Notice of Annual General Meeting
of Shareholders and
20182020 Proxy Statement
Your vote is important
Please vote by using the Internet, the telephone,
or by signing, dating, and returning the enclosed proxy card
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
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material Pursuant to§240.14a-12 | |
AXIS CAPITAL HOLDINGS LIMITED
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☒ | No fee required. | |||
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| (4) | Proposed maximum aggregate value of transaction:
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| ☐ | Fee paid previously with preliminary materials. | |||
| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
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Notice of Annual General Meeting
of Shareholders and
20182020 Proxy Statement
Your vote is important
Please vote by using the Internet, the telephone,
or by signing, dating, and returning the enclosed proxy card
March 27, 2018April 2, 2020
Dear Shareholder:
You are cordially invited to attend the 20182020 Annual General Meeting of Shareholders of AXIS Capital Holdings Limited (“AXIS”), to be held at AXIS House, 92 Pitts Bay Road, Pembroke HM 08, Bermuda on Wednesday,Thursday, May 2, 20187, 2020 at 8:30 a.m. local time.
The attached Notice of Annual General Meeting of Shareholders and Proxy Statement describe the formal business to be transacted at the Annual General Meeting. During the Annual General Meeting, we will make available information relating to the operations of AXIS during the past year. Representatives from our independent registered public accounting firm, Deloitte Ltd., will be present to respond to questions from shareholders.
Please mark, date, sign and return your proxy card in the enclosed envelope by following the instructions on the proxy card at your earliest convenience. You may also vote over the Internet or by telephone by following the voting instructions printed on your proxy card. This will assure that your shares will be represented and voted at the meeting even if you do not attend.
Sincerely,
Michael A. Butt
Chairman of the Board
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Thursday, May
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AXIS House 92 Pitts Bay Road Pembroke HM 08 Bermuda
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| 1. | To elect the | |||||
| 2. | To approve, bynon-binding vote, the compensation paid to our named executive officers; | |||||
| 3. | To appoint Deloitte Ltd., Hamilton, Bermuda, to act as our independent registered public accounting firm for the fiscal year ending December 31, | |||||
| 4. | To transact such other business as may properly come before the meeting or any postponement or adjournment thereof. | |||||
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Close of business on March | ||||
By Order of the Board of Directors,
Conrad D. Brooks
Corporate Secretary
March 27, 2018April 2, 2020
This Notice of Annual General Meeting of Shareholders and Proxy Statement are being distributed or made available, as the case may be, on or about March 27, 2018.April 2, 2020. The Proxy Statement, the 20172019 Annual Report to Shareholders and the Form10-K of AXIS Capital Holdings Limited for 20172019 are available at https://materials.proxyvote.com/G0692U.
PLEASE COMPLETE, DATE, SIGN AND RETURN THE ACCOMPANYING PROXY CARD IN THE RETURN ENVELOPE FURNISHED FOR THAT PURPOSE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. IF YOU LATER DESIRE TO REVOKE YOUR PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED PROXY STATEMENT. YOU ALSO MAY VOTE OVER THE INTERNET OR BY TELEPHONE BY FOLLOWING THE VOTING INSTRUCTIONS PRINTED ON THE ACCOMPANYING PROXY CARD.
Notice of Annual General Meeting Of Shareholders DATE AND TIME PLACE ITEM OF BUSINESS RECORD DATE
| Table of Contents |   |
| Proxy Statement Summary | 1 | |||
| Proposal 1. Election of Directors | ||||
| 6 | ||||
| 7 | ||||
| 9 | ||||
| Corporate Governance | 12 | |||
| 16 | ||||
Code of Business Conduct and Corporate Governance Guidelines | ||||
| 18 | ||||
| Principal Shareholders | ||||
| Executive Officers | ||||
| Proposal 2.Non-Binding Vote on Executive Compensation | ||||
| 25 | ||||
| Compensation Discussion and Analysis | ||||
| 27 | ||||
| 27 | ||||
| 28 | |||
| 31 | ||||
| 32 | ||||
| 32 | ||||
| 33 | ||||
| 41 | ||||
| 42 | ||||
| 42 | ||||
| 43 | ||||
| OTHER COMPENSATION TOPICS | ||||
Restriction on Trading by Directors and Officers/Anti-Hedging and Pledging | ||||
| 45 | ||||
Stock Ownership Guidelines for Directors and Executive Officers | ||||
| Compensation Committee Report | ||||
| Executive Compensation | ||||
Employment and Other Agreements with Named Executive Officers | ||||
| Equity Compensation Plan Information | ||||
| Audit Committee Report | ||||
| Proposal 3. Appointment of Independent Auditors | ||||
| Principal Accounting Fees and Services | ||||
| Shareholder Proposals for | ||||
| Other Matters | ||||
| Appendix 1 | A-1 | |||
| PROXY STATEMENT SUMMARY |
AXIS Capital Holdings Limited |
8:30 a.m. local time
AXIS House
92 Pitts Bay Road
Pembroke HM 08
Bermuda
| Directions to the |
Definition | When used in this proxy statement, the terms “we,” “us,” “our,” “the Company,” “AXIS” and “AXIS |
Agenda | 1. | The election of the |
| 2. | The approval, bynon-binding vote, of the compensation paid to our named executive officers. |
| 3. |
| 4. | Such other business as may properly come before the meeting or any postponements or adjournments thereof. |
Proxies Solicited By | The Board of Directors of AXIS Capital Holdings Limited. The Company will bear the cost of soliciting proxies for the Annual General Meeting. |
First Mailing Date | We anticipate mailing the proxy statement on |
Record Date | March |
Voting | Except as set forth in ourbye-laws, each common share entitles the holder of record to one vote. In accordance with ourbye-laws, shareholders whose shares constitute 9.5% or more of the voting power of our common shares are entitled to less than one vote for each common share held by them, but only in the event that a U.S. shareholder, as defined in ourbye-laws, owning 9.5% or more of our common shares is first determined to exist. We will notify any shareholder whose voting power is reduced prior to the meeting. |
Majority Vote Standard | Two or more persons present in person and representing in person or by proxy shares representing more than fifty percent (50%) of the aggregate shares represented by voting power of the Company constitutes a quorum. Abstentions and “brokernon-votes” that are present and entitled to vote at the Annual General Meeting will be counted for purposes of determining a quorum. A “brokernon-vote” occurs when a nominee holding shares for a beneficial owner does not have discretionary voting power for a proposal and has not received instructions from the beneficial owner. Under current New York Stock Exchange (“NYSE”) rules, the proposal to appoint Deloitte as our independent registered public accounting firm is considered a “discretionary” item. Therefore, there will be no “brokernon-votes” on the approval of the appointment of Deloitte. |
| The affirmative vote of a majority of the votes cast by the holders of shares represented in person or by proxy at the Annual General Meeting is required for: (i) the election of directors; (ii) thenon-binding determination of the compensation paid to our named executive officers; and (iii) the appointment of Deloitte. |
| PROXY STATEMENT SUMMARY 1 | |
| In determining whether: (i) a director nominee has been elected by the shareholders; (ii) the compensation paid to our named executive officers |
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has been approved; and (iii) the appointment of Deloitte has been approved, abstentions and “brokernon-votes” (if applicable) will have no effect on the outcome of any of these proposals because such shares are not considered votes cast. |
| We will count common shares held by shareholders who have signed their proxy cards or properly submitted their proxy by phone or over the Internet but have not specified how their shares are to be voted towards the presence of a quorum, and we will vote those shares in accordance with the Board’s recommendations for each of the proposals contained in this proxy statement. |
Proxies | We will vote signed returned proxies “FOR” (i) the election of each of the |
Revoking Your Proxy | Any shareholder giving a proxy has the power to revoke it prior to its exercise by sending notice of revocation to our Corporate Secretary in writing, by executing and delivering a subsequent proxy card or by voting in person at the meeting. To revoke a proxy previously submitted over the Internet or by telephone, you may simply vote again at a later date, using the same procedures, in which case your later submitted vote will be recorded and your earlier vote revoked. You may also vote in person at the Annual General Meeting. |
| While we have every intention of holding the Annual General Meeting as indicated in the “Notice of Annual General Meeting of Shareholders”, if exigent and unexpected circumstances, such as a global health crisis, prevent the Company from holding the Annual General Meeting as planned, we may determine to change the location or format of the Annual General Meeting. If the Company needs to take such action on an exceptional basis, we plan on issuing a press release and posting an update on our website at www.axiscapital.com, notifying our shareholders of such development. Any such decision by the Company has no impact on a shareholder’s ability to provide their proxy by using the Internet or telephone or by completing, signing, dating and mailing their proxy card, each as explained in this proxy statement. |
2019 Company Financial Performance |
AXIS Capital’s 2019 financial results for these performance metrics are set forth below:
| Measure | Fiscal Year 2019 | Change versus Fiscal Year 2018 | ||
Ex-PGAAP OROACE (1) | 5.2% | 0.5% pts | ||
ROACE | 6.3% | 6.3% pts | ||
Total Shareholder Return (2) | 18.3% | 12.5% pts | ||
| (1) | See Appendix 1 for a |
| (2) | One-year total shareholder return with dividends reinvested. |
|
Ex-PGAAPOROACE, is calculated by dividing |
| 2 PROXY STATEMENT SUMMARY | | |
Evolution of our Compensation Program | The Committee is focused on ensuring that our executive compensation programs attract, retain and motivate leaders who create long-term value for our shareholders. Following a thorough review of our executive compensation program and incorporating feedback received from our shareholders, the Compensation Committee made the following changes to our compensation program in 2019 and 2020. |
Compensation Program Changes | Rationale | |
For Fiscal Year 2019 | ||
Changed performance metric for PSUs to relative TSR | • | The use of relative TSR as the performance metric for the PSUs is designed to align payouts with shareholder value creation. |
TSR is an objective, transparent measure that is aligned with shareholders.
Since a significant portion of our NEOs’ compensation is provided in the form of equity, TSR has a strong impact on the compensation realized by executives over time.
Revised performance scale for PSUs | • | Maintains executives’ alignment to our long-term goals. |
The prior PSU design allowed several cycles of awards to be negatively impacted in the event of a single year or quarter of catastrophic events, eliminating their retentive power.
The plan reduces the volatility of PSU payouts in line with the Company’s senior officers and directors, in orderfocus to encourage a long-term focus in managing the Company;less-volatile business.
Expanded Performance Peer Group for assessing performance of PSUs | • | Addresses the reduced number of comparable peers due to merger and acquisition activity. |
Provides a statistically-robust sample to avoid potential relative payout anomalies that could occur with a smaller sample size.
Better represents AXIS’ global footprint by adding relevant international peers.
Eliminated three-year performance look back previously used to determine the grant pool | • | Ensures that executives’ interests are aligned with the interests of our shareholders through the ownership of stock. |
The removal of the look back simplifies the program and limit perquisites;is consistent with market practice.
The removal of the look back eliminates the possibility that new NEOs under certain circumstances;are awarded stock based on retrospective performance goals.
For Fiscal Year 2020 | ||
Adjusted the annual incentive mix for our CEO to increase the weighting of financial metrics and decrease the weighting ofnon-financial metrics | • | Places a stronger emphasis on financial results for the CEO and increases the portion on the bonus that is subject to formulaic assessment of financial results. |
Adjusted the long-term incentive mix for our CEO to increase the weighting of PSUs and decrease the weighting of RSUs | • | Increases the portion of the CEO’s equity award that is tied to relative TSR performance and provides for a stronger alignment with shareholders. |
Added a TSR governor, whereby an award cannot exceed target if absolute TSR is negative | • | Aligns with corporate governance best practice and ensures that executives’ PSU payouts are aligned with shareholder value creation. |
Increased required stock ownership levels for CEO | • | Ensures even greater alignment between our CEO and shareholders. |
Increased the target performance goal for the PSUs from the 50th percentile to 55th | • | Increases the rigor of the goals and ensures target payouts are only received if relative TSR performance exceeds the majority of peers. |
| PROXY STATEMENT SUMMARY 3 | |
Corporate Governance Highlights | Corporate |
Lead Independent Director role
Majority vote standard for election of directors
Regular shareholder engagement
Regular Board and committee self-evaluations
Majority independent Board and fully independent Audit, Compensation and Corporate Governance and Nominating Committees
None of our directors serve on the board of directors of more than three other publicly-held corporations
Majority vote standard for election of directors
No stockholder rights plan (“poison pill”)
Shareholders holding 10% or more of our outstanding stock have the right to call a special meeting
Shareholder Engagement and Responsiveness to Shareholders | • | During 2019, we reached out to shareholders representing over 61% of our outstanding shares and ultimately held meetings with holders of approximately 45% of our outstanding shares. |
Our Lead Independent Director and Chairman of the Compensation Committee, Henry Smith, actively participated in a majority of these meetings.
During these meetings, we discussed our executive compensation and governance practices as well as environmental, social and sustainability topics.
Responding to shareholder feedback, changes were made to our compensation program as summarized in “Evolution of our Compensation Program” above and fully independent Audit, Compensationdiscussed in further detail in “Compensation Discussion and Corporate GovernanceAnalysis—Executive Summary, Shareholder Engagement and Nominating CommitteesResponsiveness to 2019 Say on Pay Vote”.
Prompt return of your proxy will help reduce the costs of resolicitation.re-solicitation.
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| 4 PROXY STATEMENT SUMMARY | | |
| PROPOSAL 1. ELECTION OF DIRECTORS |
Our Board is divided into three classes, designated Class I, Class II and Class III. The term of office for each Class III director expires at this year’s Annual General Meeting to be held on May 2, 2018;7, 2020; the term of office for each Class III director will expire at the Company’s Annual General Meeting in 2020;2021; and the term of office for each Class III director will expire at the Company’s Annual General Meeting in 2019.2022. At each annual general meeting of the Company, the successors of the class of directors whose term expires at that meeting will be elected to hold office for a term expiring at the annual general meeting to be held in the third year following the year of their election.
TwoThree Class III directors are to be elected at the meeting to hold office until the Company’s Annual General Meeting in 2021.2023. All of the nominees are currently are directors. Our Corporate Governance and Nominating Committee recommended all of the nominees to our Board for election at the meeting. All nominees have consented to serve if elected. We do not expect that any of the nominees will become unavailable for election as a director, but if any nominee should become unavailable prior to the meeting, proxy cards authorizing the proxies to vote for the nominees will instead be voted for substitute nominees recommended by our Board.
Our Board has reviewed its classified board structure and continues to believe that this structure provides greater stability and continuity in the Board’s membership and in the direction and guidance that it provides to the Company’s management.
As compared with an annual election process, this approach promotes a long-term perspective to our strategic objectives and has proved beneficial to our CEO and executive management in establishing the Company’s shortshort- and long-term priorities. We believe that a classified election process remains in the best interests of our shareholders.
SKILLS, QUALIFICATIONS AND EXPERIENCE OF DIRECTORS
In order for the Board to satisfy its oversight responsibilities effectively, the Board seeks members who combine the highest standards of integrity with significant accomplishment in their chosen field of endeavor. The Corporate Governance and Nominating Committee is responsible for recommending qualified candidates for directorships to be filled by the Board or by our shareholders. Directors are expected to bring a diversity of experiences, skills and perspectives to our Board. The Committee considers qualities of intelligence, honesty, perceptiveness, good judgment, high ethics and standards, integrity and fairness to be of paramount importance. It also examines experience, knowledge and skills in business judgment, leadership, strategic planning, general management practices and crisis response. In addition, the Committee looks for candidates with financial expertise and a willingness and ability to commit the time required to fully discharge their responsibilities to the Board. The Committee evaluates candidates on the basis of their qualifications and not on the basis of the manner in which they were submitted for consideration.
In addition, although the Board doesAlthough we do not have a formal policy with regard to the consideration of diversity in identifying director nominees, among the many factors that the Committee carefully considers are the benefits to the Company ofviews diversity ofas an essential element for our Board’s composition and effectiveness. Attributes such as race, gender, age, ethnicity and national origin are considered in board composition.the identification and evaluation of our director candidates that will be additive to our overall Board’s diversity.
When considering whetherThe below table illustrates the Board’s directorscontinued commitment to selecting highly qualified and nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of the Company’s business and structure, the Board focused primarily on the information discussed in each of the Board members’ or nominees’ biographical information set forth in “Director Nominees” and “Directors Continuing in Office” below. In particular, the Board considered the following:
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In addition, in connection with the nominations of Messrs. Butt and Davis for election as directors at the 2018 Annual General Meeting, the Board considered their valuable contributions to the Company’s success during their term of Board service.varied yet complementary functional backgrounds.
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| PROPOSAL 1. ELECTION OF DIRECTORS 5 | |
HIGHLY QUALIFIED BOARD PROVIDES EFFECTIVE OVERSIGHT
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| DIRECTORS |
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EXPERIENTIAL CRITERIA (1) | ||||||||||||||||||||||||||||||||||||||||||||
Public Company Experience |
| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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Digital Experience |
| ✓ |
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| ✓ |
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Insurance Experience |
| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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Reinsurance Experience |
| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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Finance Experience |
| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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International Experience |
| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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Banking Experience |
| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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| ✓ |
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Legal/Regulatory Experience |
| ✓ |
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COMPOSITION | ||||||||||||||||||||||||||||||||||||||||||||
Other Current Public Boards |
| 0 |
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| 0 |
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| 2 |
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| 0 |
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| 0 |
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| 0 |
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| 0 |
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| 0 |
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| 2 |
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| 1 |
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| 1 |
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Age |
| 62 |
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| 77 |
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| 71 |
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| 61 |
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| 75 |
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| 47 |
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| 76 |
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| 71 |
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| 60 |
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| 75 |
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| 61 |
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Tenure (Years) |
| 8 |
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| 17 |
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| 17 |
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| 0.4 |
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| 13 |
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| 1.3 |
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| 10 |
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| 15 |
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| 1.6 |
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| 10 |
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| 1 |
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Gender |
| M |
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| M |
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| M |
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| F |
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| M |
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| F |
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| M |
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| M |
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| F |
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| M |
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| F |
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| (1) | Competencies with a “✓” indicate substantial professional experience. |
Our Board is committed to orderly director succession planning and having a diversity of skills and experiences on our Board aligned with our long-term strategy. Our Board benefits immensely from the industry expertise of our longer-tenured directors, yet also recognizing the importance of regular, thoughtful refreshment, our Corporate Governance and Nominating Committee has embarked on a thoughtful director succession planning process. With the assistance of a third-party search firm, our Corporate Governance and Nominating Committee identified the skills and experience which the Company would need to lead the Company into the future, in line with our evolving strategy, and has evaluated director candidates based upon these desired qualities, attributes and skills. This succession planning has been conducted over time, as part of a multi-stage process, to ensure that the Company continues to benefit from the Company-specific expertise of our longer-tenured directors, balanced with the fresh perspectives brought by our newer directors.
Our director succession planning and refreshment process:
Emphasized the importance of diversity, resulting in the appointment of four highly qualified women to our Board since 2018
Focused on expanding the collective skills and experience of our Board with our new directors bringing deep financial and industry expertise, regulatory experience, innovative thinking and strategic perspective
| 6 PROPOSAL 1. ELECTION OF DIRECTORS | | |
Highlights of our directors continuing in office include the following:
Gender | Tenure | Independence | ||
 |  |  |
The table below sets forth the names, ages, classes and positions of the nominees who are standing for election at the meeting.
| Name | Age | Class | Position | Since | ||||
| | 76 | II | Independent Director | July 2009 | ||||
| Wilhelm Zeller | 75 | |||||||
| Independent Director | July 2009 | |||||||
| Lizabeth H. Zlatkus (1) | 61 | II | Independent Director | March 2019 | ||||
| (1) | Ms. Zlatkus was first identified as a director candidate by our third-party search firm as part of our Board refreshment process. Upon the recommendation by the Committee, Ms. Zlatkus was unanimously appointed by the Board effective March 15, 2019. |
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Former Chairman and President of Liberty International, a wholly owned subsidiary of Liberty Mutual Group, from 1997 to 2009. Also served as Executive Vice President of Liberty Mutual Group from 1995 through 2009.
Served as President and Chief Executive Officer of American International Healthcare, a subsidiary of AIG.
Founder and President of an international healthcare trading company.
Currently a trustee of the Brookings Institution.
Former director of The Warranty Group, the International Insurance Society, the Coalition of Services Industries and Chairman of the International Fund for Animal Welfare.
Former member of the Chongqing, China Mayor’s International Advisory Council.
| Key Qualifications: The Board |
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Served as the Chairman of the Executive Board of Hannover Re from 1996 to June 2009.
Served as a member of the Executive Board of Cologne Re from 1977 through 1995 and served as a member of the Executive Council of General Re Corporation, the new principal shareholder of Cologne Re, in 1995.
| PROPOSAL 1. ELECTION OF DIRECTORS 7 | |
Served as the head of the Casualty Department and International DepartmentNon-Life at Zurich Insurance Company from 1970 through 1977.
An NACD board leadership fellow, he currently is a corporate director and consultant, serving as a director of EIS Group Ltd. and Willis Towers Watson.
| Key Qualifications: The Board believes Mr. Zeller is qualified to serve as a director |
Lizabeth H. Zlatkus | Experience: |
Served in various senior leadership positions during her tenure with The Hartford Financial Services Group from 1983 to 2011, including Chief Financial Officer and Chief Risk Officer of the firm andCo-President of Hartford Life Insurance Companies; and as Executive Vice President of The Hartford’s international operations and the group life and disability divisions.
Serves as a director on the boards of Boston Private Financial Holdings, Inc.;SE-2, a privately held technology services company; and the Pennsylvania State University Business School Board, where she also served as Chair from 2012 to 2015.
She is also Vice Chair of the Connecticut Science Center Trustee Board, serving on its executive committee since 2012.
Formerly, a director of Legal & General Group plc; Computer Sciences Corporation; and Indivior plc.
Previously served as Regulatory Chair for the North American Chief Risk Officers Council; as a member on the Hewlett Packard Financial Services Board of Advisors; as a member of the LOMA Board of Directors; and as Trustee of the Connecticut Women’s Hall of Fame.
| Key Qualifications:The Board believes that Ms. Zlatkus is qualified to |
Recommendation of the Board
The Board recommends that you vote “FOR” the election of these nominees.
| 8 PROPOSAL 1. ELECTION OF DIRECTORS | | |
DIRECTORS CONTINUING IN OFFICE
The table below sets forth the names, ages, classes and positions of the directors who are not standing for election at the Annual General Meeting but whose term of office will continue after the meeting. Robert L. Friedman, a Class II director, will not be standing forre-election at the meeting, and will be retiring from the Board on May 7, 2020. Maurice A. Keane, a Class III director, will also retire from the Board effective May 7, 2020.
| Name | Age | Class | Position | Since | ||||
| Michael A. Butt(1) | 77 | I | Chairman of the Board | September 2002 | ||||
| Albert A. Benchimol | III | Chief Executive Officer and President | January 2012 | |||||
| | Independent Director | November 2001 | ||||||
| Anne Melissa Dowling | 61 | III | Independent Director | January 2020 | ||||
| Christopher V. Greetham | III | Independent Director | October 2006 | |||||
| | I | Independent Director | November 2018 | |||||
| Henry B. Smith(2) | 71 | III | Independent Director | May 2004 | ||||
| Barbara A. Yastine | Independent Director | |||||||
| (1) | Mr. Butt will retire from the Board effective September 16, 2020. |
| (2) | Effective upon Mr. Butt’s retirement from the Board, Mr. Smith will assume the Chairman role. |
Michael A. Butt | Experience: |
Former Chairman of Sedgwick Limited from 1982 to 1986 and also served as Vice Chairman of the Sedgwick Group plc.
Served as Chairman and Chief Executive Officer of Eagle Star Holdings plc and Eagle Star Insurance Company from 1987 to 1992.
Was Chief Executive Officer and President of Mid Ocean Limited from 1993 to 1998.
Served as director of XL Capital Ltd. from 1998 to 2002.
Former director of the Farmers Insurance Group; BAT Industries; and Instituto Nazionale delle Assicuranzioni.
From 2008 to 2009, served as Chairman of the Association of Bermuda Insurers and Reinsurers.
In 2019, was appointed as an Officer of the Order of the British Empire to commemorate his distinguished contributions toward the building of the Bermuda reinsurance industry.
Named by the International Insurance Society as its 2019 Insurance Hall of Fame Laureate.
Albert A. Benchimol |
Joined AXIS as Executive Vice President and Chief Financial Officer in January 2011.
Served as Executive Vice President and Chief Financial Officer of PartnerRe Ltd. from April 2000 through September 2010 and as Chief Executive Officer of PartnerRe Ltd.’s Capital Markets Group business unit from June 2007 through September 2010.
Prior to joining PartnerRe, Mr. Benchimol was Senior Vice President and Treasurer at Reliance Group Holdings, Inc. for 11 years and was previously with the Bank of Montreal from 1982 to 1989.
Assumed the role as Chair of the Association of Bermuda Insurers and Reinsurers in 2019, after serving as its Vice-Chair from 2017 through 2018.
Appointed as an External Member of the Council of Lloyd’s in February 2019.
| PROPOSAL 1. ELECTION OF DIRECTORS 9 | |
| Key Qualifications: |
| The Board believes that Mr. Benchimol is qualified to serve as a director based on his 38 years of experience in corporate finance, investments, the finance and insurance industry and his specific background as the Company’s Chief Executive Officer and President and, formerly, Chief Financial Officer. |
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Currently, the Chief Executive Officer of Stone Point Capital LLC, serving since June 2005.
From 1998 until May 2005, was with MMC Capital, Inc., a subsidiary of Marsh & McLennan Companies, Inc., serving as the Chief Executive Officer from 1999 to 2005 and as Chairman from 2002 to 2005. Also served as a Vice Chairman of Marsh & McLennan Companies, Inc. from 1999 to November 2004.
Spent 23 years at Goldman, Sachs & Co., where, among holding other positions, he served as head of Investment Banking Services worldwide; head of the Financial Services Industry Group; a General Partner, a Senior Director; and as a Limited Partner.
Current director of The Hershey Company and The Progressive Corporation.
| Key Qualifications: The Board believes that Mr. Davis is qualified to serve as a director |
Anne Melissa Dowling | Experience: |
Served as Director of Insurance for the State of Illinois from 2015 to 2017 and as Deputy Commissioner of Insurance for the State of Connecticut from 2011 to 2015.
Held executive management roles in the areas of investments, treasury, strategic planning and marketing and governance at Massachusetts Mutual Financial Group; Connecticut Mutual Life Insurance Company; Travelers Insurance Company; and at Aetna Life & Casualty, where she began her career in 1982.
Current director of Prosperity Life Group and Insurance Capital Group and a current advisory board member for Carpe Data.
Former director of Spectranetics Corporation and former advisory board member for Life Epigenetics.
Received an M.B.A. from Columbia Business School and a B.A. from Amherst College and holds the Chartered Financial Analyst (CFA) designation.
| Key Qualifications: The Board believes that |
Christopher V. Greetham |
Served as Chief Investment Officer of XL Capital Ltd. from 1996 to 2006.
From 1982 to 1996, was Chief Financial Officer of OIL Insurance Ltd. and President of OIL Investment Corporation Ltd.
Served as an investment analyst and a portfolio manager at Bankers Trust Company between 1975 and 1982.
| Key Qualifications: The Board believes that Mr. Greetham |
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| 10 PROPOSAL 1. ELECTION OF DIRECTORS | | |
Elanor R. Hardwick |
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Currently, the Chief Digital Officer of UBS, leading the bank’s innovation and digitization activities across all business lines and functions globally.
From 2016 to 2018, was former Head of Innovation of Deutsche Bank, leading innovation across business lines and functions globally and supporting the company’s digital strategy development.
Served as Chief Executive Officer of Credit Benchmark Ltd., a FinTechstart-up and provider of credit risk data, leading the company from its foundation in 2012.
Held a succession of senior leadership positions at Thomson Reuters, including Global Head of Strategy, Investment and Advisory; Global Head of Professional Publishing; and Head of Strategy for Europe and Asia.
Held positions at Morgan Stanley International; Booz-Allen & Hamilton; and the United Kingdom’s Department of Trade and Industry.
Earned an M.B.A. from Harvard Business School and an M.A. from the University of Cambridge.
| Key Qualifications:The Board believes that Ms. Hardwick is qualified to serve as a director |
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Henry B. Smith |
Served as the Chief Executive Officer and President of W.P. Stewart & Co., Ltd. from May 2005 to March 2006.
Former Chief Executive Officer of the Bank of Bermuda Limited from March 1997 to March 2004.
Joined the Bank of Bermuda in 1973 serving in various senior positions including Executive Vice President and Chief Operations Officer; Executive Vice President Europe; and Senior Vice President and General Manager, Retail Banking.
| Key Qualifications: The Board believes that Mr. Smith |
Barbara A. Yastine | Experience: |
Former Chair and CEO of Ally Bank, a digital banking leader. Served as Chair from 2010 to 2015 and became interim CEO and President in 2011 before serving as CEO and President beginning in 2012. Also served as Chief Administrative Officer of Ally Financial from 2010 to 2012.
