UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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WHITE MOUNTAINS INSURANCE GROUP, LTD. | |||
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Notice of 20182020
Annual General Meeting
Of Members and
Proxy Statement
LETTER FROM THE BOARD OF DIRECTORS
FROM OUR BOARD OF DIRECTORS
Dear Fellow Shareholders:
2019 was a strong year for our Company driven by good operating results in our main businesses and strong absolute investment returns. Our share price increased 30%. We also deployed $435 million into businesses during the year, and ended 2019 with undeployed capital at $1.0 billion. This level of undeployed capital reflects management’s thoughtful and patient redeployment and return of capital over the past several years following sales of a number of our large businesses between 2015 and 2017 that generated $4 billion in proceeds. Your Board believes that this patient approach to redeployment will serve owners well in the years to come.
Strong Financial Performance
We finished 2019 with book value per share of $1,024 and adjusted book value per share of $1,018, increases of 14% and 15% from the prior year. Excluding the gain from the MediaAlpha transaction in February 2019, BVPS and ABVPS each grew 8%. We focus management on growing ABVPS because we believe that, in the long term, growth in market value per share will follow growth in ABVPS. In 2019, our one-year total shareholder return was 30.2%. Each of our main operating businesses performed well this year, and our total investment portfolio returned 20.4% (15.5% excluding the gain from the MediaAlpha transaction). A very satisfying result.
Execution of Our Business Strategy
During 2019, your Company made good progress on capital deployment, putting $435 million to work. Three significant deals emerged from our platform companies: (i) Embrace, a pet insurance MGA acquired by NSM, (ii) the acquisition of NSM’s collector car renewal rights and (iii) our buyout of Oaktree’s 50% interest in Kudu. At the parent company, we closed the Elementum transaction and strengthened our deal pipeline considerably.
Thoughtful Approach to Board Composition with a Demonstrated Commitment to Refreshment
As part of our ongoing commitment to creating a balanced and effective Board with diverse viewpoints, skills, and deep industry expertise related to our Company strategy, Peter Carlson joined the Board in 2019. Pete brings over thirty years of accounting and audit experience in the insurance industry. He is the former Executive Vice President and COO of Brighthouse Financial and the former Executive Vice President and CAO of MetLife. Our Board has a robust refreshment process and, since 2017, four new independent directors have joined the Board, replacing three long-serving directors. Average tenure now stands at seven years, and women comprise 25% of our members.
Ongoing Dialogue with Shareholders Through Proactive Engagement
Engaging with our shareholders remains a high priority. Over the last year, members of the Board and management reached out to shareholders owning 72% of White Mountains’ outstanding shares and met with all shareholders who requested meetings, who represented 26% of our shares outstanding. Over the past several years, feedback received from these discussions has helped guide changes to our executive compensation program and further enhance our disclosures about the skills and areas of expertise of our Board, the Board’s oversight of risk management, and our human capital management initiatives. In this year’s proxy statement, we have included a Board skills matrix, enhanced our disclosure around Board oversight of ESG, and added a section on human capital management.
The global pandemic is challenging all of us in 2020, but our core principles serve us equally well in times of calm and times of uncertainty. We wish you well as you manage through these turbulent times. It is a privilege to serve as your Board, and we greatly value your support of White Mountains.
Sincerely,
The White Mountains Insurance Group Board of Directors
Morgan W. Davis, Chair | Peter M. Carlson | Mary C. Choksi |
Philip A. Gelston | Edith E. Holiday | G. Manning Rountree |
Lowndes A. Smith | David A. Tanner |
April 7, 2020
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PROPOSAL 3: APPROVAL OF THE APPOINTMENT OF INDEPENDENT REGISTEREDPUBLIC ACCOUNTING FIRM FOR |
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White Mountains Insurance Group, Ltd. (the “Company”, “Registrant” or “WTM”) is an exempted Bermuda limited liability company whose principal businesses are conducted through its insurance subsidiaries and other affiliates. Within this proxy statement, the term “White Mountains” is used to refer to one or more entities within the consolidated organization, as the context requires.
White Mountains is engaged in the business of making opportunistic and value-oriented acquisitions of businesses and assets in the insurance, financial services and related sectors, operating these businesses and assets through ourits subsidiaries and, if and when attractive exit valuations become available, disposing of these businesses and assets.
White Mountains currently conducts its business primarily in threefour areas: municipal bond insurance, marketing technologyspecialty insurance distribution, capital solutions for asset management firms, and other operations. White Mountains’s municipal bond insurance business is conducted through its subsidiary HG Global Ltd. (“HG Global”) and through its wholly-owned reinsurance subsidiary HG Re Ltd. (“HG Re” and, collectively, “HG Global”). HG Global was established to fund the startup of and provide reinsurance, through HG Re, to Build America Mutual Assurance Company (“BAM”), a mutual municipal bond insurance company. White Mountains’s marketing technologyspecialty insurance distribution business is conducted through its subsidiaries QL Holdingssubsidiary NSM Insurance HoldCo, LLC and its subsidiaries (collectively, “NSM”). White Mountains provides capital solutions for asset management firms through its subsidiary QuoteLab,Kudu Investment Management, LLC and its subsidiaries (collectively, “MediaAlpha”“Kudu”). White Mountains’s investing activities are conducted throughother operations consist of the Company and its wholly ownedwholly-owned subsidiary, White Mountains Capital, Inc (“WM Capital”), its other intermediate holding companies, its wholly-owned investment management subsidiary, White Mountains Advisors LLC (“WM Advisors”)., investment assets managed by WM Advisors, and certain other consolidated and unconsolidated entities and certain other strategic investments. White Mountains’s reportable segments are HG Global/BAM, MediaAlpha,NSM, Kudu and Other Operations.
On September 28, 2017, White Mountains completed the disposition of OneBeacon Insurance Group, Ltd. (“OB” or “OneBeacon”) to Intact Financial Corporation. While owned by White Mountains, OneBeacon was a provider of a wide range of property and casualty insurance products in the United States primarily through independent agencies, regional and national brokers, wholesalers and managing general agencies. For additional information on our business segments, please refer to the Form 10-K for 20172019, which can be found at www.whitemountains.com.
The 20182020 Annual General Meeting will be confined to a Membershareholder vote on the proposals set forth in this Proxy Statement and on such other matters properly brought before the meeting.
For a reconciliation of non-GAAP measures used in this Proxy Statement to their most comparable GAAP measures, see Annex A.
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider. You should read the entire Proxy Statement carefully before voting.
Meeting Information and Availability of Proxy Materials | |
Date and Time: | May 21, 2020 at 10:00 a.m. Eastern Time |
Place: | White Mountains Insurance Group, 23 South Main Street, Suite 3B, Hanover, New Hampshire |
Record Date: | April 1, 2020 |
This Proxy Statement and the accompanying proxy card are being distributed and made available to shareholders on or about April 23, 2020.
Voting Matters and Board Recommendations | ||
Matter | Our Board’s Recommendation | |
Proposal 1 | Election of two directors to Class II with terms ending in 2023 | For |
Proposal 2 | Approval of the advisory resolution on executive compensation | For |
Proposal 3 | Approval of the appointment of PwC as the Company’s Independent Registered Public Accounting Firm for 2020 | For |
How to Vote |
Even if you plan to attend the 2020 Annual Meeting of Members in person, we encourage you to vote in advance of the meeting. You may vote using one the following voting methods. Make sure to have your proxy card or voting instruction form in hand and follow the instructions. Participants who hold shares in a brokerage account, an employee benefit plan, or through a nominee will need to follow instructions on their proxy card, which may include options to vote their shares by telephone or over the internet. You can vote in one of three ways: |
Record Holders | Beneficial Owners |
Vote via the internet ·Go to www.envisionreports.com/WTM | Follow the instructions set forth on the voting instruction form provided by your broker with these proxy materials. |
Vote by telephone ·Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada | |
Vote by mail ·Complete, sign, date and return your proxy card in the envelope provided |
Company Performance Highlights | |
2019 was a strong year for our Company driven by good operating results in our main businesses and strong absolute investment returns. Highlights of our 2019 operational and financial performance include: | |
üDeployed $435 million into businesses during the year and ended 2019 with undeployed capital at $1.0 billion üTotal investment portfolio returned 20.4% (15.5% excluding the gain from the MediaAlpha transaction) üOne-year total shareholder return was 30.2% | üFinished 2019 with book value per share of $1,024 and adjusted book value per share of $1,018, increases of 14% and 15% from the prior year üHad three significant capital deployments: (i) Embrace, a pet insurance MGA acquired by NSM, (ii) the acquisition of NSM’s collector car renewal rights and (iii) our buyout of Oaktree’s 50% interest in Kudu |
Governance Highlights | |
The Company’s commitment to strong corporate governance, effective risk management and strong independent oversight of management by the Board is reflected in our sound governance practices and policies. Governance highlights include: | |
üBoard Composed of 88% Independent Directors üCommitment to Board Refreshment (Three New Directors in Past Two Years, 38% of Current Composition) üAverage Board Tenure is 7 years üIndependent Chairman | ü25% Board Gender Diversity üShareholder Right to Call a Special Meeting at 10% üAnnual Board, Committee, and Individual Self-Evaluations üRobust Director and Executive Officer Stock Ownership Guidelines (5x cash retainer for Directors and 10x salary for CEO and Executive Vice Presidents) |
Shareholder Outreach |
Shareholder engagement is of great importance to our Board and management team as a means to solicit feedback and to ensure accountability and responsiveness to our shareholders. Building on our 2018 engagement efforts, as part of our 2019 shareholder engagement, we reached out to owners representing 72% of outstanding shares and met with all shareholders who requested meetings, who represented 26% of outstanding shares. Our Compensation / Nominating & Governance Committee Chair led discussions in meetings with shareholders representing 13% of outstanding shares, which were all meetings in which her participation was requested. The feedback from these discussions was shared with the Board to help guide changes to our executive compensation plan and further enhance our proxy disclosure. In this year’s proxy statement, we have included a Board skills matrix, enhanced our disclosure around Board oversight of ESG, and added a section on human capital management. For further details on the topics discussed with shareholders and the responsive actions taken to the feedback received, please refer to page 13 of the proxy statement. |
Executive Compensation Highlights | |
üFormulaic Annual Incentive Plan with Pre-established, Rigorous, and Quantifiable Performance Targets üHalf of Annual Long-Term Incentives Delivered in Performance-Based Equity, with a Three-Year Performance Period üClawback Policy for Annual and Long-Term Incentive Plan üDouble-Trigger Change-in-Control Provisions | üOver 92% of Total Target 2019 CEO Compensation Was Linked to Metrics Assessing Company or Stock Performance and Therefore Meaningfully “At-Risk” üOver 86% of Total Target 2019 CEO Compensation Delivered in Long-Term Incentives üThoughtful Peer Group Selection Methodology with Peer Group Used for Variability and Assessment of Appropriate Compensation Structure, Not for Benchmarking Purposes |
Chief Executive Officer:
Other NEOs:
Board’s Role in ESG Oversight |
The Board is responsible for overseeing the Company’s management of ESG matters. Following our core operating principle of Thinking Like Owners, we maintain robust and owner-focused corporate governance practices. With respect to environmental matters, though our business operations do not have a large physical footprint, we strive to make meaningful contributions towards protecting the environment and contributing to our local communities. As to sustainability, the Board oversees the Company’s corporate culture and reinforces the importance of promoting a respectful and diverse work environment that enables our employees to be productive and feel valued. We focus on building long-term value for our owners by building enduring partnerships with the management teams and our partners in our various businesses and in the communities in which we operate. The Board is proud of the Company’s efforts, which can generally be broken down into four main categories: (i) human capital management, (ii) diversity and inclusion, (iii) social impact, and (iv) sustainability. For further details on our Company’s efforts on these categories, please refer to page 19 of the proxy statement.
WHITE MOUNTAINS INSURANCE GROUP, LTD.
NOTICE OF 20182020 ANNUAL GENERAL MEETING OF MEMBERS
TO BE HELD MAY 24, 201821, 2020
| April | 7, 2020 |
Notice is hereby given that the 20182020 Annual General Meeting of Members of White Mountains Insurance Group, Ltd. will be held on Thursday, May 24, 201821, 2020 at 8:10:00 am AtlanticEastern Time at Rosewood Bermuda Hotel, 60 Tucker’s Point Drive, Hamilton Parish, Bermuda.White Mountains Insurance Group, 23 South Main Street, Suite 3B, Hanover, New Hampshire. At this meeting, you will be asked to consider and vote upon the following proposals:
1)election of threetwo directors to Class IIIII with a termterms ending in 2021;2023;
2)approval of the advisory resolution on executive compensation; and
3)approval of the appointment of PricewaterhouseCoopers LLP (“PwC”) as the Company’s Independent Registered Public Accounting Firm for 20182020.
The Company’s audited financial statements for the year ended December 31, 2017,2019, as approved by the Company’s Board of Directors, will be presented at this Annual General Meeting.
MembersShareholders of record of common shares on the record date, Monday,Wednesday, April 2, 2018,1, 2020, (1) who are individuals, may attend and vote at the meeting in person or by proxy or (2) that are corporations or other entities, may have their duly authorized representative attend and vote at the meeting in person or by proxy. A list of all MembersShareholders entitled to vote at the meeting will be open for public examination during regular business hours beginning on or about April 24, 201820, 2020 at the Company’s registered office located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
All Members are invited to attend this meeting.
| By Order of the Board of Directors, |
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| Jennifer L. Moyer |
| Corporate Secretary |
MembersShareholders are invited to complete and sign the accompanying proxy card to be returned to White Mountains Insurance Group, Ltd., Proxy Services, c/o Computershare Investor Services, P.O. Box 505008, Louisville, Kentucky 40233-9814, in the envelope provided, whether or not they expect to attend the meeting. MembersShareholders may also vote their shares by telephone or via the internet in accordance with the instructions on your proxy card.
WHITE MOUNTAINS INSURANCE GROUP, LTD.
This Proxy Statement is being furnished in connection with the solicitation of proxies on behalf of the Company’s Board of Directors (the “Board”) for the 20182020 Annual General Meeting of Members (the “2018“2020 Annual Meeting”), to be held on Thursday, May 24, 201821, 2020 at Rosewood Bermuda Hotel, 60 Tucker’s Point Drive, Hamilton Parish, Bermuda.White Mountains Insurance Group, 23 South Main Street, Suite 3B, Hanover, New Hampshire.
Holders of the Company’s common shares (“Shareholders”), par value $1.00 per share, as of the close of business on Wednesday, April 1, 2020, the record date, are entitled to vote at the meeting. The solicitation of proxies will be made primarily by mail, and the Proxy Statement and related proxy materials will be distributed to registered MembersShareholders on or about April 24, 2018.
Holders of the Company’s common shares (“Members”), par value $1.00 per share, as of the close of business on Monday, April 2, 2018, the record date, are entitled to vote at the meeting.23, 2020.
You can ensure that your common shares are properly voted at the meeting by completing, signing, dating and returning the enclosed proxy card in the envelope provided. MembersShareholders may also vote their shares by telephone or via the internet in accordance with the instructions on your proxy card. A Member hasShareholders have the right to appoint another person (who need not be a Member)Shareholder) to represent the MemberShareholder at the meeting by completing an alternative form of proxy which can be obtained from the Corporate Secretary or by notifying the Inspectors of Election (see page 37)54). Every MemberShareholder entitled to vote has the right to do so either in person or by one or more persons authorized by a written proxy executed by such MemberShareholder and filed with the Corporate Secretary. Any proxy duly executed will continue in full force and effect unless revoked by the person executing it in writing or by the filing of a subsequent proxy.
Sending in a signed proxy will not affect your right to attend the meeting and vote. If a MemberShareholder attends the meeting and votes in person, his or her signed proxy is considered revoked.
IMPORTANT VOTING INFORMATION
If you hold your shares through a broker, bank or other financial institution, in order for your vote to be counted on any matter other than Proposal 3 (the ratification of the selection of PwC as the Company’s auditor for 2018)2020), you must provide specific voting instructions to your broker, bank or financial institution by completing and returning the proxy card or following the instructions provided to you to vote your shares via telephone or the Internet.internet. Voting deadlines vary by institution. Please check with your broker, bank or other financial institution for the voting cut-off date for WTM.
Your Participation in Voting the Shares You Own Is Important
Voting your shares is important to ensure that you have a say in the governance of your company. Please review the proxy materials and follow the instructions on the proxy card to vote your shares. We hope you will exercise your rights and fully participate in your company’s future.
More Information Is Available
If you have any questions about this rule or the proxy voting process in general, please contact the broker, bank or other financial institution where you hold your shares. The U.S. Securities and Exchange Commission (“SEC”) has information available on the internet at: https://www.investor.gov/system/files/publications/documents/english/sec-guide-to-proxy-brochures.pdf with more information about your voting rights as a shareholder.
PROPOSAL 1 - ELECTION OF THE COMPANY’S DIRECTORS
The Board is divided into three classes (each a “Class”). Each Class serves a three-year term.
At the 20182020 Annual General Meeting, G. Manning Rountree and Mary C. Choksi Philip A. Gelston, and Edith E. Holiday are nominated to be elected to Class IIIII with a term ending in 2021.2023. Mr. Rountree and Ms. Choksi were previously elected by Shareholders.
The Board recommends a vote FOR Proposal 1 which calls for the election of the 20182020 nominees.
The current members of the Board and terms of each Class are set forth below:
Director
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Director
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Class I - Term ending in 2019 |
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Morgan W. Davis, Chairman |
| 67 |
| 2006 |
Lowndes A. Smith |
| 78 |
| 2003 |
Gary C. Tolman |
| 66 |
| 2015 |
Class II - Term ending in 2020 |
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Yves Brouillette |
| 66 |
| 2007 |
G. Manning Rountree |
| 46 |
| 2017 |
Class III - Term ending in 2018 |
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Mary C. Choksi* |
| 67 |
| 2017 |
A. Michael Frinquelli** |
| 76 |
| 2005 |
Philip A. Gelston* |
| 65 |
| 2018 |
Edith E. Holiday* |
| 66 |
| 2004 |
Director |
Age |
| Director Since |
Class I - Term ending in 2022 |
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Morgan W. Davis, Chairman | 69 |
| 2006 |
Peter M. Carlson | 55 |
| 2019 |
David A. Tanner | 61 |
| 2018 |
Class II - Term ending in 2020 |
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G. Manning Rountree* | 48 |
| 2017 |
Lowndes A. Smith** | 80 |
| 2003 |
Class III - Term ending in 2021 |
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Mary C. Choksi* | 69 |
| 2017 |
Philip A. Gelston | 67 |
| 2018 |
Edith E. Holiday | 68 |
| 2004 |
*Nominated to be elected at the 2020 Annual General Meeting to Class II with a term ending in 2023. **Retiring from the Board at completion of current term, which ends as of the 2020 Annual General Meeting. The Board is Board Composition and Refreshment The Company is committed to maintaining a Board with members from a variety of backgrounds to promote diverse, independent thinking. Diversity considerations are an important part of the director search process, and the Company believes that continually enhancing the makeup of the Board is important. Currently, the board has 25% gender diversity, with both women also chairing a Committee. Out of eight directors, seven are independent, with 100% independence on key committees. The Company actively refreshes the Board to ensure the directors collectively have the optimal mix of diverse skills and experiences to effectively oversee the business as it evolves. Our most recent addition in 2019 was Peter Carlson. Mr. Carlson brings over thirty years of accounting and audit experience and is the former Executive Vice President and COO of Brighthouse Financial. In December 2019, Mr. Carlson joined MiMedx Group, an industry leader in advanced wound care and an emerging therapeutic biologics company, and became its Chief Financial Officer in March 2020.* Nominated to be elected at the 2018 Annual General Meeting to Class III with a term ending in 2021.**Retiring from the Board, effective as of the 2018 Annual General Meeting. comprised of eight independent directors and the Chief Executive Officer. Upon Mr. Frinquelli’s retirement from the Board at the end of the 2018 term, the Board will be comprised of seven independent directors and the Chief Executive Officer.
Director Skills and Qualifications
Our Board seeks Directors with a broad range of skills, experience and perspectives in order to ensure effective oversight of the Company’s strategies and risks. The Board believes its members should have a diversity of skillsmust be willing and experience and be willingable to devote adequate time and effort to Board responsibilities. In evaluating director candidates, the Compensation/Nominating and& Governance Committee evaluates attributes such as independence, integrity, expertise, breadth of experience, diversity, knowledge about the Company’s business and industry and ownership interest in the Company. Key aspectsThe skills matrix below highlights our Board’s key skills and qualifications that are directly relevant to our business, strategy and operations. The Board reviews this matrix and the overall Board composition periodically in order to ensure the appropriate balance of diversity, knowledge and experience.
Skills and Qualifications | Peter Carlson | Mary Choksi | Morgan Davis | Philip Gelston | Edith Holiday | Manning Rountree | Lowndes Smith | David Tanner |
Insurance/Financial Services Industry Experience promotes our Board’s ability to define and direct our strategy, evaluate potential transactions, and oversee and strategically guide our management team | ü | ü | ü | ü | ü | ü | ||
Senior Leadership Experience enhances our Board’s ability to understand and impact the opportunities and challenges management faces in leading our businesses | ü | ü | ü | ü | ü | ü | ü | ü |
Financial Reporting Expertise strengthens the Board’s oversight of our financial statements and internal controls | ü | ü | ü | ü | ||||
Risk Assessment/Risk Management Experience strengthens the Board’s oversight of complex risks facing the Company | ü | ü | ü | ü | ü | ü | ||
Legal/Regulatory Expertise provides the Board with insights into the highly regulated insurance and financial services industries, as well as guidance on these aspects of our mergers and acquisitions activity | ü | ü | ü | |||||
Public Company Board Experience equips our Board to maintain robust governance and board practices that are designed to put owners first | ü | ü | ü | ü | ü | ü |
The lack of a checkmark for a particular item does not mean that the directors’ experiences, qualifications and skills are included in their individual biographies.director does not possess that qualification, skill or experience, but rather the checkmark indicates that the item is a particularly prominent qualification, skill or experience that the director brings to the Board.
