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| (3)3. | The authorization of the election of the five directors of Maiden Global Holdings, Ltd. (“Maiden Global Holdings”), a wholly owned subsidiary of the Company, (“Maiden Global Holdings”), named in the accompanying Proxy Statement to serve until the next annual general meeting of the shareholders of Maiden Global Holdings; and |
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| (4) | An advisory vote on a non-binding resolution to approve the compensation of certain of our named executive officers disclosed in this Proxy Statement; |
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| (5) | The authorization to change the name of our wholly owned subsidiary Maiden Insurance Company Ltd. to Maiden Reinsurance Ltd.; and |
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| (6)4. | The appointment of BDO USA, LLP as the Company'sCompany’s and BDO LLP as Maiden Global Holdings'Holdings’ independent registered public accounting firm, BDO USA, LLP as Maiden Reinsurance’s independent U.S. GAAP financial statement auditor and Arthur Morris and& Company Limited as Maiden Insurance'sReinsurance’s independent public accounting firm,approved Bermuda statutory financial statement auditor for the 20142016 fiscal year. |
Our Board of Directors unanimously recommends that you vote “FOR” the nominees in Proposals 1, 2 and 3; and “FOR” Proposals 4, 5 and 6.in Proposal 4.
Holders of record of common shares at the close of business on March 15, 2014,2016, the date fixed by our Board of Directors as the record date for the Meeting, are entitled to notice of and to vote on any matters that properly come before the Annual General Meeting and on any adjournment or postponement thereof. Please sign and return your proxy card in the enclosed envelope at your earliest convenience to assure that your shares will be represented and voted at the Meeting even if you cannot attend. On behalf of the officers, directors and employees of the Company, I would like to express our appreciation for your continued support. I look forward to seeing you at the Annual General Meeting.
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| | By Order of the Board of Directors, |
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| | Arturo M. Raschbaum President and Chief Executive Officer |
Hamilton, Bermuda
April 2, 20144, 2016
YOU ARE URGED TO VOTE BY PROMPTLY SIGNING AND RETURNING THE ENCLOSED PROXY IN THE RETURN ENVELOPE PROVIDED TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED. IF YOU ATTEND THE MEETING, YOU MAY, IF YOU DESIRE, REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON REGARDLESS OF THE METHOD BY WHICH YOU VOTED. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THIS PROXY STATEMENT.
Important Notice Regarding the Availability of Proxy Materials
for the Annual General Meeting To Be Held on May 6, 2014:4, 2016:
The Proxy Statement and Annual Report to security holders are available at maidenholdings.investorroom.com.www.iproxydirect.com/MHLD
PROXY STATEMENT
General Information
This Proxy Statement and the accompanying form of proxy are furnished to you and other shareholders of Maiden Holdings, Ltd. (“Maiden Holdings,” “Company,” “our,” “us,” or “we”) on behalf of our board of directors (the “Board of Directors”) for use at the 20142016 Annual General Meeting of Shareholders (the “Annual General Meeting” or the “Meeting”) to be held at the Company's offices, Maiden House, 131 Front Street, Hamilton HM12, Bermuda, on Tuesday,Wednesday, May 6, 2014,4, 2016, at 3:00 p.m. (local time) and any adjournment or postponement thereof. All shareholders are entitled and encouraged to attend the Annual General Meeting in person.
All expenses in connection with this solicitation of proxies will be paid by us. Proxies will be solicited principally by mail, but directors, officers and certain other individuals authorized by us may personally solicit proxies. We will reimburse custodians, nominees or other persons for their out-of-pocket expenses in sending proxy material to beneficial owners.
This Proxy Statement, together with the accompanying proxy card, was first mailed to shareholders entitled to vote at the Annual General Meeting on or about April 2, 2014.4, 2016.
Matters to Be Voted Upon
As of March 15, 2014,2016, the only business we expect to be presented at the Annual General Meeting is:
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1. | Election of the five directors of Maiden Holdings named in the accompanying Proxy Statement to serve until the 20152017 Annual General Meeting of Shareholders; |
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2. | Authorization of the election of the sixfive directors of Maiden Insurance CompanyReinsurance Ltd. (“Maiden Reinsurance”), a wholly owned subsidiary of the Company, (“Maiden Insurance”), named in this Proxy Statement to serve until the next annual general meeting of the shareholders of Maiden Insurance;Reinsurance; |
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3. | Authorization of the election of the five directors of Maiden Global Holdings, Ltd. (“Maiden Global Holdings”), a wholly owned subsidiary of the Company, (“Maiden Global Holdings”), named in this Proxy Statement to serve until the next annual general meeting of the shareholders of Maiden Global Holdings; and |
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4. | An advisory vote on a non-binding resolution to approve the compensation of certain of our named executive officers disclosed in this Proxy Statement; |
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5. | The authorization to change the name of our wholly owned subsidiary Maiden Insurance Company Ltd. to Maiden Reinsurance Ltd.; and |
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6. | The appointment of BDO USA, LLP as the Company'sCompany’s and BDO LLP as Maiden Global Holdings'Holdings’ independent registered public accounting firm, BDO USA, LLP as Maiden Reinsurance’s independent registered U.S. GAAP financial statement auditor and Arthur Morris and& Company Limited as Maiden Insurance'sReinsurance’s independent public accounting firm,approved Bermuda statutory financial statement auditor for the 20142016 fiscal year. |
Record Date
The Board has fixed the close of business on March 15, 20142016 as the record date for determining the holders of common shares entitled to notice of and to vote at the Annual General Meeting.
Outstanding Voting Securities
As of the record date, there were 72,732,28074,038,483 outstanding common shares entitled to one vote per share.
Voting
Only holders of record of common shares at the close of business on March 15, 20142016 are entitled to vote at the Annual General Meeting or at any adjournment or postponement of the Meeting. Each common share that you own entitles you to one vote.
If I am a shareholder of record of common shares, how do I vote?
If you are a shareholder of record, you may vote by mailing a completed proxy card. To vote by mailing a proxy card, please sign and return the enclosed proxy card in the enclosed prepaid and self-addressed envelope and your shares will be voted at the Annual General Meeting in the manner you directed. You may also vote your shares in person at the Annual General Meeting. If you are a shareholder of record, you may request a ballot at the Annual General Meeting.
If I am a beneficial owner of shares held in street name, how do I vote?
If you are the beneficial owner of shares held in street name, you will receive instructions from your bank or broker that must be followed for such bank or broker to vote your shares per your instructions. Your bank or broker will not have discretion to vote uninstructed shares on Proposals 1, 2 3, 4 and 5.3. Thus, if you hold your shares in street name and do not instruct your bank or broker how to vote on Proposals 1, 2 3, 4 and 5,3, no votes will be cast on your behalf with respect to such matter (a “broker non-vote”). Your bank or broker will, however, have discretion to vote uninstructed shares on the appointment of BDO USA, LLP as the independent auditors of the Company,Company’s and BDO LLP as the independent auditors of Maiden Global Holdings,Holdings’ independent registered public accounting firm, BDO USA, LLP as Maiden
Reinsurance’s independent registered U.S. GAAP financial statement auditor and Arthur Morris and& Company Limited as Maiden Reinsurance’s independent approved Bermuda statutory financial statement auditor for the independent auditors of Maiden Insurance.2016 fiscal year.. Please ensure that you complete the voting instruction card sent by your bank or broker. If your shares are held in street name and you wish to vote in person at the Annual General Meeting, you must obtain a proxy issued in your name from your bank or broker and bring it with you to the Meeting. We recommend that you vote your shares in advance as described above so that your vote will be counted if you later decide not to attend the Annual General Meeting.
May I change my vote?
All proxies delivered pursuant to this solicitation are revocable at any time before they are exercised at the option of the persons submitting them by giving written notice to the Corporate Secretary, Maiden Holdings, Ltd., Maiden House, 131 Front Street, Hamilton HM12, Bermuda, by submitting a later-dated proxy by mail or by voting in person at the Annual General Meeting. If your shares are held in a brokerage account, you must make arrangements with your broker or bank to revoke your proxy.
What constitutes a quorum?
Two or more persons present in person or representing in person or by proxy in excess of 50% of the total issued voting shares of the Company will constitute a quorum for the transaction of business at the Annual General Meeting. Shareholder abstentions and broker non-votes will be included in the number of shareholders present at the Annual General Meeting for the purpose of determining the presence of a quorum.
What if a quorum is not represented at the Annual General Meeting?