Is currently an active investor in private companies.
Current director of Primerica, Inc. and Zions Bancorporation.
Previously served on the Board of First Data Corporation from 2016 to July 2019 and also as a director andco-CEO of privately held Lebenthal Holdings, LLC from September 2015 to June 2016. In November 2017, Lebenthal and certain of its subsidiaries filed voluntary petitions for bankruptcy under Chapter 7 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.
Previously held various executive roles at Citigroup and Credit Suisse First Boston spanning over 17 years.
Received a B.A. in Journalism and an M.B.A. from New York University.
| Key Qualifications: The Board believes that Ms. Yastine is qualified to serve as a director based on her more than 30 years of management experience in the financial services and risk management sectors, including her prior role as Chair, Chief Executive Officer and President of |
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| PROPOSAL 1. ELECTION OF DIRECTORS | | ||
| CORPORATE GOVERNANCE |
CORPORATE GOVERNANCE HIGHLIGHTS
Corporate governance is an area of significant focus for our Board and is a critical component to our success in driving sustained shareholder value. Highlights of our corporate governance standards are provided below:
| ✓ | Majority vote standard for election of directors. Each director must be elected by a majority of votes cast, not a plurality. |
| ✓ | No “over-boarding”. None of our directors serve on the board of directors of more than three other |
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| ✓ | Regular Board and |
| ✓ | Active Board refreshment process |
| ✓ | No hedging the economic risk of owning AXIS stock or pledging of AXIS stock for loans or other |
| ✓ | Independent |
| ✓ | Shareholders holding 10% or more of our outstanding stock have the right to call a special meeting. |
| ✓ | Majority independent Board. |
| ✓ | Independent Audit, Compensation and Corporate Governance and Nominating |
| ✓ | Robust Code of Business Conduct. AXIS is committed to operating |
Our Board currently consists of 1013 directors, of whom eighteleven are independent directors.directors, and will be reduced in size to 11 directors effective May 7, 2020. As noted above, Messrs. Friedman and Keane will retire from the Board effective May 7, 2020. The Board has affirmatively determined that each of Messrs. Davis, Friedman, Greetham, Keane, Ramey, Smith and Zeller and Ms. Lister isMses. Dowling, Hardwick, Yastine and Zlatkus are independent as defined in the listing standards of the NYSE and in accordance with the Company’s Corporate Governance Guidelines. Mr. Benchimol serves as our Chief Executive Officer and President and therefore is not independent. Similarly, because Mr. Butt was an employee of the Company until his May 3, 2012 retirement and also is a consultant to us, he is not independent under the NYSE listing standards. Mr. Butt continues to serve as Chairman of the Board in his capacity as anon-management director. The Board has made these determinations based primarily on a review of the responses of the directors to questions regarding employment and compensation history, family relationships and affiliations and discussions with the directors.
With respect to Charles A. Davis, the Board reviewed his current relationship with Stone Point Capital LLC (“Stone Point”) and assets that we currently have under management with affiliates of Stone Point. The Board determined that neither of these relationships constitute a material relationship with us as defined in the listing standards of the NYSE. For more details about this relationship and transactions, see “Certain Relationships and Related Transactions” below.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our Chairman, Mr. Butt, received $500,000 in consulting fee payments in 2017 pursuant to the terms of a consulting agreement by and between Mr. Butt and the Company dated May 3, 2012, as amended. The consulting agreement was most recently amended on December 7, 2017 to extend the term of the agreement to the Company’s 2019 Annual General Meeting for an annual fee of $500,000.
Charles A. Davis is the Chief Executive Officer of Stone Point. In the ordinary course of business, we have contracted with SKY Harbor Capital Management, LLC, an affiliate of Stone Point, for asset management services for certain of our short duration high yield debt portfolios. In 2017, we paid $2,388,406 to SKY Harbor Capital Management, LLC. Additionally, we currently have $30 million committed to the NXT Capital Senior Loan Fund II and $30 million committed to the NXT Capital Senior Loan Fund III (the “NXT Funds”). The manager of the NXT Funds is an indirect subsidiary of NXT Capital Holdings, L.P. (“NXT Capital”). Stone Point, through an affiliated fund, owns approximately 42% of NXT Capital. During 2017, fees paid to NXT Capital totaled $859,509.
We also have $50 million committed to the Freedom Consumer Credit Fund, LLC Series B. The manager of this fund is Freedom Financial Asset Management, LLC (“Freedom”) which is an indirect subsidiary of Pantheon Partners, LLC (“Pantheon”). Stone Point owns a 14.5% interest in Pantheon through investment funds managed by Stone Point. During 2017, fees paid to Freedom totaled $1,140,380.
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Policies and Procedures for Transactions with Related Persons.We analyzeWith the assistance of the Company’s Corporate Secretary and General Counsel, our Corporate Governance and Nominating Committee is required to consider and approve all transactions in which AXIS participates and in whichwhere a related person may have a direct or indirect material interest both due towhich involves an amount greater than $120,000. After considering the facts and circumstances, the Committee determines the potential for a conflict of interest and to determinealso whether disclosure of the transaction is required under applicable SEC rules and regulations. Related persons include any of our directors, director nominees or executive officers, certain of our shareholders and their respective immediate family members. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, in any way with our interests. Our Code of Business Conduct requires all directors, officers and employees who may have either a potential or apparent conflict of interest to fullypromptly disclose all the relevant facts promptlysuch conflict to our General Counsel.
In addition to the reporting requirements under the
| 12 CORPORATE GOVERNANCE | | |
We seek affirmative confirmation of compliance with our Code of Business Conduct to identify related person transactions,from our directors, officers and employees annually.
Additionally, each year, we submit and require our directors and executive officers to complete Director and Officer Questionnaires identifyingquestionnaires that require the identification of any arrangements or transactions with us in which the officer or directorthey or their family members have an interest. AnyAll potential related personrelated-person transactions are reviewed by our Corporate Governance and Nominating Committee, which pursuant to its charter is responsible for reviewing and approving any proposed transaction with any related person.
During 2019, our Chairman, Mr. Butt, received $350,000 in consulting fee payments pursuant to the terms of a consulting agreement by and between Mr. Butt and the Company dated May 3, 2012. The agreement was most recently amended on July 18, 2019 to extend the term of the agreement to December 31, 2020. Mr. Butt will not receive any additional fees for consulting services provided during the extended term.
Charles A. Davis is the Chief Executive Officer of Stone Point. In the ordinary course of business, we have contracted with SKY Harbor Capital Management, LLC, an affiliate of Stone Point, for asset management services for certain of our high-yield debt portfolios. In 2019, we paid $2.6 million to SKY Harbor Capital Management, LLC in management fees relating to these portfolios.
During 2019, we committed to invest $71 million in Stone Point’s Trident VIII. For the year ended December 31, 2019, we have not paid any fees to Stone Point in relation to Trident VIII.
We also have $52 million invested in the Freedom Consumer Credit Fund, LLC Series B, the manager of which is Freedom Financial Asset Management, LLC, an indirect subsidiary of Pantheon Partners, LLC. Investment funds managed by Stone Point own approximately 14.5% of Pantheon Partners, LLC. During 2019, fees paid to Freedom Financial Asset Management, LLC totaled $2.7 million.
In January 2020, we committed to invest $10 million in aco-investment with Stone Point to purchase a limited partnership interest inT-VIIICo-Invest-A LP, which is being formed by Stone Point to facilitate the investment by multiple investors in Duff & Phelps, a financial advisory firm. No management or other fees will be paid by AXIS to Stone Point in connection with Stone Point’s management of this investment.
Our Board maintains Audit, Compensation, Corporate Governance and Nominating, Finance, Risk and Executive Committees. Current copies of the charter for each of these committees, as well as our Corporate Governance Guidelines, are available on our website at www.axiscapital.com. The table below provides current membership and meeting information for each committee. In addition, the table identifies the independent directors, as determined by our Board within the meaning of the NYSE listing standards, applicable SEC regulations and our Corporate Governance Guidelines.
| Name | Audit | Compensation | Corporate Governance and Nominating | Finance | Risk | Executive | Independent Director | Audit | Compensation | Corporate Governance and Nominating | Finance | Risk | Executive | Independent Director | ||||||||||||||
| Albert A. Benchimol | Member | Member | Member | Member | ||||||||||||||||||||||||
| Michael A. Butt | Member | Member | ||||||||||||||||||||||||||
| Charles A. Davis | Chair | Member | Member | X | Chair | Member | Member | X | ||||||||||||||||||||
| Anne Melissa Dowling | Member | Member | Member | X | ||||||||||||||||||||||||
| Robert L. Friedman | Member | Member | X | Member | Member | X | ||||||||||||||||||||||
| Christopher V. Greetham | Member | Member | Member | Chair | X | Member | Member | Member | Chair | X | ||||||||||||||||||
| Elanor R. Hardwick | Member | Member | Member | X | ||||||||||||||||||||||||
| Maurice A. Keane | Member | Member | Member | X | Member | Member | Chair | X | ||||||||||||||||||||
| Cheryl-Ann Lister | Chair | Member | X | |||||||||||||||||||||||||
| Thomas C. Ramey | Chair | Member | Member | X | Chair | Member | Member | X | ||||||||||||||||||||
| Henry B. Smith | Member | Chair | Member | Chair | X | Chair | Member | Member | Chair | X | ||||||||||||||||||
| Barbara A. Yastine | Member | Member | Member | X | ||||||||||||||||||||||||
| Wilhelm Zeller | Member | Member | X | Member | Member | Member | X | |||||||||||||||||||||
| 2017 Meetings | 10 | 6 | 4 | 4 | 4 | 0 | ||||||||||||||||||||||
| Lizabeth H. Zlatkus | Member | Member | Member | X | ||||||||||||||||||||||||
| 2019 Meetings | 10 | 6 | 4 | 4 | 4 | 0 | ||||||||||||||||||||||
| CORPORATE GOVERNANCE 13 | |
Audit Committee. The Audit Committee has general responsibility for the oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent auditor’s qualifications and independence and the performance of our internal audit functions and independent auditors. The Committee appoints, retains and determines the compensation for our independent auditors,pre-approves fees and services of the independent auditors and reviews the scope and results of their audit. The Audit Committee has been established in accordance with Rule10A-3 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). Each member of the Audit Committee is anon-management director and is independent as defined in the listing standards of the NYSE, our Corporate Governance Guidelines and under the Exchange Act. Our Board has determined that Mr. Ramey qualifies as an audit committee financial expert pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).
Compensation Committee. The Compensation Committee establishes compensation for our Chief Executive Officer and certain other executives in light of our established corporate performance goals and makes recommendations to our Board with respect to overall officer, management and employee compensation policies, incentive compensation plans, equity-based plans and director compensation. Each member of this Committee is a“non-employee director” for purposes of Rule16b-3 under the Exchange Act and is independent as defined in the listing standards of the NYSE. For a description of our processes and procedures for the consideration and determination of executive and director compensation, see “Compensation Discussion and Analysis” and “2017“2019 Directors Annual Compensation” later in this proxy statement.
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Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee takes a leadership role in shaping our corporate governance by identifying and proposing qualified director nominees,nominees; overseeing the purpose, structure and composition of our Board committees,committees; overseeing the annual evaluation of the Board and its committeescommittees; and periodically reviewing our Code of Business Conduct and Corporate Governance Guidelines. The Committee also oversees our corporate citizenship initiatives. Each member of this Committee is anon-management director and is independent as defined in the listing standards of the NYSE.
Finance Committee. The Finance Committee oversees the finance functioninvestment and treasury functions of the Company, including the investment of funds and financing facilities. It also is responsible for establishing our investment policies and guidelines, reviewing the selection of investment managers, evaluating the performance of investment managers, monitoring the need for additional financing and ensuring compliance with outstanding debt facility covenants.
Risk Committee. The Risk Committee assists the Board in its oversight of risks to which the Company is exposed and monitors our compliance with our aggregate risk standards and risk appetite. The Risk Committee also evaluatesreviews compensation practices to determine whether our policies and plans are consistent with the Company’s risk framework and do not encourage excessive risk taking.
Executive Committee. The Executive Committee may exercise the authority of the Board when the entire Board is not available to meet, except in cases where the action of the entire Board is required by our memorandum of association, ourbye-laws or applicable law.
MEETINGS OF THE BOARD AND ITS COMMITTEES
Pursuant to our Corporate Governance Guidelines, we expect our directors to attend all meetings of our Board, all meetings of all committees of the Board on which they serve and each annual general meeting, absent exigent circumstances. Our Board met nine (9)five (5) times during the year ended December 31, 2017.2019. No director attended fewer than 75% of the aggregate of the total number of meetings of the Board and the total number of meetings of all committees of the Board on which the director served (during the period that each director served on the Board or such committee(s)). All of our directors then in office attended our 20172019 Annual General Meeting.
MEETINGS OFNON-MANAGEMENT DIRECTORS
The Board believes that one of the key elements of effective, independent oversight is that the independent directors meet in executive session on a regular basis without the presence of management. In 2017, as part of the agenda for each of the four regularly-scheduled Board meetings,2019, the independent directors met in executive session with the Lead Independent Director presiding at sucheach of our four regularly scheduled Board meetings.
| 14 CORPORATE GOVERNANCE | | |
The Board believes that the role of Lead Independent Director enhances effective governance. Mr. Smith currently serves as Lead Independent Director. In addition to presiding at executive sessions of thenon-management directors as well as all meetings at which the Chairman is not present, the Lead Independent Director’s duties include:
providing input on meeting scheduling, agendas and information that is provided to the Board;
acting as a liaison between the independent directors and the Chairman;
recommending, as appropriate, that the Board retain consultants who will report directly to the Board; and
consulting and communicating with major shareholders on a per requestper-request basis.
The Board believes that the decision of whether to combine or separate the positions of Chief Executive Officer and Chairman will vary company to company and depends upon a company’s particular circumstances at a given point in time. For our Company, the Board currently believescontinues to believe that separating the Chief Executive Officer and Chairman positions is the appropriate leadership structure and is in the best interests of our shareholders. In addition, the Board also believes that AXIS’ leadership structure does not affect the Board’s role in risk oversight of the Company. Accordingly, Mr. Butt currently serves as our Chairman of the Board, and Mr. Smith will assume the position of Chairman upon Mr. Butt’s retirement, while Mr. Benchimol serves as our
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Chief Executive Officer and President. Our Board believes that this structure best encourages the free and open dialogue of alternative views and provides for strong checks and balances. Additionally, Mr. Butt’s attention to Board and committee matters allows Mr. Benchimol to focus more specifically on overseeing the Company’sday-to-day operations and underwriting activities as well as strategic opportunities and planning.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Smith, Greetham, Keane and Ramey served on our Compensation Committee during fiscal year 2019 and effective January 1, 2020, Mses. Hardwick and Zlatkus and Mr. Zeller became members. During the year ended December 31, 2017,fiscal 2019, none of our executive officers served as a memberon the Compensation Committee (or its equivalent) or on the board of the compensation committee or as a directordirectors of another entity where one of whose executive officers served on our Compensation Committee or as one of our directors.members was an executive officer.
CONSIDERATION OF DIRECTOR NOMINEES
The Corporate Governance and Nominating Committee will consider candidates recommended by shareholders to be nominated to our Board for election at the Annual General Meeting. A shareholder who wishes to submit a candidate for consideration must be a shareholder of record at the time that such shareholder submits a candidate for nomination and must be entitled to vote for the candidate at the meeting. A shareholder must give written notice of the submission to our Secretary not less than 90 days nor more than 120 days prior to the anniversary of the annual general meeting for the preceding year; provided, that, if the date of the annual general meeting is moved more than 30 days before or after the anniversary date of the annual general meeting for the preceding year, the deadline for giving written notice of the submission to our Secretary will instead be a reasonable time before we begin to print and mail our proxy materials. The notice must include:
the name, age and business and residence addresses of the candidate;
the principal occupation or employment of the candidate;
the number of common shares or other securities of the Company beneficially owned by the candidate;
all other information relating to the candidate that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act; and
the candidate’s written consent to be named in the proxy statement and to serve as a director if elected.
The notice also must include information on the shareholder submitting the nomination, including the shareholder’s name and address as it appears on our share register and the number of our common shares beneficially owned by the shareholder.
| CORPORATE GOVERNANCE 15 | |
COMMUNICATIONS WITH BOARD OF DIRECTORS
Shareholders and other interested parties may send communications to our Board by sending written notice to our Secretary at our headquarters at AXIS House, 92 Pitts Bay Road, Pembroke HM 08, Bermuda. The notice may specify whether the communication is directed to the entire Board, to thenon-management directors, to the Lead Independent Director or to a particular Board committee or other director. Our Secretary will handle routine inquiries and requests for information or will otherwise determine whether the communication is made for a valid purpose and is relevant to the Company and its business and, if he so determines, will forward the communication to our Chairman of the Board, to thenon-management directors or to the appropriate committee chairman or director. At each meeting of our Board, our Secretary presents a summary of all communications received since the last meeting that were not forwarded and makes those communications available to the directors on request.
EMPLOYEE, OFFICER AND DIRECTOR HEDGING
Our Insider Trading Policy prohibits our officers, employees and directors from transacting certain forms of hedging or monetization transactions (including prepaid variable forward contracts, equity swaps, collars and exchange funds), or otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our securities held by them.
RISK GOVERNANCE AND RISK MANAGEMENT ORGANIZATION
The key elements of our governance framework, as it relates specifically to risk management, are described below.
Board of Directors’ Level
The Risk Committee of the Board assists the Board of Directors in overseeing the integrity and effectiveness of our enterprise risk management framework and ensuring that our risk assumption and risk mitigation activities are consistent with that framework. The Risk Committee reviews, approves and monitors our overall risk strategy, risk appetite and key risk limits and receives regular reports from the Group Risk Management function (“Group Risk”) to ensure
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any significant risk issues are being addressed by management. The Risk Committee further reviews, with management and Internal Audit,our internal audit function, our general policies and procedures and satisfies itself that effective systems of risk management and controls are established and maintained. Among its other responsibilities, the Risk Committee also reviews and approves our annual Own Risk and Solvency Assessment, or ORSA, report. The Risk Committee assesses the independence and objectivity of our Group Risk function, approves its terms of reference and reviews its ongoing activities.
Following a recommendation by ourthe Chief Executive Officer, the Risk Committee also conducts a review and provides a recommendation to the Board of Directors regarding the appointment and/or removal of the Chief Risk and Actuarial Officer. The Risk Committee meets with the Chief Risk and Actuarial Officer in separate executive sessionsessions on a regular basis.
The Finance Committee of our Board oversees our investment of funds and adequacy of financing facilities. This includes approval of aour strategic asset allocation plan.
The Audit Committee of our Board, which is supported by our internal audit function, is responsible for overseeing internal controls and compliance procedures andprocedures. The Finance Committee also reviews with management and the Chairman of the Risk Committee, of the Boardour guidelines and policies regarding risk assessment and risk management acrossmanagement.
As part of its oversight of risks and opportunities generally, our Board oversees the AXIS group.risks and opportunities relating to climate change.
Group Executive Level
Our management Executive Committee formulates our business objectives and risk strategy within the overall risk appetite set by our Board. It allocates capital resources and sets limits across the group,AXIS operating entities, with the objective of balancing return and risk. While the management Executive Committee is responsible overall for risk management, it has delegated some authority to the executive level Risk Management Committee.Committee, or RMC, consisting of the Chief Executive Officer, Chief Financial Officer, Chief Strategy Officer, Chief Underwriting Officer, each of the Chief Executive Officers for each segment, Chief Risk Officer, Chief Actuary and General Counsel.
The Risk Management CommitteeRMC is responsible for overseeing the integrity and effectiveness of ourthe Group’s enterprise risk management framework and ensuring that our risk assumption and risk mitigation activities are consistent with that framework,
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including a review of the annual business plan relative to our risk limits. In addition to the Risk Management Committee,RMC, there is an established framework of separate yet complementary management committees and subcommittees, which focusfocusing on particular aspects of enterprise risk management including the following:
Management Committees
The Business Council oversees underwriting strategy and performance, establishes return targets and manages risk/exposure constraints across each line of business, in line with the Company’s strategic goals.
The Product Boards for each major line of business aim to develop a coherent strategy for portfolio management, set underwriting guidelines and risk appetite and leverage expertise across the multiple geographies that we operate in. The Product Boards also oversee exposure management frameworks and view of risk.
The Investment and Finance Management Committee oversees our investment activities by, among other things, monitoring market risks, the performance of our investment managers and our asset-liability management, liquidity positions and investment policies and guidelines. The Investment and Finance Management Committee also prepares our strategic asset allocation and presents it to the Finance Committee of the Board for its approval.
The Capital Management Committee oversees the integrity and effectiveness of the Company’s Capital Management Policy, including the capital management policies of the Company’s legal entities and branches, and oversees the availability of capital within the AXIS operating entities.
The Group Reserve Committee ensures appropriate oversight and challenge of the Group and Segment Reserves, led by the Group Chief Reserving Actuary.
RMCSub-Committees
The Reinsurance Security Committee sets out the financial security requirements of our reinsurance counterparties and approves reinsuranceour counterparties, as needed.
The Operational Risk Committee oversees our operational riskthe Group’s Operational Risk framework for the identification, management, mitigation and measurement of operational risk and facilitates the embedding of effective operational risk management practices across ourthroughout the AXIS companies.
The Emerging Risks CommitteeWorking Group oversees the processes for identifying, assessing and monitoring current and potential emerging risks.
Group Risk Management Organization
As a general principle, management in each of our business units is responsible in the first instance for both the risks and returns of its decisions. Management is the “owner” of risk management processes and is responsible for managing our business within defined risk limits.
Our Chief Risk and Actuarial Officer, reportedwho reports to ourthe Chief ExecutiveFinancial Officer and the Chairman of the Board Risk Committee, leads our independent Group Risk function and is responsible for oversight and implementation of our enterprise
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risk management framework as well as providing guidance and support for risk management practices. Group Risk is responsible for developing methods and processes for identifying, measuring, managing and reporting risk. This forms the basis for informing the Risk Committee of the Board and the Risk Management CommitteeRMC of our risk profile. Group Risk develops our risk management framework and oversees the adherence to this framework at the group and operating entity level. Our Chief Risk and Actuarial Officer regularly reportedreports risk matters to ourthe Chief ExecutiveFinancial Officer, management Executive Committee, Risk Management CommitteeRMC and to the Risk Committee of the Board.Committee.
Internal Audit,audit, an independent, objective function, reports to the Audit Committee of the Board on the effectiveness of our risk management framework. This includes assurance that key business risks have been adequately identified and managed appropriately and that our system of internal control is operating effectively. Internal Auditaudit also provides independent assurance around the validation of our internal capital model and coordinates risk-based audits, compliance reviews, and other specific initiatives to evaluate and address risk within targeted areas of our business.
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Our risk governance structure is further complemented by our Legal Departmentlegal department which seeks to mitigate legal and regulatory compliance risks with support from other departments. This includes ensuring that significant developments in law and regulation are observed and that we react appropriately to impending legislative and regulatory changes and applicable court rulings.
CODE OF BUSINESS CONDUCT AND CORPORATE GOVERNANCE GUIDELINES
Our Corporate Governance Guidelines, along with our Code of Business Conduct and the charters of each of the committees of our Board, of Directors, provide a framework for the corporate governance of the Company addressing matters such as director qualification standards, director responsibilities and duties and compensation of our directors. Our Corporate Governance Guidelines and our Code of Business Conduct apply to all of our directors, officers and employees, including our Chief Executive Officer and President, our Chief Financial Officer and our Controller and are available on our website at www.axiscapital.com. We intend to disclose on our website any required amendment to, or waiver of, a provision of the Code of Business Conduct that applies to our Chief Executive Officer and President, our Chief Financial Officer or our Controller. In addition, waivers of the Code of Business Conduct for our directors and executive officers may be made only by our Board or the Corporate Governance and Nominating Committee and will be promptly disclosed to shareholders on our website in accordance with the listing standards of the NYSE.
CORPORATE CITIZENSHIP AND SUSTAINABILITY
We define our corporate purpose as giving people and organizations the confidence to take necessary risks in the pursuit of their goals and ambitions. Our corporate citizenship program is organized around identifying, assessing and managing on an ongoing basis the environmental, social and governance factors that are relevant to our long-term financial performance. Our approach is to take into account the input of our core stakeholders, including our colleagues, our shareholders and our communities, and to consider material environmental, social and governance factors in our strategic planning and risk oversight.
The Corporate Governance and Nominating Committee of the Board has primary oversight responsibilities for our corporate citizenship program. The Committee regularly reports on citizenship and sustainability matters to, and receives the input of, the full Board. In addition, our senior management provides guidance for our citizenship and sustainability strategy and initiatives.
The Company has determined that it will focus its corporate citizenship efforts initially in four areas: environment (which includes environmental sustainability and climate-risk mitigation), diversity and inclusion, philanthropy and advocacy. Select initiatives in each of these areas are discussed below.
ENVIRONMENT
Since its inception, AXIS has been at the forefront of assessing and offering protection against weather-related risks such as hurricanes, storms, wildfires and floods, helping businesses and individuals proactively manage their exposure to such risks, and, when the need arises, recover from their aftermath. Our assessment of sustainability risks and opportunities takes into account the physical and transitional risks and opportunities of climate change. Through its NatCat Centre of Excellence, the AXIS Research Center, a newly formed climate-change working group, and local modeling teams, AXIS continues to advance research and monitoring of the newest science on climate change, as well as modeling and reviewing peril regions most likely to be affected thereby. For example:
AXIS is a member of the Bermuda Institute of Ocean Sciences’ Risk Prediction Initiative, which was formed in the wake of Hurricane Andrew in 1992. The Risk Prediction Initiative was formed in part to improve models for natural catastrophes and better estimate probable loss distributions.
AXIS partners with leading researchers and students at the University of Illinois’ Office of Risk Management and Insurance Research. This partnership is creating new natural catastrophe risk conceptualization models that leverage data analytics and computer programming. This partnership is part of AXIS’ longstanding commitment to promote education in areas relevant to the insurance industry and provide a platform to address areas like climate risk.
In 2019, we significantly scaled up our environmental and climate-risk work with additional initiatives such as the following:
AXIS formed the climate change working group, a cross-functional group tasked with (i) assessing climate-related risks and opportunities identified in other AXIS working groups focused on product development;
| 18 CORPORATE GOVERNANCE | | |
(ii) evaluating and recommending changes to modeling, pricing and underwriting based on climate change; (iii) promoting knowledge-sharing across key groups on the topic of climate change; (iv) leading research into climate change and providing information to enterprise management and other senior decision makers; (v) collaborating with modeling vendors, market and regulatory groups to develop climate change scenarios that may have impacts on the Company (financial or otherwise); and (vi) considering emerging risks associated with climate change and liaising with the proper internal working groups and committees for their consideration in the areas of, among other things, product development and risk management. |
In October 2019, AXIS published its thermal coal and oil sands policy. AXIS was only the second insurer with significant U.S. operations to publish any such policy, and the first to publish one addressing oil sands. Reflecting AXIS’ belief that (re)insurers have an important role to play in mitigating climate risk and transitioning to alow-carbon economy, this policy limits the provision of (re)insurance to, or investment in, new thermal coal plants or oil sands infrastructure or the companies that build, own or operate such enterprises. The policy is a part of the Company’s broader strategy to reduce investments in lines that do not align with its long-term approach while investing in growth areas such as renewable energyinsurance-an area in which the Company has maintained its position as a top global (re)insurer, particularly of offshore wind and solar facilities.
AXIS has hosted, sponsored and/or had executives participate in a number of climate-risk-related panels. In November 2019, the Chairman of the Board, Mr. Butt, along with the Chairman of the Audit Committee, Mr. Ramey, and several senior executives participated in the “Future of Insurance Symposium: Climate Risk & Insurance Implications” hosted by the University of Illinois in partnership with their Office of Risk Management and Insurance Research and the AXIS Risk Management Academy. Together with researchers from the University, the panelists at November’s symposium discussed recent works on climate risks and how these risks affect business practices in the insurance industry now and prospectively. As part of this, AXIS and the Office of Risk Management and Insurance Research funded five faculty fellowships to continue to pursue relevant research.
In September 2019, AXIS hosted the International Society of Catastrophe Managers conference, “Climatechange-a key driver in catastrophe risk management, or one factor among many?” in Zurich, with over 80 participants and speakers. The aim of this conference was to provide different scientific, regulatory and (re)insurance/risk management industry views on the current and potential future impacts of climate change and to assess, among other things, whether assessments of cat risk will change in the future as our understanding of climate change and its causes and effects become better understood; what the quantification of climate change impacts will do to alter how the (re)insurance industry comprises its cat portfolios and charges premiums, and what concerns regulators are beginning to raise regarding climate risk.
