granted under our annual cash incentive program for 2022, as indicated, and payment was contingent on our achievement of a given level of corporate performance, as described above in the section titled Compensation of Executive Officers - Compensation Discussion and Analysis - Elements of Executive Compensation. The amounts, if any, actually earned and paid to our NEOs for 2022 under our Annual Incentive Plan are shown in the Non-Equity Incentive Plan Compensation column in the 2022 Summary Compensation Table above.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | Grant
Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All other stock awards: Number of shares of stock or units (#)(3) | All other option awards: Number of shares of stock or units (#) | Exercise or base price of option awards ($/sh) | Grant Date Fair Value of Stock Awards($)(4) |
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
| R. DANIEL PEED | 5/3/22 | | | | | | | 5,000 | | | | 11,600 | |
| B. BRADFORD MARTZ | N/A | — | | 300,000 | | — | | | | | | | | |
| 5/27/22 | | | | 58,824 | | 117,647 | | 176,471 | | | | | 200,000 | |
| 5/27/22 | | | | | | | 88,235 | | | | 150,000 | |
| 5/27/22 | | | | | | | | 174,947 | | 1.70 | | 150,000 | |
| | | | | | | | | | | |
| CHRISTOPHER GRIFFITH | N/A | — | | 220,000 | | — | | | | | | | | |
| 5/27/22 | | | | 32,353 | | 64,706 | | 97,059 | | | | | 110,000 | |
| 5/27/22 | | | | | | | 48,529 | | | | 82,500 | |
| 5/27/22 | | | | | | | | 96,221 | | 1.70 | | 82,500 | |
| | | | | | | | | | | |
| BROOKE ADLER | N/A | — | | 130,000 | | — | | | | | | | | |
| 4/23/21 | | | | 24,510 | | 49,019 | | 73,529 | | | | | 83,333 | |
| 4/23/21 | | | | | | | 36,765 | | | | 62,500 | |
| 4/23/21 | | | | | | | | 72,895 | | 1.70 | | 62,500 | |
| | | | | | | | | | | |
| BROOKE SHIRAZI | | | | | | | | | | | |
(1) Amounts reflected under the "Estimated Future Payouts Under Non-Equity Incentive Plan Awards" column of the table above represent only potential payments to NEOs under our Annual Incentive Plan, based upon the Compensation and Benefits Committee's discretionary assessment of performance for the year, subject to achievement of specified performance objectives. The amounts actually earned and paid to our NEOs for 2022 under these awards are shown in the Non-Equity Incentive Plan Compensation column in the 2022 Summary Compensation table above.
(2) Amounts reflected under the "Estimated Future Payouts Under Equity Incentive Plan Awards" column of the table above represent the award opportunities for NEOs under our Long-Term Incentive Plan, based upon the Compensation and Benefits Committee's discretionary assessment of performance over the performance period from January 1, 2022 to December 31, 2022, subject to achievement of specified performance objectives. This table excludes DEUs distributed throughout the year. PSU tranches that were eligible to be earned in fiscal 2022 were forfeited due to the targets not being achieved, as described above, under Elements of Executive Compensation - Long Term Incentives.
(3) Amounts reflected under the "All other stock awards: Number of shares of stock or units" column of the table above represent time-vested restricted stock unit awards. This table excludes DEUs distributed throughout the year.
(4) Represents grant date fair value as calculated pursuant to ASC Topic 718. The amounts included in this column for the performance units granted during 2022 are calculated based on the probable satisfaction of the performance conditions for such awards as of the date of grant. See Note 19 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, for a discussion of the relevant assumptions used in calculating the value of the awards granted prior to December 31, 2022.
(5) As of December 31, 2022, Mrs. Shirazi is no longer employed by the Company and is not eligible for future payouts. As such, amounts for her have been omitted from this table.
NARRATIVE DISCLOSURE TO 2022 SUMMARY COMPENSATION TABLE AND
2022 GRANTS OF PLAN-BASED AWARDS TABLE
Certain elements of compensation set forth in the 2021 Summary Compensation Table for the Year Ended December 31, 2022 and Grants of Plan-Based Awards for Year 2022 Table reflect the terms of employment agreements between us and certain of the NEOs.
R. DANIEL PEED
We have not entered into a formal employment agreement with Mr. Peed.
B. BRADFORD MARTZ
We are party to an employment agreement with Mr. Martz entered into on October 31, 2012 and amended and restated on October 1, 2020. The agreement will remain effective for one-year terms that automatically renew each October 1 until we give or are provided by Mr. Martz with 60 days’ notice of termination, or certain other
termination events occur. The agreement provides for base salary and eligibility for annual performance-based cash bonuses at the discretion of our Compensation and Benefits Committee. Mr. Martz would be entitled to severance in the event his employment is terminated by us without cause or by himself for good reason (as discussed below under the heading Potential Payments upon Termination or Change of Control). The Compensation and Benefits Committee has discretion to pay additional compensation as it sees fit.
CHRISTOPHER GRIFFITH
We are party to an employment agreement with Mr. Griffith entered into on October 1, 2018 and amended and restated on October 1, 2020. The agreement will remain effective for one-year terms that automatically renew each October 1 until we give or are provided by Mr. Griffith with 60 days' notice of termination, or certain other termination events occur. The agreement provides for an initial base salary that is subject to annual review and adjustment at the discretion of our Compensation and Benefits Committee. In addition, pursuant to his employment agreement, Mr. Griffith is eligible to receive annual performance-based cash bonuses at the discretion of our Compensation and Benefits Committee. Mr. Griffith would be entitled to severance in the event his employment is terminated by us without cause or by himself for good reason (as discussed below under the heading Potential Payments upon Termination or Change of Control). The Compensation and Benefits Committee has the discretion to pay additional compensation as it sees fit.
BROOKE ADLER
We are party to an employment agreement with Ms. Adler entered into on April 19, 2021. The agreement will remain effective for one-year terms that automatically renew each April 1 until we give or are provided by Ms. Adler with 60 days’ notice of termination, or certain other termination events occur. The agreement provides for an initial base salary that is subject to annual review and adjustment at the discretion of our Compensation and Benefits Committee. In addition, pursuant to her employment agreement, Ms. Adler is eligible to receive annual performance-based cash bonuses at the discretion of our Compensation and Benefits Committee. Ms. Adler would be entitled to severance in the event her employment is terminated by us without cause or by herself for good reason (as discussed below under the heading Potential Payments upon Termination or Change of Control). The Compensation and Benefits Committee has discretion to pay additional compensation as it sees fit.
BROOKE SHIRAZI
During 2022 we were party to an employment agreement with Ms. Shirazi entered into on January 18, 2021. Prior to Ms. Shirazi’s resignation, her employment agreement provided for a base salary and eligibility to receive annual performance-based cash bonuses at the discretion of our Compensation and Benefits Committee. Because Ms. Shirazi resigned without “good reason,” she was not entitled to any severance.Ms. Shirazi continues to be bound by the restrictive covenants in her employment agreement which provide for (a) indefinite confidentiality, (b) a 12 month post-termination non-compete and (c) a 24 month post-termination non-solicitation of Company employees.