Board of Directors
Class I -– Term Ending in 20192022
Morgan W. Davis Chairman Qualifications ·Joined in 2006 ·Age: 69 ·Chairman of the Board ·Committees: Compensation/Nominating & Governance, Executive (Chair) Experience: ·Appointed Chairman of the Board in March 2017 ·Formerly Managing Director of OneBeacon (2001 to 2005) and served in a variety of capacities for White Mountains subsidiaries (1994 to 2001) ·Prior to 1994, Mr. Davis had 21 years of experience in the insurance industry, mostly at Fireman’s Fund Insurance Company and INA/Cigna ·Served as a director of OneBeacon from 2005 until its acquisition by Intact Financial Corporation in September 2017 ·Served as a director of Endurance Specialty Holdings, and as a member of its Finance and Compensation Committees, from 2015 until its acquisition by SOMPO Holdings, Inc. in March 2017 ·Serves on the Board of Trustees of Lipscomb University and on the Board of Directors for the United States African Development Foundation Mr. Davis has extensive executive and board-level experience gained over the course of his more than 45-year career in the property and casualty insurance industry. Select Board Service: ·Compare.com (Private) ·MediaAlpha (Private) ·NSM Insurance Group (Private) Peter M. Carlson Qualifications ·Joined in 2019 ·Age: 55 ·Committees: Audit Experience: ·Chief Financial Officer of MiMedx Group, a biopharmaceutical company; joined December 2019 ·Formerly served as Executive Vice President and Chief Operating Officer of Brighthouse Financial, a U.S. annuity and life insurance company that spun off from MetLife, from 2017 to 2018 ·Served as Executive Vice President and Chief Accounting Officer at MetLife from 2009 to 2017 ·Formerly at Wachovia Corporation from 2002 to 2009, where he served as Executive Vice President and Corporate Controller from 2006 to 2008 ·Joined Wachovia after fifteen years at Arthur Andersen, where he served as an audit partner working in financial services, manufacturing, commercial services and distribution ·Serves as a Trustee of Wake Forest University Mr. Carlson has extensive accounting and auditing experience gained over the course of his 30-year career in the insurance and financial services industries.Morgan W. Davis has been
Lowndes A. Smith has been a director of the Company since 2003. Mr. Smith has served as Managing Partner of Whittington Gray Associates since 2001. Mr. Smith formerly served as Vice Chairman of The Hartford Financial Services Group, Inc. (1989-2001) and President and CEO of Hartford Life Insurance Company (1989-2001). Mr. Smith served OneBeacon as Chairman of the Board and the Compensation Committee and was a member of the Audit, Executive and Compensation Committees until September 2017. Mr. Smith also served as Chairman of the Board and a member of the Audit, Compensation and Executive Committees of Symetra Financial Corporation from 2007 until its February 2016 merger with Sumitomo Life Insurance Company. Mr. Smith has more than 40 years of experience in the insurance industry as well as broad management and financial experience.
David A. Tanner Qualifications ·Joined in 2018 ·Age: 61 ·Vice Chairman of the Board ·Committees: Audit, Finance Experience: ·Appointed Vice Chairman of the Board in February 2020 ·Managing Director of Three Mile Capital LLC, a private investment company ·Partner at Rosemark Capital, an investor in and owner of media and marketing technology companies ·Served as the Managing Director of Arlon Group LLC and as Executive Vice President and a member of the Management Committee of Continental Grain Company from 2006 to 2017 ·Served as Founder and Managing Principal of Quadrangle Group, LLC from 2000 to 2006 ·Served as Managing Director at Lazard Freres & Co. and Managing Principal at Lazard Capital Partners from 1998 to 2000 ·Serves as Chairman of the Board of the New York University School of Law, Trustee of New York University, Chair Emeritus of Montefiore Medicine Academic Health System, Director of Lawyers for Children, Director of The Carroll and Milton Petrie Foundation and a member of the Council on Foreign Relations Mr. Tanner has extensive executive and board-level service and financial expertise gained over the course of over 30 years in the financial services industry. Select Board Service: ·Northeast Bancorp (Public)Gary C. Tolman has been a director of the Company since June 2015. Mr. Tolman is the co-founder of NOBLR, a full stack telematics-specific personal auto insurance company. Mr. Tolman formerly served as the President and Chief Executive Officer of Esurance, the direct-to-consumer personal auto insurance company, from 2000 until his retirement in 2015. Mr. Tolman also served as the Chairman of the Board of Directors for Answer Financial, one of the country’s largest personal lines insurance agencies. Prior to joining Esurance in 1999, Mr. Tolman served as the President and Treasurer of Talegen Holdings, formerly the property and casualty insurance operations of Xerox Corporation. Before Talegen Holdings, Mr. Tolman worked at Fireman’s Fund Insurance Company for 15 years, serving in a number of capacities and leaving as Senior Vice President and Chief Financial Officer of its reinsurance company. Mr. Tolman has served on the boards of a number of insurance and insurance services companies during his more than 40-year career in the property and casualty insurance industry. He currently serves on the Board of Directors of Kelly Klee Inc. and on the Board of Governors of the International Tennis Hall of Fame.
Class II – To Be Elected to a Term Ending in 20202023
G. Manning Rountree | Qualifications |
·Joined in 2017 ·Age: 48 ·Committees: Executive, Finance | Experience: ·Joined White Mountains in 2004 ·Prior to CEO appointment in 2017, served as President of White Mountains Capital and President of White Mountains Advisors ·Senior Vice President and Head of Corporate Development, Putnam Investments (2002-2004) ·Associate, McKinsey & Company (1999-2002) Mr. Rountree has extensive management and financial expertise gained over the course of his career in the investment and insurance industries. Select Board Service: ·Admiral Group, plc (Public) ·Build America Mutual Assurance Co (Private) ·Various WTM portfolio companies (Private) |
Yves Brouillette has been a director of the Company since 2007. He has been the President of Beluca Investment, Inc. since 2006. Previously, Mr. Brouillette had been with ING since 1989, serving in many leadership positions at ING companies, including most recently as the CEO for ING Latin America operations in Mexico, Brazil, Chile and Peru (2002-2005). From 2004 until May 2017, Mr. Brouillette was a director of Intact Financial Corporation (formerly ING Canada), where he served on the Audit and Risk Committees, and was the Chairman of the Board (2003-2007). Mr. Brouillette is an actuary and has over 30 years of experience in the property and casualty insurance industry in North and South America.
G. Manning Rountree was appointed as a director and Chief Executive Officer of the Company on March 1, 2017. Previously, Mr. Rountree served as an Executive Vice President of the Company and President of White Mountains Capital, Inc. (“WM Capital”). He joined White Mountains in 2004 and served as President of WM Advisors from March 2009 until December 2014. Prior to joining White Mountains, Mr. Rountree was a Senior Vice President at Putnam Investments for two years. Prior to joining Putnam Investments, Mr. Rountree spent three years with McKinsey & Company. Mr. Rountree is a director and member of the Risk Management Committee of Admiral Group plc, a large car insurance provider based in the UK.
Class III – To Be Elected to a Term Ending in 20212023
Mary C. Choksi | Qualifications |
·Joined in 2017 ·Age: 69 ·Committees: Executive, Finance (Chair) | Experience: ·Founding Partner (and Senior Managing Director/Senior Advisor until February 2017) of Strategic Investment Group, an investment management enterprise founded in 1987 which designs and implements global investment strategies for institutional and individual investors ·Founder and Managing Director of Emerging Markets Management LLC until May 2011 ·Prior to 1987, worked in the Pension Investment Division of the World Bank ·Serves as a Trustee of Washington and Lee University Ms. Choksi has extensive executive and board-level service and investment management expertise gained over the course of her 40 years in the financial services industry. Select Board Service: ·Avis Budget Group - Compensation Committee (Public) ·Omnicom Group - Audit and Compensation Committees (Public) ·Franklin Templeton Mutual Funds (36 investment companies) - Audit Committee |
Philip A. Gelston has been a director of the company since February 2018. Mr. Gelston joined Cravath, Swaine & Moore LLP in 1978 and became a partner in 1984. He retired from Cravath’s Corporate Department in December 2017. He has extensive experience in mergers and acquisitions, joint ventures and general corporate counseling. Mr. Gelston’s practice encompassed complicated negotiated transactions, hostile transactions (both offense and defense), cross border transactions, activist defense, and advising boards and senior executives, particularly on corporate governance and managing crisis situations. Mr. Gelston also serves as a Trustee for the Friends of Bronx Preparatory Charter School.
Edith E. Holiday has been a director of the Company since 2004. Ms. Holiday formerly served as Operating Trustee for TWE Holdings I and II Trusts from 2002 to 2007. Ms. Holiday was also the President, Secretary and Treasurer of Comcast TW Holdings, Inc. from 2006 to 2007. From 1990 to 1993 Ms. Holiday served as Assistant to the President of the United States and Secretary of the Cabinet. From 1989 to 1990 she was General Counsel to the United States Treasury Department. Ms. Holiday also holds directorships at Canadian National Railway Company (since 2001), where she also serves on the Audit Committee, Hess Corporation (since 1993), Santander Consumer USA (since 2016), and is a director or trustee of 42 investment companiesClass III – Term Ending in the Franklin Templeton Group of Mutual Funds (since 1996). Ms. Holiday also served as a Director for the H. J. Heinz Company (from 1995 until its sale in 2013) and RTI International Metals Inc. (from 1999 until its sale in 2015). Ms. Holiday has extensive board-level experience across diverse industries and significant experience with the U.S. Federal government.2021
Philip A. Gelston | Qualifications |
·Joined in 2018 ·Age: 67 ·Committees: Audit, Compensation/ Nominating & Governance | Experience: ·Joined Cravath, Swaine & Moore LLP in 1978, became a partner in 1984, and retired in December 2017 ·Currently a member of Cravath’s Office of General Counsel ·Has extensive experience in mergers and acquisitions, joint ventures and general corporate counseling, encompassing complicated negotiated transactions, hostile transactions (both offense and defense), cross border transactions, activist defense, and advising boards and senior executives, particularly on corporate governance and managing crisis situations ·Serves as a Trustee for the Friends of Bronx Preparatory Charter School Mr. Gelston has extensive legal and management expertise gained over the course of his 40-year career in the legal field. |
Edith E. Holiday | Qualifications |
·Joined in 2004 ·Age: 68 ·Committees: Compensation/ Nominating & | Experience: ·Served as the President, Secretary and Treasurer of Comcast TW Holdings, Inc. from 2006 to 2007 ·Former Operating Trustee for TWE Holdings I and II Trusts from 2002 to 2007 ·Served as Assistant to the President of the United States and Secretary of the Cabinet from 1990 to 1993 ·Served as General Counsel to the United States Treasury Department from 1989 to 1990 Ms. Holiday has extensive board-level experience across diverse industries and significant experience with the U.S. Federal government. Select Board Service: ·Canadian National Railway Co – Audit Committee (Public) ·Franklin Templeton Mutual Funds (36 investment companies) ·Hess Corporation (Public) ·Santander Consumer USA (Public) |
Corporate governance is the system by which companies are directed and controlled and involves the distribution of rights and responsibilities among the Board, management and theThe Company’s Members. The Company has established Corporate Governance Guidelines that spell out itsour overall approach towards corporate governance.
The Company also has a Code of Business Conduct that applies to all directors, officers and employees in carrying out their responsibilities to, and on behalf of, the Company. No waivers of the Code of Business Conduct were requested of, or granted by, the Board for any director or executive officer during 2017.2019.
The Company’s Corporate Governance Guidelines and Code of Business Conduct are available at our website, www.whitemountains.com. These documents are available in print, free of charge, to any Membershareholder upon request.
The Board
The day-to-day management of the Company, including preparation of financial statements and short-term and long-term strategic planning, is the responsibility of management. The primary responsibility of the Board is to oversee and review management’s performance of these functions in order to advance the long-term interests of the Company and its Members.shareholders.
In fulfilling this responsibility, directors must exercise common sense business judgment and act in what they reasonably believe to be in the best interests of the Company and its Members.Company. Directors are entitled to rely on the honesty and integrity of senior management and the Company’s outside advisors and auditors. However, it is the Board’s responsibility to establish that they have a reasonable basis for such reliance by ensuring that they have a strong foundation for trusting the integrity, honesty and undivided loyalty of the senior management team upon whom they are relying and the independence and expertise of outside advisors and auditors.
Mr. Davis, an independent director, serves as Chairman of the Board. At meetings of the Board, Mr. Davis presides over a separate session of non-management directors without Company management present. In addition to being led by an independent Board Chair, the Board is comprised of directors that, together, are knowledgeable and experienced in the Company’s business. The Board is satisfied that the current structure provides strong oversight of the Company’s affairs.
Shareholder Engagement
Shareholder engagement is of great importance to our Board and management team as a means to solicit feedback and to ensure accountability and responsiveness to our shareholders. Building on our 2018 engagement efforts, as part of our 2019 shareholder engagement, we reached out to shareholders owning 72% of outstanding shares and met with all shareholders who requested meetings, who represented 26% of outstanding shares. Our Compensation / Nominating & Governance Committee Chair personally led discussions in meetings with shareholders representing 13% of outstanding shares, which were all meetings where her participation was requested.
These discussions centered around our business strategy, corporate governance, executive compensation program, and board oversight of risk management. More specifically, we discussed the changes we made to our compensation program in 2019, our continued board refreshment with the appointment in 2019 of our newest independent director, insurance industry veteran Peter Carlson, and our environmental and sustainability practices. The 2019 changes to our compensation program were to (i) make our annual bonus program for executive officers entirely formulaic with a pre-established, rigorous and quantifiable performance target relevant for our Company and industry and (ii) adopt share ownership guidelines for our executive officers. Our shareholders were overwhelmingly supportive of our executive compensation programs, including the performance metrics used in our 2019 annual bonus program and 2019-2021 long-term incentives, and our patient capital redeployment efforts.
Shareholder feedback is regularly communicated to our full Board, and the input we received directly informed enhancements implemented to our executive compensation program in 2019, as well as the expanded disclosure in this year’s proxy statement (e.g., Board’s Role in ESG Oversight and Director Skills and Qualifications with an individual skills matrix).
Director Independence
The Board has determined that a majority of the Company’s current directors are independent, as defined in Section 303A of the New York Stock Exchange (“NYSE”) Listed Company Manual. Those directors determined to be independent are Messrs. Brouillette,Carlson, Davis, Frinquelli, Gelston, Smith and TolmanTanner and Mmes. Choksi and Holiday. For a director to be independent, the Board must determine that the director has no relationship with the Company (other than being a director or shareholder of the Company or its subsidiaries) or has only immaterial relationships with the Company. The Company does not apply categorical standards as a basis for determining director independence. Accordingly, the Board considers all relevant facts and circumstances, on a case-by-case basis, in making an independence determination.
The Board notes no current relationships (other than being directors or shareholders) with Messrs. Brouillette, Frinquelli,Carlson, Gelston, TolmanSmith and SmithTanner or Mmes. Choksi and Holiday. The Board notes a relationship with Mr. Davis, as disclosed herein under “Director Compensation”, that it concluded was immaterial and did not impair his independence. In making its independence determinations, the Board considers all such relationships in light of NYSE standards as well as the attributes it believes should be possessed by independent-minded directors. Those attributes include the relative impact of the transactions to the director’s personal finances, the perceived degree of dependence by the director or the Company upon the relationship or transactions continuing in the future and whether the transactions were on terms that were reasonable and competitive.
Board Meetings and Committees; Annual Meeting Attendance
During 2017,2019, the following meetings of the Board were held: sevenfour meetings of the full Board, elevennine meetings of the Audit Committee, fourfive meetings of the CompensationCompensation/Nominating & Governance Committee, three meetingsone meeting of the Performance Compensation Subcommittee three meetings of the Nominating and Governance Committee and four meetings of the Finance Committee. During 2017,2019, each director attended more than 75% of the aggregate of: (1) the total number of meetings of the Board (held during the period for which he or she has been a director); and (2) the total number of meetings held by all committees of the Board on which he or she served.
It is White Mountains practice that all directors are invited to, receive materials for and generally attend all Committee meetings. In addition, each Committee Chair provides regular updates to the full Board regarding Committee activities.
Directors are encouraged but are not required, to attend annual meetings. All of the Company’s directors were in attendance at the 20172019 Annual General Meeting, which was held on May 25, 2017.23, 2019.
Committees of the Board
Nominating and Governance Committee
The primary purposes of the Nominating and Governance Committee are to: (1) identify individuals qualified to become Board members and recommend such individuals to the Board for nomination for election to the Board; (2) make recommendations to the Board concerning committee appointments; (3) develop, recommend and annually review corporate governance guidelines applicable to the Company and oversee corporate governance matters; and (4) oversee the evaluation of the Board and management.
The Nominating and Governance Committee is currently comprised of Ms. Holiday (as Chairwoman) and Messrs. Brouillette, Davis and Smith. The Board has determined that each current member of the Nominating and Governance Committee satisfies applicable NYSE requirements.
The Nominating and Governance Committee Charter, which outlines the duties and responsibilities of the Nominating and Governance Committee, is available at www.whitemountains.com. The Nominating and Governance Committee Charter is available in print, free of charge, to any Member upon request.
General Criteria and Process for Selection of Director Candidates. In identifying and evaluating director candidates, the Nominating and Governance Committee does not set specific criteria for directors. Under its Charter, the Committee is responsible for determining desired Board skills and evaluating attributes such as independence, integrity, expertise, breadth of experience, knowledge about the Company’s business or industry and ownership interest in the Company. In selecting director candidates, the Company seeks a diversity of skills and experience, but does not affirmatively seek diversity based on race, gender, or national origin. Directors must be willing to devote adequate time and effort to Board responsibilities. As set forth in the Company’s Corporate Governance Guidelines and its Charter, the Committee is responsible for recommending director candidates to the Board.
Consideration of Director Candidates Nominated by Members. The Company has not adopted a specific policy regarding consideration of director candidates from Members. Members who wish to recommend candidates for consideration by the Committee may submit their nominations in writing to the Corporate Secretary at the address provided in this Proxy Statement. The Committee may consider such Member recommendations when it evaluates and recommends candidates to the Board for submission to Members at each annual general meeting. In addition, Members may nominate director candidates for election without consideration by the Committee by complying with the eligibility, advance notice and other provisions of our Bye-laws as described below.
Compensation/Nominating & Governance Committee Met five times during fiscal year 2019 Current Committee Members: ·Edith Holiday (Chair) ·Morgan Davis ·Philip Gelston Primary Responsibilities ·Review and make recommendations on director compensation ·Discharge the Board’s responsibilities relating to the compensation of executives ·Oversee the administration of the Company’s (and, to the extent the Committee deems appropriate, the major subsidiaries of the Company) compensation plans, in particular the incentive compensation and equity-based plans ·Prepare the annual report on executive compensation required by the rules and regulations of the Securities and Exchange Commission (the “Commission”) to be included in the Company’s annual proxy statement or annual report on Form 10-K, as applicable ·Identify individuals qualified to become Board members and recommend such individuals to the Board for nomination for election to the Board ·Make recommendations to the Board concerning committee appointments ·Develop, recommend and annually review corporate governance guidelines applicable to the Company and oversee corporate governance matters ·Oversee the evaluation of the Board and management The Compensation/Nominating & Governance Committee Charter, which outlines the duties and responsibilities of the Compensation/Nominating & Governance Committee, is available at www.whitemountains.com. The Compensation/Nominating & Governance Committee Charter is available in print, free of charge, to any shareholder upon request. Independence The Board has determined that each current member of the Compensation/Nominating & Governance Committee satisfies applicable NYSE requirements.Procedures for Nominating Director Candidates. Under the Company’s Bye-laws, nominations for the election of directors may be made by the Board or by any Member entitled to vote for the election of directors (a “Qualified Member”). A Qualified Member may nominate persons for election as directors only if written notice of such Qualified Member’s intent to make such nomination is delivered to the Secretary not later than: (1) with respect to an election to be held at an annual general meeting, 90 days prior to the anniversary date of the immediately preceding annual general meeting or not later than 10 days after notice or public disclosure of the date of the annual general meeting is given or made available to Qualified Members, whichever date is earlier, and (2) with respect to an election to be held at a special general meeting for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to Qualified Members. Each such notice shall set forth: (a) the name and address of the Qualified Member who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the Qualified Member is a holder of record of common shares entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the Qualified Member and each such candidate and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the Qualified Member; (d) such other information regarding each candidate proposed by such Qualified Member as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each such candidate been nominated, or intended to be nominated, by the Board; and (e) the consent of each such candidate to serve as a director of the Company if so elected.
Interlocks and Insider Participation
No member of the Compensation/Nominating & Governance Committee was an employee of the Registrant during the last fiscal year or has served as an officer of the Registrant.
Consideration of Director Nominees
General Criteria and Process for Selection of Director Candidates. In identifying and evaluating director candidates, the Compensation/Nominating & Governance Committee does not set specific criteria for directors. Under its Charter, the Committee is responsible for determining desired Board skills and evaluating attributes such as independence, integrity, expertise, breadth of experience, diversity and knowledge about the Company’s business and industry and ownership interest in the Company. In selecting director candidates, the Company seeks a diversity of skills, backgrounds and experience. Directors must be willing to devote adequate time and effort to Board responsibilities. As set forth in the Company’s Corporate Governance Guidelines and its Charter, the Committee is responsible for recommending director candidates to the Board.
Consideration of Director Candidates Nominated by Shareholders. The Company has not adopted a specific policy regarding consideration of director candidates from shareholders. Shareholders who wish to recommend candidates for consideration by the Committee may submit their nominations in writing to the Corporate Secretary at the address provided in this Proxy Statement. The Committee may consider such shareholder recommendations when it evaluates and recommends candidates to the Board for submission to shareholders at each annual general meeting. In addition, shareholders may nominate director candidates for election without consideration by the Committee by complying with the eligibility, advance notice and other provisions of our Bye-laws as described below.