We are also working on aligning our climate-related disclosures using Sustainability Accounting Standards Board principles.
As part of its oversight of risks and opportunities generally, our Board oversees the risks and opportunities relating to climate change.
At AXIS, investing in our people is a top priority. We strongly encourage our employees to develop critical capabilities that will aid in their professional and personal growth, propel their careers, and help them engage in the communities where they work and live. We also recognize the importance of a diverse workforce. Our goal is to elevate the level of service that we provide to our customers and partners, retain our top talent and support the communities where we do business. Some of our 2019 initiatives in furtherance of this goal are described below:
Last year, 20% of our open positions were filled by internal candidates. We aim to meet or exceed that goal in 2020, assisted in part by a new relationship that we established with a human capital analytics organization to foster a fair and equitable workplace by helping AXIS set, track and consistently improve diversity, equity and inclusion metrics.
We launched a management-development series, focusing on how our leaders can maximize the talent of their team members.
We also introduced our Early Careers Program in 2019, which includes a robust and growing summer internship program and an early career development program. The Early Careers Program is focused on building a diverse pipeline of talent for numerous careers at AXIS.
| CORPORATE GOVERNANCE 19 | |
AXIS Careers was created to provide our employees with a centralized repository of tools, resources, and training modules to assist them on their career journey at AXIS. This includeson-demand mobile courses, programming for early-career talent, leadership training, and more.
A key pillar of our corporate citizenship platform is diversity and inclusion. Encouraging a wide range of experiences, backgrounds and perspectives makes AXIS a more rewarding place to work, enables us to attract talented teammates, enriches our perspectives and makes us stronger as a global organization. Below are strategies and initiatives enacted to further the advancement of our diverse and inclusive culture:
AXIS continues to broaden its recruiting strategies to identify diverse candidates. Recent initiatives include:
| ¡ | Developing relationships with veterans’ organizations to utilize their job boards and candidate databases for open roles, and encourage the organizations’ members to participate in recruitment events; |
| ¡ | Establishing and enhancing existing relationships with diverse universities; and |
| ¡ | Providing recruitment training and manager coaching with a focus on enhancing managers’ effectiveness at recruiting diverse candidates. |
AXIS developedin-house unconscious-bias training for the entire AXIS workforce which trained all of our employees on unconscious biases that, among other things, can impede the career progress of underrepresented groups and help employees better understand diverse perspectives. Approximately 80 mandatoryin-person sessions were conducted in partnership with local senior business leaders.
PHILANTHROPY
We believe in a grassroots approach to philanthropy: advancing charitable endeavors that are interwoven into the fabric of our local communities. AXIS has a long history of supporting charitable causes that align with our values. Our giving comes in many forms:
During 2019, AXIS’ charitable giving activities focused on disaster preparedness, cybersecurity, education and research.
More than half of our employees participated in the AXIS Global Day of Giving Rally, a period of time when colleagues can use paid time off to volunteer at local organizations. We also offer one additional paid day off to volunteer at any point during the year. In 2019, AXIS employees participated in more than 50 events across the world, helping at local food pantries, teaching children about issues such as insurance and cybersecurity, and supporting environmental programs.
| • | As part of our investment in communities, AXIS sponsors a Matching Gifts Program, which is now in its 12th year of operation. |
ADVOCACY
AXIS focuses its advocacy efforts on driving significant change in the (re)insurance industry by promoting issues, policies and initiatives that are supportive of the other three pillars of our corporate citizenship program, in particular pertaining to the environment and diversity and inclusion. For example, as part of our advocacy efforts, we are engaged with organizations such as the Geneva Association as well as the Insurance Development Forum, launched by the United Nations, the World Bank and the insurance industry;scaled-up our involvement in the Lloyd’s Dive In Festival, a festival for diversity and inclusion in the insurance sector; and sponsored initiatives through the UN Foundation-backed female empowerment initiative, Girl Up.
| 20 CORPORATE GOVERNANCE | | |
| PRINCIPAL SHAREHOLDERS |
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information as of March 8, 201817, 2020 regarding beneficial ownership of our common shares by each of the following, in each case based on information provided by these individuals:
Each person or group known to us to be the beneficial owner of more than 5% of our common shares
Each of our directors
Each of our NEOs
All of our directors and executive officers as a group
| Directors and Executive Officers | Number of Common Shares(1) | Percent of Outstanding Common Shares(1) | ||||
| Albert A. Benchimol | 235,043 | * | ||||
| Michael A. Butt | 973,038 | 1.2% | ||||
| Charles A. Davis | 34,063 | * | ||||
| Robert L. Friedman | 59,248 | * | ||||
| Christopher V. Greetham | 24,949 | * | ||||
| Maurice A. Keane | 103,648 | * | ||||
| Cheryl-Ann Lister | 29,199 | * | ||||
| Thomas C. Ramey | 12,276 | * | ||||
| Henry B. Smith | 50,605 | * | ||||
| Wilhelm Zeller | 13,184 | * | ||||
| Christopher N. DiSipio | 75,351 | * | ||||
| Jan Ekberg | 18,943 | * | ||||
| Joseph C. Henry | 88,064 | * | ||||
| John D. Nichols | 27,145 | * | ||||
| Peter W. Wilson | 27,348 | * | ||||
| All directors and executive officers as a group (17 persons) | 1,686,395 | 2.0% | ||||
| Other Shareholders | ||||||
| FMR LLC and related entities(2) | 3,160,072 | 3.8% | ||||
| Pzena Investment Management, LLC(3) | 4,628,962 | 5.5% | ||||
| BlackRock, Inc.(4) | 6,210,023 | 7.4% | ||||
| Vulcan Value Partners, LLC(5) | 7,646,245 | 9.2% | ||||
| The Vanguard Group(6) | 7,929,743 | 9.7% | ||||
| Directors and Executive Officers | Number of Common Shares (1) | Percent of Outstanding Common Shares (1) | ||||
Albert A. Benchimol | 363,260 | * | ||||
Michael A. Butt | 986,922 | 1.2% | ||||
Charles A. Davis(2) | 42,120 | * | ||||
Anne Melissa Dowling | 1,923 | * | ||||
Robert L. Friedman | 66,955 | * | ||||
Christopher V. Greetham | 28,452 | * | ||||
Elanor R. Hardwick | 4,225 | * | ||||
Maurice A. Keane | 109,468 | * | ||||
Thomas C. Ramey | 15,779 | * | ||||
Henry B. Smith | 44,976 | * | ||||
Barbara A. Yastine | 4,410 | * | ||||
Wilhelm Zeller | 21,056 | * | ||||
Lizabeth H. Zlatkus | 4,871 | * | ||||
Steve K. Arora | 24,118 | * | ||||
David S. Phillips | 31,872 | * | ||||
Peter J. Vogt | 28,725 | * | ||||
Peter W. Wilson | 43,941 | * | ||||
All directors and executive officers as a group (17 persons) | 1,823,073 | 2.2% | ||||
| OTHER SHAREHOLDERS | ||||||
Pzena Investment Management, LLC (3) | 5,383,049 | 6.4% | ||||
The Vanguard Group(4) | 8,431,435 | 10.0% | ||||
T. Rowe Price Associates, Inc.(5) | 9,725,625 | 11.5% | ||||
| * | Less than 1% |
| (1) | Unless otherwise indicated, the number of common shares beneficially owned and percent of outstanding common shares are based on |
| (2) | 501,026 common shares are held by T-VIII PubOpps LP (“T8”). The GP of T8 is T-VIII PubOpps GP LLC (“T8 GP”). The managing member of T8 GP is Trident VIII, L.P. The general partner of Trident VIII, L.P. is Trident Capital VIII, L.P. A limited liability company solely owned by Mr. Davis is one of the five general partners of Trident Capital VIII, L.P. Mr. Davis is also chief executive officer and a member of Stone Point Capital LLC, which serves as the investment manager of T8. Mr. Davis disclaims beneficial ownership of such common shares that are held by T8 except to the extent of any pecuniary interest therein. The principal address of T8 is c/o CSC at 251 Little Falls Drive, Wilmington, Delaware 19808. The principal business address for Stone Point Capital LLC is 20 Horseneck Lane, Greenwich, Connecticut 06830. |
| (3) | The number of common shares beneficially owned and the information set forth below is based solely on information contained in Amendment No. |
| ||
| PRINCIPAL SHAREHOLDERS | |
The number of common shares beneficially owned and the information set forth below is based solely on information contained in Amendment No. |
| (5) | The number of common shares beneficially owned and the information set forth below is based solely on information contained in Amendment No. 2 to Schedule 13G/A filed on February 14, |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than 10% of a registered class of our equity securities to file with the SEC and the NYSE reports on Forms 3, 4 and 5 concerning their ownership of the common shares and other equity securities of the Company. Under SEC rules, we must be furnished with copies of these reports.
Based on our review of these reports, we believe that all of our directors, executive officers and shareholders who are required to file reports filed all of such reports on a timely basis during the year ended December 31, 2017.
| 22 PRINCIPAL SHAREHOLDERS | | |
| EXECUTIVE OFFICERS |
The table below sets forth certain information concerning our current executive officers:
| Name | Age | Position | ||
Albert A. Benchimol(1) | Chief Executive Officer, President and Director | |||
Peter J. Vogt | ||||
| Chief Financial Officer | ||||
Steve K. Arora | 43 | Chief Executive Officer, AXIS Reinsurance | ||
David S. Phillips | 51 | Chief Investment Officer | ||
Peter W. Wilson | Chief Executive Officer, AXIS Insurance | |||
| (1) | Mr. Benchimol’s biography is available under “Directors Continuing in Office”. |
|
Peter J. Vogt | Peter J. Vogt was appointed Chief Financial Officer of AXIS Capital in January 2018. He previously served as the Company’s Deputy CFO from July 1, 2017 until his appointment as CFO in January 2018 and was also Chief Operating Officer of AXIS Insurance from 2013 to June 2017. Mr. Vogt joined AXIS in 2010 as CFO and COO of the Company’s Accident & Health business unit. Prior to AXIS, Mr. Vogt served as CFO of Penn Mutual Life Insurance Company. He also held the CFO role at CIGNA’s Group Insurance business. Mr. Vogt started his career at Hartford Life Insurance Company where, over nearly 14 years, he held a series of actuarial roles and eventually led sales, marketing and product development for its corporate retirement business. Mr. Vogt holds a BBA in Actuarial Science from Temple University and is a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. |
Steve K. Arora | Steve K. Arora joined AXIS in January 2018 as CEO of its reinsurance business. Mr. Arora came to AXIS from Swiss Re, where he spent 18 years in a variety of senior positions, most recently as Head of Casualty Reinsurance and as a member of the Reinsurance Executive Committee. He has held positions in New York, Munich, London, Tokyo and Zurich, and his expertise crosses Finance, Risk Management, Underwriting, and General Management. In his most recent role at Swiss Re, Mr. Arora led a250-person organization that spanned the company’s global network of offices. Previously he served as President and Managing Director of Swiss Re Japan, where he had oversight of the Company’s entire Japanese platform. Mr. Arora held multiple positions at GE Insurance Solutions prior to its acquisition by Swiss Re. |
David S. Phillips | David S. Phillips joined AXIS as Chief Investment Officer in April 2014. With over 25 years of experience in investments, Mr. Phillips previously served as Head of Investments for PartnerRe where he had management and asset allocation responsibilities for public fixed income, public equities, private equities, and alternative fixed income. Prior to PartnerRe, he was the Director of Research and a Portfolio Manager at Oppenheimer Capital, an institutional money manager based in New York City. Mr. Phillips is a CFA charter holder and received an MBA from the Wharton School of the University of Pennsylvania and an AB from Princeton University. |
Peter W. Wilson | Peter W. Wilsonwas appointed Chief Executive Officer of AXIS Insurance in April 2014. He joined AXIS in May 2013 as President of U.S. Insurance. Prior to joining the Company, Mr. Wilson served as President and Chief Operating Officer for CNA Specialty, a unit of CNA Financial Corporation, which is focused on professional and management liability, healthcare, surety and other specialized insurance products and services. During his more than20-year tenure with CNA Financial Corporation, Mr. Wilson served in a number of leadership positions and had management responsibility for a diverse group of business units operating both in the U.S. and internationally. Prior to CNA, he served as an Executive Vice President at AIG, where he managed AIG’s commercial public D&O business in the U.S. |
| ||
| EXECUTIVE OFFICERS | |
| PROPOSAL 2. NON-BINDING VOTE ON EXECUTIVE COMPENSATION |
In accordance with the requirements of Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”)) and the related rules of the SEC, we are including in this proxy statement a separate resolution subject to shareholder vote to approve, in anon-binding vote, the compensation paid to our named executive officers as disclosed below. The language of the resolution, commonly known as a “Say on Pay” proposal, is as follows:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in this proxy statement pursuant to the rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and any related narrative discussion is hereby APPROVED.”
In considering their vote, shareholders may wish to review with care the information on our compensation policies and decisions regarding our NEOs presented in the “Compensation Discussion and Analysis” section below as well as the discussion regarding the Compensation Committee Process, also below.
The Board has adopted a policy providing for annual Say on Pay advisory votes. Accordingly, the next Say on Pay vote will occur in 2019.2021.
Recommendation of the Board
The Board recommends that you vote “FOR” the approval of the compensation paid to our NEOs.
| 24 PROPOSAL 2. NON-BINDING VOTE ON EXECUTIVE COMPENSATION | | |
LETTER FROM COMPENSATION COMMITTEE CHAIRMAN
Dear Shareholders,
Over the course of the past year, I have had the privilege of speaking with many of you directly, in connection with both our 2019 Annual Meeting and our fall outreach program. During these meetings, we discussed our executive compensation practices, including the changes made to our compensation structure to further align pay and performance. We also reviewed our governance practices, including our Board composition and refreshment process. In addition, we discussed environmental, social, and other sustainability topics, such as climate change as it relates to the Company’s business. The feedback provided substantially contributed to the positive enhancements made to our compensation, governance, and citizenship programs.
Changes in our compensation structure in 2019 and 2020
The Compensation Committee is committed to overseeing executive compensation programs that support our business strategy and transformation initiatives, encourage decision-making consistent with our risk framework, and align with our shareholders’ interests and the Company’s long-term goals. We also recognize that as AXIS and the (re)insurance industry continue to evolve, it is necessary to continually adapt our compensation programs to account for these shifting business dynamics and the corresponding expectations from our shareholders.
Following a thorough review of our executive compensation program over the last 18 months and incorporating feedback received from our shareholders, the Compensation Committee made changes to our compensation program in 2019 and 2020. As detailed further in this proxy statement, we have:
Changed the performance metric for PSUs to relative TSR, which the Compensation Committee believes most accurately and holistically measures successful execution of our strategy
Expanded the performance peer group for assessing performance of PSUs
Removed the three-year look-back structure for RSUs
Revised the performance scale for PSUs by decreasing the maximum payout while increasing the minimum payout, aligned with the strategy to reduce volatility in our underwriting portfolio
Adjusted the weightings of metrics within our annual and long-term incentive programs for our Chief Executive Officer to focus more heavily on quantitative measures of performance
The Committee will continue to evaluate the Company’s compensation programs annually to ensure our compensation programs continue to attract, retain and motivate executive talent. This assessment will take into account the Company’s strategic objectives to realign portfolios to exit less profitable lines and reduce volatility, grow more promising classes of business, apply technology to support growth and efficiency, and cultivate exceptional talent.
Performance and pay outcomes in 2019
While our executive team has made significant progress in building a stronger, more profitable and future-ready company, it has taken longer than expected to deliver the desired financial results of our strategy. The Company’s 2019 financial performance was impacted by significant weather events, including an exceptionally severe Japanese typhoon season, poor crop conditions in the U.S., and loss creep from prior period catastrophes.
We have taken your feedback, both through the vote at our last Annual Meeting and our many conversations throughout the year, and incorporated it into our compensation program. The Compensation Committee is committed to reinforcing the strong link between pay and performance and therefore, took action to address your concerns. In light of below-plan financial performance, our Chief Executive Officer’s total compensation was reduced by 26% for performance year 2019 compared to 2018.
| LETTER FROM COMPENSATION COMMITTEE CHAIRMAN 25 | |
As you review the discussion and analysis of our compensation program in the next several pages, I believe that you will find a program well-tailored to match the needs and strategic objectives of our business. Thank you for your continued investment in AXIS.
Henry Smith
Lead Independent Director
Compensation Committee Chair
| 26 LETTER FROM COMPENSATION COMMITTEE CHAIRMAN | | |
| COMPENSATION DISCUSSION AND ANALYSIS |
This Compensation Discussion and Analysis is divided into the following sections:
Section | Page | |||
| 27 | ||||
| 32 | ||||
| 33 | ||||
| 41 | ||||
| 44 | ||||
NAMED EXECUTIVE OFFICERSNAMED EXECUTIVE OFFICERS
The Compensation Discussion and Analysis section whichthat follows explains the Company’s executive compensation program as it relates to our named executive officers (the “NEOs”) whose compensation information is presented in the tables following this discussion in accordance with SEC rules. Our NEOs for 20172019 were:
| Name | Title | ||
Albert A. Benchimol | Chief Executive Officer and President | ||
Peter J. Vogt | Chief Financial Officer | ||
Steve K. Arora | Chief Executive Officer, AXIS | ||
David S. Phillips | Chief | ||
Peter W. Wilson | Chief Executive Officer, AXIS Insurance | ||
EXECUTIVE SUMMARYEXECUTIVE SUMMARY
Execution of Long-Term Strategic Plan Despite Challenging Business Conditions
While fiscal year 2017 wasDuring 2019, the Company continued to advance its transformation program designed to reposition AXIS to become a challenging yearstronger, more nimble company. Our management team has remained focused on executing against our plan, making strategic decisions and investments that we believe will create a strong and lasting foundation for AXIS and the (re)insurance industry with near record levels of catastrophe activity, 2017 was also a year in which AXIS made significant strides by positioning our business for long-termprofitable growth and profitability. We made significant progress in advancing our long-term strategic plan, andleadership.
In 2019, we took concrete measures to move toward our goal of achievingtop-quintile industrynon-GAAP operating ROACE and growth in book value per share adjusted for dividends, with volatility consistent with the industry average. In particular, we took positive steps to advancesignificantly advanced the following fourfive strategic initiatives previously established by our CEO:Board:
Reorienting the portfolio.We reoriented the portfolio to exit lower performing lines of business and efforts on marketsreduce volatility, and invested in and grew business classes where we have relevance, scale and a path forstrong potential to achieve profitable growthgrowth.
Innovating with the customer at the center.We introduced customized reinsurance capabilities, progressed digital offerings for attractive professional lines including cyber, and progressed our data and analytics capabilitiescapability to innovate around product for micro customers, adjacent to our current markets.
WhereAdvancing our digital, agile platform. We progressed the transformation of our IT and data organizations and operating models, and launched a multi-year operations transformation program leveraging enhanced digital capabilities.
Developing our people and growing our high-performance culture. We developed and facilitated an industry-leading diversity, equity and inclusion program coupled withstate-of-the-art leadership development programs, affirming our investment in our leaders, people and culture.
Continuing to advance key strategic programs.We continued to advance key programs, including taking measures to ensure the successful integration of Novae Group plc and to strengthen our group operating model.
Financial Highlights
Notwithstanding the Company’s strategic accomplishments, 2019 was a challenging financial year. It has taken longer than we are now Relevant Player in Core Markets with a More Diversified Portfolio Top 10 u.s. Excess and Surplus Lines (P&C) London Market / Lloyd’s Insurer of North American Professional Lines top 15 global P&C reinsurer 2001 START-UP Provider of large capacity for volatile lines In a “hard” market Where we are headed LEADERSHIP GOALS Onehad planned to demonstrate the beneficial financial impact of the top go-to players for specialty risks Top 10 (re)insurer inactions we have taken to strengthen our chosen markets Top quintile profitabilityportfolio.
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| COMPENSATION DISCUSSION AND ANALYSIS | |
Ex-PGAAP OROACEwas the financial metric used for evaluating cash bonus awards under our strategic partnerships and positioning AXIS asAnnual Incentive Plan. TSR was the company that intelligently matches a broad array of risks to the most appropriate capital
The followingAXIS Capital’s 2019 financial results for these performance metrics are among the highlights of our achievements during 2017 in advancing our strategic initiatives and were considered in evaluating thenon-financial performance of our NEOs:set forth below:
| Measure | 2019 Results | Change versus Fiscal Year 2018 | ||
Ex-PGAAP OROACE (1) | 5.2% | 0.5% pts | ||
ROACE | 6.3% | 6.3% pts | ||
Total shareholder return (2) | 18.3% | 12.5% pts | ||
| (1) | See Appendix 1 for a reconciliation ofnon-GAAP financial measures to our | GAAP. |
| (2) | One year total shareholder return with dividends reinvested. |
SHAREHOLDER ENGAGEMENT AND RESPONSIVENESS TO 2019 SAY ON PAY VOTE
At our 2019 Annual Meeting of Shareholders, 67% of the votes cast were in favor of our advisory vote on executive compensation, a decrease of over twenty percentage points from the result at our 2018 Annual Meeting. We believe one of the significant factors impacting this result was that our Chief Executive Officer received increased compensation for performance year 2018, despite Company financial results that did not meet our expectations. This increase was delivered fully in the form of equity, leaving his base salary and bonus target flat. This was intended to ensure his alignment with shareholders as he leads the Company’s multi-year transformation initiative and to recognize his additional responsibilities in light of the increased size and complexity of our business.
Both the Compensation Committee and management were disappointed with thesay-on-pay outcome and sought to understand our shareholders’ perspectives. In the spring of 2019, in advance of our 2019 Annual Meeting and thereafter, in the fall of 2019, we reached out to shareholders representing over 61% of our outstanding shares and held meetings with holders of approximately 45% of our outstanding shares.
In order to establish a direct line of communication between shareholders and our Board, our Lead Independent Director and Chairman of the Compensation Committee, Mr. Smith, actively participated in the majority of these meetings. During the meetings, in addition to discussing governance and corporate citizenship matters, we discussed our executive compensation practices, including the changes made to our compensation structure in 2019 and 2020 to further align pay and performance. In particular, we discussed that our business strategy, the markets in which we operate and our peer companies have substantially changed since the inception of our long-term incentive plan. In light of these changes, the Committee sought to redesign our long-term incentive plan so that it continues to attract, retain and motivate executive talent. Our shareholders provided us their input, and their feedback was reviewed and discussed with our Compensation Committee, Corporate Governance and Nominating Committee and the full Board.
The Compensation Committee is committed to ensuring a strong link between pay and performance. Based on 2019 Company financial results, the Committee significantly reduced our Chief Executive Officer’s compensation. For performance year 2019, our Chief Executive Officer’s annual incentive and equity awards were reduced by 48% and 26%, respectively.
These reductions were a product of the Company’s below-target financial performance and several actions taken by the Committee, as follows:
Financial Performance
The financial portion of the annual incentive paid out at 52% of target per the prescribed plan formula
Committee Discretion
The decision to eliminate a payout under thenon-financial portion of his annual incentive
Substantially reduced equity award as compared to the prior year
| 28 COMPENSATION DISCUSSION AND ANALYSIS | | |
Financially, 2017 wasThe table below is a historic year for insurance industry catastrophe losses, which at approximately $120 billion is second onlysummary of the recent changes to 2011. Other challenges included competitive market conditionsour compensation program and a change in the Ogden rate in the UK, which increased the costs for our European motor business. We also experienced highernon-catastrophe losses in our property line of business. All of these factors contributed to an operating net loss for the year, and, therefore, a negative operating return on average common equity (“OROACE”) – the principal financial metric used to measure annual performance under our executive Annual Incentive Plan. Our book value was also impactedpractices, incorporating feedback provided by the change in the U.S. tax law. For our long-term incentive plan, our key metric for performance measurement is diluted book value per common share adjusted for dividends over the three year period ending September 30, 2017. For the three year performance period ending September 30, 2017, diluted book value per share, adjusted for dividends grew 19.1%.
Leadership Transition
On the leadership front, we appointed new executives who will play key roles in executing our long-term strategic plan. In particular, the following leadership changes occurred in 2017:shareholders.
What We Heard | What We Did | |||
Annual Incentive | Request for greater clarity and disclosure aroundnon-financial performance metrics | Enhanced disclosure of individual performance assessments in
| ||
Adjusted the annual incentive mix for our CEO to increase the weighting of financial metrics from 70% to 75% and decrease the weighting ofnon-financial metrics to 25%. | ||||
PSUs | Request for greater clarity and disclosure around PSU program and payout ranges based on relative TSR | Disclosed performance targets for the PSU program in our proxy statement. | ||
Added a TSR governor, whereby award cannot exceed target if absolute TSR is negative (effective with the 2020 awards). | ||||
| Support for increasing the PSU portion of the long-term incentive award for the CEO | Adjusted the weighting of PSUs from 50% to 60% and decreased the weighting of RSUs to 40% for the CEO (effective with his 2020 awards). | |||
| Request to ensure target performance for PSUs is rigorous | Increased the target performance goal from the 50th percentile to the 55th percentile for measuring relative TSR performance (effective with the 2020 awards). | |||
Director Compensation | Concern regarding the magnitude of the Chairman’s consulting agreement | Reduced annual compensation by extending the term of the Chairman’s consulting agreement, without compensation. | ||
Enhanced disclosure of consulting services provided by our Chairman, who will retire in 2020. | ||||
No consulting agreement for the Chairman-elect. | ||||
Compensation Governance | General overarching support for rigorous stock ownership requirements | Increased required stock ownership amount for CEO from five times to ten times his annual base salary. |
Strong Link Between Pay and Performance
AThe success of our transformation initiatives will depend on the talents of our executive team to embrace excellence, drive innovation and lead our workforce. We believe we have the right team for this critical juncture in the history of our Company. With our strategic, transformational journey, our Compensation Committee is focused on maintaining a pay for performance orientation, while ensuring that executives are aligned with shareholders and the Company’s long-term goals.
With that in mind, a substantial portion of our NEOs’ compensation is long-term, performance-based and “at risk.” The Committee defines“at-risk” compensation as variable pay that has both upside potential and downside risk depending on the Company’s performance.
As illustrated
| COMPENSATION DISCUSSION AND ANALYSIS 29 | |
The below charts illustrate the target mix of pay for our CEO 86% ofand other NEOs for the 2019 performance year:
For our CEO’s target compensation was performance-based and 62%CEO, approximately 89% of his target compensation consistsis performance-based.
For our NEOs, on average, approximately 72% of long-term incentives.their target compensation is performance-based.
CEO Target Mix of Pay
 |  |
Although our CEO demonstrated strong leadership and made excellent progress in advancing the Company’s long-term strategic plan, the Compensation Committee wanted to reinforce the strong link between pay and performance and did not award a bonus to him despite Mr. Benchimol exceeding hisnon-financial, strategic goals.performance. Based on the Company’s financial results, the Compensation Committee approved the following with respect to CEO compensation for the 20172019 performance year:
Bonus was awarded at 36% of target, resulting in a 48% decrease year-over-year, despite Mr. Benchimol exceedinghis non-financial, strategic goals and improved year-over-year returns
Equity awards were reduced by 26% from performance year 2018
PSUs were adjusted to 60% of the equity award and RSUs were reduced to 40%
Total direct compensation for our CEO, which we define as 20172019 salary and bonus and equity awarded for 20172019 performance, was reduced by 32%26% from the prior year. The Committee maintained the mix of the CEO’s compensation to ensure that approximately three quarters is received in the form of equity for which the value is directly impacted by the Company’s stock price performance.
| 30 COMPENSATION DISCUSSION AND ANALYSIS | | |
The following chart shows the overall decrease in our CEO’s total direct compensation from 2016 to 2017.
Year-over-Year Change to Awarded CEO Total Direct Compensation (1)between the 2018 and 2019 performance years:
| (1) | Some of the |
CEO Pay and Alignment with ShareholdersBEST PAY PRACTICES
The Compensation Committee is committed to ensuring that our compensation programs foster a long-term alignment with our shareholders.
The Compensation Committee considers various key performance indicators when determining compensation that link to shareholder value creation. While total shareholder return is not explicitly used in any of our incentive plans, our CEO’s pay has tracked closely with our total shareholder return (“TSR”) performance. Additionally, since a significant portion of our NEOs’ compensation is provided in the form of equity, TSR will have a strong impact on the compensation realized by executives over time.
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The following chart illustrates how the pay decisions for the CEO’s compensation over the past three years are aligned with our Company’s TSR performance.
