March 23, 2022 |
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It is with great pleasure that we invite you to our 20212022 Annual General Meeting of shareholders on Wednesday, May 5, 2021,4, 2022, at 6 Bevis Marks in London. Whether or not you plan to attend the meeting, please vote your shares; your vote is important to us.
Some of the highlights from our year include:
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While our share price in 2020 was not unaffected by concerns related to the COVID-19 pandemic, our business model is designed with unusually severe credit events in mind, and our share price has been recovering in 2021. We have the financial strength to fulfill our commitments, and events such as the COVID-19 pandemic tend to remind investors of the value of our primary product: our financial guaranty insurance policy.
On a personal note, we offer our support and well wishes for those impacted by the pandemic, and our thanks to the many people on the front lines, whether in healthcare or in the many other fields where people are putting themselves at risk to support their communities during these difficult times.
Sincerely,
Francisco L. Borges | Dominic J. Frederico | |||||||
President and Chief Executive Officer |
23, 2022
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2022. EMPLOYEE SHAREHOLDERS WHO PARTICIPATE IN THE ASSURED GUARANTY EMPLOYEE STOCK PURCHASE PLAN MAY VOTE UP UNTIL 11:59 P.M. EASTERN DAYLIGHT SAVINGS TIME ON APRIL 29, 2022.
SUMMARY ____________________________ | 1 | |||||||||||||
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How Are Directors Nominated? _____________ | 4 | |||||||||||||
Committees of the Board _________________ | 5 | |||||||||||||
How Are Directors Compensated? __________ | 7 | |||||||||||||
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How Does the Board Oversee Risk? ________ | 9 | |||||||||||||
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________________ | 10 | |||||||||||||
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___________ | 11 | |||||||||||||
HUMAN CAPITAL MANAGEMENT ________ | 12 | |||||||||||||
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How Much Stock Is Owned By Directors, Nominees and Executive Officers? ________ | ||||||||||||||
Which Shareholders Own More Than 5% of Our Common Shares? __________________ | ||||||||||||||
ELECTION OF DIRECTORS _____________ | ||||||||||||||
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CD&A Roadmap _______________________ | 30 | |||||||||||||
Summary _____________________________ | 31 | |||||||||||||
Executive Compensation Program Structure and Process _________________________ | 36 | |||||||||||||
_______________ | ||||||||||||||
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2021 Executive Compensation Conclusion | ||||||||||||||
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Governance ______________ | ||||||||||||||
Post-Employment Compensation __________ | 64 | |||||||||||||
Tax Treatment _________________________ | 64 | |||||||||||||
Non-GAAP Financials Measures ___________ | 65 |
Compensation | 66 | |||||||||||||
Summary Compensation Table _____________ | 67 | |||||||||||||
_________________ | 68 | |||||||||||||
Perquisite Policy ________________________ | ||||||||||||||
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Employee Stock | 68 | |||||||||||||
Indemnification Agreements _______________ | 68 | |||||||||||||
2021 Grants of Plan-Based Awards _________ | 69 | |||||||||||||
Outstanding Equity Awards ________________ | 71 | |||||||||||||
2021 Stock Vested ______________________ | 72 | |||||||||||||
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Potential Payments Upon Termination or Change in Control ______________________ | ||||||||||||||
_________________________ | ||||||||||||||
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ADVISORY APPROVAL OF | 78 | |||||||||||||
APPOINTMENT OF INDEPENDENT AUDITOR _____________________________ | ||||||||||||||
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Pre-Approval Policy of Audit and Non-Audit Services | ||||||||||||||
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PROPOSALS CONCERNING OUR SUBSIDIARY, ASSURED GUARANTY RE LTD. ______________________________ | 81 | |||||||||||||
Proposal 4.1-Election of AG Re Directors _____ | ||||||||||||||
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How do I submit a proposal for inclusion in next year’s proxy material? _______________ | ||||||||||||||
How do I submit a proposal or make a nomination at an Annual General Meeting? __ | ||||||||||||||
OTHER MATTERS _____________________ |
23, 2022.
Time and Date | ||||||||
Place | 6 Bevis Marks London, EC3A 7BA United Kingdom | |||||||
Record Date | March | |||||||
Voting | Shareholders as of the record date are entitled to vote. Each Common Share is entitled to one vote for each director nominee and one vote for each of the proposals to be voted on. |
Agenda Item |
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Election of directors | For each director nominee | Page | 18 | |||||||||
Approval, on an advisory basis, of the compensation paid to AGL’s named executive officers | For |
| Page | 78 | ||||||||
Appointment of PricewaterhouseCoopers as AGL’s independent auditor for | For |
| Page | 79 | ||||||||
Direction of AGL to vote for directors of, and the appointment of the independent auditor of, AGL’s subsidiary, Assured Guaranty Re Ltd. | For each director nominee and for the independent auditor | Page | 81 |
DIRECTOR |
COMMITTEES
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NOMINEE
| SINCE
| PRINCIPAL OCCUPATION
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| Francisco L. Borges | 69 | 2007 | Chairman, Landmark Partners, LLC |
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| G. Lawrence Buhl | 74 | 2004 | Former Regional Director for Insurance Services, Ernst & Young LLP |
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| Dominic J. Frederico | 68 | 2004 | President and Chief Executive Officer, Assured Guaranty Ltd. |
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| Bonnie L. Howard | 67 | 2012 | Former Chief Auditor and Global Head of Control and Emerging Risk, Citigroup |
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| Thomas W. Jones | 71 | 2015 | Founder and Senior Partner of TWJ Capital, LLC |
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| Patrick W. Kenny | 78 | 2004 | Former President and Chief Executive Officer, International Insurance Society |
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| Alan J. Kreczko | 69 | 2015 | Former Executive Vice President and General Counsel of The Hartford Financial Services Group, Inc. |
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| Simon W. Leathes | 73 | 2013 | Former independent non-executive director of HSBC Bank plc |
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| Michelle McCloskey | 59 | New | Former President of the Americas of Man Group and President of Man FRM | ||||||||||||||||||||||
| Michael T. O’Kane | 75 | 2005 | Former Senior Managing Director, Securities Division, TIAA CREF |
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| Yukiko Omura | 65 | 2014 | Former Executive Vice President and Chief Executive Officer of the Multilateral Investment Guarantee Agency of the World Bank Group |
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| Lorin P.T. Radtke | 52 | New | Co-founder and Partner, M Seven 8 |
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| Courtney C. Shea | 60 | New | Managing Member, Columbia Capital Management |
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2020 Meetings | 5 | 5 | 4 | 4 | 4 | 4 | 0 |
cast
.NOMINEE | DIRECTOR SINCE | PRINCIPAL OCCUPATION | COMMITTEES | ||||||||||||||||||||||||||||||||
A | C | ES | F1 | NG | RO | E | |||||||||||||||||||||||||||||
Francisco L. Borges | 70 | 2007 | Partner of Ares Management Corporation and Co-Head of Ares Secondary Solutions | ||||||||||||||||||||||||||||||||
G. Lawrence Buhl | 75 | 2004 | Former Regional Director for Insurance Services, Ernst & Young LLP | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||
Dominic J. Frederico | 69 | 2004 | President and Chief Executive Officer, Assured Guaranty Ltd. | ✓ | |||||||||||||||||||||||||||||||
Bonnie L. Howard | 68 | 2012 | Former Chief Auditor and Global Head of Control and Emerging Risk, Citigroup | ✓ | ✓ | ||||||||||||||||||||||||||||||
Thomas W. Jones | 72 | 2015 | Founder and Senior Partner of TWJ Capital, LLC | ✓ | ✓ | ||||||||||||||||||||||||||||||
Patrick W. Kenny | 79 | 2004 | Former President and Chief Executive Officer, International Insurance Society | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||
Alan J. Kreczko | 70 | 2015 | Former Executive Vice President and General Counsel of The Hartford Financial Services Group, Inc. | ✓ | ✓ | ||||||||||||||||||||||||||||||
Simon W. Leathes | 74 | 2013 | Former Independent non-executive director of HSBC Bank plc | ✓ | ✓ | ||||||||||||||||||||||||||||||
Michelle McCloskey | 60 | 2021 | Former President of the Americas of Man Group and President of Man FRM | ✓ | ✓ | ||||||||||||||||||||||||||||||
Yukiko Omura | 66 | 2014 | Former Executive Vice President and Chief Executive Officer of the Multilateral Investment Guarantee Agency of the World Bank Group | ✓ | ✓ | ✓ | |||||||||||||||||||||||||||||
Lorin P.T. Radtke | 53 | 2021 | Co-founder and Partner, M Seven 8 | ✓ | ✓ | ||||||||||||||||||||||||||||||
Courtney C. Shea | 61 | 2021 | Former Managing Member, Columbia Capital Management | ✓ | ✓ | ||||||||||||||||||||||||||||||
2021 Meetings | 4 | 5 | 4 | 4 | 4 | 4 | 0 |
2
•The Board and management have reviewed the rules of the SEC and the New York Stock Exchange (which we refer to as the NYSE) listing standards regarding corporate governance policies and processes, and we are in compliance with the rules and listing standards.
•We have adopted Corporate Governance Guidelines covering issues such as director qualification standards (including independence), director responsibilities, Board self-evaluations, and executive sessions of the Board.
•Our Corporate Governance Guidelines contain our Categorical Standards for Director Independence.
•We have adopted a Global Code of Ethics for our employees and directors and charters for each Board committee.
Telephone | (441) 279-5725 | |||||||
Facsimile | (441) 279-5701 | |||||||
generalcounsel@agltd.com |
2021. Ms. McCloskey was elected to the Board effective May 5, 2021, and so was eligible to attend only two of the sets of Board and committee meetings held in 2021. She missed only one set of Board and committee meetings, due to illness.
Compensation Committee.
•Our Board has a substantial majority of independent directors.
•All members of the Audit, Compensation, Nominating and Governance, Finance, Environmental and Social Responsibility, and Risk Oversight Committees are independent directors.
3
•Our Audit Committee recommends to the Board, which recommends to the shareholders, the annual appointment of our independent auditor. Each year our shareholders are asked to authorize the Board, acting through its Audit Committee, to determine the compensation of, and the scope of services performed by, our independent auditor. The Audit Committee also has the authority to retain outside advisors.
•No member of our Audit Committee simultaneously serves on the audit committee of more than one other public company.
•Our Compensation Committee has engaged a compensation consultant, Frederic W. Cook & Co., Inc., which we refer to as FW Cook, to assist it in evaluating the compensation of our CEO, based on corporate goals and objectives and, with the other independent directors, setting his compensation based on this evaluation. FW Cook has also assisted us in designing our executive compensation program. The Compensation Committee has conducted an assessment of FW Cook’s independence and has determined that FW Cook does not have any conflict of interest. Our Nominating and Governance Committee also engages FW Cook to assist it in evaluating the compensation of our independent directors.
•We established an Executive Committee to exercise certain authority of the Board in the management of company affairs between regularly scheduled meetings of the Board when it is determined that a specified matter should not be postponed to the next scheduled meeting of the Board. Our Executive Committee did not meet in 2020.
•We have adopted a Global Code of Ethics that sets forth basic principles to guide our day-to-day activities. The Global Code of Ethics addresses, among other things, conflicts of interest, corporate opportunities, confidentiality, fair dealing, protection and proper use of company assets, compliance with laws and regulations, including insider trading laws, and reporting illegal or unethical behavior. The full text of our Global Code of Ethics is available on our website at www.assuredguaranty.com/governance. • |
In addition to AGL’s quarterly Board meetings, our Board has an annual business review meeting to assess specific areas of our Company’s operations and to learn about general trends affecting the financial guaranty and asset management industries. We also provide our directors with the opportunity to attend continuing education programs.
•We established an Environmental and Social Responsibility Committee in May 2019, and itwhich began meeting in August 2019. Prior to the establishment of the Environmental and Social Responsibility Committee, our Nominating and Governance Committee was responsible for many such matters.
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•Reviews the qualifications of potential nominees to determine whether they might be good candidates for Board of Directors membership
•Reviews the potential nominees’ judgment, experience, independence, understanding of our business or other related industries and such other factors as it determines are relevant in light of the needs of the Board of Directors and our Company
•Selects qualified candidates and reviews its recommendations with the Board of Directors, which will decide whether to nominate the person for election to the Board of Directors at an Annual General Meeting of Shareholders (which we refer to as an Annual General Meeting). Between Annual General Meetings, the Board, upon the recommendation of the Nominating and Governance Committee, can fill vacancies on the Board by appointing a director to serve until the next Annual General Meeting.
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provide that Board members should have individual backgrounds that, when combined, provide a portfolio of experience and knowledge that will serve our governance and strategic needs. The Nominating and Governance Committee will consider Board candidates on the basis of a range of criteria, including broad-based business knowledge and contacts, prominence and sound reputation in their fields as well as having a global business perspective and commitment to good corporate citizenship. Our Corporate Governance Guidelines specify that directors should represent all shareholders and not any special interest group or constituency. The guidelines additionally specify that directors should be able and prepared to provide wise and thoughtful counsel to top management on the full range of potential issues facing us. Directors must possess the highest personal and professional integrity. Directors must have the time necessary to fully meet their duty of due care to the shareholders and be willing to commit to service over the long term.
•the shareholder’s name as it appears in AGL’s books
•a representation that the shareholder is a record holder of AGL’s sharesCommon Shares and intends to appear in person or by proxy at the meeting to present such proposal
•the class and number of sharesCommon Shares beneficially owned by the shareholder
•the name and address of any person to be nominated
•a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons, naming such other person or persons, pursuant to which the nomination or nominations are to be made by the shareholder
•such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement filed pursuant to the SEC’s proxy regulations
•the consent of each nominee to serve as a director of AGL, if so elected
Mr. O'Kane, who currently serves as chair of the Finance Committee and a member of the Audit and Nominating and Governance Committees, will retire upon the completion of his 2021-2022 term.
The Audit Committee | Chair: Bonnie L. Howard / | ||||
Other Audit Committee members: G. Lawrence Buhl, Thomas W. Jones, Michelle McCloskey, Michael T. |
The Compensation Committee | Chair: Thomas W. Jones / 5 meetings during | ||||
Other Compensation Committee members: G. Lawrence Buhl, Bonnie L. Howard, Patrick W. Kenny |
The Environmental and Social Responsibility Committee | Chair: Alan J. Kreczko / 4 meetings during | ||||
Other Environmental and Social Responsibility Committee members: |
The Finance Committee | |||||
Other Finance Committee members: Alan J. Kreczko, Simon W. Leathes, Yukiko Omura, Lorin P.T. Radtke |
The Nominating and Governance Committee | Chair: Francisco L. Borges / 4 meetings during | ||||
Other Nominating and Governance Committee members: |
6
The Risk Oversight Committee | Chair: Simon W. Leathes / 4 meetings during | ||||
Other Risk Oversight Committee members: |
The Executive Committee | Chair: Francisco L. Borges / No meetings during | ||||
Other Executive Committee members: Dominic J. Frederico, Patrick W. Kenny, Simon W. Leathes |
•The non-executive Chairman Chair of the Board receives an annual retainer of $225,000 in recognition of the strategic role he plays and the time commitment involved. The ChairmanChair of the Board has elected not to receive any fees for serving as a member or chair of a board committee.
•The Chairmanchair of each committee of the Board other than the Executive Committee receives an additional $30,000 annual retainer.
•Members, other than the chairmanchair of the committee, of each committee of the Board other than the Executive Committee receive an additional $15,000 annual retainer.
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2018,2020 Director Compensation Report, the most recent year for which
•the absence of meeting fees to simplify program administration and avoid the implication that there is additional pay for meeting attendance, which is an expected part of Board service
•the use of committee member retainers to differentiate compensation among directors based on workload
•the vesting of annual restricted stock awards over a one-year period, which protects against the possibility of director entrenchment
•the payment of additional retainers to the board and committee leadership to recognize the additional responsibilities and time commitment associated with these roles
•our limited benefits (we provide a Company match of up to $15,000 per director for contributions to charitable organizations of the director’s choice)
•a meaningful and robust stock ownership guideline
2019.
Name | Fees Earned or Paid in Cash | Stock Awards(1) | All Other Compensation(2) | Total | ||||||||||||
Francisco L. Borges(3) |
| $345,000 |
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| $145,000 |
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| $17,733 |
| $ | 507,733 |
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G. Lawrence Buhl |
| $150,000 |
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| $145,000 |
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| $16,276 |
| $ | 311,276 |
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Bonnie L. Howard |
| $165,000 |
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| $145,000 |
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| $26,776 |
| $ | 336,776 |
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Thomas W. Jones |
| $165,000 |
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| $145,000 |
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| $26,776 |
| $ | 336,776 |
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Patrick W. Kenny(4) |
| $165,000 |
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| $145,000 |
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| $15,983 |
| $ | 325,983 |
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Alan J. Kreczko(5) |
| $180,000 |
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| $145,000 |
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| $16,276 |
| $ | 341,276 |
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Simon W. Leathes(6) |
| $301,631 |
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| $145,000 |
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| $ 8,548 |
| $ | 455,179 |
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Michael T. O’Kane |
| $165,000 |
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| $145,000 |
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| $ 2,733 |
| $ | 312,733 |
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Yukiko Omura |
| $150,000 |
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| $145,000 |
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| — |
| $ | 295,000 |
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Name | Fees Earned or Paid in Cash | Stock Awards(1) | All Other Compensation(2) | Total | ||||||||||||||||||||||
Francisco L. Borges(3) | $345,000 | $145,000 | $12,707 | $502,707 | ||||||||||||||||||||||
G. Lawrence Buhl | $165,000 | $145,000 | $16,760 | $326,760 | ||||||||||||||||||||||
Bonnie L. Howard | $180,000 | $145,000 | $16,760 | $341,760 | ||||||||||||||||||||||
Thomas W. Jones | $180,000 | $145,000 | $16,760 | $341,760 | ||||||||||||||||||||||
Patrick W. Kenny(4) | $150,000 | $145,000 | $16,957 | $311,957 | ||||||||||||||||||||||
Alan J. Kreczko(5) | $180,000 | $145,000 | $16,760 | $341,760 | ||||||||||||||||||||||
Simon W. Leathes(6) | $198,840 | $145,000 | $7,521 | $351,361 | ||||||||||||||||||||||
Michelle McCloskey(7) | $150,000 | $145,000 | — | $295,000 | ||||||||||||||||||||||
Michael T. O’Kane | $180,000 | $145,000 | $12,707 | $337,707 | ||||||||||||||||||||||
Yukiko Omura | $165,000 | $145,000 | — | $310,000 | ||||||||||||||||||||||
Lorin P.T. Radtke | $150,000 | $145,000 | $10,000 | $305,000 | ||||||||||||||||||||||
Courtney C. Shea | $150,000 | $145,000 | $15,000 | $310,000 |
Name | Unvested Restricted Stock(1) | |||||||
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9,544 | ||||||||
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2,824 | ||||||||
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2,824 | ||||||||
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2,824 | ||||||||
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3,409 | ||||||||
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6,330 | ||||||||
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2,824 | ||||||||
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2,922 | ||||||||
Michael T. O’Kane | ||||||||
2,824 | ||||||||
Yukiko Omura | 2,824 | |||||||
Lorin P.T. Radtke | ||||||||
Courtney C. Shea | 2,824 |
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Company by developing appropriate corporate governance guidelines and identifying qualified individuals to become board members. The Environmental and Social Responsibility Committee oversees risks related to the environment, sustainability and social responsibility, while each of our other Board committees have responsibility for risk assessment of such risks to the extent within their purview.