Procedures for Nominating Director Candidates. Under the Company’s Bye-laws, nominations for the election of directors may be made by the Board or by any shareholder entitled to vote for the election of directors (a “Qualified Shareholder”). A Qualified Shareholder may nominate persons for election as directors only if written notice of such Qualified Shareholder’s intent to make such nomination is delivered to the Secretary not later than: (1) with respect to an election to be held at an annual general meeting, 90 days prior to the anniversary date of the immediately preceding annual general meeting or not later than 10 days after notice or public disclosure of the date of the annual general meeting is given or made available to Qualified Shareholders, whichever date is earlier, and (2) with respect to an election to be held at a special general meeting for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to Qualified Shareholders. Each such notice shall set forth: (a) the name and address of the Qualified Shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the Qualified Shareholder is a holder of record of common shares entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the Qualified Shareholder and each such candidate and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the Qualified Shareholder; (d) such other information regarding each candidate proposed by such Qualified Shareholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each such candidate been nominated, or intended to be nominated, by the Board; and (e) the consent of each such candidate to serve as a director of the Company if so elected.
Shareholder Communications
Shareholders, employees and others interested in communicating directly with the Board, any of the Board’s Committees or any individual member of the Board should write to the addressee, c/o the Corporate Secretary, at the address presented under “Available Information” (which appears on page 55).
Risk Oversight
The Board, directly and through its Committees, plays an active role in the oversight of the Company’s risk management. The subject of risk management is a recurring agenda item, for which the Board regularly receives reports from management on capital, investments, and operations, including the risks associated with each and the steps management is taking to manage those risks. The Board also discusses with management the Company’s business strategy, risk appetite and appropriate levels of risk.
The Board’s committees are assigned oversight responsibility for particular areas of risk. For example, the Audit Committee receives a report, at least annually, on company-wide risks which considers operational, financial, legal, compliance, cyber and reputational risks, as well as climate risks and sustainability matters. The Compensation/Nominating & Governance Committee oversees risk related to executive compensation plans and implementation. The Finance Committee oversees the risks related to managing the Company’s investment portfolio. Full Board meetings and individual Committee meetings are scheduled so as not to overlap and all directors are encouraged to attend all committee meetings, allowing for every director to participate and provide guidance regarding any risk concerns.
Board’s Role in ESG Oversight
The Board is responsible for overseeing the Company’s management of ESG matters. Following our core operating principle of Thinking Like Owners, we maintain robust and owner-focused corporate governance practices. With respect to environmental matters, while our business operations do not have a large physical footprint, we strive to make meaningful contributions towards protecting the environment and contributing to our local communities. As to sustainability, the Board oversees the Company’s corporate culture and reinforces the importance of promoting a respectful and diverse work environment that enables our employees to be productive and feel valued. We focus on building long-term value for our owners by building enduring partnerships with the management teams and our partners in our various businesses and in the communities in which we operate. The Board is proud of the Company’s efforts, which can generally be broken down into four main categories:
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Voting Rights of Shareholders
As of April 1, 2020, there were 3,128,644 common shares outstanding. Shareholders of record of common shares shall be entitled to one vote per common share, provided that if, and so long as, the votes conferred by “Controlled” common shares (as defined below) of any person constitute ten percent (10%) or more of the votes conferred by the outstanding common shares of the Company, each outstanding common share comprised in such Controlled common shares shall confer only a fraction of a vote that would otherwise be applicable according to the following formula:
[(T divided by 10)-1] divided by C
Where: “T” is the aggregate number of votes conferred by all the outstanding common shares; and “C” is the number of votes conferred by the Controlled common shares of such person.
“Controlled” common shares in reference to any person means:
(1)all common shares directly, indirectly, or constructively owned by such person within the meaning of Section 958 of the Internal Revenue Code of 1986, as amended, of the United States; and
(2)all common shares directly, indirectly, or constructively owned by any person or “group” of persons within the meaning of Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder; provided that this clause (ii) shall not apply to (a) any person (or any group that includes any person) that has been exempted from the provisions of this clause or (b) any person or group that the Board, by the affirmative vote of at least seventy-five percent (75%) of the entire Board, may exempt from the provisions of this clause.
The limitations set forth above do not apply to any Shareholder which is a “Byrne Entity” (as defined below) for any matter submitted to the vote of Shareholders, except with respect to the election of directors. “Byrne Entity” means any foundation or trust established by John J. Byrne, Patrick Byrne, and any associate or affiliate of any of them (or any group of which any of them is a part), as defined under Section 13(d) of the United States Securities Exchange Act of 1934, as amended.
If, as a result of giving effect to the foregoing provisions or otherwise, the votes conferred by the Controlled common shares of any person would otherwise represent 10% or more of the votes conferred by all the outstanding common shares, the votes conferred by the Controlled common shares of such person shall be reduced in accordance with the foregoing provisions. Such process shall be repeated until the votes conferred by the Controlled common shares of each person represent less than 10% of the votes conferred by all common shares.
Voting Rights of Members
As of April 2, 2018, there were 3,753,405 common shares outstanding. Members of record of common shares shall be entitled to one vote per common share, provided that if, and so long as, the votes conferred by “Controlled” common shares (as defined below) of any person constitute ten percent (10%) or more of the votes conferred by the outstanding common shares of the Company, each outstanding common share comprised in such Controlled common shares shall confer only a fraction of a vote that would otherwise be applicable according to the following formula:
[(T divided by 10)-1] divided by C
Where: “T” is the aggregate number of votes conferred by all the outstanding common shares; and “C” is the number of votes conferred by the Controlled common shares of such person.
“Controlled” common shares in reference to any person means:
(1)all common shares directly, indirectly, or constructively owned by such person within the meaning of Section 958 of the Internal Revenue Code of 1986, as amended, of the United States; and
(2)all common shares directly, indirectly, or constructively owned by any person or “group” of persons within the meaning of Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder; provided that this clause (ii) shall not apply to (a) any person (or any group that includes any person) that has been exempted from the provisions of this clause or (b) any person or group that the Board, by the affirmative vote of at least seventy-five percent (75%) of the entire Board, may exempt from the provisions of this clause.
The limitations set forth above do not apply to any Member which is a “Byrne Entity” (as defined below) for any matter submitted to the vote of Members, except with respect to the election of directors. “Byrne Entity” means any of John J. Byrne, any foundation or trust established by John J. Byrne, Patrick Byrne, and any associate or affiliate of any of them (or any group of which any of them is a part), as defined under Section 13(d) of the United States Securities Exchange Act of 1934, as amended.
If, as a result of giving effect to the foregoing provisions or otherwise, the votes conferred by the Controlled common shares of any person would otherwise represent 10% or more of the votes conferred by all the outstanding common shares, the votes conferred by the Controlled common shares of such person shall be reduced in accordance with the foregoing provisions. Such process shall be repeated until the votes conferred by the Controlled common shares of each person represent less than 10% of the votes conferred by all common shares.
Security Ownership of Certain Beneficial Owners
To the knowledge of the Company, there was no person or entity beneficially owning more than 5% of the common shares outstanding as of April 2, 2018,1, 2020, except as shown below.
Name and Address of Beneficial Owner | Amount of |
| Percent of |
|
|
|
|
The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 287,826 | (a) | 7.7 % |
T. Rowe Price Associates, Inc. 100 E. Pratt St., Baltimore, MD 21202 | 276,125 | (b) | 7.4 % |
Name and Address of Beneficial Owner | Amount of |
| Percent of |
|
|
|
|
The Vanguard Group 100 Vanguard Blvd., Malvern, PA 19355 | 316,058 | (a) | 10.1 % |
Wellington Management Group, LLP 280 Congress Street, Boston, MA 02210 | 247,882 | (b) | 7.9 % |
(a)Information as of December 31, 2017,February 28, 2020, based on Schedule 13G13G/A filed with the Securities and Exchange Commission on February 8, 2018,March 6, 2020, by and on behalf of The Vanguard Group.
(b)Information as of December 31, 2017,2019, based on Schedule 13G13G/A filed with the Securities and Exchange Commission on February 14, 2018,January 27, 2020, by and on behalf of T. Rowe Price Associates, Inc.Wellington Management Group, LLP.
Security Ownership of Management
The following table sets forth, as of April 2, 2018,1, 2020, beneficial ownership of common shares by each director, the Named Executive Officers (as defined on page 23)26) and all other executive officers as a group:
|
|
|
| ||||||||
|
| Amount of Ownership |
| ||||||||
|
|
|
| ||||||||
|
|
|
|
|
| Amount of Ownership | |||||
Name of Beneficial Owner |
| Beneficially | (b) | Economically | (c) | Beneficially | (a) |
|
| Economically | (b) |
|
|
|
|
|
| ||||||
Raymond Barrette (a) |
| 37,564 |
| 30,138 |
| ||||||
Yves Brouillette |
| 6,662 |
| 6,662 |
| ||||||
Frank R. Bazos | 3,600 |
|
|
| 7,200 |
| |||||
Reid T. Campbell |
| 15,136 |
| 21,636 |
| 16,765 |
|
|
| 22,565 |
|
Peter M. Carlson | 313 |
|
|
| 313 |
| |||||
Mary C. Choksi |
| 188 |
| 188 |
| 688 |
|
|
| 688 |
|
Morgan W. Davis |
| 20,790 |
| 20,790 |
| 9,689 |
|
|
| 9,689 |
|
David T. Foy (a) |
| 13,901 |
| 13,901 |
| ||||||
A. Michael Frinquelli |
| 2,641 |
| 2,641 |
| ||||||
Philip A. Gelston |
| 63 |
| 63 |
| 563 |
|
|
| 563 |
|
Edith E. Holiday |
| 2,102 |
| 2,102 |
| 2,602 |
|
|
| 2,602 |
|
David B. Linker (a) |
| 4,151 |
| 4,151 |
| ||||||
T. Michael Miller (a) |
| - |
| - |
| ||||||
J. Brian Palmer |
| 3,665 |
| 5,285 |
| 3,319 |
|
|
| 4,769 |
|
G. Manning Rountree |
| 15,747 |
| 24,747 |
| 19,087 |
|
|
| 27,787 |
|
Robert L. Seelig |
| 23,846 |
| 29,646 |
| 16,950 |
|
|
| 20,650 |
|
Lowndes A. Smith |
| 2,902 |
| 2,902 |
| 1,102 |
|
|
| 1,102 |
|
Gary C. Tolman |
| 2,370 |
| 2,370 |
| ||||||
|
|
|
|
|
| ||||||
All directors, Named Executive Officers and all other executive officers as a group (16 persons)
|
| 151,728 |
| 167,222 |
| ||||||
David A. Tanner | 938 |
|
|
| 938 |
| |||||
All directors, Named Executive Officers and all other executive officers as a group (12 persons) | 75,616 |
|
|
| 98,866 |
| |||||
(a) The common shares shown as beneficially owned by all directors, Named Executive Officers and all other executive officers as a group represent 2.4% of the total common shares outstanding at April 1, 2020. No director or executive officer beneficially owned 1% or more of the total common shares outstanding at that date. Beneficial ownership has been determined in accordance with Rule 13d-3 of the Exchange Act.
(b) Common shares shown as economically owned include common shares beneficially owned and target unearned performance share awards, less any common shares in which the owner disclaims a pecuniary interest. |
(a) The common shares shown as beneficially owned by all directors, Named Executive Officers and all other executive officers as a group represent 2.4% of the total common shares outstanding at April 1, 2020. No director or executive officer beneficially owned 1% or more of the total common shares outstanding at that date. Beneficial ownership has been determined in accordance with Rule 13d-3 of the Exchange Act.
(b) Common shares shown as economically owned include common shares beneficially owned and target unearned performance share awards, less any common shares in which the owner disclaims a pecuniary interest. |
(a) Share ownership information for Messrs. Barrette, Foy, Linker and Miller is based on information provided to the Company by each21
Table of them, respectively.Contents
(b) The common shares shown as beneficially owned by (1) Mr. Barrette and (2) all directors, Named Executive Officers and all other executive officers as a group represent 1.0% and 4.0% of the total common shares outstanding at April 2, 2018, respectively. No other director or executive officer beneficially owned 1% or more of the total common shares outstanding at that date. Beneficial ownership has been determined in accordance with Rule 13d-3 of the Exchange Act.
(c) Common shares shown as economically owned include common shares beneficially owned and target unearned performance share awards, less any common shares in which the owner disclaims a pecuniary interest.
FROM OUR COMPENSATION/NOMINATING & GOVERNANCE COMMITTEE
Dear Fellow Shareholders:
One of our most important mandates as the independent Compensation/Nominating & Governance Committee (the “CNG Committee”) is to structure our executive compensation programs and governance practices to create close alignment with our shareholders’ interests, while continuing to attract and retain talented executives to execute on our Company’s strategy and create long-term value.
To that end, we regularly seek feedback from our shareholders on our compensation practices and, as appropriate, make refinements that we believe enhance our programs. Following our 2019 Say-on-Pay vote which received nearly 94% support, we reached out to shareholders owning 72% of White Mountains’ outstanding shares and met with all shareholders who requested meetings, who represented 26% of our shares outstanding. Ms. Edith Holiday, the CNG Committee chair, personally led discussions in meetings with shareholders representing 13% of our shares outstanding, which were all meetings in which her participation was requested. The feedback received during these meetings was extremely valuable as we evaluate our compensation programs for potential improvements in structure or disclosure.
2019 Compensation Program Highlights:
ØBase salaries were held flat for all Named Executive Officers
ØAnnual percent-of-salary target bonus opportunities were held flat for all Named Executive Officers
ØOver 92% of total target 2019 CEO compensation was linked to Company or share performance and therefore meaningfully “at-risk”
Changes in Response to Shareholder Feedback:
ØIntroduced a formulaic annual incentive program for our executive officers, with pre-established, rigorous, and quantifiable performance targets that are relevant for our firm and industry – see page 32
ØEstablished share ownership guidelines for our executive officers, set at 10x base salary for our CEO and Executive Vice Presidents, and at 3x base salary for other executive officers – see page 35
White Mountains remains in a transitional period marked by thoughtful and patient redeployment of undeployed capital generated from sales of businesses in recent years, and the CNG Committee remains committed to ensuring that our executive compensation programs and governance practices continue to motivate long-term value creation. We believe the actions highlighted above are responsive to our shareholders’ input, and we welcome your continued feedback.
Sincerely,
The White Mountains Insurance Group Compensation/Nominating & Governance Committee
Edith E. Holiday, Chair
Morgan W. Davis
Philip A. Gelston
April 7, 2020
Compensation Discussion and Analysis
Executive Summary
Business Overview and 2019 Performance Highlights
White Mountains is engaged in the business of making opportunistic and value-oriented acquisitions of businesses and assets in the insurance, financial services and related sectors, operating those businesses and assets through its subsidiaries and, if and when attractive exit valuations become available, divesting to realize gains on their sale. Our principal focus is to grow adjusted book value per share (“ABVPS”) because we believe that, over the long term, our share price growth will parallel our growth in ABVPS (see chart and discussion on page 30). Since our IPO, including dividends, White Mountains has delivered 13% annualized growth in ABVPS and 12% annualized growth in market value per share. Having sold off a number of significant businesses from 2015-2017, which generated $1.4 billion in transaction gains and left us with $3.1 billion of pro forma undeployed capital, we remain in a transitional period as we continue to work to thoughtfully redeploy and distribute the proceeds of those transactions.
2019 was a strong year for our Company driven by good operating results in our main businesses and strong absolute investment returns, which led to a strong one-year total shareholder return of 30.2%. Excluding the gain from the MediaAlpha transaction in February 2019, we grew ABVPS by 8.1% and our total investment portfolio returned 15.5%.
In 2019, we redeployed $435 million into businesses, following $332 million in capital deployments in 2018, and we ended the year with undeployed capital of $1.0 billion. We expect our returns to continue to normalize and revenues to grow as we finish redeploying and distributing this capital.
2019 Performance Highlights | |
$435 million of capital deployments | 8.1% growth in ABVPS (excl. the MediaAlpha transaction) |
Commitment to Ongoing Shareholder Engagement
As part of our ongoing commitment to better understand the views of our shareholders with respect to our business, governance, and compensation practices, we have continued our investor outreach efforts in 2019. Over the past several years, feedback received from these discussions has helped guide refinements to our executive compensation programs and governance practices, as well as enhancements to our public disclosure. A summary of these efforts in 2019, feedback received and responsiveness is below:
The Right Compensation Peer Group
As described in more detail below, the CNG Committee refers to a peer group as part of its evaluation of the Company’s compensation practices. Importantly, we do not use this peer group to benchmark compensation. Rather, we evaluate the executive compensation programs of these peers in terms of structure and variability of payouts in good and poor performance scenarios. We seek to structure our compensation program to be more variable than most other insurance and reinsurance peers. The CNG Committee believes that our compensation structures closely align the financial interests of management with those of our shareholders and encourage appropriate, but not excessive, risk taking.
We have made meaningful progress in redeploying and distributing the proceeds from our sale transactions in recent years. However, as we continue to have $1 billion of undeployed capital, our returns are not comparable to peers who are fully deployed, and pay level benchmarking comparisons to any peer group, including our own, are not meaningful at this time. The CNG Committee regularly evaluates the continuing appropriateness of our peer group and will revisit our peer group as we continue to redeploy capital. See page 29 for further details on our 2019 peer group.
Compensation Program Aligned with Company Performance
In assessing the design of our executive compensation program, we value input from our shareholders and incorporate their feedback into our assessment. The current design of our compensation program consists of three primary elements: base salary, annual incentive bonus and long-term incentive compensation. Each element isstructured with the primary goal of maximizing shareholder value over long periods of time. Highlights of our 2019 compensation program are as follows:
We believe that the goal of maximizing shareholder value over long periods of time is best pursued by utilizing a pay-for-performance program that closely aligns the financial interest of management with those of our shareholders while rewarding appropriate risk taking. We accomplish this by emphasizing variable long-term compensation, the value of which is tied to performance over a number of years rather than fixed entitlements. To illustrate, 86% of our CEO’s 2019 target total direct compensation was linked to long-term incentives, while 8% was made up of base salary, and 6% linked to annual cash bonus opportunity at target.
Chief Executive Officer:
Other NEOs:
Named Executive Officers
In this CD&A, we review the philosophy of White Mountains’s executive compensation program, the compensation process, the program’s elements, and the 20172019 and 20182020 compensation decisions for our current named executive officers:
· Manning Rountree, CEO as of March 1, 2017
· Reid Campbell, EVP and CFO as of May 17, 2017
· Robert Seelig, EVP and General Counsel
· Brian Palmer, Managing Director and CAO
In addition, under applicable SEC rules, we also are required to discuss the 2017 compensation decisions for the following former named executive officers:
· Ray Barrette, former Chairman and CEO, who served through March 1, 2017
· David Foy, former CFO, who served through May 16, 2017 and remained an employee until December 31, 2017
· David Linker, former President of WM Advisors, who served through November 2017 and remained an employee until January 31, 2018
2019 Named Executive Officers G. Manning Rountree Chief Executive Officer Reid T. Campbell Executive Vice President &Chief Financial Officer Frank R. Bazos Executive Vice President &Head of Mergers &Acquisitions of WM Capital Robert L. Seelig Executive Vice President &General Counsel J. Brian Palmer Managing Director &Chief Accounting Officer Unless otherwise noted, the term named executive White Mountains is engaged in the business of making opportunistic and value-oriented acquisitions of businesses and assets in the insurance, financial services and related sectors, operating these businesses and assets through · Michael Miller, CEO of OneBeacon, who ceased to be an executive officer of White Mountains upon the closing of the sale of OneBeacon on September 28, 2017officer as usedofficers (or “NEOs”) refers to the group of the five individuals listed in this CD&A does not include Messrs. Barrette, Foy, Linker and Miller,above table, the term “CEO” refers to Mr. Rountree, the term “CFO” refers to Mr. Campbell, and the term “Committee”“CNG Committee” refers to the CompensationCompensation/Nominating & Governance Committee of the Board of Directors of White Mountains.BackgroundBusiness Overview, Significant Transactions in 2015-2017 and Performance Highlightsourits subsidiaries and, if and when attractive exit valuations become available, disposingdivesting to realize gains on the sale of these businesses and assets.In recent years,From 2015-2017, White Mountains has sold a number of its businesses—OneBeacon,Sirius, Symetra, Tranzact Sirius and Symetra—OneBeacon—as buyers made compelling offers that resulted in roughly $1.4 billion of transaction gains thatand drove strong growth in adjusted book value per share (“ABVPS”) during 2015-2017.ABVPS. As a result of these sales, the Company finds itselfis in a transitional period of transition as management works to intelligently redeploy and distribute the transaction proceeds. Pro forma for the OneBeacon sale, asAs of May 2017, on a pro forma basis for theOneBeacon sale, the Company had an undeployed capital position of $3.1 billion on a capital base of $4.2 billion. In addition, after the Company’s remaining businessessales, the Company generated much lower revenues than before the sold businesses,sales, and the high level of undeployed capital impliesimplied a low single digit go-forward rate of growth in ABVPS, at least in the short term. WeABVPS. As undeployed capital continues to be deployed or distributed, we expect returns to normalize and revenues to grow over several years, asgrow.
In 2019, we continued to make good progress and deployed $435 million. Three significant deals emerged from our platform companies: (i) Embrace, a pet insurance MGA acquired by NSM, (ii) the acquisition of NSM’s collector car renewal rights and (iii) our buyout of Oaktree’s 50% interest in Kudu. As of December 31, 2019, undeployed capital is deployedwas down to $1.0 billion. In 2019, excluding the gain from the early 2019 MediaAlpha transaction, ABVPS and CVPS grew by 8.1% and 9.1%, respectively. These results outperformed their respective targets for the year, which were set rigorously by the CNG Committee above the prior period targets. In addition, for the 2017-2019 performance cycle, the average annual growth in new opportunities or distributed. ABVPS and CVPS was 8.9% and 7.9%, respectively.