Key Features of our Executive Compensation – Best Pay Practices
Highlighted below are compensation practices that we maintained in 20172019 to drive Company performance and align the interests of the Company’s executives with its stockholders:
CEO Performance Year Pay vs. TSRshareholders:
| COMPENSATION DISCUSSION AND ANALYSIS | |
EXECUTIVE COMPENSATION FRAMEWORK
EXECUTIVE COMPENSATION PHILOSOPHY AND KEY FEATURES
We are a globalspecialty insurer and global reinsurer with a mission to providethat provides our clients and distribution partners with a broad range of risk transfer products and services and meaningful capacity, backed by excellent financial strength. Accordingly, it is critical that we recruit, retain and motivate the best talent in the highly competitive global marketplace. To achieve these goals, we have designed our executive compensation programs to retain and reward leaders who create long-term value for our shareholders. The combination of fixed and variable compensation that we pay to our NEOs is structured to reward above-median performance with above-median levels of compensation and conversely, to provide below-median compensation for below-median performance. A large portion of our NEOs’ compensation is variable, or performance-based, and consists of annual incentive awards and long-term equity awards, while the fixed component of their compensation is designed to reflect their significant level of responsibility and overall contributions to our success. In addition to leading the Company’sday-to-day underwriting, investing, financial oversight and operating activities, our NEOs manage and lead a team of senior professionals that we believe is one ofamong the strongest teams in our industry. The significant diversity and successful management of our operations ultimately serveserves to maintain our capital and drive long-term shareholder returns. The primary consideration for our compensation decisions continues to be the assessment of our overall financial performance based on: (i) certain short-term and long-term financial metrics and (ii) both business unit and individual performance.
Company and Business Unit Financial Metrics
The financial metrics infor our incentive plans against which wefor the 2019 performance year wereex-PGAAP OROACE and TSR. TSR is the metric used to measure performance for our CompanyPSUs granted in early 2019. Previously, performance are OROACE andfor PSUs was measured based on the growth in DBVPS adjusted for dividends as compared to our peers.peers, and the PSUs granted in 2017, which vested in March 2020, were measured based on the DBVPS metric. The below chart describes thesethe metrics used in our 2019 and 2020 incentive programs and why we believe these metrics are critically important to the Company.Company and our current strategy.
| Used In: | |||||||||
| Metric | Annual Incentive Awards | Long-Term Incentive Awards | Why Metric is Important to AXIS and Our Strategy | |||||||
OROACE |
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• Our goal is to achieve top quintile OROACE to deliver value creation for shareholders; therefore, we have aligned our annual incentive program to this financial metric. • This metric reflects the rate of return the Company is earning on its capital and surplus. • Generally, the higher the return, the | ||||||||||
Relative | X | • • • • | ||||||||
Company and IndividualNon-Financial Metrics
At the beginning of the year, the Compensation Committee approves the Company’snon-financial objectives, as described underobjectives. At the “Executionend of Long-Term Strategic Plan Despite Challenging Market Conditions” section above. Ourthe year, our CEO evaluates and makes a recommendationcompensation recommendations to the Compensation Committee on the performance of the NEOs against these objectives. The Compensation Committee in turn reviews the individual performance of each NEO, considers the recommendations from our CEO (except with regard to his own individual performance) and makes a final determination with respect to each element ofdecision for each NEO’s compensation.
| 32 COMPENSATION DISCUSSION AND ANALYSIS | | |
COMPENSATION COMMITTEE PROCESS
Under our Compensation Committee’s charter, the Compensation Committee:
Our Compensation Committee generally receives proposals and information from our Chief Human Resources Officer, our CEO and the Committee’s independent consultant for their consideration regarding executive compensation and director compensation. The Compensation Committee is permitted to delegate any of its responsibilities to subcommittees in its discretion, but to date has not done so.
At the beginning of each calendar year, our Compensation Committee:
Mid-year, the Compensation Committee reviews our independent compensation consultant’s report regarding our executive compensation program and reviews our employee compensation programs. In the fall of every year, the Compensation Committee reviews our director compensation program, approves any needed changes to the director compensation program and conducts a preliminary assessment of our performance for the year. Our Compensation Committee generally meets at the end of each calendar year to determine equity awards and make preliminary decisions regarding the salaries for the next calendar year and incentive cash payments that will be made at the beginning of the next calendar year, subject to finalyear-end results. At the beginning of the following year, and before any awards are distributed, the Compensation Committee considers the final auditedyear-end financial results and either confirms or adjusts the preliminary awards accordingly based upon their review.
RISK MANAGEMENT ANDELEMENTS OF EXECUTIVE COMPENSATION
In line with the Company’s requirements for managing compensation risk, the Compensation Committee seeks to ensure that our executive compensation program does not encourage executives to take risks that are inconsistent with the long-term success of the Company. The Compensation Committee believes that AXIS’ executive compensation program does not encourage inappropriate risk-taking. Specifically, the Company’s annual incentive and long-term incentive plans are tied to our OROACE and growth in DBVPS, respectively, which ensures that our shareholders’ short and long-term interests are at the forefront of decision-making for our employees and NEOs.
Additionally,
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COMPENSATION COMMITTEE CONSULTANT
Our Compensation Committee has sole authority to select, retain and terminate any consultants or advisors used to provide independent advice to the Compensation Committee and evaluate executive compensation, including sole authority to approve the fees and any other retention terms for any such consultant or advisor. The Compensation Committee engaged Farient Advisors LLC (“Farient”) as its independent compensation consultant to assist in establishing compensation policies and programs. During 2017, Farient:
Farient did not provide any services to the Company or any of the Company’s affiliates other than advising the Compensation Committee on director and executive officer compensation. Farient completes an annual questionnaire regarding any potential conflicts of interest. The Compensation Committee reviews the completed questionnaire and evaluates whether any work performed by Farient raises a conflict of interest. The Compensation Committee believes that Farient is independent and that Farient’s work has not raised any conflict of interest.
From time to time, management also engages its own external compensation consultant to advise it with regard to the Company’s compensation programs generally, prepare reports that compare our compensation programs to those of peer companies and help ensure the competitiveness and appropriateness of our compensation programs.
Although AXIS gives careful consideration to each element of total compensation, we evaluate our competitive position with respect to our NEOs on a total direct compensation basis, which consists of base salary and short and long-term incentives. We consider market pay practices when setting executive compensation, as the Compensation Committee uses benchmarking from our peer group and other industry-specific compensation surveys to guide decision-making with respect to executive pay levels.
Each year, as part of its evaluation, Farient advises on and the Committee reviews our peer group. In 2017, in light of the continued consolidation within the (re)insurance industry, Farient recommended and the Committee approved augmenting oursize-appropriate compensation peer group with additional global (re)insurers to form a Performance Peer Group. Our Performance Peer Group recognizes that our marketplace for investment capital extends beyond the size parameters of our compensation benchmarking peer group. The addition of these companies also provides a statistically-robust sample to avoid potential relative payout anomalies that could occur with a smaller sample size.
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Below is a summary of our peer companies:
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SAY-ON-PAY VOTES AND SHAREHOLDER ENGAGEMENT
In 2017, the Compensation Committee considered the outcome of the shareholder advisory vote on 2016 executive compensation when making decisions relating to the compensation of our NEOs and our executive compensation program and policies. At our 2017 annual shareholders meeting, over 97% of the votes cast approved the Company’s executive compensation programs and policies and the resulting compensation described in the 2017 Proxy Statement. Based on the level of support, the Compensation Committee determined that shareholders support our compensation practices. Accordingly, our approach to executive compensation for 2017 remained generally consistent with past practice.
Below is a summary of the results of the Company’s shareholder advisory votes on executive compensation over the past three years.
| SAY ON PAY HISTORY | ||||
| 2015 | 2016 | 2017 | ||
| 94.88% | 97.35% | 97.29% | ||
During the past year, we reached out to and offered to speak with our largest shareholders of our outstanding common shares. The Compensation Committee intends to continue to consider the views of our shareholders when designing, reviewing and administering the Company’s compensation programs and policies.
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The following table lists the elements of target direct compensation for our 2017 executive compensation program. The program uses a mix of fixed and variable compensation elements and provides alignment with both short- and long-term business goals through annual and long-term incentives. Our incentives are designed to drive overall Company, segmentbusiness unit and individual performance using financial andnon-financial measures the Committee believes are correlated to gains in shareholder value. TheAt the beginning of the performance year, the Committee establishes the performance measures and ranges of performance for the variable compensation elements.
Component | ||||||||||
| Description | |||||||||
Short- Term | Base Salary | Attract and retain
| Annual fixed-cash compensation | |||||||
| Annual Incentive |
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Ex-PGAAP OROACE: • Measures rate of return earned on capital and surplus • Goal to achieve top quintile OROACE to create shareholder value | ||||||||||
Business Unit Financial Assessment (Business Unit Heads only): • Combined ratio (Insurance & Reinsurance CEOs) • Investment performance (Chief Investment Officer) | ||||||||||
Individual Performance: • Non-financial metric accounting for individual strategic contributions to company-wide performance | ||||||||||
| Long-Term | PSUs | Promote accountability and strategic long-term | 100% Relative TSR over three-year performance period: • | |||||||
Relative Base Percentile | Vesting | |||||||||
³ 75th | 125% | |||||||||
50th(55th starting in 2020) | 100% | |||||||||
£ 25th | 75% | |||||||||
• Decreased maximum and increased threshold payout for 2019 to lower impact of aone-time catastrophe on incentive program | ||||||||||
• Measured relative to performance peers, with expanded set of peers to better represent AXIS’ global footprint | ||||||||||
| RSUs | Foster a culture of ownership, aligning long-term interests of our executives and shareholders | Vests ratably over four years | ||||||||
| COMPENSATION DISCUSSION AND ANALYSIS 33 | |
Salaries are the most basic form of compensation and are integral to any employment arrangement. Our main consideration in determining base salaries is to remain competitive. We also seek to balance a logical salary structure within the Company globally reflecting the demands of the market for executive talent. A competitive salary allows us to attract and retain key staff.
Placement of our NEOs within a salary range is based on the market data for an individual’seach NEO’s position, the executive’s expertise and historical compensation, scope of role, geographic location and the Compensation Committee’s determination of competitiveness and appropriate levels based on the CEO’s recommendations (other than with respect to his own salary).
In 2017, salaries of our NEOs remained unchanged from 2016. ForSince being appointed as CEO in 2012, Mr. Benchimol 2017 marked the fifth consecutive year in which he didhas not receivereceived an increase in his base salary. In 2019, the Chief Investment Officer and Chief Financial Officer each received increases in their base salaries of 4% and 9%, respectively, to more closely align them to the market for their positions.
Annual incentive compensation for our NEOs is provided under our 2014 Annual Incentive Plan (the “Annual Incentive Plan”). TheOur Annual Incentive Plan is intended to provide for formulaic annual incentive payouts to our NEOs and serves as a critical tool for rewarding the achievement of our annual corporatefinancial and strategic goals.
In order to achieve a competitive total compensation package, we established individual annual incentive targets expressed as a percentage of salary for each NEO, with the exception of Mr. Ekberg who received a target value for 2017 in connection with his appointment as interim CEO of AXIS Reinsurance.NEO. For our other NEOs, annual incentive targets are governed by the terms of their employment agreements, but are not guaranteed. The individual annual incentive targets for our NEOseach NEO for 20172019 are as follows:follows, with only Mr. Vogt receiving an increase in his target percentage to remain competitively positioned against market:
Name | 2018 Bonus Target | 2019 Bonus Target | ||||||||
Albert A. Benchimol | 175% | 175% | ||||||||
Peter J. Vogt | 100% | 115% | ||||||||
Steve K. Arora | 125% | 125% | ||||||||
David S. Phillips | 125% | 125% | ||||||||
Peter W. Wilson | 125% | 125% | ||||||||
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AnnualFor 2019, annual incentive compensation iswas determined based on the weightings ofex-PGAAP OROACE, business unit financial metrics and individualnon-financial metrics as follows:
| Metric | Company Financial (OROACE) | Business Unit Financial | Non-Financial Weighting | ||||||||||||||||||
| Executive | Company Financial Metric (Ex-PGAAP Weighting | Business Unit Financial Metric Weighting | Non-Financial Weighting | ||||||||||||||||||
| CEO | 70% | N/A | 30% | 70% | — | 30% | |||||||||||||||
| Business Unit Leaders | 35% | 35% | 30% | 35% | 35% | 30% | |||||||||||||||
| Corporate Function Leaders | 60% | N/A | 40% | 60% | — | 40% | |||||||||||||||
| (1) | As discussed in “Executive Summary – Shareholder Engagement and Responsiveness to 2019 Say on Pay Vote” section, the CEO’s annual incentive mix will be 75% Company financial metric and 25%non-financial metric starting in 2020. |
Company Financial Performance Goals and Results
Each year, the Compensation Committee sets a financial performance target OROACE after considering the Company’s business plan and market conditions for the current year. The Committee also receives input from Korn Ferry, its independent compensation consultant, as to the rigor and stretch inherent in the goals.
The
| 34 COMPENSATION DISCUSSION AND ANALYSIS | | |
For 2019, our target performance wasex-PGAAP OROACE target for 2017 remained at 9.0%of 10%, which was higher than our 2018 target of 9% OROACE and our actual 20162018ex-PGAAP OROACE of 7.9%4.7%. The maximum awardThis continues AXIS’ history of 200% of target would be achieved ifsetting challenging targets. For 2019, the Company’s annualex-PGAAP OROACE was 14%. No5.2%, resulting in a payout would automatically be achieved if OROACE was equal to or below 4%. For performance between these levels, payouts would be determined based on linear interpolation.factor of 52% for the Company financial portion of the formula. The Compensation Committee believes thisthe 2019 goal range setsprovided appropriately challenging performance targets, while mitigating inappropriate risk-taking.
AXIS achieved an annual OROACE of (5.4)%, which resulted in a payout factor of 0%
Historical Annual Incentive Results vs. Target (1)
| (1) | As described in the chart above, the 2017 target was set at 9% OROACE and performance was -5.1% OROACE. For 2018, target was set at 9% OROACE, and the Committee evaluated OROACE on an ex-PGAAP basis. The 2018 ex-PGAAP OROACE was 4.7%. For 2019, target was set at 10% ex-PGAAP OROACE and performance was 5.2% ex-PGAAP OROACE. OROACE and ex-PGAAP OROACE are non-GAAP financial measures, as defined in Item 10(e) of SEC Regulation S-K. The reconciliation to the most comparable GAAP financial measure (ROACE) is provided at Appendix 1. |
Annual Incentive Plan Goal Ranges (1) | ||||
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| Ex-PGAAP Achievement | Multiplier | ||
Maximum | 15% | 200% | ||
Target | 10% | 100% | ||
Threshold | 5% | 50% | ||
| (1) | The table above sets forth the threshold, target and maximumex-PGAAP OROACE, as well as the payout factor for the Annual Incentive Plan. To the extent that performance fell between the applicable threshold, target or maximum levels forex-PGAAP OROACE, payouts were determined using linear interpolation. |
Business Unit Financial Goals and Results
Business unit financial goals are set and ultimately measured based on comparing the combined ratio relative to the plan for the respective business unit. The driversunit, or in the resultingcase of Mr. Phillips, by comparing investment performance against a benchmark. With respect to the Insurance and Reinsurance segments, combined ratio will also be evaluatedis a key metric in assessing achievement of the goalgoals.
The business unit financial score for the Accident & Healthour insurance business was earned at 45% of target based on falling short of the financial achievementsplan. The business unit financial score for that business. The Insurance and Reinsurance businesses did not meet their threshold levelour reinsurance business, which missed its goals, was rated at 10% of performance, and therefore no bonuses were allocated based on that metric.target. For our investment function, our investment portfolio performed below the benchmark, resulting in a score of 83% of target.
Non-Financial Performance Goals and Results
Each of ourWith respect to the formulaic financial payout factors, for all NEOs exceeded theirnon-financial goals and made significant achievements on– including the strategic imperatives ofCEO – the Company in 2017. As such, the assessment of each NEO’snon-financial achievement relative to their objectives yielded a bonus payout on thenon-financial portion of their short-term incentives. The Compensation Committee applied its judgment and considered the contributions and factors applicable to each NEO to determine appropriate bonus awards. See below for descriptions relating to: (i) Mr. Benchimol (who did not receive a bonus); (ii) Messrs. Ekberg and Wilson (who received RSUs in lieu of a cash bonus) and (iii) Messrs. DiSipio and Henry (who each received a cash bonus).
Albert A. Benchimol.Mr. Benchimol exceeded hisnon-financial goals in 2017. The Committee determined he made significant progresspayouts in advancingaccordance to the prescribed formulas set out in our long-term strategic plan and drove all of the initiatives detailed in the Executive Summary of the “Compensation Discussion and Analysis” section of this proxy statement. Among other items, Mr. Benchimol oversaw the acquisition of Novae. He had the vision to position the Company to be future ready and took concrete measures to strengthen our operating platform. Mr. Benchimol accelerated efforts to expand our data and analytics framework as well as demonstrated excellent stewardship during a historic year for insurance industry catastrophe losses. We believe, through his leadership, he has positioned the Company to achieve our long-term goals.Annual Incentive Plan.
Despite these significant achievements, the Compensation Committee wanted to reinforce the strong link between pay and financial performance and did not award Mr. Benchimol a bonus for 2017.
| 2017 Metric | Payout Factor | x Weighting | = Adjusted Weighting | X Target Bonus | = Bonus Payout | |||||||||||
OROACE | 0% | 70% | 0.0 | % | $0 | $ | 0 | |||||||||
Non-Financial | N/A | 30% | 0.0 | % | $ | 0 | ||||||||||
TOTAL | 0.0 | % | $ | 0 | ||||||||||||
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| COMPENSATION DISCUSSION AND ANALYSIS | |
Jan Ekberg.CEONon-Financial Performance AchievementsWith respect to
Under the leadership of Mr. Ekberg’snon-financialBenchimol, the organization made significant progress on its strategic initiatives that were established at the beginning of 2019. Our Board of Directors believes these achievements will provide the Committee considered, among other items, Mr. Ekberg’s exceptional leadership in serving as interim CEOfoundation for AXIS Reinsurance. His achievements included continuing to keep the Reinsurance team engaged during a periodfuture success of transition, while maintaining momentum in business development. He also advanced AXIS Re’s Lloyd’s initiative and he completed substantial work in connection with the acquisition and integration of the Novae reinsurance team.
Because Mr. Ekberg exceeded hisour organization. Progress againstnon-financial goals the Compensation Committee decided to award time-based RSUs in lieu ofare reviewed on a cash bonus for thenon-financial portion of Mr. Ekberg’s bonus. The Committee believes that awarding equity recognizes the performance of Mr. Ekberg for his significantnon-financial achievements and is alignedquarterly basis with the long-term interests of our shareholders.
| 2017 Metric | Payout Factor | x Weighting | = Adjusted Weighting | X Target Bonus | = Equity in Lieu of Bonus | |||||||||||
OROACE | 0% | 35% | 0.0 | % | $1,000,000 | $ | 0 | |||||||||
Business Unit Financial | 0% | 35% | 0.0 | % | $ | 0 | ||||||||||
Non-Financial | 150% | 30% | 45.0 | % | $ | 450,000 | ||||||||||
TOTAL | 45.0 | % | $ | 450,000 | ||||||||||||
Peter W. Wilson.With respect to Mr. Wilson’snon-financial achievements,Committee. The below table lists the Committee considered, among other items, Mr. Wilson’s significant leadership in connection with the Company’s successful acquisition and integration of Novae and Aviabel, theset-up and approval of the AXIS Lloyd’s managing agency and enhancements made to the underwriting process and numerous operational achievements.
Because Mr. Wilson exceeded hisnon-financial goals, the Compensation Committee decided to award time-based RSUs in lieu of a cash bonus for thenon-financial portion of Mr. Wilson’s bonus. The Committee believes that awarding equity recognizes the performance of Mr. Wilson for his significantnon-financial achievements and is aligned with the long-term interests of our shareholders.
| 2017 Metric | Payout Factor | x Weighting | = Adjusted Weighting | X Target Bonus | = Equity in Lieu of Bonus | |||||||||||
OROACE | 0% | 35% | 0.0 | % | $1,000,000 | $ | 0 | |||||||||
Business Unit Financial | 0% | 35% | 0.0 | % | $ | 0 | ||||||||||
Non-Financial | 165% | 30% | 49.5 | % | $ | 495,000 | ||||||||||
TOTAL | 49.5 | % | $ | 495,000 | ||||||||||||
Christopher N. DiSipio. Mr. DiSipio’snon-financial achievements include the advancement of our approach to InsurTech and expanding our footprint in the Middle East. He also played a key role in sourcing strategic investments focused on accident and health business.
A bonus was provided to Mr. DiSipio for exceeding hisnon-financial goals and achieving his business unit financial goals. Because Mr. DiSipio is leaving the Company on April 1, 2018, the Committee awarded his bonusaccomplishments achieved in cash.2019:
| 2017 Metric | Payout Factor | x Weighting | = Adjusted Weighting | X Target Bonus | = Bonus Payout | |||||||||||
OROACE | 0% | 35% | 0.0 | % | $500,000 | $ | 0 | |||||||||
Business Unit Financial | 100% | 35% | 35.0 | % | $ | 175,000 | ||||||||||
Non-Financial | 115% | 30% | 34.5 | % | $ | 172,500 | ||||||||||
TOTAL | 69.5 | % | $ | 347,500 | ||||||||||||
Joseph C. Henry. Mr. Henry’snon-financial achievements include the significant work involved in evaluating, analyzing and supporting the Aviabel and Novae acquisitions and the $350 million senior notes financing. Under Mr. Henry’s leadership, superior analytics were delivered in order to execute on these critical transactions. Mr. Henry was instrumental in transitioning the finance and corporate development functions to Mr. Vogt.
A bonus was provided to Mr. Henry for exceeding hisnon-financial goals. Because Mr. Henry retired from the Company on December 31, 2017, the Committee awarded his bonus in cash.
| 2017 Metric | Payout Factor | x Weighting | = Adjusted Weighting | X Target Bonus | = Bonus Payout | |||||||||||
OROACE | 0% | 60% | 0.0 | % | $565,000 | $ | 0 | |||||||||
Non-Financial | 150% | 40% | 60.0 | % | $ | 339,000 | ||||||||||
TOTAL | 60.0 | % | $ | 339,000 | ||||||||||||
GOALS | Accelerate the optimization of the portfolio for profitability and balance | Drive profitable growth with innovation including new product capabilities | Advance foundation of a digital, agile platform | Invest in the development of our people and our culture | Finish the programs | |||||||
WEIGHTING | 40% | 15% | 15% | 15% | 15% | |||||||
| • Built out our group underwriting unit and implemented the enterprise-wide portfolio optimization framework. • Achieved significant reduction in businesses identified as underperforming or not aligned with strategic targets, while growing targeted business, resulting in an improved and more balanced consolidated portfolio. • Significantly reduced overall natural catastrophe exposure across the curve. • Raised incremental Third Party Capital under management, and increased premiums ceded to strategic capital partners resulting in significant fee increase. • Utilized group portfolio optimization framework to enhance plan portfolio for 2020, to target a higher mean return and lower volatility for group results. | • Advanced engagement with key distribution partners to build out application program interface integrations to enable digital underwriting and distribution; initial product launch with existing digital small cyber product, with more products being developed. • Established and introduced new Customized Re capabilities to clients. • Developed new small commercial digital and multi-product line offerings for 2020. | • Launched digital transformation program to accelerate and orchestrate digitization of AXIS business through data / technology capabilities, innovation, and talent transformation. • Identified 15 operations and technology initiatives to be implemented over a multi-year time horizon and sequenced to realize significant positive impact in near- to medium-term. • Transformed IT operating model, including establishment ofin- house strategic and cost-effective | • Held leadership summit focused on driving strategic change, which launched new OneAXIS values and aligned organization on key transformational goals. • Formalized diversity and inclusion strategy by delivering unconscious bias training to 90% of employee base. • Launched and invested instate-of-the art leadership development programs, affirming our investment in our leaders, people and culture. | • Completed and on- • Designed new group operating model and on target to deliver savings by end of 2020. • Completed Brexit preparedness for 2020. | |||||||
| 36 COMPENSATION DISCUSSION AND ANALYSIS | | |
Other NEOsNon-Financial Performance Achievements
Each of our NEOs and their respective functions were critical to the success of our strategy. The Committee evaluated each of the NEO’s final achievements against theirnon-financial goals, and anon-financial payout factor was determined for each executive. Their contributions are described in the below table:
Steve K. Arora | David S. Phillips | Peter J. Vogt | Peter W. Wilson | |||
• Enhanced the portfolio by substantially reducing our exposure and moving capital away from historicallylow-performing lines, resulting in a 59% reduction in low return business. • Expanded AXIS Re Strategic Partners, introduced in 2018, which uses a focused engagement model to enable a more proactive and consultative approach with key clients and brokers. • Added the ability to structure tailor-made solutions for clients. • Improved client satisfaction by 30%, according to the external Business Capability Index, due to our increased focus on client management andbest-in-class claims payment. In 2019, AXIS Re paid out 17,000 claims with a5-day average turnaround time. • Hired additional strategic account executives to work across North America, Europe and Asia to broaden the scope of AXIS Re. | • Remained integrated with Insurance/Reinsurance/Third Party Capital areas and adjusted Investments to benefit the overall AXIS portfolio. • Maintained credit exposure despite market concerns at the outset of the year regarding global growth. Reduced exposure to increasingly crowded middle market lending as year progressed and shifted into less economically sensitive opportunities. • Efficiently handled inter-company transactions among legal entities due to the change in tax laws and debt refinancing. • Completed integration of Novae and Aviabel, including efficient liquidation/transfer of the Aviabel Re investment portfolio. | • Increased economic capital model use supporting the business plan, group underwriting unit and risk funding projects. • Increased investor relation activities, year over year, including meetings with new potential shareholders as well as top 10 shareholders. • Implemented methodology changes to more accurately reflect underlying portfolios’ risk, enhanced reporting by adding net exposures, and drove expense focus and discipline throughout the Company. • Led exposure management reviews for newly launched business lines and developed enterprise risk management framework, implemented new company-wide planning process. • Enhanced talent in the Finance organization including the recruitment and internal promotion of key leadership roles. | • Increased high-performing lines to represent 70% of entire portfolio while reducing lower-performing lines by approximately 40% in terms of gross written premium. • Launched fast-flow specialty small commercial business and added resources to support alternative distribution. • Completed initial operations transformation design, streamlined clearance turnaround time, and strengthened business intelligence and analytics within Insurance. • Realized continued savings from transformation efforts and synergies from Novae acquisition. • Launched successful summer internship program and early career development program that will create a diverse pipeline of talent for numerous careers at AXIS. | |||
Despite the excellent progress made in 2019 on ournon-financial goals, the Committee took into account the Company’s below-target financial performance and decided to reduce thenon-financial/qualitative payout factor for the CEO and the Insurance and Reinsurance segment heads. The CEO’snon-financial performance payout was reduced to 0%. For the segment heads, theirnon-financial payout factors were reduced to the combined average financial score of the Company and their respective business units. |
| COMPENSATION DISCUSSION AND ANALYSIS 37 | |
Annual Incentive Performance Results and Payouts
Albert A. Benchimol | ||||||||||||||||||||||
2019 Metric | (A) Weighting | (B) Target Bonus ($) | (C) Performance Result | (D) = A*C Payout Factor | (E) = D*B Actual Bonus ($) |
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Company Financial |
| 70% |
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| 1,347,500 |
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| 52% |
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| 36.4% |
|
| 700,700 |
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Non-Financial* |
| 30% |
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| 577,500 |
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| 0% |
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| 0.0% |
|
| 0 |
| |||||||
TARGET BONUS |
| 100% |
|
| 1,925,000 |
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| TOTAL ACTUAL |
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| 36.4% |
|
| 700,700 |
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Peter J. Vogt | ||||||||||||||||||||||
2019 Metric | (A) Weighting | (B) Target Bonus ($) | (C) Performance Result | (D) = A*C Payout Factor | (E) = D*B Actual Bonus ($) |
| ||||||||||||||||
Company Financial |
| 60% |
|
| 414,000 |
|
| 52% |
|
| 31.2% |
|
| 215,280 |
| |||||||
Non-Financial |
| 40% |
|
| 276,000 |
|
| 110% |
|
| 44.0% |
|
| 303,600 |
| |||||||
TARGET BONUS |
| 100% |
|
| 690,000 |
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| TOTAL ACTUAL |
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| 75.2% |
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| 518,880 |
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Steve K. Arora | ||||||||||||||||||||||
2019 Metric | (A) Weighting | (B) Target Bonus ($) | (C) Performance Result | (D) = A*C Payout Factor | (E) = D*B Actual Bonus ($) |
| ||||||||||||||||
Company Financial |
| 35% |
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| 393,750 |
|
| 52% |
|
| 18.2% |
|
| 204,750 |
| |||||||
Business Unit Financial |
| 35% |
|
| 393,750 |
|
| 10% |
|
| 3.5% |
|
| 39,375 |
| |||||||
Non-Financial* |
| 30% |
|
| 337,500 |
|
| 31% |
|
| 9.3% |
|
| 104,625 |
| |||||||
TARGET BONUS |
| 100% |
|
| 1,125,000 |
|
| TOTAL ACTUAL |
|
| 31.0% |
|
| 348,750 |
| |||||||
David S. Phillips | ||||||||||||||||||||||
2019 Metric | (A) Weighting | (B) Target Bonus ($) | (C) Performance Result | (D) = A*C Payout Factor | (E) = D*B Actual Bonus ($) |
| ||||||||||||||||
Company Financial |
| 35% |
|
| 262,500 |
|
| 52% |
|
| 18.2% |
|
| 136,500 |
| |||||||
Business Unit Financial |
| 35% |
|
| 262,500 |
|
| 83% |
|
| 29.1% |
|
| 217,875 |
| |||||||
Non-Financial |
| 30% |
|
| 225,000 |
|
| 105% |
|
| 31.5% |
|
| 236,250 |
| |||||||
TARGET BONUS |
| 100% |
|
| 750,000 |
|
| TOTAL ACTUAL |
|
| 78.8% |
|
| 590,625 |
| |||||||
Peter W. Wilson | ||||||||||||||||||||||
2019 Metric | (A) Weighting | (B) Target Bonus ($) | (C) Performance Result | (D) = A*C Payout Factor | (E) = D*B Actual Bonus ($) |
| ||||||||||||||||
Company Financial |
| 35% |
|
| 393,750 |
|
| 52% |
|
| 18.2% |
|
| 204,750 |
| |||||||
Business Unit Financial |
| 35% |
|
| 393,750 |
|
| 45% |
|
| 15.8% |
|
| 177,188 |
| |||||||
Non-Financial* |
| 30% |
|
| 337,500 |
|
| 48% |
|
| 14.4% |
|
| 162,000 |
| |||||||
TARGET BONUS |
| 100% |
|
| 1,125,000 |
|
| TOTAL ACTUAL |
|
| 48.4% |
|
| 543,938 |
| |||||||
| * | Reflectsnon-financial payout factors that were adjusted to acknowledge the below-target performance of the Company and business unit financial results. |
We have providedprovide long-term incentive compensation to our NEOs through equity awards under our shareholder-approved 2007 Long-Term Equity Compensation Plan (the “2007 LTEP”). In addition, our shareholders approved the 2017 Long-Term Equity Compensation Plan (the “2017 LTEP” or “Long-Term Equity Compensation Plan”) on May 4, 2017, which replaced the 2007 LTEP as of that date.. Equity awards are an especially valuable tool in linkingdirectly link the personal interestscompensation of our NEOs to thosethe interests of our shareholders as the amount the executive will ultimately receive under these awards is determined by our stock price. A higher stock price benefits our shareholders and increases the value of the executive’s equity awards. In addition, the vesting requirement for our equity awards is a valuable retention tool that we consider to be very important in aour competitive industry.