•disclosed in director and officer questionnaires (which must also be completed by nominees for director) or in certifications of Global Code of Ethics compliance
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•reported directly by the related person or by another employee of our Company
•identified by our vendor management procedures and matching gift procedures based on comparison of vendors and matching gift recipients against a list of directors, executive officers and known 5% shareholders and certain of their related persons
If we have a related person transaction that requires committee approval in accordance with the policies set forth in our committee charters, we either seek that approval before we enter into the transaction or, if that timing is not practical, we ask the appropriate committee to ratify the transaction.
that module. 2021.2020,2021, the following transactions occurred with investors who reported beneficial ownership of 5% or more of our voting securities., and its affiliates, which we refer to as BlackRock, own approximately 10.13%9.8% and 8.93%13.8% of our Common Shares outstanding, respectively, as of March 12, 202111, 2022 (the record date for our Annual General Meeting), based on the amount of Common Shares they reported in their Schedule 13G filings as of the date set forth in such filing, and on the amount of our Common Shares outstanding as of the record date. We appointed both Wellington Management and BlackRock as an investment managersmanager to manage certain of our investment accounts prior to theirit reaching such ownership thresholds. As of December 31, 2020,2021, Wellington Management managed approximately $3$2.7 billion of our investment assets, which is approximately 32%29% of our total fixed maturity and short-term investment portfolio. In connection with the consolidation of our unaffiliated investment managers in the third quarter of 2020, we terminated the investment management agreement with BlackRock, but continued our investment reporting agreement with them. In 2020,2021, we incurred expenses of approximately $1.7$1.9 million related to our investment management agreement with Wellington ManagementManagement. BlackRock supplies our investment reporting module, and $1.7 millionin 2021 we incurred expenses of approximately $497,000 with respect to our investment management and investment reporting agreements with BlackRock.16(A)16(a) REPORTS2020.
As discussed below, in late 2021, we launched a formal one-on-one mentoring program to provide an additional learning resource for our employees.
Our Company isus. We are committed to building and sustaining at all levels of the organization a diverse workforce that is representative of our communities, in a manner consistent with our business needs, scale and resources, and creating an inclusive culture and workplace that embraces the differences within our staff and effectively utilizes the many and varied talents of our employees.
During 2020, we worked to promote The Environmental and Social Responsibility Committee reviews information about our diversity and foster inclusion within our Company through several new initiatives:
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DIVERSITY AND INCLUSION COMMITTEE. We formed an employee-led Diversity and Inclusion Committee, composed of dedicated employees with different backgrounds, points of view, levels of seniority and tenure with us, to provide input into our policies and strategies for achieving a diverse workforce and an inclusive culture.
Our Diversity and Inclusion Policy articulates our commitment to building and sustaining a diverse workforce at all levels of our company and creating an inclusive culture and guides our approaches for achieving these goals. You can find our Diversity and Inclusion Policy on our website at www.assuredguaranty.com/governance.
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Under the governance of the Environmental and Social Responsibility Committee and the guidance of senior management, the Company formalized the consideration of
two primary external portfolio managers to conduct an ESG analysis of their respective portions of our investment portfolio, to the extent to which ESG data is readily available, for us to analyze if there are any material ESG risks in the portfolio that may adversely impact return expectations.
governance
.results are reviewed periodically by an independent third party, which conducts a limited assurance review in accordance with ISO 14064-3 International Standards.
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Name of Beneficial Owner | Common Shares Beneficially Owned | Unvested Restricted Common Shares(1) | Restricted Share Units(2) | |||||||||
Robert A. Bailenson | 232,780 | — | 149,567 | |||||||||
Francisco L. Borges | 251,321 | 17,425 | — | |||||||||
Russell B. Brewer II | 203,243 | — | 85,507 | |||||||||
G. Lawrence Buhl | 60,424 | 5,156 | — | |||||||||
David A. Buzen | 71,076 | — | 61,574 | |||||||||
Ling Chow | 64,813 | — | 84,957 | |||||||||
Dominic J. Frederico(3) | 1,444,395 | — | 481,392 | |||||||||
Bonnie L. Howard | 31,751 | 5,156 | — | |||||||||
Thomas W. Jones | 31,398 | 5,156 | — | |||||||||
Patrick W. Kenny | 67,468 | 6,223 | — | |||||||||
Alan J. Kreczko | 34,310 | 11,558 | — | |||||||||
Simon W. Leathes | 17,222 | 7,112 | — | |||||||||
Michelle McCloskey | — | — | — | |||||||||
Michael T. O’Kane | 60,335 | 5,156 | — | |||||||||
Yukiko Omura | 13,798 | 5,156 | — | |||||||||
Lorin P.T. Radtke | — | — | — | |||||||||
Courtney C. Shea | — | — | — | |||||||||
All directors, nominees and executive officers
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| 2,849,177
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| 68,098
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| 990,179
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Name of Beneficial Owner | Common Shares Beneficially Owned | Unvested Restricted Common Shares(1) | Restricted Share Units(2) | |||||||||||||||||
Robert A. Bailenson | 211,086 | — | 152,388 | |||||||||||||||||
Francisco L. Borges | 268,746 | 9,544 | — | |||||||||||||||||
Russell B. Brewer II(3) | 196,632 | — | 88,355 | |||||||||||||||||
G. Lawrence Buhl | 45,580 | 2,824 | — | |||||||||||||||||
David A. Buzen | 81,023 | — | 62,661 | |||||||||||||||||
Ling Chow | 77,396 | — | 86,304 | |||||||||||||||||
Dominic J. Frederico(4) | 1,528,494 | — | 510,171 | |||||||||||||||||
Bonnie L. Howard | 36,650 | 2,824 | — | |||||||||||||||||
Thomas W. Jones | 36,554 | 2,824 | — | |||||||||||||||||
Patrick W. Kenny | 72,874 | 3,409 | — | |||||||||||||||||
Alan J. Kreczko | 45,868 | 6,330 | — | |||||||||||||||||
Simon W. Leathes | 21,167 | 2,824 | — | |||||||||||||||||
Michelle McCloskey | — | 2,922 | — | |||||||||||||||||
Michael T. O’Kane | 65,491 | 2,824 | — | |||||||||||||||||
Yukiko Omura | 16,667 | 2,824 | — | |||||||||||||||||
Lorin P.T. Radtke | — | 2,824 | — | |||||||||||||||||
Courtney C. Shea | — | 2,824 | — | |||||||||||||||||
All directors, nominees and executive officers as a group (20 individuals)(5) | 2,918,766 | 44,797 | 1,033,681 |
Name and Address of Beneficial Owner | Number of Shares
| Percent
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BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 9,049,844(1) | 13.8% | ||||||||||||||||
Putnam Investments, LLC 100 Federal Street Boston, MA 02110 | 7,706,196(2) |
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The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | 7,517,675(3) |
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Wellington Management Group LLP c/o Wellington Management Company LLP 280 Congress Street Boston, MA 02210 | 6,462,794(4) |
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Dimensional Fund Advisors LP 6300 Bee Cave Road, Building One Austin, TX 78746 | 3,997,428(1)) |
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The board of directors recommends that you vote “FOR” the election of the nominees as directors of AGL. |
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RACIAL OR ETHNIC DIVERSITY |
n | Women | n | Asian | ||||||||||||||
n | Men | n | Black or African American | ||||||||||||||
n | White |
DIRECTOR TENURE | |||||
Average Tenure |
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n | <65 | n | <6 | ||||||||||||||
n | 65-70 | n | 6-10 | ||||||||||||||
n | >70 | n | 11+ |
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Borges | Buhl | Frederico | Howard | Jones | Kenny | Kreczko | Leathes | McCloskey | Omura | Radtke | Shea | |||||||||||||||||||||||||||
Financial Guaranty Industry | ü | ü | ü | ü | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||
U.S. Public Finance | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||||
Non - U.S. Finance | ü | ü | ||||||||||||||||||||||||||||||||||||
Infrastructure Finance | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||||||
Audit and Internal Control | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||
Government Service | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||||
Financial Reporting | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||
Investment Management | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||
Legal and Compliance | ü | ü | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||||
Insurance Industry | ü | ü | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||||
Banking | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||||
Corporate Governance | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||
Risk Management | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||
Enterprise Risk Management | ü | ü | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||||
Cybersecurity and Data Privacy | ü | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||
Human Capital Management | ü | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||
Environmental and Climate Change | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||||
Audit Com. Financial Expert* | ü | ü | NA | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||||
Independent | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||
Director Since | 2007 | 2004 | 2004 | 2012 | 2015 | 2004 | 2015 | 2013 | 2021 | 2014 | 2021 | 2021 | ||||||||||||||||||||||||||
Age | 70 | 75 | 69 | 68 | 72 | 79 | 70 | 74 | 60 | 66 | 53 | 61 |
NOMINEES FOR DIRECTOR
The following pages provide biographical information about the thirteen individuals who have been nominated to serve as directors of our Company until their successors are duly elected. Our directors are elected annually.
The biographical information on the following pages should be read in conjunction with the skills matrix on the previous page.
Francisco L. Borges
Chair of the Board Director Since:2007 Committee Memberships: Nominating and Governance (Chair) Executive (Chair)
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G. Lawrence Buhl Independent Director Director Since: 2004 Committee Memberships: Audit Compensation Environmental and Social Responsibility |
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Dominic J. Frederico Chief Executive Officer Director Since: 2004 Committee Memberships: Executive |
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Bonnie L. Howard Independent Director Director Since: 2012 Committee Memberships: Audit (Chair) Compensation Nominating and Governance |
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Thomas W. Jones Independent Director Director Since: 2015 Committee Memberships: Compensation (Chair) Audit Nominating and Governance |
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Patrick W. Kenny Independent Director Director Since: 2004 Committee Memberships: Compensation Nominating and Governance Executive |
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Alan J. Kreczko Independent Director Director Since: 2015 Committee Memberships: Environmental and Social Responsibility (Chair) Finance Risk Oversight |
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Simon W. Leathes Independent Director Director Since: 2013 Committee Memberships: Risk Oversight (Chair) Finance Executive |
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Michelle McCloskey Independent Director Director Since: 2021 Committee Memberships: Audit Environmental and Social Responsibility |
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Yukiko Omura Independent Director Director Since: 2014 Committee Memberships: Environmental and Social Responsibility Finance Risk Oversight |
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Qualifications:
Mr. O’Kane’s background has given him considerable experience in investment and risk management, both of which are key aspects of our business and are important to the Board and Board committee deliberation.
Biography:
Mr. O’Kane, age 75, became a director of AGL in August 2005. From 1986 until his retirement in August 2004, Mr. O’Kane was employed at TIAA-CREF (financial products) in a number of different capacities, most recently as Senior Managing Director, Securities Division. In that capacity, he oversaw approximately $120 billion of fixed income assets and approximately $3.5 billion of private equity fund investments.
From 2006 to 2013, Mr. O’Kane served as a director of Jefferies Group, Inc., where he was a member of the Audit, Compensation and Governance committees. In March 2013, Jefferies merged into Leucadia National Corporation, where Mr. O’Kane now serves as the lead director and as a member of the Compensation and the Nominating and Governance committees.
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Lorin P.T. Radtke Independent Director Director Since: 2021 Committee Memberships: Finance Risk Oversight |
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Courtney C. Shea Independent Director Director Since: 2021 Committee Memberships: Audit Environmental and Social Responsibility |
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•each Audit Committee member is independent, as that concept is defined in Section 10A of the Exchange Act, the SEC rules promulgated thereunder, and the NYSE listing standards, of our Company and our management;
•each Audit Committee member is financially literate, as contemplated by the NYSE listing standards; and
each•five Audit Committee member is anmembers, Mss. Howard and Shea and Messrs. Buhl, Jones and O'Kane, are audit committee financial expert,experts, as that term is defined under Item 407(d) of Regulation S-K.
•the firm’s internal quality-control procedures;
•any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation of the firm by governmental or professional authorities, within the preceding five years, and any steps taken to deal with any such issues; and
26
•an assessment of the independent auditors’ independence and relationships between the independent auditor and the Company.
2022.
•reviewed and discussed the audited financial statements contained in the Form 10-K with management and PwC;
•reviewed and discussed our quarterly earnings press releases and related materials;
•reviewed the overall scope and plans for the internal and independent audits and the results of such audits;
•reviewed critical accounting estimates and policies and the status of our loss reserves;
•reviewed and discussed our compliance with our conflict of interest, regulatory compliance and global code of ethics policies with the General Counsel, Chief Compliance Officer and/or Deputy Compliance Officer;
•reviewed and discussed our enterprise risk management and insurance underwriting with the Chief Risk Officer, the Chief Surveillance Officer and the Chief Credit Officer, coordinating the oversight of enterprise risk management and insurance underwriting with the Risk Oversight Committee;
•reviewed and discussed cybersecurity and privacy matters with our establishment of an asset management segment and the related accounting, financial reporting, compliance, internal control and regulatory implications;
•reviewed and discussed the impact of the continuing COVID-19 pandemic on our insurance segment and our asset management segment;
•reviewed and discussed the impact on information technologyIT resources, cybersecurity, audit procedures and our internal controls of the remote work environment resulting from the continuing COVID-19 pandemic as well as the hybrid office / work-from-home environment adopted by the Company upon the return of its employees to the office;
reviewed our compliance with the requirements of Sarbanes Oxley Section 404 and our internal controls over financial reporting, including controls to prevent and detect fraud;
•reviewed our whistleblower policy and its application;
•discussed with PwC all the matters required to be discussed by U.S. GAAP, including the matters required to be discussed by the applicable requirements of the Public Accounting Oversight Board and the SEC, such as:
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–PwC’s judgments about the quality, not just the acceptability, of our Company’s accounting principles as applied in our financial reporting;
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•reviewed all other material written communications between PwC and management; and
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31 | |||||
2021 Achievements Highlights _____________ | 31 | ||||
Our Total Shareholder Return _____________ | |||||
2021 Results Against Financial Performance Targets _____________________________ | 35 |
Snapshot of Our CEO’s 2021 Compensation _ | 35 | |||||||
__________________________ | 36 |
________ | 36 | |||||
________________ | 38 | |||||
_____________ | 39 | |||||
____________________________ |
40 | |||||
48 | |||||
Overview ______________________________ | 48 | ||||
Base Salary ___________________________ | |||||
Cash Incentive _________________________ | 49 |
Equity Compensation ____________________ | 55 | |||||
Perquisites ____________________________ | 56 | |||||
____________________________ | 56 |
| 58 | |||||||
Separation Agreement ______________________ | 59 | |||||||
2021 Executive Compensation Conclusion______ | 60 | |||||||
Compensation Governance __________________ | 60 | |||||||
_____________________________ | 60 | |||||||
______ | 60 | |||||||
Executive Compensation Comparison Group ___ | 61 | |||||||
Executive Officer Recoupment Policy and Related Forfeiture and Termination for Cause Provisions _____________________________ | 61 | |||||||
Share Ownership Guidelines ________________ | 62 | |||||||
Anti-Hedging Policy _______________________ | 63 | |||||||
Anti-Pledging Policy _______________________ | 63 | |||||||
Award Timing ____________________________ | 63 | |||||||
| 64 | |||||||
Retirement Benefits _______________________ | 64 | |||||||
Severance ______________________________ | ||||||||
Change in Control Benefits _________________ | 64 | |||||||
Tax Treatment _____________________________ | 64 | |||||||
_______________ | 65 |
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For 2020,$204 million economic benefit against our gross written premiums were $454 million, while our new business productionexpected losses in the insurance segment,public finance sector.
$50.20 at year-end 2021.
$366 million. 60% share of new-issue insured par, we led the municipal bond insurance industry to its highest market penetration in a dozen years. product.) PVP. |
We •
AUM. • refer to as CLOs. •As a result of both •In addition, we are using the knowledge base and experience of AssuredIM to expand the categories and types of investments included in our investment portfolio. |
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We further managed our capital, . •We returned approximately •Over the last In 2021 alone, we repurchased approximately 14% of the Common Shares we had outstanding at the beginning of 2021. •We |
While we smoothly transitioned to operating remotely in the COVID-19• environment, theThe uncertainty createdand travel and face-to-face meeting restrictions caused by the continuing COVID-19 pandemic as well as travel and face-to-face meeting restrictions, made it more difficult to conduct business in some of our markets.
•Over the last several years, municipal bond yields have been at historically low levels, making our insurance product less attractive to issuers. In 2020, municipal interest rates reached new lows. The 30-year AAA Municipal Market Data (MMD) rate is a measure of interest rates in the Company’s largest financial guaranty insurance market, U.S. public finance. The 30-year AAA MMD rate started the year off2021 at 2.07%1.39% and endedremained mostly steady ending the year at 1.39%1.49%. On August 7th,The average rate for the 30-year AAA Municipal Market Data benchmark yields reached 1.27%year was 1.54%, below the lowest yield since1.71% average for the benchmark was first published in June 1981.Theprior year and a new historical low. The level of interest rates influences how high a premium our Company can charge for our financial guaranty insurance product, with lower interest rates generally lowering the premium rates we may charge.