2022 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END TABLE
The following table sets forth certain information with respect to our NEOs concerning restricted stock awards that have not vested as of December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Grant Date(3) | Number of securities underlying unexercised option (#) exercisable | Number of securities underlying unexercisable options (#) unexercisable | Option exercise price
($) | Option expiration date | Number of shares or units that have not vested (1) (#) | Market $ value of shares or units that have not vested (2) ($) | Equity incentive plan awards; number of unearned shares that have not vested (3) (#) | Equity incentive plan awards; market value of unearned shares that have not vested (4) ($) |
| R. DANIEL PEED | May 4, 2022 | — | | — | | — | | N/A | 5,000 | | 5,300 | | — | | — | |
| | | | | | | | | |
| B. BRADFORD MARTZ | May 5, 2020 | 21,965 | | 10,982 | | 8.77 | | 5/5/30 | 3,685 | | 3,906 | | 7,370 | | 7,812 | |
| April 23, 2021 | 18,599 | | 37,198 | | 6.16 | | 4/23/31 | 11,736 | | 12,440 | | 23,472 | | 24,880 | |
| September 28, 2021 | 40,000 | | 80,000 | | 3.46 | | 9/28/31 | — | | — | | — | | — | |
| May 27, 2022 | — | | 174,947 | | 1.70 | | 5/27/32 | 88,235 | | 93,529 | | 117,647 | | 124,706 | |
| | | | | | | | | |
| CHRISTOPHER GRIFFITH | May 5, 2020 | 9,318 | | 4,658 | | 8.77 | | 5/5/30 | 1,558 | | 1,651 | | 3,124 | | 3,311 | |
| April 23, 2021 | 6,804 | | 13,609 | | 6.16 | | 4/23/31 | 4,292 | | 4,550 | | 8,586 | | 9,101 | |
| September 28, 2021 | 30,000 | | 60,000 | | 3.46 | | 9/28/31 | — | | — | | — | | — | |
| May 27, 2022 | — | | 96,221 | | 1.70 | | 5/27/32 | 48,529 | | 51,441 | | 64,706 | | 68,588 | |
| | | | | | | | | |
| BROOKE ADLER | April 23, 2021 | — | | — | | — | | N/A | 3,333 | | 3,533 | | — | | — | |
| September 28, 2021 | 30,000 | | 60,000 | | 3.46 | | 9/28/31 | — | | — | | — | | — | |
| May 27, 2022 | — | | 72,895 | | 1.70 | | 5/27/32 | 36,765 | | 38,971 | | 49,019 | | 51,960 | |
| | | | | | | | | |
(1) All shares granted are related to the performance year prior to the year in which they were granted. All shares issued were issued as part of the 2020 Omnibus Incentive Plan. All grants vest ratably over three years on the anniversary of the grant date.
(2) Based on market value as of December 31, 2022 of $1.06 per share, which was the closing sale price of a share of our common stock on the last trading day of the year.
(3) The performance stock units vest ratably over three years beginning on the grant date, subject to the satisfaction of the applicable performance goals.
(4) Based on market value as of December 31, 2022 of $1.06 per share, which was the closing sale price of a share of our common stock on the last trading day of the year. In accordance with the SEC executive compensation disclosure rules, the amounts reported are based on achieving the threshold performance goals.
(5) As of December 31, 2022, Mrs. Shirazi was no longer employed by the Company and no long has any outstanding equity awards. As such, she has been excluded from the table above.
OPTION EXERCISES AND STOCK VESTED IN 2022
The following table contains information concerning option awards that were exercised by our NEOs and restricted stock that vested in 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards |
| Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#)(1) | | Value Realized on Vesting ($)(2) |
| R. DANIEL PEED | | — | | | $ | — | | | 5,000 | | | $ | 11,350 | |
| B. BRADFORD MARTZ | | — | | | — | | | 11,586 | | | 30,851 | |
| CHRISTOPHER GRIFFITH | | — | | | — | | | 4,574 | | | 12,160 | |
| BROOKE ADLER | | — | | | — | | | 1,667 | | | 4,518 | |
(1) Represents the gross number of shares vested during 2022. The following number of shares from RSUs were forfeited by each executive to pay for related taxes during 2022: Mr. Martz - 608 shares with a value of $1,915. Messers. Peed and Griffith, and Ms. Adler did not forfeit shares for taxes. PSU tranches that were eligible to be earned in fiscal 2022 were forfeited due to the targets not being achieved, as described above, under Elements of Executive Compensation - Long Term Incentives.
(2) Represents the gross number of shares vested multiplied by the closing price of our common stock on the Nasdaq Stock Market on the date of vesting.
EQUITY COMPENSATION PLANS
The following table summarizes information as of December 31, 2022, relating to equity compensation plans of the Company pursuant to which grants of options, restricted stock, restricted stock units or other rights to acquire shares of the Company's common stock may be granted from time to time.
| | | | | | | | | | | | | | | | | | | | |
| Plan Category | | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights(1) (a) | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(2) | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a))(3) |
| Equity compensation plans approved by security holders | | 1,802,994 | | | $ | 4.03 | | | 228,272 | |
| Equity compensation plans not approved by security holders | | — | | | — | | | — | |
| Total | | 1,802,994 | | | $ | 4.03 | | | 228,272 | |
(1) Includes 318,865 PSUs that were outstanding on December 31, 2022 under the Company's 2020 Omnibus Incentive Plan. The number included for PSUs reflects grant date units awarded and dividend equivalent units (DEUs) distributed on the outstanding PSUs. Assuming maximum payout for PSU grants and DEUs that have not completed the required performance period, the number of securities to be issued would increase by 159,433.
(2) Only option awards were used in computing the weighted-average exercise price.
(3) This column includes the number of securities remaining available for issuance under the Company's 2020 Omnibus Incentive Plan.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
The information below describes certain compensation and benefits to which our NEOs are entitled in the event their employment is terminated under certain circumstances and/or change of control occurs. See the table at the end of this section for the amount of compensation and benefits that would have become payable under existing plans and contractual arrangements assuming a termination of employment had occurred on December 31, 2022, given the NEOs' compensation and service levels as of such date. There can be no assurance that an actual triggering event would produce the same or similar results as those estimated if such event occurs on any other date or at any other price, or if any other assumption used to estimate potential payments and benefits is not correct. Due to the number of factors that affect the nature and amount of any potential payments or benefits, any actual payments and benefits may be different.
Generally, as a condition to receipt of separation entitlements, the NEOs are required to deliver a release of claims in favor of the Company and abide by certain restrictive covenants including confidentiality and non-disclosure, non-solicitation of employees and a non-compete.
TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON
As described above, we are a party to employment agreements with each of our NEOs, all of which were entered into prior to December 31, 2022. Under each employment agreement, "cause" generally means (i) any action or omission of the executive which constitutes a material breach of the employment agreement, (ii) willful (only if done or omitted to be done without a good faith reasonable belief that such act or failure to act was in the best interests of the Company) failure to perform the duties assigned to the executive by the CEO or the Board; (iii) fraud, breach of fiduciary duty, embezzlement or misappropriation as against the Company, or (iv) the conviction (from which no appeal can be taken) of the executive for any criminal act which is a felony.