If within a half hour30 minutes from the time appointed for the Meeting a quorum is not present, the Meeting shall stand adjourned to the same day one week later, at the same time and place or to such other day, time or place as the Corporate Secretary may determine. Unless the Meeting is adjourned to a specific date, place and time announced at the Meeting being adjourned, fresh notice of the date, place and time for the resumption of the adjourned Meeting shall be given to each shareholder entitled to attend and vote thereat.
How many votes are required to approve a proposal?
Under our bye-laws, any question proposed for the consideration of the shareholders at any general meeting shall be decided by the affirmative votes of a majority of the votes cast “For” andor “Against” the proposal by the holders of the common shares of the Company.
How will my shares be voted and how are votes counted?
All common shares represented by properly executed proxies received pursuant to this solicitation will be voted in accordance with the shareholder’s directions specified on the proxy.
Election of Directors
In voting by proxy with regard to the election of directors, shareholders may vote in favor of each nominee or withhold their votes as to each nominee. Should any nominee become unable to accept nomination or election, the proxy holders named in the proxy card will vote for the election of such other person as a director as the present directors may recommend in the place of such nominee. Abstentions and broker non-votes will have no effect on the election of directors.
Advisory Vote on Executive Compensation
The number of affirmative votes validly cast in favor of the proposal to approve the compensation of our named executive officers must exceed the number of votes cast against the proposal in order to approve, on an advisory basis, the proposal, although such vote will not be binding on us. Abstentions and broker non-votes will have no effect on this proposal.
Maiden Insurance Name Change
The number of affirmative votes validly cast in favor of the proposal to approve the name change of Maiden Insurance to Maiden Reinsurance Ltd. must exceed the number of votes cast against the proposal in order to approve the proposal. Abstentions and broker non-votes will have no effect on this proposal.
Ratification of Auditors
With regard to the ratification of the appointment of the independent auditors, shareholders may vote in favor of the proposal, may vote against the proposal or may abstain from voting.
Shareholders should specify their choices on the enclosed proxy card. If no directions have been specified by marking the appropriate squares on the accompanying proxy card, the shares represented by a properly submitted proxy will be voted:
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(1) | “FOR” the election of the five directors of Maiden Holdings to serve until the 20152017 Annual General Meeting; |
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(2) | “FOR” the election of the sixfive directors of Maiden InsuranceReinsurance to serve until the next annual general meeting of the shareholders of Maiden Insurance;Reinsurance; |
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(3) | “FOR” the election of the five directors of Maiden Global Holdings to serve until the next annual general meeting of the shareholders of Maiden Global Holdings; and |
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(4) | "FOR" the approval, on an advisory basis, of the compensation of certain of our named executive officers disclosed in this Proxy Statement; |
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(5) | "FOR the authorization to change the name of Maiden Insurance to Maiden Reinsurance Ltd.; and |
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(6) | “FOR” the appointment of BDO USA, LLP as the Company'sCompany’s and BDO LLP as Maiden Global Holdings'Holdings’ independent registered public accounting firm, BDO USA, LLP as Maiden Reinsurance’s independent U.S. GAAP financial statement auditor and “FOR” the appointment of Arthur Morris and& Company Limited as Maiden Insurance'sReinsurance’s independent public accounting firm,approved Bermuda statutory financial statement auditor for the 20142016 fiscal year. |
In connection with any other business that may properly come before the Annual General Meeting, all properly executed proxies delivered pursuant to this solicitation and not revoked will be voted for you in the discretion of the proxy holders named in the proxy card.
A shareholder signing and returning the accompanying proxy has the power to revoke it at any time prior to its exercise by giving written notice of revocation to our Corporate Secretary, by submitting a proxy bearing a later date, or by attending the Annual General Meeting and voting in person. Attendance at the Annual General Meeting will not constitute, in itself, revocation of a proxy. If your shares are held in a brokerage account, you must make arrangements with your broker or bank to revoke your proxy.
May I see a list of shareholders entitled to vote as of the record date?
A list of registered shareholders as of the close of business on March 15, 20142016 will be available for examination by any shareholder during normal business hours through May 5, 2014,3, 2016, at the principal executive offices of the Company, at Maiden House, 131 Front Street, Hamilton HM12, Bermuda.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to the beneficial ownership of our common shares by each person or group known by us to own more than 5% of our common shares. Ownership percentages are based on 72,732,28074,038,483 common shares outstanding as of March 15, 2014.2016. We refer to Barry Zyskind, Michael Karfunkel and George Karfunkel as our “Founding Shareholders” in this Proxy Statement.
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Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class |
Barry D. Zyskind c/o Maiden Holdings, Ltd. 131 Front Street Hamilton HM12 Bermuda | | 3,724,292 | (1) | | 5.1 | % |
Michael Karfunkel c/o Maiden Holdings, Ltd. 131 Front Street Hamilton HM12 Bermuda | | 4,492,130 | (2) | | 6.2 | % |
George Karfunkel c/o Maiden Holdings, Ltd. 131 Front Street Hamilton HM12 Bermuda | | 6,797,030 | (3) | | 9.3 | % |
Leah Karfunkel c/o Maiden Holdings, Ltd. 131 Front Street Hamilton HM12 Bermuda | | 5,500,470 | (4) | | 7.6 | % |
Boston Partners One Beacon Street Boston, MA 02108 | | 4,795,940 | (5) | | 6.6 | % |
Dimensional Fund Advisors LP Palisades West, Building One 6300 Bee Cave Road Austin, TX 78746 | | 3,637,313 | (6) | | 5.0 | % |
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Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class |
Michael Karfunkel c/o Maiden Holdings, Ltd. 131 Front Street, Hamilton HM12, Bermuda | | 4,492,130 | (1) | | 6.1 | % |
Leah Karfunkel c/o Maiden Holdings, Ltd. 131 Front Street, Hamilton HM12, Bermuda | | 5,500,470 | (2) | | 7.4 | % |
Boston Partners One Beacon Street Boston, MA 02108 | | 4,785,343 | (3) | | 6.5 | % |
Dimensional Fund Advisors LP Building One 6300 Bee Cave Road, Austin, TX 78746 | | 5,440,336 | (4) | | 7.3 | % |
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | | 4,418,365 | (5) | | 6.0 | % |
Goldman Sachs Asset Management, L.P. 200 West Street New York, NY 10282 | | 3,971,064 | (6) | | 5.4 | % |
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(1) | Based on Form 4 filed with the Securities and Exchange Commission ("SEC") on August 14, 2012. Includes 50,000 shares held by Teferes Foundation, a charitable foundation organized by Mr. Zyskind. Mr. Zyskind does not have a beneficial interest in the shares held by Teferes Foundation, and therefore, disclaims beneficial ownership of these common shares. Mr. Zyskind holds 220,000 of these common shares as a custodian for his children under the Uniform Transfers to Minors Act. |
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(2) | Based on Amendment No. 35 to Schedule 13D filed with the SEC on December 31, 2012,August 11, 2015, Michael Karfunkel beneficially owns 600,0003,200,000 common shares held directly. Michael Karfunkel disclaims beneficial ownership of the 3,892,1301,292,130 common shares that he holds indirectly as a trustee of the HodHOD Foundation, a charitable foundation organized by Michael Karfunkel. |
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(3)(2) | Based on Amendment No. 1 to Schedule 13D filed with the SEC on September 23, 2010, George Karfunkel beneficially owns 6,055,577 common shares as follows: (i) 2,458,547 common shares held directly by George Karfunkel and (ii) 3,597,030 common shares held in equal parts indirectly by the George Karfunkel 2007 Grantor Retained Annuity Trust #1 and the George Karfunkel 2007 Grantor Retained Annuity Trust #2, each of which George Karfunkel is a beneficiary. George Karfunkel disclaims beneficial ownership of the 741,453 common shares that he holds indirectly as a trustee of the Chesed Foundation, a charitable foundation organized by George Karfunkel. |
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(4) | Based on Amendment No. 35 to Schedule 13D of Michael Karfunkel filed with the SEC on December 31, 2012,August 11, 2015, Leah Karfunkel beneficially owns 5,500,470 common shares held indirectly as a trustee of the Michael Karfunkel 2005 Grantor Retained AnnuityFamily Trust. Leah Karfunkel is the wife of Michael Karfunkel. |
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(5)(3) | Based on Amendment No. 35 to Schedule 13G filed with the SEC on February 11, 2014.2016. |
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(4) | Based on Amendment No. 2 to Schedule 13G filed with the SEC on February 9, 2016. |