•The difference, or credit spread, between “A” and “AAA” 30-year general obligation started the year at 3730-year A-rated General Obligation (GO) relative to the 30-year AAA MMD averaged 33 basis points, which we abbreviaterefer to as bps, rose to a peak of 49in 2021--down from 42 bps in June, then returned to finish the year at 39 bps, still relatively tight. On the other hand,2020. BBB credit spreads measured on the same basis started the year at 65 bps, rose to a peak of 157averaged 70 bps in late June2021, significantly tighter than the 121 bps average in 2020. Both the A and early July, and ended the yearBBB credit spreads are at 108 bps, which is elevated compared to the 5-year average of 89 bps.their narrowest levels in over a decade. A largernarrower credit spread is one factor that may allowrestrict the level of premiums our Company tocan charge higher premiums for our financial guaranty insurance product.
We have continued to accumulate excess capital at our insurance companies as our insured portfolios have amortized. While we believe we have reached an inflection point where, assuming a stable capital market environment, we should insure as much new insured par as the amount of our insured portfolio that amortizes, there are regulatory constraints to moving capital in excess of that needed to support our insurance segment to businesses that could provide more earnings, and these constraints reduce our capital efficiency.
•We also continued to face pricing competition in certain segments of the financial guaranty market from another financial guaranty insurer that serves a smaller portion of the market than we serve.
31
Cumulative TSR from 12/31/15 | Assured Guaranty | S&P 500 Index | S&P 500 Financial Sector GICs Level 1 Index | Russell MidCap Financial Services Index | ||||
12/31/2015 | 100.00 | 100.00 | 100.00 | 100.00 | ||||
12/31/2016 | 145.60 | 111.95 | 122.75 | 115.15 | ||||
12/31/2017 | 132.44 | 136.38 | 149.92 | 134.28 | ||||
12/31/2018 | 152.24 | 130.39 | 130.37 | 120.80 | ||||
12/31/2019 | 198.12 | 171.44 | 172.21 | 161.33 | ||||
12/31/2020 | 130.88 | 202.96 | 169.19 | 169.30 |
Calculated from total returns published by Bloomberg.
The table below shows our cumulative TSR over one year, three years and five years compared to that of our executive compensation comparison group. Our executive compensation comparison group is described below under “Compensation Governance—Executive Compensation Comparison Group.”
Total Shareholder Return Comparison
Period Ending 12/31/20 | Comparison Group Average TSR | Assured Guaranty TSR | ||
1 Year | (0.7)% | (33.9)% | ||
3 Years | 11.0% | (1.2)% | ||
5 Years | 50.0% | 30.9% |
Calculated from total returns published by Bloomberg.
32
The table and chart below depictwhen the cumulative TSR in dollars onprice of our Common Shares from December 31, 2015 through February 26,shares reflected the impact of 2021 relativedevelopments related to the cumulative TSR of the Russell Midcap Financial Services Index, Standard & Poor’s 500 Stock Index and Standard & Poor’s 500 Financials Index over the same period. The table and chart depict the value on December 31 of each year from 2015 through 2020, andPuerto Rico announced on February 26, 2021, of a $100 investment made on December 31, 2015, with all dividends reinvested.25, 2022. As can be seen, when measured through February 26, 2021,28, 2022, our TSR essentially kept pace overwith most of the62-month period with both financial indices to which we compare ourselves.
Cumulative TSR from 12/31/15 | Assured Guaranty | S&P 500 Index | S&P 500 Financial Sector GICs Level 1 Index | Russell MidCap Financial Services Index | ||||
12/31/2015 | 100.00 | 100.00 | 100.00 | 100.00 | ||||
12/31/2016 | 145.60 | 111.95 | 122.75 | 115.15 | ||||
12/31/2017 | 132.44 | 136.38 | 149.92 | 134.28 | ||||
12/31/2018 | 152.24 | 130.39 | 130.37 | 120.80 | ||||
12/31/2019 | 198.12 | 171.44 | 172.21 | 161.33 | ||||
12/31/2020 | 130.88 | 202.96 | 169.19 | 169.30 | ||||
02/26/2021 | 183.79 | 206.44 | 185.34 | 186.73 |
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The table below showsourselves, and exceeded our cumulative TSR over the last 14 months, 38 months and 62 months compared to that of our executive compensation comparison group. On this basis, our TSR materially exceeds that of ourcurrent executive compensation comparison group by nearly 50%.
Cumulative TSR from 12/31/16 | Assured Guaranty | Executive Compensation Comparison Group | S&P 500 Index | S&P 500 Financials Index | Russell MidCap Financial Services Index | ||||||||||||
12/31/2016 | 100.00 | 100.00 | 100.00 | 100.00 | 100.00 | ||||||||||||
12/31/2017 | 90.96 | 114.10 | 121.82 | 122.14 | 116.62 | ||||||||||||
12/31/2018 | 104.56 | 97.49 | 116.47 | 106.21 | 104.91 | ||||||||||||
12/31/2019 | 136.07 | 130.66 | 153.13 | 140.30 | 140.11 | ||||||||||||
12/31/2020 | 89.89 | 129.22 | 181.29 | 137.83 | 147.03 | ||||||||||||
12/31/2021 | 145.94 | 160.02 | 233.28 | 185.90 | 199.75 | ||||||||||||
02/28/2022 | 180.15 | 153.76 | 214.58 | 183.48 | 194.82 |
) The chart and table below show our cumulative TSR over the
previous 14 months, 38 months and 62 months, with an end date of February 28, 2022, compared to that of our current executive compensation comparison group. On this basis, our TSR is more than five times that of our current executive compensation comparison group over the previous 14 months, and materially exceeds that of our current executive compensation comparison group over 38 months and 62 months.Period Ending 02/26/2021 | Comparison Group Average TSR | Assured Guaranty TSR | ||
14 months | 5.9% | (7.2)% | ||
38 months | 16.2% | 38.8% | ||
62 months | 55.7% | 83.8% |
Calculated from total returns published by Bloomberg.
Period Ending 02/28/2022 | Executive Compensation Comparison Group Average TSR | Assured Guaranty TSR | ||||||
14 months | 18.99% | 100.42% | ||||||
38 months | 57.72% | 72.29% | ||||||
62 months | 53.76% | 80.15% | ||||||
Calculated from total returns published by Bloomberg. |
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FINANCIAL PERFORMANCE MEASURES | 2021 TARGETS | 2021 RESULTS | BELOW TARGET | ABOVE TARGET | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Core Operating Income per Diluted Share* | $3.62 | $5.91 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Core Operating Return on Equity* | 4.6% | 7.3% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Core Operating Shareholders’ Equity per Share* | $82.90 | $88.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Core Adjusted Book Value per Share* | $122.60 | $130.33 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PVP | $475 million | $361 million | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross Third-Party Assets Raised | $2.7 billion | $3.0 billion | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
34
Mr. Frederico received a compensation package for the 20202021 performance year that was 6.5% higher than the one he received for the 2020 performance year, reflecting our strong financial and share price performance and the achievement of non-financial strategic objectives that position us for future growth and our successful transformation into a financial services company with a dual focus on financial guaranty and asset management. The increase should also be viewed in the context of Mr. Frederico's compensation package for the 2020 performance year being 4.2% lower than the one he received for the 2019 performance year.
•Mr. Frederico’s cash incentive compensation decreasedincreased by 20.1%16.0% from the prior year, largely as a function of the financial performance goal scores awarded by the Compensation Committee. As a result of meeting only threeall but one of the six financial performance targets set by the Compensation Committee, at the beginning of the year prior to the onset of the COVID-19 pandemic, the Compensation Committee awarded Mr. Frederico a weighted score on his financial performance targets of 61.4%82.1%, considerably belowabove his score of 83.1%61.4% for 2019.2020, when only three of the six financial performance targets were met. The Compensation Committee also awarded him a somewhat lowersimilar weighted score on his non-financial objectives for 2020,2021, 56.1% for 2021 compared to 57.8% for 2020 compared to 66% for 2019.2020. Mr. Frederico’s total achievement score for 20202021 was 138.2%, substantially above his score of 119.2% for 2020, substantially down frombut still below his total achievement score of 149.1% for 2019.
•The Compensation Committee considered the appropriate amount of long-term incentive equity compensation to award Mr. Frederico in light of his establishmentrecognition of our AssuredIM platformsignificant achievements despite the continued disruption of COVID-19 and in recognitionthe extraordinarily low interest rates of his leadership of our Company through the turbulence of 2020 and our smooth transition to a remote work environment.2021. In recognition of these accomplishments and the Compensation Committee’s strong desire that Mr. Frederico continue his leadership as we transform our Company into a more diversified financial services company with a dual focus on financial guaranty insurance and asset management, the Compensation Committee granted Mr. Frederico long-term equity compensation with a target nominal value of $7,000,000,$7,250,000, an increase of $250,000 from his grant for the 20192020 performance year.
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2020 Performance Year Compensation | 2019 Performance Year Compensation | Change from 2019 to 2020 Perf. Year | ||||||||||
Fixed Compensation—Base Salary(1) | $ | 1,250,000 | $ | 1,250,000 | — | % | ||||||
Incentive Compensation | ||||||||||||
Cash Incentive Compensation | $ | 2,979,625 | $ | 3,727,000 | (20.1 | )% | ||||||
Long-Term Performance-Based Equity | $ | 4,200,000 | (2) | $ | 4,050,000 | (2) | 3.7 | % | ||||
Long-Term Time-Based Equity | $ | 2,800,000 | (2) | $ | 2,700,000 | (2) | 3.7 | % | ||||
Total Direct Compensation | $ | 11,229,625 | $ | 11,727,000 | (4.2 | )% |
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n | Performance-Based Equity1 | ||||
n | Time-Based Equity1 | ||||
n | Performance-Based Cash Incentive | ||||
n | Fixed Compensation-Base Salary |
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2021 Performance Year Compensation | 2020 Performance Year Compensation | Change from 2020 to 2021 Perf. Year | ||||||||||||||||||
Fixed Compensation—Base Salary (1) | $ 1,250,000 | $ 1,250,000 | — | % | ||||||||||||||||
Incentive Compensation | ||||||||||||||||||||
Cash Incentive Compensation | $ 3,454,988 | $ 2,979,625 | 16.0 | % | ||||||||||||||||
Long-Term Performance-Based Equity | $ 4,350,000 | (2) | $ 4,200,000 | (2) | 3.6 | % | ||||||||||||||
Long-Term Time-Based Equity | $ 2,900,000 | (2) | $ 2,800,000 | (2) | 3.6 | % | ||||||||||||||
Total Direct Compensation | $11,954,988 | $11,229,625 | 6.5 | % |
Pay for Performance | Accountability | Alignment | Retention | |||||||||||||||||||
by providing an incentive for exceptional performance and the possibility of reduced compensation if executives are unable to successfully execute our strategies |
for short- and long- term performance | with shareholder interests |
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of highly qualified executives with financial guaranty and asset management experience |
Our executive officers
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Principal Elements of Executive Compensation Package | Purpose | |||||
Base Salary | Based on responsibilities, skill set and experience, and market measures | |||||
Cash Incentive Compensation | Cash reward for performance against annual financial performance targets and progress against strategic non-financial objectives that we expect to drive our growth over the medium to long term | |||||
| 60% in performance restricted share units, which we refer to as PSUs, that may be earned over a 3-year performance period based on performance targets, and are paid at the end of the 3-year performance period if particular performance targets are achieved, with half of the PSUs (or 30% of the long-term equity incentive) being based on growth in our Core Adjusted Book Value per share, and half of the PSUs (or 30% of the long-term equity incentive) being based on our TSR, relative to the 55th percentile of the Russell Midcap Financial Services Index 40% in restricted share units, which we refer to as RSUs, that cliff vest at the end of a 3-year period |
•With respect to the short-term cash incentive compensation, we reduced the CEO’s target individual cash multiple to 2.0x from 2.5x and introduced negative discretion for scoring the achievement of financial performance targets that were set below prior year actual results.
•With respect to the long-term equity compensation, we increased the amount dependent on performance measures from 50% to 60% and introduced the two new types of PSUs described above.
•We also ended our reimbursement of executives for the cost of financial planning.
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•In August and November, our Compensation Committee reviews our year-to-date corporate performance as well asagainst our business plan, our financial performance, and the progress of each executive officermember of our senior leadership team against individual performance goals. Our chairman of
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•In February, our Compensation Committee meets twice. It first meets in early February to receive and review our final results and to evaluate executivethe performance of members of our senior leadership team for the previous calendar year, which we refer to as the performance year, against that performance year’s goals. Our Compensation Committee formulates its preliminary compensation decisions for members of the senior leadership team with respect to that year’s executive performance, along with our executive officerthe performance goals for each member of our senior leadership team for the coming year. Later in February, our Compensation Committee discusses with other Board members its preliminary compensation decisions for the previous year and our executive officerthe performance goals for each member of our senior leadership team for the coming year, and then makes its final decisions with respect to those matters. Our CEO is not present when our Compensation Committee meetsgoes into executive session to evaluate his performance and determine his compensation.
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contributions of each member of our senior leadership team. | |||||||||||||||||||||||||||||||||||||||||
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Step 1: Establishment of financial performance goals non-financial objectives. At or prior to the beginning of each performance year, our Compensation Committee discusses our Company’s business plan at length and establishes corporate financial goals for the upcoming performance year. Our Compensation Committee also discusses the strategic direction of our Company and establishes non-financial objectives it expects to drive our growth over the medium to long term. | |||||||||||||||||||||||||||||||||||||||||
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2022.
2022.
For the 2020 performance year, the Compensation Committee added a new financial performance measure to incentivize the building of our asset management business—gross third-party assets raised—and weighted all six financial performance targets equally.
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Core operating income per diluted share |
| |||||||
| enables us to evaluate the amount of income we are generating in our business without certain items, primarily non-economic fluctuations and movements in fair value, foreign exchange movements related to long dated receivables and payables, and other adjustments, as well as removing the impact of consolidating VIEs. | |||||||
Core operating ROE | represents core operating income for a specified period divided by the average of core operating shareholders’ equity at the beginning and the end of that period. This measure enables us to evaluate our return on equity. | |||||||
Core operating shareholders’ equity per share | presents our equity excluding non-economic fair value adjustments as well as the impact of consolidating VIEs. Core operating shareholders’ equity per share is the basis of the calculation of core adjusted book value, which we refer to as Core ABV, per share, as described below. | |||||||
Core
per share |
| |||||||
| reflects our core operating shareholders’ equity, plus unearned premiums in excess of expected losses, plus future estimated revenues from contracts other than financial guaranty insurance contracts (such as specialty insurance contracts and credit derivatives), less deferred acquisition costs. This measure enables us to measure our intrinsic value, excluding our franchise value. | |||||||
PVP | represents the estimated value of new business production in our insurance segment. PVP takes into account upfront premiums and the present value of estimated future installment premiums using a consistent discount rate on all new contracts written in a reporting period. | |||||||
Gross third-party assets raised | represents the gross increase in |
With the weightings the Compensation Committee has established for each component of the calculation aggregating 100% overall, the maximum total overall weighted score achievable is 200%, and since the Individual Target Cash Incentive Multiple for each of our named executive officers is 2.0x, the maximum short-term incentive opportunity for each of our named executive officers is 4x their base salary. For the 2018 performance year, in response to the previous year's say-on-pay vote result, shareholder feedback and the advice of FW Cook, the Compensation Committee reduced Mr. Frederico's Individual Target Cash Incentive Multiple to 2.0x from 2.5x, thereby reducing his maximum short-term incentive opportunity to 4x his base salary from 5x his base salary. The Compensation Committee has maintained Mr. Frederico's Individual Target Cash Multiple at 2.0x since then, and Mr. Frederico has not received an increase in his base salary since 2017.
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Setting Financial Performance Targets
PVP. Our annual business plan for 2020 challenged our executives to originate more financial guaranty business in 2020 than the regular financial guaranty business we originated in 2019. Our most direct measurement of new business origination is PVP. However, our reported 2019 PVP of $569 million included $193 million attributable to a group of non-repeatable, privately executed, bilateral guarantees on a large number
Core Operating Income per Diluted Share and Core Operating Return on Equity. Our Compensation Committee set the financial performance targets for core operating income per diluted share and core operating return on equity for the 2021 performance year materially higher than the 2020 actual results. These targets were particularly challenging when considering the unique earnings model of the financial guaranty insurance industry. When a financial guarantor writes a new financial guaranty policy, it does not earn the full amount of the premium immediately; rather, when a policy is written, the upfront premium it receives (plus the present value of future premiums) is recorded on its balance sheet as the unearned premium reserve, which we refer to as the UPR. This UPR is earned over the term of the insured obligation, often as long as 20, 30 or even 40 years. For example, only approximately 3% of the premiums we earned in 2021 related to new financial guaranty policies we wrote in 2021, and the rest was earned from our previously established UPR. Because the volume and pricing of new financial guaranty business written in a particular year has only a small impact on premium earnings for that year, most of our operating income from our core financial guaranty business may be forecast based on projections with respect to the very significant UPR that we earn as our insured portfolio amortizes. Despite the relative predictability of the contribution of our primary financial guaranty business to our core operating income per diluted share and core operating return on equity, we consider the financial performance goals we set for these measures to be challenging due to potential uncertainties in the broader market and environment. Those uncertainties include unexpected loss development, level of refunding activity, unexpected mark-to-market movements of investments in alternative investments, and unexpected changes to investment rates. In addition, variability of our share price and availability of funds for share repurchases may add to the challenges of reaching these goals. Our core operating ROE is also negatively impacted by the amount of excess capital we continue to have. Despite the strides we have made in managing our capital (see “Summary – 2021 Achievement Highlights” above), we believe we still have excess capital that we need regulatory approval to deploy, and therefore are constrained in our ability to improve our capital efficiency and our core operating ROE. |
Core Operating Income per Diluted Share and Core Operating Return on Equity. Our Compensation Committee set the financial performance targets for core operating income per diluted share and core operating return on equity based on the same annual business plan that challenged us to originate more business in 2020 than in 2019 (excluding the impact of the group of non-repeatable, privately executed, bilateral guarantees on a large number of sub-sovereign credits) despite the challenging business environment, but lower than the actual results for these measures in 2019. Why would our Compensation Committee set these financial performance targets at levels that were below our prior year actual results, and still view those targets as challenging?