Under Messers. Martz and Griffith and Ms. Adler's employment agreements, if we terminate their employment without cause, the executive would be entitled to:
•payment of all accrued payments in full within the next normal payroll period following termination;
•severance payments equal to the amount of base salary for a period of twelve months beginning the day after termination payable through normal payroll;
•any annual incentive bonuses earned but not yet paid for any completed full fiscal year immediately preceding the employment termination date, payable in full within the next normal payroll period following termination;
•if termination occurs prior to the end of any fiscal year, the pro rata annual incentive bonus for such fiscal year in which employment termination occurs for which the executive would have been entitled if employed at the conclusion of the fiscal year determined and paid based on actual performance achieved for the portion of such fiscal year when the executive was employed by the Company, to be paid in full within ninety days following the completion of the fiscal year; and
•COBRA benefits as provided by law.
Messers. Martz and Griffith and Ms. Adler would receive these same benefits if they were to terminate employment for good reason. “Good reason” generally means: (a) a material reduction in the executive's annual base salary or target bonus opportunity; (b) a material diminution in executive's title, duties or responsibilities; or (c) the Company relocates the executive's principal work location by more than fifty miles from its location as of the date of the employment agreement. Written notice of their decision not to extend their employment term must be provided 90 days prior to termination.
Under the terms of our restricted stock unit and performance stock unit awards, if an NEO is terminated without cause (or if the NEO resigns), then the unvested portion of the award will be immediately forfeited and cancelled by the Company. With respect to options, those options vested as of the termination (or resignation) will remain exercisable until the earlier of three months post-termination or the applicable expiration date. Restricted stock awards will vest in full upon a termination by the Company without cause.
Because Ms. Shirazi resigned without "good reason" (as defined above) she was not entitled to any severance in connection with her separation from the Company. In addition, the unvested portion of her RSUs and PSUs were immediately forfeited and cancelled by the Company. All of her options have since expired.
TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON
If any NEO with an employment agreement is terminated for cause (as defined above) or without good reason (as defined above), he or she would be entitled to receive payment of any unpaid base salary accrued through the effective date of termination, as well as any expense reimbursement. The executive would be owed any benefits under any benefit plans (in accordance with the terms of such plans).
Under the terms of our restricted stock unit, performance stock unit and option awards, if an NEO is terminated for Cause, then the outstanding award (whether vested or unvested) shall be forfeited and cancelled by the Company. With respect to restricted stock awards, if the NEO is terminated for cause (or resigns) any unvested restricted shares will be forfeited.
RETIREMENT
"Retirement" generally means termination of employment or service with the Company and its affiliates on or after the date the NEO has both attained age sixty-five (65) and completed ten (10) years of service with the Company and its affiliates; provided that at the time of such termination, no circumstances exist that would constitute cause.
Under the terms of our restricted stock unit, performance stock unit and option awards, if an NEO retires the awards will continue to vest in accordance with the terms of the applicable award notice, subject to compliance with certain restrictive covenants. With respect to vested options, they will remain exercisable through the earlier of five years from the date of retirement or the applicable expiration date. Restricted stock awards will vest in full upon retirement.
TERMINATION DUE TO DEATH OR DISABILITY
If any NEO with an employment agreement is terminated due to death or disability, he (or his estate or legal representatives (as applicable)) would be entitled to receive payment of any unpaid base salary accrued as of the date of termination of employment, reimbursement for expenses incurred, any benefits under any benefit plans (in accordance with the terms of such plans), any annual incentive bonuses earned but not yet paid for any completed full fiscal year immediately preceding the termination date, and if termination occurs prior to the end of any fiscal year, a pro rata annual incentive bonus for the fiscal year in which termination occurs (determined and paid based on actual performance achieved for that fiscal year against the performance goals for that fiscal year) to which the NEO would have been entitled if employed at the conclusion of the fiscal year. In addition, in the case of termination of employment due to the NEO's death, we would continue to provide all benefits applicable to the NEO's family for six months. Any such payments would be made on or before March 15th of the year following death or disability.
Under the terms of our restricted stock unit and performance stock unit awards, if an NEO is terminated due to death or disability, a pro-rata reduction of their awards scheduled to vest on the next vesting date will vest immediately (with the performance stock units vesting at target levels) and the remaining unvested portion being forfeited and cancelled. With respect to our option awards, vested options will remain outstanding until the earlier of three years following the NEO's termination or the applicable expiration date. A pro-rata portion of the unvested options will vest under similar terms to that of the restricted stock units and performance stock units.
CHANGE OF CONTROL
Under the terms of our performance stock units awards, if an NEO is terminated without cause (or if the NEO resigns for good reason) within 24 months following a change of control then (i) if employment is terminated during the year of the change of control, then unvested performance stock units vest at actual levels for the completed portion of the performance period and at target levels for the uncompleted portion of the performance period or (ii) if employment is terminated after the year of the change in control, any unvested performance stock units will vest at target levels. Under the terms of our restricted stock unit awards, if an NEO is terminated without cause (or if the NEO resigns for good reason) within 24 months following the change in control the restricted stock units will immediately vest. Under the terms of our option awards, if an NEO is terminated without cause (or if the NEO resigns for good reason) within 24 months following the change in control, all options shall immediately vest and will remain exercisable until the earlier of three months post-termination or the expiration date.
The table below sets forth the estimated value of the potential payments to each of the NEOs, assuming the employment of each executive was terminated on December 31, 2022. The figures in the table below are based on the employment agreements in effect on December 31, 2022.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Termination without cause | | Termination with cause | | Termination due to death | | Termination due to disability | | Termination due to retirement | | Qualifying termination following a change in control |
| R. DANIEL PEED | | | | | | | | | | | | |
| Salary continuation | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Benefits | | — | | | — | | | — | | | — | | | — | | | — | |
| COBRA coverage | | — | | | — | | | — | | | — | | | — | | | — | |
| Most recent annual incentive bonus | | — | | | — | | | — | | | — | | | — | | | — | |
Acceleration of restricted stock awards(1) | | — | | | — | | | 5,300 | | | 5,300 | | | 5,300 | | | 5,300 | |
| B. BRADFORD MARTZ | | | | | | | | | | | | |
| Salary continuation | | 523,688 | | | — | | | — | | | — | | | — | | | — | |
| Benefits | | — | | | — | | | 12,601 | | | — | | | — | | | — | |
| COBRA coverage | | 4,059 | | | — | | | — | | | — | | | — | | | — | |
| Most recent annual incentive bonus | | 247,500 | | | — | | | 247,500 | | | 247,500 | | | — | | | — | |
Acceleration of restricted stock awards(1) | | — | | | — | | | 582,433 | | | 582,433 | | | 582,433 | | | 582,433 | |
| CHRISTOPHER GRIFFITH | | | | | | | | | | | | |
| Salary continuation | | 452,025 | | | — | | | — | | | — | | | — | | | — | |
| Benefits | | — | | | — | | | 15,095 | | | — | | | — | | | — | |
| COBRA coverage | | 7,351 | | | — | | | — | | | — | | | — | | | — | |
| Most recent annual incentive bonus | | 181,500 | | | — | | | 181,500 | | | 181,500 | | | — | | | — | |
Acceleration of restricted stock awards(1) | | — | | | — | | | 324,898 | | | 324,898 | | | 324,898 | | | 324,898 | |
| BROOKE ADLER | | | | | | | | | | | | |
| Salary continuation | | 370,125 | | | — | | | — | | | — | | | — | | | — | |
| Benefits | | — | | | — | | | 11,214 | | | — | | | — | | | — | |
| COBRA coverage | | 2,612 | | | — | | | — | | | — | | | — | | | — | |
| Most recent annual incentive bonus | | 148,500 | | | — | | | 148,500 | | | 148,500 | | | — | | | — | |
Acceleration of restricted stock awards(1) | | — | | | — | | | 75,374 | | | 75,374 | | | 75,374 | | | 75,374 | |
BROOKE SHIRAZI (2) | | — | | | — | | | — | | | — | | | — | | | — | |
(1) Based on a market value as of December 31, 2022 of $1.06 per share, which was the closing sale price of a share of our common stock on such date.