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(5) | Based on Schedule 13G filed with the SEC on February 10, 2016. |
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(6) | Based on Amendment No. 1 to Schedule 13G filed with the SEC on February 10, 2014.3, 2016. |
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is information concerning the beneficial ownership of our common shares by each director, by our executive officers named in the Summary Compensation Table below and by all our directors and executive officers as a group as of March 15, 2014.2016. For purposes of the table below, common shares subject to options which are currently exercisable or exercisable within 60 days of March 15, 20142016 are considered outstanding and beneficially owned by the person holding the options for the purposes of computing beneficial ownership of that person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
| | Name of Beneficial Owner** | | Amount & Nature of Beneficial Ownership | | Percent of Class(1) | | Amount & Nature of Beneficial Ownership | | Percent of Class(1) |
Barry D. Zyskind | | 3,724,292 | (2) | | 5.1% | | 3,269,292 | (2) | | 4.4% |
Arturo M. Raschbaum | | 1,219,572 | (3) | | 1.7% | | 1,338,837 | (3) | | 1.8% |
John M. Marshaleck | | 223,029 | (4) | | * | |
Karen L. Schmitt | | 233,643 | (5) | | * | | 312,772 | (4) | | * |
Patrick J. Haveron | | 61,813 | (6) | | * | | 115,214 | (5) | | * |
Thomas H. Highet | | | 30,580 | (6) | | * |
Lawrence F. Metz | | 68,086 | (7) | | * | | 78,887 | (7) | | * |
Simcha G. Lyons | | 78,505 | (8) | | * | | 60,505 | (8) | | * |
Raymond M. Neff | | 267,000 | (8) | | * | | 254,000 | (9) | | * |
Yehuda L. Neuberger | | 107,000 | (9) | | * | | 119,000 | (10) | | * |
Steven H. Nigro | | 43,000 | (8) | | * | | 7,000 | (11) | | * |
All executive officers and directors as a group (10 persons) | | 6,025,940 |
| | 8.3% | | 5,586,087 |
| | 7.4% |
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** | The address of each beneficial owner listed in the table is c/o Maiden Holdings, Ltd., 131 Front Street, Hamilton HM12, Bermuda. |
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(1) | Based on 72,732,28074,038,483 common shares outstanding. Includesoutstanding at March 15, 2016 plus shares that the beneficial owner has the right to acquire within 60 days of March 15, 20142016 upon exercise of share options. |
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(2) | Includes 50,00095,000 shares held by Teferes Foundation, a charitable foundation organized by Mr. Zyskind. Mr. Zyskind does not have a beneficial interest in the shares held by Teferes Foundation, and therefore disclaims beneficial ownership of these common shares. Mr. Zyskind holds 220,000 of these common shares as a custodian for his children under the Uniform Transfers to Minors Act. |
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(3) | The amount shown above includes vested options to acquire 948,680896,180 common shares (and excludes options to acquire 20,833 common shares) granted on November 12, 2008, November 12, 2009 and November 12, 2010. All of these optionsIt does not include 70,360 restricted share units which vest 25% on the first anniversary of the date of grantinto common shares in February 2017, 46,928 restricted share units which vest into common shares in February 2018 and 6.25% each quarter thereafter.25,330 restricted share units which vest into common shares in February 2019. |
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(4) | The amount shown above includes vested options to acquire 150,000110,200 common shares granted on November 12, 2008, February 24, 2009 and March 4, 2010. Includes 9,731 restricted shares which vest on February 19, 2015. Also includes 8,56810,127 restricted shares issued on February 18, 2014, whereby 50%17, 2015, of the shareswhich one-half will vest on January 1, 2015,February 17, 2017 and 50% of the sharesone-half will vest on January 1, 2016.February 17, 2018. |
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(5) | The amount shown above includes vested options to acquire 134,37530,000 common shares granted to Mr. Haveron on November 12, 2008, February 24, 2009 and March 4, 2010. Includes 7,774 restricted shares which vest on February 19, 2015. Also includes 6,8456,326 restricted shares issued on February 18, 2014, whereby 50%17, 2015, of the shareswhich one-half will vest on January 1, 2015,February 17, 2017 and 50% of the sharesone-half will vest on January 1, 2016.February 17, 2018. |
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(6) | The amount shown above includes vested options to acquire 40,000938 common shares granted to Mr. Haveron on March 4, 2010. Includes 4,990 restricted shares which vest on February 19, 2015. Also includes 4,833 restricted shares issued on February 18, 2014, whereby 50% of the shares vest on January 1, 2015, and 50% of the shares vest on January 1, 2016. |
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(7) | The amount shown above includes vested options to acquire 60,000 common shares granted on June 1, 2009 and March 4, 2010. Includes 3,244 restricted shares which vest on February 19, 2015. Also includes 2,999 restricted shares issued on February 18, 2014, whereby 50% of the shares vest on January 1, 2015, and 50% of the shares vest on January 1, 2016. |
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(8) | The amount shown above includes vested options to acquire 42,00024,000 common shares granted on June 26, 2007, June 1, 2013 and June 1, 2014. Excludes an option to acquire 6,000 common shares granted on June 1, 2015, which options will vest on the first anniversary of the date of grant. |
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(9) | The amount shown above includes vested options to acquire 54,000 common shares granted on June 26, 2007, June 26, 2008, June 1, 2009, June 1, 2010, June 1, 2011, June 1, 2012, June 1, 2013 and June 1, 2012.2014. Excludes an option to acquire 6,000 common shares granted on June 1, 2013,2015, which options will vest on the first anniversary of the date of grant. |
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(9)(10) | The amount shown above includes vested options to acquire 42,00054,000 common shares granted on January 8, 2008, June 26, 2008, June 1, 2009, June 1, 2010, June 1, 2011, June 1, 2012, June 1, 2013 and June 1, 2012.2014. Excludes an option to acquire 6,000 common shares granted on June 1, 2013,2015, which options will vest on the first anniversary of the date of grant. |
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(11) | The amount shown above includes vested options to acquire 6,000 common shares granted on June 1, 2014. Excludes an option to acquire 6,000 common shares granted on June 1, 2015, which options will vest on the first anniversary of the date of grant. |
PROPOSAL 1:
ELECTION OF DIRECTORS
Our Board of Directors currently consists of five directors. These five directors will be elected at the Annual General Meeting, each to serve for a one-year term until the 20152017 Annual General Meeting of Shareholders and until the election or appointment and qualification of his successor, or until his earlier death, resignation or removal. Upon recommendation of the Nominating and Corporate Governance Committee, the Board of Directors has unanimously nominated Messrs. Barry D. Zyskind, Simcha G. Lyons, Raymond M. Neff, Yehuda L. Neuberger and Steven H. Nigro for election as directors at the Annual General Meeting. Proxies cannot be voted for more than five director nominees.
Each of the five director nominees is standing for re-election to the Board of Directors and has consented to serve for a new term. Unless you otherwise indicate, proxies that we receive will be voted in favor of the election of the director nominees. The Board of Directors does not contemplate that any of the nominees will be unable to stand for election, but if any nominee becomes unable to serve or for good cause will not serve, all proxies (except proxies marked to the contrary) will be voted for the election of a substitute nominee as our Board of Directors may recommend.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL NOMINEES BELOW.
Information About the Nominees
Barry D. Zyskind, 42,44, has served as non-executive Chairman of our Board of Directors since June 2007 and is a Founding Shareholder of the Company. Since 1998, Mr. Zyskind has served as the President, Chief Executive Officer and director of AmTrust Financial Services, Inc. (“AmTrust”), a publicly-traded multinational property and casualty insurer specializing in commercial lines coverage for small to mid-size businesses. Mr. Zyskind is also a director of several of AmTrust's wholly owned subsidiaries. Prior to joining AmTrust, Mr. Zyskind was an investment banker at Janney Montgomery Scott LLC in New York. Mr. Zyskind holds an M.B.A. from New York University's Stern School of Business. Mr. Zyskind is the son-in-law of Michael Karfunkel, who is a major shareholder of the Company and the non-executive chairman of the board of directors of AmTrust and the chairman of the board of directors and chief executive officer of National General Holding Corporation (“NGHC”), a holding company of the former GMAC Insurance personal lines companies. Mr. Zyskind has been a director of NGHC since 2013.
In selecting Mr. Zyskind as a director nominee, our Nominating and Corporate Governance Committee and Board of Directors considered Mr. Zyskind's outside board service and business activities, including his significant executive experience in international business operations, his finance, strategic planning and information technology expertise and his knowledge of the insurance industry.
