☐ | Preliminary proxy statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ | Definitive proxy statement | |
☐ | Definitive additional materials | |
☐ | Soliciting material pursuant to Rule 14a-12 |
☒ | No fee required. | |||
☐ | Fee paid previously with preliminary materials. | |||
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and0-11 |
March 20, 2023 | ||
Dear fellow stockholders: It is my privilege to present Ryan Specialty’s 2023 Proxy Statement. The significance of the specialty insurance sector, and While economic uncertainty and a tough insurance market presented a number of hurdles, they also provided additional opportunities to further grow our business and expand our market share. With our specialization and industry-leading team that possess the skills and expertise to navigate the complexities of increasingly difficult risks, we continue to be well positioned to provide customized solutions that are tailored to our clients’ unique needs. |
April 26, 2022
Dear Fellow stockholders,
I am pleased to provide you with Ryan Specialty’s 2022 Proxy Statement, which is our first as a publicly traded company. After more than 60 years inOur performance this year again demonstrated the insurance business, I remain captivated by this incredible industry that is part of the fabric of allstrength of our lives. Specialty insurance, in particular, provides boundless opportunity for creativity and entrepreneurism while playing a critical role in facilitating global commerce.
2021 was a banner year for Ryan Specialty. We again demonstrated why Ryan Specialty isbusiness, continuing the preeminent specialty insurance intermediary and a destinationtrack record of choice forsuccess we’ve established over the industry’s top talent.past 12 years. To highlight a few of our manynoteworthy accomplishments in 2022, we completedachieved yet another year of annual revenue growth of over 20%, including double-digit organic revenue growth1, successfully integrated our prior year acquisitions, announced a highly successful initial public offering, completed all significant aspects ofnew strategic acquisition, and invested in exceptional talent while onboarding the integration of All Risks and made great progress on strengthening the depth and breadthlargest production class in our history. Furthermore, we maintained a 97% retention of our servicesproducers and product offerings. This success is a testament to our winning culture, differentiated distribution platform, depth of talent, andlaid the tireless efforts of our entire team to executegroundwork for our clients and trading partners.ACCELERATE 2025 program.
As noted, our organic revenue1 increased by 16% year-over-year. Our strong results this past year position usorganic growth performance was due to several factors, including the successful launch of new products and services, new client wins, as well for sustained and profitable growth in 2022 and beyond.as increased demand from our existing clients as business continued to flow into the Excess & Surplus (E&S) sector.
AllMoreover, all three of our specialties and their teams once again performed remarkably well during 2021.admirably in 2022 – each achieving double-digit top-line growth.
We continued to generate impressive growth in ourOur Wholesale Brokerage specialty drivengenerated 20%+ growth, led by sustained strength across allin Property Casualty and Professional LiabilityCasualty lines of business.business, despite headwinds in certain other lines.
Our delegated authority specialties – Binding Authority specialtyand Underwriting Management – also generated impressive growth,delivered strong results, fueled by additional capabilities and wecapacity. These strong results are a testament to our commitment to delivering unparalleled value to our clients. We remain very excited about the opportunity for further expansion. We have diligently built a scaled Binding Authority operation complete with broad distribution, underwriting expertise, and carrier capacity. This platform positions us well positioned to take a leading positionexpand these specialties in the consolidation of the highly fragmented delegated authority market, facilitating our goal of building the industry’s first truly 50-state binding authority operation.
Furthermore, our Underwriting Management specialty completed a strong 2021. We see multiple growth avenuesyears ahead and are prepared to invest in this specialty in 2022 and beyond to take advantage of these opportunities, especially through de novo formations.
In addition to the organic growth of our specialties, our M&A pipeline remains robust with potential opportunities across our business. As we have said often, we believe today’s acquisition is tomorrow’sboth organic growth and strategic M&A transactions.
Along with another year of double-digit organic growth1, we remain highly focused on strategicseamlessly integrated our 2021 acquisitions that are a cultural fit and align with our economic and operational goals.
Toward the end of 2021, we completed two highly complementary acquisitions – Crouse & Associates and Keystone Risk Partners – that exemplifyPartners. Crouse allowed us to cement our disciplined approachstatus as a national transportation leader by complementing our existing platform and providing the durability to M&A. Crouse’s expertisecompete for the toughest accounts in transportation and Keystone’sthe sector, while Keystone was a key contributor to our alternative risk strategy, helping to diversify our revenue streams and solidify our expansion into this increasingly significant segment of the market. Toward the end of 2022, we announced a highly strategic acquisition – Griffin Underwriting Services – which broadens our geographic scope and our capabilities considerably boostin our strengthBinding Authority and geographic footprint in those arenas.Wholesale Brokerage specialties. As we have always done, we remain disciplined and opportunistic in our search forpursuit of potential acquisition partnersacquisitions that are aligned witha strong cultural fit, strategic, and accretive to our goals, culture, values,returns.
We also continued to invest in our people and expectationsinfrastructure and are proud to have executed on goal of onboarding the largest production class in Ryan Specialty history. We invested in intellectual capital throughout the year, adding to an already strong and deep roster, and again proving that we are a destination of choice for the best talent in the industry. The exceptional team we have assembled since our founding, including additions over the last year, has enabled development of new programs and the introduction of new products in our MGAs and MGUs, brought in new, expanded existing, and arranged alternative capital, all in an effort to deliver value for our clients and trading partners.
We remain consistent in our strategy to balance investments necessary to continue strong and consistent organic growth.
This pastAchievements for 2022
• | Revenue increased $292.4 million, or 20.4%, driven by annual organic revenue growth1 of 16.4%. |
• | Net Income of $163.3 million, compared to Net Income of $56.6 million in the prior year. Net Income for 2021 included $79.5 million of one-time costs related to our IPO. |
• | Adjusted EBITDAC1 increased $57.2 million, or 12.4%, to $517.4 million, from $460.2 million in the prior year. |
• | Adjusted EBITDAC margin1 of 30.0%. |
• | Wholesale Brokerage revenue grew $197.3 million, or 21.2%, to $1.1 billion from $932.0 million in 2021. |
• | Binding Authority revenue increased $21.4 million, or 10.2%, to $231.0 million, compared to $209.6 million in the prior year. |
• | Underwriting Management revenue increased $61.0 million, or 21.0%, to $351.6 million, compared to $290.6 million in 2021. |
• | Signed agreement to acquire Griffin Underwriting Services, a binding authority specialist and wholesale insurance broker. |
In February, we announced our ACCELERATE 2025 program, which will strengthen how Ryan Specialty operates while improving efficiency and unlocking additional value for our clients and stockholders. We have always been an innovative firm, and this program will enable us to further differentiate our offerings and position us to remain an industry leader. We will achieve this by:
• | Streamlining our processes and increasing the use of technology to enhance collaboration across our businesses, improve efficiency, and prepare us for the next cycle of growth. |
• | Making investments that will further enhance our data and analytics capabilities, assist us to innovate faster, serve clients with more distinction, and further differentiate us from our competitors. |
ACCELERATE 2025 is aptly named as it will accelerate our ability to scale more efficiently while delivering new capabilities that help us build on our proven track record of innovation and growth.
As we celebrate our 2022 achievements, we also mourn the passing of our longtime friend and Lead Director Andrew J. McKenna, who we lost in February 2023. Andy played a crucial role in Ryan Specialty’s success since the inception of our Board in 2012. His expertise on the topic of corporate governance aided our firm’s strategy, and his legacy will continue to inspire us as we navigate the challenges and opportunities that lie ahead. We are eternally grateful for Andy’s contributions to our success.
Looking to the year ahead, we see continued solid growth in the underlying business driven by broad E&S tailwinds, expect to grow our business through M&A, and look to grow through our alternative risks and benefits strategies. We will continue to invest in our business through another year of targeted hiring; we will also further validatedexecute on our strategic initiatives to increase the scalability of our operating platform. By continuing to make investments in people and infrastructure ahead of growth, we
We believe wethe E&S insurance market will continue to havebe a standout within the opportunityinsurance industry. Flow continues to realize margin expansion overenter this important segment of the long term.market at an accelerated rate, while pricing is holding firm or accelerating in many lines of business. We remain committed to serving the increasing demand and our clients’ needs for specialty insurance solutions, particularly given the increasing challenges in finding coverage for hard-to-place risks.