(2) As of December 31, 2022, Mrs. Shirazi is no longer employed by the Company. As such, amounts for her have been omitted from the table above.
PAY VERSUS PERFORMANCE
As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. In accordance with Item 402(v) of Regulation S-K, the following information includes disclosure about all of our NEOs since our 2020 fiscal year, include John L Forney, our former Chief Executive Officer who resigned effective June 30, 2020. For further
information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the “Compensation Discussion and Analysis.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Value of Initial Fixed $100 Investment Based On: | | |
| Year | Summary Compensation (Comp.) Table Total for PEO (Peed) (1) | Comp. Actually Paid to PEO (Peed) (2)(3) | Summary Comp. Table Total for PEO (Forney) (4) | Comp. Actually Paid to PEO (Forney) (5)(6) | Average Summary Comp. Table Total for Non-PEO NEOs (7) | Average Comp. Actually Paid to Non-PEO (NEOs) (3)(8) | Total Shareholder Return (TSR) | Peer Group TSR (9) | Net Income (thousands) (10) | Core ROBE (11) |
| 2022 | $ | 161,900 | | $ | 144,700 | | $ | — | | $ | — | | $ | 1,023,150 | | $ | 544,163 | | $ | 9.49 | | $ | 66.84 | | $ | (469,885) | | (66.4) | % |
| 2021 | 180,600 | | 174,600 | | — | | — | | 968,033 | | 884,100 | | 37.32 | | 103.46 | | (57,919) | | (8.3) | % |
| 2020 | 157,250 | | 119,650 | | 2,047,726 | | (208,883) | | 748,261 | | 439,401 | | 48.04 | | 125.87 | | (96,454) | | 8.0 | % |
(1) Amounts reported in this column are the amounts of total compensation reported for Mr. Peed (our CEO and Chairman of the Board) for each corresponding year in the “Total” column of the 2022 Summary Compensation Table. See “Executive Compensation – 2022 Summary Compensation Table.”
(2) Amounts reported in this column represent the amount of “compensation actually paid” to Mr. Peed, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Peed during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Peed’s total compensation for each year to determine the compensation actually paid:
| | | | | | | | | | | | | | | | | | | | |
| Year | 2022 | | 2021 | | 2020 |
| Summary Compensation Table Total Compensation | $ | 161,900 | | | $ | 180,600 | | | $ | 157,250 | |
| Less, value of Equity Awards reported in Summary Compensation Table | 11,600 | | | 29,400 | | | 43,800 | |
| Plus, Year-End Fair Value of Equity Awards Granted in Fiscal Year that are Unvested and Outstanding | 5,300 | | | 21,200 | | | 28,600 | |
| Plus, Change in Fair Value of Prior Year Equity Awards that are Outstanding and Unvested | — | | | — | | | — | |
| Plus, Change in Fair Value (from prior year-end) of Prior Year Equity Awards that Vested this Year | (10,900) | | | 2,200 | | | (22,350) | |
| Plus, Dollar Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included | — | | | — | | | — | |
| Less, Prior Year Fair Value of Prior Equity Awards that Failed to Vest this Year | — | | | — | | | — | |
| Total Adjustments | $ | 17,200 | | | $ | 6,000 | | | $ | 37,550 | |
| Compensation Actually Paid | $ | 144,700 | | | $ | 174,600 | | | $ | 119,700 | |
(3) For the portion of “compensation actually paid” that is based on year-end stock prices, $1.06 was used for 2022, $4.24 was used for 2021 and $5.72 was used for 2020.
(4) The amount reported in this column is the amount of total compensation reported for Mr. John L. Forney (our former Chief Executive Officer who resigned effective June 30, 2020), as shown in the Summary Compensation Table to our 2021 Proxy Statement.
(5) The amount reported in this column represents the amount of “compensation actually paid” to Mr. Forney for our 2020 fiscal year, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Forney in our 2020 fiscal year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Forney’s total compensation in 2020 to determine the compensation actually paid:
| | | | | | | | | | | | | | |
| Year | | | | | 2020 |
| Summary Compensation Table Total Compensation | | | | | $ | 2,047,726 | |
| Less, value of Equity Awards reported in Summary Compensation Table | | | | | 765,000 | |
| Plus, Year-End Fair Value of Equity Awards Granted in Fiscal Year that are Unvested and Outstanding | | | | | — | |
| Plus, Change in Fair Value of Prior Year Equity Awards that are Outstanding and Unvested | | | | | — | |
| Plus, Change in Fair Value (from prior year-end) of Prior Year Equity Awards that Vested this Year | | | | | (149,593) | |
| Plus, Dollar Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included | | | | | — | |
| Less, Prior Year Fair Value of Prior Equity Awards that Failed to Vest this Year | | | | | 1,342,016 | |
| Total Adjustments | | | | | $ | 2,256,609 | |
| Compensation Actually Paid | | | | | $ | (208,883) | |
(6) For the portion of “compensation actually paid” that is based on our 2020 year-end stock price, which was $5.72.
(7) Amounts reported in this column represent the average of the amounts reported for the Company’s NEOs as a group (excluding Mr. Peed, and for 2020, Mr. Forney) in the “Total” column of our Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Peed, and for 2020, Mr. Forney) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2022, B. Bradford Martz, Christopher Griffith, Brooke Adler and Brooke Shirazi, (ii) for 2021, B. Bradford Martz, Christopher Griffith, Scott St. John and Alycia Weigley and (iii) for 2020, B. Bradford Martz, Christian Dittman, Scott St. John, Deepak Menon and Christopher Griffith.