Following a thorough,18-month review of our executive compensation program, the Committee introduced changes to the Long-Term Equity Compensation Program in 2019. This was driven by a shift in our industry, the markets in which we operate and our own transformation. These changes ensure that the Long-Term Executive Compensation Program continues to retain, motivate and align our executives to long-term decision making and shareholder value creation.
| 38 COMPENSATION DISCUSSION AND ANALYSIS | | |
Under ourthe Executive Long-Term Equity Compensation Program in place in 2019, two types of equity awards arewere granted to our NEOs: (a) time-vesting awards with performance-based adjustments at the time of grant (“RSUs”); and (b) performance-vesting awards with performance-based adjustments applied at the time of vesting (“PSUs”). These equity awards are summarized in the table below:below table:
50% | 50% | |
• Vests 25% per year over four years
| • Vests in a single installment on the third anniversary of the grant date • The number of PSUs that ultimately vest is based on three-year relative
• Peer group is established at time of grant with performance measured after three years |
| (1) | As discussed in the “Shareholder Engagement and Responsiveness to 2019 Say on Pay Vote”section, the CEO’s annual long-term incentive mix will be 40% RSUs and 60% PSUs starting with his award granted in early 2020 relating to 2019 performance. |
2017 Performance Year – Long Term Incentive2019 Equity Awards Reflected in the Summary Compensation Table (Relating to 2018 Performance)
For the three year performance period ending September 30, 2017,In early 2019, long-term incentive awards for our annual measurement date for diluted book value per share, AXIS ranked in the 46th percentile of our RSU peer group, resulting in RSU funding at 85% of target. PSUsNEOs were granted at target, sincetarget. For PSUs, performance will be measured over the forward-looking three-year period which will ultimately determine the number of units that will actually vest. Accordingly, the Compensation Committee approved the following equity awards in early 2018 for 2017 performance. In addition, as discussed in “Annual Incentive Awards” above, the Compensation Committee approved an additional award for Mr. Ekberg and Mr. Wilson for exceeding theirnon-financial goals in a difficult year in lieu of a cash bonus award. Due to Mr. Ekberg’s role as interim CEO, AXIS Reinsurance, his 2017 equity award consisted only of RSUs. These awards, approved in February 2018 will be reflected in the Summary Compensation table and Grants of Plan-Based Awards table in next year’s proxy statement.
| 2017 Equity Awards (Granted in Early 2018) | ||||||||||||||||
| Name | Time-Based RSUs ($) | Performance-Based RSUs ($) | Time-Based RSUs in Lieu of Bonus ($) | Total ($) | ||||||||||||
Albert A. Benchimol | 2,125,000 | 2,500,000 | - | 4,625,000 | ||||||||||||
Christopher N. DiSipio(1) | - | - | - | - | ||||||||||||
Jan Ekberg(2) | 850,000 | - | 450,000 | 1,300,000 | ||||||||||||
Joseph C. Henry(3) | - | - | - | - | ||||||||||||
John D. Nichols(4) | - | - | - | - | ||||||||||||
Peter W. Wilson(5) | 382,500 | 450,000 | 495,000 | 1,327,500 | ||||||||||||
|
Grants Reflected in the Summary Compensation Table (Relating to 2016 Performance)
Excluding Mr. Ekberg, time-vesting RSUs for the 2016 performance were awarded at 115% of each NEO’s target, based on the relative DBVPS performance metric in place for our equity program. PSUs were granted at target, since performance will be measured over the forward-looking three-year period which will ultimately determine the number of PSUs that will actually vest. Equity-based incentives granted in 20172019 for the 20162018 performance year as shown in the table below are reflected in the “Summary Compensation Table”.
In order to ensure alignment with the Company’s long-term strategy and to drive sustainable value creation, the Committee increased Mr. Benchimol’s equity target in 2019, while leaving his base salary and target bonus flat. The Committee believed this year’s Summaryincrease was merited after considering competitive data from our Compensation Table.Benchmarking Peers, the increased size and complexity of our business due to acquisitions, and the desire to further reinforce our pay for performance philosophy to drive sustainable value creation. The Committee acknowledged the magnitude of the award size, but felt that delivery of the award in the form of long-term incentives ensured that the CEO would only realize the target value of the award in the event of strong Company performance.
| Name | 2016 Equity Target ($) | PSUs & RSUs ($) Awarded in 2017 (1) (2016 Performance) ($) | ||||||
Albert A. Benchimol | 5,000,000 | 5,374,920 | ||||||
Christopher N. DiSipio | 720,000 | 773,945 | ||||||
Jan Ekberg(2) | N/A | 999,964 | ||||||
Joseph C. Henry | 1,200,000 | 1,289,930 | ||||||
John D. Nichols | 1,400,000 | 1,504,939 | ||||||
Peter W. Wilson | 900,000 | 967,447 | ||||||
2019 PSU and RSU Awards (Relating to 2018 Performance) | ||||||||||||
Name | RSUs ($) | PSUs ($) | Total ($) (1) | |||||||||
Albert A. Benchimol |
| 3,374,990 |
|
| 3,374,990 |
|
| 6,749,980 |
| |||
Peter J. Vogt |
| 474,960 |
|
| 474,960 |
|
| 949,920 |
| |||
Steve K. Arora |
| 699,996 |
|
| 699,996 |
|
| 1,399,992 |
| |||
David S. Phillips |
| 359,981 |
|
| 359,981 |
|
| 719,962 |
| |||
Peter W. Wilson |
| 499,958 |
|
| 499,958 |
|
| 999,916 |
| |||
| (1) | Amounts represent the aggregate grant date fair value of |
29, 2019 ($54.70).
Long-Term Incentive Performance Goals for PSUs Awards (Relating to 2018 Performance)
The determinationCommittee regularly evaluates its executive compensation programs. In 2019, the Committee decreased the maximum and increased the threshold payout for the PSU awards to reduce the impact of annual RSU awardsone-time catastrophes on the incentive program and ultimate vesting payouts forreduce the volatility in our compensation program in line with our current strategy.
The number of PSUs is based onpre-determined criteria, as follows:
Performance Metrics for Determining Time-Based Awards Upon Grant
| DBVPS Percentile | Multiplier | |||||||
| Maximum | 100% | 125% | ||||||
| Target | 60% - 69.99% | 100% | ||||||
| Threshold | 10% or below | 75% | ||||||
Performance Metrics for Determining the Number of Earned Award Units
| DBVPS Percentile | Multiplier | |||||||
| Maximum | 100% | 200% | ||||||
| Target | 60% | 100% | ||||||
| Threshold | Less than 20% | 10% | ||||||
| Performance Metrics for Determining Number of Earned PSUs | ||||||||
| Relative TSR Percentile | Award Modifier | |||||||
Maximum | ³ 75th | +25 | % | |||||
Target | 50th | — | % | |||||
Threshold | £ 25th | -25 | % | |||||
| COMPENSATION DISCUSSION AND ANALYSIS | | ||
Vesting – 2015of 2017 PSU GrantsAwards
Under our 2013 Executive Long-Term Equity Compensation Program, RSU awards vest in four equal installments over a four-year vesting period, whileThe PSU awards “cliff vest”granted in 2017 vested in March 2020, based on the third anniversary of the date of grant, subjectCompany’s performance relative to satisfying certain Company performance criteria.its peer group. The performance period for the PSUs granted in 20152017 was September 30, 20142016 through September 30, 2017.2019. As of September 30, 2017,2019, the three yearthree-year DBVPS growth ranked in the 58th36th percentile of the peer group that was determined at the time of grant. This resulted in a payout factor of 80%, and the40%. The below table describes the number of shares actually earned by the NEOs based on this performance.
| PSUs Awarded in 2015 Performance Period (September 30, 2014 – September 30, 2017) | ||||||||
| Name | Number of Target Shares Granted | Equity Incentive Plan Awards: # of Shares Based on | ||||||
Albert A. Benchimol | 44,634 | 35,707 | ||||||
Christopher N. DiSipio | 7,016 | 5,613 | ||||||
Jan Ekberg(1) | N/A | N/A | ||||||
Joseph C. Henry | 11,693 | 9,354 | ||||||
John D. Nichols(2) | 13,642 | 13,642 | ||||||
Peter W. Wilson | 8,770 | 7,016 | ||||||
| 2017 PSU Awards (Performance Period: September 2016 – September 2019) | ||||||||
| Name | Number of Target PSUs Granted | Number of PSUs Earned Based on Performance | ||||||
Albert A. Benchimol | 39,056 | 15,623 | ||||||
Peter J. Vogt(1) | N/A | N/A | ||||||
Steve K. Arora (1) | N/A | N/A | ||||||
David S. Phillips | 5,624 | 2,250 | ||||||
Peter W. Wilson | 7,030 | 2,812 | ||||||
| (1) | Messrs. Arora and Vogt did not receive PSU awards in |
The 2017 awards mark the third consecutive year that PSU awards paid below target, as illustrated below:
2020 Equity Awards (Relating to 2019 Performance Year)
As discussed in the “Executive Summary”, the Committee responded to shareholder feedback and made further changes to the design of the program by:
Increasing the relative TSR percentile from the 50th to 55th percentile to achieve a target payout
Adding a TSR governor to further support our business strategy, whereby an award cannot exceed target if the absolute TSR is negative
Adjusting the equity award mix for our CEO to place a higher weighting on PSUs (60%) than RSUs (40%)
The Committee was focused on ensuring a strong alignment between pay and performance. Accordingly, the Committee reduced the value of the CEO’s equity award, granted in early 2020 (for performance year 2019) by 26% compared to his prior year award. For the other NEOs, the value of their 2020 equity awards (for performance year 2019) were reduced by 15% as compared to their 2019 annual target opportunities. Messrs. Vogt and Phillips received an 11% increase to their respective annual equity targets effective for the 2019 performance year. These increases were not realized due to the Committee’s decision to reduce the NEOs’ equity awards by 15%.
| 40 COMPENSATION DISCUSSION AND ANALYSIS | | |
The Committee approved the following equity awards in January 2020, which will be reflected in the “Summary Compensation Table” and “Grants of Plan-Based Awards Table” in next year’s proxy statement.
2020 Equity Awards (Relating to 2019 Performance) | ||||||||||||
Name | RSUs ($) | PSUs ($) | Total ($) | |||||||||
Albert A. Benchimol |
| 2,000,000 |
|
| 3,000,000 |
|
| 5,000,000 |
| |||
Peter J. Vogt |
| 425,000 |
|
| 425,000 |
|
| 850,000 |
| |||
Steve K. Arora |
| 595,000 |
|
| 595,000 |
|
| 1,190,000 |
| |||
David S. Phillips |
| 340,000 |
|
| 340,000 |
|
| 680,000 |
| |||
Peter W. Wilson |
| 425,000 |
|
| 425,000 |
|
| 850,000 |
| |||
COMPENSATION COMMITTEE PROCESS
Under our Compensation Committee’s charter, the Committee:
sets the CEO’s annual compensation after evaluating his performance relative to corporate goals and objectives established by the Committee each year;
approves annual compensation, as well as any initial offers of employment for executive committee members;
makes recommendations to the Board regarding compensation programs and policies affecting our executives as well as our other employees;
makes recommendations on the form and amount of director compensation;
approves all equity awards to our executive committee members and establishes the pool for all other equity award recipients;
approves the design of our incentive and equity compensation plans and any changes or amendments to those plans;
considers the outcome of the shareholder advisory vote on executive compensation annually in connection with its determination of our NEOs’ compensation and the related programs; and
reviews and advises on executive development and succession plans.
The Committee receives recommendations and information from management and our independent consultant for their consideration regarding executive compensation and director compensation. The Committee is permitted to delegate any of its responsibilities to subcommittees in its discretion, but to date has not done so. The Committee’s annual process for reviewing and determining executive compensation is summarized below:
| COMPENSATION DISCUSSION AND ANALYSIS 41 | |
The Committee conducts the other key activities set forth in its charter throughout the year, as illustrated below:
RISK MANAGEMENT AND COMPENSATION
In line with the Company’s requirements for managing compensation risk, the Committee seeks to ensure that our executive compensation program does not encourage executives to take risks that are inconsistent with the long-term success of the Company. The Compensation Committee believes that AXIS’ executive compensation program does not encourage inappropriate risk-taking. Specifically, in 2019, the Company’s annual incentive and long-term incentive plans were tied to ex-PGAAP OROACE and TSR, respectively, aligning our shareholders’ short- and long-term interests with the decision-making for our employees and NEOs.
Additionally,
the Committee retains downward discretion in overseeing our compensation programs, such that meaningful reductions in compensation are possible if our financial results do not meet our expectations;
the Committee also retains downward discretion if our risk management policies or tolerances have been breached;
our executive compensation Clawback Policy ensures that our executives are not inappropriately rewarded in the event that we are required to restate our financial results;
our stock ownership guidelines are designed to ensure that the long-term interests of our executives are aligned with those of our shareholders;
the Chairman of our Compensation Committee meets annually with our Risk Committee to review the Company’s compensation policies;
the Chairman of our Risk Committee is also a member of our Compensation Committee; and
our Compensation Committee retains an independent consultant, apart from any consultant retained by management, as discussed in detail below.
COMPENSATION COMMITTEE CONSULTANT
Our Compensation Committee has sole authority to select, retain and terminate any consultants or advisors used to provide independent advice to the Compensation Committee and evaluate executive compensation, including the sole authority to approve the fees and any other retention terms for any such consultant or advisor. Farient Advisors LLC (“Farient”) served as the Committee’s independent compensation consultant until May 2019, when the Committee engaged Korn Ferry as its independent compensation consultant.
| 42 COMPENSATION DISCUSSION AND ANALYSIS | | |
The independent compensation consultants assisted in establishing the Company’s compensation policies and programs. During 2019, the independent compensation consultants:
reviewed and advised the Compensation Committee on matters concerning compensation of the CEO and our other executive officers;
reported on all aspects of short- and long-term compensation program design, including incentive mix, measures and plan leverage;
reported on emerging trends and developments in executive compensation and corporate governance;
prepared quarterly formal presentations for the Compensation Committee regarding executive compensation;
prepared and advised on peer groups;
prepared and reviewed compensation benchmarking analysis for each of the Company’s executive committee members; and
reviewed and advised on director compensation.
In 2019, Farient did not provide any services to the Company other than advising the Compensation Committee on director and executive compensation. In addition to the work Korn Ferry performed for the Compensation Committee during 2019, management retained Korn Ferry to provide other services. In fiscal year 2019, the Company paid Korn Ferry $107,500 for executive and director compensation consulting services performed for the Compensation Committee, and the Company paid $127,000 for executive search consulting services.
Each year, our compensation consultant is required to submit a completed conflict of interest questionnaire to the Committee for the Committee’s evaluation of the consultant’s independence including any conflicts of interest that may exist. The Committee has determined that Farient and Korn Ferry are independent and their work during 2019 did not raise any conflict of interest.
From time to time, management also engages its own external compensation consultant to advise on the Company’s compensation programs generally, prepare reports that compare our compensation programs to those of peer companies and help ensure the competitiveness and appropriateness of our compensation programs.
AXIS gives careful consideration to each element of total compensation. We also evaluate our competitive position with respect to our NEOs on a total direct compensation basis, which consists of base salary and short and long-term incentives. We consider market pay practices when setting executive compensation, as the Compensation Committee uses benchmarking from our compensation peer group and other industry-specific compensation surveys as inputs into decision-making with respect to executive pay levels. Due to the inclusion of relevant size, business model, and capitalization criteria to determine our peers, our Committee uses our compensation peer group as the primary source of competitive market data, which is supplemented by industry-leading surveys. We believe this process provides a more robust and accurate representation of the marketplace for talent in which we compete.
Annually, the Committee reviews the Company’s peer groups based on advice from its compensation consultant. The compensation peer group is used for benchmarking compensation levels and other key features of our executive compensation programs. The Committee has established a separate performance peer group to assess relative performance to determine vesting for performance-contingent equity awards. The performance peer group augments the compensation peer group with additional global (re)insurers. Importantly, the Committee believed a larger peer group was necessary to compare performance given that the compensation group is fairly small and the industry consolidation of recent years is expected to continue.
| COMPENSATION DISCUSSION AND ANALYSIS 43 | |
Compensation Peer Group
| Compensation Peer Group | ||
2019 Compensation Benchmarking Peer Companies • Alleghany Corporation • Arch Capital Group Ltd. • Argo Group International Holdings, Ltd. • Aspen Insurance Holdings Limited • Everest Re Group, Ltd. • Markel Corporation • Renaissance Re Holdings Ltd. • W.R. Berkley Corporation | Purpose • Provides appropriately sized peers when evaluating our executive compensation levels • Avoids potential pay inflation that could occur if larger performance peers were included when determining pay targets Selection Criteria • Size-appropriate global (re)insurance companies • Underwrite similar lines of business with similar geographic breadth • Representative of the • Strong capitalization as indicated by A.M. Best rating | |
In addition to the compensation peers listed above, the Committee also uses market data sourced from the following surveys:
Mercer US Property and Casualty Insurance Survey
Willis Towers Watson Financial Services Executive Compensation Survey
Equilar Top 25 Executive Compensation Survey
Performance Peer Group
Performance Peer Group | ||||
2019 Performance Peer Companies • Alleghany Corporation • American Financial Group, Inc. • American International Group, Inc. • Arch Capital Group • Argo Group International Holdings, Ltd. • Chubb Limited • Cincinnati Financial Corporation • CNA Financial Corporation • Everest Re Group, Ltd. • Fairfax Holdings Limited • Hannover Ruck SE • The Hanover Insurance Group, Inc. • The Hartford Financial Services Group, Inc. • James River Group Holdings Ltd. • Kinsale Capital Group | • Lancashire Holdings Limited • Markel Corporation • Munich RE • Old Republic International Corporation • ProAssurance Corporation • QBE • RenaissanceRe Holdings Ltd. • RLI Corp • RSA Insurance Group plc • SCOR SE • Selective Insurance Group • Swiss Re LTD • The Traveler’s Companies, Inc. • United Fire Group, Inc. • W.R. Berkley Corp • Zurich Re | Purpose • Provides a statistically-robust sample of • Incorporates international peers, representing the Company’s expanded global footprint • Avoids potential relative payout anomalies that could occur with a smaller sample size Selection Criteria • Global (re)insurance companies with similar geographic breadth • Relevant public P&C insurers and reinsurers • Relevant international company with similar P&C underwriting operations • Representative of the | ||
PERQUISITES AND OTHER PERSONAL BENEFITS
Because our business is global and we are headquartered in Bermuda, many of our NEOs aremay be required to relocate or to maintain a second residence or travel for business in order to work for us. To reduce the likelihood that this factor will discourage talented executive officers from joining AXIS, we provide reimbursements for a certain amount of personal travel for return trips home to NEOs who work away from their home countries, as well as, in some cases, housing allowances to help defray the cost of maintaining a second residence orwe provide reimbursement for certain expenses associated with working in multiple locations. our various locations to ensure we maintain our global presence.
| 44 COMPENSATION DISCUSSION AND ANALYSIS | | |
We also provide certain other perquisites and benefits, as well as the general health plan and otheremployee benefits provided to all employees,of our workforce, which make us a competitive employer and do not represent a significant cost to us. These benefits also provide our NEOs with the security and convenience that allows them to focus their attention on carrying out their responsibilities to AXIS. Refer to the “All Other Compensation for 2019—Supplemental Table” for additional detail.
Although we do not maintain a general severance plan for our NEOs, each of our NEOs has rights under their employment agreements upon termination of his employment under his employment agreement.their employment. The terms and conditions of the separation benefits and payments are described in detail in the section entitled “Potential Payments Upon Termination or Change in Control.” We provide these benefits in order to be competitive as an employer. We also provide various benefits in connection with a change in control, in part because a change in control situation often undermines our NEOs’ job security, and it is to the benefit of AXIS and its shareholders to encourage the NEOs to seek out beneficial business transactions and to remain with us through the closing of the transaction,transactions, even though their futures may be uncertain as a result. As such, we structured the change in control provisions in each of the employment agreements for our NEOs with a “double trigger,” which requires termination of the executive without cause or termination by the executive for good reason in connection with a change in control. Because the consummation of a transaction alone would not trigger this benefit, this structure essentially places the decision of whether or not to trigger change in control benefits largely in the hands of the acquiring company.
We provide our NEOs with benefits and severance payments if we terminate them without cause and in some cases if they voluntarily leave under certain circumstances. These benefits add a level of security to the NEO’s position. We believe these benefits are needed to attract and retain talented executives in our industry. These provisions encourage individuals to move from other firms in the industry and help attract individuals from outside of the industry to take a position in our industry, which is generally more volatile. In addition, we face significant
|
competition within our industry for experienced leaders, and we believe these benefits are needed to remain competitive as an employer as it is a common feature in many of our competitors’ compensation programs. Furthermore, we provide these benefits in part so that we can obtain valuable agreements from the NEOs to assign to us certain intellectual property rights and maintain the confidentiality of our information, and not to compete with us or solicit our employees or customers for a certain period of time after leaving, not to solicit our employees or customers after leaving and to maintain the confidentiality of our information.leaving. Moreover, providing termination payments allows us to obtain a release of claims from the NEO upon his or her departure from AXIS, which we consider a valuable benefit to us.
As discussed in “Leadership Transition” section above, Mr. Nichols left the Company on March 31, 2017, Mr. Henry retired from the Company on December 31, 2017 and Mr. DiSipio will be leaving the Company on April 1, 2018. They are entitled to severance payments and other benefits pursuant to the terms of their respective Separation Agreements, the terms of which are summarized under “Potential Payments Upon Termination or Change in Control” in this proxy statement.
RESTRICTION ON TRADING BY DIRECTORS AND OFFICERS/ANTI-HEDGING AND PLEDGING
The Company’s policy on insider trading generally permits directors and executive officers (including our NEOs) to engage in transactions involving the Company’s common stock and other securities only (a) during a Company-prescribedCompany- prescribed trading window of limited duration; and (b) after seekingpre-clearance to avoid trading while in possession of materialnon-public information. In addition, the Company’s policy on insider trading prohibits all employees and directors from engaging in hedging transactions with respect to the Company’s securities and also prohibits pledging, or using as collateral, the Company’s securities in order to secure personal loans or other obligations.
The Company has adopted a Clawback Policy relating to the recovery of executive compensation. Under the terms of the Company’s Clawback Policy, as currently in effect, if the Company is required to restate its financial results because of its material noncompliance with any financial reporting requirement under the securities laws, the Committee will review all awards or payments of any form of incentive-based compensation made to current and former executive officers within the three-year period immediately preceding the date on which the Company is required to prepare the restatement and will, to the extent permitted by applicable law, seek to recover for the benefit of the Company the difference between the amounts awarded or paid and the amounts which would have been awarded or paid based on the restated results. The Clawback Policy is based on expected regulations to be issued by the U.S. Securities and Exchange Commission to fulfill aspects of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Committee expects to revise this policy once final regulations are issued. The Clawback Policy supplements the clawback provisions required under the Sarbanes-Oxley Act of 2002, which remain in effect. In addition, the 2017 Long-Term Equity Compensation Plan and Annual Incentive Plan provide that the Company has a right to recoup compensation in accordance with the Company’s the Clawback Policy and applicable law.
| COMPENSATION DISCUSSION AND ANALYSIS 45 | |
STOCK OWNERSHIP GUIDELINES FOR DIRECTORS AND EXECUTIVE OFFICERS
We believe it is important to align the financial interests of our directors, NEOs and other senior executives and directors with those of our shareholders. Accordingly, we have adopted guidelines which specifyrobust Stock Ownership Guidelines designed to ensure that the minimum amountrequired amounts, set forth below, sufficiently align their long-term interests with those of AXIS securities that we expectAXIS:
Stock Ownership Requirements(1) | ||||
CEO (2) | 10x Annual Base Salary | |||
Chairman(3) | 5x Total Earned Compensation | |||
Other NEOs | 3x Annual Base Salary | |||
Directors | $500,000 | |||
| (1) | NEOs and directors have five years to comply with the minimum required amount. |
| (2) | In 2019, our Compensation Committee increased the minimum required stock ownership amount for our Chief Executive Officer from five times to ten times his annual base salary. |
| (3) | Total Earned Compensation as reflected in the Director Compensation table later in this proxy statement. |
All of our directors, NEOs and keyother senior management employees to own on a direct basis, meaning stock which is subject to market risk, not simply held under option. Our stock ownership guidelines require our CEO to hold AXIS securities with a value equal to a minimum of five times his annual base salary and require our NEOs to hold AXIS securities with a value equal to a minimum of three times their annual base salary. They have five years from the date of promotion or appointment to a position subject to the guidelines to meet the applicable minimum requirement. Directorsexecutives are required to hold AXIS securitiescontinually maintain compliance with atheir required minimum value of $300,000 and have from the later of five years from (i) December 4, 2015; or (ii) the effective date of their initial election as a director to comply with the guidelines. Annually, thestock ownership amounts. The Compensation Committee reviews and confirms compliance of our officers and directors with these guidelines.annually.
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to certain executive officer,officers, although for tax years prior to 2018,2019, performance-based compensation arrangements could qualify for an exemption from the deduction limit if they satisfy various requirements under Section 162(m). Section 162(m) was recently amended by the U.S. Tax Cuts and Jobs Act to eliminate the exception for performance-based compensation (other than with respect to payments made pursuant to certain “grandfathered” arrangements entered into prior to November 2, 2017) and to expand the group of current and former executive officers who may be covered by the deduction limit under Section 162(m). For AXIS, Section 162(m) has had limited effect because our Company is headquartered in Bermuda and U.S. tax law only affects a portion of our income. Therefore, although we are aware of and have considered the impact of this rule when developing and implementing our executive compensation program, deductibility of compensation under Section 162(m) has not been a driving factor in the operation of our executive compensation program. We do not expect the recent changes to Section 162(m) to change our executive compensation practices prospectively.
|
OPPORTUNITY FOR SHAREHOLDER FEEDBACK
We value feedback from our shareholders about our executive compensation philosophy and program, and welcome shareholders to express their views to the Board in writing.