The Company remains focused on economics and creating shareholder value, while targeting redeployment in its areas of expertise: primarily insurance, broader financial services and adjacent sectors. The Company remains value-oriented, opportunistic and highly flexible.
In making compensation grants in early 2018Shareholder Engagement and setting related performance targets, the Committee took account of the stage of transition of the Company, including the level of deployed and undeployed capital and the expected run rate returns thereon, and made assumptions regarding the timing and magnitude of redeployment and distributions consistent with the Company’s communications with shareholders in May 2017. In particular, for the new incentive grants, which were the first grants made after the completion of all the aforementioned sales, the Committee decreased the total target number of shares granted under the long-term incentive plan by roughly 24% and increased the performance target applicable to the new performance share cycle by 1 point over the prior cycle. In addition, the Committee considered the feedback received from owners through the Company’s shareholder outreach conducted in May 2017 and the vote levels from the 2017 “say-on-pay” proposal. The Committee will strongly consider the feedback and vote levels when determining the appropriateness and amounts of any future separation payments to executives. The Committee has determined that separation payments relating to periods after the date of separation generally will be limited to no more than target levels.
May 2017 Shareholder Engagement2019 Compensation Program Changes
Engaging with our owners is central to our commitment to good governance and critical to maintaining our strong corporate governance practices. Building on our 2018 engagement efforts, our 2019 shareholder outreach was led by the Board and senior management, often including our CNG Committee chair, Ms. Edith Holiday, leading the discussion and providing a direct line of communication between the Board and our shareholders. Following the announcementour 2019 Say-on-Pay vote which received nearly 94% support, we reached out to shareholders representing 72% of the OneBeacon saleour outstanding shares and met with all shareholders who requested meetings, who represented 26% of our shares outstanding. Ms. Holiday personally led discussions in May 2017, the Company published an investor presentation and held meetings with a numbershareholders representing 13% of our shares outstanding, which were all meetings in which her participation was requested. Shareholder feedback received from these meetings was shared with the Company’s shareholders. The presentation discussed (1)entire Board and helped inform the CNG Committee’s thinking as it evaluated our compensation programs to continue to motivate and reward our executive officers for strong performance in executing our strategic transformation, while also taking into account shareholders’ views on the structure of the Company through the previously discussed sales of businesses over the course of the 2015-2017 performance cycle, (2) capital management activities, (3) management changes, and (4) expectations for the Company going forward, including lower run rate returns and revenues, particularly until capital generated from the sale transactions is redeployed.our compensation programs.
At aboutThe main topics in our engagement meetings were our current business strategy, corporate governance, executive compensation program, and board oversight of risk management. More specifically, we discussed the same time,changes we made to our compensation program in advance2019, our continued board refreshment with the appointment in 2019 of our newest independent director, insurance industry veteran Peter Carlson, and our environmental and sustainability practices. Our shareholders were overwhelmingly supportive of our executive compensation programs, including the Company’sperformance metrics used in our 2019 annual general meeting held on May 25, 2017, certainbonus program and 2019-2021 long-term incentives, and our patient capital redeployment efforts. Shareholder feedback is regularly communicated to our full Board, and the input we received previously directly informed enhancements implemented to our executive compensation program in 2019 (summarized below), as well as the expanded disclosure in this year’s proxy advisory firms recommendedstatement (e.g., Board’s Role in ESG Oversight and Director Skills and Qualifications with an individual skills matrix).
2019 executive compensation program changes in response to shareholder feedback were:
ØIntroduced a formulaic annual incentive program for our executive officers, with pre-established, rigorous, and quantifiable performance targets that shareholders vote against the Company’s “say-on-pay” proposal. In light of the recommendations, theare relevant for our firm and industry – see page 32 for additional detail
ØEstablished share ownership guidelines for our executive officers, set at 10x base salary for our CEO and Executive Vice Presidents, and at 3x base salary for other executive officers – see page 35 for additional detail
The Company’s management met with 14 shareholders who held roughly 51% of the Company’s sharesand Board is committed to discuss the recommendations and address questions about the Company’s compensation program, including the cash retirement payment made to Mr. Barrette that is discussed below. In general, these shareholders understood the basis for the Company’s compensation actions in conjunction with the sales of businesses and the strong transaction gains that the Company produced and indicated they would vote in favor of the “say-on-pay” proposal.
At the 2017 Annual Meeting, 68% of shareholders voted in favor of the “say-on-pay” proposal (65% after giving effect to the voting cutback applicable to certain shareholders). The Committee noted that, although a meaningful majority of shareholders voted in favor of the “say-on-pay” proposal, a reasonable minority of owners voted against the proposal. The Committee took account ofcontinuing its extensive shareholder feedback and these vote levels and, in the future, will strongly consider them when determining the appropriateness and amounts of any future separation payments to executives. The Committee has determined that separation payments relating to periods after the date of separation generally will be limited to no more than target levels.outreach program.
Compensation Philosophy
Our executive compensation policies are designed with the primary goal of maximizing shareholder value over long periods of time. We believe that this goal is best pursued by utilizing a pay-for-performance program that closely aligns the financial interests of management with those of our shareholders and encourageswhile rewarding appropriate risk taking. We accomplish this by emphasizing variable long-term compensation, the value of which is tied to performance over a number of years rather than fixed entitlements (such as base salary, pensions, and employee benefits). To that end, the CNG Committee has established
base salaries and target annual bonuses for our executives that tend to be lower than those paid by comparable property and casualty insurers and reinsurers, while granting the bulk of an executive’s target compensation as long-term incentive compensation. To illustrate, 86% of our CEO’s 2019 target total direct compensation was linked to long-term incentives, while 8% was made up of base salary and 6% was target annual cash bonus opportunity.
The following principles guide and inform the CNG Committee’s efforts to deliver a highly effective executive compensation program that drives shareholder value and fosters the attraction and motivation of key talent:
Manage for the Long-Term The Board manages for the long-term and makes pay decisions with the primary goal of maximizing shareholder value over long periods of time | Alignment with Shareholders Compensation is directly linked to performance and is aligned with shareholders by having a majority of NEO pay at risk in both short- and long-term incentives | |
Extensive Shareholder Engagement We engage directly with our shareholders, and our Board carefully reviews shareholder feedback as it considers refinements to our compensation practices | Share Ownership Guidelines Executives are required to meet and maintain significant share ownership requirements: 10x base salary for our CEO and EVPs, and 3x base salary for other executive officers. |
Compensation Setting Process
The CNG Committee is responsible for approving our compensation programs for executive officers, and it specifically approves all compensation for our executive officers and for any employee with target annual compensation in excess of $1.5 million. Our CEO annually presents to the CNG Committee his evaluation of our executives, their individual performance, achievements, and the contributions they made to the Company’s accomplishments over the past year, as well as over the most recent long-term incentive plan cycle. In connection with this evaluation, the CEO recommends to the CNG Committee appropriate compensation amounts for these executives. The CNG Committee assesses the performance, responsibilities and contributions of the CEO, considers CEO succession plans, and sets the compensation of the CEO.
We generally have structured ourWith the exception of significant promotions and new hires, compensation matters are usually addressed at the first meeting of the CNG Committee each year (typically late February), following the availability of financial results for the prior year and the current year’s financial plan. This allows us to determine the results of prior period grantsand to set targets for the current year and newest long-term incentiveperformance cycle. Performance cycles for long-term compensation as performance shares and restricted shares, which reward company-wide performance. The numbertypically run for three years beginning on January 1st of WTM common shares earned from a grantthe year of performance shares can be from 0x to 2x the target number granted. The metric we use to measure performance is our after-tax annual growth in compensation value per share over the performance cycle (“CVPS”, which is defined by the Committee as the average of growth in ABVPS and growth in “intrinsic business value per share”, which is the ABVPS including franchise value and certain other adjustments). The market value of our shares is not included as a measure of performance, but it determines the value of performance and restricted share awards. The Committee focuses on performance metrics that relate to growth in book value per share because it believes these are the best metrics for valuing insurance and reinsurance companies. As Benjamin Graham said in his famous quote: “In the short run, the market is a voting machine, but in the long run it is a weighing machine.”grant.
Performance shares and restricted shares typically are granted annually, and performance is tied to a three-year period. Under our long-term incentive programs, at any given time an executive usually has three overlapping cycles running. This approach avoids cliffs that could foster a short-term outlook and also serves as an effective retention tool.
From year-to-year when we make new long-term incentive grants, we typically adjust the target number of shares granted to individual employees to reflect the change in CVPS during the prior year, rather than focusing on changes in market values. This is consistent with our view that the change in book value per share and related metrics provides a better view of the change in value of the Company than short-term market price fluctuations. In addition, we generally limit total annual share grants to employees to less than 1% of the Company’s outstanding shares. For both the 2017-2019 and 2018-2020 cycles, we adhered to this guideline.Compensation Peer Group
When making new long-term incentive grants, the CNG Committee assesses the impact of different performance scenarios on potential realizable compensation. Further, in order to test our beliefs about the sizestructure and variability of the awards we make, the CNG Committee annually reviews and their variability, annually the Committee has reviewed and consideredconsiders a systematic analysis prepared by management of the public compensation disclosures about compensation made by other property and casualty insurers and reinsurers that the CNG Committee considers to be peers. The focus
Importantly, our compensation peer group is not used for benchmarking purposes, but rather to analyze whether our compensation programs are appropriately structured and to ensure they are more variable than most other insurance and reinsurance peers. We remain in a thoughtful transitional period of the analysisredeploying substantial proceeds from past value-generating transactions, and as such our returns with $1.0 billion of capital undeployed as of year-end will not be comparable to peers who are fully deployed. Therefore, pay level benchmarking comparisons to any peer group, including our own, is not on benchmarking, but rather on the variability, structure and levelsmeaningful at this time.
Table of compensation at those companies at differing levels of performance. Contents
The companies included in the analysis presented to the CNG Committee prior to it making compensation decisions in 20182019 were:
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· | Alleghany Corporation | · | CNA Financial |
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· | Arch Capital Group | · | Everest Re Group |
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· | Argo Group | · | Markel Corp |
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· | Aspen Insurance Holdings | · | RenaissanceRe Holdings |
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· | Axis Capital | · | Selective Insurance Group |
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· | Cincinnati Financial | · | W.R. Berkley | |||
The Company uses this group of companies as it reflects traditional competitors of White Mountains. The CNG Committee regularly evaluates the continuing appropriateness of this groupgroup. Even though sales transactions over the past five years temporarily lowered our go-forward revenues and although the Company is going through a period of transitionnear-term growth in ABVPS expectations, our strategy remains intact as management workswe look to redeploy and distributeour capital. Therefore, the sales proceeds, theCNG Committee believes this group currently remains appropriate. appropriate for the Company’s competitive analysis, as a temporary reduction in revenues following significantly value-generating asset sales is not an appropriate catalyst for what would be an interim peer group change at this time.
The CNG Committee concluded that the peer analysis supported its view that the Company’s compensation programs are appropriately sized and more variable than most other insurers,insurance and reinsurance peers, have fewer fixed elements of compensation and perquisites, and do not lead to significant rewards for poor performance.
To measure value sharing, in light of the significant sales of businesses over the past couple of years, the amount of undeployed capital, and the resulting change in the profile of the Company, the Committee has begun focusing on run rate “at target” compensation expense relative to the capital base. In 2015, 2016 and 2017, the at target run rate compensation expense was 1.3%, 1.4% and 1.6% of total capital. Despite the substantial shrink in the capital base as a result of the return of over $1.6 billion to shareholders in 2016 and 2017, the 2018 run rate expense is back down to 1.3% of total capital as the Company has aggressively managed total compensation expense while working to redeploy the proceeds of the sale transactions.
The CNG Committee believes that the compensation structures that have been developed for the Company closely align the financial interests of management with those of our shareholders and encourage appropriate, but not excessive, risk taking.
Our Compensation ProcessBest Practices
The Committee is responsible for approvingWe maintain a number of compensation governance best practices which support our overarching compensation philosophy and are fully aligned with our compensation principles, as discussed in the following section. Our compensation practices that affect executive officers, and it specifically approves all compensation for our executive officers and for any employeealso align with target annual compensation in excess of $1.5 million. Our CEO annually presents the Committee with his evaluation of our executives, their individual performances, responsibilities, and the contributions they made to the Company’s accomplishments over the past year, as well as over the last long-term incentive plan cycle and his expectations for the future and succession plans. In connection with this evaluation, the CEO presents the Committee with his recommendations for establishing the compensation for these executives for its consideration. The Committee assesses the performance, responsibilities, and contributions of the CEO, considers CEO succession plans, and sets the compensation of the CEO.
With the exception of significant promotions and new hires, compensation matters are usually addressed at the first meeting of the Committee each year (typically late February) following the availability of financial results for the prior year and the current year’s financial plan. This allows us to determine the results of prior period grants and to set targets for the current year and newest long-term performance cycle. Performance cycles for long-term compensation typically run for three years beginning on January 1st of the year of grant.input we have received from shareholders.
Key Compensation Highlights | |
What We Do | What We Do Not Do |
üCommitment to pay for performance as evidenced by having over 92% of total target 2019 CEO compensation linked to company, stock or individual performance and, therefore, meaningfully “at-risk” üHalf of annual LTI delivered in performance-based equity, with a three-year measurement period üFormulaic annual incentive program, based on pre-determined goals üClawback policy for annual and long-term incentive plans üDouble-trigger change-in-control provisions üAnnual Say-On-Pay vote üShare ownership guidelines for executive officers | ONo hedging of Company securities ONo executive pensions ONo single-trigger vesting of equity-based awards upon change-in-control ONo excise tax gross-ups upon change-in-control ONo dividends on unvested performance shares ONo long-term employment agreements with executive officers ONo excessive perquisites or benefits |
Significant Corporate TransactionsSuperior Track Record and the Alignment of Growth in 2017ABVPS and During the 2015-2017 Long-term Incentive CycleMarket Value Per Share
OverFrom our IPO in 1985 through year-end 2019, we have delivered 13% annualized growth in ABVPS and 12% annualized growth in market value per share to our shareholders. Importantly, as seen in the coursechart below, ABVPS and market value per share have generally moved in tandem over the last thirty-five years, despite short-term fluctuations. This is a core reasoning behind the CNG Committee’s selection of the 2015-2017incentive plan performance cycle, White Mountains sold its interestmetrics that relate to growth in four major businesses generating $1.4 billion of transaction gains. Over the three-year period, ABVPS grew from $664 to $915, representing an annualized ROE of 11.4%, including dividends. In 2017, ABVPS grew from $789 to $915, an ROE of 16.1%, including dividends.book value per share.
In 2017, OneBeacon agreed to be acquired by Intact Financial for $1.7 billion, or 1.7x book value. In exchange for our 76% stake, we received cash proceeds of about $1.3 billion and recorded an after-tax gain of $555 million. Over the 16 years from acquisition to sale, White Mountains’s returns on the OneBeacon investment were a 14% after-tax IRR (vs. an S&P 500 annual total return of 6%) and a 2.5 multiple of invested capital. With the timing and structure of the transaction, we avoided the significant catastrophe losses resulting from the difficult Atlantic hurricane season and the other natural catastrophes experienced by most other insurers and reinsurers.
In 2016, White Mountains sold Tranzact after a 20-month hold generating an $82 million after-tax gain in adjusted book value ($16 per share) and a 35% IRR.30
In 2015, White Mountains agreed to sell its reinsurance business, Sirius Group, to China Minsheng Investments for approximately $2.6 billion. The transaction closed in 2016, and White Mountains recorded a total after-tax gain on the sale of $477 million. Over White Mountains’s 20-year history with its reinsurance business, we managed to produce an after-tax IRR of 11%.
Also in 2015, Symetra Financial agreed to be sold to Sumitomo Life. White Mountains recorded a total after-tax gain relating to the sale of $270 million and generated a 15% IRR over its 11-year ownership period, more than double the S&P 500 return over during that time.
These four transactions generated total proceeds of $4.2 billion and resulted in undeployed capital of roughly $3.1 billion at May 2017 pro forma for the OneBeacon transaction. As discussed with shareholders through an investor presentation and meetings in May 2017, management expects to shrink the Company over the medium term by distributing $1.5 billion to $2 billion of undeployed capital. To that end, in 2017 the Company returned $724 million to owners while reducing outstanding shares by 832,725. In addition, management is seeking to deploy $200 million annually in new opportunities, though we expect these deployments to be lumpy. In 2017, approximately $275 million was deployed in/committed to new business opportunities. In total, about $1.0 billion was returned or deployed, bringing year-end undeployed capital to $2.1 billion.
Compensation for 20172019
The principal elements of compensation for our executives in 2017—2019 - base salary, annual incentive bonuses and long-term incentive compensation base salary, and annual incentive bonuses—- are discussed below.
20172019 Target Annual Direct Compensation Mix
1. Base Salary
As discussed above under “Philosophy”“Compensation Philosophy”, the Company’s compensation program emphasizes variable long-term incentive compensation, rather than fixed entitlements. Accordingly, we pay our executive officers salaries that we believe to be below-market.below market. In 2008, we limited base salaries to a maximum of $500,000. Each of our Named Executive Officers currently receives a salary of $500,000, other than Mr. Palmer who receives a salary of $400,000.
The salaries of our NEOs were not increased in 2019, and they are also kept flat for 2020:
` | Base Salaries in Effect During | ||
Executive | 2018 | 2019 | 2020 |
G. Manning Rountree | $500,000 | $500,000 | $500,000 |
Reid T. Campbell | $500,000 | $500,000 | $500,000 |
Frank R. Bazos | -- | $500,0001 | $500,000 |
Robert L. Seelig | $500,000 | $500,000 | $500,000 |
J. Brian Palmer | $400,000 | $400,000 | $400,000 |
1 Mr. Bazos commenced employment on May 1, 2019, therefore he earned a pro-rated salary of $323,077 for 2019. |
2. Annual Incentive Bonuses
We provide annual bonus opportunities to our executive officers.officers, which make up a small percentage of each NEO’s target total annual compensation – 6% for our CEO, and 11% on average for the other NEOs in 2019 – as the bulk of our executive officers’ compensation opportunity is tied to long-term incentives. Each Named Executive Officer participates in the annual bonus pool applicable to the parent holding companies. For 2017,2019, the target bonus pool was $4.2$5.6 million for 3842 employees.
Following the 2018 annual general meeting, the Company’s management team, along with CNG Committee chair Edith Holiday, who participated in a significant portion of the meetings, engaged with shareholders representing approximately 50% of our outstanding shares. Based on those discussions and as a direct response to feedback, the CNG Committee has introduced a formulaic annual incentive program in effect for 2019 for our executive officers, with pre-established, rigorous, quantifiable performance targets relevant for our firm and industry.
Under our quantitative annual bonus program, the level of payout is determined by reference to the Company’s growth in CVPS, which is defined by the CNG Committee as the average of growth in ABVPS and growth in “intrinsic business value per share,” which is the ABVPS including franchise value step-ups to reflect the fair value of certain subsidiaries carried at book value. In choosing this metric for the annual bonus program, the CNG Committee recognized that this is the same metric as used in a portion of the Company’s long-term incentives (albeit for a different time period). The awarded bonus pool size can rangeCNG Committee considered a number of other metrics but concluded that no other metric is as pertinent to our business as CVPS. CVPS is the metric that the Board and the management team focus on because it is linked to growth in book value per share metrics, which we believe is what ultimately drives growth in our share price for our shareholders. As previously disclosed in our 2019 proxy statement, 2019 annual bonuses were eligible to be earned ranging from 0% to 200% of target, depending upon performance. Individual bonuses can vary widely aroundaccording to the pool average based on individual performance and no cap (other than the sizeharvest scale of the pool) applies to any single individual2%-7%-12%.
For the Named Executive Officers, the annual incentive bonus is designed to reward company-wide performance and the individual NEO’s contributions to those results. The Committee did not set a quantitative target in 2017 and instead established the size of the awarded pool based on a qualitative assessment of the Company’s performance during the year based on its judgment. The Committee believes that using a qualitative assessment rather than a quantitative target for the Company’s annual bonus is appropriate given that the Company seeks to maximize shareholder value over long periods of time, whereas quantitative results over a one-year period do not necessarily provide a full picture of the performance of the Company. In addition, and reflecting this, annual bonus opportunity reflects a small proportion of the total compensation opportunity of our executive officers, (e.g., less than 10% of the total compensation opportunity inCNG Committee maintains the case of our CEO and EVPs), withdiscretion to decrease the bulk of ourindividual annual bonus payouts after the quantitative formula has been applied, however it does not have discretion to increase payouts. Our executive officers’ compensation opportunity tied to long-term incentives. officers, at most, receive the quantitative result.
For 2017,2019, the Named Executive Officers had target annual bonuses of 75% of salary, which was unchanged from the prior year.
year and is continued into 2020. Based on the Company’s strong performance of 9.1% growth in 2017,CVPS in 2019, the CNG Committee awarded athe NEOs with bonuses of 141% of target. The lone exception was Mr. Bazos, who joined the Company in May 2019, whose annual bonus poolfor 2019 was set at target of 175% of target, which equaled $7.4 million. Among the items considered by the Committee in awarding the bonus pool were: (1) the Company’s 15% growth in adjusted book value per share for compensation purposes (which reflects in 2017 the full amount of the Wobi write down), (2) 8% growth in intrinsic business value per share (including the full amount of the Wobi write down), (3) the large gain on the well-timed sale of OneBeacon, and (4) strong investment results that were well above benchmarks and plan. Messrs. Rountree and Seelig received lower percentage bonuses in order$375,000 pursuant to free up additional money in the bonus pool for more junior employees.his offer letter.
| Target Bonus | Earned Bonus | % of Target |
Rountree | $375,000 | $500,000 | 133% |
Campbell | $375,000 | $750,000 | 200% |
Seelig | $375,000 | $500,000 | 133% |
Palmer | $300,000 | $600,000 | 200% |
2019 Annual Bonus Decisions | |||
Executive | Target Bonus | Earned Bonus | % of Target |
G. Manning Rountree | $375,000 | $528,750 | 141% |
Reid T. Campbell | $375,000 | $528,750 | 141% |
Frank R. Bazos | $375,000 | $375,000 | 100% |
Robert L. Seelig | $375,000 | $528,750 | 141% |
J. Brian Palmer | $300,000 | $423,000 | 141% |
3. Long-Term Incentive Compensation
Long-term equity awards generally consist of an equal mix of performance shares and restricted shares, rewarding long-term value creation and aligning executives’ interests with shareholders. Restricted shares are subject to a three-year cliff-vesting provision, instead of annual vesting, in order to promote retention that balances incentives to redeploy capital aggressively and to remain patient for good opportunities. The number of WTM common shares earned from a grant of performance shares can range from 0%-200% of target, based on after-tax annual growth in CVPS over the three-year performance cycle.