(8) Amounts reported in this column represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. Peed, and for 2020, Mr. Forney), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Peed, and for 2020, Mr. Forney) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation to determine the compensation actually paid:
| | | | | | | | | | | | | | | | | | | | |
| Year | 2022 | | 2021 | | 2020 |
| Summary Compensation Table Total Compensation | $ | 1,023,150 | | | $ | 968,033 | | | $ | 748,261 | |
| Less, value of Equity Awards reported in Summary Compensation Table | 215,833 | | | 156,900 | | | 172,498 | |
| Plus, Year-End Fair Value of Equity Awards Granted in Fiscal Year that are Unvested and Outstanding | 107,299 | | | 107,996 | | | 87,045 | |
| Plus, Change in Fair Value of Prior Year Equity Awards that are Outstanding and Unvested | (331,880) | | | (9,535) | | | (81,742) | |
| Plus, Change in Fair Value (from prior year-end) of Prior Year Equity Awards that Vested this Year | (7,408) | | | 1,058 | | | (13,519) | |
| Plus, Dollar Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included | 2,083 | | | 9,197 | | | 3,835 | |
| Less, Prior Year Fair Value of Prior Equity Awards that Failed to Vest this Year | 33,248 | | | 35,749 | | | 131,981 | |
| Total Adjustments | $ | 478,987 | | | $ | 83,933 | | | $ | 308,860 | |
| Compensation Actually Paid | $ | 544,163 | | | $ | 884,100 | | | $ | 439,401 | |
(9) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the Company’s peer group for Fiscal Year 2022 as set forth in the Compensation Discussion and Analysis.
(10) Reflects “Net Income” in the Company’s Consolidated Financial Statements included in the Company’s Annual Reports on Form 10-K for each of the years ended December 31, 2022, 2021 and 2020.
(11) Company-selected measure is Core Income After-Tax Return on Equity (“Core ROBE”), which is a non-GAAP financial measure that is computed by dividing core income by the Company’s beginning stockholders’ equity for the period. Core income (loss) is computed by adding amortization, net of tax, and current accident year net incurred losses and loss adjustment expenses resulting from named and numbered storms, net of tax, to net income (loss) and subtracting realized gains (losses) on the Company’s investment portfolio, net of tax, and subtracting realized
gains (losses) on the Company’s equity securities. Amortization expense is related to the amortization of intangible assets acquired, including goodwill, through mergers and, therefore, the expense does not arise through normal operations. Investment portfolio gains (losses) and unrealized equity security gains (losses) vary independent of the Company’s operations. Named windstorm expenses are related to losses that arise when hurricanes and tropical storms make landfall in the Company’s geographic regions of coverage. These storms cause loss trends to vary significantly between periods as a result of their frequency of occurrence and severity and can significantly impact net income (loss).
The Company believes it is useful for investors to evaluate these components both separately and in the aggregate when reviewing the Company's performance. The most directly comparable GAAP measure is net income. Core ROBE should not be considered a substitute for net income and does not reflect the overall profitability of the Company's business.
Relationship between Pay and Performance. Below are graphs showing the relationship of “compensation actually paid” to our PEOs and other NEOs in 2022, 2021 and 2020 to (1) TSR of both the Company and the Company’s peer group, (2) the Company’s net income and (3) the Company’s Core ROBE.
“Compensation actually paid” (“CAP”), as required under SEC rules, reflects adjusted values to unvested and vested equity awards during the years shown in the table based on year-end stock prices, GAAP valuation assumptions, and projected performance modifiers but does not reflect actual amounts paid out for those awards. CAP generally fluctuates due to stock price achievement and varying levels of projected and actual achievement of performance goals. For a discussion of how our Committee assessed the Company’s performance and our NEOs’ pay each year, see the “Compensation Discussion and Analysis” in this proxy statement and in the proxy statements for 2021 and 2020.
Listed below are the financial and non-financial performance measures which in our assessment represent the most important performance measures we use to link compensation actually paid to our NEOs, for 2022, to Company performance. Core ROBE and Renewal Rate Change metrics are used to determine annual incentive compensation payouts while Return on Average Equity is used to determine vesting of our PSUs. For more information on annual incentive compensation and actual payouts, see “Compensation Discussion and Analysis – Elements of Executive Compensation”.
| | |
| Most important Performance Measures for 2022 |
| Core ROBE |
| Return on Average Equity |
Renewal Rate Change (1) |
(1) Measured by reference to the average increase in renewal policy rates on the Company’s personal lines book of business between December 31, 2021 and December 31, 2022.
CEO PAY RATIO
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO:
Our CEO to median employee pay ratio is calculated in accordance with Item 402(u) of Regulation S-K. We identified the median employee by examining the annual total compensation for all of our associates, excluding our CEO, who were employed by us on December 31, 2022. We included all associates, whether employed on a full-time, part-time or seasonal basis. We annualized the compensation for any full-time employees who were employed by us on December 31 but were not employed by us for all of 2022. To determine the median employee, we considered the total annual compensation for each of our associates as gross earnings.
After identifying the median employee based on the process described above, we calculated annual total compensation for the median employee using the same methodology we use for our NEOs as set forth in the 2022 Summary Compensation Table earlier in this Proxy Statement. The total annual compensation calculated for our CEO was $161,900 and for our median employee for fiscal 2022 was $95,972. The resulting ratio for our CEO's total annual compensation to the annual compensation of our median employee was 1.69:1.
BENEFICIAL OWNERSHIP
STOCK OWNERSHIP OF OUR DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table provides information, as of June 8, 2021,April 10, 2023, regarding the number and approximate percentage of shares of our common stock beneficially owned by (i) each of our directors, director nominees and named executive officers and (ii) all of our directors and executive officers as a group. We calculated the approximate percentage of common stock ownership based upon the 43,228,37143,273,373 shares of our common stock outstanding on June 8, 2021.April 10, 2023.