Shareholders and other interested parties may send communications to our Board by sending written notice to our Secretary at our headquarters at 92 Pitts Bay Road, Pembroke, Bermuda HM 08. The notice may specify whether the communication is directed to the entire Board, to thenon-management directors, to the Lead Independent Director or to a particular Board committee or other director. Our Secretary will handle routine inquiries and requests for information or will otherwise determine whether the communication is made for a valid purpose and is relevant to the Company and its business and, if he so determines, will forward the communication to our Chairman of the Board, to thenon-management directors or to the appropriate committee chairman or director. At each meeting of our Board, our Secretary presents a summary of all communications received since the last meeting that were not forwarded and makes those communications available to the directors on request.
| ||
| 46 COMPENSATION DISCUSSION AND ANALYSIS | | |
| COMPENSATION COMMITTEE REPORT |
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement. Based on the review and discussions referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
COMPENSATION COMMITTEE
Henry B. Smith, Chairman
Christopher V. Greetham
Elanor R. Hardwick
Maurice A. Keane
Thomas C. Ramey
Wilhelm Zeller
Lizabeth H. Zlatkus
| COMPENSATION COMMITTEE REPORT | | ||
| EXECUTIVE COMPENSATION |
The following table sets forth compensation provided to: (i) each individual who served as a Chief Executive Officer of AXIS in 2017;2019; (ii) each individual who served as a Chief Financial Officer of AXIS in 2017;2019; and (iii) the other three most highly compensated executive officers serving at the end of the year ended December 31, 2017 and (iv) one individual who would have been one of our three most highly compensated executive offices had he been serving at the end of the year ended December 31, 2017.2019.
| Name & Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(2) | Total ($) | ||||||||||||||||||
Albert A. Benchimol CEO, President and Director | 2017 | 1,100,000 | 5,374,920 | - | 570,858 | 7,045,778 | ||||||||||||||||||
| 2016 | 1,100,000 | 4,999,957 | 1,950,025 | 488,299 | 8,538,281 | |||||||||||||||||||
| 2015 | 1,100,000 | 4,999,901 | 2,327,325 | 497,671 | 8,924,896 | |||||||||||||||||||
Christopher N. DiSipio CEO, AXIS A&H | 2017 | 500,000 | 773,945 | 347,500 | 50,200 | 1,671,645 | ||||||||||||||||||
| 2016 | 500,000 | 719,952 | 520,750 | 51,731 | 1,792,433 | |||||||||||||||||||
| 2015 | 500,000 | 683,962 | 618,000 | 51,731 | 1,853,693 | |||||||||||||||||||
Jan Ekberg(3) CEO, AXIS Reinsurance | 2017 | 513,213 | 999,964 | - | 108,891 | 1,622,068 | ||||||||||||||||||
Joseph C. Henry CFO | 2017 | 565,000 | 1,289,930 | 339,000 | 68,075 | 2,262,005 | ||||||||||||||||||
| 2016 | 565,000 | 1,199,955 | 606,810 | 64,000 | 2,435,765 | |||||||||||||||||||
| 2015 | 565,000 | 1,139,954 | 746,930 | 67,196 | 2,519,080 | |||||||||||||||||||
John D. Nichols(4) CEO, AXIS Reinsurance | 2017 | 225,000 | 1,573,723 | - | 3,041,583 | 4,840,306 | ||||||||||||||||||
| 2016 | 900,000 | 1,735,386 | 1,125,000 | 198,449 | 3,958,835 | |||||||||||||||||||
| 2015 | 900,000 | 1,670,584 | 1,615,500 | 472,378 | 4,658,462 | |||||||||||||||||||
Peter W. Wilson CEO, AXIS Insurance | 2017 | 800,000 | 967,447 | - | 80,200 | 1,847,647 | ||||||||||||||||||
| 2016 | 800,000 | 899,966 | 929,000 | 86,041 | 2,715,007 | |||||||||||||||||||
| 2015 | 800,000 | 854,979 | 1,051,000 | 82,769 | 2,788,748 | |||||||||||||||||||
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (2) | Total ($) | |||||||||||||||||||||
Albert A. Benchimol CEO, President and Director |
| 2019 |
|
| 1,100,000 |
|
| 6,749,980 |
|
| 700,700 |
|
| 727,650 |
|
| 9,278,330 |
| ||||||||||
| 2018 |
|
| 1,100,000 |
|
| 4,624,945 |
|
| 1,345,575 |
|
| 734,276 |
|
| 7,804,796 |
| |||||||||||
| 2017 |
|
| 1,100,000 |
|
| 5,374,920 |
|
| - |
|
| 767,547 |
|
| 7,242,467 |
| |||||||||||
Peter J. Vogt Chief Financial Officer |
| 2019 |
|
| 600,000 |
|
| 949,920 |
|
| 518,880 |
|
| 74,210 |
|
| 2,143,010 |
| ||||||||||
| 2018 |
|
| 550,000 |
|
| 813,236 |
|
| 540,100 |
|
| 166,375 |
|
| 2,069,711 |
| |||||||||||
Steve K. Arora CEO, AXIS Reinsurance |
| 2019 |
|
| 900,000 |
|
| 1,399,992 |
|
| 348,750 |
|
| 520,040 |
|
| 3,168,782 |
| ||||||||||
| 2018 |
|
| 900,000 |
|
| 2,125,000 | (3) |
| 3,412,982 |
|
| - |
|
| 560,281 |
|
| 6,998,263 |
| ||||||||
David S. Phillips Chief Investment Officer |
| 2019 |
|
| 600,000 |
|
| 719,962 |
|
| 590,625 |
|
| 66,210 |
|
| 1,976,797 |
| ||||||||||
| 2018 |
|
| 575,000 |
|
| 1,252,415 |
|
| 761,516 |
|
| 63,700 |
|
| 2,652,631 |
| |||||||||||
Peter W. Wilson CEO, AXIS Insurance |
| 2019 |
|
| 900,000 |
|
| 999,916 |
|
| 543,938 |
|
| 90,000 |
|
| 2,533,854 |
| ||||||||||
| 2018 |
|
| 900,000 |
|
| 1,327,412 |
|
| 735,000 |
|
| 96,656 |
|
| 3,059,068 |
| |||||||||||
| 2017 |
|
| 800,000 |
|
| 967,447 |
|
| - |
|
| 80,200 |
|
| 1,847,647 |
| |||||||||||
| (1) | For |
| (2) | See “All Other Compensation for |
| (3) | The amount shown for Mr. |
| ||
| 48 EXECUTIVE COMPENSATION | | |
ALL OTHER COMPENSATION FOR 20172019 – SUPPLEMENTAL TABLE
The following table describes the incremental cost of other benefits provided in 20172019 that are included in the “All Other Compensation” column.
| Name | Personal ($)(1) | Housing Allowance ($) | Retirement Contributions ($)(2) | Other Compensation ($)(3) | All Other Compensation ($) | |||||||||||||||
Albert A. Benchimol | 99,913 | 300,000 | 26,700 | 144,245 | 570,858 | |||||||||||||||
Christopher N. DiSipio | - | - | 50,200 | - | 50,200 | |||||||||||||||
Jan Ekberg | - | - | 108,891 | - | 108,891 | |||||||||||||||
Joseph C. Henry | - | - | 26,700 | 41,375 | 68,075 | |||||||||||||||
John D. Nichols | - | 75,000 | 10,800 | 2,955,783 | 3,041,583 | |||||||||||||||
Peter W. Wilson | - | - | 80,200 | - | 80,200 | |||||||||||||||
Total: | 99,913 | 375,000 | 303,491 | 3,141,403 | 3,919,807 | |||||||||||||||
Personal ($) (1) | Housing Allowance ($) | Retirement Contributions ($) (2) | Other Compensation ($) (3) | All Other Compensation ($) | ||||||||||||||||
Albert A. Benchimol |
| 69,791 |
|
| 300,000 |
|
| 28,000 |
|
| 329,859 |
|
| 727,650 |
| |||||
Peter J. Vogt |
| - |
|
| - |
|
| 28,000 |
|
| 46,210 |
|
| 74,210 |
| |||||
Steve K. Arora |
| - |
|
| 300,000 |
|
| 90,000 |
|
| 130,040 |
|
| 520,040 |
| |||||
David S. Phillips |
| - |
|
| - |
|
| 60,000 |
|
| 6,210 |
|
| 66,210 |
| |||||
Peter W. Wilson |
| - |
|
| - |
|
| 90,000 |
|
| - |
|
| 90,000 |
| |||||
| (1) | This amount represents the incremental cost to the Company |
| (2) | The amounts for Messrs. Benchimol |
| (3) | Other Compensation includes: (i) a cash payment in lieu of a Company contribution to the U.S. Supplemental Plan for Messrs. Benchimol ($ |
| | |
GRANTS OF PLAN-BASED AWARDS IN 20172019
The following table provides information on annual incentive payments and restricted stock awards granted in 20172019 to each of our NEOs.
| Name | Award Type | Grant Date (1) |
Estimated Possible Payouts Under Awards (2) |
Estimated Future Payouts Under Equity Incentive Plan | All Other Stock Awards: Shares of Stock or Units (#)(10) | Grant Date Fair ($) (11) | ||||||||||||||||||||||||||||||||
| Threshold ($) (3) | Target ($) (4) | Maximum ($) (5) | Threshold # (7) | Target # (8) | Maximum # (9) | |||||||||||||||||||||||||||||||||
Mr. Benchimol | PSU Award | 1/31/2017 | - | - | - | 3,906 | 39,056 | 78,112 | - | 2,499,975 | ||||||||||||||||||||||||||||
RSU Award | 1/31/2017 | - | - | - | - | - | - | 44,914 | 2,874,945 | |||||||||||||||||||||||||||||
Annual Incentive Award | N/A | - | 1,925,000 | 3,850,000 | - | - | - | - | - | |||||||||||||||||||||||||||||
Mr. DiSipio | PSU Award | 1/31/2017 | - | - | - | 562 | 5,624 | 11,248 | - | 359,992 | ||||||||||||||||||||||||||||
| RSU Award | 1/31/2017 | - | - | - | - | - | - | 6,467 | 413,953 | |||||||||||||||||||||||||||||
Annual Incentive Award | N/A | - | 500,000 | 1,000,000 | - | - | - | - | - | |||||||||||||||||||||||||||||
Mr. Ekberg | RSU Award | 1/31/2017 | - | - | - | - | - | - | 15,622 | 999,964 | ||||||||||||||||||||||||||||
Annual Incentive Award | N/A | - | 1,000,000 | 2,000,000 | - | - | - | - | - | |||||||||||||||||||||||||||||
Mr. Henry | PSU Award | 1/31/2017 | - | - | - | 937 | 9,373 | 18,746 | - | 599,966 | ||||||||||||||||||||||||||||
| RSU Award | 1/31/2017 | - | - | - | - | - | - | 10,779 | 689,964 | |||||||||||||||||||||||||||||
Annual Incentive Award | N/A | - | 565,000 | 1,130,000 | - | - | - | - | - | |||||||||||||||||||||||||||||
Mr. Nichols (12) | PSU Award | 1/31/2017 | - | - | - | 1,094 | 10,935 | 21,870 | - | 699,949 | ||||||||||||||||||||||||||||
| RSU Award | 1/31/2017 | - | - | - | - | - | - | 12,576 | 804,990 | |||||||||||||||||||||||||||||
Annual Incentive Award | N/A | - | 1,125,000 | 2,500,000 | - | - | - | - | - | |||||||||||||||||||||||||||||
Accelerated Equity Awards | N/A | - | - | - | - | - | - | 65,515 | (13) | 676,031 | (13) | |||||||||||||||||||||||||||
Mr. Wilson | PSU Award | 1/31/2017 | - | - | - | 703 | 7,030 | 14,060 | - | 449,990 | ||||||||||||||||||||||||||||
| RSU Award | 1/31/2017 | - | - | - | - | - | - | 8,084 | 517,457 | |||||||||||||||||||||||||||||
Annual Incentive Award | N/A | - | 1,000,000 | 2,000,000 | - | - | - | - | - | |||||||||||||||||||||||||||||
Name | Award Type | Grant Date (1) |
Estimated Possible Payouts Under Non-Equity Incentive Plan |
Estimated Future Payouts Under Equity Incentive Plan | All Other Stock or (#) (10) | Grant Date Awards ($) (11) | ||||||||||||||||||||||||||||||||
Threshold ($) (3) | Target ($) (4) | Maximum ($) (5) | Threshold # (7) | Target # (8) | Maximum # (9) | |||||||||||||||||||||||||||||||||
Albert A. Benchimol | PSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| 46,275 |
|
| 61,700 |
|
| 77,125 |
|
| - |
|
| 3,374,990 |
| ||||||||||||
RSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 61,700 |
|
| 3,374,990 |
| |||||||||||||
Annual
| N/A |
| 86,625 |
|
| 1,925,000 |
|
| 3,850,000 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| |||||||||||||
Peter J. Vogt | PSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| 6,512 |
|
| 8,683 |
|
| 10,853 |
|
| - |
|
| 474,960 |
| ||||||||||||
RSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 8,683 |
|
| 474,960 |
| |||||||||||||
Annual
| N/A |
| 41,400 |
|
| 690,000 |
|
| 1,380,000 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| |||||||||||||
Steve K. Arora | PSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| 9,597 |
|
| 12,797 |
|
| 15,996 |
|
| - |
|
| 699,996 |
| ||||||||||||
RSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 12,797 |
|
| 699,996 |
| |||||||||||||
Annual
| N/A |
| 50,625 |
|
| 1,125,000 |
|
| 2,250,000 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| |||||||||||||
David S. Phillips | PSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| 4,935 |
|
| 6,581 |
|
| 8,226 |
|
| - |
|
| 359,981 |
| ||||||||||||
RSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 6,581 |
|
| 359,981 |
| |||||||||||||
Annual
| N/A |
| 33,750 |
|
| 750,000 |
|
| 1,500,000 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| |||||||||||||
Peter W. Wilson | PSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| 6,855 |
|
| 9,140 |
|
| 11,425 |
|
| - |
|
| 499,958 |
| ||||||||||||
RSU | 1/29/2019 |
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 9,140 |
|
| 499,958 |
| |||||||||||||
Annual
| N/A |
| 50,625 |
|
| 1,125,000 |
|
| 2,250,000 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
| |||||||||||||
| (1) | Represents the date the |
| (2) | Represents the bonus opportunity for each of our NEOs in |
| (3) | Amounts represent the minimum incentive bonus opportunity pursuant to |
| (4) | Amounts represent the annual target incentive bonus opportunity pursuant to each NEO’s employment agreement. |
| (5) | Amounts represent the maximum incentive bonus opportunity pursuant to |
| (6) | Reflects PSUs which vest in one installment on the third anniversary of the |
| (7) | Amounts represent the minimum number of PSUs awarded subject to performance vesting conditions. |
| (8) | Amounts represent the target number of PSUs awarded subject to performance vesting conditions. |
| (9) | Amounts represent the maximum number of PSUs awarded subject to performance vesting conditions. |
| (10) | Amounts represent the number of RSUs awarded. The RSUs vest in four equal installments beginning on the first |
|
| (11) | Amounts represent the grant date fair value of the equity awards |
2019.
| 50 EXECUTIVE COMPENSATION | | |
EMPLOYMENT AND OTHER AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
Albert A. Benchimol | Under the terms of an employment agreement between Mr. Benchimol and the Company dated May 3, 2012, as amended, |
| Mr. Benchimol’s employment agreement provides for certain benefits upon termination of his employment for various reasons, as described below in the section entitled “Potential Payments Upon Termination or Change in Control.” |
| The employment agreement also provides for a12-month notice period should Mr. Benchimol desire to voluntarily terminate his employment with the Company andnon-competition andnon-solicitation provisions for a period of 24 months from the date of any termination. |
| Mr. |
| The employment agreement also requires a12-month notice period in the event Mr. |
|
|
| ||
| EXECUTIVE COMPENSATION | |
|
| Mr. Arora’s employment agreement also provides for certain benefits upon termination of his employment for various reasons, as described below under “Potential Payments Upon Termination or Change in Control.” |
| Additionally, a12-month notice period is required in the event Mr. Arora voluntarily terminates his employment with the Company andnon-competition andnon-solicitation provisions apply for a period of 12 months from the date of any termination under the employment agreement. |
|
| Mr. |
| The employment agreement also |
|
|
Peter W. Wilson | The Company and Mr. Wilson entered into an employment agreement dated June 23, 2014, |
| 52 EXECUTIVE COMPENSATION | | |
depending upon which approach would result in his receiving the greatest amount of payments after taxes. In the case of the latter, Mr. Wilson would be liable for any excise tax owed. |
| Under the employment agreement, Mr. Wilson is entitled to: (i) an annual base salary of no less than |
| Mr. Wilson’s employment agreement provides for certain benefits upon termination of his employment for various reasons, as described below under “Potential Payments Upon Termination or Change in Control.” |
The Compensation Committee regularly reviews and may make changes to the value of compensation components, as needed, as described in the “Compensation Discussion of Analysis – Elements of Executive Compensation.”
| ||
| EXECUTIVE COMPENSATION | |
Long-Term Equity Compensation Plans.In 2017,2019, we provided long-term incentive compensation through equity awards under our 2007 Long-Term Equity Compensation Plan, as amended (“2007 LTEP”), and our 2017 Long-Term Equity Compensation PlanLTEP which was approved by our shareholders at our Annual General Meeting held in May 2017. The 2017 (“2017 LTEP”). The plans provideLTEP provides for awards to our employees, directors and consultants in the grantform of RSUs, PSUs, restricted stock unit awards, performance unit awards, restricted stock awards,shares, nonqualified stock options, incentive stock options, stock appreciation rights restricted stock awards, restricted stock unit awards, performance unit awards and other equity-based or equity-related awards that our Compensation Committee determines to our employees, directorsbe consistent with the purpose of the plan and consultants.in the interests of the Company. The Compensation Committee has broad authority to administer both plans,the plan, including the authority to select plan participants, determine when awards will be made, determine the type and amount of awards, determine the exercise price of options and stock appreciation rights, determine any limitations, restrictions or conditions applicable to each award and determine the terms of any agreement or other document that evidences an award. A minimum of one yearone-year vesting is required for at least 95% of all shares subject to awards granted under the 2017 LTEP, other than in connection with a change ofin control, or as a result of a participant’s qualifying retirement, death or disability. TheDuring 2019, the only forms of equity awards granted to our NEOs during 2017 under the 2007 LTEP and the 2017 LTEP were RSUs and PSUs.
Awards of RSUs and PSUs represent a promise to grant shares of our common stock once certain vesting conditions are met or after a certain passage of time, subject to restrictions on transfer of the shares, any other restrictions the Compensation Committee imposes and forfeiture of the shares if the participant terminates employment before the shares vest. RSU awardsRSUs granted to our NEOs during 20172019 vest (and the restrictions lapse) in four equal installments on the first, second, third and fourth anniversaries of the vesting commencement date, except for those RSUs awardedawarded: (i) in lieu of bonus which(which vest in three equal annual installments. PSU awardsinstallments); and (ii) to Mr. Arora who has one RSU award vesting in a single installment on the third anniversary of the vesting commencement date and one RSU award vesting in three equal installments beginning on the first anniversary of the vesting commencement date. PSUs granted to our NEOs during 20172019 vest in a single installment on the third anniversary of the vesting commencement date, which is March 1 of the year of grant, if performance metrics are met. Vesting is fully accelerated upon the death or permanent disability of the participant or termination in connection with a change in control, as described below under “Potential Payments Upon Termination or Change in Control.” RSUs and PSUs awarded to our NEOs settle 100% in shares of our common stock. RSU and PSU award recipients receive accumulated dividend equivalents paid with respect to the underlying units only upon vesting. The 2007 LTEP expired at the Company’s 2017 Annual General Meeting and was replaced with the 2017 LTEP as of that date.
We provide annual incentive payments under our 2014Our Annual Incentive Plan to provideprovides performance-based annual cash annual bonuses for our NEOs and other members of our executive committee. For a full description of the funding for our 2014 Annual Incentive Plan, see “Compensation Discussion and Analysis” – “Annual Incentive Awards” above.
OurEach of our NEOs participate in our AXIS 401(k) PlanPlan. Messrs. Arora, Phillips and Wilson also participate in our U.S. Supplemental Plan. During 2017, Messrs. Benchimol, DiSipio, Henry and Wilson participated in the AXIS 401(k) Plan. Messrs. DiSipio and Wilson participated in our U.S. Supplemental Plan during 2017. The programs described below are generally available to all eligible employees.
In the United States, we maintain the AXIS 401(k) Plan under which all employees as participants may contribute a portion of their earnings on atax-deferred basis and we make matching contributions. We also may make annual employer discretionary contributions. For 2017,2019, we made matching contributions equal to 100% of each participant’s contributions, subject to a maximum match of 4% of eligible earnings. We also made annual employer discretionary contributions equal to 6% of each participant’s eligible earnings. For purposes of calculating the matching and employer discretionary contributions, only the first $270,000$275,000 of each NEO’s earnings was taken into account, due to limitations imposed by the Internal Revenue Code. NEOs are always fully vested in our matching contributions, and vest in our employer discretionary contributions 25% per year, with full vesting after four years of service. Vested benefits are distributable upon death, disability, retirement, termination of employment or upon reaching age59-1/2.
We also maintain the U.S. Supplemental Plan in the United States which is designed to permit eligible participantsemployees to accumulate additional retirement income through a nonqualified deferred compensation plan that enables them to (i) make salary deferrals of up to 100% of their salary in excess of deferrals allowed under the AXIS 401(k) Plan, to
|
Plan; (ii) make additional deferrals from their bonus payments of up to 100% of their bonus; and to(iii) receive discretionary employer contributions. Each year, we make a discretionary contribution equal to all participants in the U.S. Supplemental Plan expressed as a percentage10% of the respective participant’s base salary that is above the Internal Revenue Code maximum under the AXIS 401(k) Plan.
Effective January 1, 2017, the Company established the AXIS Executive RSU Retirement Plan to reward certain
| 54 EXECUTIVE COMPENSATION | | |
Our equity retirement plan rewards eligible long-term employees of the Company with outstanding RSUs.equity awards upon retirement. Prior to the adoption of this plan in January 2017, outstanding RSUsequity awards were generally forfeited upon a voluntary termination of employment. In accordance with terms and conditions set forth in the plan, including the requirement that the employee execute a Confidentiality,Non-Solicitation andNon-Competition and Release Agreement, employees who are Retirement Eligiblea retirement eligible employee’s outstanding equity awards may vest, or continue to vest asupon the case may be pursuant to the terms of the plan, in certain RSUs that are outstanding and unvested as of theemployee’s date of his or her termination. In general,retirement. Generally, an employee is “Retirement Eligible” if he or she isretirement eligible at age 60 or older and haswith at least ten completed years of service with the Company or an employer affiliateservice. None of the Company, in each case as of the date of termination. Of our NEOs Mr. Ekberg is the only NEO that is Retirement Eligible.are retirement eligible.
Each of our NEOs areis encouraged to participate in our Executive Health Examination Program which entitledentitles each of them to have aan annual physical examination in 2017. We pay the full cost of the physical examination plus any travel-related expenses. In 2017, Mr. Henry completed a physical examination. Amounts reimbursed to Mr. Henry are included in the 2017 “All Other Compensation” column of the “Summary Compensation Table”.
In 2005, our Compensation Committee adopted a formal practice permittingThe Company permits personal use of corporate aircraft by certain of our executive officers. Mr. Benchimol is currently our only executive eligible for personal usage of the aircraft, and his employment contract provides for up to 30 hours of personal usage per calendar year.
| ||
| EXECUTIVE COMPENSATION | |
OUTSTANDING EQUITY AWARDS AT 20172019 FISCALYEAR-END
The following table sets forth information regarding all outstanding equity awards held by our NEOs. It includes unexercised RSUs and PSUs for which vesting conditions were not yet satisfied as of December 31, 2019.
| Name | Stock Awards | |||||||||||||||||||
| Grant Date | Number of Shares or Number Units of Stock that have Not Vested (#)(1)(2) | Market Value of Shares or Units of Stock that have Not Vested ($)(3) | Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights that have Not Vested (#)(1)(2) | Equity Plan | ||||||||||||||||
| Albert A. Benchimol | 5/18/2015 | 58,024 | 2,916,286 | - | - | |||||||||||||||
| 2/2/2016 | 34,851 | 1,751,611 | 46,468 | 2,335,482 | ||||||||||||||||
| 1/31/2017 | 44,914 | 2,257,378 | 39,056 | 1,962,955 | ||||||||||||||||
| | Aggregate Market Value: | |||||||||||||||||||
| 11,223,711 | ||||||||||||||||||||
| Christopher N. DiSipio | 2/4/2014 | 2,030 | 102,028 | - | - | |||||||||||||||
| 2/3/2015 | 8,770 | 440,780 | - | - | ||||||||||||||||
| 2/2/2016 | 5,019 | 252,255 | 6,691 | 336,290 | ||||||||||||||||
| 1/31/2017 | 6,467 | 325,031 | 5,624 | 282,662 | ||||||||||||||||
| | Aggregate Market Value: | |||||||||||||||||||
| 1,739,046 | ||||||||||||||||||||
| Jan Ekberg | 2/4/2014 | 1,692 | 85,040 | - | - | |||||||||||||||
| 2/3/2015 | 2,632 | 132,284 | - | - | ||||||||||||||||
| 2/2/2016 | 4,879 | 245,219 | - | - | ||||||||||||||||
| 1/31/2017 | 15,622 | 785,162 | - | - | ||||||||||||||||
| | Aggregate Market Value: | | ||||||||||||||||||
| 1,247,705 | ||||||||||||||||||||
| Joseph C. Henry | 2/4/2014 | 3,384 | 170,080 | - | - | |||||||||||||||
| 2/3/2015 | 14,616 | 734,600 | - | - | ||||||||||||||||
| 2/2/2016 | 8,364 | 420,375 | 9,665 | 485,763 | ||||||||||||||||
| 1/31/2017 | 10,779 | 541,753 | 7,499 | 376,900 | ||||||||||||||||
| | Aggregate Market Value: | |||||||||||||||||||
| 2,729,470 | ||||||||||||||||||||
| John D. Nichols | 2/4/2014 | - | - | - | - | |||||||||||||||
| 2/3/2015 | - | - | - | - | ||||||||||||||||
| 2/2/2016 | - | - | - | - | ||||||||||||||||
| 1/31/2017 | - | - | - | - | ||||||||||||||||
| | Aggregate Market Value: | |||||||||||||||||||
| - | ||||||||||||||||||||
| Peter W. Wilson | 2/4/2014 | 4,500 | 226,170 | - | - | |||||||||||||||
| 2/3/2015 | 10,963 | 551,000 | - | - | ||||||||||||||||
| 2/2/2016 | 6,273 | 315,281 | 8,364 | 420,375 | ||||||||||||||||
| 1/31/2017 | 8,084 | 406,302 | 7,030 | 353,328 | ||||||||||||||||
| | Aggregate Market Value: | |||||||||||||||||||
| 2,272,456 | ||||||||||||||||||||
| Stock Awards | ||||||||||||||||||||
| Name | Grant Date | Number of (#) | Market Value ($) | Equity (#) | Equity Plan ($) | |||||||||||||||
Albert A. Benchimol |
| 2/2/2016 | (1) |
| 11,617 |
|
| 690,514 |
|
| - |
|
| - |
| |||||
| 1/31/2017 | (1) |
| 22,457 |
|
| 1,334,844 |
|
| - |
|
| - |
| ||||||
| 1/31/2017 | (2) |
| 15,623 |
|
| 928,631 |
|
| - |
|
| - |
| ||||||
| 2/6/2018 | (1) |
| 32,598 |
|
| 1,937,625 |
|
| 51,135 |
|
| 3,039,464 |
| ||||||
| 1/29/2019 | (1) |
| 61,700 |
|
| 3,667,448 |
|
| 61,700 |
|
| 3,667,448 |
| ||||||
| | Aggregate Market Value: | | ||||||||||||||||||
| 15,265,975 |
| ||||||||||||||||||
| Peter J. Vogt | 2/2/2016 | (1) | 1,394 | 82,859 | - | 0 | ||||||||||||||
| 1/31/2017 | (1) | 3,125 | 185,750 | - | 0 | |||||||||||||||
| 5/1/2017 | (1) | 4,175 | 248,162 | - | 0 | |||||||||||||||
| 2/6/2018 | (4) | 2,909 | 172,911 | - | 0 | |||||||||||||||
| 2/6/2018 | (1) | 4,602 | 273,543 | 6,136 | 364,724 | |||||||||||||||
| 1/29/2019 | (1) | 8,683 | 516,118 | 8,683 | 516,118 | |||||||||||||||
| | Aggregate Market Value: | | ||||||||||||||||||
| 2,360,184 | ||||||||||||||||||||
| Steve K. Arora | 1/1/2018 | (3) | 20,296 | 1,206,394 | - | 0 | ||||||||||||||
| 1/1/2018 | (4) | 32,651 | 1,940,775 | - | 0 | |||||||||||||||
| 1/29/2019 | (1) | 12,797 | 760,654 | 12,797 | 760,654 | |||||||||||||||
| | Aggregate Market Value: |
| ||||||||||||||||||
| 4,668,477 | ||||||||||||||||||||
| David S. Phillips | 2/2/2016 | (1) | 1,674 | 99,503 | - | 0 | ||||||||||||||
| 1/31/2017 | (1) | 3,234 | 192,229 | - | 0 | |||||||||||||||
| 1/31/2017 | (2) | 2,250 | 133,740 | - | 0 | |||||||||||||||
| 2/6/2018 | (4) | 7,998 | 475,401 | - | 0 | |||||||||||||||
| 2/6/2018 | (1) | 4,694 | 279,011 | 7,363 | 437,657 | |||||||||||||||
| 1/29/2019 | (1) | 6,581 | 391,175 | 6,581 | 391,175 | |||||||||||||||
| | Aggregate Market Value: |
| ||||||||||||||||||
| 2,399,890 | ||||||||||||||||||||
| Peter W. Wilson | 2/2/2016 | (1) | 2,091 | 124,289 | - | 0 | ||||||||||||||
| 1/31/2017 | (1) | 4,042 | 240,256 | - | 0 | |||||||||||||||
| 1/31/2017 | (2) | 2,812 | 167,145 | - | 0 | |||||||||||||||
| 2/6/2018 | (4) | 6,750 | 401,220 | - | 0 | |||||||||||||||
| 2/6/2018 | (1) | 5,868 | 348,794 | 9,204 | 547,086 | |||||||||||||||
| 2/6/2018 | (1) | 9,140 | 543,282 | 9,140 | 543,282 | |||||||||||||||
| | Aggregate Market Value: |
| ||||||||||||||||||
| 2,915,354 | ||||||||||||||||||||
The market value of RSUs and PSUs is calculated by multiplying the closing price of AXIS stock as of December 31, 2019 ($59.44) (the last trading day for the year) by the number of shares underlying each award
| 56 EXECUTIVE COMPENSATION | | |
and, with respect to the PSUs, that have not yet vested based on the satisfaction of performance conditions, assuming satisfaction of the target levels for the applicable performance conditions.
| (1) | Represents RSUs that vest in four equal annual installments beginning on the first anniversary of the vesting commencement date. |
| (2) | Represents PSUs, calculated at 40% payout, that vest in a single installment on March 1, |
| (3) | Represents RSUs that vest in a single installment on |
| (4) | Represents RSUs that vest |
|
OPTION EXERCISES AND STOCK VESTED IN 20172019
The following table sets forth information regarding the amounts received by our NEOs as a result of the vesting of RSUs and PSUs held by our NEOs during the 20172019 fiscal year. None of our NEOs acquired any shares as a result of the exercise of stock options.