The answer to that question follows from the unique earnings model of the financial guaranty insurance industry. When a financial guarantor writes a new financial guaranty policy, it does not earn the full amount of the premium immediately; rather, when a policy is written, the upfront premium it receives (plus the present value of any future premiums it expects to receive) is recorded on its balance sheet as the unearned premium reserve, which we refer to as the UPR. This UPR is earned over the term of the insured obligation, often as long as 20, 30 or even 40 years. In 2020, for example, only approximately 5% of the premiums we earned in 2020 related to new financial guaranty policies we wrote in 2020, and the rest was earned from our previously established UPR. Because the volume and pricing of new financial guaranty business written in a particular year has only a small impact on premium earnings for that year, most of our operating income from our core financial guaranty business may be forecast based on projections with respect to the very significant UPR that we earn as our insured portfolio amortizes.
Despite the relative predictability of the contribution of our primary financial guaranty business to our core operating income per diluted share and core operating return on equity, we consider the financial performance goals we set for these measures to be challenging due to potential uncertainties in the broader market and environment. Those uncertainties include unexpected changes to investment rates, level of refunding activity and unexpected loss development. In addition, variability of our share price and availability of funds for share repurchases may add to the challenges of reaching these goals.
For several years we increased the insured portfolio through strategic transactions with legacy bond insurers. Such transactions significantly increased our future earnings power during that period. Because the significant increases to UPR from strategic, non-repeating transactions exceed the rate at which we are able to increase the UPR based on new business from the insurable market in the recent low credit spread environment, our Compensation Committee believes the core operating income goal it set, while lower than the prior year result, was still challenging.
Our core operating ROE is also negatively impacted by the amount of excess capital we continue to have. Despite the strides we have made in managing our capital (see “Summary – 2020 Achievement Highlights” above), we believe we still have excess capital that we need regulatory approval to deploy, and therefore are constrained in our ability to improve our capital efficiency and our core operating ROE.
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Core Operating Shareholders’ Equity Per Share and Core Adjusted Book Value Per Share. Our Compensation Committee also wants to encourage our executives to build intrinsic value in our Company over time for our shareholders, so our Compensation Committee sets targets for core operating shareholders’ equity per share and core adjusted book value per share. Our Compensation Committee believes these measures best capture the long-term value we are building for our shareholders and that growth in these measures will eventually result in growth in the price of our Common Shares. Our Compensation Committee believes that core adjusted book value per share, in particular, is such an important measure of the intrinsic value we are building for our shareholders that our Compensation Committee has made this measure a component of both our short-term and long-term incentive programs. Our Compensation Committee believes that this will motivate our executives to focus on growth in this measure in both the short and long term, and that eventually growth in the price of our Common Shares will follow.
Gross Third-Party Assets Raised. Our Compensation Committee introduced this new financial performance measure for the 2020 performance year. Our Compensation Committee believes that AUM is an appropriate metric against which to weigh the success of management’s efforts to grow our asset management business. Our Compensation Committee also recognized that our purchase of BlueMountain Capital Management, LLC and associated entities on October 1, 2019 included a number of strategies that were in wind-down, which would reduce AUM. Our Compensation Committee preferred to select a metric that measured more directly whether management is successfully building the AssuredIM business, without the “noise” of the reduction of AUM attributable to the wind-down business. Consequently, our Compensation Committee settled on gross third-party assets raised as the appropriate measure.
Core Operating Shareholders’ Equity Per Share and Core Adjusted Book Value Per Share. Our Compensation Committee also wants to encourage our senior leadership team to build intrinsic value in our Company over time for our shareholders, so our Compensation Committee sets targets for core operating shareholders’ equity per share and core adjusted book value per share. Our Compensation Committee believes these measures best capture the long-term value we are building for our shareholders and that growth in these measures will eventually result in growth in the price of our Common Shares. Our Compensation Committee believes that core adjusted book value per share, in particular, is such an important measure of the intrinsic value we are building for our shareholders that our Compensation Committee has made this measure a component of both our short-term and long-term incentive programs. Our Compensation Committee believes that this will motivate our senior leadership team to focus on growth in this measure in both the short and long term, and that eventually growth in the price of our Common Shares will follow. |
PVP. Our annual business plan for 2021 challenged our senior leadership team to originate more financial guaranty business in 2021 than the financial guaranty business we originated in 2020. Our most direct measurement of new insurance business origination is PVP. We set our 2021 PVP target nearly 22% higher than our our 2020 actual results. |
Gross Third-Party Assets Raised. Our Compensation Committee set this target nearly 69% higher than 2020 actual results. Our Compensation Committee believes that gross third-party assets raised eliminates the “noise” of the reduction of AUM attributable to the wind-down business and is an appropriate metric against which to weigh the success of management’s efforts to grow our asset management business. |
| X | Annual Achievement Score (a percentage from 0% to 200%) | = |
| ||||||||||||||||||||||||||||||||||||||||||||
( | 2021 Base Salary |
X |
|
2021 Individual Target Cash Incentive Multiple | ) | X | ( |
2021 Financial Target Achievement Score (weighted 67%) | + |
2021 Non-Financial Objective Achievement Score (weighted 33%) | ) | = |
2021 Cash Incentive Payout |
FINANCIAL PERFORMANCE GOALS
| 2014
| 2020
| ||||||
PVP |
| $172 million |
|
| $390 million |
| ||
Core Operating Income per Diluted Share |
| $2.83 |
|
| $3.11 |
| ||
Core Operating Shareholders’ Equity per Share |
| $37.48 |
|
| $78.46 |
| ||
Core Operating Return on Equity |
| 8.1 | % |
| 4.4 | % | ||
Core Adjusted Book Value per Share |
| $53.78 |
|
| $114.97 |
| ||
Gross Third-Party Assets Raised |
| NA |
|
| $1.6 billion |
|
FINANCIAL PERFORMANCE GOALS | 2014 Results | 2021 Results | ||||||||||||
Core Operating Income per Diluted Share | $2.83 | $5.91 | ||||||||||||
Core Operating Return on Equity | 8.1 | % | 7.3 | % | ||||||||||
Core Operating Shareholders’ Equity per Share | $37.48 | $88.26 | ||||||||||||
Core Adjusted Book Value per Share | $53.78 | $130.33 | ||||||||||||
PVP | $172 million | $361 million | ||||||||||||
Gross Third-Party Assets Raised | NA | $3.0 billion |
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Like cash incentive compensation, equity incentive compensation is awarded after the end of the performance year to which such compensation relates. For the 20202021 performance year, our Compensation Committee determined the amount of equity incentive compensation in February 2021.
2022.
, with the remainder in time-based RSUs.
Prior to the grants made in February 2019 for the 2018 performance year, the number of our Common Shares executive officers could earn for each PSU was based on the price of our Common Shares over a
PSUs tied to growth in our core adjusted book value per share over a three-year period, which we refer to as ABV PSUs; and
•PSUs tied to our TSR over a three-year period relative to the TSR of the 55th percentile of the Russell Midcap Financial Services Index, which we refer to as Relative TSR PSUs.
The
Each ABV PSU represents the right to receive up to two of our Common Shares at the end of a three-year performance period, which runs from January 1 of the year of the grant to December 31 three years later, depending on the growth in Core ABV per share over the three-year performance period.
Each ABV PSU represents the right to receive up to two of our Common Shares at the end of a three-year performance period, which runs from January 1 of the year of the grant to December 31 three years later, depending on the growth in Core ABV per share over the three-year performance period. •The target growth rate is an aggregate of 15% over that three-year period, for which the |
• | At 80% of the target growth (or 12%), which we refer to as the threshold, the |
• | At 120% of the target growth (or 18%) or above, which we refer to as the maximum, the | For Core ABV per share growth rates between the threshold and the target and between the target and the maximum, the amount of our Common Shares earned for each ABV PSU is based on straight-line interpolation. |
For Core ABV per share growth rates between the threshold and the target and between the target and the maximum, the amount of our Common Shares earned for each ABV PSU is based on straight-line interpolation.
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Our Compensation Committee set the ABV PSU target growth rate based on the projected operating results in our annual business plan and after consulting with FW Cook. In setting the ABV PSU target, our Compensation Committee did not consider significant potential or theoretical strategic activities that had not been finalized or share repurchases the funding of which require regulatory approvals that have not yet been obtained, because the conditions for success are highly contingent and outside of the executive officers’ control.control of our senior leadership team. Given the outsize positive impact on our Company of the successful achievement of at least some such endeavors, our Compensation Committee believes it is appropriate for its executive officerssenior leadership team to be encouraged to pursue success in these areas through the ABV PSUs. The ABV PSU performance targets remain aligned with our long range plan and are unchanged from last year.
Each Relative TSR PSU represents the right to receive up to 2.5 (for extraordinary performance at the 95th percentile) of our Common Shares at the end of a three-year performance period, which runs from January 1 of the grant year to December 31 three years later, depending on the performance of our TSR over that three-year period relative to the TSR of the Russell Midcap Financial Services Index, which we refer to as the Index.
The target Company TSR for that period is the 55th percentile of the Index, for which the executive officer earns one Common Share for each Relative TSR PSU.
Each Relative TSR PSU represents the right to receive up to 2.5 (for extraordinary performance at the 95th percentile) of our Common Shares at the end of a three-year performance period, which runs from January 1 of the grant year to December 31 three years later, depending on the performance of our TSR over that three-year period relative to the TSR of the Russell Midcap Financial Services Index, which we refer to as the Index. •The target Company TSR for that period is the 55th percentile of the Index, for which the recipient earns one Common Share for each Relative TSR PSU. •At the 25th percentile of the Index, which we refer to as the threshold, the |
• | A Company TSR at the 95th percentile of the Index, which we refer to as the maximum, or above earns the | For Company TSRs between the threshold and the target and between the target and the maximum, the amount of our Common Shares earned for each Relative TSR PSU is based on straight-line interpolation. The Compensation Committee adopted the following additional restrictions on the Relative TSR PSUs: •The number of Common Shares that can be earned is capped at one share per Relative TSR PSU if the Company TSR is negative, even if above the 55th percentile. •Common Shares earned pursuant to the Relative TSR PSUs remain restricted until one year after they vest. |
For Company TSRs between the threshold and the target and between the target and the maximum, the amount of our Common Shares earned for each Relative TSR PSU is based on straight-line interpolation.
The
The number of Common Shares that can be earned is capped at one share per Relative TSR PSU if the Company TSR is negative, even if above the 55th percentile.
Common Shares earned pursuant to the Relative TSR PSUs remain restricted until one year after they vest.
Prior to establishing the TSR PSUs in February 2019, our Compensation Committee sought advice from FW Cook in selecting an index for a target TSR and in establishing the target, threshold and maximum TSR levels and the number of our Common Shares awarded for each Relative TSR PSU.
When our Compensation Committeebest available measure when it established the TSR PSUs in February 2019, it considered2019. Our Compensation Committee believed that aspects of our business are comparable to aspects of various financial services companies, and rejectedso determined that the best benchmark for our TSR was a broad index of somewhat similarly-sized financial services companies. The Compensation Committee made this determination after considering and rejecting a number of other options:
Our Compensation Committee considered establishing a peer group of companies against which to measure our Company’s TSR, but only•Only one other financial guarantor continues to write new business, and that company is not publicly traded.
Our Compensation Committee considered establishingtraded, so a peer group of financial guarantors is not available.
Our Compensation Committee also considered using•While the executive compensation comparison group it uses to evaluate the level and mix of compensation it pays its executives. While thecurrent executive compensation comparison group comprises similarly-sized companies in businesses somewhat similar to our business, many of the companies in that group are mortgage finance and property and casualty insurance and reinsurance companies and our Compensation Committee diddoes not believe that group wasis an appropriate benchmark for our TSR.
Our
45
We engaged Aon plc, which we referreference index used for the TSR PSUs. It chose not to as Aon, to model the grant date valuation of the Relative TSR PSUs and to track the Relative TSR PSUs on an ongoing basis.
make any changes.
Each restricted stock unit represents a right to receive one of our Common Shares at the end of a three-year vesting period as described below under “Incentive Plans—Assured Guaranty Ltd. 2004 Long-Term Incentive Plan”.
Each restricted share unit represents a right to receive one of our Common Shares at the end of a three-year vesting period as described below under “Incentive Plans—Assured Guaranty Ltd. 2004 Long-Term Incentive Plan”. |
In light of Mr. Frederico’s significant accomplishments in the difficult 20202021 performance year and the importance of his continued leadership as we work to grow our asset management business, but also consideringtransform ourselves into a diversified financial services company, the price performance of our shares over the last year and that we did not reach threeachieved five of our six financial performance targets, the Compensation Committee awarded Mr. Frederico total compensation of $11,229,625,$11,954,988, a 4.2% decrease6.5% increase from his total compensation for the 2020 performance year. More specifically,That increase reflects our strong financial and share price performance and the Compensation Committee significantly decreased Mr. Frederico’s short-term compensation in response to the resultsachievement of non-financial strategic objectives that position us for the 2020 performance year, but increased his long-term compensation to provide him with an appropriate incentive to continue to leadfuture growth and our multi-yearsuccessful transformation into a financial services company with a dual focus on both financial guaranty and asset management.
The increase should also be viewed in the context of Mr. Frederico's compensation package for the 2020 performance year being 4.2% lower than the one he received for the 2019 performance year, and his 2021 compensation package being only 1.9% higher than his 2019 compensation package.
2020 Performance Year Compensation | 2019 Performance Year Compensation | Change from 2019 to 2020 | ||||||||||
Fixed Compensation—Base Salary(1) | $1,250,000 | $1,250,000 | — | % | ||||||||
Incentive Compensation | ||||||||||||
Cash Incentive Compensation | $2,979,625 | $3,727,000 | (20.1 | )% | ||||||||
Long-Term Performance-Based Equity | $4,200,000 | (2) | $4,050,000 | (2) | 3.7 | % | ||||||
Long-Term Time-Based Equity | $2,800,000 | (2) | $2,700,000 | (2) | 3.7 | % | ||||||
Total Direct Compensation | $11,229,625 | $11,727,000 | (4.2 | )% |
|
|
46
2021 Performance Year Compensation | 2020 Performance Year Compensation | 2019 Performance Year Compensation | Change from 2020 to 2021 | |||||||||||||||||||||||
Fixed Compensation—Base Salary (1) | $1,250,000 | $1,250,000 | $1,250,000 | — | % | |||||||||||||||||||||
Incentive Compensation | ||||||||||||||||||||||||||
Cash Incentive Compensation | $3,454,988 | $2,979,625 | $3,727,000 | 16.0 | % | |||||||||||||||||||||
Long-Term Performance-Based Equity | $4,350,000 | (2) | $4,200,000 | (2) | $4,050,000 | (2) | 3.6 | % | ||||||||||||||||||
Long-Term Time-Based Equity | $2,900,000 | (2) | $2,800,000 | (2) | $2,700,000 | (2) | 3.6 | % | ||||||||||||||||||
Total Direct Compensation | $11,954,988 | $11,229,625 | $11,727,000 | 6.5 | % |
In
In February 2021, given the continued importance of maintaining Mr. Frederico’s strategic leadership as we seekexperience and contributions and to transform ourselves in accordance withmotivate him to continue his vision from a financial guaranty insurance company to a financial services company offering both financial guaranty products and asset management services, but also considering the result of our say-on-pay vote in 2018 and based on shareholder feedback and advice from FW Cook, the Compensation Committee chose to again maintain Mr. Frederico’s salary at $1,250,000 for the 2021 performance year. The last increase in base salary Mr. Frederico received was granted in February 2017, effective January 1, 2017.
PVP. The Compensation Committee views PVP as the best measure of our success capturing new financial guaranty insurance business that will, under our financial guaranty business model, support our earnings for decades to come. Because it takes many years for us to earn the premium we generally receive up front on new business, the Compensation Committee believes it is appropriate to take a long view of management’s success in building new, repeatable financial guaranty business, and excludes strategic and non-repeatable transactions when evaluating the financial performance target to set for PVP. On that basis, the Compensation Committee excluded from consideration $193 million of 2019 PVP from a group of non-repeatable, privately executed, bilateral guarantees on a large number of sub-sovereign credits when setting the 2020 target for PVP. Similarly, the Compensation Committee excluded from consideration $400 million of 2018 PVP from a portfolio insurance transaction with SGI when setting the 2019 target.
47
As can be seen from the graph below, since 2013 we have been steadily building the rate at which we add PVP when excluding the PVP from strategic and non-repeatable transactions in 2018 and 2019, so the Compensation Committee views its approach to incentivizing management on this measurement as successful.
Core Operating Income per Diluted Share and Core Operating ROE. The Compensation Committee set the financial performance targets for core operating income per diluted share and core operating ROE at levels it viewed as challenging but that were below 2019 comparable results. As described above under “Executive Compensation Program Structure and Process”, the nature of the accounting model for the financial guaranty business, where only approximately 5% of the premiums we earned in 2020 related to new financial guaranty policies we wrote in 2020, shows how little impact activity in our core insurance business has on the two of our financial measures related to income. Absent strategic transactions, and until the asset management business begins contributing more, almost all of our core operating income per diluted share and core operating ROE for a year can be projected at the beginning of the year based on insurance business already originated in prior years. Consequently, the Compensation Committee’s approach to setting targets for these two measures is to project the core operating income per diluted share and core operating ROE for the year based on our in-force insurance business and targets for PVP production, and then set targets that require management to exceed those projections. When the projections are lower than actual performance for the prior year, as was the case for these two measures for 2020, the resulting targets can be quite challenging while still being below the prior year actual results. The Compensation Committee believes the targets it set in 2020 for these two measures fall in this category. In any event, we did not achieve these two targets.
Mr. Frederico’s 20202021 Financial Performance Target Scores
We generated PVP•Core operating income per share of $390 million, the highest reported since 2009 (when excluding$5.91 was nearly 63% above our 2018 reinsurance transaction with SGItarget and the 2019 group of 90% above our actual 2020 results.
Core operating shareholders’ equity per share reached its highest level in our history, increasing 17%nearly 13% from year-end 2019 2020 and exceeding our goal by 13%nearly 7%.