Select Achievements for 2021
We successfully completed our initial public offering.
Total reported revenue increased $414.5 million, or 40.7%, to $1.4 billion from $1.0 billion in 2020 driven by the inclusion of All Risks and exemplary organic growth.
Wholesale Brokerage revenue grew $258.9 million, or 38.5%, to $932.0 million, from $673.1 million in 2020.
Binding Authority revenue increased $64.8 million, or 44.7%, to $209.6 million, compared to $144.8 million in the prior year.
Underwriting Management revenue increased $91.8 million, or 46.2%, to $290.6 million, compared to $198.8 million in 2020.
We ended 2021 in the strongest position in our history and believe thatAlthough we face heightened macro uncertainty, we are well positioned to capitalize on the opportunities presented in 2022skillfully navigate through this challenging economic environment and beyond. Ryan Specialty remains the destination of choice for top talent, as evidenced by our 97% producer retention,have a flexible business model that can quickly pivot and we intendadapt to significantly enhance the strength and depthchanging market conditions. Nearly all of our bench this year, including onboarding the largest numberbusiness is commercial, over 70% of experienced broker hiresour premiums placed are in our history, and a record matriculation in our new graduate program – Ryan Specialty University.
As we enter 2022, the Excess and Surplus (E&S) insurance market continues to expand faster than the Admitted market. Pricing remains robust and, more significantly, we continue to see strong tailwinds from increased flow into the E&S distribution channel asmarket, and, importantly, the world becomes increasingly riskier and more complex. As we’ve highlighted inmajority of the past, our business and our operating model are built to outperform in any environment, andproducts that we are well positioned to capitalizeplace or underwrite on the increased need and demand for specialty insurance solutions.
Looking ahead, Ryan Specialty continues to deliver on our promise to enhance diversity within our firm and throughout the insurance industry. We remain committed to building and sustaining a diverse workforce reflectivebehalf of society where differences are considered corporate assets, as bringing together varied backgrounds and perspectives better serves our clients trading partners and communities. We formed a Diversity, Equity, and Inclusion Council, collaborated with several educational institutions, nonprofit and community organizations to support and develop a diverse talent pipeline and have engaged a Diversity, Equity & Inclusion consultant to further our progress. I invite you to read more about these very important efforts in our 2022 Proxy Statement.are compulsory.
I remain extremely proud of the unique culture we have built at Ryan Specialty – one of empowerment, innovation, integrity, and inclusion – which is paramount to our long-term continued success.
Finally, I want to acknowledge the dedicated supportexpress my gratitude to all of our exceptional team members, trading partners and clients; it is because of them that this magnificent journey is possible.
The future is bright for Ryan Specialty teammates for their hard work and dedication throughout the year. Their commitment to excellence has been the cornerstone of our success, and I hope thatam proud to lead such a talented and motivated team.
Thank you share in my excitement about where we are headed as our story continues to be written.for your continued support.
Respectfully yours,
Patrick G. Ryan
Founder, Chairman & CEO
1 | Non-GAAP Measures. For a definition and a reconciliation of Organic Revenue Growth, Adjusted EBITDAC and Adjusted EBITDAC Margin to the most directly comparable GAAP measure, see “Appendix A” to this Proxy Statement. |
NOTICE OF 20222023 ANNUAL MEETING
OF STOCKHOLDERS AND PROXY STATEMENT
Dear Stockholder:stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders (the “Annual Meeting”) of Ryan Specialty Group Holdings, Inc. (the “Company”) on:
DATE: | ||||
TIME: | 12:00 p.m. Eastern Time. | |||
PLACE: | The meeting will be a virtual-only meeting, conducted exclusively via webcast at www.proxydocs.com/RYAN. There will not be a physical location for the meeting, and you will not be able to attend the meeting in person. Stockholders will be able to attend, vote, and submit questions (both before and during a portion of the meeting) virtually. | |||
RECORD DATE: | ||||
WHO CAN VOTE: | Stockholders of record on the Record Date. | |||
WHO CAN ATTEND: | All stockholders are invited to attend the virtual Annual Meeting. To attend the meeting at www.proxydocs.com/RYAN, you must enter the control number on your Notice of Internet Availability of Proxy Materials, Proxy Card, or voting instruction form. The virtual meeting room will open at 11:45 a.m. Eastern Time. | |||
DATE OF MAILING: | A Notice of how to access the Proxy Statement and |
Continuing our goal to protect our stockholders, directors and colleagues during the COVID-19 pandemic, pleasePlease note that there is no in-person annual meeting for you to attend. Stockholders will be able to listen, vote, and submit questions from any remote location with Internet connectivity. Information on how to participate in the virtual Annual Meeting begins on page 4 of this Proxy Statement.
Items of Business to be Conducted:
1. | To elect the |
2. | To ratify the selection of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm |
3. | To approve, by a non-binding advisory vote, the compensation of our named executive officers (i.e., |
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To conduct any other business that may properly come before the meeting. |
YOUR VOTE IS VERY IMPORTANT
If you were a stockholder at the close of business on the Record Date (i.e., April 11, 2022)March 10, 2023), you are eligible to vote at this year’s Annual Meeting. Regardless of whether you plan to attend the virtual Annual Meeting, your vote is very important. We urge you to participate in the election of our directors and in deciding the other items on the agenda for the Annual Meeting.
In light of the ongoing COVID-19 pandemic, stockholdersStockholders are strongly encouraged to vote their shares by proxy in advance of the Annual Meeting. Stockholders who wish to attend the Annual Meeting virtually may do so via webcast at www.proxydocs.com/RYAN, as further described on page 43 of the Proxy Statement. Please note that attending the Annual Meeting virtually will not necessarily allow you to vote at the Annual Meeting. Accordingly, we strongly advise you to vote in advance by one of the methods described on page 54 of the Proxy Statement.
All holders of Class A common stock, $0.001 par value per share, and Class B common stock, $0.001 par value per share, at the close of business on the Record Date can vote. A stockholder of record entitled to attend and vote at the Annual Meeting may appoint one or more proxies to attend, speak, and vote on their behalf by any of the procedures set out on page 54 of the Proxy Statement. A proxy holder need not be a stockholder of record.
We will provide access to our proxy materials via the Internet at www.proxydocs.com/RYAN rather than in hard copy. We will mail a notice containing instructions on how to access this Proxy Statement and our Annual Report on or about April [26], 2022March 20, 2023, to all stockholders entitled to vote at the Annual Meeting. Stockholders who prefer a paper copy of the proxy materials may request one, on or before May 30, 2022at no cost, by following the instructions provided in the notice we will send.
Only stockholders that owned Class A common stock or Class B common stock at the close of business on the Record Date are entitled to notice. A list of our stockholders of record will be available at our principal executive offices, Two Prudential Plaza, 180 North Stetson Ave., Suite 4600, Chicago, Illinois 60601 for examination by any stockholder for any purpose relevant to the meeting during ordinary business hours for at least ten days prior to June 7, 2022May 1, 2023, and will be available online during the Annual Meeting. Your vote is important. Regardless of whether you plan to attend the Annual Meeting, we urge you to vote. You may vote by proxy over the Internet, by telephone, or by mail by following the instructions on the Proxy Card. Voting by proxy will ensure your representation at the Annual Meeting regardless of whether you attend online.
Our Board recommends that you vote:
Proposals | Board Recommendation | Page Reference | ||
1. Election of
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FOR each nominee | 16
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2. Ratification of Deloitte & Touche LLP as our independent registered public accounting firm
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3. Advisory (non-binding) vote to approve executive compensation
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By Order of the Board of Directors,
Mark S. Katz
Corporate Secretary
Chicago, Illinois
April [26], 2022March 20, 2023
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING
The Board of Directors (the “Board”) of Ryan Specialty Group Holdings, Inc. is soliciting your proxy to vote at our 20222023 Annual Meeting of Stockholders to be held on June 7, 2022,May 1, 2023, at 12:00 p.m. Eastern Time in a virtual-only meeting online at www.proxydocs.com/RYAN, and any adjournment or postponement of that meeting (the “Annual Meeting”). This Proxy Statement is dated as of April [26], 2022.March 20, 2023. As used in this Proxy Statement henceforward, unless otherwise stated or the context clearly indicates otherwise, the terms the “Company,” the “Registrant,” “Ryan Specialty,” “we,” “us”“us,” and “our” refer to Ryan Specialty Group Holdings, Inc., a Delaware corporation.