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| Stock Awards | ||||||||||||
| Name | Number of (#) | Market Value ($) | ||||||||||
Albert A. Benchimol | 82,045 | 4,711,544 | (1) | |||||||||
Steve K. Arora | 16,324 | 902,554 | (2) | |||||||||
David S. Phillips | 15,784 | 903,476 | (3) | |||||||||
Peter J. Vogt | 9,493 | 543,003 | (4) | |||||||||
Peter W. Wilson | 18,106 | 1,036,387 | (5) | |||||||||
| (1) | Total shares vested for Mr. Benchimol consisted of: |
– 11,61711,159 RSUs on May 18, 2019 based on the closing price of our common stock on May 18, 2019 of $58.61
33,712 RSUs on March 1, 20172019 based on the closing price of our common stock on March 1, 20172019 of $70.92$57.24
– 11,159 RSUs on May 18, 2017 based on the closing price of our common stock on May 18, 2017 of $62.96
– 3,125 RSUs on February 4, 2017 based on the closing price of our common stock on February 3, 2017 of $66.66
with an additional 3,125 RSUs settling in cash
– 6,09037,174 PSUs on March 1, 20172019 based on the closing price of our common stock on March 1, 20172019 of $70.92$57.24
with an additional 6,090 PSUs settling in cash
| (2) | Total shares vested for Mr. Arora consisted of: |
16,324 RSUs on February 1, 2019 based on the closing price of our common stock on February 1, 2019 of $55.29
– 1,015
| (3) | Total shares vested for Mr. Phillips consisted of: |
10,432 RSUs on March 1, 20172019 based on the closing price of our common stock on March 1, 20172019 of $70.92$57.24
with an additional 1,015 RSUs settling in cash
– 3,251 RSUs5,354 PSUs on March 1, 20172019 based on the closing price of our common stock on March 1, 20172019 of $70.92$57.24
Total shares vested for Mr. |
– 8752,088 RSUs on February 4, 2017May 1, 2019 based on the closing price of our common stock on February 3, 2017May 1, 2019 of $66.66$57.06
with an additional 875 RSUs settling in cash
– 4,0097,405 RSUs on March 1, 20172019 based on the closing price of our common stock on March 1, 20172019 of $70.92
with an additional 4,008 RSUs settling in cash$57.24
Total shares vested for Mr. |
– 7,500 on February 4, 2017 based on the closing price of our common stock on February 3, 2017 of $66.66
– 20,301 PSUs11,415 RSUs on March 1, 2019 based on the closing price of our common stock on March 1, 20172019 of $70.92$57.24
– 8,802 RSUs6,691 PSUs on March 1, 20172019 based on the closing price of our common stock on March 1, 20172019 of $70.92
– 10,000 RSUs on February 4, 2017 based on the closing price of our common stock on February 3, 2017 of $66.66
– 23,685 PSUs on March 1, 2017 based on the closing price of our common stock on March 1, 2017 of $70.92
– 10,269 RSUs on March 1, 2017 based on the closing price of our common stock on March 1, 2017 of $70.92
– 69,463 on March 31, 2017 based on the closing price of our common stock on March 31, 2017 of $67.03
in accordance with Mr. Nichols’ separation agreement.
– 6,310 RSUs on March 1, 2017 based on the closing price of our common stock on March 1, 2017 of $70.92
with an additional 6,310 RSUs settling in cash
– 4,064 RSUs on March 1, 2017 based on the closing price of our common stock on March 1, 2017 of $70.92;
– 3,125 on May 6, 2017 based on the closing price of our common stock on May 6, 2017 of $65.57
with an additional 3,125 RSUs settling in cash$57.24
| | |
We have no pension benefits for our NEOs.
NONQUALIFIED DEFERRED COMPENSATION FOR 20172019
The following table sets forth information regarding our NEOs’ deferred compensation arrangements that are not tax qualified.
| Name | Executive Contributions in Last FY ($) | Registrant ($)(1) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||||||
| Albert A. Benchimol | - | - | - | - | - | |||||||||||||||
| Christopher N. DiSipio | 194,150 | 23,500 | 232,291 | - | 1,541,226 | |||||||||||||||
| Jan Ekberg | - | - | - | - | - | |||||||||||||||
| Joseph C. Henry | - | - | - | - | - | |||||||||||||||
| John D. Nichols | - | - | - | - | - | |||||||||||||||
| Peter W. Wilson | - | 53,500 | 36,022 | - | 234,713 | |||||||||||||||
| Name | Executive Contributions in Last FY ($) (1) | Registrant Contributions in Last FY ($) (2) | Aggregate Earnings in Last | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last ($) (3) | ||||||||||||||||||||
| Albert A. Benchimol | - | - | - | - | - | ||||||||||||||||||||
| Steve K. Arora | - | 62,500 | 2,994 | - | 70,569 | ||||||||||||||||||||
| David S. Phillips | 30,461 | 30,000 | 9,541 | - | 284,785 | ||||||||||||||||||||
| Peter J. Vogt | - | - | 6,184 | - | 148,803 | ||||||||||||||||||||
| Peter W. Wilson | - | 62,500 | 17,184 | - | 404,976 | ||||||||||||||||||||
| (1) | These amounts include individual contributions |
| (2) | These amounts include our contributions to the U.S. Supplemental Plan for Messrs. |
| (3) | Amounts reported in this column are included in the Summary Compensation Table for previous years as follows: for Mr. Arora, ($62,500) was included in the “All Other Compensation” column for 2018; for Mr. Phillips, ($30,000) was included in the “All Other Compensation” column for 2018; for Mr. Wilson, ($62,500) and ($53,500) was included in the “All Other Compensation” column for 2018 and 2017, respectively. |
Each NEO’s own contributions under the U.S. Supplemental Plan are always fully vested. Company contributions vest based on the participant’s years of service at a rate of 25% per year with full vesting after four years of service isare completed. The NEO’s own contributions may be distributed upon separation of employment or upon the earlier of separation of employment or a specified date in either a lump sum or over a period of annual installments between two and 10ten years. Benefits will be paid immediately in a lump sum in the event of the executive’s death.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
This section describes payments that would be made to our NEOs upon a change in control of AXIS or following termination of employment or upon the NEO’s death or disability. In the first part of this section, we describe benefits under general plans that apply to any NEO participating in those plans. We then describe specific benefits to which each NEO is entitled, along with estimated amounts of benefits assuming a triggering event on December 29, 2017.31, 2019.
Long-Term Equity Compensation Plans.Under the terms of our 2007 LTEP and 2017 LTEP, as described above, upon the occurrence of a change ofin control, unless otherwise provided in an applicable agreement with the affected participant, the Committee maymay: (i) provide for the substitution or assumption of outstanding awards,awards; (ii) accelerate the vesting or exercisability of outstanding awardsawards; and/or (iii) make payments in consideration for the cancellation of outstanding awards. Our current award agreements contain a “double trigger” vesting provision under which awards will automatically vest upon a change ofin control of the Company only upon an awardee’s subsequent termination of employment: (a) by the Company without cause;cause, or (b) by the awardee with good reason, in each case within 24 months of the change ofin control.
Executive Employment Agreements – Messrs. Benchimol, DiSipio and WilsonAgreements..Messrs. Benchimol, DiSipioArora, Phillips, Vogt and Wilson, collectively referred to as “Executives” for purposes of this summary are entitled to the benefits under their respective employment agreements upon termination of their employment.
In particular, the Executives’ employment will automatically terminate upon death, and we may terminate the Executives’ employment as a result of their disability if they are unable to work for 181 days in any12-month period due to illness or injury. We may terminate the Executives’ employment of Messrs. Arora, Vogt and Wilson without cause upon 30 days’ notice, except that wenotice. We may only terminate Mr. Benchimol’s employment without cause upon12-months’ notice and
| 58 EXECUTIVE COMPENSATION | | |
may terminate Mr. Phillips’ employment without cause upon six months’ notice. The Executives may terminate their employment upon at least12-months’ notice to us, except for Mr. DiSipioPhillips whose notice period to us is six months. In addition, the Executives’ employment may be terminated as a result of either party declining to extend the term of their respective employment agreement.
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Under each of the Executives’ employment agreements, we may terminate the Executives’ employment for cause upon the Executives’:
| (i) | material breach of the terms of their employment; |
| (ii) | conviction for a felony or commission of any act which would rise to the level of a felony; |
| (iii) | commission of a lesser crime or offense that materially harms or could harm our business or reputation; |
| (iv) | willful violation of our specific directives; |
| (v) | commission of a dishonest or wrongful act involving fraud, misrepresentation, or moral turpitude causing us damage or potential damage; |
| (vi) | willful failure to perform a substantial part of their duties; or |
| (vii) | breach of fiduciary duty. |
Under each of the Executives’ employment agreements, except for Mr. DiSipio,Phillips, in the event the Executive is terminated for cause, the Executives are given 15 days to cure the event that is the basis for the Company’s termination for cause, except that the right to cure will not apply in the event of a termination for cause due to any of the acts described in (ii), (iii) or (v) above.
Under the employment agreements, the Executives may terminate their employment for good reason if: (i) (a) the scope of their respective position, authority or duties is materially adversely changed, (b)changed; (ii) their compensation is not paid or their base salary or target bonus is reduced below the levels specified in the agreement or there is a material adverse change in their employee benefits, (c)benefits; (iii) they are required to relocate away from their current primary place of employment, (d)employment; (iv) they are assigned duties that are materially inconsistent with their position with the Company, (e) their immediate reporting relationships are changed or, in the case ofCompany; (v) with respect to Mr. Benchimol, he is required to report to any person or entity other than the Board, (f)Board; (vi) they are required to report to anyone other than any mutually agreed person; (vii) with respect to Mr. Benchimol, the Company fails to offer him continuing employment on terms no less favorable than set forth in his agreement at least six months before the end of his employment term; (ii)(viii) with respect to Mr. DiSipio, he givesMessrs. Benchimol and Phillips, they provide the Company written notice of histheir intent to terminate histheir employment as a result of such event within 30 days of such event occurring;occurring, the Company does not make necessary corrections within 30 days of receiving such notice and Messrs. Benchimol and/or Phillips terminate their employment no later than 10 days following the end of the 30 day period; (ix) with respect to Messrs. Arora and Wilson, they provide the Company written notice of their intent to terminate their employment as a result of such event within 60 days of such event occurring, the Company does not make necessary corrections within 60 days of receiving such notice and Messrs. Arora and/or Wilson terminate their employment no later than 10 days following the end of the 60 day period; and (x) with respect to Mr. Wilson,Vogt, he gives the Company written notice of his intent to terminate his employment as a result of such event within 60 days of such event occurring; (iii) with respect to Mr. DiSipio,occurring, the Company does not make the necessary corrections within 3045 days of receipt ofreceiving such written notice;notice and with respect to Mr. Wilson, the Company does not make the necessary corrections within 60 days of receipt of such written notice; and (iv) with respect to Messrs. DiSipio and Wilson, they terminate theirVogt terminates his employment no later than 10 days following the end of their respective noticethe 45 day period.
In the event the Executives’ employment is terminated for any reason, they are entitled to receive payment for any accrued but unpaid base salary up to the date of termination, any bonus awarded in respect of a prior year’s target annual bonus but not yet paid as of the date of termination, any accrued but unpaid reimbursable expenses, any unused vacation accrued to the date of termination, any unpaid housing allowance, if applicable, accrued to the date of termination and reimbursement for reasonable relocation costs incurred within six months of termination.
In the event that the Executives’ employment is terminated due to death or disability, then their beneficiaries or they will be paid apro-rata portion of the annual bonus that they would have been entitled to receive for the calendar year in which their termination occurred, except for Mr. Benchimol, whose beneficiary or he will be paid a cash lump sum amount equal to one year’s base salary and annual bonus that he would have been entitled to receive for the calendar year in which his termination occurred. Additionally, any and all outstanding and unvested RSUs and PSUs held by the Executives pursuant to our 2007 or 2017 LTEP shall immediately vest.
| EXECUTIVE COMPENSATION 59 | |
In the event that the Executives’ employment is terminated by the Company without cause or by them with good reason, they will be entitled to: (i) a lump sum amount equal to one year’s base salary, except for Mr. Benchimol, who will be entitled to a lump sum amount equal to two year’s base salary;salary, and Mr. Phillips, who will be entitled to a lump sum amount equal to .75 of his base salary for termination by the Company without cause and a lump sum amount equal to one year’s base salary for termination by him with good reason; (ii) an amount equal to the annual bonus that they would have been entitled to receive for the calendar year in which their termination occurs, except for Mr. Benchimol, who will be entitled to an amount equal to two times the higher of (a) the highest annual bonus earned for any of the three calendar years preceding the date of termination, or (b) the annual bonus that he would have been entitled to receive for the calendar year in which his termination occurs;occurs, and Mr. Phillips, who will be entitled to a lump sum amount equal to .75 of his annual bonus for termination by the Company without cause and a lump sum amount equal to his annual bonus for termination by him with good reason; (iii) apro-rata portion of the annual bonus that they would have been entitled to receive for the calendar year in which their termination occurs; (iv) continued payment by the Company of medical coverage or COBRA premiums for a12-month period, or less
|
in the event they cease to be eligible for COBRA continuation coverage; and (v) all outstanding and unvested RSUs and PSUs held by them pursuant to our 2007 or 2017 LTEP shall continue to vest on the applicable dates set forth in the applicable award agreements.agreements, except for Mr. Vogt whose outstanding and unvested RSUs and PSUs shall immediately vest; and (vi) with respect to Mr. Benchimol, a cash lump sum amount equal to his most recent annual equity award.
In the event that the Executives’ employment is terminated by the Company without cause or by them, in each case within 24 months following a change in control, they will be entitled to: (i) a lump sum amount equal to one year’s base salary, except for Mr. Benchimol who will be entitled to a lump sum amount equal to two year’s base salary; (ii) an amount equal to two times the annual bonus that they would have been entitled to receive for the calendar year in which their termination occurs, except for Mr. Benchimol who will be entitled to an amount equal to three times the higher of (a) the highest annual bonus earned for any of the three calendar years preceding the date of termination, or (b) the annual bonus that he would have been entitled to receive for the calendar year in which his termination occurs; (iii) apro-rata portion of the annual bonus that they would have been entitled to receive for the calendar year in which their termination occurs;occurs, except for Mr. Phillips; (iv) continued payment by the Company of medical coverage or COBRA premiums for a12-month period, or less in the event that they cease to be eligible for COBRA continuation coverage; and (v) all outstanding and unvested RSUs and PSUs held by them pursuant to our 2007 or 2017 LTEP shall immediately vest upon termination.termination; (vi) with respect to Mr. Benchimol, a cash lump sum amount equal to his most recent annual equity award; and (vii) with respect to Messrs. Arora, Benchimol, Vogt and Wilson, if any payments made in connection with their termination following a “Change in Control” were to constitute an “excess parachute payment” under Section 280G of the Internal Revenue Code, such payments shall either be reduced so that no portion of any such payments would constitute an excess parachute payment, or shall be paid in full, depending upon which approach would result in their receiving the greatest amount of payments after taxes. In the case of the latter approach, they would be liable for any excise tax owed.
In the event that the employment agreement for Mr. Wilson is not renewed by the Company at the end of his respective term of employment and on at least as favorable terms and conditions, Mr. Wilson will be entitled to those benefits payable under a termination of employment by the Company without cause as described above.
Under the employment agreements, the Executives are required to execute a general release and waiver of claims against us and to resign from their positions upon termination of their employment for any reason. The Executives are subject tonon-competition andnon-solicitation (of our employees and customers) provisions for a period of 12 months after termination for any reason, except for: (i) Mr. DiSipioPhillips who, isin the event of his voluntary termination, shall be subject to anon-competition provision for a period of sixthree months from the date of his voluntary termination or the Company’s termination of his employment for cause and anon-solicitation provision for a period of 12six months from the date of termination for any reason; and (ii) Mr. Benchimol who is subject tonon-competition andnon-solicitation (of our employees and customers) provisions for a period of 24 months after termination of employment. Additionally, the Executives are subject to ongoing confidentiality requirements.
Employment Agreement – Mr. Ekberg. Mr. Ekberg is subject to non-competition and non-solicitation provisions during his employment term and is also subject to ongoing confidentiality requirements. Upon a change of control, no payments are required under Mr. Ekberg’s employment agreement. Under his outstanding equity award agreements, all outstanding and unvested RSUs held by Mr. Ekberg pursuant to the 2007 or 2017 LTEP shall immediately vest upon termination in connection with a change of control.
Separation Agreements – Messrs. Nichols, Henry and DiSipio. In connection with Mr. Nichols’ resignation from the Company effective March 31, 2017, the Company and Mr. Nichols entered into a separation agreement on February 27, 2017 providing for a separation payment, subject to Mr. Nichols’ execution of a general release of claims and agreement to comply with the restrictive covenants in the agreement which includenon-competition andnon-solicitation (of the Company’s employees and customers) provisions for a period of 12 months following his departure date. The severance includes: (i) payment of $2,330,397 as required in the event of the Company’s termination of Mr. Nichols without cause under Mr. Nichols’ employment agreement; (ii) payment of $500,000 relating to the transition of client relationships and his functional responsibilities to Mr. Ekberg; (iii) the accelerated vesting of his outstanding equity awards which had a fair market value of $4,656,105 as of March 31, 2017 and which otherwise would have continued to vest under his employment agreement; and (iv) a three month housing allowance of $75,000 as Mr. Nichols was under assignment in Zurich.
In connection with Mr. Henry’s retirement from the Company on December 31, 2017, the Company and Mr. Henry entered into a separation agreement on December 11, 2017 providing for a separation payment, subject to Mr. Henry’s execution of a general release of claims and agreement to comply with the restrictive covenants in the agreement which includenon-competition andnon-solicitation (of the Company’s employees and customers) provisions for a period of 12 months following his departure date. Mr. Henry received: (i) payment of $1,151,000, as required in the event of the Company’s non-renewal of Mr. Henry’s employment agreement; and (ii) the accelerated vesting of his outstanding equity awards which otherwise would have continued to vest under his employment agreement which had a fair market value of $2,675,657 on January 2, 2018.
Additionally, the Company entered into a Consulting Agreement with Mr. Henry effective January 1, 2018 through December 31, 2018 for a fee of $1,200,000 under which Mr. Henry will serve as a senior advisor to our Chief Executive Officer and provide guidance and support to our Chief Financial Officer, as needed.
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| 60 EXECUTIVE COMPENSATION | | |
In connection with Mr. DiSipio leaving the Company on April 1, 2018, the Company and Mr. DiSipio entered into a separation agreement on March 14, 2018 providing for a separation payment subject to Mr. DiSipio’s execution of a general release of claims and agreement to comply with the restrictive covenants in the agreement. The restrictive covenants include a non-competition restriction for a period of six months following his departure date and a restriction from soliciting the Company’s employees for a period of one year following his departure date. The severance includes: (i) payment of $1,116,000 and the continued vesting of Mr. DiSipio’s outstanding equity awards as of his departure date as required in the event of the Company’s termination of Mr. DiSipio without cause under his employment agreement; and (ii) payment in the amount of $666,000 representing the cash value of Mr. DiSipio’s equity award for the 2017 performance year.
With the exception of Mr. Nichols who was no longer employed by the Company on December 29, 2017 and Mr. Henry who entered into a separation agreement with the Company on December 11, 2017, the following table sets forth the termination and/or change in control benefits payable to each NEO under the benefits applicable to all executive officers as well as under each NEO’s applicable employment agreement, assuming termination of employment on December 29, 2017.31, 2019. With the exception of insured benefits, all termination payments will be made by us.
| Name | Death or Disability | Executive Termination for Good Reason or Company Termination Without Cause (pre-Change in Control) | Executive Termination for Good Reason or Company Termination Without Cause in Connection with Change in Control (1) | Death or Disability | Executive Termination for Good Reason or Company Termination Without Cause (pre-Change in Control) | Executive Termination for Good Reason or Company Termination Without Cause in Connection with Change in Control (1) | |||||||||||||||||||||
Albert A. Benchimol | |||||||||||||||||||||||||||
Base Pay ($) | 1,100,000 | 2,200,000 | 2,200,000 | 1,100,000 | 2,200,000 | 2,200,000 | |||||||||||||||||||||
Separation Bonus ($) | 1,925,000 | 6,579,650 | 8,906,975 | 1,925,000 | 5,825,050 | 7,775,075 | |||||||||||||||||||||
Value of Equity Awards ($)(2) | 11,223,711 | 11,223,711 | 11,223,711 | 15,265,975 | 15,265,975 | 15,265,975 | |||||||||||||||||||||
Benefits and Perquisites: Medical, Dental, Vision ($)(3) | - | 27,320 | 27,320 | 45,533 | 45,533 | 45,533 | |||||||||||||||||||||
Cash Payments(4) | - | 5,000,000 | 5,000,000 | ||||||||||||||||||||||||
Total ($) | 14,248,711 | 20,030,681 | 22,358,006 | 18,336,508 | 28,336,558 | 30,286,583 | |||||||||||||||||||||
Christopher N. DiSipio(4) | |||||||||||||||||||||||||||
Peter J. Vogt | |||||||||||||||||||||||||||
Base Pay ($) | - | 500,000 | 500,000 | - | 600,000 | 600,000 | |||||||||||||||||||||
Separation Bonus ($) | 500,000 | 1,000,000 | 1,500,000 | 690,000 | 1,380,000 | 2,070,000 | |||||||||||||||||||||
Value of Equity Awards ($)(2) | 1,739,046 | 1,739,046 | 1,739,046 | 2,360,184 | 2,360,184 | 2,360,184 | |||||||||||||||||||||
Benefits and Perquisites: Medical ($)(3) | - | 18,131 | 18,131 | ||||||||||||||||||||||||
Benefits and Perquisites: Medical, Dental, Vision ($)(3) | 30,176 | 30,176 | 30,176 | ||||||||||||||||||||||||
Total ($) | 2,239,046 | 3,257,177 | 3,757,177 | 3,080,360 | 4,370,360 | 5,060,360 | |||||||||||||||||||||
Jan Ekberg | |||||||||||||||||||||||||||
Steve K. Arora | |||||||||||||||||||||||||||
Base Pay ($) | - | - | - | - | 900,000 | 900,000 | |||||||||||||||||||||
Separation Bonus ($) | - | - | - | 1,125,000 | 2,250,000 | 3,375,000 | |||||||||||||||||||||
Value of Equity Awards ($)(2) | 1,247,705 | - | 1,247,705 | 4,668,477 | 4,668,477 | 4,668,477 | |||||||||||||||||||||
Benefits and Perquisites: Medical, Dental, Vision ($) | - | - | - | ||||||||||||||||||||||||
Benefits and Perquisites: Medical, Dental, Vision ($)(3) | 30,196 | 30,196 | 30,196 | ||||||||||||||||||||||||
Total ($) | 5,823,673 | 7,848,673 | 8,973,673 | ||||||||||||||||||||||||
David S. Phillips | |||||||||||||||||||||||||||
Base Pay ($) | - | 450,000 | 600,000 | ||||||||||||||||||||||||
Separation Bonus ($) | 750,000 | 1,312,500 | 1,500,000 | ||||||||||||||||||||||||
Value of Equity Awards ($)(2) | 2,399,890 | 2,399,890 | 2,399,890 | ||||||||||||||||||||||||
Benefits and Perquisites: Medical, Dental, Vision ($)(3) | 30,176 | 30,176 | 30,176 | ||||||||||||||||||||||||
Total ($) | 1,247,705 | - | 1,247,705 | 3,180,066 | 4,192,566 | 4,530,066 | |||||||||||||||||||||
Peter W. Wilson | |||||||||||||||||||||||||||
Base Pay ($) | - | 800,000 | 800,000 | - | 900,000 | 900,000 | |||||||||||||||||||||
Separation Bonus ($) | 1,000,000 | 2,000,000 | 3,000,000 | 1,125,000 | 2,250,000 | 3,375,000 | |||||||||||||||||||||
Value of Equity Awards ($)(2) | 2,272,456 | 2,272,456 | 2,272,456 | 2,915,354 | 2,915,354 | 2,915,354 | |||||||||||||||||||||
Benefits and Perquisites: Medical, Dental, Vision ($)(3) | - | 18,131 | 18,131 | 21,978 | 21,978 | 21,978 | |||||||||||||||||||||
Total ($) | 3,272,456 | 5,090,587 | 6,090,587 | 4,062,332 | 6,087,332 | 7,212,332 | |||||||||||||||||||||
| (1) | Under the 2017 LTEP and each of our NEO’s employment agreements, a change |
|
| other transaction occurs; or (iv) a complete liquidation or dissolution of our company, or the sale or other disposition of all or substantially all of our assets (or, in the case of our NEO employment agreements, the approval by our shareholders of such a transaction). |
| (2) | Indicates value of unvested equity awards for which vesting accelerates upon termination for death or disability and for which vesting continues in accordance with the vesting terms set forth in the applicable award agreements in the case of |
| EXECUTIVE COMPENSATION 61 | |
| Company termination without |
| (3) | Value of continued coverage under medical, dental and vision assumes that the Company is paying the full cost of COBRA premiums for one year and is based on |
| (4) | Represents lump sum cash payment equal to the grant date fair value of Mr. |
| ||
| 62 EXECUTIVE COMPENSATION | | |
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K (“Item 402(u)”), the Company is providing the following reasonable estimate of the ratio of the median of the annual total compensation of all of our employees (except Albert A. Benchimol, our Chief Executive Officer and President (“CEO”)), to the annual total compensation of Mr. Benchimol, calculated in a manner consistent with Item 402(u). For 2017,2019, our last completed fiscal year:
The median of the annual total compensation of all of our employees, excluding our CEO, was $148,262.$144,000.
The annual total compensation of our CEO was $7,045,778.$9,278,330.
Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all of our employees except our CEO was 48:64:1.
We determined that, as of October 1, 2017,2019, our employee population consisted of approximately 1,3001,667 individuals. As permitted by Item 402(u), such employee population and our calculation of the pay ratio disclosed above omits approximately 300 individuals who became our employees as the result of our acquisition of Novae Group plc on October 2, 2017.