Simcha G. Lyons, 67,69, has been a member of our Board of Directors since June 2007, and he currently serves as Chairman of the Nominating and Corporate Governance Committee and as a member of the Audit Committee and the Compensation Committee. Since 2005, Mr. Lyons has served as a senior advisor to the Ashcroft Group, LLC of Washington, D.C., a strategic consulting firm that was founded by the former Attorney General of the United States, John Ashcroft. In addition, Mr. Lyons has been the chairman of Lyons Global Insurance Services, LLC since 2009. Since 2003, he has also served as chairman of Lyons Global Advisors Ltd., a political consulting firm. Prior to 2002, Mr. Lyons was Vice-Chairman of Raskas Foods of St. Louis, Missouri, a family owned business that manufactured cream cheese, sour cream and blue cheese products for the supermarket industry, the food service industry and the food processing industry.
In selecting Mr. Lyons as a director nominee, our Nominating and Corporate Governance Committee and Board of Directors considered Mr. Lyons’s outside business activities, including his extensive understanding of governmental and legal affairs and significant executive and finance experience.
Raymond M. Neff, 72,74, has been a member of our Board of Directors since June 2007, and he currently serves as Chairman of the Audit Committee and as a member of the Compensation Committee and the Nominating and Corporate Governance Committee. Since 1999, Mr. Neff has served as President of Neff & Associates, Inc. and Insurance Home Office Services, LLC. He previously worked at the FCCI Insurance Group from 1986 to 1999, most recently as President and Chief Executive Officer from 1987 to 1999. He was previously Chairman of the Board of the Florida Workers' Compensation Joint Underwriting Association. Mr. Neff has held various positions at the Department of Labor and Employment Security and the Department of Insurance for the State of Florida. Mr. Neff previously worked at an insurance consulting group, a multi-line insurance agency and the Department of Insurance for the State of Michigan. Mr. Neff holds a B.S. in Mathematics and Accounting from Central Michigan University and an M.A. in Actuarial Science from the University of Michigan. Mr. Neff is a Member of the American Academy of Actuaries and an Associate of the Society of Actuaries.
In selecting Mr. Neff as a director nominee, our Nominating and Corporate Governance Committee and Board of Directors considered Mr. Neff's deep understanding of the insurance industry, as well as his business activities and significant executive and finance experience.
Yehuda L. Neuberger, 37,39, has been a member of our Board of Directors since January 2008. Mr. Neuberger is a private equity investor, investing across a broad spectrum of companies. Mr. Neuberger also serves in a leadership and board capacity with numerous, large not-for-profit organizations. Between December 2001 and December 2013, Mr. Neuberger held various senior leadership positions (including Executive Vice President and Director) at American Stock Transfer & Trust Company, LLC. Prior to joining American Stock Transfer, Mr. Neuberger practiced as an attorney with the law firm of Weil, Gotshal & Manges. Mr.
Neuberger holds a B.S. from Johns Hopkins University and a J.D. from Harvard Law School. Mr. Neuberger is the son-in-law of George Karfunkel, who is a major shareholder of the Company, as well as a major shareholder and a director of AmTrust.
In selecting Mr. Neuberger as a director nominee, our Nominating and Corporate Governance Committee and Board of Directors considered Mr. Neuberger's business activities and significant executive and finance knowledge. In addition, our Nominating and Corporate Governance Committee and Board of Directors values Mr. Neuberger's extensive experience as a lawyer and as a director of other companies.
Steven H. Nigro, 54,56, has been a member of our Board of Directors since July 2007, and he currently serves as Chairman of the Compensation Committee and as a member of the Audit Committee and the Nominating and Corporate Governance Committee. Mr. Nigro has over 25 years of experience in financial services and specializes in corporate and structured finance in the insurance industry. Mr. Nigro serves as a director of Clear Blue Specialty Insurance Company, Clear Blue Insurance Company, Clear Blue Financial Holdings, LLC and AEU Holdings, LLC. In September 2012, Mr. Nigro became the Managing Partner of TAG Financial Institutions Group, an affiliate of The Alberleen Group. From 2011 to 2012, Mr. Nigro was the Managing Director and head of the Financial Services practice at Allegiance Capital Corporation. Prior to joining Allegiance, Mr. Nigro co-founded Pfife Hudson Group in 2005, an investment bank specializing in corporate finance, structured finance and asset management with a specialty in the insurance industry. Mr. Nigro previously served as a managing director at Rhodes Financial Group, LLC and Hales & Company, both financial advisory firms catering exclusively to the insurance industry. Prior to joining Hales & Company, he was Chief Financial Officer and Treasurer of Tower Group, Inc., an insurance holding company, where he was responsible for financial and regulatory management, strategic planning and corporate finance. Mr. Nigro began his career with Arthur Young and Co. and is a Certified Public Accountant in New York. Mr. Nigro holds a B.A. from SUNY - Albany.
In selecting Mr. Nigro as a director nominee, our Nominating and Corporate Governance Committee and Board of Directors considered Mr. Nigro's extensive experience in the finance sector and his deep understanding of the insurance industry. Mr. Nigro's experience as a certified public accountant and an investment banker specializing in the insurance industry is valuable to our Nominating and Corporate Governance Committee and Board of Directors.
CORPORATE GOVERNANCE
Board Independence
Messrs. Lyons, Neff and Nigro are “independent directors” under the rules of the NASDAQ Global Select Market ("NASDAQ") and the New York Stock Exchange ("NYSE"). NASDAQ and the NYSE rules require that a majority of the Board of Directors be independent, and we are in compliance with this requirement. The independent directors held separate executive sessions without senior management on fiveat least four occasions in 2013,2015, and neither the chairman, chief executive officer (the "CEO") nor any member of management, at any level, attended any of the executive sessions of the independent directors.
Board Meetings and Committees; Attendance at Annual General Meeting
The Board of Directors held four meetings in 2013, and acted twice by unanimous written consent.2015. Each director attended at least 75% of the aggregate of the total number of meetings held in 20132015 of the Board and any committee on which he served. Michael Karfunkel and George Karfunkel, two of our Founding Shareholders, have non-voting observer rights with respect to the Board of Directors.Directors, though neither attended a board meeting in 2015. All directors are expected to make every effort to attend the 20142016 Annual General Meeting, and each director attended the 20132015 Annual General Meeting.
Board Committees
Our Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee, each comprised entirely of independent directors within the meaning of the rules of NASDAQ and NYSE.
Audit Committee
We have a separately-designated standing Audit Committee. The Audit Committee assists our Board of Directors in monitoring the integrity of our financial statements, the independent auditor's qualifications and independence, performance of our independent auditors and our internal audit function, the establishment and maintenance of proper internal accounting controls and procedures, the treatment of employees' concerns regarding accounting and auditing matters as reported to our whistleblower hotline, and our compliance with legal and regulatory requirements. The Audit Committee's responsibilities also include appointing (subject to shareholder ratification), reviewing, determining funding for and overseeing our independent auditors and their services. Further, the Audit Committee, to the extent it deems necessary or appropriate, among its several other responsibilities, shall:
review and approve all related party transactions, including those with AmTrust, NGHC and our Founding Shareholders, as well as any subsequent modifications thereto, for actual or potential conflict of interest situations on an ongoing basis;
review and discuss with appropriate members of our management and the independent auditors our audited financial statements, related accounting and auditing principles, practices and disclosures;
review and discuss our audited annual and unaudited quarterly financial statements prior to the filing of such statements;
establish procedures for the receipt, retention and treatment of complaints we receive regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding our financial statements or accounting policies;
review reports from the independent auditors on all critical accounting policies and practices to be used for our financial statements and discuss with the independent auditor the critical accounting policies and practices used in the financial statements;
assist the Enterprise Risk Management Committee in its responsibility for oversight of risk management;management, including cybersecurity;
obtain reports from our management and internal auditors that we and our subsidiaries are in compliance with the applicable legal requirements and our Code of Business Conduct and Ethics, and advise our Board of Directors about these matters; and
monitor the adequacy of our operating and internal controls as reported by management and the independent or internal auditors.
We have adopted a policy that requires that all related party transactions be approved by our Audit Committee. In response to an annual questionnaire, we require directors, director nominees and executive officers to submit a description of any current or proposed related party transaction and provides updates during the year. In addition, we will provide the Audit Committee any similar available information with respect to any known transactions with beneficial owners of 5% or more of our voting securities. If management becomes aware of any potential transactions during the year, management presents such transactions for approval by the Audit Committee. In the event management becomes aware of any transaction that was not approved under the policy, management will present the transaction to the Audit Committee for its action as soon as reasonably practicable, which may include termination, amendment or ratification of the transaction. The Audit Committee will approve only those transactions that are in, or are not inconsistent with, the best interests of Maiden and our shareholders, as is determined in good faith in accordance with
its business judgment. Unless otherwise indicated below, each of these related party transactions was approved by our Audit Committee.