•Core adjusted book value, which we refer to as Core ABV, per share increased by 18%more than 13%, exceeded our goal by 14%more than 6% and reached its highest level in our history, propelled byhistory.
We missed our core operating income per diluted share target by 12% and our core operating ROE by 20%.
Our efforts to remake AssuredIM were probably most impacted by the travel and gathering restrictions relatedthis shortfall can be attributed to the COVID-19 pandemic,interest rate environment — the average 30-year AAA Municipal Market Data (MMD) rate (a measure of interest rates in our largest financial guaranty insurance market, U.S. public finance) for 2021 was 1.54%, below the 1.71% average for the prior year and we missed oura new historical low.
•Financial services is a “people business”, and the travel and gathering restrictions tied to the COVID-19 pandemic were substantial obstacles to building new relationships.
•Over the last several years, municipal bond yields have been at historically low levels, making our financial guaranty product less attractive to issuers. Interestissuers and generally lowering the premium rate we may charge. As noted above, the average 30-year AAA MMD rate for 2021 was 1.54%, below the 1.71% average for the prior year and a new historical low.
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•We continued to face competition in an already tight market from a second financial guaranty insurer that focuses on a smaller portion of the market than we do and provides price competition in those markets where we overlap.
•Despite the strides we have made in managing our capital, we believe we still have excess capital that we need regulatory approval to deploy, and therefore are constrained in our ability to improve our capital efficiency and core operating ROE.
The Compensation Committeeand then weighted Mr. Frederico’shis financial performance measurement scores in accordance with the cash incentive formula, which resulted in a weighted financial performance goal score of 61.4%82.1%:
2020
2021 Targets | 2021 Results | Weighting | 2021 Achievement Score (0%-200%) | Weighted Achievement Score | |||||||||||||
Financial Performance Measurements* | |||||||||||||||||
Core operating income per diluted share | $3.62 | $5.91 | 11.17% | 165% | 18.4% | ||||||||||||
Core operating ROE | 4.6% | 7.3% | 11.17% | 170% | 19.0% | ||||||||||||
Core operating shareholders’ equity per share | $82.90 | $88.26 | 11.17% | 110% | 12.3% | ||||||||||||
Core ABV per share | $122.60 | $130.33 | 11.17% | 110% | 12.3% | ||||||||||||
PVP | $475 million | $361 million | 11.17% | 75% | 8.4% | ||||||||||||
Gross third-party assets raised | $2.7 billion | $3.0 billion | 11.17% | 105% | 11.7% | ||||||||||||
Total Financial Performance Measurement Achievement Score | 67.0% | 82.1% |
2020 Targets | 2020 Results | Weighting | 2020 Achievement Score (0%-200%) | Weighted Achievement Score | ||||||||||||||||
Financial Performance Measurements* | ||||||||||||||||||||
PVP | $373 million | $390 million | 11.17% | 105 | % | 11.7% | ||||||||||||||
Core operating income per diluted share | $3.55 | $3.11 | 11.17% | 90 | % | 10.1% | ||||||||||||||
Core operating shareholders’ equity per share | $69.56 | $78.46 | 11.17% | 115 | % | 12.8% | ||||||||||||||
Core operating ROE | 5.5% | 4.4% | 11.17% | 80 | % | 8.9% | ||||||||||||||
Core ABV per share | $101.12 | $114.97 | 11.17% | 115 | % | 12.8% | ||||||||||||||
Gross third-party assets raised
|
| $3.4 billion
|
|
| $1.6 billion
|
|
| 11.17%
|
|
| 45
| %
|
| 5.0%
|
| |||||
Total Financial Performance Measurement
|
| 67.0%
|
|
| 61.4%
|
|
| ||
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Non-Financial Objectives | 2021 Results | ||||
Insurance Growth—Articulate clear strategy and lead effective implementation of business plan to grow financial guaranty and related business globally •Expand U.S. public finance financial guaranty business •Expand global infrastructure financial guaranty business •Expand global structured finance financial guaranty business •Attempt to purchase bond insurance portfolios if they become available for purchase •Maintain strong financial strength ratings at insurance companies to facilitate articulated business strategies and periodically assess the financial strength ratings of each insurance company to determine whether to request that a rating agency add or drop a rating from that company | Underwrote a total of • • •
U.S. Public Finance: •As a result of increased institutional demand for our insurance, •Industry insured penetration rose to 8.2% of municipal par
•The $22.6 billion that we insured
in a decade International Public Finance: •Wrote par) •Sustained trend started in the fourth quarter of 2015 of writing new business in each quarter; opportunities continue to support our targets Global •Wrote
• |
50
Non-Financial Objectives | ||||||
Insurance Loss Mitigation and Avoidance—Proactively manage financial guaranty portfolio to identify and avoid losses when stress develops and minimize losses when losses cannot be avoided •Use all available levers to creatively resolve Puerto Rico credits while minimizing losses to the Company |
•
outstanding on December 31, 2021 •
| |||||
Asset Management and Alternative Investments—Lead effective implementation of asset management and alternative investment strategies •Grow assets under management (AUM) organically and/or through acquisitions •Improve yield on investment portfolio by investing a portion of excess capital in alternative investments | • •Reduced AUM of wind down funds by 64% from $1,623 million to $582 million •Increased CLO fee-earning AUM and the recovery of previously deferred CLO fees, resulting in a 109% increase in CLO fees •Committed $209 million in additional insurance company capital into AssuredIM funds, •Capital invested in AssuredIM Funds generated $80 million 20.8% •
| |||||
Capital Management—Articulate clear strategy to maintain optimal capital structure, considering internal risk measures and rating agency and regulatory requirements •Accumulate capital outside of insurance companies to support asset management and other strategies •Return excess capital to shareholders | •
•Issued $500 million of 10-year Senior Notes at an attractive rate of 3.15% in May and issued $400 million of 30-year Senior Notes at an attractive rate of 3.6% in August, benefiting the Company by |
51
Non-Financial Objectives | ||||||
Regulatory—Maintain optimal corporate and regulatory structure and good standing to pursue the articulated business strategies | •
•Obtained approval for $250 million of insurance company assets to •Obtained approval for new Assured Guaranty Municipal and •Obtained approval for arrangements supporting renewed European structured finance underwriting | |||||
Risk Management—Ensure that the Company has comprehensive, best-practice risk management with respect to all of its activities •Insure credits of good quality consistent with underwriting guidelines and consistent with risk appetite statement •Articulate and execute thorough enterprise risk management program | •No unanticipated risk issues •Enhanced underwriting procedures to identify insurable credits with ample financial strength to withstand • for 2021 remained nominal •Participated in periodic conference calls with regulators to focus on
•Successful testing of Business Continuity Plan in 2021, as employees have been able to effectively work remotely since mid-March of 2020 | |||||
Operations—Establish an environment of excellence in all areas of operations, including investment management, accounting and financial reporting, and legal and compliance, and provide a secure information technology environment
| •All financial statements and regulatory reports completed successfully and filed on time •Transitioned schedule and layering pandemic response atop existing IT mandates •Successful Annual General Meeting, with shareholders supporting all proposals, including over • cybersecurity events •Successfully passed •Successfully avoided ransomware and security attacks • office space • |
52
Non-Financial Objectives | ||||||
Human Capital Management | • candidates • •Established Employee Resource Groups for Black / African American employees, women, and working parents •Issued statements (i) condemning religious hate crimes and discrimination, and (ii) opposing violence and discrimination against Asian American and Pacific Islander (AAPI) communities, and made contributions to various organizations that work to promote a more equitable society | |||||
Environmental and Social | •Measured and disclosed greenhouse gas (GhG) emissions; •Developed new underwriting criteria to address climate change risk •Created AssuredIM and Assured Healthcare Partners Environmental, Social and Governance (ESG) statements; conducted annual ESG review of investment portfolio •Developing an analysis of risk aggregation of the insured portfolio along the coastline for
hurricane 5 risks • •Held bias awareness training sessions for entire firm and continued work with •Held D+I hosted events throughout the
|
53
The Compensation Committee then added that weighted non-financial objective score of 57.8%56.1% to the weighted financial performance target score of 61.4%82.1% achieved by Mr. Frederico as described earlier, to derive a total achievement score of 119.2%138.2% in accordance with the cash incentive formula, as follows:
Weighting | 2020 Achievement Score (0%-200%) | Weighted Achievement Score | ||||||||||
Total Financial Performance Measurement Achievement Score (Summarized on page 39 above.) |
| 67% |
|
| 61.4% |
| ||||||
Non-Financial Objectives | ||||||||||||
Insurance Growth—Articulate clear strategy and lead effective implementation of business plan to grow financial guaranty and related businesses globally | ||||||||||||
Insurance Loss Mitigation and Avoidance—Proactively manage financial guaranty profile to identify and avoid losses when stress develops and minimize losses when losses cannot be avoided | ||||||||||||
Asset Management and Alternative Investments—Lead effective implementation of asset management and alternative investment strategies | ||||||||||||
Capital Management—Articulate clear strategy to maintain optimal capital structure, considering internal risk measures and rating agency and regulatory requirements | ||||||||||||
Regulatory—Maintain optimal corporate and regulatory structure and good standing to pursue articulated business strategies | ||||||||||||
Risk Management—Ensure that the Company has comprehensive, best-practice risk management with respect to all of its activities | ||||||||||||
Operation—Establish an environment of excellence in all areas of operations, including investment management, accounting and financial reporting, and legal and compliance, and provide a secure information technology environment | ||||||||||||
Management Development and Succession Planning—Attract and retain top quality senior management, develop succession plan for critical positions, including assisting the Board in further development of CEO succession plan | ||||||||||||
Environmental and Social Responsibility—Articulate a clear strategy and lead effective implementation of conducting business in an environmentally and socially responsible manner | ||||||||||||
Non-Financial Objective Score |
| 33% |
|
| 175% |
|
| 57.8% |
| |||
Achievement Score |
| 119.2% |
|
|
Weighting | 2021 Achievement Score (0%-200%) | Weighted Achievement Score | |||||||||
Total Financial Performance Measurement Achievement Score (Summarized on page 50 above.) | 67% | 122.5% | 82.1% | ||||||||
Non-Financial Objective Score | 33% | 170% | 56.1% | ||||||||
Achievement Score | 138.2% |
increase appreciably.
54
we envision.
23, 2022.
•Under U.S. GAAP, the value of an ABV PSU as of February 24, 202123, 2022 was determined to be $44.01.$56.69. This value is based on the closing price of our Common Shares on that date, which U.S. GAAP allows as a practical expedient to value grants with complicated features, such as in this case the estimated growth rate of the Company’s Core ABV per share.
•Under U.S. GAAP, the value of a Relative TSR PSU on February 24, 202123, 2022 was $60.06.$83.97. This value was computed using a Monte-Carlo simulation model taking into account the historical relationship of our TSR and the TSR of the Index, including for the period from the beginning of the Relative TSR PSU performance period to February 24, 2021,23, 2022, the grant date. We engaged Aon to provide this computation for us.
•Under U.S. GAAP, the value of an RSU was $44.01,$56.69, based our Common Share closing price on February 24, 2021.
Compensation Committee Target
| Equity
| U.S. GAAP
| ||||||||||
ABV PSUs |
| $2,100,000 |
| 56,772 |
| $ | 2,498,536 |
| ||||
Relative TSR PSUs |
| $2,100,000 |
| 56,772 |
| $ | 3,409,726 |
| ||||
RSUs |
| $2,800,000 |
| 75,696 |
| $ | 3,331,381 |
| ||||
TOTAL |
| $7,000,000 |
| 189,240 |
| $ | 9,239,643 |
|
55
ABV PSUs $2,175,000 40,055 $2,270,718 Relative TSR PSUs $2,175,000 40,055 $3,363,418 RSUs $2,900,000 53,407 $3,027,643 TOTAL $7,250,000 133,517 $8,661,779
Thein 2021 he received less value than he received in 2020. On this basis, the Compensation Committee concluded that it was appropriate thatthe value of perquisites provided to Mr. Frederico’s individual cash incentive decline by 20.1% from 2019 in light ofFrederico under our Company achieving only three of its six financial performance targets, but recognizing the obstacles that arose as a result of the COVID-19 pandemic and historically low interest rates. This decrease reflected the significant decrease in Mr. Frederico’s scorecard for his financial performance measurements, and a decrease in the score for his non-financial objectives.
The Compensation Committee also considered the importance of maintaining Mr. Frederico’s leadership of our Company in the years ahead as we seek to continue developing both our financial guaranty business and our newly established asset management business, manage our insured exposure and mitigate any losses in the insured portfolio, and manage our capital, and as a result increased Mr. Frederico’s long-term equity compensation by less than 4%.
Taking these various factors into account, the Compensation Committee believed it was appropriate for Mr. Frederico’s total compensation for the 2020 performance year, which it determined in accordance with its formulas and methodologies, to be $11,229,625, or 4.2% lower than his total compensation for the 2019 performance year.
20202021 performance year based on its assessment of their achievements and Mr. Frederico’s review of their performance, as well as Mr. Frederico’s compensation recommendations. The other named executive officers’ achievements were evaluated based on their contributions to our achievement of our financial measurement targets, their contributions to the achievement of Mr. Frederico’s non-financial objectives, and their own achievements of the individual non-financial objectives Mr. Frederico had assigned to them, as described below.20202021 performance year for meeting all internal and external financial requirements, managing our capital efficiently, meeting with investors, and participating on earnings calls. Mr. Bailenson has involved himself in all aspects of our business and leads the financial team in addressing market and regulatory changes. More specifically, Mr. Bailenson:Contributed•Successfully refinanced our $430 million of 100-year debt with interest rates ranging from 6 7/8% to the integration5.6%, plus $170 million of the asset management business$500 million of 5% senior notes we had due in 2024, with the restan issuance in May of our Company;
Successfully oversaw the conversion$500 million of 3.15% senior notes due 2031 and an issuance in August of $400 million of 3.6% senior notes due 2051; also used some of the accounting and Treasury functionsdebt-issuance proceeds for general corporate purposes, primarily to a remote work environment while maintaining compliance with Sarbanes-Oxley requirements;
Successfully developed solutions to more efficiently deploy capital within our companies and free funds to support various corporate initiatives, includingfund our share repurchase program;
Met•Successfully oversaw the automation of legacy accounting and investment accounting and reporting systems;
Worked with Mr. Buzen to increase the efficiency and efficacy of our investment activities;
•Actively participated in loss mitigation and settlement activities relating to Puerto Rico, and other credits; and
•Was responsible for the timely and accurate filing of all financial statements and tax returns.
•Supervised the the asset management integration and corporate governance and other issues before our Board werewas exemplary. Under Ms. Chow’s direction, we were able to navigate the complex compliance and regulatory environments of both the insurance and asset management segments of our business to accomplish our corporate objectives. More specifically, Ms. Chow:establishment of our European platform in France and reorganized the legal function in the United Kingdom and France;
Led the successful integration of the legal and compliance departments of AssuredIM with the rest of our Company;
Successfully led the effort to obtain a number of regulatory approvals, including approvals for various actions that had the effect of increasing the resources available for strategic priorities of our holding company;
Oversaw the Legal Department’sdepartment’s contribution to our efforts to mitigate losses on our insured Puerto Rico losses,exposure, including numerousnegotiating support agreements, pursuing legal actions,proceedings, and developing a short-term financing structure to facilitate anticipated claim payments;
56
Oversaw•Provided legal supportadvice on the various initiatives of our employee-led D+I Committee; and analysis
Oversaw all disclosure activities; and
Supervised our response to various legal and regulatory issues, including those related to cybersecurity and privacy as well as the rising prominence of environmental, social and governance issues.
Russell B. Brewer II, Chief Surveillance Officer
•Led the surveillance process for our $234$236 billion net par insured portfolio and the timely review and updateupdating of internal ratings for our insured portfolio, helping to identify and intervene in deteriorating situations before losses developed to avoid losses altogether or mitigate them if they cannot be avoided;
Led•Actively participated in periodic rating agency meetings including annual rating reviews and discussions to describe the in-depth analysis of the potential effect of risks faced from COVID-19 on our insured portfolio and presented the resultsstrategies to our Board, our regulators and the rating agencies;
•Oversaw and participated in many of our risk mitigation activities, including making major contributions to our effort in Puerto Rico;
•Oversaw the integration of the asset management information technology systems with the restautomation of our information technology systems, greatly facilitating the wider integration of asset management with the rest of our Company;
•Oversaw the successful implementation of Sarbanes-Oxley controls in the information technology and operations systemstransition of the asset management business;
Oversaw the successful and rapid transition ofIT team to our entire global workforcenew Chief Technology Officer while pivoting to a remotehybrid work environment over the schedule and layering pandemic response atop existing IT mandates; and
Oversaw the effective defense of our systems from cyberattacks and our compliance with newevolving cybersecurity regulations.
becamewas responsible in the 2021 performance year for guiding investment decisions for our Chiefinvestment portfolio and building our asset management business. More specifically, Mr. Buzen:OfficerWorkout and HeadLegal personnel to develop a funding plan for anticipated Puerto Rico claim payments.Asset Managementour other named executive officers were set by the Compensation Committee in February 2021. Consistent with the Compensation Committee's pay-for-performance philosophy, it chose to set Mr. Bailenson's 2021 salary at the same level as 2020, and Mr. Buzen's 2021 salary at the same level as it had been set in August 2020 upon the departure of the formerwhen he became Chief Investment Officer and Head of Asset Management, and since then has been responsibleto use incentive compensation to reward each of them for our asset management segment as well as guiding investment decisionstheir performance, experience and contributions, and to motivate them to continue their leadership of their respective functions. In light of Ms. Chow’s achievements for our investment portfolio. More specifically, Mr. Buzen:Demonstrated exemplary leadership skills in taking the reins of AssuredIM mid-yearDrove2020 performance year and the integration of corporate functions with the rest of our CompanyBrought reporting standardscomplexity of the asset management business,issues handled by the legal department, the Compensation Committee supported Mr. Frederico's recommendation to increase her salary to $600,000 from $550,000 for the 2021 performance year. In recognition of the steadiness with which until our acquisitionMr. Brewer manages both the surveillance and the information technology departments, the efforts of BlueMountain Capital Management, LLCthe surveillance department in analyzing the potential impact of COVID-19 on the insured portfolio, and associated entities was not partMr. Brewer’s recruitment of a publicly traded company, upnew chief technology officer during the year, the Compensation Committee also supported Mr. Frederico's recommendation to those of our publicly-traded CompanyLaunched the new healthcare strategyContinued CLO issuancesStreamlined the management of our own investment assetsImproved returns on our excess capital through alternative investments57
Compensation Decisionsincrease Mr. Brewer's salary to $550,000 from $525,000 for the Other Named Executive Officers
2021 performance year. In February 2022 the Compensation Committee decided to maintain the 2022 salaries of all of the other named executive officers at their 2021 levels.