In addition to solicitations by mail, our directors, officers, and regular employees, without additional remuneration, may solicit proxies by telephone, e-mail, and personal interviews. All costs of solicitation of proxies will be borne by us. Brokers, custodians, and fiduciaries will be requested to forward proxy soliciting material to the owners of stock held in their names as of the Record Date, and we will reimburse them for their reasonable out-of-pocket expenses incurred in connection with the distribution of proxy materials.
We have elected to provide access to our proxy materials on the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials to our stockholders of record as of April 11, 2022March 10, 2023 (the “Record Date”), while brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar notice. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice of Internet Availability of Materials or to request a printed set of the proxy materials. Instructions on how to request a printed copy by mail or e-mail may be found in the Notice of Internet Availability of Materials and on the website referred to in the Notice of Internet Availability of Materials, including an option to request paper copies, at no cost, on an ongoing basis. We are making this Proxy Statement available on the Internet on or about April [26], 2022March 20, 2023, and are mailing the Notice of Internet Availability of Materials to all stockholders entitled to vote at the Annual Meeting on or about April [26], 2022.March 20, 2023. We intend to mail or e-mail this Proxy Statement, together with a Proxy Card, to those stockholders entitled to vote at the Annual Meeting who have properly requested copies of such materials by mail or e-mail, within three business days of such request.
The Company has two classes of voting securities, Class A common stock, $0.01$0.001 par value per share (“Class A common stock”), and Class B common stock, $0.01$0.001 par value per share (“Class B common stock,” and, collectively, the “common stock”). Holders of Class A common stock are entitled to one vote per share on all matters submitted to a vote of the Company’s stockholders and the holders of Class B common stock are entitled to ten votes per share on all matters submitted to a vote of the Company’s stockholders. As of the Record Date, there were 259,148,398259,655,568 shares of common stock outstanding consisting of 110,275,625113,233,651 shares of Class A common stock and 148,872,773146,421,917 shares of classClass B common stock. We need the holders of a majority in voting power of the shares of common stock issued and outstanding and entitled to vote, present virtually or represented by proxy, to hold the Annual Meeting.
The Company’sCompany’s Annual Report, which contains financial statements for fiscal year 20212022 (the “Annual Report”“Annual Report”), accompanies this Proxy Statement. Stockholders that receive the Notice of Internet Availability of Materials can access this Proxy Statement and the Annual Report at the website referred to in the Notice of Internet Availability of Materials. The Annual Report and this Proxy Statement are also available on the “SEC Filings”“SEC Filings” section of our investor relations website at https//ir.ryansg.comir.ryanspecialty.com and at the website of the Securities and Exchange Commission (the “SEC”“SEC”) at www.sec.gov. Please note that the information on our website is not part of this Proxy Statement. You also may obtain a copy of Ryan Specialty’s Proxy Statement and Annual Report, without charge, by writing to our Investor Relations department at ir@ryansg.com.ir@ryanspecialty.com.
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QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Q: Why did I receive these materials?
The Board of Ryan Specialty is soliciting your proxy to vote at our Annual Meeting (or at any postponement or adjournment of the meeting). Stockholders who own shares of our common stock as of the Record Date are entitled to vote at the Annual Meeting. You should review these proxy materials carefully as they provide important information about the proposals that will be voted on at the Annual Meeting, as well as other important information about Ryan Specialty.
Notice of Electronic Availability of Proxy Statement and Annual Report.As permitted by SEC rules, we are making this Proxy Statement and our Annual Report available to our stockholders electronically via the Internet. The notice of electronic availability contains instructions on how to access this Proxy Statement and our Annual Report and vote online. If you received a notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the notice instructs you on how to access and review all of the important information contained in this Proxy Statement and Annual Report. The notice also instructs you on how you may submit your proxy over the Internet or by telephone. If you received a notice by mail and would like to receive a printed copy of our proxy materials, at no cost, you should follow the instructions for requesting such materials contained in the notice.
Householding.Householding. The SEC’s rules permit us to print an individual’s multiple accounts on a single notice or set of Annual Meeting materials. To take advantage of this opportunity, we have summarized on one notice or set of Annual Meeting materials all of the accounts registered with the same tax identification number or duplicate name and address, unless we received contrary instructions from the impacted stockholder prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the notice or Annual Meeting materials, as requested, to any stockholder to which a single copy of those documents was delivered. If you prefer to receive separate copies of the notice or Annual Meeting materials, contact our Investor Relations department at ir@RyanSG.com.ir@ryanspecialty.com. A number of brokerage firms have instituted householding. They will have their own procedures for stockholders who wish to receive individual copies of the proxy materials.
Q: Who can vote at the Annual Meeting?
Only stockholders of record at the close of business on the Record Date will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, there were 259,148,398259,655,568 shares of common stock outstanding consisting of 110,275,625113,233,651 shares of Class A common stock and 148,872,773146,421,917 shares of Class B common stock.
Stockholder of Record: Shares Registered in Your Name
If, on the Record Date, your shares of Class A common stock were registered directly in your name with the transfer agent for our common stock, American Stock Transfer & Trust Company, LLC (“AST”), or if you hold shares of Class B common stock, then you are a stockholder of record. As a stockholder of record, you may: vote virtually at the Annual Meeting; vote by proxy on the Internet or by telephone; or vote by signing and returning a Proxy Card, if you request and receive one. Regardless of whether you plan to attend the virtual Annual Meeting, to ensure your vote is counted, we urge you to vote by proxy on the Internet as instructed in the Notice of Internet Availability of Materials, by telephone as instructed on the website referred to in the Notice of Internet Availability of Materials, or (if you request and receive a Proxy Card by mail or e-mail) by signing, dating, and returning the Proxy Card sent to you or by following the instructions on such Proxy Card to vote on the Internet or by telephone.
Beneficial Owner: Shares Registered in the Name of a Broker, Bank or Other Agent
If, on the Record Date, your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the virtual Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares at the virtual Annual Meeting, unless you request and obtain a legal proxy from your broker or other agent who is the record holder of the shares, authorizing you to vote at the Annual Meeting.
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Q: What am I being asked to vote on?
You are being asked to vote on sixthree proposals:
Proposal No. 1: the election of fourthree Class III directors to hold office until the 20252026 annual meeting of stockholders and until their successors are duly elected and qualified;
Proposal No. 2: the ratification of the selection, by the Audit Committee of our Board, of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2022;2023; and
Proposal No. 3: the non-binding advisory approval of the compensation of our named executive officers;officers.
Proposal No. 4: the non-binding advisory approval on the frequency of holding a stockholder vote on the compensation of our named executive officers every one, two or three years;
Proposal No. 5: the non-binding advisory approval to retain the supermajority voting requirements set forth in the Company’s Amended and Restated Certificate of Incorporation (the “Certificate”) and the Amended and Restated Bylaws (“Bylaws”); and
Proposal No. 6: the non-binding advisory approval to retain the classified structure of the Board.
In addition, you are entitled to vote on any other matters that are properly brought before the Annual Meeting.
Q: How does the Board recommend I vote on the Proposals?
The Board recommends that you vote:
FOR each of the four director nominees;
• | FOR each of the three director nominees; |
FOR ratification of Deloitte & Touche LLP as our independent registered public accounting firm;
• | FOR ratification of Deloitte & Touche LLP as our independent registered public accounting firm; and |
• | FOR the non-binding advisory approval of the compensation of our named executive officers. |
FOR the non-binding advisory approval of the compensation of our named executive officers;
FOR every ONE YEAR as the frequency of future non-binding advisory votes to approve the compensation of our named executive officers;
FOR the non-binding advisory approval to retain the supermajority voting standards set forth in the Certificate and Bylaws; and
FOR the non-binding advisory approval to retain the classified structure of the Board.
Q: Who can attend the Annual Meeting?