The CNG Committee selected performance metrics that relate to growth in book value per share because it continues to believe these metrics ultimately drive growth in our share price for our shareholders. The market value of our shares is not included as a direct measure of performance, but it determines the ultimate value of earned performance and restricted share awards.
From year-to-year when we make new long-term incentive grants, we typically adjust the target number of shares granted to individual employees to reflect the change in CVPS during the prior year, rather than focusing on changes in market values. This is consistent with our view that the change in book value per share and related metrics provides a better view of the change in value of the Company than metrics reflecting short-term market price fluctuations. In addition, we generally limit total annual share grants to employees to equal to or less than 1% of the Company’s outstanding shares. For each of the 2017-2019, 2018-2020, 2019-2021, and 2020-2022 cycles, we adhered to this guideline.
New Grants for the 2017-2019 Performance Cyclein 2019:. For the CEO and each named executive officer recipient of aour other NEOs, the annual 2019 long-term incentive grant for the 2017-2019 performance cycle, the new grantsawards were allocated 50% as performance shares and 50% as restricted shares, which generally wasconsistent with prior years. The restricted shares are subject to a three-year cliff vesting provision based on continuous service, in order to promote retention of key executive talent. The performance shares will vest in a range of 0% - 200% of target, following a three-year performance period.
For the same allocation as in 2016. The Subcommittee2019-2021 performance period, the CNG Committee established a target of 5%7% annual growth in CVPS as the performance target that would result in the payout of 100% of the target performance shares. AnnualThere would be no payout for annual growth of 1%2% or less, would result in a payout of 0%, and annual growth of 9%12% or more would result inbe required for a payout of 200%. Importantly, the target and maximum goals for the 2019-2021 performance cycle (2%-7%-12%) were set higher than the previous 2018-2020 cycle (2%-6%-10%), which in turn were set higher than the previous 2017-2019 cycle (1%-5%-9%). In setting this performance scale, a primary goal of the SubcommitteeCNG Committee was to set a performance target that would incentivize management to redeploy capital thoughtfully. The CNG Committee took account of the level of deployed and undeployed capital (and the expected run rate returns thereon) and made assumptions regarding the timing and magnitude of redeploymentfuture deployment and distributions of undeployed capital consistent withcapital. In addition, the Company’s communications with shareholders in May 2017.CNG Committee considered that the one-year performance scale for the 2019 annual bonus program was the same as the three-year average performance scale being set for the 2019-2021 performance shares. The Committee determined that this scale was appropriate due to the factors discussed above and their applicability over a longer time frame (which equates to aggregate growth of 6%-23%-40% over a three-year period).
In total, the WTM performance share and restricted share grants made to all employeesA detailed breakdown of the Company forfiscal 2019 grants are included in the 2017-2019 performance cycle totaled approximately 0.8% of the then outstanding shares, within the Committee’s 1% guideline.table below:
CEO. Mr. Rountree became CEO of the Company on March 1, 2017. Previously, Mr. Rountree served as EVP of the Company and President of WM Capital. Mr. Rountree’s promotion to CEO occurred at the same time as the board meeting at which compensation decisions for the year were made. After reviewing Mr. Rountree’s historical compensation, his share ownership, his existing incentives, compensation granted to CEOs at other property and casualty (re)insurance companies, and the historical run rate compensation level of WTM’s CEO (i.e., in 2015 and prior, which was before the former CEO’s 2016 compensation package was reduced as he moved toward retirement), the Subcommittee determined to grant him 2,900 target performance shares and 2,900 restricted shares for the 2017-2019 performance cycle. The grant date market value was approximately $5.5 million. The number of performance shares that will be earned will be determined after the end of 2019 based on the Company’s performance over the cycle compared to the target described above. The 2017-2019 restricted shares will vest on January 1, 2020, subject to Mr. Rountree’s continued employment.
2019 Long-Term Incentive Grants | ||||||
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| Grant Date | Restricted Shares | Performance Shares | Total 2019 LTI | ||
Executive | # Shares | Grant Value | # Shares | Grant Value | ||
G. Manning Rountree | 2/27/2019 | 3,000 | $2,804,100 | 3,000 | $2,804,100 | $5,608,200 |
Reid T. Campbell | 2/27/2019 | 2,000 | $1,869,400 | 2,000 | $1,869,400 | $3,738,800 |
Frank R. Bazos | 5/1/2019 | 1,900 | $1,749,805 | 1,900 | $1,749,805 | $3,499,610 |
Robert L. Seelig | 2/27/2019 | 1,000 | $934,700 | 1,000 | $934,700 | $1,869,400 |
J. Brian Palmer | 2/27/2019 | 500 | $467,350 | 500 | $467,350 | $934,700 |
Named Executive Officers. In the case of Messrs. Campbell, Seelig and Palmer, in determining the amount of new long-term incentive compensation grants for 2017,2019 for our named executive officers, the CNG Committee assessed each executive’s scope of authority and ability to impact the success of the Company. Based on the CNG Committee’s general experience and the recommendation of the CEO, for NEOs other than himself, the CNG Committee established a grant level that it believed was appropriate to reflect each such executive’s expected contribution to the Company over the next performance cycle.
Reid Campbell. Mr. Campbell became EVP and CFO of the Company in May 2017. Previously, he was a Managing Director of WM Capital and the President of WM Advisors. For the performance cycle from 2017-2019, Mr. Campbell originally was granted 2,000 WTM performance shares and 2,000 restricted shares. The grant date market value was approximately $3.8 million. In connection with his promotion to CFO in May 2018, the Subcommittee granted Mr. Campbell an additional 250 target performance shares and 250 restricted shares in each open cycle. The grant date market value of the total additional grants was approximately $1.3 million. The number of performance shares that will be earned in the 2017-2019 cycle will be determined after the end of 2019 based on the Company’s performance over the cycle compared to the target described above. The 2017-2019 restricted shares will vest on January 1, 2020, subject to Mr. Campbell’s continued employment.
Robert Seelig. Mr. Seelig is EVP and General Counsel of the Company. For the performance cycle from 2017-2019, Mr. Seelig was granted a total of 2,000 WTM performance shares and 2,000 restricted shares. The total grant date market value was approximately $3.8 million. The number of performance shares that will be earned will be determined after the end of 2019 based on the Company’s performance over the cycle compared to the target described above. The restricted shares will vest on January 1, 2020, subject to Mr. Seelig’s continued employment.
Brian Palmer. Mr. Palmer is Managing Director and Chief Accounting Officer of the Company. For the performance cycle from 2017-2019, Mr. Palmer was granted a total of 560 WTM performance shares and 560 restricted shares. The total grant date market value was approximately $1.1 million. The number of performance shares that will be earned will be determined after the end of 2019 based on the Company’s performance over the cycle compared to the target described above. The restricted shares will vest on January 1, 2020, subject to Mr. Palmer’s continued employment.
Payout of 2015-20172017-2019 Performance Cycle.: For the 2015-20172017-2019 performance cycle, long-term incentives were granted to the NEOs as follows: 50% as performance shares and 50% as restricted shares. For the performance shares, which matured at the end of 2017, 8%2019, 5% annual growth in CVPS was the performance target for a payout of 100% of the target performance shares. Annual growth of 2%1% or less would have resulted
in ano payout of 0% and annual growth of 14%9% or more would have resulted in a payout of 200%. At its meeting in March 2018,February 2020, based on an average annual growth in CVPS of 10.7%7.9%, the Performance Compensation Subcommittee confirmed that the payout that was earned was 145%174% of target.
2015-2017 Performance Share Cycle | |||||
| |||||
| Target Shares | Performance | Actual Annual | Payout % | Shares |
Rountree | 3,000 | 2%-8%-14% | 10.7% | 145% | 4,350 |
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Campbell | 2,750 | 2%-8%-14% | 10.7% | 145% | 3,988 |
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Seelig | 2,500 | 2%-8%-14% | 10.7% | 145% | 3,625 |
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Palmer | 700 | 2%-8%-14% | 10.7% | 145% | 1,015 |
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2017-2019 Performance Share Cycle | |||||
Executive | Target Shares | Performance Scale | Actual Average | Payout % | Shares |
G. Manning Rountree | 3,000 | 1% - 5% - 9% | 7.9% | 174% | 5,220 |
Reid T. Campbell | 2,250 | 1% - 5% - 9% | 7.9% | 174% | 3,915 |
Robert L. Seelig | 2,000 | 1% - 5% - 9% | 7.9% | 174% | 3,480 |
J. Brian Palmer | 560 | 1% - 5% - 9% | 7.9% | 174% | 974 |
20182020 Compensation Actions
New Long-Term Incentive GrantsTarget total cash compensation opportunities remain unchanged from 2019. At its February 2020 meeting, the CNG Committee decided to keep the NEOs’ 2020 base salaries and Annual Bonus Programpercent-of-salary target bonus opportunities at the same levels as in 2019. This reflected the CNG Committee’s long-standing philosophy of linking a vast majority of executives’ compensation to long-term incentives in order to align their interests with those of our shareholders, as opposed to awarding high levels of fixed or variable annual cash compensation.
Further, the design of our executive officers’ 2020 annual bonus plan will be similar to the plan in effect for 2019, with a harvest scale of 2%-7%-12% annual CVPS growth set for threshold / target / maximum payout levels. At the time of the CNG Committee meeting in February, the 7% target reflected a 540 basis point spread to the yield on the 10-year treasury bond, which was a 90 basis point increase in the spread from a year before. As a result, and combined with the Company continuing to have $1.0 billion of undeployed capital, the CNG Committee determined to pause the increases in the target that had been made for the past few years and that 7% was an appropriate target for the 2020 annual bonus plan. However, the CNG Committee expects that in future years the target will continue to increase.
2020 Long-term Incentive Grants. In March 2018,February 2020, the CNG Committee made new long-term incentive grants to and established annual bonus target levels for the Named Executive Officers based on the same factors described above with respect to grants made in 2017. The 2018 target annual bonus pool is $4.6 million for 37 employees. The2019 and allocated 50% as performance shares and 50% as restricted shares. With respect to grants made to all employees of the Company, the CNG Committee granted 26,90028,110 target shares for the 2018-20202020-2022 performance cycle.cycle, which represents a 10% decrease, year over year, in the number of shares granted. This amount was down substantially fromreflects our longstanding policy of adjusting the 2017-2019 and 2016-2018 cycles, whenbaseline pool size in a given year inversely proportionally to the Subcommittee granted 35,275 and 45,460 target shares, respectively.increase or decrease in intrinsic value per share in the prior year. In total, the WTM performance share and restricted share grants made to all employees of the Company for the 2018-20202020-2022 performance cycle totaled approximately 0.7%0.9% of the then outstanding shares, within the CNG Committee’s 1% guideline. The new long-term incentive grants were allocated 50% as performance shares and 50% as restricted shares, which was the same allocation as in 2017.guideline discussed above.
With approximately $2.1$1.0 billion of undeployed capital at year-end 2017,2019, deploying capital intelligently remains the key job for the Company’s management team. Taking account of the same factors discussed above with respect to the annual bonus plan, as well as the level of deployed and undeployed capital (and current expected run rate returns thereon)thereon over the three-year performance period) and reasonable assumptions regarding the timing and magnitude of future redeployment and distributions of undeployed capital, the CNG Committee determined that 6%7% annual growth in CVPS is an appropriately challenging target for a payout of 100% of the target shares for the 2018-20202020-2022 performance cycle. Annual growth of 2% or less would result in ano payout of 0%, and annual growth of 10%12% or more would result inbe required for a payout of 200%.As seen in the table below, the performance target goals associated with our performance shares have increased significantly over the past five grant cycles.
Performance Cycle | Target Shares | % Change from Prior | Performance Target |
2016 - 2018 | 45,460 | (23%) | 0% - 4% - 8% |
2017 - 2019 | 35,275 | (22%) | 1% - 5% - 9% |
2018 - 2020 | 26,900 | (24%) | 2% - 6% - 10% |
2019 - 2021 | 31,200 | 16% | 2% - 7% - 12% |
2020 - 2022 | 28,110 | (10%) | 2% - 7% - 12% |
34 Performance Cycle Target Shares Granted % Change from Prior Year Performance Target 2016-2018 45,460 (23)% 0%-4%-8% 2017-2019 35,275 (22)% 1%-5%-9% 2018-2020 26,900 (24)% 2%-6%-10%
(min/target/max)
The CNG Committee believes this target and scale properly balance the competing incentives (i) to deploy or distribute undeployed capital aggressively and (ii) to remain patient for good opportunities. This target is an increase of 1 point from the target for the previous cycle. The Committee expects targets for future performance share cycles to increase as the level of undeployed capital normalizes over time.
Compensation Actions Relating to Former Executive Officers
FormerShare Ownership Guidelines for Executive Officers. The CNG Committee has established share ownership guidelines for our executive officers. According to the guidelines, our CEO
and EVPs are required to hold Company shares with a value of 10x salary, while other executive officers are required to hold Company shares with a value of 3x salary. Shares received upon vesting must be held until the executive is in compliance with the guideline. Unvested restricted shares will count toward satisfaction of the guideline, while unvested performance shares will not count. As of December 31, 2019 all named executive officers, with the exception of Mr. Barrette retired as Chairman and CEO on March 1, 2017.Bazos, are in compliance with the guidelines. As discussed in the Company’s Compensation Discussion and Analysis included in the Company’s Proxy Statement last year, in connection with Mr. Barrette’s retirement,Bazos has joined the Company entered into a letter agreement (the “Agreement”) with him. Pursuant to the agreement, the Company agreed to pay Mr. Barrette (i) a cash bonus for 2017 equal to $187,500 and (ii) a cash retirement payment equal to approximately $21 million. Mr. Barrette’s unvested long term performance shares and restricted shares were canceled in connection with his retirement. The Agreement also provides that Mr. Barretteduring 2019, he will be subjectrequired to certain restrictive covenants regarding competition, solicitationhold shares received upon vesting of any past and disparagement that apply through December 31, 2018.future equity awards until he is in compliance with the guidelines.
Other Former Executive Officers
David Foy. In connection with Mr. Campbell’s promotion to CFO in May 2017, Mr. Foy became an advisor to senior management and entered into an employment agreement with the Company dated May 2, 2017, which predated the Company’s shareholder engagement later that month. The agreement provided for his employment through December 31, 2017 at which point he retired from the Company. Under the terms of the agreement, and following his execution of a release agreement and a non-compete/non-solicit agreement, Mr. Foy’s 3,000 performance shares for the 2015-2017 performance cycle and 2,900 performance shares for the 2016-2018 performance cycle were canceled and in lieu thereof he was paid the cash value of 8,850 shares. This was equivalent to such shares being paid out at 150% of target, which was the estimated payout level of these two cycles at the time of the agreement after giving effect to the gain resulting from the sale of OneBeacon. In addition, his outstanding restricted shares for those cycles vested. Mr. Foy received an annual bonus for 2017 of $656,250, which equaled 175% (the average pool percentage) of his target bonus. Because Mr. Foy remained employed through the end of 2017, the only additional payouts that he received under his employment agreement that he would not have otherwise earned were the vesting of his long-term incentive grants for the 2016-2018 performance cycle. The Committee believes this was appropriate in light of his 14 years of service to the Company and his assistance in ensuring a smooth transition as Mr. Campbell became CFO.
David Linker. In November 2017, in connection with the reorganization of the Company’s investment operations following the sale of OneBeacon, Mr. Linker ceased to be an executive officer of the Company, although he remained an employee of the Company.
For the 2015-2017 cycle, Mr. Linker was granted 1,725 target performance shares and 1,725 restricted shares. Based on performance targets applicable to White Mountains Advisors, the performance shares paid out at 148% of target and he earned 2,553 performance shares. The restricted shares vested on January 1, 2018. In addition, for 2017 Mr. Linker earned a bonus of $825,000, which was 132% of his target bonus. Lastly, for the performance cycle from 2017-2019, Mr. Linker was granted 1,500 WTM performance shares and 1,500 restricted shares. The total grant date market value was approximately $2.8 million.
Michael Miller. In September 2017, Mr. Miller ceased to be an executive officer of the Company as he remained the CEO of OneBeacon upon completion of the OneBeacon sale.
Following the OneBeacon initial public offering (the “OB IPO”) in November 2006, the Committee determined that it would fully delegate to the OneBeacon Compensation Committee (the “OneBeacon Committee”) authority for the compensation of OneBeacon’s officers, including those who might be Named Executive Officers of the Company. Accordingly, the OneBeacon Committee was responsible for compensation actions for Mr. Miller.
In February 2017, for the 2017-2019 performance cycle, the OneBeacon Committee granted Mr. Miller (1) 26,250 OneBeacon performance units with a target value of $2,650,000 and (2) 96,200 OneBeacon restricted shares. In addition, upon the closing of the OneBeacon sale, the OneBeacon Committee awarded Mr. Miller a $4,000,000 bonus in light of the success of the transaction and to recognize that OneBeacon’s compensation programs did not otherwise incentivize management to pursue a sale of OneBeacon.
Clawback Policy
The Company has adopted a clawback policy applicable to bonuses and long-term incentive awards. If the Company is required to restaterestates any financial statement included in an SEC filing as a result of an employee’s misconduct, the Board may, without prejudice to any other remedies available to the Company, seek reimbursement of any bonus or long-term incentive award received by such person that relates in whole or in part to any period for which such financial statements were restated. If the misconduct wasinvolved fraud, then in addition to other actions the Board will mandatorily will seek such reimbursement.
Other Elements of Compensation
Retirement Benefits
We have no active U.S. defined benefit pension plans. Benefit accruals under all our U.S. qualified defined benefit pension plans and all our U.S. supplemental defined benefit pension plans were frozen for all employees in 2002.
Our Named Executive Officers who are not employees of Bermuda-domiciled entities may participate in our voluntary non-qualified deferred compensation plans whereby they may defer all or a portion of their compensation. Investment options in these plans are those available in our 401(k) plans, including White Mountains common shares. None of the investment options offered under these plans provides an above-market rate of interest.
Our employees may participate in our qualified 401(k) plans and eligible employees can participate in a qualified employee stock ownership plan. We do not provide supplemental retirement benefits to any employees in connection with these plans.
Perquisites
We review the perquisites that our senior management receives. The primary perquisites include housing allowances in special circumstances andperquisite is limited personal use of corporate aircraft.
We allow our Named Executive Officers to use our corporate aircraft from time to time for personal reasons. The aggregate incremental cost to the Company is included, for proxy reporting purposes, as compensation to the Named Executive Officer. For tax purposes, we comply with IRS regulations. We do not “gross-up” our Named Executive Officers for their taxes associated with perquisites, including with respect to personal use of our aircraft.
Our Named Executive Officers also participate in our other benefit plans on the same terms as our other employees. These plans include medical and health insurance, company paid life insurance and charitable gift matching.
Certain Board Fees
Our Named Executive Officers do not receive director fees for serving on the Company’s board of directors or for serving on the boards of directors of our wholly-owned or majority-owned subsidiaries. However, those Named Executive Officers who serve on the boards of directors of other companies in which we have a minority interest may receive director fees.fees from those companies. We consider those board fees when evaluating the compensation of our Named Executive Officers.
Employment and Severance Agreements; Change in ControlCompensation Arrangement for Mr. Bazos
We have no long-term employment agreements with our Named Executive Officers although, from time to time, we have entered into short-term arrangements with newly hired executives governing their compensation and severance during up to their first three years with the Company. No such arrangements are
Mr. Bazos joined the Company in effectMay 2019 in the position of Executive Vice President and Head of Mergers & Acquisitions of WM Capital. With more than 25 years of private equity experience, primarily in the financial services, healthcare and insurance sectors, Mr. Bazos joined as a senior leader of the Company as we execute on our strategy to thoughtfully redeploy capital generated from sales of significant businesses from 2015-2017.
The Compensation/Nominating & Governance Committee determined that securing the employment of an experienced executive like Mr. Bazos from the private equity industry required a competitive compensation package that would incentivize Mr. Bazos to depart a senior, highly compensated role at his previous employer to join White Mountains. Therefore, we entered into a short-term arrangement with Mr. Bazos governing his compensation and severance during his first two years with the Company. Following the initial two-year period, Mr. Bazos will have no long-term employment agreement, as is the case with our other Named Executive Officers.
In connection with Mr. Bazos’s hiring, the Company agreed to the following terms, which the CNG Committee believes were reasonably negotiated and aligned with market practices:
1)a $1,500,000 sign on bonus payable in three equal tranches: upon signing, in March 2020 and in March 2021.
·The CNG Committee determined that this sign on bonus would provide market-competitive compensation for Mr. Bazos given his inability to earn any payouts from long-term incentive awards until 2022, consistent with our standard executive compensation program which is heavily weighted toward long-term performance-based pay.
2)an annual bonus for 2019 set at a target of $375,000.
3)in the event Mr. Bazos were terminated without cause prior to March 15, 2021, to receive any unpaid tranches of his signing bonus plus $875,000 and full vesting of any outstanding long-term incentives. After March 15, 2021, a termination of Mr. Bazos’s employment would be treated the same as applicable to any other senior executive (as described below).