(
| 2020 Salary
| X
| 2020 Individual Target Incentive Multiple
| )
|
X
| (
| Financial Achievement Score (weighted 67%)
| +
| Individual Financial Achievement (weighted 33%)
| )
| =
| 2020 Cash Incentive Payout
| ||||||||||||||||||||||
Robert A. Bailenson |
| $ | 800,000 |
|
|
| 2.00x |
|
|
|
|
| 61.4% |
| 42.9% |
|
| $ | 1,669,360 |
| ||||||||||||||
Russell B. Brewer II |
| $ | 525,000 |
|
|
| 2.00x |
|
|
|
|
| 61.4% |
| 61.1% |
|
| $ | 1,286,093 |
| ||||||||||||||
Ling Chow |
| $ | 550,000 |
|
|
| 2.00x |
|
|
|
|
| 61.4% |
| 56.1% |
|
| $ | 1,292,885 |
| ||||||||||||||
David A. Buzen* |
| $ | 612,500 |
|
|
| 2.00x |
|
|
|
|
| 48.9% |
| 57.8% |
|
| $ | 1,306,585 |
|
|
Primarily as a result of the reduction of the financial performance measurement achievement score for the performance year 2020 in relation to the score for 2019, all of the other named executive officers who were also named executive officers last year experienced a material decline in their short-term cash incentive, as shown below.
Robert A. Bailenson | Russell B. Brewer II | Ling Chow | David A. Buzen | |||||||||||||
2020 Cash Incentive |
| $1,669,360 |
|
| $1,286,093 |
|
| $1,292,885 |
|
| $1,306,585 |
| ||||
2019 Cash Incentive |
| $1,994,720 |
|
| $1,548,015 |
|
| $1,461,390 |
|
| NA |
| ||||
Change |
| (16.3) | % |
| (16.9) | % |
| (11.5) | % |
| NA |
|
( | 2021 Base Salary | X | 2021 Individual Target Cash Incentive Multiple | ) | X | ( | Financial Performance Measurement Achievement Score (weighted 67%) | + | Individual Non- Financial Objective Achievement Score (weighted 33%) | ) | = | 2021 Cash Incentive Payout | |||||||||||||||||||||||||||||
Robert A. Bailenson | $800,000 | 2.00x | 82.1% | 46.2% | $2,052,792 | ||||||||||||||||||||||||||||||||||||
David A. Buzen | $800,000 | 2.00x | 73.1% | 33.0% | $1,696,480 | ||||||||||||||||||||||||||||||||||||
Ling Chow | $600,000 | 2.00x | 82.1% | 42.9% | $1,499,994 | ||||||||||||||||||||||||||||||||||||
Russell B. Brewer II | $550,000 | 2.00x | 82.1% | 42.9% | $1,374,995 |
Robert A. Bailenson | Russell B. Brewer II | Ling Chow | David A. Buzen | |||||||||||||
Fixed Compensation—Base Salary(1) |
| $ 800,000 |
|
| $ 525,000 |
|
| $ 550,000 |
|
| $ 612,500 |
| ||||
Incentive Compensation |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash Incentive Compensation |
| $1,669,360 |
|
| $1,286,093 |
|
| $1,292,885 |
|
| $1,306,585 |
| ||||
Long-Term Equity Incentive Target Values(2) |
| $1,575,000 |
|
| $1,250,000 |
|
| $1,200,000 |
|
| $1,000,000 |
| ||||
Total Direct Compensation |
| $4,044,360 |
|
| $3,061,093 |
|
| $3,042,885 |
|
| $2,919,085 |
|
|
|
Robert A. Bailenson | David A. Buzen | Ling Chow | Russell B. Brewer II | |||||||||||
Fixed Compensation—Base Salary(1) | $ 800,000 | $ 800,000 | $ 600,000 | $ 550,000 | ||||||||||
Incentive Compensation | ||||||||||||||
Cash Incentive Compensation | $2,052,792 | $1,696,480 | $1,499,994 | $1,374,995 | ||||||||||
Long-Term Equity Incentive Target Values(2) | $1,575,000 | $770,000 | $1,200,000 | $1,250,000 | ||||||||||
Total Direct Compensation | $4,427,792 | $3,266,480 | $3,299,994 | $3,174,995 |
While recognizing our senior management team’s
PAYOUT UNDER PERFORMANCE RETENTION AWARDS
Performance Retention Awards, which we refer to as PRA, had been utilized as a form of incentive compensation for the executive officers until 2015. Their focus on adjusted book value and operating return on equity over a multi-year performance period reduced the incentive to concentrate on short-term gain and fostered a long-term view that minimized unnecessary or excessive risk taking.
In response to shareholder feedback that we should simplify our executive compensation program and emphasize equity rather than cash for incentive compensation, the Compensation Committee stopped granting our then executive officers new PRA beginning in 2015. We continue to grant PRA to employees other than our executive officers. Ms. Chow, who was not an executive officer until 2018, continued to receive PRA through February 2017, so she received her last PRA cash distribution in March 2021.
The principal amount of each PRA is divided into three installments. The portion of principal associated with each installment and the performance period relating to such installment are set out in the terms of the award.
59
The award payment for each installment is the product of:
Principal amount of award
Portion of principal associated with installment
50% of the sum of 1 and the percentage change in the core ABV per share for the relevant performance period
50% of the sum of 1 and the core operating ROE for the relevant performance period
The payout for the amount that vested on December 31, 2020 is set forth in footnote 2 to the Summary Compensation Table. The payout is a function of decisions made in February 2017 regarding the amount of PRA to grant Ms. Chow before she became an executive officer, as well as growth in core ABV per share and the core operating ROE during the relevant performance period.
•Establishing executive compensation policies
•Determining the compensation of our CEO
•Reviewing our CEO’s compensation recommendations regarding other members of the senior officersleadership team and determining appropriate compensation for such officers
2021.
60
Affilated Managers Group | Enstar Group Limited | Radian Group | ||||||
Alleghany | ||||||||
| Essent Group, Ltd. | RenaissanceRe Holdings | ||||||
AllianceBernstein | ||||||||
| Everest Re Group, Ltd. | Sculptor Capital | ||||||
Arch Capital Group | Federated Hermes | Selective Insurance Group, Inc | ||||||
Argo Group International Holdings, Ltd. |
|
| ||||||
| First American Financial Corporation | The Hanover Insurance Group, Inc. | ||||||
Assurant, Inc. | Janus Henderson Group | Virtus Investment Partners | ||||||
AXIS Capital Holdings Limited |
|
| ||||||
| MGIC Investment Corporation | White Mountains Insurance Group, Inc. |
To determine the asset management companies to add,company.
percentile.
and Related Forfeiture and Termination for Cause Provisions
In connection with Rule 10D-1 proposed by the SEC,November 2015, the Compensation Committee amended the recoupment policy in November 2015 so that it would apply, to the extent required by law, to incentive compensation received in the three yearthree-year period before a determination that a material restatement of our financial results is required. The amended
61
Forfeit Unpaid Incentive Compensation* | Recoup Already Paid Incentive Compensation* | Termination for Cause | |||||||||
Misconduct: (a) felony; (b) other crime involving moral turpitude in certain circumstances; and (c) other serious misconduct that may cause material harm to our employees or material reputational harm to the Company or may expose the Company to material regulatory, legal or financial risk | ü | ü | ü | ||||||||
Any act or omission likely to injure our operations or reputation or to prevent such executive from being able to perform their duties | ü | ü | |||||||||
Material restatement of financial statements (regardless of misconduct) | ü | ü | |||||||||
Overstatement of objectively quantifiable performance objectives | ü | ü | |||||||||
Violation of specified covenants (non-compete, non-solicitation, breach of confidentiality) | ü | ü | ü | ||||||||
Failure to follow directions of the Board or supervisor or any willful, serious and continued failure to perform their duties | ü | ü |
Named Executive Officer | Guideline | Current Ownership | ||||||||||||
Dominic J. Frederico | 7 × Salary | 70.2 × Salary | (1) | |||||||||||
Robert A. Bailenson | 5 × Salary | 17.9 × Salary | ||||||||||||
| 5 × Salary |
| ||||||||||||
Ling Chow (3) | 5 × Salary |
| ||||||||||||
|
|
|
| |||||||||||
|
|
| ||||||||||||
|
|
| ||||||||||||
Russell B. Brewer II | 5 × Salary | 20.5 × Salary |
| |||||||||||
|
|
|
|
|
|
62
|
| |||||
Core contribution | We contribute | |||||
Company match | We match 100% of each employee’s contribution, up to |
•Long-term incentive awards will vest only upon certain terminations of employment following a change in control (double-trigger)
•Such awards will vest upon a change in control (single-trigger) if the acquirer does not assume the awards
•We do not provide excise tax reimbursements and gross-up payments in the case of a change in control
As a result of the changes in the Act, beginning in 2018, the Company is no longer able to take a deduction for any compensation paid to our covered employees in excess of $1 million unless the compensation originally was exempt from such limitation and qualifies for transition relief applicable to certain arrangements in place on November 2, 2017. Because of the performance-based compensation exception repeal, amounts paid pursuant to a contract effective after November 2, 2017 will not be deductible as performance-based compensation, and the Compensation Committee will not need to consider the requirements of the performance-based compensation exception when considering the design of any such future contracts as part of our compensation program.
63
As with prior years, although the Compensation Committee will consider deductibility under Section 162(m) with respect to the compensation arrangements for executive officers, deductibility will not be the sole factor used in determining levels or methods of compensation. The Compensation Committee considers many factors when designing its compensation arrangements in addition to the deductibility of the compensation, and maintains the flexibility to grant awards or pay compensation amounts that are non-deductible if they believe it is in the best interest of our Company and our shareholders.
|
|
|
|
|
|
|
|
64
Chair
65
Name and Principal
| Year
| Salary
| Stock Awards(1)
|
Non-Equity Incentive Plan Compen- sation(2)
| All Other Compen- sation(3)
| Total
| ||||||||||||||||||
Dominic J. Frederico, |
| 2020 |
|
| $1,250,000 |
|
| $5,964,855 |
|
| $2,979,625 |
|
| $682,044 |
|
| $10,876,524 |
| ||||||
President and Chief | 2019 | $1,250,000 | $6,424,343 | $3,727,000 | $752,127 | $12,153,470 | ||||||||||||||||||
Executive Officer | 2018 | $1,250,000 | $6,865,967 | $3,812,000 | $843,935 | $12,771,902 | ||||||||||||||||||
Robert A. Bailenson, |
| 2020 |
|
| $800,000 |
|
| $1,325,546 |
|
| $1,669,360 |
|
| $367,904 |
|
| $4,162,810 |
| ||||||
Chief Financial Officer | 2019 | $700,000 | $1,606,106 | $1,994,720 | $364,809 | $4,665,635 | ||||||||||||||||||
2018 | $700,000 | $1,791,111 | $1,949,920 | $314,899 | $4,755,930 | |||||||||||||||||||
Ling Chow, |
| 2020 |
|
| $550,000 |
|
| $1,016,267 |
|
| $1,481,135 |
|
| $264,960 |
|
| $3,312,362 |
| ||||||
General Counsel | 2019 | $525,000 | $1,070,695 | $1,769,140 | $236,317 | $3,601,152 | ||||||||||||||||||
2018 | $500,000 | $1,275,345 | $1,631,350 | $195,344 | $3,602,039 | |||||||||||||||||||
Russell B. Brewer II, |
| 2020 |
|
| $525,000 |
|
| $1,016,267 |
|
| $1,286,093 |
|
| $268,315 |
|
| $3,095,675 |
| ||||||
Chief Surveillance Officer | 2019 | $525,000 | $1,177,776 | $1,548,015 | $284,043 | $3,534,834 | ||||||||||||||||||
2018 | $525,000 | $1,313,465 | $1,583,715 | $286,076 | $3,708,256 | |||||||||||||||||||
David A. Buzen, |
| 2020 |
|
| $612,500 | (4) |
| $662,752 |
|
| $1,306,585 |
|
| $235,131 |
|
| $2,816,968 |
| ||||||
Chief Investment Officer and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Head of Asset Management
|
|
|
2020 | 2019 | 2018 | ||||||||||
Cash Incentive Compensation | $1,292,885 | $1,461,390 | $1,260,800 | |||||||||
PRA Payout | $188,250 | $307,750 | $370,550 | |||||||||
Total | $1,481,135 | $1,769,140 | $1,631,350 |
|
D. Frederico | R. Bailenson | L. Chow | R. Brewer | D. Buzen | ||||||||||||||||
Employer Contribution to Retirement Plans |
| $602,669 |
|
| $340,795 |
|
| $246,795 |
|
| $254,190 |
|
| $210,131 |
| |||||
Bermuda Housing Allowance |
| $5,264 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Bermuda Car Allowance |
| $20,000 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Bermuda Travel Allowance |
| $15,000 |
|
| — |
|
| — |
|
| — |
|
| — |
| |||||
Tax Return Preparation |
| — |
|
| — |
|
| $4,840 |
|
| $11,000 |
|
| — |
| |||||
Matching Gift Donations |
| $15,000 |
|
| $20,000 |
|
| $13,325 |
|
| $3,125 |
|
| $25,000 |
| |||||
Business-Related Spousal Travel |
| — |
|
| $2,109 |
|
| — |
|
| — |
|
| — |
| |||||
Miscellaneous |
| $24,111 |
|
| $5,000 |
|
| — |
|
| — |
|
| — |
| |||||
Total |
| $682,044 |
|
| $367,904 |
|
| $264,960 |
|
| $268,315 |
|
| $235,131 |
|
|
66
Name and Principal Position | Year | Salary | Stock Awards(1) | Non-Equity Incentive Plan Compen- sation(2) | All Other Compen- sation(3) | Total | ||||||||||||||
Dominic J. Frederico, | 2021 | $1,250,000 | $9,239,643 | $3,454,988 | $591,431 | $14,536,062 | ||||||||||||||
President and | 2020 | $1,250,000 | $5,964,855 | $2,979,625 | $682,044 | $10,876,524 | ||||||||||||||
Chief Executive Officer | 2019 | $1,250,000 | $6,424,343 | $3,727,000 | $752,127 | $12,153,470 | ||||||||||||||
Robert A. Bailenson, | 2021 | $800,000 | $2,078,969 | $2,052,792 | $316,847 | $5,248,608 | ||||||||||||||
Chief Financial Officer | 2020 | $800,000 | $1,325,546 | $1,669,360 | $367,904 | $4,162,810 | ||||||||||||||
2019 | $700,000 | $1,606,106 | $1,994,720 | $364,809 | $4,665,635 | |||||||||||||||
David A. Buzen(4), | 2021 | $800,000 | $1,319,932 | $1,696,480 | $273,314 | $4,089,726 | ||||||||||||||
Chief Investment Officer and | 2020 | $612,500 | $662,752 | $1,306,585 | $235,131 | $2,816,968 | ||||||||||||||
Head of Asset Management | ||||||||||||||||||||
Ling Chow, | 2021 | $600,000 | $1,583,883 | $1,499,994 | $251,905 | $3,935,782 | ||||||||||||||
General Counsel | 2020 | $550,000 | $1,016,267 | $1,481,135 | $264,960 | $3,312,362 | ||||||||||||||
2019 | $525,000 | $1,070,695 | $1,769,140 | $236,317 | $3,601,152 | |||||||||||||||
Russell B. Brewer II, | 2021 | $550,000 | $1,649,945 | $1,374,995 | $259,055 | $3,833,995 | ||||||||||||||
Chief Surveillance Officer | 2020 | $525,000 | $1,016,267 | $1,286,093 | $268,315 | $3,095,675 | ||||||||||||||
2019 | $525,000 | $1,177,776 | $1,548,015 | $284,043 | $3,534,834 |
2020 | 2019 | |||||||
Cash Incentive Compensation | $1,292,885 | $1,461,390 | ||||||
PRA Payout | $188,250 | $307,750 | ||||||
Total | $1,481,135 | $1,769,140 |
D. Frederico | R. Bailenson | D. Buzen | L. Chow | R. Brewer | |||||||||||||
Employer Contribution to Retirement Plans | $513,079 | $301,847 | $258,314 | $232,670 | $225,855 | ||||||||||||
Bermuda Car Allowance | $20,000 | — | — | — | — | ||||||||||||
Tax Return Preparation | $20,208 | — | — | $4,235 | $11,000 | ||||||||||||
Matching Gift Donations | $15,000 | $15,000 | $15,000 | $15,000 | $14,700 | ||||||||||||
Miscellaneous | $23,144 | — | — | — | $7,500 | ||||||||||||
Total | $591,431 | $316,847 | $273,314 | $251,905 | $259,055 |
However, as discussed in “Compensation Discussion and Analysis—Separation Agreement,” Mr. Brewer has entered into a separation agreement with the Company pursuant to which he remains employed by the Company in a non-executive officer position, serving as Senior Advisor to the Chief Executive Officer, for a transition period through December 31, 2022.
Prior to January 1, 2019, we provided tax preparation and financial planning services as a perquisite to maximize the value of Company-provided compensation and to assist our named executive officers with tax compliance in various jurisdictions, especially since some of our named executive officers fulfill their responsibilities to the Company by working outside their home country for a portion of their time. Beginning January 1, 2019, we no longer provide financial planning services.
executives.
•The indemnification agreements provide for indemnification arising out of specified indemnifiable events, such as events relating to the fact that the indemnitee is or was one of our directors or officers or is or was a director, officer, employee or agent of another entity at our request or relating to anything done or not done by the indemnitee in such a capacity.
•The indemnification agreements provide for advancement of expenses.
•These agreements provide for mandatory indemnification to the extent an indemnitee is successful on the merits. To the extent that indemnification is unavailable, the agreements provide for contribution.