The Annual Meeting is being held as a virtual onlyvirtual-only meeting this year. If you are a stockholder of record as of the Record Date, you may attend, vote, and ask questions virtually at the meeting by logging in at www.proxydocs.com/RYAN and registering by providing your control number. This number is included in the notice or on your Proxy Card.
If you are a stockholder holding your shares in “street name” as of the Record Date, you may gain access to the meeting by following the instructions in the voting instruction card provided by your broker, bank, or other nominee. You may not vote your shares via the Internet at the Annual Meeting unless you receive a valid proxy from your brokerage firm, bank, broker-dealer, or other nominee holder. IfYou may attend and ask questions virtually at the meeting by logging in at www.proxydocs.com/RYAN and registering by providing your control number.
The control number is included in the notice or on your Proxy Card. Upon completing your registration, you were not a stockholder as of the Record Date,will receive further instructions via email, including your unique link that will allow you may still listen to access the Annual Meeting butand to submit questions during the meeting and, if you are either the (i) record holder or (ii) a beneficial holder with a valid proxy, vote during the meeting. Please be sure to follow the instructions found on your Proxy Card and/or voting authorization form and subsequent instructions that will not be abledelivered to ask questions or vote at the meeting.you via email after you register.
If you have questions, you may type them into the dialog box provided at any point during the Annual Meeting (until the floor is closed to questions). The audio broadcast of the Annual Meeting will be archived on the Company’s website for at least one year at www.ryansg.com.
Recording of the Annual Meeting will not be permitted.
Q: Why is the Annual Meeting virtual only?
In light of the environment surrounding the coronavirus, or COVID-19, this year’sOur Annual Meeting will be conducted virtually, via live video webcast. Protectinga virtual meeting format only in which stockholders will participate by accessing a website using the healthInternet. There will not be a physical meeting location. We believe that hosting a virtual meeting will facilitate stockholders’ attendance and well-beingparticipation at our Annual Meeting by enabling stockholders to participate remotely from any location around the world. We have designed the virtual Annual Meeting to provide stockholders the same rights and opportunities to participate as they would have at an in-person meeting, including the right to vote and ask questions through the virtual meeting platform. A virtual meeting also provides an additional opportunity for stockholders to communicate with the Board by submitting questions before and during the meeting through the virtual meeting platform. A virtual meeting also eliminates many of the attendees (employees,costs associated with hosting a physical meeting, which will benefit both our stockholders and the general public) and facilitating access to the Annual Meeting as the pandemic persists are among our top priorities.Company.
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Q: How do I vote?
For Proposal 1, you may either vote “For,” or choose that your vote be “Withheld” from, any of the nominees to the Board.
• | For Proposal 1, you may either vote “For,” or choose that your vote be “Withheld” from, any of the nominees to the Board. |
For Proposal 2, you may either vote “For” or “Against” the proposal, or “Abstain” from voting.
• | For Proposal 2, you may either vote “For” or “Against” the proposal or “Abstain” from voting. |
• | For Proposal 3, you may either vote “For” or “Against” the proposal or “Abstain” from voting. |
For Proposal 3, you may either vote “For” or “Against” the proposal, or “Abstain” from voting.
For Proposal 4, you may either vote for every "One Year," "Two Years" or "Three Years," or “Abstain” from voting.
For Proposal 5, you may either vote “For” or “Against” the proposal, or “Abstain” from voting.
For Proposal 6, you may either vote “For” or “Against” the proposal, or “Abstain” from voting.
Please note that by casting your vote by proxy you are authorizing the individuals listed on the proxy to vote your shares in accordance with your instructions and in their discretion with respect to any other matter that properly comes before the Annual Meeting or any adjournments or postponements thereof. The procedures for voting, depending on whether you are a stockholder of record or a beneficial owner, are as follows:
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in any of the following manners:
To personally vote during the annual meeting prior to the close of the polls, log into the virtual Annual Meeting and follow the instructions on how to vote at the virtual annual meeting.
• | To personally vote during the Annual Meeting prior to the close of the polls, log into the virtual Annual Meeting and follow the instructions on how to vote at the virtual annual meeting. |
To vote over the Internet prior to and during the Annual Meeting, follow the instructions provided on the Notice of Internet Availability of Materials or on the Proxy Card that you request and receive by mail or e-mail. We provide Internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies.
• | To vote over the Internet prior to and during the Annual Meeting, follow the instructions provided on the Notice of Internet Availability of Materials or on the Proxy Card that you request and receive by mail or e-mail. We provide Internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. |
To vote by telephone, call the toll-free number found on the Proxy Card you request and receive by mail or e-mail, or the toll-free number that you can find on the website referred to on the Notice of Internet Availability of Materials.
• | To vote by telephone, call the toll-free number found on the Proxy Card you request and receive by mail or e-mail or the toll-free number that you can find on the website referred to on the Notice of Internet Availability of Materials. |
• | To vote by mail, complete, sign, and date the Proxy Card you request and receive by mail or e-mail and return it promptly. As long as your signed Proxy Card is received prior to the Annual Meeting, we will vote your shares as you direct. |
To vote by mail, complete, sign and date the Proxy Card you request and receive by mail or e-mail and return it promptly. As long as your signed Proxy Card is received prior to the Annual Meeting, we will vote your shares as you direct.
Regardless of whether you plan to attend the virtual Annual Meeting, we urge you to vote by proxy by mail, Internet, or telephone to ensure your vote is counted. Even if you have submitted your vote before the Annual Meeting, you may still attend the virtual Annual Meeting and vote during the Annual Meeting. In such case, your previously submitted vote will be disregarded.
Beneficial Owner: Shares Registered in the Name of Broker, Bank, or Other Agent
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a voting instruction card and voting instructions with these proxy materials from that organization, rather than from us. Simply complete and mail the voting instruction card to ensure that your vote is counted or follow the instructions to submit your vote by the Internet or telephone, if those instructions provide for Internet and telephone voting. To vote during the Annual Meeting, you must obtain a valid proxy from your broker, bank, or other agent. Follow the instructions from your broker, bank, or other agent included with these proxy materials, or contact your broker, bank, or other agent to request a proxy form.
Q: Who counts the votes?
Mediant Communication, Inc. (“Mediant”) has been engaged as our independent agent to tabulate stockholder votes, also known as the Inspector of Election. If you are a stockholder of record, and you choose to vote over the Internet prior to the Annual Meeting or by telephone, Mediant will access and tabulate your vote electronically, and if you request and receive proxy materials via mail or e-mail and choose to sign and mail your Proxy Card, your executed Proxy Card is returned directly to Mediant for tabulation. As noted above, if you hold your shares through a broker, your broker (or its agent for tabulating votes of shares held in “street name”) returns one Proxy Card to Mediant on behalf of all of its clients.
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Q: How are votes counted?
Votes will be counted by the Inspector of Election appointed for the Annual Meeting. For Proposal 1, the Inspector of Election will separately count “For” and “Withheld” votes and broker non-votes for each nominee. For Proposals 2 3, 5 and 6,3 the Inspector of Election will separately count “For” and “Against” votes, abstentions and broker non-votes. For Proposal 4, the Inspector of Election will separately count “One Year”, “Two Years” and “Three Years,” abstentions and broker non-votes. If you do not give instructions to your broker, your broker can vote your shares with respect to “routine” items, but not with respect to “non-routine” items. See below for more information regarding: “What“What are “broker non-votes?”non-votes”? and “Which“Which ballot measures are considered “routine” and “non-routine?”non-routine”?
Q: What are “broker non-votes”?
Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed “non-routine.” Generally, if shares are held in street name,“street name”, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. In the event that a broker, bank, custodian, nominee, or other record holder of common stock indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular proposal, then those shares will be treated as broker non-votes with respect to that proposal. Accordingly, if you own shares through a nominee, such as a broker or bank, please be sure to instruct your nominee how to vote to ensure that your vote is counted on each of the proposals. Under recently adopted New York Stock Exchange (“NYSE”) rules, abstentions will be treated in accordance with our Bylaws and Delaware state law.
Q: Which ballot measures are considered “routine” or “non-routine”?
The ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 20222023 (Proposal 2) is considered routine under applicable law. A broker or other nominee may generally vote on routine matters, and therefore, no broker non-votes are expected to exist in connection with Proposal 2. The election of directors (Proposal 1), and the non-binding approval of the compensation of our named executive officers (Proposal 3), the non-binding vote of the frequency of votes for the non-binding approval of the compensation of our named executive officers (Proposal 4), the non-binding approval to retain the supermajority voting standards set forth in the Certificate and Bylaws (Proposal 5) and the non-binding approval to retain the classified structure of our Board (Proposal 6) are considered non-routine under applicable law. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore, there may be broker non-votes on Proposals 1 and 3 through 6.3.
Q: How many votes are needed to approve the proposal?
With respect to Proposal 1, Directorsdirectors will be elected by a plurality of the votes of the shares present or represented by proxy at the virtual Annual Meeting and entitled to vote. This means that the fourthree nominees receiving the highest number of votes at the virtual Annual Meeting will be elected, even if those votes do not constitute a majority of the votes cast. ”Withhold” votes and broker non-votes are not considered votes cast for the foregoing purpose, and will have no effect on the election of nominees.
With respect to Proposal 2, the affirmative vote of the majority of voting power of shares present or represented by proxy at the virtual Annual Meeting and entitled to vote is required for approval. Votes to “Abstain” are treated as cast “Against” this proposal. We do not expect there to be any broker non-votes with respect to Proposal Two.2.
With respect to Proposal 3, the affirmative vote of the majority of voting power of shares present or represented by proxy at the virtual Annual Meeting and entitled to vote is required for approval. Votes to “Abstain” are treated as cast “Against” this proposal and broker non-votes will have no effect on the vote for this proposal.
With respect to Proposal 4, stockholders may choose among four choices, “one year,” “two years,” “three years” and “Abstain” at the virtual Annual Meeting. Approval of the frequency of the advisory (non-binding) vote on named executive officer compensation requires a favorable vote of the majority of voting power of the shares present at the meeting or represented by proxy at the Annual Meeting and entitled to vote. However, if no choice receives a majority of the vote cast, then the choice of frequency that receives the highest number of votes will be considered the preference of our stockholders. Abstentions and broker non-votes will have no effect on the outcome of the vote for this proposal.
With respect to Proposal 5, the affirmative vote of the majority of voting power of shares present or represented by proxy at the virtual Annual Meeting and entitled to vote is required for approval. Votes to “Abstain” are treated as cast “Against” the proposal and broker non-votes will have no effect on the vote for this proposal.
With respect to Proposal 6, the affirmative vote of the majority of voting power of shares present or represented by proxy at the virtual Annual Meeting and entitled to vote is required for approval. Votes to “Abstain” are treated as cast “Against” this proposal and broker non-votes will have no effect on the vote for this proposal.
Q: How many votes do I have?
On each matter to be voted upon, each share of Class A common stock that you own as of the Record Date has one vote and each share of Class B common stock that you own as of the Record Date has ten votes.
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Q: What if I return a Proxy Card but do not make specific choices?
If we receive a signed and dated Proxy Card that does not specify how your shares are to be voted, your shares will be voted “For” the election of each of the fourthree nominees for director; “For” the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2022;2023; and “For” the non-binding approval of the compensation of our named executive officers; for every “One-Year” regarding the non-binding approval of the frequency of holding a stockholder vote on the compensation of our named executive officers; “For” the non-binding approval to retain the supermajority voting standards set forth in the Certificate and Bylaws; and “For” the non-binding approval to retain the classified structure of the Board.officers. If any other matter is properly presented at the Annual Meeting, your proxy (one of the individuals named on your Proxy Card) will vote your shares using their best judgment.
Q: Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In addition to those proxy materials received by mail or on the Internet, our directors, officers, and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors, officers, and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks, and other agents for the cost of forwarding proxy materials to beneficial owners.
Q: What does it mean if I receive more than one Notice of Internet Availability of Materials or more than one set of printed materials?
If you receive more than one Notice of Internet Availability of Materials or more than one set of printed materials, your shares are registered in more than one name or are registered in different accounts. In order to vote all the shares you own, you must follow the instructions for voting on each Notice of Internet Availability of Materials or Proxy Card you receive via mail or e-mail upon your request, which include voting over the Internet, telephone or by signing and returning any of the Proxy Cards you request and receive.
Q: Can I change or revoke my proxy after submitting my proxy vote?
Yes. YouYes, you can revoke your proxy vote at any time before the Annual Meeting by:
submitting a new vote on the Internet or by telephone or submitting a properly completed Proxy Card with a later date; or
sending a written notice that you are revoking your proxy, that is received prior to the Annual Meeting, to Ryan Specialty’s Corporate Secretary at Two Prudential Plaza, 180 North Stetson Ave., Suite 4600, Chicago, IL 60601.
submitting a new vote on the Internet or by telephone or submitting a properly completed Proxy Card with a later date; or |
• | sending a written notice that you are revoking your proxy, which is received prior to the Annual Meeting, to Ryan Specialty’s Corporate Secretary at Two Prudential Plaza, 180 North Stetson Ave., Suite 4600, Chicago, IL 60601. | ||||
If you are the record holder of your shares, you may also revoke your proxy vote by:
• | attending the virtual Annual Meeting and personally voting during the Annual Meeting prior to the close of the polls. Simply attending the virtual Annual Meeting without voting during the meeting will not, by itself, revoke your proxy. |
attending the virtual Annual Meeting and personally voting during the Annual Meeting prior to the close of the polls. Simply attending the virtual Annual Meeting without voting during the meeting will not, by itself, revoke your proxy.
Q: How will voting on any business not described in this Proxy Statement be conducted?
We are not aware of any business to be considered at the Annual Meeting other than the items described in this Proxy Statement. If any other matter is properly presented at the Annual Meeting, your proxy will vote your shares using their best judgment.
Q: What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting of stockholders. A quorum will be present if the holders of a majority in voting power of the shares of common stock issued and outstanding and entitled to vote are present at the virtual Annual Meeting or are represented by proxy at the virtual Annual Meeting. On the Record Date, there were there were 110,275,625113,233,651 shares of Class A common stock, with one vote each, and 148,872,773146,421,917 shares of Class B common stock, with 10 votes each. Accordingly, shares representing 799,501,678788,726,411 votes must be represented by stockholders present in person or by proxy at the virtual Annual Meeting to have a quorum.
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If you are a stockholder of record, your shares will be counted towards the quorum only if you submit a valid proxy vote or vote at the virtual Annual Meeting. If you are a beneficial owner of shares held in “street name,” your shares will be counted towards the quorum if your broker or nominee submits a proxy for your shares at the Annual Meeting, even a proxy which result in a broker non-vote due to the absence of voting instructions from you. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, either the chairperson of the Annual Meeting or a majority in voting power of the stockholders entitled to vote at the Annual Meeting, present at the virtual Annual Meeting or represented by proxy at the Virtual Annual Meeting, may adjourn the Annual Meeting to another time or place.
Q: How can I find out the results of the voting at the Annual Meeting?
The preliminary voting results will be announced at the Annual Meeting. Final voting results will be announced by the filing of a Current Report on Form 8-K within four business days after the Annual Meeting. If final voting results are unavailable at that time, we will file an amended Current Report on Form 8-K within four business days of the day the final results are available.
Q: What is the deadline for submitting a stockholder proposal or director nomination for the 20232024 Annual Meeting?
Stockholder proposals pursuant to SEC Rule 14a-8 for inclusion in our Proxy Statement and form of proxy for our 20232024 annual meeting of stockholders, to be held in 2023,2024, must be received by us at our principal executive offices at Two Prudential Plaza, 180 North Stetson Avenue, Suite 4600, Chicago, IL 60601 no later than the close of business on [December 27, 2022].November 21, 2023. Stockholders wishing to make a director nomination or bring a proposal before the annual meeting to be held in 20232024 (but not include it in our proxy materials) must provide written notice of such proposal to the Corporate Secretary at our principal executive offices no later than the close of business on March 9, 2023February 1, 2024, and not earlier than the close of business on February 7, 2023,January 2, 2024, assuming we do not change the date of the 20232024 annual meeting of stockholders by more than 30 days before or after the anniversary of the 20222023 Annual Meeting. If so, we will release an updated time frame for stockholder proposals. Any stockholder proposal or director nomination must comply with the other provisions of our Amended and Restated Bylaws and be submitted in writing to the Corporate Secretary at our principal executive offices. To comply with the universal proxy rules, (once effective), shareholdersstockholders who intend to solicit proxies in support of director nominees, other than the Company’s nominees, must provide notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) no later than April 8, 2023.March 2, 2024.