Mr. Neff is the chairman of our Audit Committee and the other members are Messrs. Lyons and Nigro. All the members of the Audit Committee are independent both under SEC rules and as that term is defined in the listing standards of NASDAQ and NYSE. The Board of Directors has determined that Messrs. Lyons, Neff and Nigro are “audit committee financial experts.”
The Audit Committee has adopted a charter, which is currently available on our website at www.maiden.bm. Information on our website is not incorporated by reference into this report and does not otherwise form a part of this report.
During 2013,2015, the Audit Committee met fourfive times.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed the audited consolidated financial statements of Maiden Holdings, Ltd. with management and the independent auditors for the year ended December 31, 2013.2015. The Audit Committee has discussed with the independent auditors the matters required to be discussed by the Statement on Auditing Standards No. 16, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
The Audit Committee has received the written disclosures and the letter from the independent auditors required by applicable requirements of the Public Company Accounting Oversight Board in Rule 3526 regarding the independent auditors' communications with the Audit Committee concerning independence. The Audit Committee has discussed with the independent auditors the independent auditors' independence. The independent auditors and the Company's internal auditors had full access to the Audit Committee, including meetings without management present as needed.
Based on the Audit Committee’s review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company's audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 20132015 filed with the SEC on March 4, 2014.February 29, 2016.
Raymond M. Neff, Chairman
Simcha G. Lyons
Steven H. Nigro
Compensation Committee
The Compensation Committee’s responsibilities include, among other responsibilities:
reviewing and approving corporate and individual goals and objectives relevant to the compensation of our Chief Executive Officer and other named executive officers;
evaluating the performance of our Chief Executive Officer and other executive officers in light of such corporate and individual goals and objectives and, based on that evaluation, together with the other independent directors if directed by the Board of Directors, determining the base salary and bonus of the Chief Executive Officer and other executive officers and reviewing the same on an ongoing basis;
reviewing all related party transactions involving compensatory matters including those with AmTrust, NGHC and our Founding Shareholders;
establishing and administering equity-based compensation under the Amended and Restated 2007 Share Incentive Plan (the “Plan”) and any other incentive plans and approving all grants made pursuant to such plans; and
making recommendations to our Board of Directors regarding non-employee director compensation and any equity-based compensation plans.
Please refer to the Compensation Discussion and Analysis within this Proxy Statement for additional discussion of our policies and procedures for determining and establishing executive compensation.
Mr. Nigro is the chairman of our Compensation Committee and the other members of our Compensation Committee are Messrs. Neff and Lyons. All the members of the Compensation Committee are independent both under SEC rules and as that term is defined in the listing standards of NASDAQ and NYSE.
The Compensation Committee has adopted a charter. The charter is currently available on our website at www.maiden.bm. Information on our website is not incorporated by reference into this report and does not otherwise form a part of this report.
The Compensation Committee's independent compensation consultant is Mercer. Mercer is engaged by, and reports directly to, the Compensation Committee, which has the sole authority to hire or fire Mercer and to approve fee arrangements for work performed. Mercer assists the Compensation Committee in fulfilling its responsibilities under its charter, including advising on proposed compensation packages for executive officers, compensation program design and market practices generally. The Compensation Committee has authorized Mercer to interact with management on behalf of the Compensation Committee, as needed in connection with advising the Compensation Committee. It is the Compensation Committee's policy that the Chairman of the Compensation Committee or the full Compensation Committee pre-approve any additional services provided to management
by our independent compensation consultant. In fiscal year 2013,2015, Mercer only did work for the Compensation Committee or its senior management designee. The Compensation Committee has assessed the independence of Mercer pursuant to SEC rules and concluded that Mercer's work for the Compensation Committee does not raise any conflict of interest.
During 2013,2015, the Compensation Committee met fourthree times.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee’s responsibilities with respect to assisting our Board of Directors include, among other responsibilities:
establishing the criteria for membership on our Board of Directors;Directors and certain subsidiaries;
reviewing periodically the structure, size and composition of our Board of Directors and making recommendations to the board as to any necessary adjustments;
identifying individuals qualified to become directors for recommendation to our Board of Directors;
identifying and recommending for appointment to our Board of Directors, directors qualified to fill vacancies on any committee of our Board of Directors;
having sole authority to select, retain and terminate any consultant or search firm to identify director candidates and having sole authority to approve the consultant or search firm’s fees and other retention terms;
considering matters of corporate governance, developing and recommending to the board a set of corporate governance principles and our Code of Business Conduct and Ethics, as well as recommending to the board any modifications thereto;
considering questions of actual or possible conflicts of interest, including related party transactions, of members of our Board of Directors and of senior executives of our Company;
developing and recommending to our Board of Directors for its approval an annual board and committee self-evaluation process to determine the effectiveness of their functioning; and
exercising oversight of the evaluation of the board, its committees and management.
Mr. Lyons is the chairman of our Nominating and Corporate Governance Committee and the other members are Messrs. Neff and Nigro. All the members of the Nominating and Corporate Governance Committee are independent both under SEC rules and as that term is defined in the listing standards of NASDAQ and NYSE.
In carrying out its function to nominate candidates for election to our Board of Directors, the Nominating and Corporate Governance Committee considers the mix of skills, experience, character, commitment, and diversity of background, all in the context of the requirements of our Board of Directors at that point in time. The Nominating and Corporate Governance Committee interprets diversity to include viewpoints, background, expertise, industry knowledge and geography, as well as more traditional characteristics of diversity, such as race and gender. We believe that the commitment of the Board and the Committee to greater diversity in its governing committees is demonstrated by the current structure of the Board and the varied skills sets of our directors. The Nominating and Corporate Governance Committee believes that each candidate should be an individual who has demonstrated integrity and ethics in such candidate's personal and professional life, has an understanding of elements relevant to the success of a publicly-traded company and has established a record of professional accomplishment in such candidate's chosen field. Each candidate should be prepared to participate fully in Board of Directors activities, including attendance at, and active participation in, meetings of the Board of Directors, and not have other personal or professional commitments that would, in the Nominating and Corporate Governance Committee's judgment, interfere with or limit such candidate's ability to do so. Each candidate should also be prepared to represent the best interests of all of our shareholders and not just one particular constituency. Additionally, in determining whether to recommend a director for re-election, the Nominating and Corporate Governance Committee also considers the director's past attendance at Board of Directors and committee meetings and participation in and contributions to the activities of our Board of Directors.
The Nominating and Corporate Governance Committee considers recommendations for director candidates submitted by shareholders. In order for an individual recommended by a shareholder to be eligible for election as a director and considered by the Nominating and Corporate Governance Committee for the 20152017 Annual General Meeting of Shareholders, the Corporate Secretary must receive the shareholder's recommendation not earlier than January 6, 2015,5, 2017, nor later than February 5, 2015,4, 2017, as required by our bye-laws.
A shareholder recommending an individual for election as a director must provide the Nominating and Corporate Governance Committee with the candidate's name, age, principal occupation or employment, background and relationship with the proposing shareholder, share ownership, a brief statement outlining the reasons the candidate would be an effective director and information relevant to the considerations described above. Shareholders should send the required information to the Corporate Secretary, Maiden House, 131 Front Street, Hamilton HM12, Bermuda. The Nominating and Corporate Governance Committee may require further information. Such recommendations must be sent via registered, certified or express mail (or other means that allow the shareholder to determine when the recommendation was received by us). The Corporate Secretary will send any shareholder recommendations to the Nominating and Corporate Governance Committee for consideration at a future committee meeting.
Individuals recommended by shareholders in accordance with these procedures will receive the same consideration as other individuals evaluated by the Nominating and Corporate Governance Committee.
On February 18, 2014,15, 2016, the Nominating and Corporate Governance Committee agreed to recommend the present five directors for re-nomination to the Board as well as to maintain the present composition of the various committees of the Board. The Nominating and Corporate Governance Committee further agreed to recommend five directors of Maiden Reinsurance and five directors of Maiden Global Holdings for nomination.
The Nominating and Corporate Governance Committee has adopted a charter. The charter is currently available on our website at www.maiden.bm. Information on our website is not incorporated by reference into this report and does not otherwise form a part of this report.
During 2013,2015, the Nominating and Corporate Governance Committee met one time.two times.