•The indemnification agreements set forth procedures relating to indemnification claims.
•The agreements also provide for maintenance of directors’ and officers’ liability insurance.
67
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||||||||||||||||||||
Name | Grant Date | Target | Maximum | Threshold | Target | Maximum | | All Other Stock Awards: Number of Shares of |
| | Grant Date Fair Value of Stock and Option Awards(5) | |||||||||||||||||||||
Dominic J. Frederico |
| Feb. 26, 2020(1) |
|
| $2,500,000 |
|
| $5,000,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||
| Feb. 26, 2020(2) |
|
| — |
|
| — |
|
| 21,379 |
| 42,758 |
| 106,895 |
| — |
|
| $1,665,852 |
| ||||||||||||
| Feb. 26, 2020(3) |
|
| — |
|
| — |
|
| 21,379 |
| 42,758 |
| 85,516 |
| — |
|
| $1,842,442 |
| ||||||||||||
| Feb. 26, 2020(4) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 57,010 |
| $2,456,561 |
| ||||||||||
Robert A. Bailenson |
| Feb. 26, 2020(1) |
|
| $1,600,000 |
|
| $3,200,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||
| Feb. 26, 2020(2) |
|
| — |
|
| — |
|
| 4,751 |
| 9,502 |
| 23,755 |
| — |
|
| $370,198 |
| ||||||||||||
| Feb. 26, 2020(3) |
|
| — |
|
| — |
|
| 4,751 |
| 9,502 |
| 19,004 |
| — |
|
| $409,441 |
| ||||||||||||
| Feb. 26, 2020(4) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 12,669 |
| $545,907 |
| ||||||||||
Ling Chow |
| Feb. 26, 2020(1) |
|
| $1,100,000 |
|
| $2,200,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||
| Feb. 26, 2020(2) |
|
| — |
|
| — |
|
| 3,643 |
| 7,285 |
| 18,213 |
| — |
|
| $283,824 |
| ||||||||||||
| Feb. 26, 2020(3) |
|
| — |
|
| — |
|
| 3,643 |
| 7,285 |
| 14,570 |
| — |
|
| $313,911 |
| ||||||||||||
| Feb. 26, 2020(4) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 9,713 |
| $418,533 |
| ||||||||||
Russell B. Brewer II |
| Feb. 26, 2020(1) |
|
| $1,050,000 |
|
| $2,100,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||
| Feb. 26, 2020(2) |
|
| — |
|
| — |
|
| 3,643 |
| 7,285 |
| 18,213 |
| — |
|
| $283,824 |
| ||||||||||||
| Feb. 26, 2020(3) |
|
| — |
|
| — |
|
| 3,643 |
| 7,285 |
| 14,570 |
| — |
|
| $313,911 |
| ||||||||||||
| Feb. 26, 2020(4) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 9,713 |
| $418,533 |
| ||||||||||
David A. Buzen |
| Feb. 26, 2020(1) |
|
| $1,600,000 |
|
| $3,200,000 |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
| ||||||||
| Feb. 26, 2020(2) |
|
| — |
|
| — |
|
| 2,376 |
| 4,751 |
| 11,878 |
| — |
|
| $185,099 |
| ||||||||||||
| Feb. 26, 2020(3) |
|
| — |
|
| — |
|
| 2,376 |
| 4,751 |
| 9,502 |
| — |
|
| $204,721 |
| ||||||||||||
| Feb. 26, 2020(4) |
|
| — |
|
| — |
|
| — |
|
| — |
|
| — |
|
| 6,334 |
| $272,932 |
|
|
|
68
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | |||||||||||||||||||||||||
Name | Grant Date | Target | Maximum | Threshold | Target | Maximum | All Other Stock Awards: Number of Shares of Stock or Units | Grant Date Fair Value of Stock and Option Awards(5) | ||||||||||||||||||
Dominic J. Frederico | Feb. 24, 2021(1) | $2,500,000 | $5,000,000 | — | — | — | — | — | ||||||||||||||||||
Feb. 24, 2021(2) | — | — | 28,386 | 56,772 | 141,930 | — | $3,409,726 | |||||||||||||||||||
Feb. 24, 2021(3) | — | — | 28,386 | 56,772 | 113,544 | — | $2,498,536 | |||||||||||||||||||
Feb. 24, 2021(4) | — | — | — | — | — | 75,696 | $3,331,381 | |||||||||||||||||||
Robert A. Bailenson | Feb. 24, 2021(1) | $1,600,000 | $3,200,000 | — | — | — | — | — | ||||||||||||||||||
Feb. 24, 2021(2) | — | — | 6,387 | 12,774 | 31,935 | — | $767,206 | |||||||||||||||||||
Feb. 24, 2021(3) | — | — | 6,387 | 12,774 | 25,548 | — | $562,184 | |||||||||||||||||||
Feb. 24, 2021(4) | — | — | — | — | — | 17,032 | $749,578 | |||||||||||||||||||
David A. Buzen | Feb. 24, 2021(1) | $1,600,000 | $3,200,000 | — | — | — | — | — | ||||||||||||||||||
Feb. 24, 2021(2) | — | — | 4,055 | 8,110 | 20,275 | — | $487,087 | |||||||||||||||||||
Feb. 24, 2021(3) | — | — | 4,055 | 8,110 | 16,220 | — | $356,921 | |||||||||||||||||||
Feb. 24, 2021(4) | — | — | — | — | — | 10,814 | $475,924 | |||||||||||||||||||
Ling Chow | Feb. 24, 2021(1) | $1,200,000 | $2,400,000 | — | — | — | — | — | ||||||||||||||||||
Feb. 24, 2021(2) | — | — | 4,866 | 9,732 | 24,330 | — | $584,504 | |||||||||||||||||||
Feb. 24, 2021(3) | — | — | 4,866 | 9,732 | 19,464 | — | $428,305 | |||||||||||||||||||
Feb. 24, 2021(4) | — | — | — | — | — | 12,976 | $571,074 | |||||||||||||||||||
Russell B. Brewer II | Feb. 24, 2021(1) | $1,100,000 | $2,200,000 | — | — | — | — | — | ||||||||||||||||||
Feb. 24, 2021(2) | — | — | 5,069 | 10,138 | 25,345 | — | $608,888 | |||||||||||||||||||
Feb. 24, 2021(3) | — | — | 5,069 | 10,138 | 20,276 | — | $446,173 | |||||||||||||||||||
Feb. 24, 2021(4) | — | — | — | — | — | 13,517 | $594,883 |
|
|
|
69
Stock Awards | ||||||||||||||||||||||||
Name | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | ||||||||||||||||||||
Dominic J. Frederico | 82,237 | (1 | ) | $2,589,643 | — |
|
|
| — | |||||||||||||||
| 147,821 | (2 | ) | $4,654,884 | — |
|
|
| — | |||||||||||||||
| 59,850 | (3 | ) | $1,884,677 | — |
|
|
| — | |||||||||||||||
| 57,010 | (4 | ) | $1,795,245 | — |
|
|
| — | |||||||||||||||
| — |
|
|
| — | 22,444 | (5 | ) | $ | 706,762 | ||||||||||||||
| — |
|
|
| — | 22,444 | (6 | ) | $ | 706,762 | ||||||||||||||
| — |
|
|
| — | 21,379 | (7 | ) | $ | 673,225 | ||||||||||||||
| — |
|
|
| — | 21,379 | (8 | ) | $ | 673,225 | ||||||||||||||
Robert A. Bailenson | 21,453 | (1 | ) | $675,555 | — |
|
|
| — | |||||||||||||||
| 38,562 | (2 | ) | $1,214,310 | — |
|
|
| — | |||||||||||||||
| 14,963 | (3 | ) | $471,185 | — |
|
|
| — | |||||||||||||||
| 12,669 | (4 | ) | $398,947 | — |
|
|
| — | |||||||||||||||
| — |
|
|
| — | 5,611 | (5 | ) | $ | 176,690 | ||||||||||||||
| — |
|
|
| — | 5,611 | (6 | ) | $ | 176,690 | ||||||||||||||
| — |
|
|
| — | 4,751 | (7 | ) | $ | 149,609 | ||||||||||||||
| — |
|
|
| — | 4,751 | (8 | ) | $ | 149,609 | ||||||||||||||
Ling Chow | 9,296 | (1 | ) | $292,731 | — |
|
|
| — | |||||||||||||||
| 16,710 | (2 | ) | $526,184 | — |
|
|
| — | |||||||||||||||
| 9,975 | (3 | ) | $314,113 | — |
|
|
| — | |||||||||||||||
| 9,713 | (4 | ) | $305,862 | — |
|
|
| — | |||||||||||||||
| — |
|
|
| — | 3,741 | (5 | ) | $ | 117,788 | ||||||||||||||
| — |
|
|
| — | 3,741 | (6 | ) | $ | 117,788 | ||||||||||||||
| — |
|
|
| — | 3,643 | (7 | ) | $ | 114,702 | ||||||||||||||
| — |
|
|
| — | 3,643 | (8 | ) | $ | 114,702 | ||||||||||||||
| 2,415 | (9 | ) | $76,048 | — |
|
|
| — | |||||||||||||||
| 6,593 | (10 | ) | $207,614 | — |
|
|
| — | |||||||||||||||
Russell B. Brewer II | 15,732 | (1 | ) | $495,401 | — |
|
|
| — | |||||||||||||||
| 28,278 | (2 | ) | $890,483 | — |
|
|
| — | |||||||||||||||
| 10,973 | (3 | ) | $345,540 | — |
|
|
| — | |||||||||||||||
| 9,713 | (4 | ) | $305,862 | — |
|
|
| — | |||||||||||||||
| — |
|
|
| — | 4,115 | (5 | ) | $ | 129,566 | ||||||||||||||
| — |
|
|
| — | 4,115 | (6 | ) | $ | 129,566 | ||||||||||||||
| — |
|
|
| — | 3,643 | (7 | ) | $ | 114,702 | ||||||||||||||
| — |
|
|
| — | 3,643 | (8 | ) | $ | 114,702 | ||||||||||||||
David A. Buzen | 10,727 | (1 | ) | $ | 337,793 | — |
|
|
| — | ||||||||||||||
| 19,282 | (2 | ) | $ | 607,183 | — |
|
|
| — | ||||||||||||||
| 7,481 | (3 | ) | $ | 235,577 | — |
|
|
| — | ||||||||||||||
| 6,334 | (4 | ) | $ | 199,458 | — |
|
|
| — | ||||||||||||||
| — |
|
|
| — | 2,806 | (5 | ) | $ | 88,345 | ||||||||||||||
| — |
|
|
| — | 2,806 | (6 | ) | $ | 88,345 | ||||||||||||||
| — |
|
|
| — | 2,376 | (7 | ) | $ | 74,804 | ||||||||||||||
| — |
|
|
| — | 2,376 | (8 | ) | $ | 74,804 |
70
Stock Awards | ||||||||||||||||||||
Name | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested | ||||||||||||||||
Dominic J. Frederico | 59,850 | (1) | $3,004,470 | — | — | |||||||||||||||
57,010 | (2) | $2,861,902 | — | — | ||||||||||||||||
75,696 | (3) | $3,799,939 | — | — | ||||||||||||||||
35,749 | (4) | $1,794,600 | — | — | ||||||||||||||||
89,776 | (5) | $4,506,755 | — | — | ||||||||||||||||
— | — | 21,379 | (6) | $1,073,226 | ||||||||||||||||
— | — | 21,379 | (7) | $1,073,226 | ||||||||||||||||
— | — | 28,386 | (8) | $1,424,977 | ||||||||||||||||
— | — | 28,386 | (9) | $1,424,977 | ||||||||||||||||
Robert A. Bailenson | 14,963 | (1) | $751,143 | — | — | |||||||||||||||
12,669 | (2) | $635,984 | — | — | ||||||||||||||||
17,032 | (3) | $855,006 | — | — | ||||||||||||||||
8,937 | (4) | $448,637 | — | — | ||||||||||||||||
22,444 | (5) | $1,126,689 | — | — | ||||||||||||||||
— | — | 4,751 | (6) | $238,500 | ||||||||||||||||
— | — | 4,751 | (7) | $238,500 | ||||||||||||||||
— | — | 6,387 | (8) | $320,627 | ||||||||||||||||
— | — | 6,387 | (9) | $320,627 | ||||||||||||||||
David A. Buzen | 7,481 | (1) | $375,546 | — | — | |||||||||||||||
6,334 | (2) | $317,967 | — | — | ||||||||||||||||
10,814 | (3) | $542,863 | — | — | ||||||||||||||||
4,469 | (4) | $224,344 | — | — | ||||||||||||||||
11,222 | (5) | $563,344 | — | — | ||||||||||||||||
— | — | 2,376 | (6) | $119,275 | ||||||||||||||||
— | — | 2,376 | (7) | $119,275 | ||||||||||||||||
— | — | 4,055 | (8) | $203,561 | ||||||||||||||||
— | — | 4,055 | (9) | $203,561 | ||||||||||||||||
Ling Chow | 9,975 | (1) | $500,745 | — | — | |||||||||||||||
9,713 | (2) | $487,593 | — | — | ||||||||||||||||
12,976 | (3) | $651,395 | — | — | ||||||||||||||||
5,958 | (4) | $299,092 | — | — | ||||||||||||||||
14,962 | (5) | $751,092 | — | — | ||||||||||||||||
— | — | 3,643 | (6) | $182,879 | ||||||||||||||||
— | — | 3,643 | (7) | $182,879 | ||||||||||||||||
— | — | 4,866 | (8) | $244,273 | ||||||||||||||||
— | — | 4,866 | (9) | $244,273 | ||||||||||||||||
3,297 | (10) | $165,509 | — | — | ||||||||||||||||
Russell B. Brewer II | 10,973 | (1) | $550,845 | — | — | |||||||||||||||
9,713 | (2) | $487,593 | — | — | ||||||||||||||||
13,517 | (3) | $678,553 | — | — | ||||||||||||||||
6,554 | (4) | $329,011 | — | — | ||||||||||||||||
16,458 | (5) | $826,192 | — | — | ||||||||||||||||
— | — | 3,643 | (6) | $182,879 | ||||||||||||||||
— | — | 3,643 | (7) | $182,879 | ||||||||||||||||
— | — | 5,069 | (8) | $254,464 | ||||||||||||||||
— | — | 5,069 | (9) | $254,464 |
|
|
|
(1) Represents a time-based RSU award. These units were granted on February 27, 2019, and vested on February 27, 2022. (2) Represents a time-based RSU award. These units were granted on February 26, |
|
|
|
|
|
|
2020, OPTION EXERCISES ANDand will vest on February 26, 2023, subject to continued employment, with limited exceptions.
| Option Awards | Stock Awards | ||||||||||||||
Name | Number of Shares Acquired on Exercise(1) | Value Realized on Exercise(2) | Number of Shares Acquired on Vesting(3) | Value Realized on Vesting(4) | ||||||||||||
Dominic J. Frederico | — | — | 191,532 | $8,867,932 | ||||||||||||
Robert A. Bailenson | — | — | 45,271 | $2,096,047 | ||||||||||||
Ling Chow | 3,898 | $40,539 | 8,271 | $380,490 | ||||||||||||
Russell B. Brewer II | — | — | 38,306 | $1,773,568 | ||||||||||||
David A. Buzen | — | — | 26,118 | $1,209,263 |
|
|
|
|
71
Stock Awards | ||||||||
Name | Number of Shares Acquired on Vesting(1) | Value Realized on Vesting(2) | ||||||
Dominic J. Frederico | 230,058 | $9,087,291 | ||||||
Robert A. Bailenson | 60,015 | $2,370,593 | ||||||
David A. Buzen | 30,009 | $1,185,356 | ||||||
Ling Chow | 31,717 | $1,253,087 | ||||||
Russell B. Brewer II | 44,010 | $1,738,395 |
Name | Executive Contributions in Last FY(1) | Registrant Contributions in Last FY(2) | Aggregate Withdrawals/ Distributions | Aggregate Earnings in Last FY | Aggregate Balance at Last FYE(3) | |||||||||||||||
Dominic J. Frederico |
| $282,334 |
|
| $564,669 |
|
| — |
|
| $1,904,763 |
|
| $14,362,325 | (4) | |||||
Robert A. Bailenson |
| $151,397 |
|
| $302,795 |
|
| — |
|
| -$98,093 |
|
| $6,244,159 |
| |||||
Ling Chow |
| $104,398 |
|
| $208,795 |
|
| — |
|
| $225,568 |
|
| $2,963,980 |
| |||||
Russell B. Brewer II |
| $108,095 |
|
| $216,190 |
|
| — |
|
| $221,248 |
|
| $5,563,950 |
| |||||
David A. Buzen |
| $86,065 |
|
| $172,131 |
|
| — |
|
| $196,999 |
|
| $1,050,188 |
|
|
|
|
Name
| 2020 Amount | 2019 Amount | ||||||
Dominic J. Frederico |
| $11,308,809 |
|
| $10,448,049 |
| ||
Robert A. Bailenson |
| $2,819,659 |
|
| $2,393,074 |
| ||
Ling Chow |
| $491,544 |
|
| $220,500 |
| ||
Russell B. Brewer II |
| $1,782,936 |
|
| $1,453,767 |
| ||
David A. Buzen |
| — |
|
| — |
|
|
Name | Executive Contributions in Last FY(1) | Registrant Contributions in Last FY(2) | Aggregate Withdrawals/ Distributions | Aggregate Earnings in Last FY | Aggregate Balance at Last FYE(3) | |||||||||||||||
Dominic J. Frederico | $237,206 | $474,412 | — | $3,444,816 | $18,518,759 | (4) | ||||||||||||||
Robert A. Bailenson | $131,590 | $263,180 | — | $1,897,277 | $8,536,206 | |||||||||||||||
David A. Buzen | $109,824 | $219,647 | — | $185,001 | $1,564,660 | |||||||||||||||
Ling Chow | $97,002 | $194,003 | — | $558,644 | $3,813,629 | |||||||||||||||
Russell B. Brewer II | $93,594 | $187,188 | — | $170,952 | $6,015,684 |
Name | 2021 Amount | 2020 Amount | ||||||
Dominic J. Frederico | $12,155,812 | $11,308,809 | ||||||
Robert A. Bailenson | $3,273,851 | $2,819,659 | ||||||
David A. Buzen | $258,196 | — | ||||||
Ling Chow | $804,737 | $491,544 | ||||||
Russell B. Brewer II | $2,107,221 | $1,782,936 |
2021.