| | Name of Beneficial Owner | Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | | Percentage of Common Stock Ownership | Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | | Percentage of Common Stock Ownership |
| Directors | Directors | | | | Directors | | | |
Gregory C. Branch(1) | Gregory C. Branch(1) | 2,270,177 | | 5.3 | % | Gregory C. Branch(1) | 2,282,099 | | | 5.3 | % |
Alec L. Poitevint, II(3)(2) | Alec L. Poitevint, II(3)(2) | 1,130,488 | | 2.6 | % | Alec L. Poitevint, II(3)(2) | 1,544,944 | | | 3.6 | % |
| Kern M. Davis, M.D. | Kern M. Davis, M.D. | 279,618 | | * | Kern M. Davis, M.D. | 284,644 | | | * |
| Michael R. Hogan | Michael R. Hogan | 203,754 | | * | Michael R. Hogan | 338,754 | | | * |
William H. Hood, III(4)(3) | William H. Hood, III(4)(3) | 772,069 | | 1.8 | % | William H. Hood, III(4)(3) | 955,206 | | | 2.2 | % |
| Sherrill W. Hudson | Sherrill W. Hudson | 183,403 | | * | Sherrill W. Hudson | 158,403 | | | * |
| Patrick F. Maroney | Patrick F. Maroney | 52,250 | | * | Patrick F. Maroney | 69,750 | | | * |
Kent G. Whittemore(5)(4) | Kent G. Whittemore(5)(4) | 309,845 | | * | Kent G. Whittemore(5)(4) | 374,885 | | | * |
| | Named Executive Officers | Named Executive Officers | | | | Named Executive Officers | |
R. Daniel Peed(2)(5) | R. Daniel Peed(2)(5) | 17,326,336 | | 40.1 | % | R. Daniel Peed(2)(5) | 17,326,336 | | | 40.0 | % |
| B. Bradford Martz | B. Bradford Martz | 266,586 | | * | B. Bradford Martz | 130,923 | | | * |
| Brooke Adler | Brooke Adler | 5,000 | | * | Brooke Adler | 5,000 | | | * |
| Christian Dittman | 72,067 | | * | |
| Scott St. John | 113,556 | | * | |
| Alycia Weigley | 33,897 | | * | |
| Christopher Griffith | Christopher Griffith | 73,482 | | * | Christopher Griffith | 52,662 | | | * |
| Directors and Executive Officers as a Group (15 persons) | Directors and Executive Officers as a Group (15 persons) | 23,092,528 | | 53.4 | % | Directors and Executive Officers as a Group (15 persons) | 23,876,660 | | | 55.2 | % |
|
*Represents less than 1%.
(1) Reflects 1,704,1971,709,197 shares directly owned by Mr. Branch, 118,588123,710 shares owned by an LLC, 407,392 shares owned by trusts and 40,00041,800 shares owned by a foundation. Mr. Branch has voting power over the shares owned by the trusts and the foundation.
(2) Reflects 1,961,936625,000 shares directly owned by an incorporated company and 568,944 shares owned by an LP. Mr. Poitevint has voting and investment power over the securities held by both. Also, reflects 175,000 shares held directly by Mr. Poitevint, and 176,000 shares owned by family members.
(3) Reflects 731,640 shares owned by a trust, of which Mr. Hood is the trustee with voting and dispositive control and 178,137 shares owned by an LLC, of which Mr. Hood has voting and investment power over the securities held. Also, reflects 45,429 shares held directly by Mr. Hood.
(4) Reflects 354,267 shares directly owned by Mr. Whittemore, and 20,618 shares held by family members.
(5) Reflects 1,966,936 shares directly owned by Mr. Peed, 11,876,563 shares owned by Peed FLP1, Ltd. LLP, and 3,487,837 shares owned by Leah Anneberg Peed. Mr. Peed has voting power over the shares owned by Peed FLP1, Ltd. LLP and Leah Anneberg Peed. Mr. Peed is party to the Stockholders Agreement, pursuant to which he is entitled to vote shares of Common Stock beneficially owned by Mr. Peed up to 25% of the outstanding Common Stock of the Company in his sole discretion and he must vote all other shares of Common Stock then beneficially owned by Mr. Peed in proportion to the votes cast with respect to the shares of Common Stock not beneficially owned by Mr. Peed or any of his affiliates with respect to any business or proposal on which the stockholders of the Company are entitled to vote, subject to certain exceptions.
(3) Reflects 569,466 shares directly owned by an incorporated company and 496,222 shares owned by an LP. Mr. Poitevint has voting and investment power over the securities held by both. Also, reflects 40,000 shares held directly by Mr. Poitevint, and 24,800 shares owned by family members.
(4) Reflects 731,640 shares owned by a trust, of which Mr. Hood is the trustee with voting and dispositive control. Also, reflects 40,429 shares held directly by Mr. Hood.
(5) Reflects 289,227 shares directly owned by Mr. Whittemore, and 20,618 shares held by family members.
The following table provides information, as of June 8, 2021,April 10, 2023, regarding the number and approximate percentage of shares of our common stock owned by each person known to us to beneficially own more than 5% of our outstanding shares of common stock. We calculated the approximate percentage of common stock ownership based upon the 43,228,37143,273,373 shares of
our common stock outstanding on June 8, 2021.April 10, 2023.
| | Name and Address of Beneficial Owner | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | | Percentage of Common Stock Ownership | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | | Percentage of Common Stock Ownership |
R. Daniel Peed 800 2nd Ave S St. Petersburg, FL 33701 | R. Daniel Peed 800 2nd Ave S St. Petersburg, FL 33701 | 17,326,336 | | 40.1 | % | R. Daniel Peed 800 2nd Ave S St. Petersburg, FL 33701 | 17,331,336 | | | 40.1 | % |
Leah Anneberg Peed(1) 20402 Hwy 249, Ste. 430 Houston, TX 77070 | Leah Anneberg Peed(1) 20402 Hwy 249, Ste. 430 Houston, TX 77070 | 3,487,837 | | 8.1 | % | Leah Anneberg Peed(1) 20402 Hwy 249, Ste. 430 Houston, TX 77070 | 3,487,837 | | | 8.1 | % |
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | 3,426,103 | | 7.9 | % | |
Gregory C. Branch 800 2nd Ave S St. Petersburg, FL 33701 | Gregory C. Branch 800 2nd Ave S St. Petersburg, FL 33701 | 2,270,177 | | 5.3 | % | Gregory C. Branch 800 2nd Ave S St. Petersburg, FL 33701 | 2,282,099 | | | 5.3 | % |
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(1)This information is derived from a Schedule 13G filed by Leah Anneberg Peed on April 3, 2017. According to the Schedule 13G, Ms. Peed has the sole power to dispose of or direct the disposition of 3,487,837 shares of common stock and the shared power to vote or direct the vote of 3,487,837 shares of common stock. R. Daniel Peed has voting power over the shares owned by Ms. Peed, and such shares are included as shares beneficially owned by Mr. Peed in the table above.
(2) This information is derived from a Schedule 13G filed by BlackRock, Inc. on February 1, 2021. According to the Schedule 13G, BlackRock, Inc.Mr. Branch has sole power to vote or direct the vote of 3,398,218 shares of common stock and the sole power to dispose of or direct the disposition of 3,426,1032,282,099 shares of common stock and the shared power to vote or direct the vote of 2,282,099 shares of common stock.
GENERAL MATTERS
DELINQUENT SECTION 16(a) REPORTS
ANNUAL REPORT ON FORM 10-KSection 16(a) of the Exchange Act requires our directors, our officers and persons who beneficially own more than 10% of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of changes in beneficial ownership of such equity securities.
Based solely on our review of such filings and the written representations we received from our directors and officers, we believe that, during the fiscal year ended December 31, 2022, all Section 16(a) reports required to be filed by our directors, officers and greater than 10% beneficial owners were timely filed, with the exception of the following: one Form 4 for Mr. Hogan filed on June 1, 2022 reporting one transaction, one Form 4 for each of Mr. Martz, Mr. Griffith and Ms. Adler filed on June 1, 2022 reporting three transactions; one Form 4 for Mr. Hood filed on December 19, 2022 reporting one transaction; and one Form 4 for Mr. Whittemore filed on December 29, 2022 reporting two transactions.