Corporate Governance Guidelines and Code of Business Conduct and Ethics
We have adopted corporate governance guidelines and a code of business conduct and ethics that apply to all of our directors, officers and employees. These documents will be made available in print, free of charge, to any shareholder requesting a copy in writing to the Corporate Secretary, Maiden Holdings, Ltd., Maiden House, 131 Front Street, Hamilton HM12 Bermuda. A copy of our Corporate Governance Guidelines and our Code of Business Conduct and Ethics is available on our website at
www.maiden.bm. Information on our website is not incorporated by reference into this report and does not otherwise form a part of this report.
Communications with the Board of Directors and Audit Committee
Shareholders and other interested parties may communicate with members of the Board of Directors (either individually or as a body) by addressing the correspondence to that individual or body to The Board of Directors, c/o Chief Financial Officer, Maiden Holdings, Ltd., Maiden House, 131 Front Street, Hamilton HM12, Bermuda or by calling (441) 298-4900.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires officers, directors and persons who own more than ten (10) percent of a class of equity securities registered pursuant to Section 12 of the Exchange Act to file reports of ownership and changes in ownership with both the SEC and the principal exchange upon which such securities are traded or quoted. Officers, directors and persons holding greater than ten (10) percent of the outstanding shares of a class of Section 12-registered equity securities (“Reporting Persons”) are also required to furnish copies of any such reports filed pursuant to Section 16(a) of the Exchange Act with the Company. Based solely on a review of the copies of such forms furnished to the Company and written representations that no other reports were required, the Company believes that from January 1, 20132015 to December 31, 20132015 all but four Section 16(a) filing requirements applicable to its Reporting Persons were complied with in a timely manner.
Risk Management Oversight
The Board of Directors has the ultimate oversight responsibility for the risk management function of the Company. The Company has implemented an enterprise-wide approach to risk management and has established an Enterprise Risk Management Committee (the “ERMC”) which consists of members of the Company's executive management. The members of the ERMC include senior executives in the finance, legal and internal audit departments, including our Chief Executive Officer, Chief Financial Officer, Executive Vice President, presidents of our major subsidiaries, and General Counsel. It also includes senior executives from our other main operating subsidiaries in Bermuda, the United States and Europe. The ERMC oversees the Company's framework for the identification, assessment, measurement, and reporting of and management exposure to the Company's risk on an enterprise-wide basis. Our Audit Committee receives a quarterly enterprise risk management overview from executive management, which includes updates on areas including operational/strategic risk, financial risk, legal/compliance risk, and emerging risks.
The Audit Committee assists the ERMC in its responsibility for oversight of risk management. In particular, the Audit Committee focuses on major financial risk exposures and the steps management has taken to monitor and control such risks, and discusses with our independent auditor the policies governing the process by which senior management and the various units of the Company assess and manage our financial risk exposure and operational/strategic risk.
The Company has separated the positions of Chief Executive Officer and Chairman of the Board. This separation enhances Board administration and communication, allows for consistent Board leadership and allows the Chief Executive Officer to focus on managing the Company.
Risks Related to Compensation Practices and Policies
Our Compensation Committee has reviewed our material compensation policies and practices applicable to our employees, including our named executive officers, and concluded that these policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. Our Compensation Committee assessed the Company's compensation and benefits programs to determine if the programs' provisions and operations create undesired or unintentional risk of a material nature. We do not have any programs where the ability of a participant may directly affect variability of payout. Rather, we support the use of base salary, performance-basedperformance based compensation, and retirement plans that are generally uniform in design and operation throughout the Company and with all levels of employees.
Based on the foregoing, we believe that our compensation policies and practices do not create inappropriate or unintended significant risk to the Company as a whole. We also believe that our incentive compensation arrangements provide incentives that do not encourage risk-taking beyond our Company's ability to effectively identify and manage significant risks, are compatible with our effective internal controls and our risk management practices, and are supported by the oversight and administration of the Compensation Committee with regard to executive compensation programs.
EXECUTIVE OFFICERS
The table below sets forth the names, ages and positions of our executive officers:officers as of the date of this Proxy Statement:
|
| | | | |
Name | | Age | | Position(s) |
Arturo M. Raschbaum | | 5860 | | President and Chief Executive Officer |
John M. MarshaleckKaren L. Schmitt | | 6257 | | Executive Vice President and Chief Financial Officer |
Karen L. Schmitt | | 55 | | President of Maiden Reinsurance Company and President of Maiden Specialty Insurance Company |
Patrick J. Haveron | | 5254 | | Executive Vice President and President of Maiden Insurance CompanyReinsurance Ltd. |
Thomas H. Highet | | 56 | | President of Maiden Reinsurance North America, Inc. |
Lawrence F. Metz | | 4143 | | SeniorExecutive Vice President, General Counsel and Secretary |
Set forth below are descriptions of the backgrounds of each of our executive officers.
Arturo M. Raschbaum, President and Chief Executive Officer, has served in that role since November 2008. Mr. Raschbaum also has been a director of Maiden InsuranceReinsurance since 2009 and a director of Maiden Global Holdings since 2010. Mr. Raschbaum is also a director of several of our other wholly owned subsidiaries. From 1994 to 2008, Mr. Raschbaum held several leadership positions with GMAC Insurance Holdings, including president of GMAC Insurance and president of GMAC RE and its predecessors. Mr. Raschbaum holds a B.B.A. from the University of Texas at El Paso and attended the Stanford University Executive Program. Mr. Raschbaum services on the board of governors of the Property Casualty Insurers Association of America, and also serves on the Board of Advisors of the RAND Institute for Civil Justice.
John M. MarshaleckKaren L. Schmitt, Executive Vice President and Chief Financial Officer, has served in that rolethose roles since August 2009,May 2014, and previously served as Chief Operating Officer and Secretary. Mr. Marshaleck also has been a director of Maiden Insurance since 2009 and a director of Maiden Global Holdings since 2010. From 1983 to 2008, Mr. Marshaleck served in several capacities with GMAC RE and its predecessors, including president, chief operating officer and chief financial officer. Mr. Marshaleck holds a B.B.A. from Temple University.
Karen L. Schmitt, President of Maiden Reinsurance Company (“Maiden US”), our wholly owned subsidiary,North America, Inc. and President of Maiden Specialty Insurance Company (“Maiden Specialty”), a wholly owned subsidiary of Maiden US, has served in those roles since November 2008.from 2009 to 2014. Ms. Schmitt is also a director of several of our wholly owned subsidiaries. From 1999 to 2008, Ms. Schmitt served in various capacities at GMAC RE, including most recently as Chief Operating Officer. Prior to 1999, Ms. Schmitt held positions as Chief Actuary and Senior Vice President at TIG Holdings, Vice President of American Reinsurance, and various positions at Prudential Property and Casualty. Ms. Schmitt holds an M.B.A from the Wharton School of the University of Pennsylvania and a B.S. in Actuarial Science from Lebanon Valley College. She is a Fellow of both the Casualty Actuarial Society (FCAS) and the Canadian Institute of Actuaries (FCIA), a Member of the American Academy of Actuaries (MAAA), a Chartered Enterprise Risk Analyst (CERA), and a Chartered Financial Consultant (ChFC).
Patrick J. Haveron, Executive Vice President, has served in that role since 2010,November 2009, and as President of Maiden Insurance CompanyReinsurance since February 2014. Mr. Haveron also has been a director of Maiden Global Holdings since 2010. From 2004 to 2009, Mr. Haveron was President and Chief Executive Officer of Preserver Group, Inc., a publicly-traded property and casualty insurer, after having served in a variety of financial and executive leadership roles since 1988. Mr. Haveron was also Senior Vice President and Chief Operating Officer of Tower Group, Inc., a publicly-traded property and casualty insurer, from 2007 to 2009 after its acquisition of Preserver in 2007. Mr. Haveron has previously served on the board of governors of the Property Casualty Insurers Association of America, and holds a B.S. from the University of Scranton.
Thomas H. Highet, President of Maiden Reinsurance North America, Inc., has served in that role since May 2014 and previously served as its Executive Vice President. Mr. Highet, who joined Maiden Re Insurance Services, LLC ("Maiden Re") (formerly GMAC RE) in 1988, has over 30 years of reinsurance experience. He previously held positions with PMA Re, Metropolitan Re and AFIA. Mr. Highet graduated from Stevens Institute of Technology with a Bachelor of Science. He is an Associate of the Casualty Actuarial Society and a Member of the American Academy of Actuaries.