Name | Unvested RSUs | Unvested PSUs(1) | Total | |||||||||
Dominic J. Frederico |
| $6,269,565 |
|
| $8,176,788 |
|
| $14,446,353 |
| |||
Robert A. Bailenson |
| $1,545,687 |
|
| $2,060,758 |
|
| $3,606,445 |
| |||
Ling Chow |
| $1,376,207 |
|
| $1,129,219 |
|
| $2,505,426 |
| |||
Russell B. Brewer II |
| $1,146,803 |
|
| $1,519,624 |
|
| $2,666,427 |
| |||
David A. Buzen |
| $772,828 |
|
| $1,030,406 |
|
| $1,803,234 |
|
|
72
Name | Unvested RSUs | Unvested PSUs(1) | Total | ||||||||
Dominic J. Frederico | $9,666,311 | $12,396,767 | $22,063,078 | ||||||||
Robert A. Bailenson | $2,242,133 | $2,927,503 | $5,169,636 | ||||||||
David A. Buzen | $1,236,376 | $1,538,682 | $2,775,058 | ||||||||
Ling Chow | $1,805,242 | $2,092,520 | $3,897,762 | ||||||||
Russell B. Brewer II | $1,716,991 | $2,209,623 | $3,926,614 |
Name | Unvested RSUs | Unvested PSUs(1) | Total | |||||||||
Dominic J. Frederico |
| $5,419,309 |
|
| $9,730,856 |
|
| $15,150,165 |
| |||
Robert A. Bailenson(2) |
| — |
|
| — |
|
| — |
| |||
Ling Chow(3) |
| — |
|
| — |
|
| — |
| |||
Russell B. Brewer II |
| $989,938 |
|
| $1,784,402 |
|
| $2,774,340 |
| |||
David A. Buzen |
| $566,151 |
|
| $1,053,475 |
|
| $1,619,626 |
|
|
|
|
Name | Unvested RSUs | Unvested PSUs(1) | Total | ||||||||
Dominic J. Frederico | $9,507,316 | $21,128,095 | $30,635,411 | ||||||||
Robert A. Bailenson(2) | — | — | — | ||||||||
David A. Buzen | $786,087 | $1,726,632 | $2,512,719 | ||||||||
Ling Chow(3) | — | — | — | ||||||||
Russell B. Brewer II | $1,687,840 | $3,748,489 | $5,436,329 |
Name | Salary Continuation | Cash Incentive Compensation | Benefits | Unvested RSUs | Unvested PSUs(1) | Total | ||||||||||||||||||
Dominic J. Frederico |
| $1,250,000 |
|
| $4,021,333 |
|
| $50,417 |
|
| $6,269,565 |
|
| $8,176,788 |
|
| $19,768,103 |
| ||||||
Robert A. Bailenson |
| $800,000 |
|
| $1,890,922 |
|
| $34,395 |
|
| $1,545,687 |
|
| $2,060,758 |
|
| $6,331,762 |
| ||||||
Ling Chow |
| $550,000 |
|
| $1,240,730 |
|
| $34,395 |
|
| $619,975 |
|
| $1,129,219 |
|
| $3,574,319 |
| ||||||
Russell B. Brewer II |
| $525,000 |
|
| $1,543,243 |
|
| $23,530 |
|
| $1,146,803 |
|
| $1,519,624 |
|
| $4,758,200 |
| ||||||
David A. Buzen |
| $500,000 |
|
| $922,650 |
|
| $34,395 |
|
| $772,828 |
|
| $1,030,406 |
|
| $3,260,279 |
|
|
Name | Salary Continuation | Cash Incentive Compensation | Benefits | Unvested RSUs | Unvested PSUs(1) | Total | ||||||||||||||
Dominic J. Frederico | $1,250,000 | $3,506,208 | $53,979 | $9,666,311 | $12,396,767 | $26,873,265 | ||||||||||||||
Robert A. Bailenson | $800,000 | $1,871,333 | $36,082 | $2,242,133 | $2,927,503 | $7,877,051 | ||||||||||||||
David A. Buzen | $800,000 | $1,106,928 | $36,082 | $1,236,376 | $1,538,682 | $4,718,068 | ||||||||||||||
Ling Chow | $600,000 | $1,338,358 | $36,082 | $1,639,733 | $2,092,520 | $5,706,693 | ||||||||||||||
Russell B. Brewer II | $550,000 | $1,472,608 | $24,699 | $1,716,991 | $2,209,623 | $5,973,921 |
Name | Salary Continuation | Cash Incentive Compensation | Benefits | Unvested RSUs | Unvested PSUs(1) | Total | ||||||||||||||||||
Dominic J. Frederico |
| $1,250,000 |
|
| $4,021,333 |
|
| $50,417 |
|
| $6,269,565 |
|
| $10,174,829 |
|
| $21,766,144 |
| ||||||
Robert A. Bailenson |
| $800,000 |
|
| $1,890,922 |
|
| $34,395 |
|
| $1,545,687 |
|
| $2,519,508 |
|
| $6,790,512 |
| ||||||
Ling Chow |
| $550,000 |
|
| $1,240,730 |
|
| $34,395 |
|
| $1,376,207 |
|
| $1,456,147 |
|
| $4,657,479 |
| ||||||
Russell B. Brewer II |
| $525,000 |
|
| $1,543,243 |
|
| $23,530 |
|
| $1,146,803 |
|
| $1,867,554 |
|
| $5,106,130 |
| ||||||
David A. Buzen |
| $500,000 |
|
| $922,650 |
|
| $34,395 |
|
| $772,828 |
|
| $1,259,782 |
|
| $3,489,655 |
|
|
Name | Salary Continuation | Cash Incentive Compensation | Benefits | Unvested RSUs | Unvested PSUs(1) | Total | ||||||||||||||
Dominic J. Frederico | $1,250,000 | $3,506,208 | $53,979 | $9,666,311 | $19,845,552 | $34,322,050 | ||||||||||||||
Robert A. Bailenson | $800,000 | $1,871,333 | $36,082 | $2,242,133 | $4,607,292 | $9,556,840 | ||||||||||||||
David A. Buzen | $800,000 | $1,106,928 | $36,082 | $1,236,376 | $2,544,681 | $5,724,067 | ||||||||||||||
Ling Chow | $600,000 | $1,338,358 | $36,082 | $1,805,242 | $3,366,105 | $7,145,787 | ||||||||||||||
Russell B. Brewer II | $550,000 | $1,472,608 | $24,699 | $1,716,991 | $3,527,905 | $7,292,203 |
73
•A participant does not vest in employer contributions until he or she has completed one year of service, but the participant will vest earlier if he or she dies or attains age 65 while employed by a specified Assured Guaranty employer.
•Distribution of a participant’s account balances will be made as a lump sum. However, a participant may elect to receive payment of his or hertheir account balances in annual installments over a period not exceeding five years, but only if, at the time of termination, the participant has attained age 55 and completed at least five years of service, and the amount of the participant’s account balances is at least $50,000.
•A participant who is considered to be a specified employee as defined in Section 409A of the Internal Revenue Code and whose payment of benefits begins by reason of termination of employment may not begin to receive such payment until six months after termination of employment.
74
ASSURED GUARANTY LTD. 2004 LONG-TERM INCENTIVE PLAN
•PSUs were granted in 20182019 through 20212022 that will vest at the end of a three-year performance period if certain performance conditions are satisfied (for PSUs granted through 2018, based on the highest 40-day average share price during the last eighteen months of such period exceeding certain share price hurdles, and for PSUs granted in 2019, 2020 and 2021, based(based on growth in core adjusted book value per share relative to a target and on TSR relative to the Index) and if the participant continues to be employed through the end of such three-year period, with limited exceptions as described below.
•RSUs were granted from 20182019 through 20212022 that will vest at the end of a three-year vesting period if the participant remains employed through the end of such period. Such vesting may be accelerated in the event of termination prior to the end of the vesting period due to death or disability or in the event of a change in control where the acquirer does not agree to continue such award following the change in control. Additionally, the participant may remain entitled to continued vesting of such RSUs following an involuntary termination without cause, a voluntary termination for good reason or a voluntary termination due to retirement during the vesting period if certain requirements are met, including the participant signing of a release of claims against our Company and continuing to comply with applicable restrictive covenants.
ASSURED GUARANTY LTD. PERFORMANCE RETENTION PLAN
The Performance Retention Plan was established in 2006 to permit the grant of cash-based awards to selected employees and give to the Compensation Committee greater flexibility in establishing the terms of performance retention awards, including the ability to establish different performance periods and performance objectives. PRP awards may be treated as nonqualified deferred compensation subject to the rules of Section 409A of the Internal Revenue Code.
From 2008 through 2014, our Company integrated PRP awards into its long-term incentive compensation program for the executive officers and certain selected employees. The executive officers stopped receiving PRP awards beginning in 2015 and the last outstanding PRP award to anyone who was an executive officer as of December 31, 2017 vested on December 31, 2017. However, Ms. Chow was granted PRP awards before becoming an executive officer, including in February 2017, so her last PRP award vested on December 31, 2020. Generally, for awards granted before 2020, each PRP award was divided into three installments, with 25% of the award allocated to a performance period that includes the year of the award and the next year, 25% of the award allocated to a performance period that includes the year of the award and the next two years, and 50% of the award allocated to a performance period that includes the year of the award and the next three years. Each installment of an award vested if the participant remained employed through the end of the performance period for that installment (or vested on the date of the participant’s death, disability, or retirement if that occurred during the performance period). Payment for each performance period was made at the end of that performance period. One half of each installment was increased or decreased in proportion to the increase or decrease of core ABV per share during the performance period, and one half of each installment was increased or decreased in proportion to the core operating ROE during the performance period. However, if, during the performance period, a participant died or became permanently disabled while employed, the amount for any such incomplete performance period shall have equaled the portion of the award allocated to such performance period. Core operating ROE and core ABV are defined in each PRP award agreement.
75
Plan category | Number of exercise of | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||
Equity compensation plans approved by security holders |
| 15,979(1) |
|
| $21.88 |
|
| 9,152,750(2) |
| |||
Equity compensation plans not approved by security holders |
| N/A |
| N/A |
|
| N/A |
| ||||
TOTAL |
| 15,979 | $21.88 | 9,152,750 |
| |||||||||||
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding and (b) | Number of securities remaining available for future issuance under compensation plans (excluding securities reflected in column (a)) (c) | ||||||||
Equity compensation plans approved by security holders | — | — | 8,567,790 (1) | ||||||||
Equity compensation plans not | N/A | N/A | N/A | ||||||||
TOTAL | — | — | 8,567,790 |
|
76
The board of directors recommends that you vote “FOR” the following resolution at the Annual General Meeting: |
77
2021 | 2020 | |||||||
Audit fees(1) | $9,064,000 | $9,212,000 | ||||||
Audit-related fees(2) | $855,000 | $1,428,000 | ||||||
Tax fees(3) | $332,000 | $250,000 | ||||||
All other fees | $4,000 | $4,000 |
| 2020 | 2019 | ||||||
Audit fees(1) | $ | 9,212,000 | $ | 7,906,500 | ||||
Audit-related fees(2) | $ | 1,428,000 | $ | 2,285,000 | ||||
Tax fees(3) | $ | 250,000 | $ | 250,000 | ||||
All other fees(4) | $ | 4,000 | $ | 494,000 |
|
•the audits of our consolidated financial statements, of management’s assessment of internal controls over financial reporting and of the effectiveness of these controls
•the statutory and GAAP audits of various subsidiaries
•review of quarterly financial statements
|
|
|
78
general pre-approval include other audit services, audit-related services and permissible non-audit services. If a type of service is not covered by the Audit Committee’s general pre-approval, the Audit Committee must review the service on a specific case by case basis and pre-approve it if such service is to be provided by the independent auditor. Annual audit services engagement terms and fees require specific pre-approval of the Audit Committee and management and the auditor will report actual fees versus the budget periodically throughout the year by category of service. Any proposed services exceeding pre-approved costs also require specific pre-approval by the Audit Committee. For both types of pre-approval, the Audit Committee will consider whether such services are consistent with the SEC’s rules on auditor independence. Either the Audit Committee ChairmanChair or the entire Audit Committee must pre-approve the provision of any significant additional audit fees in excess of the budgeted amount and/or any excess related to non-audit fees over the budgeted amount. All fees related to internal control work are pre-approved by the Audit Committee before such services are rendered. The Audit Committee pre-approved all of the fees described above pursuant to its pre-approval policies and procedures.
The board of directors and the Audit Committee recommend that you vote “FOR” the appointment of PwC as the Company’s independent auditor for the year ending December 31, |
79
The board of directors recommends that you direct AGL to vote “FOR” each of the nominees. |
Russell B. Brewer II, age 64, has been Chief Surveillance Officer of AGL since November 2009 and Chief Surveillance Officer of AGC and AGM since July 2009 and has also been responsible for information technology at AGL since April 2015. Mr. Brewer has been with AGM since 1986. Mr. Brewer was Chief Risk Management Officer of AGM from September 2003 until July 2009 and Chief Underwriting Officer of AGM from September 1990 until September 2003. Mr. Brewer was also a member of the Executive Management Committee of AGM. He was a Managing Director of
80
Mr. Brewer’s risk management and surveillance expertise and his position as the Chief Surveillance Officer of AGL enhance the deliberations of the Board of Directors of AG Re.
81
2020 | 2019 | |||||||
Audit fees | $ | 89,900 |
| $ | 89,900 |
| ||
Audit—related fees |
| — |
|
| — |
| ||
Tax fees |
| — |
|
| — |
| ||
All other fees |
| — |
|
| — |
|
2020.
2021 | 2020 | |||||||
Audit fees | $89,900 | $89,900 | ||||||
Audit—related fees | — | — | ||||||
Tax fees | — | — | ||||||
All other fees | — | — |
The board of directors recommends that you direct AGL to vote “FOR” each of the proposals concerning AGL’s subsidiary, AG Re. |
82
24, 2021,23, 2022, and otherwise comply with the requirements of the SEC to be eligible for inclusion in AGL’s 20222023 Annual General Meeting proxy statement and form of proxy.20222023 Annual General Meeting, such written notice must be received on or prior to February 4, 2022.3, 2023. The notice must meet the requirements set forth in our Bye-Laws. Under the circumstances described in, and upon compliance with, Rule 14a-4(c) under the Exchange Act, management proxies would be allowed to use their discretionary voting authority to vote on any proposal with respect to which the foregoing requirements have been met.83
g | XXXX XXXX XXXX XXXX |
Meeting as a result of COVID-19, we will post the revised meeting information on our website at www.assuredguaranty.com/annualmeeting as soon as possible after changing the date, time and location for the postponed meeting. We will also promptly issue a press release that we will make available on our website at www.assuredguaranty.com/annualmeeting and file with the SEC as definitive additional proxy material. Therefore, prior to and on the date of the Annual General Meeting, please visit our website or the SEC’s website (www.sec.gov)(www.sec.gov) to determine if there has been any changes to the date, time or location of our Annual General Meeting. If you wish to receive a physical copy of any such press release, please contact our Secretary at generalcounsel@agltd.com or (441) 279-5725.
4, 2022
84
or about March 24, 2021,23, 2022, to all shareholders entitled to vote at the Annual General Meeting.
$57.41.
11, 2022.
Many
|
85
the broker, bank or other nominee will vote your shares as you direct. If your broker, bank or other nominee does not receive instructions from you about how your shares are to be voted,
one of two things can happen, depending on the type of proposal. According to rules of the NYSE:
card so that it is received by 11:59 p.m.12:00 Noon Eastern Daylight Time on May 4, 2021. Similarly, in3, 2022. In order to assure that your votes, as a beneficial holder,owner, are tabulated in time to be voted at the Annual General Meeting, you must submit your voting instructions so that your broker will be able to vote by 11:59 p.m. Eastern Daylight Time on May 2, 2021.
2022. In order to assure that your votes, as an employee shareholder who participates in the Assured Guaranty Employee Stock Purchase Plan, are tabulated in time to be voted at the Annual General Meeting, you must complete your voting over the Internet or by telephone or submit your proxy card so that it is received by 11:59 p.m. Easter Daylight Savings Time on April 29, 2022.
11, 2022.
86
WHAT VOTES NEED TO BE PRESENT TO HOLD THE ANNUAL GENERAL MEETING?
11, 2022.
WHAT IS THE EFFECT OF BROKER NON-VOTES AND ABSTENTIONS?
10, 2022.
87
CAN A SHAREHOLDER, EMPLOYEE OR OTHER INTERESTED PARTY COMMUNICATE DIRECTLY WITH OUR BOARD? IF SO, HOW?
(441) 279-5725 or at generalcounsel@agltd.com. If you have any questions about your ownership of our Common Shares, please contact Robert Tucker, our Senior Managing Director, Investor Relations and Corporate Communications, at (212) 339-0861 or at rtucker@agltd.com.
88
By Order of the Board of Directors,
Ling Chow
Secretary
89
|
|
Ling Chow | ||||||||
Secretary |
Assured Guaranty Ltd. 30 Woodbourne Ave Hamilton HM 08 Bermuda | www.agltd.com | |||||||||||||||||||
Important Notice Regarding the Availability of Proxy Materials for the Annual General Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
D37301-P51090
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS
OF ASSURED GUARANTY LTD.
The undersigned hereby appoints Dominic J. Frederico, Nicholas J. Proud and Ling Chow, and each of them, with power to act without the other and with power of substitution, as proxies and attorneys-in-fact and hereby authorizes them to represent and vote, as provided on the other side, all the common shares of Assured Guaranty Ltd. which the undersigned is entitled to vote and, in their discretion, to vote upon such other business as may properly come before the Annual General Meeting of shareholders of the Company to be held May 5, 2021 or any adjournment thereof, with all powers which the undersigned would possess if present at the meeting.
THIS PROXY CARD, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE BUT THE CARD IS SIGNED, THIS PROXY CARD WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES UNDER PROPOSALS 1 AND 4A, FOR PROPOSALS 2, 3 AND 4B AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Continued and to be signed on reverse side