·The CNG Committee determined that these market-based arrangements appropriately reflect the risk taken by senior executives who, like Mr. Bazos, leave distinguished and established careers in adjacent industries to join a new organization.
Severance Agreements; Change in Control
Severance benefits, if any, for our Named Executive Officers are determined by the CNG Committee in its sole discretion. Executive officers of our operating subsidiaries participate in the severance plans, if any, generally applicable at those companies.
If any of our most senior executives were to retire, in order to enable the Company to ensure a smooth transition, to receive a non-compete/non-solicit from the executive and to retain access to valuable knowledge, talents and relationships, we generally will consider enteringwould expect to enter into arrangements that would permit the executive to earn some or all of such executive’s long-term incentive compensation then outstanding.
We have no standalone change in control agreements with our Named Executive Officers. However, under our long-term incentive plans, if a change in control of the Company (or a business unit, as applicable) were to occur, certain events, such as involuntary or constructive employment termination or amendments to our incentive plans which are materially adverse to its participants, may cause stock options to become fully exercisable, restricted shares to become immediately vested and performance shares and performance units to become payable in full or in part. Our plans do not provide for tax gross-ups for excess parachute payments that may result from a change in control.
CompensationCompensation/Nominating & Governance Committee Report
The CompensationCompensation/Nominating & Governance Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation and Nominating & Governance Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
Gary C. Tolman, Chairman
A. Michael Frinquelli
Edith E. Holiday, Chair
LowndesMorgan W. Davis
Philip A. SmithGelston
Summary Compensation Table
The following table presents compensation in 2017, 20162019, 2018 and 20152017 for the Company’s CEO, CFO and its two other most highly compensated executive officers the former CEO, the former CFO and two additional individuals for whom disclosure would have been provided had they been serving as executive officers at the end of 2017 (collectively, the “Named Executive Officers”):
Name and |
| Year |
| Salary |
| Bonus |
| Stock |
| Option |
| Non-Equity |
| Change in |
| All Other |
| Total |
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Current Executive Officers:
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G. Manning Rountree (a) |
| 2017 |
| 500,000 |
| 500,000 |
| 5,492,600 |
| - |
| - |
| - |
| 140,524 |
| 6,633,124 |
|
Chief Executive Officer |
| 2016 |
| 345,192 |
| 315,000 |
| 7,867,577 |
| - |
| - |
| - |
| 61,638 |
| 8,589,407 |
|
Reid T. Campbell (b) |
| 2017 |
| 500,000 |
| 750,000 |
| 5,099,255 |
| - |
| - |
| (1,001 | ) | 85,682 |
| 6,433,936 |
|
Executive Vice President & Chief Financial Officer |
| 2016 |
| 500,000 |
| 315,000 |
| 3,055,720 |
| - |
| - |
| 622 |
| 34,409 |
| 3,905,751 |
|
| 2015 |
| 500,000 |
| 850,000 |
| 3,324,450 |
| - |
| - |
| (20,432 | ) | 30,186 |
| 4,684,204 |
| |
Robert L. Seelig |
| 2017 |
| 500,000 |
| 500,000 |
| 3,788,000 |
| - |
| - |
| - |
| 57,654 |
| 4,845,654 |
|
Executive Vice President & General Counsel |
| 2016 |
| 500,000 |
| 2,315,000 |
| 3,055,720 |
| - |
| - |
| - |
| 46,094 |
| 5,916,814 |
|
| 2015 |
| 478,846 |
| 750,000 |
| 3,317,075 |
| - |
| - |
| - |
| 40,204 |
| 4,586,125 |
| |
J. Brian Palmer |
| 2017 |
| 390,385 |
| 600,000 |
| 1,060,640 |
| - |
| - |
| - |
| 13,475 |
| 2,064,500 |
|
Managing Director and Chief Accounting Officer |
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Former Executive Officers:
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Raymond Barrette (a) |
| 2017 |
| 96,154 |
| 187,500 |
| - |
| - |
| - |
| - |
| 21,276,724 |
| 21,560,378 |
|
Former Chairman and CEO |
| 2016 |
| 500,000 |
| 337,500 |
| 3,819,650 |
| - |
| - |
| - |
| 256,539 |
| 4,913,689 |
|
|
| 2015 |
| 500,000 |
| 750,000 |
| 6,648,900 |
| - |
| - |
| - |
| 230,135 |
| 8,129,035 |
|
David T. Foy (b) |
| 2017 |
| 500,000 |
| 656,250 |
| - |
| - |
| - |
| - |
| 7,716,452 |
| 8,872,702 |
|
Former Executive Vice President and CFO |
| 2016 |
| 500,000 |
| 315,000 |
| 4,490,694 |
| - |
| - |
| - |
| 23,430 |
| 5,329,124 |
|
| 2015 |
| 500,000 |
| 750,000 |
| 3,989,340 |
| - |
| - |
| - |
| 140,852 |
| 5,380,192 |
| |
David B. Linker (c) |
| 2017 |
| 500,000 |
| 825,000 |
| 2,841,000 |
| - |
| - |
| (6,859 | ) | 16,380 |
| 4,175,521 |
|
President of WM Advisors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. Michael Miller (d) |
| 2017 |
| 503,846 |
| 4,000,000 |
| 1,569,984 |
| - |
| - |
| - |
| 199,002 |
| 6,272,832 |
|
President and CEO of OneBeacon |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and | Year |
| Salary |
| Bonus |
| Stock |
| Option |
| Non-Equity |
| Change in |
| All Other |
| Total |
G. Manning Rountree | 2019 |
| 500,000 |
| - |
| 5,608,200 |
| - |
| 528,750 |
| - |
| 221,324 |
| 6,858,274 |
Chief Executive Officer | 2018 |
| 500,000 |
| 375,000 |
| 5,186,048 |
| - |
| - |
| - |
| 186,545 |
| 6,247,593 |
| 2017 |
| 500,000 |
| 500,000 |
| 5,492,600 |
| - |
| - |
| - |
| 140,524 |
| 6,633,124 |
Reid T. Campbell | 2019 |
| 500,000 |
| - |
| 3,738,800 |
| - |
| 528,750 |
| - |
| 140,409 |
| 4,907,959 |
Executive Vice President & | 2018 |
| 500,000 |
| 375,000 |
| 3,241,280 |
| - |
| - |
| - |
| 144,488 |
| 4,260,768 |
Chief Financial Officer | 2017 |
| 500,000 |
| 750,000 |
| 5,099,255 |
| - |
| - |
| (1,001) |
| 85,682 |
| 6,433,936 |
Frank R. Bazos | 2019 |
| 323,077 |
| 875,000 |
| 3,499,610 |
| - |
| - |
| - |
| 29,294 |
| 4,726,981 |
Executive Vice President & |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Head of Mergers & Acquisitions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert L. Seelig | 2019 |
| 500,000 |
| - |
| 1,869,400 |
| - |
| 528,750 |
| - |
| 61,261 |
| 2,959,411 |
Executive Vice President & | 2018 |
| 500,000 |
| 250,000 |
| 2,917,152 |
| - |
| - |
| - |
| 65,115 |
| 3,732,267 |
General Counsel | 2017 |
| 500,000 |
| 500,000 |
| 3,788,000 |
| - |
| - |
| - |
| 57,654 |
| 4,845,654 |
J. Brian Palmer | 2019 |
| 400,000 |
| - |
| 934,700 |
| - |
| 423,000 |
| - |
| 23,772 |
| 1,781,472 |
Managing Director and | 2018 |
| 400,000 |
| 300,000 |
| 810,320 |
| - |
| - |
| - |
| 28,350 |
| 1,538,670 |
Chief Accounting Officer | 2017 |
| 390,385 |
| 600,000 |
| 1,060,640 |
| - |
| - |
| - |
| 13,475 |
| 2,064,500 |
(a)On March 1, 2017, Mr. Rountree was appointed Chief Executive Officer of the Company and as a member of the Board. Mr. Barrette retired from the Company on that date.
(b)On May 16, 2017, Mr. Campbell was appointed Chief Financial Officer of the Company. Mr. Foy resigned as Chief Financial Officer and as an executive officer of the Company on that date. Mr. Foy continued to be employed by the Company through December 31, 2017.
(c)As of November 16, 2017, Mr. Linker ceased to be an executive officer of the Company.
(d)As of September 28, 2017, Mr. Miller ceased to be an executive officer or employee of the Company as a result of Intact Financial Corporation’s acquisition of OneBeacon Insurance Group (the “OneBeacon Transaction”). The table presents compensation for Mr. Miller prior to the date of the OneBeacon Transaction.
(e) For Messrs. Rountree, Campbell, Seelig Palmer, Barrette, Foy and Linker,Palmer, the amounts represent annual incentive bonuses earned for the years ended December 31, 2017, 20162018 and 2015.2017. For Mr. Seelig,Bazos, the amount in 2016 also includes2019 represents a specialsign-on award of $2,000,000 earned in connection with$500,000 paid to him upon joining the closingCompany and a targeted annual incentive bonus of the sale of Sirius Group.$375,000 for 2019. See “Compensation Discussion and Analysis.”
(f)(b) For Mr. Miller, the amount in 2017 represents a bonus of $4,000,000 earned in connection with the OneBeacon Transaction.
(g)For Messrs. Rountree, Campbell, Seelig, Palmer, Barrette, Foy and Linker, the amounts representRepresents the grant date market value of WTM performance shares granted in 2017, 20162019, 2018 and 20152017 and WTM restricted shares issued in 2017, 20162019, 2018 and 2015.2017. The WTM performance share awards included in the table have a maximum payout of 200% of the shares granted and, at such level, would have a grant date fair value equal to 200% of the amounts shown in the Grants of Plan Based Awards table. See “Grants of Plan Based Awards” and “Outstanding Equity Awards at Fiscal Year End.”
(h)(c) For Mr. Miller,In 2019, the amount representsannual incentive bonus program for named executive officers changed to a formulaic program, with the grant date market valuelevel of OB restricted shares issuedpayout determined by reference to the Company’s growth in 2017.CVPS. Amounts presented in 2019 represent annual incentive awards paid in cash in March 2020 for performance in the year ended December 31, 2019. See “Grants of Plan Based Awards.“Compensation Discussion and Analysis.”
(i)(d) See next table for details of All Other Compensation.
All Other Compensation
The following table presents a breakout of “All Other Compensation” included in the Summary Compensation Table for 2017, 20162019, 2018 and 2015:2017:
Name |
| Year |
| Director |
| Personal |
| Restricted |
|
Company |
| Employee |
| Severance |
| Legal Fees |
| Administrative |
| Total |
| Year | Director | Personal | Restricted | Company | Employee | Other | Total |
G. Manning Rountree |
| 2017 |
| 75,000 |
| 45,069 |
| 8,800 |
| 8,100 |
| 3,555 |
| - |
| - |
| - |
| 140,524 |
| 2019 | 90,000 | 105,872 | 9,000 | 12,600 | 3,852 | - | 221,324 |
|
| 2016 |
| 37,500 |
| 9,469 |
| 4,500 |
| 6,614 |
| 3,555 |
| - |
| - |
| - |
| 61,638 |
| 2018 | 90,000 | 66,395 | 9,000 | 12,375 | 8,775 | - | 186,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2017 | 75,000 | 45,069 | 8,800 | 8,100 | 3,555 | - | 140,524 |
Reid T. Campbell |
| 2017 |
| 56,250 |
| 11,277 |
| 6,500 |
| 8,100 |
| 3,555 |
| - |
| - |
| - |
| 85,682 |
| 2019 | 90,000 | 27,707 | 6,250 | 12,600 | 3,852 | - | 140,409 |
| 2018 | 90,000 | 26,838 | 6,500 | 12,375 | 8,775 | - | 144,488 | |||||||||||||||||||||
| 2017 | 56,250 | 11,277 | 6,500 | 8,100 | 3,555 | - | 85,682 | |||||||||||||||||||||
Frank R. Bazos | 2019 | - | 15,944 | - | 12,600 | - | 750 | 29,294 | |||||||||||||||||||||
|
| 2016 |
| - |
| 15,129 |
| 6,750 |
| 8,975 |
| 3,555 |
| - |
| - |
| - |
| 34,409 |
|
|
|
|
|
|
|
| |
|
| 2015 |
| - |
| 11,726 |
| 7,000 |
| 7,950 |
| 3,510 |
| - |
| - |
| - |
| 30,186 |
|
|
|
|
|
|
|
| |
Robert L. Seelig |
| 2017 |
| - |
| 39,499 |
| 6,500 |
| 8,100 |
| 3,555 |
| - |
| - |
| - |
| 57,654 |
| 2019 | - | 40,009 | 4,800 | 12,600 | 3,852 | - | 61,261 |
|
| 2016 |
| - |
| 24,439 |
| 6,625 |
| 11,475 |
| 3,555 |
| - |
| - |
| - |
| 46,094 |
| 2018 | - | 38,165 | 5,800 | 12,375 | 8,775 | - | 65,115 |
|
| 2015 |
| - |
| 22,119 |
| 6,625 |
| 7,950 |
| 3,510 |
| - |
| - |
| - |
| 40,204 |
| 2017 | - | 39,499 | 6,500 | 8,100 | 3,555 | - | 57,654 |
J. Brian Palmer |
| 2017 |
| - |
| - |
| 1,820 |
| 8,100 |
| 3,555 |
| - |
| - |
| - |
| 13,475 |
| 2019 | - | 1,560 | 12,600 | 3,852 | 5,760 | 23,772 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2018 | - | 1,620 | 12,375 | 8,775 | 5,580 | 28,350 | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2017 | - | 1,820 | 8,100 | 3,555 | - | 13,475 | |
Raymond Barrette |
| 2017 |
| 18,750 |
| 45,780 |
| - |
| 1,558 |
| 3,555 |
| 21,095,738 |
| 50,000 |
| 61,343 |
| 21,276,724 |
| ||||||||
|
| 2016 |
| 75,000 |
| 161,509 |
| 5,000 |
| 11,475 |
| 3,555 |
| - |
| - |
| - |
| 256,539 |
| ||||||||
|
| 2015 |
| 75,000 |
| 143,675 |
| - |
| 7,950 |
| 3,510 |
| - |
| - |
| - |
| 230,135 |
| ||||||||
David T. Foy |
| 2017 |
| - |
| - |
| 5,900 |
| 8,100 |
| 3,555 |
| 7,687,097 |
| 11,800 |
| - |
| 7,716,452 |
| ||||||||
|
| 2016 |
| - |
| - |
| 8,400 |
| 11,475 |
| 3,555 |
| - |
| - |
| - |
| 23,430 |
| ||||||||
|
| 2015 |
| 122,140 |
| - |
| 9,375 |
| 5,827 |
| 3,510 |
| - |
| - |
| - |
| 140,852 |
| ||||||||
David B. Linker |
| 2017 |
| - |
| - |
| 4,725 |
| 8,100 |
| 3,555 |
| - |
| - |
| - |
| 16,380 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
T. Michael Miller |
| 2017 |
| - |
| 128,673 |
| 60,606 |
| 6,168 |
| 3,555 |
| - |
| - |
| - |
| 199,002 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
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|
|
(a)Amounts for Messrs. Rountree, Campbell and Barrette represent director fees paid by BAM. Amount for Mr. Foy represents director fees paid by Symetra Financial Corporation.
(b) Amounts represent the aggregate incremental cost to the Company for the use of aircraft that were not otherwise in use for business. For Company aircraft, the incremental cost is the direct cost per hour multiplied by the number of hours of use.
(c) In March 2017,Represents parking garage rental fees paid by the Company on behalf of Mr. Barrette received a cash payment of $21,095,738 in exchange for his unvested WTM restricted sharesBazos and WTM performance shares.Mr. Palmer.
In May 2017, in connection with his release agreement, Mr. Foy received a cash paymentTable of $7,687,097 in settlement of his unvested WTM performance shares. In addition, Mr. Foy’s unvested restricted shares became vested. See “Option Exercises and Stock Vested”.Contents
(e)Amounts for Messrs. Barrette and Foy represent legal fees White Mountains paid on their behalf in connection with their separation arrangements.
(f)Amount represents the reimbursement of administrative services for Mr. Barrette pursuant to his separation arrangement.
Grants of Plan-Based Awards
The following table presents grants of plan-based awards granted, except as otherwise noted, under the White Mountains Long-Term Incentive Plan (the “WTM Incentive Plan”) to the Named Executive Officers that received such awards during 2017:2019:
|
|
|
|
|
| Non- |
| Estimated Future Payouts |
| Estimated Future Payouts |
| All Other |
| All Other |
| Exercise |
| Grant Date |
| ||||||||
Name |
| Grant |
| Type of |
| Equity |
| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
| Number of |
| Number of |
| or Base |
| Fair Value |
|
G. Manning Rountree |
| 3/1/17 |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| 0 |
| 2,900 |
| 5,800 |
| - |
| - |
| - |
| 2,746,300 |
|
|
| 3/1/17 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 2,900 |
| - |
| - |
| 2,746,300 |
|
Reid T. Campbell |
| 3/1/17 |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| 0 |
| 2,000 |
| 4,000 |
| - |
| - |
| - |
| 1,894,000 |
|
|
| 3/1/17 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 2,000 |
| - |
| - |
| 1,894,000 |
|
|
| 5/25/17 |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| 0 |
| 750 |
| 1,500 |
| - |
| - |
| - |
| 655,628 |
|
|
| 5/25/17 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 750 |
| - |
| - |
| 655,628 |
|
Robert L. Seelig |
| 3/1/17 |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| 0 |
| 2,000 |
| 4,000 |
| - |
| - |
| - |
| 1,894,000 |
|
|
| 3/1/17 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 2,000 |
| - |
| - |
| 1,894,000 |
|
J. Brian Palmer |
| 3/1/17 |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| 0 |
| 560 |
| 1,120 |
| - |
| - |
| - |
| 530,320 |
|
|
| 3/1/17 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 560 |
| - |
| - |
| 530,320 |
|
David B. Linker |
| 3/1/17 |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| 0 |
| 1,500 |
| 3,000 |
| - |
| - |
| - |
| 1,420,500 |
|
|
| 3/1/17 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 1,500 |
| - |
| - |
| 1,420,500 |
|
T. Michael Miller |
| 2/28/17 |
| OB Performance Units |
| 26,250 |
| 0 |
| 2,625,000 |
| 5,250,000 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
|
|
| 2/28/17 |
| OB Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 96,200 |
| - |
| - |
| 1,569,984 |
|
Footnotes to Grants of Plan-Based Awards Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
| Estimated Future Payouts |
| Estimated Future Payouts |
| All Other |
| All Other |
| Exercise |
| Grant Date |
| ||||||||
Name |
| Grant |
| Type of Award |
| Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
| Number of |
| Number of |
| or Base |
| Fair Value |
|
G. Manning Rountree |
|
|
| Annual Incentive Bonus |
| 0 |
| 375,000 |
| 750,000 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
|
|
| 2/27/19 |
| WTM Performance Shares |
| - |
| - |
| - |
| 0 |
| 3,000 |
| 6,000 |
| - |
| - |
| - |
| 2,804,100 |
|
|
| 2/27/19 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| 3,000 |
| - |
| - |
| 2,804,100 |
|
Reid T. Campbell |
|
|
| Annual Incentive Bonus |
| 0 |
| 375,000 |
| 750,000 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
|
|
| 2/27/19 |
| WTM Performance Shares |
| - |
| - |
| - |
| 0 |
| 2,000 |
| 4,000 |
| - |
| - |
| - |
| 1,869,400 |
|
|
| 2/27/19 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| 2,000 |
| - |
| - |
| 1,869,400 |
|
Frank R. Bazos |
|
|
| Annual Incentive Bonus |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
|
|
| 5/1/19 |
| WTM Performance Shares |
| - |
| - |
| - |
| 0 |
| 1,900 |
| 3,800 |
| - |
| - |
| - |
| 1,749,805 |
|
|
| 5/1/19 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| 1,900 |
| - |
| - |
| 1,749,805 |
|
Robert L. Seelig |
|
|
| Annual Incentive Bonus |
| 0 |
| 375,000 |
| 750,000 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
|
|
| 2/27/19 |
| WTM Performance Shares |
| - |
| - |
| - |
| 0 |
| 1,000 |
| 2,000 |
| - |
| - |
| - |
| 934,700 |
|
|
| 2/27/19 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| 1,000 |
| - |
| - |
| 934,700 |
|
J. Brian Palmer |
|
|
| Annual Incentive Bonus |
| 0 |
| 300,000 |
| 600,000 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
|
|
| 2/27/19 |
| WTM Performance Shares |
| - |
| - |
| - |
| 0 |
| 500 |
| 1,000 |
| - |
| - |
| - |
| 467,350 |
|
|
| 2/27/19 |
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| 500 |
| - |
| - |
| 467,350 |
|
(a) On February 28, 2017 Mr. Miller was granted OBThese columns indicate the range of payouts (0%, 100% and 200%) targeted for fiscal 2019 performance unitsunder our Annual Incentive Bonus Plan as described in “Compensation Discussion and Analysis” in this proxy statement. The actual payout with respect to fiscal 2019 for each named executive officer is shown in the 2017-2019 performance cycle underSummary Compensation Table in the OneBeacon Long-Termcolumn titled “Non-Equity Incentive Plan. Each unit has a fixed value of $100. The performance goals are weighted 67% based on achievement of an average annual 96.5% combined ratio over the award period, and 33% based on achievement of an average annual Growth in Book Value Per Share (“GBVPS”) of 10.0%. For the portion of the performance goal weighted based on the achievement of an average annual combined ratio, 101.5% or more (Threshold) would result in no payout and 91.5% or lower (Maximum) would result in a 200% payout. For the portion of the performance goal weighted based on the achievement of an average annual GBVPS, 3% or lower (Threshold) would result in no payout and 17% or more (Maximum) would result in a 200% payout.Plan Compensation.”