To identify our “median employee” from this employee population, we obtained from our internal compensation system, annualized base salary amounts for 20172019 to each employee in the employee population. We believe this consistently applied compensation measure reasonably reflects annual compensation across our employee base. Base salary amounts for employees located outside the United States and compensated in currencies other than U.S. dollars were converted to U.S. dollars based on the foreign exchange rates as of December 31, 2017.2019. We annualized the base salary amounts for any permanent employees in the employee population who were employed by us for less than the full fiscal year. We then ranked the resulting base salaries for all of the employees in the employee population other than our CEO to determine our median employee. Once we identified our median employee, we combined all of the elements of such employee’s compensation for 20172019 in accordance with the requirements of Item 402(c)(2)(x) of RegulationS-K for the Summary Compensation Table. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our Summary Compensation Table set forth above in this proxy statement.
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The table below sets forth information regarding compensation earned by ournon-management directors in 2017.2019.
| Name | Fees Earned or Paid ($)(1) | All Other Compensation ($) | Total ($) | Fees Earned or Paid ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
Michael A. Butt | 402,000 | (2) | 500,000 | (3) | 902,000 | 250,000 | 100,000 | 350,000 | (4) | 700,000 | ||||||||||||||||||
Charles A. Davis | 220,000 | - | 220,000 | 130,000 | 100,000 | - | 230,000 | |||||||||||||||||||||
Anne Melissa Dowling(5) | - | - | - | - | ||||||||||||||||||||||||
Robert L. Friedman | 210,000 | - | 210,000 | 120,000 | 100,000 | - | 220,000 | |||||||||||||||||||||
Christopher V. Greetham | 302,000 | (2) | - | 302,000 | ||||||||||||||||||||||||
Maurice A. Keane | 232,500 | (2) | - | 232,500 | ||||||||||||||||||||||||
Cheryl-Ann Lister | 225,000 | - | 225,000 | |||||||||||||||||||||||||
Christopher V. Greetham(6) | 220,000 | 100,000 | - | 320,000 | ||||||||||||||||||||||||
Elanor R. Hardwick | 123,553 | 100,000 | - | 223,553 | ||||||||||||||||||||||||
Maurice A. Keane (6) | 195,000 | 100,000 | - | 295,000 | ||||||||||||||||||||||||
Thomas C. Ramey | 255,000 | - | 255,000 | 162,500 | 100,000 | - | 262,500 | |||||||||||||||||||||
Henry B. Smith | 314,500 | (2) | - | 314,500 | ||||||||||||||||||||||||
Henry B. Smith(6) | 217,500 | 100,000 | - | 317,500 | ||||||||||||||||||||||||
Barbara A. Yastine | 132,500 | 100,000 | - | 232,500 | ||||||||||||||||||||||||
Wilhelm Zeller | 220,000 | - | 220,000 | 120,000 | 100,000 | - | 220,000 | |||||||||||||||||||||
Lizabeth H. Zlatkus | 99,573 | 79,659 | - | 179,232 | ||||||||||||||||||||||||
| (1) | Under the terms of |
| (2) | Represents the aggregate grant date fair value of the |
| (3) | Mr. Butt |
| (4) | Represents $350,000 in consulting fee payments pursuant to the terms of a consulting agreement by and between Mr. Butt and the Company dated May 3, 2012, |
| (5) | Ms. Dowling joined our Board in January 2020 and will receive the board and committee service retainers set forth in our Annual Directors Compensation Program effective January 1, 2020 as described below. |
| (6) | Each of the cash payments for Messrs. Greetham, Keane and Smith include $55,000 for their 2019 |
2017 DIRECTORS ANNUAL COMPENSATION PROGRAM
CompensationOur director compensation philosophy is to appropriately compensate ournon-management directors for the time, expertise, and effort required to serve as a director of an international (re)insurance company and to properly align the interests of our directors generally consists of cash compensation in the form of annual retainers for Board and Committee service.long-term shareholders. Our director compensation program is reviewed annually by our independent compensation consultant against our compensation benchmarking peer group. Understanding that the talent pool for qualified directors extends beyond this group, Korn Ferry also benchmarked our director compensation against asize-relevant group of financial services organizations. Although this competitive review is conducted annually, it is our practice to make changes to director pay periodically so that they can remain competitive for a longer period of time.
Pursuant to our Directors may elect to receive common sharesAnnual Compensation Program, our directors were compensated in the form of annual retainers for Board and committee service plus additional retainers for service asnon-employee Chairman of the
| 64 2019 DIRECTOR COMPENSATION | | |
Board and Lead Independent Director. Directors who are employees of the Company do not receive compensation for their service. Each of the directors were required to receive 50% of their annual Board retainer in lieuAXIS common shares. The directors had the option to receive the remaining 50% of their Board retainer and all or 50% of the annualtheir retainers for committee service in AXIS common shares by notifying the Company of their electionelections prior to January 1, of the year for which the election will be effective.2019. The number of common shares issued to participants iswas based onupon the closing fair market value of the Company’s common shares on the tenth trading day in January.January 2019, in accordance with the Program.
For Board service during 2019, our directors were entitled to receive an annual retainer of $200,000. Directors who also are employees do not receive compensation for their service as directors.Non-management directors who become directorsappointed after January 1, are entitled to a2019 receivedpro-rated portion of the annual director compensationretainer(s) based on months of service in that year.
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Pursuantduring 2019. Our directors were entitled to the 2017 Directors Annual Compensation Program, ournon-management directors received an annual retainer of $200,000 for service on the Board. Ournon-management Chairman of the Board received an additional retainer of $150,000. Our Lead Independent Director received an additional retainer of $15,000. Directors receivedreceive the following annual retainers for committee service during 2017:2019:
| Committee Member | Annual Retainer | |||
Audit Committee | $ | 15,000 | ||
Compensation Committee | $ | 10,000 | ||
Corporate Governance and Nominating Committee | $ | 7,500 | ||
Finance Committee | $ | 10,000 | ||
Risk Committee | $ | 10,000 | ||
| Committee Member | Annual Retainer ($) | ||||
Audit Committee | 15,000 | ||||
Compensation Committee | 10,000 | ||||
Corporate Governance and Nominating Committee | 7,500 | ||||
Finance Committee | 10,000 | ||||
Risk Committee | 10,000 | ||||
Committee chairpersons received the following additional annual retainers:
| Committee Chair | Annual Retainer | |||
Audit Committee | $ | 30,000 | ||
Compensation Committee | $ | 15,000 | ||
Corporate Governance and Nominating Committee | $ | 7,500 | ||
Finance Committee | $ | 10,000 | ||
Risk Committee | $ | 20,000 | ||
| Committee Chair | Annual Retainer ($) | ||||
Audit Committee | 30,000 | ||||
Compensation Committee | 15,000 | ||||
Corporate Governance and Nominating Committee | 7,500 | ||||
Finance Committee | 10,000 | ||||
Risk Committee | 20,000 | ||||
In additionMr. Smith, our Lead Independent Director, received an additional retainer of $15,000. Mr. Butt, ournon-management Chairman, received an additional retainer of $150,000.
Effective September 16, 2020, Mr. Butt will retire as Chairman of the Board and Mr. Smith will assume the role. Mr. Butt will continue to provide services under his consulting agreement through December 2020 which include, among other things:
acting as a senior adviser to our CEO, segment CEOs and our management Executive Committee;
providing guidance on director, executive officer and senior management professional development;
playing an instrumental role in employee development and engagement, including by advising on the culture of continuous development for our employees and engaging in person with employees across our global offices at various professional levels;
representing AXIS at key industry events, including as a keynote speaker at the “Future of Insurance Symposium: Climate Risk & Insurance Implications” discussed above;
assisting with regulatory initiatives;
advising on management succession planning; and
| • | acting as a key adviser on the Company’s corporate citizenship initiatives. In particular, Mr. Butt continues to take a leadership role in addressing the challenges and opportunities facing our industry as a result of climate risk and is a frequent writer and lecturer on this topic. Most recently, following the Climate Risk Symposium, Mr. Butt authored a foreword to an issue ofThe Insurance Insider further discussing his remarks on climate risk. |
Upon assuming the Chairman role on September 16, 2020, Mr. Smith will be entitled to receive apro-rated portion of the $150,000 retainer for Chairman service in accordance with our Directors Annual Compensation Program and will not receive any additional compensation received for service on our Board,outside of the Program.
Those directors who serveserved on the Boards of our Irish subsidiaries, AXIS Re SE and AXIS Specialty Europe SE, during 2019 also received an annual retainer in the amount of $40,000 for service as director plus $3,000 for each meeting attended.
| 2019 DIRECTOR COMPENSATION 65 | |
Director Compensation for 2018.2020.In September 2017,December 2019, our Board, based upon the recommendationsrecommendation of our Compensation Committee, approved the 2018revised our Directors Annual Compensation Program to (i) provide that cash payments of annual retainers be paid semi-annually in arrears in July and in the following January; and (ii) provide the Chairman and Lead Independent Director with the option to receive all or 50% of their respective retainers in AXIS common shares. There were no changes fromto any of the 2017 program.annual retainer amounts and the additional provisions of our Directors Annual Compensation Program remain substantially unchanged.
| 66 2019 DIRECTOR COMPENSATION | | |
| EQUITY COMPENSATION PLAN INFORMATION |
The following table presents information concerning our equity compensation plans as of December 31, 2017.2019.
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1) | Weighted- Average Exercise Price Outstanding Options, Warrants and Rights(2) | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in the First Column)(3) | Number of Exercise of Outstanding Warrants and | Weighted- Exercise Price Outstanding Warrants and | Number of Remaining under Equity Compensation Reflected in the First Column)(3) | |||||||||||||||||||||
Equity compensation plans approved by security holders | 1,584,444 | - | 3,274,004 | 1,530,410 | - | 2,565,143 | |||||||||||||||||||||
Equity compensation plans not approved by security holders | - | - | - | - | - | - | |||||||||||||||||||||
Total | 1,584,444 | - | 3,274,004 | 1,530,410 | - | 2,565,143 | |||||||||||||||||||||
| (1) | Includes |
| (2) | There were no outstanding options at December 31, |
| (3) | Includes common shares available for issuance under our 2017 LTEP pursuant to awards of stock options, stock appreciation rights, restricted stock unit awards and other equity-based or equity-related awards. |
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| EQUITY COMPENSATION PLAN INFORMATION | |
| AUDIT COMMITTEE REPORT |
The primary purpose of the Audit Committee is to assist our Board in its oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, the independent registered public accounting firm’s qualifications, independence and performance and the performance of our internal audit function. The Audit Committee is solely responsible for the appointment, retention and compensation of our independent registered public accounting firm. It is not the responsibility of the Audit Committee to plan or conduct audits or to determine that our financial statements are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. This is the responsibility of management and the independent auditors, as appropriate.
In performing its duties, the Audit Committee:
has reviewed our audited financial statements for the year ended December 31, 20172019 and had discussions with management regarding the audited financial statements;
has discussed with the independent registered public accounting firm the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard 1301 “Communications with Audit Committees”; and applicable requirements of the SEC;
has received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence; and
has discussed with the independent registered public accounting firm their independence, the audited financial statements and other matters the Audit Committee deemed relevant and appropriate.
Based on these reviews and discussions, the Audit Committee recommended to the Board that our audited financial statements for the year ended December 31, 20172019 be included in our Annual Report on Form10-K for that year for filing with the Securities and Exchange Commission. The Board of Directors approved the Audit Committee’s recommendations.
AUDIT COMMITTEE
Thomas C. Ramey, Chairman
Anne Melissa Dowling
Christopher V. Greetham
Elanor R. Hardwick
Maurice A. Keane
Henry B. SmithBarbara A. Yastine
Lizabeth H. Zlatkus
| 68 AUDIT COMMITTEE REPORT | | |
| PROPOSAL 3. APPOINTMENT OF INDEPENDENT AUDITORS |
The Audit Committee and our Board have recommended the appointment of Deloitte Ltd. as our independent registered public accounting firm for the fiscal year ending December 31, 20182020 and the authorization of our Board, acting through the Audit Committee, to set the fees for the independent registered public accounting firm. Representatives of the firm are expected to be present at the Annual General Meeting with an opportunity to make a statement if they desire to do so and to be available to respond to appropriate questions.
Recommendation of the Board
The Board recommends that you vote “FOR” the appointment of Deloitte Ltd. as our independent registered public accounting firm and the authorization of our Board, acting through the Audit Committee, to set the fees for the independent registered public accounting firm.
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| PROPOSAL 3. APPOINTMENT OF INDEPENDENT AUDITORS | |
| PRINCIPAL ACCOUNTING FEES AND SERVICES |
Aggregate fees for professional services rendered for us by Deloitte Ltd. for the fiscal years ended December 31, 20172019 and 20162018 are set forth below.
| Fiscal Year 2017 ($) | Fiscal Year 2016 ($) | Fiscal Year 2019 ($) | Fiscal Year 2018 ($) | |||||||||||||
Audit Fees(1) | 6,580,443 | 4,668,369 | 6,064,804 | 5,697,126 | ||||||||||||
Audit-Related Fees(2) | 79,220 | 52,194 | 149,220 | 89,870 | ||||||||||||
Tax Fees(3) | 45,053 | 125,906 | 81,910 | 71,225 | ||||||||||||
All Other Fees(4) | 39,712 | - | ||||||||||||||
Total | 6,744,428 | 4,846,469 | 6,295,934 | 5,858,221 | ||||||||||||
| (1) | Audit |
| (2) | Audit-related fees for the years ended December 31, |
| (3) | Tax fees for the years ended December 31, |
The Audit Committee of the Board considered whether providing thenon-audit services included in this table was compatible with maintaining Deloitte Ltd.’s independence and concluded that it was.
In September 2003, our Board adopted a policy regarding the procurement of audit services andnon-audit services. The primary purpose of the policy is to ensure that we engage public accountants as external auditors to provide only audit andnon-audit services that are compatible with maintaining independence. The policy requires that the Audit Committeepre-approve all audit andnon-audit services for which our auditors are engaged. The Audit Committee may delegate the authority to grantpre-approvals to the Chairman of the Audit Committee or, in the event of hisnon-availability, to any other Audit Committee member. The Chairman of the Audit Committee or such other Audit Committee member must present to the Audit Committee at each scheduled meeting anypre-approvals that are granted. For the years ended December 31, 20172019 and 2016,2018, 100% of the audit fees, the audit-related fees and the tax fees werepre-approved.
| 70 PRINCIPAL ACCOUNTING FEES AND SERVICES | | |
| SHAREHOLDER PROPOSALS FOR |
Shareholder proposals intended for inclusion in the Proxy Statement for the 20192021 Annual General Meeting pursuant to Rule14a-8 under the Exchange Act should be sent to our Secretary at AXIS House, 92 Pitts Bay Road, Pembroke HM 08, Bermuda and must be received by November 27, 2018December 3, 2020 and otherwise comply with the requirements of Rule14a-8 in order to be considered for inclusion in the 20192021 proxy materials. If the date of next year’s Annual General Meeting is moved more than 30 days before or after the anniversary date of this year’s Annual General Meeting, the deadline for inclusion of proposals in our proxy materials is instead a reasonable time before we begin to print and mail our proxy materials. In addition, if a holder of our common shares intends to present a proposal at the 20192021 Annual General Meeting other than pursuant to Rule14a-8 under the Exchange Act, and if the proposal is not received by our Secretary by February 10, 201917, 2021 or, if the date of next year’s Annual General Meeting is moved more than 30 days before or after the anniversary date of this year’s Annual General Meeting, a reasonable time before we mail our proxy materials for the 20192021 Annual General Meeting, then the proxies designated by our Board for the 20192021 Annual General Meeting may vote in their discretion on any such proposal any common shares for which they have been appointed proxies without mention of such matter in the proxy materials for such meeting.
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| SHAREHOLDER PROPOSALS FOR | |
| OTHER MATTERS |
We know of no specific matter to be brought before the meeting that is not referred to in this proxy statement. If any other matter properly comes before the meeting, including any shareholder proposal properly made, the proxy holders will vote the proxies in accordance with their best judgment on such matter.
The proxies are solicited by our Board on our behalf for use at the 20182020 Annual General Meeting and any adjournments or postponements thereof and we will bear the cost of the solicitation of proxies. We have engaged Morrow Sodali LLC, 470 West Ave., Stamford, CT 06902, to assist us in the solicitation of proxies and the anticipated cost of such engagement is approximately $15,000. Proxies also may be solicited by our directors, officers and employees and our subsidiaries without receiving additional compensation. The solicitation may be conducted by mail, telephone, telegram, telecopy, email, Internet and personal solicitation. Upon request, we also will reimburse brokers, banks and others who hold shares in their names, or in the names of nominees, for forwarding proxy materials to the beneficial owners.
WE WILL FURNISH, WITHOUT CHARGE TO ANY SHAREHOLDER, A COPY OF OUR ANNUAL REPORT ON FORM10-K THAT WE FILE WITH THE SECURITIES AND EXCHANGE COMMISSION. A COPY OF THE REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 20172019 MAY BE OBTAINED UPON WRITTEN REQUEST TO OUR SECRETARY AT AXIS HOUSE, 92 PITTS BAY ROAD, PEMBROKE HM 08, BERMUDA.
| 72 OTHER MATTERS | | |
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AXIS CAPITAL HOLDINGS LIMITED
NON-GAAP FINANCIAL MEASURES RECONCILIATION (UNAUDITED)
EX-PGAAP OPERATING INCOME ANDEX-PGAAP OPERATING RETURN ON AVERAGE COMMON EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
| Years ended December 31, | ||||||||
| 2019 | 2018 | |||||||
Net income available to common shareholders | $ | 282,361 | $ | 396 | ||||
Net investment (gains) losses[a] | (91,233 | ) | 150,218 | |||||
Foreign exchange (gains)[b] | (12,041 | ) | (29,165 | ) | ||||
Reorganization expenses[c] | 37,384 | 66,940 | ||||||
Interest in (income) of equity method investments[d] | (9,718 | ) | (993 | ) | ||||
Income tax expense (benefit) | 6,656 | (26,697 | ) | |||||
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Operating income[e] | $ | 213,409 | $ | 160,699 | ||||
Amortization of value of business acquired (“VOBA”) and intangible assets[f] | 37,939 | 184,531 | ||||||
Amortization of acquisition cost[g] | (12,207 | ) | (125,467 | ) | ||||
Income tax (benefit) | (4,888 | ) | (11,222 | ) | ||||
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Ex-PGAAP operating income[h] | $ | 234,253 | $ | 208,541 | ||||
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Average common shareholders’ equity | $ | 4,512,040 | $ | 4,410,668 | ||||
Return on average common equity | 6.3 | % | - | % | ||||
Operating return on average common equity[e] | 4.7 | % | 3.6 | % | ||||
Ex-PGAAP operating return on average common equity[h] | 5.2 | % | 4.7 | % | ||||
| [a] | Tax cost (benefit) of $12 million and $(12) million for the years ended December 31, 2019 and 2018, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the ability to utilize capital losses. |
| [b] | Tax cost (benefit) of $1 million and $(4) million for the years ended December 31, 2019 and 2018, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions, after consideration of other relevant factors including the tax status of specific foreign exchange transactions. |
| [c] | Tax (benefit) of $(7) million and $(11) million for the years ended December 31, 2019 and 2018, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions. |
| [d] | Tax cost of $nil and $0.3 million for the years ended December 31, 2019 and 2018, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions. |
| [e] | Operating income (loss) and operating return on average common equity (“operating OROACE”) arenon-GAAP financial measures as defined in Item 10(e) of SEC RegulationS-K. The reconciliations to the most comparable GAAP financial measures, net income (loss) available (attributable) to common shareholders and return on average common equity (“ROACE”), respectively, are presented in the table above, and a discussion of the rationale for the presentation of these items is provided later in this report. |
| [f] | Tax (benefit) of $(7) million and $(35) million for the years ended December 31, 2019 and 2018, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions. |
| [g] | Tax cost of $2 million and $24 million for the years ended December 31, 2019 and 2018, respectively. Tax impact is estimated by applying the statutory rates of applicable jurisdictions. |
| [h] | Ex-PGAAP operating income (loss) andex-PGAAP operating return on average common equity(“ex-PGAAP operating OROACE”) arenon-GAAP financial measures as defined in Item 10(e) of SEC RegulationS-K. The reconciliations to the most comparable GAAP financial measures, net income (loss) available (attributable) to common shareholders and ROACE respectively, are presented in the table above, and a discussion of the rationale for the presentation of these items is provided later in this report. |
Non-GAAP Financial Measures
We present our results of operations in the way we believe will be most meaningful and useful to investors, analysts, rating agencies and others who use our financial information to evaluate our performance. Some of the measurements we use are considerednon-GAAP financial measures under SEC rules and regulations. In this
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proxy statement, we presentex-PGAAP operating income (loss) andex-PGAAP OROACE which arenon-GAAP financial measures as defined in in Item 10(e) of SEC RegulationS-K. We believe that thesenon-GAAP financial measures, which may be defined and calculated differently by other companies, better explain and enhance the understanding of our results of operations. However, these measures should not be viewed as a substitute for those determined in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Ex-PGAAP Operating Income (Loss)
Ex-PGAAP operating income (loss) representsafter-tax operational results exclusive of net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments, together with amortization of VOBA and intangible assets, and amortization of acquisition costs, both associated with the balance sheet of Novae Group plc (“Novae”) at October 2, 2017 (the “closing date” or “acquisition date”).
Although the investment of premiums to generate income and investment gains (losses) is an integral part of our operations, the determination to realize investment gains (losses) is independent of the underwriting process and is heavily influenced by the availability of market opportunities. Furthermore, many users believe that the timing of the realization of investment gains (losses) is somewhat opportunistic for many companies.
Foreign exchange losses (gains) in our consolidated statements of operations primarily relate to the impact of foreign exchange rate movements on net insurance-related liabilities. In addition, we recognize unrealized foreign exchange losses (gains) on our equity securities and foreign exchange losses (gains) realized on the sale of our available for sale investments and equity securities in net investment gains (losses). We also recognize unrealized foreign exchange losses (gains) on our available for sale investments in other comprehensive income (loss). These unrealized foreign exchange losses (gains) generally offset a large portion of the foreign exchange losses (gains) reported in net income (loss) available (attributable) to common shareholders, thereby minimizing the impact of foreign exchange rate movements on total shareholders’ equity. As a result, the foreign exchange losses (gains) in our consolidated statement of operations in isolation are not a fair representation of the performance of our business.
Reorganization expenses are primarily driven by business decisions, the nature and timing of which are not related to the underwriting process, therefore, these expenses are excluded fromex-PGAAP operating income (loss).
Interest in income (loss) of equity method investments is primarily driven by business decisions, the nature and timing of which are not related to the underwriting process, therefore, this income (loss) is excluded fromex-PGAAP operating income (loss).
Certain users of our financial statements evaluate performance exclusive ofafter-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments, together with amortization of VOBA and intangible assets, and amortization of acquisition costs, both associated with Novae’s balance sheet at the acquisition date, to understand the profitability of recurring sources of income.
We believe that showing net income (loss) available (attributable) to common shareholders exclusive ofafter-tax net investment gains (losses), foreign exchange losses (gains), reorganization expenses, interest in income (loss) of equity method investments, together with amortization of VOBA and intangible assets, and amortization of acquisition costs, both associated with Novae’s balance sheet at the closing date, reflects the underlying fundamentals of our business. In addition, we believe that this presentation enables investors and other users of our financial information to analyze performance in a manner similar to how our management analyzes the underlying business performance. We also believe this measure follows industry practice and, therefore, facilitates comparison of our performance with our peer group. We believe that equity analysts and certain rating agencies that follow us, and the insurance industry as a whole, generally exclude these items from their analyses for the same reasons.
The reconciliation ofex-PGAAP operating income (loss) to net income (loss) available (attributable) to common shareholders, the most comparable GAAP financial measure, is presented in the‘Non-GAAP Financial Measures Reconciliation’ section of this proxy statement.
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We also presentex-PGAAP OROACE which is derived from theex-PGAAP operating income (loss) measure and is reconciled to the most comparable GAAP financial measure, return on average common equity (“ROACE”) in the‘Non-GAAP Financial Measures Reconciliation’ section of this proxy statement.
We believe the presentation ofex-PGAAP operating income (loss) andex-PGAAP OROACE enables investors and other users of our financial information to analyze the performance of our business.
Acquisition of Novae
On October 2, 2017, we acquired Novae. At the acquisition date, we identified VOBA, which represents the present value of the expected underwriting profit within policies that werein-force at the closing date of the transaction. In addition, the allocation of the acquisition price to the assets acquired and liabilities assumed based on estimated fair values at the acquisition date, resulted in thewrite-off of the deferred acquisition cost asset on Novae’s balance sheet at the acquisition date as the value of policiesin-force on that date are considered within VOBA. Consequently, underwriting income (loss) in the years ended December 31, 2019 and 2018 included the recognition of premiums attributable to Novae’s balance sheet at the acquisition date without the recognition of the associated acquisition costs which were written off at the closing date.
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AXIS CAPITAL HOLDINGS LIMITED
THIS PROXY
1 U P X Mark here to vote FOR all nominees 01 - Thomas C. Ramey 02 - Wilhelm Zeller 03 - Lizabeth H. Zlatkus Mark here to WITHHOLD vote from all nominees For All EXCEPT - To withhold authority to vote for any nominee(s), write the name(s) of such nominee(s) below. Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. 03846C + + Proposals — The Board of Directors recommend a vote FOR A all the nominees listed and FOR Proposals 2 – 3. 2. To approve, by non-binding vote, the compensation paid to our named executive officers. 3. To appoint Deloitte Ltd., Hamilton, Bermuda, to act as our independent registered public accounting firm for the fiscal year ending December 31, 2020 and to authorize the Board of Directors, acting through the Audit Committee, to set the fees for the independent registered public accounting firm. 1. Election of Directors: For Against Abstain Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full 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. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q 2020 Annual Meeting Proxy Card For Against Abstain 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE_ SACKPACK__ 1234 5678 9012 345 MMMMMMMMM MMMMMMMMMMMMMMM 4 5 8 0 8 5 MR A SAMPLE (THIS AREA IS SOLICITED ON BEHALF OF THE BOARDSET 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 C 1234567890 J N T C123456789 MMMMMMMMMMMM 000000000.000000 ext If no electronic voting, delete QR code and control # You may vote online or by phone instead of mailing this card. Online Go to www.investorvote.com/AXS or scan the QR code — login details are located in the shaded bar below. Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/AXS Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Votes submitted electronically must be received by 11:59 PM Eastern Time on May 6, 2020 Your vote matters – here’s how to vote!
The undersigned hereby appoints Michael A. Butt
Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/AXS Notice of 2020 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting — May 7, 2020 Roberto Bernardino, Paul Konyecsni and Conrad D. Brooks, and eachJamie Steeves, or any of them, as proxieseach with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with full power of substitution, to vote all of the common shares of AXIS Capital Holdings Limited held in the name ofpowers which the undersigned at the close of business on March 8, 2018 on all matters presentedwould possess if personally present, at the Annual General Meeting of Shareholders of AXIS Capital Holdings Limited to be held on May 2, 2018 in Pembroke, Bermuda, and7, 2020 or at any postponement or adjournment thereof.
IF THIS PROXY IS PROPERLY EXECUTED AND RETURNED BY MAIL OR PROPERLY SUBMITTED VIA THE INTERNET OR BY PHONE, THE SHARES THAT IT REPRESENTS WILL BE VOTED AS SPECIFIED. IF NO CHOICE IS SPECIFIED, THE SHARES WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND FOR PROPOSALS 1, 2 andAND 3.
(Continued, and In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be marked, signed and dated,voted appear on the otherreverse side)
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AXIS Capital Holdings Limited qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q Change of Address — Please print new address below. Comments — Please print your comments below. C Non-Voting Items Important Notice Regarding the Availability of Proxy Materials for the
Annual General Meeting of Shareholders to be Held on May 2, 2018:
7, 2020: The Proxy Statement, the 20172019 Annual Report to Shareholders and the Form10-K of AXIS Capital Holdings
Limited for 20172019 are available at https://materials.proxyvote.com/G0692U.
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THE BOARD RECOMMENDS A VOTE “FOR” PROPOSALS 1, 2 2020 Annual Meeting Admission Ticket 2020 Annual General Meeting of Shareholders of AXIS Capital Holdings Limited May 7, 2020 at 8:30 a.m. Local Time Pembroke HM 08, Bermuda Upon arrival, please present this admission ticket and 3.
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In their judgment, upon such other matters as may properly come beforephoto identification at the meeting or any postponement or adjournment thereof.registration desk.
DATE:, 2018
AUTHORIZED SIGNATURE(S) – This section must be completed by your vote to be counted.
IMPORTANT: Please sign exactly as your name(s) appear(s) hereon. If you are acting asattorney-in-fact, corporate officer or in another representative capacity, please indicate the capacity in which you are signing.
No hedging or pledging of AXIS stock