Lawrence F. Metz, SeniorExecutive Vice President, General Counsel and Secretary, has served in that role since June 2009. Mr. Metz also has been a director of Maiden InsuranceReinsurance since 2010 and a director of Maiden Global Holdings since 2010. Mr. Metz is also a director of several of our wholly owned U.S. subsidiaries. From 2007 to 2009, Mr. Metz served as Vice President, General Counsel -US- US Operations and Assistant Secretary of AmTrust. From 2004 to 2007, Mr. Metz served as Vice President, General Counsel and Secretary of Conversion Services International, Inc., a publicly-traded provider of information management and business process optimization solutions. Mr. Metz holds a B.S. from the University of Wisconsin - Madison and a J.D. from Fordham University School of Law, and is a member of the Bar of the Supreme Court of the United States, the New Jersey State Bar Association and the New York State Bar Association. Mr. Metz serves as the Vice Chair of the Legal Subcommittee of the Legal and Government Affairs Committee of the Property Casualty Insurers Association of America, and also serves on the Board of Advisors of the RAND Center for Corporate Ethics and Governance.
COMPENSATION DISCUSSION AND ANALYSIS
The material elements of our compensation philosophy, strategy and plans are discussed below. The Compensation Committee is responsible for establishing, implementing and monitoring our compensation programs, philosophy and objectives.
Overview
At this stage in our history, theThe objectives of our executive compensation policy will be to retain those executives whom we believe will be essential to our growth, to attract other talented and dedicated executives and to motivate each of our executives to develop our overall profitability. To achieve these goals, we intend to offer each executive an overall compensation package that is competitive, and a substantial portion of which will be tied to the achievement of specific performance objectives. Our overall strategy is to compensate our named executive officers with a mix of cash compensation, in the form of base salary and bonus, and equity compensation, in the form of share options, restricted share and restricted share unit awards.
The Company, and separately the Compensation Committee, utilized industry competitive executive compensation data provided by our compensation consultant, Mercer, and the reinsurance industry surveys of Towers Watson Data Services, Property and Casualty Reinsurance Compensation Survey and the PWC Bermuda International Business Compensation Survey for the Insurance and Reinsurance Industry to analyze the competitive compensation elements of base salary, long term and annual incentives, total direct compensation and Bermuda benefits for our named executive officers and other company executives. Mr. Raschbaum is involved in making recommendations to the Compensation Committee regarding the compensation arrangements for other executives. The above factors all directly assisted the Compensation Committee to determine fair compensation for the Chief Executive OfficerCEO and the other named executive officers.
We have entered into employment agreements with each of our named executive officers.
Executive Compensation
We believe that the Company's compensation packages provide a reasonable arrangement of pay elements that align executive incentives with the creation of shareholder value, and bonuses and share-based awards that are dependent on, and strictly tied to, the Company's performance and paid upon the achievement of business goals and key business metrics. Our executive compensation policy includes the following fixed and variable elements:
Fixed Compensation
Salary. The base salaries provided to our named executive officers are designed to deliver an annual salary at a level consistent with individual experience, skills and contributions to the Company, and are consistent with levels paid by direct and indirect competitors in the reinsurance marketplace. The Compensation Committee generally establishes executive officer base salaries at base compensation levels consistent with benchmark compensation levels for executives with similar job responsibilities at select peer group companies as reported by independent compensation surveys. The annual base salary of each of the named executive officers is set in each of their employment agreements and is reviewed on an annual basis. The Compensation Committee determines the CEO's compensation after consultation with each director on the Board of Directors as well as the Company's outside compensation consultant, and reviews the recommendations of the CEO concerning the compensation of the other named executive officers and makes determinations with respect thereto. In February 2014,2016, the Compensation Committee chose to maintain the base salary of each of the executive officers except for Ms. Schmitt ($566,500Mr. Metz) whose salary was increased from $419,909 to $600,000)$461,900 to reflect his promotion to executive vice president and Messrs. Haveron ($440,000 to $501,600) and Metz ($341,250 to $392,438), whose salaries were increased to bring them in line with other similarly situated executives per our benchmarking research.his expanded responsibilities.
Benefits. The Company seeks to provide benefit plans, such as health and welfare programs to provide life insurance, 401(k), health and disability benefits to our employees, in line with applicable market conditions. These health and welfare plans help ensure that the Company has a productive and focused workforce through reliable and competitive health and other benefits. The named executive officers are eligible for the same benefit plans provided to all other employees local to the entity in which they operate.
The Company provides certain of our named executive officers with other benefits that the Company and the Compensation Committee believe are reasonable and consistent with its overall compensation program to better enable the Company to attract and retain key employees. These benefits are specified in our named executive officers' employment agreements. Many of these benefits relate to those executives, such as Messrs.Mr. Raschbaum, MarshaleckMs. Schmitt and Mr. Haveron, who reside and/or work in Bermuda and are typical of such benefits provided to expatriates in Bermuda. Examples of these benefits for Bermuda-based expatriates include housing, commuting and housingtax gross up allowances. These benefits are described under “Summary Compensation Table” and “Employment Agreements” below.
Variable Compensation
Summary of Bonus Determinations. At the beginning of each year, our Compensation Committee sets an aggregate target bonus pool for all employees for the upcoming year, which constitutes the sum of the individual bonuses at target performance
for each employee. Individual bonus targets for named executive officers are set by the Compensation Committee and reflect both the judgments of the Compensation Committee and their review of industry benchmarks.benchmarks, as well as the recommendation
of the CEO. For the balance of eligible employees, these targets are established by management using similar benchmarking along with management judgment. The Compensation Committee also sets targets for each of the key company performance metrics that will guide its determination of what percentage of the aggregate target bonus pool it will fund at the end of the year, which ranges from 0% to 200% of the aggregate target depending upon results. The Compensation Committee retains discretion to adjust the performance metrics at the end of the year based on developments in the industry and at the Company. After the year is completed, the Compensation Committee determines the aggregate size of the Company's bonus pool for the preceding year based on the Company's performance, and then determines the manner in which the pool will be distributed and granted to the named executive officers, based on the methodology described below, which includes discretion to recognize subjective elements of individual performance and contributions. For our named executive officers and all employees, individual awards are based on performance against specific defined goals.
Our bonus policy awards each named executive officer (except for the chief executive officer whose bonus is determined as described below) for his or her individual contribution to our profits for the fiscal year via our annual incentive plan (“AIP”). The AIP targets are determined by the Compensation Committee and reward the achievement of certain objective measurable company-wide performance metrics and/orand preset individual performance metrics, which the Compensation Committee maintains complete discretion to adjust. We believe that the policy of paying a bonus helps us attract qualified employees and provides an additional incentive for individuals to join our Company despite our limited track record.Company.
TheUpon recommendation of the CEO of individual performance, the Compensation Committee considered the following specific factors, among others, when considering the annual incentive awards to the non-CEO named executive officers:
The Compensation Committee determined that Mr. Marshaleck contributed to the Company by, among other reasons, completing two capital raises focused on increasing the balance sheet and replacing the trust preferred securities, continuing the development of risk based capital, optimizing efficiency of global finance staff to reduce cost and enhance effectiveness, active support and development of finance leadership to strengthen capabilities, active management of investment portfolio to optimize return and minimize risk, and active support of the ERM process.
The Compensation Committee determined that Ms. Schmitt contributed to the Company by, among other reasons, strengthening underwritingwith strong support of key business initiatives and targets, enhancing performance and profitability, taking a very active role inmanagement transparency, working with underwritingall business development units to support achievement of objectives, significantly enhancing and claims leadershipimproving capital planning and management process, actively working with rating agencies and regulators to direct activities to areas of greatest exposure, significantly reducing property catastrophe aggregates, identifyingensure that Maiden remains well capitalized across all key metrics and implementing cost reduction initiatives focused on reducing run rate expenses and improving competitiveness of the US platform by reducing expense relativities, successfully and profitably implementing regional insurer focused umbrella liability product, growing highly profitable casualty facultative portfolio by over 20%, and focusing on client service.early capital raise at favorable terms significantly enhancing Maiden capital flexibility.
The Compensation Committee determined that Mr. Haveron contributed to the Company by, among other reasons, completing twoeffectively launching the Company's European expansion, highly effective marketing activity exceeding the established goals from prospect submissions, active assistance in capital raises focused onraising and ERM activities, working actively with IIS to assist in supporting new accounts and PPI initiative, and increasing frequency of AmTrust audits in priority risk areas in both underwriting, claims, and accounting,
The Compensation Committee determined that Mr. Highet contributed to the balance sheet, assistingCompany by, among other reasons, making significant progress in the developmentimproving property results and implementation of strategy to repay the trust preferred securitiesimplementing performance improvement initiatives in the most shareholder friendly way possible, enhancing the ERM function,commercial auto, evaluating several expansion opportunities, and working with the CFO and investment managerseveral active clients as well as start-ups to actively manage risk and optimize return of invested assets portfolio, reduction in the Maiden Global Services expenses, enhancing effectiveness of the global finance staff andevaluate capital planning and management.needs which led to several new or expanded reinsurance programs.