(b) Messrs. Rountree, Campbell, Bazos, Seelig Palmer and LinkerPalmer were granted WTM performance shares for the 2017-2019 performance cycle. Mr. Campbell was also granted 250 WTM performance shares for the 2016-2018 performance cycle and 250 WTM performance shares for the 2015-20172019-2021 performance cycle. For the 2017-20192019-2021 performance cycle, the targeted performance goal for full payment of outstanding WTM performance shares granted under the WTM Incentive Plan for all NEOs except for Mr. Linker, is a 5%7% average growth in adjusted book value per share and intrinsic value per share. Average growth of 1% or less would result in no payout and average growth of 9% or more would result in a payout of 200%. For Mr. Linker’s grant of WTM performance shares for the 2017-2019 performance cycle, the targeted performance goal for full payment of outstanding WTM performance shares granted under the WTM Incentive Plan is based one-third on average growth in adjusted book value per share and intrinsic value per share (as described above) and two-thirds on achieving a total return on invested assets as measured against metrics based on U.S. Treasury Note. For the 2016-2018 performance cycle, the targeted performance goal for full payment of outstanding WTM performance shares granted under the WTM Incentive Plan is a 4% average growth in adjusted book value per share and intrinsic value per share. Average growth of 0% or less would result in no payout and average growth of 8% or more would result in a payout of 200%. For the 2015-2017 performance cycle, the targeted performance goal for full payment of outstanding WTM performance shares granted under the WTM Incentive Plan is an 8% average growth in adjusted book value per share and intrinsic value per share.CVPS. Average growth of 2% or less would result in no payout and average growth of 14%12% or more would result in a payout of 200%.
(c) Messrs. Rountree, Campbell, Bazos, Seelig Palmer and LinkerPalmer were granted WTM restricted shares that vest on January 1, 2020. Mr. Campbell was also granted 250 WTM restricted shares that vest on January 1, 2019 and 250 WTM restricted shares that vested on January 1, 2018.2022.
(d)Mr. Miller was granted 24,200 OB restricted shares that vested on February 24, 2018, 24,200 OB restricted shares that vest on February 24, 2019 and 47,800 OB restricted shares that vest on January 1, 2020.
(e) Represents the grant date fair value (based on a market price on the date of grant) as determined in accordance with ASC Topic 718 without regard to forfeitures. Assuming a maximum 200% payout, the grant date fair value of the WTM performance shares granted to Messrs. Rountree, Campbell, Bazos, Seelig Palmer and LinkerPalmer would be $5,492,600, $5,099,255, $3,788,000, $1,060,640$5,608,200, $3,738,800, $3,499,610, $1,869,400 and $2,841,000.$934,700.
Outstanding Equity Awards at Fiscal Year-End
The following table presents outstanding equity awards under the WTM Incentive Plan, except as otherwise noted, to the Named Executive Officers as of December 31, 2017:2019:
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| Option Awards |
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Name |
| Type of |
| Number of |
| Number of |
| Equity |
| Option |
| Option |
| Number of |
| Market |
| Equity |
| Equity |
|
| Type of |
| Number of |
| Number of |
| Equity |
| Option |
| Option |
| Number of |
| Market |
| Equity |
| Equity |
|
G. Manning Rountree |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 5,800 |
| 9,892,248 |
|
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 6,000 |
| 13,404,120 |
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| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 8,800 |
| 7,491,264 |
| - |
| - |
|
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 9,000 |
| 10,039,590 |
| - |
| - |
|
Reid T. Campbell |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 4,500 |
| 7,675,020 |
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| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 4,000 |
| 8,936,080 |
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| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 7,250 |
| 6,171,780 |
| - |
| - |
|
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 6,250 |
| 6,971,938 |
| - |
| - |
|
Frank R. Bazos |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 1,900 |
| 4,242,738 |
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| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 1,900 |
| 2,119,469 |
| - |
| - |
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Robert L. Seelig |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 4,000 |
| 6,822,240 |
|
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 2,800 |
| 6,256,056 |
|
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| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 6,500 |
| 5,533,320 |
| - |
| - |
|
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 4,800 |
| 5,354,448 |
| - |
| - |
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J. Brian Palmer |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 1,120 |
| 1,910,227 |
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| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 1,000 |
| 2,234,020 |
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| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 1,820 |
| 1,549,330 |
| - |
| - |
|
| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 1,560 |
| 1,740,196 |
| - |
| - |
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David B. Linker |
| WTM Performance Shares |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
| 3,000 |
| 5,116,680 |
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| WTM Restricted Shares |
| - |
| - |
| - |
| - |
| - |
| 4,725 |
| 4,022,298 |
| - |
| - |
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(a) Equity incentive plan awards not yet vested at December 31, 20172019 for Messrs. Rountree, Campbell, Bazos, Seelig and Palmer include 3,000, 2,000, 1,900, 1,000 and Linker include 2,900, 2,250, 2,000, 560 and 1,500500 target WTM performance shares, respectively, for the 2017-20192019-2021 performance cycle and 2,900, 2,250,3,000, 2,000, 5600, 1,800 and 1,500500 target WTM performance shares, respectively, for the 2016-20182018-2020 performance cycle. Payout values for WTM performance shares are shown at 200% of target for both the 2017-20192019-2021 performance cycle and 2016-2018the 2018-2020 performance cyclescycle and based on the December 31, 20172019 closing market price ($851.28)1,115.51) including dividends declared since the grant date.
(b) Stock awards not yet vested at December 31, 20172019 for Messrs. Rountree, Campbell, Bazos, Seelig and Palmer include 3,000, 2,000, 1,900, 1,000 and Linker include 2,900, 2,250, 2,000, 560 and 1,500500 WTM restricted shares, respectively, that vest on January 1, 2020; 2,900, 2,250,2022; 3,000, 2,000, 5600, 1,800 and 1,500500 WTM restricted shares, respectively, that vest on January 1, 2019;2021; and 3,000, 2,750, 2,500, 7002,250, 0, 2,000 and 1,725560 WTM restricted shares, respectively, that vested on January 1, 2018.2020. Market values are based on the December 31, 20172019 closing market price ($851.28)1,115.51).
(c) Excludes WTM performance shares for the 2015-20172017-2019 performance cycle, which vested on December 31, 2017.2019. See “Option Exercises and Stock Vested.”
Option Exercises and Stock Vested
The following table presents option exercises and stock awards that vested in 20172019 for certaineach of the Named Executive Officers. No option awards were exercised by the Named Executive Officers during 2019.
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| Option Awards Exercised |
| Stock Awards Vested | |||||||
Name |
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| Number of Shares |
| Value Realized |
| Type of Award |
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| Number of Shares |
| Value Realized |
G. Manning Rountree |
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| - |
| - |
| WTM Performance Shares | (a) |
| 4,350 |
| 3,518,280 |
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| WTM Restricted Shares | (b) |
| 2,250 |
| 1,881,113 |
Reid T. Campbell |
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| - |
| - |
| WTM Performance Shares | (a) |
| 3,988 |
| 3,225,090 |
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| WTM Restricted Shares | (b) |
| 2,250 |
| 1,881,113 |
Robert L. Seelig |
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| - |
| - |
| WTM Performance Shares | (a) |
| 3,625 |
| 2,931,900 |
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| WTM Restricted Shares | (b) |
| 2,125 |
| 1,776,606 |
J. Brian Palmer |
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| - |
| - |
| WTM Performance Shares | (a) |
| 1,015 |
| 820,932 |
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| WTM Restricted Shares | (b) |
| 650 |
| 543,433 |
Raymond Barrette |
| (c) |
| 40,000 |
| 4,375,550 |
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| - |
| - |
David T. Foy |
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| - |
| - |
| WTM Restricted Shares | (b) |
| 3,000 |
| 2,508,150 |
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| WTM Restricted Shares | (d) |
| 5,900 |
| 5,133,000 |
David B. Linker |
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| - |
| - |
| WTM Performance Shares | (a) |
| 2,553 |
| 2,064,866 |
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| WTM Restricted Shares | (b) |
| 1,025 |
| 856,951 |
T. Michael Miller |
|
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| - |
| - |
| OB Restricted Shares | (e) |
| 157,500 |
| 2,622,375 |
| Option Awards Exercised |
| Stock Awards Vested | ||||
Name | Number of Shares | Value Realized |
| Type of Award |
| Number of Shares | Value Realized |
G. Manning Rountree | - | - |
| WTM Performance Shares | (a) | 5,220 | 5,893,745 |
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| WTM Restricted Shares | (b) | 3,000 | 2,573,070 |
Reid T. Campbell | - | - |
| WTM Performance Shares | (a) | 3,915 | 4,420,309 |
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| WTM Restricted Shares | (b) | 2,250 | 1,929,803 |
Frank R. Bazos | - | - |
| WTM Performance Shares |
| - | - |
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| WTM Restricted Shares |
| - | - |
Robert L. Seelig | - | - |
| WTM Performance Shares | (a) | 3,480 | 3,929,164 |
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| WTM Restricted Shares | (b) | 2,000 | 1,715,380 |
J. Brian Palmer | - | - |
| WTM Performance Shares | (a) | 974 | 1,100,166 |
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| WTM Restricted Shares | (b) | 560 | 480,306 |
(a) Represents 3,000, 2,750, 2,5002,250, 2,000 and 700560 target WTM performance shares awarded for the 2015-20172017-2019 performance cycle to Messrs. Rountree, Campbell, Seelig and Palmer, respectively, which became fully vested on December 31, 20172019 at 145% of target. For Mr. Linker, 1,725 target WTM performance shares awarded for the 2015-2017 performance cycle became fully vested on December 31, 2017 at 148%174% of target. Value realized on vesting is based on the average of the high and the low market valuesclosing price of common shares for the 5 days preceding the CNG Committee meeting on March 1, 2018,February 27, 2020, as determined by the CompensationCNG Committee, plus dividends declared since the cycle was granted in 2015.2017.
(b) The amounts represent WTM restricted shares that vested on January 1, 2017.2019.
(d)In May 2017, Mr. Foy’s 5,900 unvested restricted shares became vested in connection with his separation agreement.
(e)The amount represents OB restricted shares that vested on February 22, 2017.
Pension Benefits
The following table presents the present value of accumulated benefits payable and payments under the OneBeacon Excess Plan for 2017 for participating Named Executive Officers. The table includes the number of years of service credited to the Named Executive Officers, determined using interest rate and mortality rate assumptions consistent with those used in the Company’s financial statements. The other Named Executive Officers did not participate in any defined pension plans sponsored by White Mountains.
Name |
| Plan Name (a) |
| Number of Years |
| Present Value of |
| Payments |
|
Reid T. Campbell |
| OneBeacon Excess Plan |
| 1.6 |
| - |
| 5,488 |
|
David B. Linker |
| OneBeacon Excess Plan |
| 1.5 |
| - |
| 63,274 |
|
(a)The OneBeacon Excess Plan was frozen effective December 31, 2002. White Mountains does not sponsor any other defined benefit pension plans.
(b)Due to the freeze, Messrs. Campbell’s and Linker’s number of years of credited service and average annual compensation remained the same as they were on December 31, 2002.
(c)On December 1, 2017, Messrs. Campbell and Linker were paid a single lump sum as part of the termination of the OneBeacon Excess Plan.in 2019.
Nonqualified Deferred Compensation
The following table presents the contributions, earnings, withdrawals and ending account balances for the Named Executive Officers under the OneBeacon Supplemental Savings Plan for 2017 for participating Named Executive Officers. The other Named Executive Officers did not participate in any nonqualified deferred compensation plans sponsored by White Mountains.
Name |
| Executive Contributions |
| Registrant Contributions |
| Aggregate Earnings |
| Aggregate Withdrawals/ |
| Aggregate Balance at |
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Reid T. Campbell |
| - |
| - |
| 1,062 |
| 8,860 |
| - |
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David B. Linker |
| - |
| - |
| 883 |
| 7,361 |
| - |
|
(a)On October 4, 2017, Messrs. Campbell and Linker were paid a single lump sum as part of the termination of the OneBeacon Supplemental Savings Plan.Mountains in 2019.
Potential Payments Upon Termination or Change in Control
Employment and Severance Agreements
We have no employment agreements with our Named Executive Officers although from time to time we have entered into short-term arrangements with newly hired executives governing their compensation and severance for a period of up to their first three years with the Company. See “Compensation Arrangement for Mr. Bazos” on page 36.
Long-Term Incentive Plans
Under our long-term incentive plans, certain events, such as retirement, death or disability, or the occurrence of both a change in control of the Company (or a business unit, as applicable) and an involuntary or constructive employment termination or materially adverse amendments to such plans, WTM restricted shares become vested and WTM performance shares become payable in full or in part. Below is a description of the payments to which each of our Named Executive Officers would be entitled assuming in each case that such events occurred on December 31, 2017.2019.
Voluntary Termination of Employment
Had any of our Named Executive Officers voluntarily terminated their employment on December 31, 2017,2019, their unvested long-term incentive grants would have been cancelled and payments, if any, in respect of those cancelled grants would be made at the sole discretion of the CompensationCNG Committee.
Involuntary Termination of Employment
In the case of Mr. Bazos, had he been terminated without cause on December 31, 2019, he would have been entitled to receive $1,875,000 and full vesting of any long-term incentives. Had any of our other Named Executive Officers been terminated without cause on December 31, 2017,2019, their outstanding long-term incentive grants would have been cancelled and payments, if any, in respect of those cancelled grants would be made at the sole discretion of the CompensationCNG Committee.
Retirement
Had any of our Named Executive Officers retired on December 31, 2017,2019, their unvested long-term incentive grants would have been cancelled and payments, if any, in respect of those cancelled grants would be made at the sole discretion of the CompensationCNG Committee.
Death or Disability
Had any of our Named Executive Officers employed as of December 31, 20172019 died or become disabled on that date, they would have been entitled to pro rata vesting of their WTM performance shares and full vesting of their restricted shares. Under this scenario, Messrs. Rountree, Campbell, Bazos, Seelig Palmer, Foy and LinkerPalmer would have been entitled to receive $13,684,794, $11,500,352, $10,338,645, $2,894,821, $0$19,233,742, $13,587,924, $4,702,859, $10,961,911 and $7,484,695,$3,389,327, respectively.
For purposes of computing the amounts above, the WTM performance shares were valued at the December 31, 20172019 common share closing market price ($851.28)1,115.51) including dividends since grant. The WTM performance shares would vest pro-rated for time and at 100% of target; provided, that in the case of the 2015-20172017-2019 performance cycle, values are shown at actual performance of 145%, except for Mr. Linker’s WTM performance shares that are shown at actual performance of 148%174%. Restricted shares were valued at the December 31, 20172019 common share closing market price.
Change in Control
Had both a change in control of the Company (or a business unit, as applicable) and an involuntary termination, constructive termination or materially adverse amendments to our long-term incentive plans occurred on December 31, 20172019 to any of our Named Executive Officers employed as of that date, they would have been entitled to full vesting of their WTM performance shares at up to 200% of target and full vesting of their restricted shares. Under this scenario, Messrs. Rountree, Campbell, Bazos, Seelig Palmer, Foy and LinkerPalmer would have been entitled to receive $22,509,192, $18,545,340, $16,626,960, $4,655,549, $0$30,154,770, $20,941,313, $8,237,207, $16,084,544 and $12,086,244,$5,226,947, respectively.
For purposes of computing the amounts above, the WTM performance shares, including the 2015-20172017-2019 performance cycle, were shown at 200% of target. The WTM performance shares were valued at the December 31, 20172019 common share closing market price ($851.28)1,115.51) including dividends since grant. Restricted shares were valued at the December 31, 20172019 common share closing market price.
Our long-term incentive plans do not provide for tax gross-ups for excess parachute payments that may result from a change in control.
Director Compensation
Our CNG Committee has adopted a compensation program for our non-employee directors that is focused on:
·attracting and retaining highly-qualified directors with a diversity of skills, backgrounds and experiences
·appropriately valuing the significant time and travel commitment required for our non-employee directors
·encouraging directors’ ownership of our common shares to further the alignment of their interests with those of our shareholders
To that end, our non-employee director compensation program in effect for fiscal 2019 included the following elements:
·an annual cash retainer of $135,000
·an annual equity retainer of 250 common shares
·an additional retainer of $100,000 and 100 common shares for our Board Chair
·an additional cash retainer of $15,000 for all members of the Audit Committee
·additional annual retainers (in addition to member retainer) of $85,000 and $25,000 for chairs of the Audit Committee and all other committees, respectively
Our CNG Committee annually assesses the structure of our non-employee director compensation program in light of market practices and emerging trends, and makes appropriate refinements if necessary. To that end, the following changes to our director compensation program have been implemented for fiscal year 2020:
·Established share ownership guidelines of 5x cash retainer within five years of appointment to the Board
·Decreased the annual equity retainer from 250 common shares to 225 common shares
·Decreased the additional Board Chair equity retainer from 100 common shares to 90 common shares
·Decreased the Audit Committee Chair retainer from $85,000 to $35,000
Our non-employee directors are not provided with any benefits other than participating in our employee matching gift program on the same terms as our employees, matching gifts up to $10,000 per participating individual.
As described in the notes to the table below, due to his extensive insurance industry expertise, Mr. Davis serves on the boards of three subsidiaries and affiliates of the Company. For his service, he receives directors fees, paid by these companies, which are included under “All Other Compensation.”
The following table summarizes director compensation for 20172019 (for directors other than Named Executive Officers):
Director |
| Fees Paid |
| Stock |
| Option Awards |
| Non-Equity |
| Change in |
| All Other |
| Total |
| Fees Paid | Stock | Option Awards | Non-Equity | Change in | All Other | Total |
Yves Brouillette |
| 517 |
| 368,026 |
| - |
| - |
| - |
| 1,172 |
| 369,715 |
| 774 | 391,476 | - | - | - | 392,250 | |
Peter Carlson | 183,750 | 301,136 | - | - | - | 484,886 | ||||||||||||||||
Mary Choksi |
| 101,250 |
| 162,466 |
| - |
| - |
| - |
| 5,000 |
| 268,716 |
| 160,000 | 242,250 | - | - | 10,000 | 412,250 | |
Morgan W. Davis |
| 235,000 |
| 305,960 |
| - |
| - |
| - |
| 189,000 |
| 729,960 |
| 235,000 | 339,150 | - | - | 145,000 | 719,150 | |
A. Michael Frinquelli |
| 175,000 |
| 218,543 |
| - |
| - |
| - |
| - |
| 393,543 |
| |||||||
Philip Gelston | 150,000 | 242,250 | - | - | 7,550 | 399,800 | ||||||||||||||||
Edith E. Holiday |
| 175,000 |
| 218,543 |
| - |
| - |
| - |
| 10,000 |
| 403,543 |
| 160,000 | 242,250 | - | - | 7,000 | 409,250 | |
Lowndes A. Smith |
| 235,000 |
| 218,543 |
| - |
| - |
| - |
| 276,500 |
| 730,043 |
| 235,000 | 242,250 | - | - | - | 477,250 | |
Gary C. Tolman |
| 160,000 |
| 218,543 |
| - |
| - |
| - |
| - |
| 378,543 |
| |||||||
David A. Tanner | 150,000 | 242,250 | - | - | - | 392,250 |
(a) Named Executive Officers doMr. Rountree does not receive any additional compensation for theirhis role as a director. Non-management directors receive an annual cash retainer of $135,000. Additional retainers in the following amounts are provided to those directors serving in the following roles: Chairman of the Board ($100,000), Chairman of the Audit Committee ($100,000)85,000), Chairman of any other Board committee ($25,000) and members of the Audit Committee ($15,000). Retainers were paid in cash except for Mr. Brouillette who received an equivalent value in common shares. Retainers relate to the twelve-month period from May 2017 through April 2018,2019 to May 2020, inclusive, and are typically pro-rated for partial year service.
(b) On May 25, 2017,23, 2019, all non-management directors except for Mr. Davis and Ms. Choksi, received an annual grant of 250 common shares and Mr. Brouillette received additional common shares forin lieu of payment of his cash retainer. Mr. Davis received 350an additional 100 common shares for his role as Chairman of the Board. Upon her election to the Board on August 24, 2017, Ms. Choksi received a grant of 188 common shares. All common shares issued were valued at $874.17 per share, except for Ms. Choksi’s shares that were valued at $864.18$969.00 per share, the market pricesprice on the datesdate the shares were granted. In addition, Mr. Carlson received a grant of 63 common shares upon his election to the Board on February 27, 2019, representing the pro-rata portion of the annual grant for the service period ending May 2019. These shares were valued at $934.70 per share, the market price on the date the shares were granted.
(c) Amount shown for Mr. Brouillette represents $1,172 in matching payments from a company-sponsored charitable gift program. Amount shown for Ms. Choksi represents $5,000$10,000 in matching payments from a company-sponsored charitable gift program. Amount shown for Mr. Davis represents $89,000$45,000 in director fees paid to him as aby Compare.com, $40,000 in director of OneBeacon, $60,000 in fees paid to him as aby MediaAlpha and $60,000 in director of Compare.com and $40,000 in fees paid to him as a director of MediaAlpha.by NSM Group. Amount shown for Ms. HolidayMr. Gelston represents $10,000$7,550 in matching payments from a company-sponsored charitable gift program. Amount shown for Ms. Holiday represents $7,000 in matching payments from a company-sponsored charitable gift program.
(d) Mr. Smith represents $276,500 in director compensation paid to him asBrouillette resigned from the ChairmanBoard of OneBeacon prior to the OneBeacon Transaction.Directors on August 29, 2019.
CEO Pay Ratio
Below is (i) the 20172019 annual total compensation of our CEO; (ii) the 20172019 annual total compensation of our median employee; (iii) the ratio of the annual total compensation of our CEO to that of our median employee, and (iv) the methodology we used to calculate our CEO pay ratio:
CEO Annual Total Compensation |
| $ |
6,858,274 | ||
Median Employee Annual Total Compensation |
| $ |
42,523 | ||
CEO to Median Employee Pay Ratio |
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Methodology
Our CEO pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules. Our methodology and process isare explained below:
(1) Determined Employee Population. We began with our global employee population as of December 31, 2017,2019, including full-time and part-time workers employed by our company or consolidated subsidiaries, but excluding our CEO.