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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our business and affairs are managed under the direction of our Board, which is composed of twelve directors.Board. Our Certificate provides that the authorized number of directors may be changed only by resolution of our Board. At each annual meeting of stockholders, a class of directors will be elected for a three-year term to succeed the class whose term is then expiring.
Board Composition
The Board is saddened by the recent passing of our Lead Director and friend, Andrew J. McKenna. Mr. McKenna served with dedication and distinction on our Board from its formation in 2012 until his passing on February 7, 2023. Ryan Specialty was made a better company owing in large part to his dedication and contributions. This Company and the insurance industry will benefit greatly in perpetuity from Mr. McKenna’s contributions.
Pursuant to the Company’s Certificate and with the consent of the Ryan Parties (defined below) pursuant to the Director Nomination Agreement, the Board adopted resolutions to set the size of the Board of Directors at eleven members, eliminating the vacancy created by Mr. McKenna’s passing. The Board currently consists of eleven members and is divided into three classes, two with four members and one with three members. The members of the three classes are elected to serve for staggered terms of three years.
Director Nomination Agreement
In connection with the Company’s initial public offering in July of 2021 (the “IPO”), the Company entered into a Director Nomination Agreement with Patrick G. Ryan, our founder, Chairman, and Chief Executive Officer and certain members of his family and various entities and trusts over which Patrick G. Ryan and his family exercise control (collectively, the “Ryan Parties”) and Onex RSG Holdings LP, a Delaware limited partnership (“Onex”) and affiliate of Onex Corporation.
The Director Nomination Agreement provides the Ryan Parties and Onex the right to nominate certain members of our Board based on the number of shares of the Company’s common stock held by the Ryan Parties and Onex, respectively. The Director Nomination Agreement provides the Ryan Parties the right to designate (in each instance, rounded up to the nearest whole number if necessary): (i) all of the nominees (with the exception of the nominee of Onex, if applicable) for election to our Board for so long as the Ryan Parties control, in the aggregate, 50% or more of the total number of shares of our common stock beneficially owned by the Ryan Parties upon completion of the IPO, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or similar changes in our capitalization (the “Original Amount”); (ii) 50% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 40%, but less than 50% of the Original Amount; (iii) 40% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 30%, but less than 40% of the Original Amount; (iv) 30% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 20%, but less than 30% of the Original Amount; and (v) 20% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 10%, but less than 20% of the Original Amount, which could result in representation on our Board that is disproportionate to the Ryan Parties’ beneficial ownership. Upon the death or disability of Patrick G. Ryan, or at such time that he is no longer on the Board or actively involved in the operations of the Company, the Ryan Parties will no longer hold the nomination rights specified in (i) through (v); however, the Ryan Parties will have the right to designate one nominee for so long as the Ryan Parties control, in the aggregate, 10% or more of the Original Amount.
Onex has the right to designate one nominee for election to our Board for so long as Onex controls more than 50% of the total number of shares of our common stock beneficially owned by Onex upon completion of the IPO, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or similar changes in our capitalization.
In addition, for so long as the Ryan Parties hold the nomination rights specified in (i) through (v), the Ryan Parties have the right to nominate the chairmanchairperson of the Board. The Director Nomination Agreement also provides that the Ryan Parties and Onex may
2023 Proxy Statement 8 | ||||||
assign such rights to an affiliate. Currently, the Ryan Parties can nominate all of the nominees for the Board with the exception of the nominee of Onex, currently Robert Le Blanc. The Director Nomination Agreement also prohibits us from increasing or decreasing the size of our Board without the prior written consent of the Ryan Parties. See “Certain“Certain Relationships and Related Party Transactions — Director Nomination Agreement”Agreement” for more details with respect to the Director Nomination Agreement.
In addition, at any time when the Ryan Parties have the right to designate at least one nominee for election to our Board, the Ryan Parties will also have the right to have one of their nominated directors hold one seat on each Board committee, subject to satisfying any applicable stock exchange rules or regulations regarding the independence of Board committee members. The Listing Standards of the NYSE require that, subject to specified exceptions, each member of a listed company’s audit and compensation and governance committees be independent and that Audit Committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act.
Classified Board
Our Certificate provides that our Board be divided into three classes of directors, with the classes as nearly equal in number as possible. Our Certificate also provides that our directors may be removed with or without cause by the affirmative vote of at least a majority of the voting power of our outstanding shares of common stock entitled to vote thereon, voting together as a single class for so long as the Ryan Parties beneficially own 40% or more, in the aggregate, of the total number of shares of our common stock then outstanding. If the Ryan Parties’ aggregate beneficial ownership falls below 40% of the total number of shares of our common stock outstanding, then our directors may be removed only for cause upon the affirmative vote of at least 66 2/3% of the voting power of our outstanding shares of common stock entitled to vote thereon.
The table below sets forth for each director nominee, and all continuing directors, their respective ages as of the Record Date, the positions currently held with the Company (if any), the year each was first elected or appointed a director of the Company, the year their current term will expire, and their current class.
Nominee/Director Name | Age | Position | Director Since(1) | Current Term Expires | Director Class |
Age |
Position | Director Since(1) | Current Term Expires | Director Class | ||||||||||
Nomination for Class I Director | ||||||||||||||||||||
Henry S. Bienen | 82 | Director | 2012 | 2022 | I | |||||||||||||||
William J. Devers | 88 | Director | 2013 | 2022 | I | |||||||||||||||
Michael D. O’Halleran | 71 | Director | 2018 | 2022 | I | |||||||||||||||
Timothy W. Turner | 61 | President and Director | 2012 | 2022 | I | |||||||||||||||
Nomination for Class II Director | Nomination for Class II Director | |||||||||||||||||||
David P. Bolger | 65 | Director | 2012 | 2023 | II | |||||||||||||||
Nicholas D. Cortezi | 56 | Chairman of Ryan Specialty Underwriting Managers and Director | 2021 | 2023 | II | |||||||||||||||
Robert Le Blanc | 56 | Director | 2018 | 2023 | II | |||||||||||||||
Continuing Directors | Continuing Directors | Continuing Directors | ||||||||||||||||||
Patrick G. Ryan | 84 | CEO and Chairman of the Board | 2010 | 2024 | III | 85 | CEO and Chairman of the Board | 2010 | 2024 | III | ||||||||||
David P. Bolger | 64 | Director | 2012 | 2023 | II | |||||||||||||||
Henry S. Bienen | 83 | Director | 2012 | 2025 | I | |||||||||||||||
Michelle L. Collins | 62 | Director | 2021 | 2024 | III | 62 | Director | 2021 | 2024 | III | ||||||||||
Nicholas D. Cortezi | 55 | Chairman of RSG Underwriting Managers and Director | 2021 | 2023 | II | |||||||||||||||
William J. Devers | 89 | Director | 2013 | 2025 | I | |||||||||||||||
D. Cameron Findlay | 62 | Director | 2012 | 2024 | III | 63 | Lead Director | 2012 | 2024 | III | ||||||||||
Robert Le Blanc | 55 | Director | 2018 | 2023 | II | |||||||||||||||
Andrew J. McKenna | 92 | Director | 2012 | 2023 | II | |||||||||||||||
Michael D. O’Halleran | 72 | Director | 2018 | 2025 | I | |||||||||||||||
John W. Rogers, Jr. | 64 | Director | 2014 | 2024 | III | 64 | Director | 2014 | 2024 | III | ||||||||||
Timothy W. Turner | 62 | President and Director | 2012 | 2025 | I |
(1) | For all directors other than Ms. Collins and Mr. Cortezi, this column reflects the date that the director joined the Board of Ryan Specialty, |
Board Leadership and Structure
The following section describes our Board leadership structure, the reasons why the structure is in place at this time, the roles of various positions, and related key governance practices. The mix of experienced independent and management directors that make up our Board, along with the independent role of our lead directorLead Director and our independent board-committee composition, benefits us and our stockholders.