The Compensation Committee determined that Mr. Metz contributed to the Company by, among other reasons, maintaining continued vigilance around regulatory andbeing highly responsive in supporting all key business initiatives not only from a legal risks, effectively managing several key human resources, claims and regulatory challenges, effectively integrating risk identification into ERMperspective but also from an effective business perspective, enhancing strategic HR support across Maiden platform with a particular emphasis on technical and leadership meetings, improvementskills, careful management of key litigation, enhance global compliance support of key non US growth initiatives, training on performance management process, expansionto all individuals in leadership positions, continuing to enhance technical reinsurance skills with external training and internal mentoring, and development of legal and regulatory guidance and technical support to underwriting teams, establishing formal mandatory pre- and post-binding contractcompliance review process, progress in developing processes around run off and insolvency exposures, effectuating run rate cost reductions of $600,000, and providing active oversight and direction to ensure that the Company is fully compliant with all regulatory, rating agency, stock exchange and other legal responsibilities.activities.
CEO annual incentive award. The Compensation Committee determined that the CEO's target bonus would be contingent on the achievement of objective and subjective standards based on objective Company performance metrics and the subjective assessment of the Compensation Committee regarding the CEO's critical management and leadership accomplishments. For 2013,2015, the Compensation Committee considered as the subjective standards the CEO's effectiveness in developing and implementing:implementing, among other reasons:
•the Maiden business strategy;
two •capital raisesraise resulting in incremental capital growth of $315$165 million;
replacing the trust preferred securities and enhancing run rate earnings levels by approximately $9.5 million annually;•continued development of our foreign expansion strategy;
record annual earnings;•controlling expenses;
reduction in expenses;
•continued enhancement of an effective risk management framework for the Company; and
•an effective working relationship with the Board of Directors and shareholders.
The Compensation Committee had previously received a top level benchmarking analysis of CEO compensation from its outside compensation consultant, focusing in particular on other Bermuda reinsurance companies. Such analysis concluded that Mr. Raschbaum's compensation was within the range of cash compensation of similarly situated CEOs. As a result of the foregoing accomplishments in 2013,2015, Mr. Raschbaum, who was targeted to receive 100% of his base compensation, was granted a cash incentive grant of 80%50% of his base compensation by the Committee, or $800,000,$500,000, and a restricted share unit award of $800,000.$1,000,000.
Annual incentive pool. The annual incentive pool ("AIP") is designed to reward our employees including our non-CEO named executive officers, based on achieving targets in the four performance areas:
•targeted operating return on equity;
•achievement of combined ratio objectives;
•growth in written premium; and
•controlling expenses.
All of our employees are eligible to earn annual incentive compensation. Our annual incentive compensation is normally paid in February or March for the prior year's performance, and approval by the Compensation Committee is required. An aggregate bonus pool target is established each year, based on the sum of all of the individual employee target bonus amounts. Employee targeted bonus amounts are determined by the employee's position and benchmarked with other reinsurance companies' positions based on information from various independent annual surveys and services. Individual awards are further adjusted to reflect performance against personal objectives.
The actual amount of the annual incentive pool is at the complete discretion of the Compensation Committee and was based in fiscal year 20132015 on achieving the following performance metrics: operating return on beginning common equity (40% of the annual incentive calculation),; combined ratio target (30%),; revenue growth (20%); and operating expense targets (10%). The Compensation Committee maintains complete discretion to modify the performance metrics based on developments in the industry, in the market and the Company during the year. Generally at a performance level of 75% of the target performance metrics, 50% of the targeted annual incentive pool would be awarded. Generally for performance levels below the 75% performance level, no annual incentive compensation would be paid. Generally for performance levels at 150% and above target performance, the annual incentive bonus pool would be capped at 200% of the targeted annual incentive pool.
ReturnOperating return on beginning common equity. ReturnOperating return on beginning common equity ("ROE"OROE") as a measure of performance is highly correlated to market value and ultimately the creation of shareholder value. As a measurement, it is a proxy for the relationship between net income and the book value of the Company. The Compensation Committee in consultation with the CEO establishes annual bonus target levels that are consistent with the objective of ultimately achieving a medium term goal of 15% annual ROE.OROE.
Combined ratio. Underwriting profit is a critical component of operating performance and the combined ratio reflects the margin by which insurance earned revenues exceed operating costs and reinsured losses. The Company utilizes this metric to evaluate its underwriting effectiveness on a contract and aggregate portfolio basis. This metric is also measured at the underwriting team level and ultimately impacts individual compensation. For Maiden, the group’s ultimate, long-term target metricobjective is a 96%96.0%, or lower, combined ratio.ratio; however, the annual target reflects factors such as business mix and market conditions.
Revenue growth rate. While the reinsurance sector is a mature market with pronounced underwriting cycles that reflect the competitive nature of the market, over time, our Board of Directors and our Compensation Committee believe that the Company's competitive advantages should enable the Company to grow at a level in excess of the broader industry growth trends. While this metric is an important measure of the effectiveness of the Company's business model and market acceptance, it receives a significantly lower weighting than ROEOROE and combined ratio in recognition of the fact that in a cyclically mature market, competition in the reinsurance sector may at times reach a level where growth opportunities at acceptable margins are limited.Maiden emphasizes that profitability is more important than growth.
Operating expense. Reflecting the mature market dynamics of the reinsurance sector, a critical element of Maiden's business model is operating efficiency. We target the maintenance of operating expense relativities (operating expenses measured against net earned premium) within the most efficient quartile among industry participants of operating efficiency on an annual basis. Our Board of Directors and Compensation Committee believe that loss costs being equal, the relative operational efficiency of our Company can further differentiate it in both profit margin and cost competitiveness. The Compensation Committee establishes this metric on an annual basis based on the business plan developed by management.
The AIP performance targets for the 20132015 fiscal year, adopted by the Compensation Committee in February 2013,2015, were a 11.5% return on equity, 96.75%14.60% OROE, 97.37% combined ratio, 10%12.70% revenue growth and an achievement of targeted operating expense levels of 3.5%2.72%. The following chart compares the target and the actual figures attained by the Company and the resulting percentage of business performance versus the AIP metrics:
| | Business Performance Metric | | Weight | | 2013 Target | | 2013 Actual | | 2013 AIP % | | Weight | | 2015 Target | | 2015 Actual Performance | | 2015 Calculated Payout |
Return On Equity | | 40.0 | % | | 11.5 | % | | 10.2 | % | | 30.7 | % | |
OROE | | | 40.00 | % | | 14.60 | % | | 11.58 | % | | 59.00 | % |
Combined Ratio | | 30.0 | % | | 96.75 | % | | 97.5 | % | | 24.4 | % | | 30.00 | % | | 97.37 | % | | 99.30 | % | | 52.00 | % |
Revenue Growth* | | 20.0 | % | | 10.0 | % | | 10.3 | % | | 21.0 | % | |
Revenue Growth(1) | | | 20.00 | % | | 12.70 | % | | 10.66 | % | | 68.00 | % |
Operating Expenses | | 10.0 | % | | 3.5 | % | | 2.9 | % | | 13.4 | % | | 10.00 | % | | 2.72 | % | | 2.66 | % | | 105.00 | % |
Total | | |
| | |
| | |
| | 89.5 | % | | 100.00 | % | | |
| | |
| | 63.00 | % |
Based on the Company's performance achieved, the aggregate bonus pool calculated to 90%63.0%. The aggregate bonus pool maximum target (not including the CEO)named executive officers) established for the 20132015 fiscal year was accrued for in the Company’s fiscal 20132015 financial statements. For employees other than the named executive officers, executive management has discretion to determine the actual incentive compensation paid, which can range from 0% to 200% of the employees’ targeted annual incentive compensation based on the employees’ individual performance for the year. The total annual incentive compensation paid cannot exceed the aggregate pool approved by the Compensation Committee.
The Compensation Committee determines the actual annual incentive compensation for each named executive officer based on the corporate performance against the AIP performance targets, as referenced above for 2013,2015, and his/her individual contribution to the achievement of the resulting performance. The Committee relied upon the benchmarking surveys from outside compensation consultants, as well as the recommendations from the entire Board of Directors and the CEO when determining and approving the annual incentive awards of the non-CEO named executive officers. The annual incentive awards are calculated based upon a target percentage of base salary. The Compensation Committee considered the specific factors listed in this CD&A for the CEO and the other named executive officers.