(2) Identified the Median Employee. WeTo identify the median employee, we calculated compensation for each employee using (i) base annual salary including estimated overtime pay as of December 31, 2017,2019, (ii) cash incentives earned in 2017,2019, (iii) WTM performance shares and WTM performance units vested on December 31, 2017,2019, and (iv) WTM restricted shares vested on January 1, 2018 to identify the median employee.2020. Compensation paid in foreign currency was translated to the U.S. dollar equivalent based on foreign exchange rates as of December 31, 2017.2019.
(3) Calculated CEO Pay Ratio. We calculated our median employee’s annual total compensation for 20172019 in accordance with SEC rules for preparing the Summary Compensation Table. We compared the median employee’s compensation to our CEO’s annual total compensation in the Summary Compensation Table to determine the pay ratio shown above.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Share Repurchases from Related Parties
On July 13, 2017, the Company repurchased 235,000 WTM common shares from Franklin Mutual Advisors for $850.00 per share, the market price at the time the agreement was reached.
Review, Approval or Ratification of Transactions with Related Persons
The Company’s Audit Committee Charter states that the Audit Committee shall approve any related or affiliated person transactions and review disclosures thereof. In determining whether to approve or reject a related person transaction, the Audit Committee takes into account, among other factors it deems appropriate, whether the proposed transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related persons’ economic interest in the transaction. For purposes of Audit Committee approval, a related person transaction is defined as any transaction that is required to be reported under Item 404 of SEC Regulation S-K.
During 2017, the Audit Committee approved all2019, there were no Transactions with Related Persons occurring since the beginningthat required Audit Committee approval.
Table of the Company’s calendar year.
Contents
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2017,2019, with respect to the common shares that may be issued under the Company’s existing incentive compensation plans. Performance shares awarded under the WTM Incentive Plan are typically paid in cash, though they may be paid in the Company’s common shares at the election of the CompensationCompensation/Nominating & Governance Committee. For that reason, this plan is listed in the Equity Compensation Plan Table below.
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| (1) |
| (2) |
| (3) |
| (1) |
| (2) |
| (3) |
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Plan category |
| Number of securities that may |
| Weighted average exercise price of |
| Number of securities remaining |
| Number of securities that may |
| Weighted average exercise |
| Number of securities remaining |
| |
Equity compensation plans approved by security holders - WTM Incentive Plan: |
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| 97,933 (a) |
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|
| 110,000 (a) |
| |
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Performance shares |
| 53,480 (b) |
| $ | 0 |
|
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| 43,120 (b) |
| $ 0 |
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(a) Represents the amount of WTM shares available for issuance at target under the WTM Incentive Plan as of December 31, 2017.2019. To the extent granted as WTM performance shares, such shares could be earned at 0x to 2x the target number granted and, although typically in cash, may be paid in WTM common shares at the discretion of the CompensationCompensation/Nominating & Governance Committee. As of April 2, 2018, 71,5981, 2020, 95,945 common shares remained available for grant, which could result in up to 143,196 common shares being issued.issuance.
(b) Represents the target amount of WTM performance shares outstanding as of December 31, 2017.2019, which includes 14,070 target performance shares for the 2017-2019 performance cycle that were settled in cash in February 2020.
In connection with the audit of the Company’s financial statements for the year ended December 31, 2017,2019, the Audit Committee has: (1) reviewed and discussed with management and PwC the Company’s audited financial statements for the year ended December 31, 2017,2019, management’s assessment of the effectiveness of the Company’s internal control over financial reporting and PwC’s audit of the Company’s internal control over financial reporting; (2) reviewed and discussed with PwC the matters required by Statementapplicable requirements of Auditing Standards No. 61, as amended;the Public Company Accounting Oversight Board (“PCAOB”) and the SEC; and (3) received the written disclosures and the letter from PwC required by the applicable Public Company Accounting Oversight BoardPCAOB rules and discussed with PwC their independence.
Based on these reviews and discussions, the Audit Committee determined that the non-audit fees billed by PwC for services performed in 20172019 and 20162018 (as presented herein) are compatible with maintaining their independence. Further, the Audit Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for filing with the SEC and for presentation to the MembersShareholders at the 20182020 Annual Meeting.
Management is responsible for the preparation, presentation and integrity of the Company’s consolidated financial statements as well as for establishing and maintaining adequate internal control over financial reporting. The Company’s independent registered public accounting firm, PwC, is responsible for expressing its opinion on the conformity of the Company’s audited financial statements with Generally Accepted Accounting Principles (“GAAP”). In addition, PwC is responsible for expressing its opinion on the effectiveness of the Company’s internal control over financial reporting. It is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with GAAP; that, as described above, is the responsibility of management and PwC. In giving its recommendation to the Board, the Audit Committee has relied on (1) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with GAAP and (2) the reports of PwC with respect to such financial statements.
The Audit Committee has established a Charter which outlines its primary duties and responsibilities. The Audit Committee Charter, which has been approved by the Board, is reviewed at least annually, is updated as necessary and is available for viewing at www.whitemountains.com.
Lowndes A. Smith, Chairman
Yves BrouillettePeter M. Carlson
Philip A. Michael FrinquelliGelston
Edith E. HolidayDavid A. Tanner
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The Audit Committee, pursuant to its policy, pre-approves the scope and fees for all services performed by PwC. Annually, the Audit Committee receives and pre-approves a written report from PwC describing the elements expected to be performed in the course of its audit of the Company’s financials.financial statements. All other audit, audit-related and non-audit-related services rendered by PwC also require pre-approval, which may be granted in accordance with the provisions of the policy either (a) at a meeting of the full Audit Committee, (b) on an interim basis by the Chairman of the Audit Committee, provided that the requested services are not expressly prohibited and are ratified by the full Audit Committee at its next regularly scheduled meeting, or (c) on a per-project basis through specific compliance with pre-approved definitions of services that do not exceed per-project limits established by the Audit Committee, provided that any such services are authorized by the Company’s General Auditor or his/her designee and that the General Auditor makes a full report of all services pre-approved per the policy at the next regularly scheduled Committee meeting.
It is the intent of the policy to assure that PwC’s performance of audit, audit-related and non-audit-related services are consistent with all applicable rules on auditor independence. As such, services expressly prohibited by the Audit Committee under its policy include bookkeeping or other services related to the accounting records or financial statements of the Company or its subsidiaries; financial information systems design and implementation; appraisal and valuation services; fairness opinions; contribution-in-kind reports; certain actuarial services; internal audit outsourcing services; management functions; human resources; broker-dealer, investment advisor or investment banking services; legal services; and expert services unrelated to the audit. All services performed by PwC during 20172019 and 20162018 were pre-approved in accordance with the policy described above.
The services performed by PwC in 20172019 and 20162018 are described below. PwC does not provide any services to the Company that are prohibited under applicable laws and regulations, such as financial information systems design and implementation. From time to time, PwC may perform permissible consulting services for the Company, provided they have been pre-approved in accordance with the policy described above. To the extent consulting services are provided by PwC, they are closely monitored and controlled by both management and the Audit Committee to ensure that their nature and extent do not interfere with the independence of PwC. The independence of PwC is also considered annually by the Audit Committee.
The following table sets forth the approximate aggregate fees billed by PwC for professional services provided in 20172019 and 2016:2018:
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| 2017(e) |
| 2016(e) |
| 2019(e) |
| 2018(e) |
|
Audit Fees (a) |
| $4,071,541 |
| $3,948,265 |
| $ 3,849,104 |
| $ 3,100,417 |
|
Audit-Related Fees (b) |
| 102,215 |
| 33,850 |
| 310,600 |
| 301,750 |
|
Tax Fees (c) |
| 597,114 |
| 876,187 |
| 335,023 |
| 776,662 |
|
All Other Fees (d) |
| 17,415 |
| 269,279 |
| 12,188 |
| 9,326 |
|
(a)The fees in this category were for professional services rendered in connection with (1) the audits of the Company’s annual financial statements, including the Company’s internal control over financial reporting, included in the Company’s Annual Report on Form 10-K, (2) the review of the Company’s quarterly financial statements included in its Quarterly Reports on Form 10-Q, (3) audits of the Company’s subsidiaries, and (4) services that generally only the Company’s independent registered public accounting firm reasonably can provide, such as comfort letters and consents.
(b)The fees in this category were for professional services rendered in connection with (1) accounting and reporting consultations related to certain transactions and (2) services in connection with certain transactions and (3) actuarial certifications of loss reserves.transactions.
(c)The fees in this category were for professional services rendered in connection with tax strategy assistance and tax compliance services.
(d)The fees in this category were for (1) advisory services in connection with the establishment of international operations and international regulatory requirements and (2) access to PwC’s proprietary technical accounting research and tax filing software.financial statement disclosure software tools.
(e)The fees reported include expense reimbursements of $157,231$152,282 and $223,435$119,984 in 20172019 and 2016,2018, respectively.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to SEC rules relating to the reporting51
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Pursuant to Section 14A of the Securities Exchange Act of 1934, in this Proposal 2 we are asking you to provide approval, on an advisory basis, of the compensation of the named executive officers as disclosed in the section of this proxy statement titled “Executive Compensation”.Compensation.” You are being asked to vote on the following advisory resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the company’s proxy statement dated April 10, 2018,7, 2020, pursuant to Item 402 of Regulation S-K, including the Compensation Discussion & Analysis, compensation tables and narrative discussion, is hereby APPROVED.
The Board of Directors believes that the compensation policies and practices described in the Compensation Discussion & Analysis are effective in achieving the Company’s primary goal of maximizing shareholder value over long periods of time, as well as motivating and retaining our key executives. The compensation of our named executive officers is heavily weighted toward variable long-term compensation, the value of which is tied to performance over a number of years.
We urge you to read the Compensation Discussion & Analysis, beginning on page 1322 of this proxy statement, as well as the 20172019 summary compensation table and related compensation tables and narrative, beginning on page 23,38, which provide detailed information on the Company’s compensation policies and practices and the compensation of our named executive officers.
Although the vote is non-binding, the Board of Directors and the CompensationCompensation/Nominating & Governance Committee will review and consider the voting results when evaluating our executive compensation program.
The Board recommends a vote FOR Proposal 2 which calls for the approval of the advisory resolution on executive compensation.
APPROVAL OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 20182020
Subject to MemberShareholder approval, the Audit Committee of the Board has appointed PwC as the Company’s independent registered public accounting firm for 2018.2020. Further, MembersShareholders are being asked to authorize the Audit Committee to negotiate and fix the remuneration to be paid to PwC in connection with its service. Representatives from PwC will attend the 20182020 Annual Meeting, will be provided with the opportunity to make a statement and will be available to answer appropriate questions.
The Board recommends a vote FOR Proposal 3 approving the appointment of PwC as the Company’s Independent Registered Public Accounting Firm for 2018.2020.
Manner of Voting Proxies
Common shares represented by all valid proxies received will be voted in the manner specified in the proxies. Where specific choices are not indicated, the common shares represented by all valid proxies received will be voted in accordance with the Board’s recommendation for each of the proposals named earlier in this Proxy Statement.
In the case of common shares held in employee benefit plans, the trustee will typically vote all common shares within such plans in direct proportion to those common shares actually voted by plan participants.
Should any matter not described above be acted upon at the meeting, the persons named in the proxy card will vote in accordance with their judgment. The Board knows of no other matters which are to be considered at the 20182020 Annual Meeting.
Votes Required for Approval
With respect to the election of directors, the nominees will be elected if the number of votes cast “for” such director exceeds the number of votes cast “against” that director. If a director in an uncontested election receives less than a simple majority of votes cast “for” his election, the director is required to submit a letter of resignation to the Board of Directors, which the Board may either accept or reject in accordance with the Company’s Bye-laws. The majority vote standard is not applicable to contested director elections, which are determined by a plurality of the votes cast. A plurality of votes cast means that the proposed director receiving the highest number of affirmative votes is elected, irrespective of how small the number of affirmative votes is in comparison to the total number of shares voted. The other proposals require the affirmative vote of a majority of the voting power held by holders of common shares present at the 20182020 Annual General Meeting, in person or by proxy, provided a quorum is present.
Inspectors of Election
Computershare Trust Company, N.A., 480 Washington Boulevard, 26th Floor, Jersey City, New Jersey 07310, has been appointed as Inspectors of Election for the 20182020 Annual Meeting. Representatives of Computershare will attend the Annual Meeting and receive votes and ballots, supervise the counting and tabulating of all votes and ballots and determine the results of the vote.
Costs of Solicitation
The solicitation of proxies will be made primarily by mail; however, directors, officers, employees and agents of the Company may also solicit proxies by telephone, internet or personal interview. Solicitation costs will be paid by the Company. Upon request, the Company will reimburse banks, brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses incurred in forwarding proxy materials to their principals.
Delivery of Documents to MembersShareholders Sharing an Address
SEC regulations permit a single set of the Annual Report and Proxy Statement to be sent to any household at which two or more shareholders reside if they appear to be members of the same family. Each MemberShareholder will continue to receive a separate proxy card. This procedure, referred to as house-holding, reduces the volume of duplicate information shareholders receive and reduces our mailing and printing costs. Those MembersShareholders who desire additional copies of this document or would like to receive separate copies of this document in the future should contact their bank, broker or other holder of record or the Corporate Secretary at the address presented under “Available Information” below.
Available Information
The Company is subject to the informational reporting requirements of the Exchange Act. In accordance therewith, the Company files reports, proxy statements and other information with the SEC. The Company will provide to any Member,Shareholder, upon request and without charge, copies of all documents (excluding exhibits unless specifically requested) filed by the Company with the SEC as well as the Charter of any of the Company’s various committees of the Board. Written or telephone requests should be directed to the Corporate Secretary, White Mountains Insurance Group, Ltd., A.S. Cooper Building, 26 Reid Street, Hamilton HM 11, Bermuda, telephone number (441) 278-3160. Additionally, all such documents are physically available at the Company’s registered office at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and are available at www.whitemountains.com shortly after such material is electronically filed with or furnished to the SEC.
Non-GAAP Measures
Information regarding the calculation of non-GAAP financial measures contained in this proxy statement can be found in Annex A: Reconciliation of Non-GAAP Measures.
Availability of Proxy Materials
Proxy materials for the 20182020 Annual General Meeting, including the Chairman’sChief Executive Officer’s Letter, Notice of 20182020 Annual General Meeting of Members and Proxy Statement and the 20172019 Management Report are available online for viewing and downloading at: www.edocumentview.com/wtm.
Offices of the Company
The Company’s headquarters is located at A.S. Cooper Building, 26 Reid Street, Hamilton HM 11, Bermuda, its principal executive office is located at 8023 South Main Street, Suite 3B, Hanover, New Hampshire 03755, and its registered office is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.
Proposals by MembersShareholders for the 20182021 Annual Meeting of Members
MemberShareholder proposals (other than proposals nominating director candidates for which the procedures for are outlined on page 8)17) must be received in writing by the Secretary of the Company no later than Tuesday, December 11, 20188, 2020 and must comply with the requirements of SEC Rule 14a-8 promulgated under the Securities Exchange Act in order to be considered for inclusion in the Company’s proxy statement relating to the Annual Meeting to be held in 2019.2021.
By Order of the Board of Directors,
Jennifer L. Moyer,
Corporate Secretary
ANNEX A: RECONCILIATION OF NON-GAAP MEASURES
Our 2020 Proxy Statement includes certain non-GAAP financial measures that have been reconciled to their most comparable GAAP financial measures. We believe these non-GAAP financial measures provide useful information to management and investors in evaluating our performance. There can be no assurance that our basis for computing these non-GAAP measures is comparable with that of other companies.
Reconciliation of growth in GAAP book value per share growth to growth in Adjusted Book Value Per Share (“ABVPS”) as if the MediaAlpha Transaction had closed as of December 31, 2018
Refer to page 58 in White Mountains’s 2019 Form 10-K
Reconciliation of GAAP total consolidated portfolio returns to total consolidated portfolio returns excluding the MediaAlpha Transaction
Refer to page 59 in White Mountains’s 2019 Form 10-K
Reconciliation from growth in ABVPS to growth in Intrinsic Value Per Share (“IVPS”)
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| Years ended December 31, |
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Growth: |
| 2019 |
| 2018 |
| 2017 |
|
ABVPS, as reported |
| 14.8% |
| -2.8% |
| 15.4% |
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reflect MediaAlpha transaction impact in 2018 |
| -6.7% |
| 6.0% |
| 0.0% |
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ABVPS[1] |
| 8.1% |
| 3.2% |
| 15.4% |
|
change in franchise value step-ups |
| 1.9% |
| -0.6% |
| -7.0% |
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IVPS[1] |
| 10.0% |
| 2.6% |
| 8.3% |
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Growth in Compensation Value Per Share[2] |
| 9.1% |
| 2.9% |
| 11.9% |
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Growth in Compensation Value Per Share[2] - 3-Year Average |
| 7.9% |
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[1]Adjusted as if the MediaAlpha transaction had closed as of December 31, 2018.
[2]Growth in Compensation Value Per Share is the average of the growth in IVPS and ABVPS.
. Electronic Voting Instructions Available 24 hours a day, 7 days a week! InsteadMMMMMMMMMMMM C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxiesthis card. Votes submitted by the Internet or telephoneelectronically must be MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 received by 11:59 PM, EST,p.m., Eastern Time, on May 23, 2018. Vote by Internet • Go to www.envisionreports.com/20, 2020. Online GIof ntoo welwewct.reonnviicsivoontrienpgo, rts.com/WTM • Ordelete QR code and control # or scan the QR code with your smartphone • Follow— login details are located in the steps outlined on the secure website Vote by telephone •shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories &and Canada on a touch tone telephone • Follow the instructions provided by the recorded messageSave paper, time and money! Sign up for electronic delivery at www.envisionreports.com/WTM Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals — The Board of Directors recommends a vote FOR all director nominees listed and FOR Proposals 2 and 3.+ 1. Election of Class IIIII Directors to a term ending in 2021. + For Withhold For Withhold2023: ForWithhold For Withhold 01 - G. Manning Rountree 02 - Mary C. Choksi 02 - Philip A. Gelston 03 - Edith E. Holiday For Against Abstain ForAgainstFor Against Abstain 2. Approval of the advisory resolution on executive compensation. 3. Approval of the appointment of PricewaterhouseCoopersPricewaterhouseCooopers LLP (“PwC”) as the Company’s Independent Registered Public Accounting Firm for 2018. B Non-Voting Items Change of Address — Please print your new address below. Comments — Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting. C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below2020. Please sign this proxy exactly as namename(s) appears hereon. When shares are held by joint tenants, bothJoint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or guardian,custodian, please give full title as such.title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND + 1 U P X 02SRFFC F 4 5 7 8 1 1 037U5A MMMMMMMMM B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3. 2020 Annual Meeting Proxy Card X IMPORTANT ANNUAL MEETING INFORMATIONCard1234 5678 9012 345
. q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — WHITE MOUNTAINS INSURANCE GROUP, LTD.+ Notice of the 20182020 Annual Meeting of Shareholders G. Manning Rountree and Jennifer L. Moyer, or either of them, each with the full power of substitution, are hereby authorized to represent and vote all Common Shares of the undersigned at the 20182020 Annual General Meeting of Members to be held Thursday, May 24, 2018,21, 2020, and at any adjournment thereof. Shares represented by this proxy will be voted by the proxyholdersproxy holders subject to any directions indicated on the reverse of this card. If no such directions are given,indicated, the proxyholdersproxy holders will have authority to vote FOR the Electionelection of all director nominees (proposal 1), and FOR proposalproposals 2 and 3. In their discretion, the proxy holders are hereby authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side.)side) Change of Address — Please print new address below. Comments — Please print your comments below. + C Non-Voting Items White Mountains Insurance Group, Ltd. Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/WTM
.MMMMMMMMMMMM Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. q PLEASE FOLD ALONG THE PERFORATION,IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals — The Board of Directors recommends a vote FOR all director nominees listed and FOR Proposals 2 and 3.+ 1. Election of Class IIIII Directors to a term ending in 2021. + For Withhold For Withhold2023: ForWithhold For Withhold 01 - G. Manning Rountree 02 - Mary C. Choksi 02 - Philip A. Gelston 03 - Edith E. Holiday For Against Abstain ForAgainstFor Against Abstain 2. Approval of the advisory resolution on executive compensation. 3. Approval of the appointment of PricewaterhouseCoopersPricewaterhouseCooopers LLP (“PwC”) as the Company’s Independent Registered Public Accounting Firm for 2018. B Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below2020. Please sign this proxy exactly as namename(s) appears hereon. When shares are held by joint tenants, bothJoint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or guardian,custodian, please give full title as such.title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. + 1 U P X 02SRGF4 5 7 8 1 1 037U6A MMMMMMMMM B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3. 2020 Annual Meeting Proxy Card X IMPORTANT ANNUAL MEETING INFORMATION
. q PLEASE FOLD ALONG THE PERFORATION,IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy — WHITE MOUNTAINS INSURANCE GROUP, LTD. Notice of the 20182020 Annual Meeting of Shareholders G. Manning Rountree and Jennifer L. Moyer, or either of them, each with the full power of substitution, are hereby authorized to represent and vote all Common Shares of the undersigned at the 20182020 Annual General Meeting of Members to be held Thursday, May 24, 2018,21, 2020, and at any adjournment thereof. Shares represented by this proxy will be voted by the proxyholdersproxy holders subject to any directions indicated on the reverse of this card. If no such directions are given,indicated, the proxyholdersproxy holders will have authority to vote FOR the Electionelection of all director nominees (proposal 1), and FOR proposalproposals 2 and 3. In their discretion, the proxy holders are hereby authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side.)side) White Mountains Insurance Group, Ltd.