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Director Independence; Board Mix
Our Board has an effective mix of independent and management directors. It is composed of eightseven independent directors,directors; our Chief Executive Officer and Chairman, Patrick G. Ryan,Ryan; our President, Timothy W. Turner,Turner; the Chairman of RSGRyan Specialty Underwriting Managers, Nicholas D. Cortezi,Cortezi; and the Executive Chairman of Geneva Re, and one of our senior advisors, Michael D. O’Halleran.
The NYSE Listed Company Manual requires directors to satisfy certain criteria to be deemed “independent.” The Board applies these standards in determining whether any director has a material relationship with the Company that would impair their independence, as discussed below. As required by the NYSE Listed Company Manual, the Board considers all material relevant facts and circumstances known to it in making an independence determination, from the standpoints of both the director and persons or organizations with which the director has an affiliation.
Our Board has determined that Mr. Bienen, Mr. Bolger, Ms. Collins, Mr. Devers, Mr. Findlay, Mr. Le Blanc, Mr. McKenna and Mr. Rogers meet the requirements to be independent directors. In making this determination, our Board considered the
relationships that each such non-employee director has with the Company and all other facts and circumstances that our Board deemed relevant in determining their independence, including beneficial ownership of our common stock. Mr. Le Blanc is affiliated with Onex, which currently owns less than 5% of our total outstanding combined Class A common stock and Class B common stock. After concluding that Mr. Le Blanc’s affiliation with Onex was not a material relationship, the Board determined that Mr. Le Blanc was independent under the NYSE’s general independence standards. The NYSE does not take the position that ownership of equity in our companyCompany by itself precludes the Board’s finding of independence.
Lead Director and Executive Session
Our Board has designateddesignates one of our non-employee independent directors Andrew J. McKenna, as a Lead Director of our Board (the “Lead Director”). The late Mr. McKenna served in this capacity throughout 2022 and until his recent passing. The Board has appointed D. Cameron Findlay to succeed Mr. McKenna in the position of Lead Director. The Board believes that it is beneficial for us and our stockholders to have a Lead Director who will serve a variety of roles, including presiding at the executive sessions of independent directors, and at all other meetings of the Board at which the chairmanchairperson of the Board is not present, and calling an executive session of non-employee directors at any time, consistent with our Corporate Governance Guidelines.
Non-employee directors of the Board meet outside the presence of other directors in executive sessions, held in conjunction with our regular Board meetings. In addition, our non-employee directors meet in executive session at least once per year and our Lead Director presides at all such executive sessions.
The table below sets forth for each director nominee, and all continuing directors their respective ages as of the Record Date, the positions currently held with the Company (if any), the year each was first elected or appointed a director of the Company, the year their current term will expire and their current class.
ChairmanChairperson and CEO
With respect to the roles of chairmanchairperson and CEO, the Corporate Governance Guidelines provide that the roles may be separated or combined, and the Board will exercise its discretion in combining or separating these positions as it deems appropriate in light of prevailing circumstances. Mr. Ryan, the founder of our Company, has been at the helm of our business since its formation and has continued as the Company’s chairman and CEO following our IPO. The Board believes that combining the roles of chairmanchairperson and CEO, together with the separate, independent role of our Lead Director, is currently the most effective leadership structure because Mr. Ryan has extensive knowledge and industry leading experience in the area of insurance through his leadership at both Aon Corporation and our Company, and a strong understanding of our business as the founder of our Company in 2010. This knowledge and experience provides Mr. Ryan the insight necessary to combine the responsibilities of strategic development and execution along with management of day-to-day operations.
Self EvaluationSelf-Evaluation
Pursuant to its charter, our Compensation and Governance Committee is developing, subject to approval by the Board,developed and overseeingoversees a process for an annual evaluation of the Board, its committees, individual directors, and management. The Compensation and Governance Committee plans to complete thiscompleted the first annual evaluation prior to the endin November of 2022.
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As part of the annual Board self-evaluation, the Board evaluates whether the size, composition, and responsibilities of our Board and its committees and our Corporate Governance Guidelines continue to be appropriate for us and our stockholders. Our Corporate Governance Guidelines provide the flexibility for our Board to modify our leadership structure in the future as appropriate.
Meetings and Attendance
During 2021, following our IPO in July 2021,2022, our Board held twofour regularly scheduled meetings and one special meeting.meetings. Each incumbent director serving since our IPO attended at least 75% of the total number of Board meetings, and at least 75% of the total number of meetings of committees of which such director is a member. The Board expects, but does not require, directors to attend the virtual Annual MeetingMeeting. Each of Stockholders. There was no priorour directors attended the 2022 annual meeting of stockholders for the Board to attend.stockholders.
All Board and Board committee meetings during 20212022 were conducted virtually due to the COVID-19 pandemic.virtually.
Board Committees
Our Board has an Audit Committee, a Compensation and Governance Committee, and an Executive Committee. The composition, duties, and responsibilities of these committees are as set forth below. In the future, our Board may establish other committees, as it deems appropriate, to assist it with its responsibilities.
Board Member | Audit Committee | Compensation and Governance Committee | Executive Committee | |||
Patrick G. Ryan | Chair | |||||
Henry S. Bienen | X | |||||
David P. Bolger | Chair | |||||
Michelle L. Collins | X | |||||
Nicholas D. Cortezi | X | |||||
William J. Devers | X | |||||
D. Cameron Findlay | Chair | X | ||||
Robert Le Blanc | X | |||||
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Michael D. O’Halleran | ||||||
John W. Rogers, Jr. | X | X | ||||
Timothy W. Turner | X |
Audit Committee
Our Audit Committee is composed of Mr. Bienen, Mr. Bolger, Ms. Collins, and Mr. Devers, with Mr. Bolger serving as chairperson of the committee. The Board has determined that all of the members of the Audit Committee are independent directors and meet the independence requirements of Rule 10A-3 under the Exchange Act and the applicable listing standards of the NYSE. Our Board has determined that all members of our Audit Committee are “financially literate” under the applicable listing standards of the NYSE and that Mr. Bolger is an “audit committee financial expert” within the meaning of SEC regulations and applicable listing standards of the NYSE. Since our IPO in July 2021, theThe Audit Committee held twofour regularly scheduled meetings and one special meeting in 2021.2022. The Audit Committee’s responsibilities include:
appointing, approving the compensation of, and assessing the qualifications, performance and independence of our independent registered public accounting firm;
• | appointing, approving the compensation of, and assessing the qualifications, performance, and independence of our independent registered public accounting firm, including an evaluation of the lead audit partner; |
pre-approving audit and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;
• | pre-approving audit and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm; |
discussing on a periodic basis, or as appropriate, with management, our policies, programs and controls with respect to risk assessment and risk management;
reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;
reviewing our management’s discussion and analysis of financial condition and results of operations to be included in our annual and quarterly reports to be filed with the SEC;
reviewing and discussing with management our earnings releases and scripts;
monitoring the rotation of partners of the independent registered public accounting firm on our engagement team in accordance with requirements established by the SEC;
monitoring and assessing the performance of the Company’s internal audit function, reviewing the scope and results of the internal audit;
reviewing management’s report on its assessment of the effectiveness of internal control over financial reporting and any changes thereto;
reviewing the adequacy of our internal control over financial reporting;
• | discussing on a periodic basis, or as appropriate, with management, our policies, programs and controls with respect to risk assessment and risk management; |
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establishing policies and procedures for the receipt, retention, follow-up and resolution of accounting, internal controls or auditing matters, complaints and concerns;
• | reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us; |
recommending, based upon the Audit Committee’s review and discussions with management and the independent registered public accounting firm, whether our audited financial statements shall be included in our Annual Report on Form 10-K;
• | reviewing our management’s discussion and analysis of financial condition and results of operations to be included in our annual and quarterly reports to be filed with the SEC; |
monitoring our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;
• | reviewing and discussing with management our earnings releases; |
preparing the Audit Committee report required by the rules of the SEC to be included in our annual proxy statement;
• | monitoring the rotation of partners of the independent registered public accounting firm on our engagement team in accordance with requirements established by the SEC; |
reviewing and assessing annually treasury functions including cash management processes;
• | monitoring and assessing the performance of the Company’s internal audit function and reviewing the scope and results of the internal audit; |
investigating any matters received, and reporting to the Board periodically, with respect to ethics issues, complaints and associated investigations;
• | reviewing management’s report on its assessment of the effectiveness of internal controls over financial reporting and any changes thereto; |
reviewing the Audit Committee charter and the committee’s performance at least annually;
• | reviewing the adequacy of our internal controls over financial reporting and disclosure controls and procedures; |
consulting with management to establish procedures and internal controls relating to cybersecurity; and
• | establishing policies and procedures for the receipt, retention, follow-up, and resolution of accounting, internal controls or auditing matters, complaints and concerns; |
• | recommending, based upon the Audit Committee’s review and discussions with management and the independent registered public accounting firm, whether our audited financial statements shall be included in our Annual Report on Form 10-K; |
reviewing all related party transactions for potential conflict of interest situations and approving or ratifying all such transactions.