POLICIES AND FINANCIAL STATEMENTSPROCEDURES REGARDING RELATED PERSON TRANSACTIONS
You can requestOur Board has adopted a copyRelated Party Transaction Policy & Procedure, which is posted under the "Governance Documents" tab of the Company’s 2020 Annual Report on Form 10-K and any additional exhibits to the Form 10-K not included in the Company’s 2020 Annual Report, free of charge, by contacting us as described in the subsection entitledour website at Contacting the Companyinvestors.upcinsurance.com. Stockholders can refer to the report for information about us andFor purposes of our performance.policy:
•a "related party" means (i) any director, nominee for director or executive officer of the Company; (ii) any beneficial owner of more than 5% of the Company's voting securities; or (iii) an immediate family member of a director, nominee for director, executive officer, or beneficial owner of more than 5% of the Company's voting securities
•a "related party transaction" means a transaction in which the Company or any of its subsidiaries was, is or is proposed to be a participant and in which any related party has, had or may have a direct or indirect material interest.
The related party, or the director, nominee, or executive officer who is an immediate family member of a related party, must notify our General Counsel of any interests such person had, has or may have in the related party transaction. Certain transactions will generally be deemed pre-approved under our policy, including transactions in the ordinary course of business that do not exceed $120,000 in any fiscal year and executive officer and director compensation arrangements approved by our Compensation and Benefits Committee. Except for certain enumerated pre-approved transactions, our General Counsel (or the Company's CFO, where our General Counsel has an interest in the related party transaction) shall notify our Audit Committee of any proposed related person transactions reported to him or her. The Audit Committee will consider all of the material facts and circumstances available regarding the related party transaction and will ratify, approve or disapprove the related party transaction based on factors it deems appropriate, including, among other factors, the benefits to our Company, the commercial reasonableness of the terms of the related party transaction, and its impact on director independence.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Since January 1, 2022, we have not been a participant in any related person transaction within the meaning of Item 404(a) of Regulation S-K, other than as follows.
On April 3, 2017, we acquired AmCo through a series of mergers by which the Company issued 20,956,355 shares of our common stock as merger consideration to RDX Holding, LLC, the parent company of AmCo. As a result of the mergers, AmCo became a wholly owned subsidiary of the Company. Each of Michael R. Hogan, R. Daniel Peed, Leah Anneberg Peed, and Peed FLP1, Ltd., L.L.P., a partnership that is wholly owned by Mr. Peed, owned an equity interest in RDX Holding, LLC and, therefore, received shares of our common stock as merger consideration. The approximate dollar value of the mergers was $285,467,139 and the approximate dollar value of merger consideration received by Mr. Hogan and Mr. Peed was $625,317 and $237,556,318, respectively.
In connection with the mergers, we entered into the Stockholders Agreement, which governs Mr. Peed’s ownership of securities of, and investment in, the Company. Notable terms and conditions of the Stockholders Agreement include:
• the right of Mr. Peed to designate for nomination up to three individuals (subject to adjustment in the event of a change to the size of our Board) to be members of our Board, until the time that Mr. Peed, his affiliates and permitted transferees no longer own (beneficially or of record) voting securities representing 15% of the issued and outstanding voting securities;
• a provision limiting, subject to certain exceptions, the number of voting securities of the Company voted by Mr. Peed at his discretion to no more than 25% of the total outstanding voting securities until the earlier of the five year anniversary of the closing and the date that Mr. Peed beneficially owns less than 25% of our total outstanding voting securities. Until such time, any shares held by Mr. Peed in excess of 25% of the voting securities of the Company must be voted in proportion with the votes cast by our stockholders other than Mr. Peed and his affiliates;
• restrictions on Mr. Peed’s ability to transfer, without our Board’s prior written consent and subject to certain exceptions, greater than 25% of his voting securities in the Company until the third anniversary of the closing; and
• customary “standstill” provisions that prohibit Mr. Peed and his affiliates from taking certain actions, including (subject to certain exceptions) acquiring additional securities, participating in efforts to acquire the Company or any of its subsidiaries, and seeking to elect or remove members of our Board.
We have established written procedures for the review, approval, disapproval or ratification of related person transactions. A related person transaction includes any single or series of transactions, arrangements or relationships in which the Company or any of its subsidiaries was, is or is proposed to be, a participant and in which a related party has, had or may have a direct or indirect material interest. The Company defines a related party as any (i) director, nominee for director or executive officer of the Company; (ii) beneficial owner of more than 5% of UIHC's voting securities; or (iii) immediate family member of a director, executive officer, nominee for director or beneficial owner of more than 5% of UIHC's voting securities.
Under the procedures, directors, nominees for director and executive officers will promptly notify the Company's General Counsel of any interests such person or an immediate family member of such person had, has or may have in a related party transaction. If a director has an interest in the related party transaction, they will not participate in the evaluation of the transaction. The Audit Committee will review the material facts of all related party transactions that require the Audit Committee's approval and either approve, disapprove or ratify such transactions. In assessing a related party transaction, the Audit Committee will consider such factors as it deems relevant and will approve or ratify only those that are in, or are not inconsistent with, the best interests of the Company and its stockholders.
DEADLINE FOR THE SUBMISSION OF STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 20222024 ANNUAL MEETING OF STOCKHOLDERS
If stockholders wish to include a proposal in our Proxy Statementproxy statement and form of proxy relating to our 20222024 annual meeting, we must receive a written copy of the proposal no later than December 16, 2021.November 22, 2023. Proposals must comply with the SEC proxy rules relating to stockholder proposals in order to be included in our proxy materials. All proposals should be submitted as described in the subsection entitled Contacting the Company.
Pursuant to our By-Laws, which were amended and restated in 2020 to, among other things, provide for advance notice procedures, stockholder proposals and nominations of directors intended to be presented at an annual meeting of stockholders, but not included in our Proxy Statementproxy statement or form of proxy, must be received by the Corporate Secretary at the principal executive offices of the Company not less than 90 or more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. Accordingly, any stockholder proposals or nominations of directors intended to be presented at the 20222024 annual meeting of stockholders of the Company must be received in writing by the Corporate Secretary at the Company's principal executive officers no later than February 3, 2022March 4, 2024 and no earlier than January 4, 2022,February 3, 2024, and comply with the other requirements of our By-Laws. Any proposal submitted before or after those dates will be considered untimely. We encourage stockholders wishing to present such a proposal or nomination to contact us as described in the subsection entitled Contacting the Company.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
The SEC has adopted rules that permit companies and intermediaries, such as brokers and banks, to satisfy delivery requirements for our Proxy Statementnotices with respect to two or more stockholders sharing the same address by delivering a single Proxy Statementnotice addressed to those stockholders. This process, known as "householding," reduces costs associated with duplicate printings and mailings and means that we and some brokers will send only one copy of the Notice of our Proxy Statementannual report and proxy statement to
stockholders who share the same address. Stockholders sharing the same address will continue to receive separate proxy cards.
If you own shares of our Common Stockcommon stock in your own name and you want to receive separate copies of the Proxy StatementNotice of our annual report and proxy statement in the future, or if you receive multiple copies and want to receive only one copy, contact American Stock Transfer & Trust Company, LLC at (800) 937-5449 or 32016201 15th Avenue, Brooklyn, NY 11219. If you hold shares of our Common Stockcommon stock in street name and you want to receive separate copies of the Proxy Statementannual report and proxy statement in the future, or if you receive multiple copies and want to receive only one copy, contact your broker, bank, or other nominee.
OTHER MATTERS
The Board knows of no other business which will be presented at the Special Meeting. If, however, other matters are properly presented, the persons named in the proxy will vote the shares represented thereby in accordance with their judgment on such matters.
Appendix A
CERTIFICATE OF AMENDMENT
OF
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
UNITED INSURANCE HOLDINGS CORP.
United Insurance Holdings Corp. (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (as amended from time to time, the “DGCL”), does hereby certify:
FIRST: The Second Amended and Restated Certificate of Incorporation of the Corporation is hereby amended as follows:
The first sentence of Article FOURTH of the Second Amended and Restated Certificate of Incorporation of the Corporation is hereby amended to read in its entirety as set forth below:
“The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 101,000,000, of which 100,000,000 shares shall be Common Stock of the par value of $.0001 per share and 1,000,000 shares shall be Preferred Stock of the par value of $.0001 per share.”
SECOND: This amendment of the Second Amended and Restated Certificate of Incorporation of the Corporation has been duly adopted in accordance with the provisions of Section 242 of the DGCL, the Board of Directors of the Corporation having adopted resolutions setting forth such amendment, declaring its advisability, and directing that it be submitted to the stockholders of the Corporation for their approval; and the holders of a majority of the outstanding stock entitled to vote thereon having adopted the amendment at a special meeting of the stockholders.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this Certificate of Amendment on the _____ day of ___________, 2021.
UNITED INSURANCE HOLDINGS CORP.
By: Name: [●]
Title: [●]
SPECIAL MEETING OF STOCKHOLDERS OF
UNITED INSURANCE HOLDINGS CORP.
OTHER INFORMATION
July 2, 2021
GO GREEN
e-Consent makes it easyNotice of our 2022 Annual Report and Proxy statement is being mailed to go paperless.With e-Consent, youour stockholders. Included in this notice are instructions on how to access both the Annual Report and Proxy Statement. You can quickly access your proxy material,
statements and other eligible documents online, while reducing costs, clutter and paper waste.Enroll
today via www.astfinancial.com to enjoy online access.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON JULY 2, 2021.
To access the Company's Proxy Statement for the Special Meetingalso request a copy, free of
Stockholders, visit:
http://www.proxydocs.com/UIHC
Please sign, date and mail
your proxy card in the
envelope provided charge, by contacting us as soon
as possible.
uPlease detach along perforated line and maildescribed in the envelope provided.subsection entitled uContacting the Company
. Stockholders can refer to the report for information about us and our performance.
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| | VOTE BY INTERNET - www.proxyvote.com
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| UNITED INSURANCE HOLDING HOLDINGS CORP.
800 2ND AVENUE S.
ST PETERSBURG, FL
33701 | VOTE BY INTERNET |
33701Before The Meeting - Go to www.proxyvote.com
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Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date.on June 1, 2023 for shares held directly and by 11:59 p.m. Eastern Time on May 30, 2023 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. |
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | | During The Meeting - Go to www.virtualshareholdermeeting.com/UIHC2023 |
| | If you would like to reduceYou may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years.the box marked by the arrow available and follow the instructions. |
| | VOTE BY PHONE - 1-800-690-6903 |
| | Use any touch-tone telephone to transmit your voting instructions up untilinstructions. Vote by 11:59 p.m. Eastern Time the day before the cut-off date or meeting date.on June 1, 2023 for shares held directly and by 11:59 p.m. Eastern Time on May 30, 2023 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructionsinstructions. |
| | VOTE BY MAIL |
| | Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood,
NY 11717.11717 |
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| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | |
| | | | M99999-TBDV13792-Z85073 | KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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| United Insurance Holdings Corp. | | | | | | | | | | | | | | | |
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| The Board of Directors recommends you vote FOR Proposals 1: | | | | | | | | | | | | | | | |
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| 1. | Amendment to the Certification of Incorporation | | | | | | | | |
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| | Approval of an amendment to the United Insurance Holdings Corp. Second Amended and Restated Certificate of Incorporation to increase the authorized number of shares of common stock form 50,000,000 to 100,000,000. | | For | Against | Abstain | | | | | |
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, trustee or guardian, please give full title as such. | | | | | | | | | | | |
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| Signature [PLEASE SIGN WITHIN BOX] | Date | | | | Signature (Joint Owners) | | Date | | | |
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| United Insurance Holdings Corp. | | | | | | | | | | | | | | | |
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| The Board of Directors recommends you vote FOR Proposals 1 and 2: | | | | | | | | | | | | | |
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| 1. | Election of Directors | | | | | | | | | | | | | | | | | |
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| | Nominees: | | | | | | | | | | | | | | | | | |
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| | To be elected for terms expiring in 2025: | | For | Against | Abstain | | | | | | | | | | | |
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| | 1a. | R. Daniel Peed | | 0 | 0 | 0 | | | | | | | | | | | |
| | | Class A Nominee | | | | | | | | | | | | | | | |
| | 1b. | Gregory C. Branch | | 0 | 0 | 0 | | | | | | | | | | | |
| | | Class A Nominee | | | | | | | | | | | | | | | |
| | 1c. | Michael R. Hogan | | 0 | 0 | 0 | | | | | | | | | | | |
| | | Class A Nominee | | | | | | | | | | | | | | | |
| | 1d. | Kent G. Whittemore | | 0 | 0 | 0 | | | | | | | | | | | |
| | | Class A Nominee | | | | | | | | | | | | For | Against | Abstain | |
| | 2. | Ratification of the appointment of Deloitte & Touche LLP as the Company's independent registered pubic accounting firm for the fiscal year ending December 31, 2023. | 0 | 0 | 0 | |
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| | | NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | | | | |
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| NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, trustee or guardian, please give full title as such. | | | | | | | | | | |
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| Signature [PLEASE SIGN WITHIN BOX] | | Date | | | Signature (Joint Owners) | Date | | | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com
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| UNITED INSURANCE HOLDINGS CORP. | |
| Annual Meeting of Stockholders | |
| PROXYJune 2, 2023 1:00 p.m. Eastern Time | |
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| THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF UNITED INSURANCE HOLDINGS CORP. | |
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| The undersigned hereby appoints B. Bradford Martz and Brooke Adler, and Scott St. John, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the shares of United Insurance Holdings Corp. Common Stock which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual Meeting of ShareownersStockholder(s) of the Company to be held JulyJune 2, 20212023 or any adjournment thereof, with all power which the undersigned would possess if present at the Meeting. | |
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| THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES UNDER PROPOSAL 1 AND FOR PROPOSAL 2, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING | |
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| (Continued and to be marked, dated and signed, on the other side) | |
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