• | monitoring our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters; |
• | preparing the Audit Committee report required by the rules of the SEC to be included in our annual proxy statement; |
• | reviewing and assessing annually tax and treasury functions, including cash management processes; |
• | investigating any matters received, and reporting to the Board periodically, with respect to ethics issues, complaints, and associated investigations; |
• | reviewing the Audit Committee charter and the committee’s performance at least annually; |
• | consulting with management to establish procedures and internal controls relating to cybersecurity; and |
• | reviewing all related party transactions for potential conflict of interest situations and approving or ratifying all such transactions. |
Our Audit Committee charter is available on our website at ryansg.com.ryanspecialty.com. To access the charter, go to our website, click on the “Investors” tab and then click on “Governance/Governance Documents” to download or view the charter.
Compensation and Governance Committee
Our Compensation and Governance Committee is composed of Mr. Findlay, Mr. Le Blanc, Mr. McKenna and Mr. Rogers, with Mr. Findlay serving as chairperson of the committee. The Board has determined that all of the members of the Compensation and Governance Committee are independent directors and meet the independence requirements of the applicable Listing Standardslisting standards of the NYSE. Since our IPO in July 2021, theThe Compensation and Governance Committee held twofive regularly scheduled meetings in 2021.2022. The Compensation and Governance Committee’s responsibilities include:
developing and recommending to our Board best practices and corporate governance principles;
• | developing and recommending to our Board best practices and corporate governance principles; |
developing and recommending to our Board a set of corporate governance guidelines;
• | developing and recommending to our Board a set of corporate governance guidelines; |
reviewing and recommending to our Board the functions, duties and compositions of the committees of our Board;
• | reviewing and discussing with management the Company’s Environmental, Social and Governance strategy, initiatives, and policies; |
developing and recommending to our Board criteria for Board and committee membership;
• | reviewing and recommending to our Board the functions, duties, and compositions of the committees of our Board; |
subject to the rights of the Ryan Parties and Onex under the Director Nomination Agreement as described in “Certain Relationships and Related Party Transactions — Director Nomination Agreement,” identifying and recommending to our Board the persons to be nominated for election as directors and to each of our Board’s committees;
• | developing and recommending to our Board criteria for Board and committee membership; |
assisting our Board with orientation and continuing education of directors;
overseeing the annual evaluations of our Board and our Board committees;
establishing and overseeing the Company’s succession, leadership and talent development planning and process;
annually reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer;
evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and determining and approving the compensation of our Chief Executive Officer;
reviewing and approving the compensation of our other executive officers;
appointing, compensating and overseeing the work of any compensation consultant, legal counsel or other advisor retained by the Compensation and Governance Committee;
conducting the independence assessment outlined in NYSE rules with respect to any compensation consultant, legal counsel or other advisor retained by the Compensation and Governance Committee;
• | subject to the rights of the Ryan Parties and Onex under the Director Nomination Agreement as described in “Certain Relationships and Related Party Transactions — Director Nomination Agreement,” identifying and recommending to our Board the persons to be nominated for election as directors and to each of our Board’s committees; |
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annually reviewing and reassessing the adequacy of the committee charter in its compliance with the listing standards of the NYSE;
• | assisting our Board with orientation and continuing education of directors; |
reviewing and establishing our overall management compensation, philosophy and policy;
• | overseeing the annual evaluations of our Board and our Board committees; |
overseeing and administering our compensation and similar plans, including any equity incentive plans;
• | establishing and overseeing the Company’s succession, leadership, and talent development planning and process; |
reviewing and making recommendations to our Board with respect to director compensation; and
• | reviewing periodically a group of peer companies against which to benchmark the compensation of the Company’s executive officers; |
• | reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer; |
reviewing and discussing with management the compensation discussion and analysis to be included in our annual proxy statement or Annual Report on Form 10-K.
• | evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and determining and approving the compensation of our Chief Executive Officer; |
• | reviewing and approving the compensation of our other executive officers; |
• | appointing, compensating, and overseeing the work of any compensation consultant, legal counsel, or other advisor retained by the Compensation and Governance Committee; |
• | conducting the independence assessment outlined in the NYSE’s rules with respect to any compensation consultant, legal counsel, or other advisor retained by the Compensation and Governance Committee; |
• | reviewing the Company’s incentive compensation arrangements to determine whether they encourage excessive risk-taking; |
• | reviewing the Company’s diversity, equity, and inclusion programs, policies, and practices to determine their effectiveness; |
• | reviewing and reassessing the adequacy of the committee charter in its compliance with the listing standards of the NYSE; |
• | reviewing and establishing our overall management compensation philosophy and policies; |
• | overseeing and administering our compensation and similar plans, including any equity incentive plans; |
• | reviewing and making recommendations to our Board with respect to director compensation; |
• | reviewing and discussing with management the Company’s corporate governance practices to be included in our annual proxy statement or Annual Report on Form 10-K; and |
• | reviewing and discussing with management the compensation discussion and analysis to be included in our annual proxy statement or Annual Report on Form 10-K. |
Our Compensation and Governance Committee charter is available on our website at ryansg.com.ryanspecialty.com. To access the charter, go to our website, click on the “Investors” tab and then click on “Governance/Governance Documents” to download or view the charter.
Executive Committee
Our Executive Committee is composed of Mr. Cortezi, Mr. Findlay, Mr. McKenna, and Mr. Rogers, Mr. Ryan, and Mr. Turner, with Mr. Ryan serving as chairperson of the committee. During intervals between meetings of the Board, the Executive Committee has and may exercise the power and authority of the Board in directing the management of the business and affairs of the Company, including but not limited to the power and authority to declare dividends, except as may be limited by applicable law, our Certificate, Bylaws, or by resolution of the Board.
Risk Oversight
The Board’s role regarding enterprise risk oversight is delegated to the Audit Committee. Pursuant to its charter, our Audit Committee is responsible for establishingreviewing and maintainingdiscussing with management our enterprise risk management process.framework. Taking into consideration the allocation of responsibility for risk oversight to the other committees of the Board, the Audit Committee is responsible for reviewing and discussing with management, on a periodicperiod basis or as appropriate, the risks faced by us and policies, guidelines, and processes by which management assesses and manages our risks, including our major financial risk exposures and the steps management has taken to monitor and control such exposures. The Audit Committee is also responsible for consultingreviewing and discussing with management to establishthe Company’s procedures and internal controls relating to cybersecurity. As we are a new public company, ourOur Audit Committee is continuing to work with management to implement these processes.processes as we mature as a company. During 2022, the Company hired a Chief Risk Officer.
The Compensation and Governance Committee reviews our compensation risk assessment. For more information, please see “Executive Compensation: Compensation Discussion and Analysis — Compensation Decision Process and Methodology.”
2023 Proxy Statement 13 | ||||||
Stockholder Recommendations for Director Nominees
The Compensation and Governance Committee will consider stockholder nominations for membership on the Board that conform to the requirements of our Bylaws. For the 20232024 annual meeting, nominations may be submitted to Ryan Specialty Group Holdings, Inc., Two Prudential Plaza, 180 NN. Stetson Ave., Suite 4600, Chicago, IL 60601, Attn: General Counsel and Corporate Secretary, and such nominations will then be forwarded to the chairperson of the Compensation and Governance Committee. Recommendations must be in writing, and we must receive the recommendation no later than March 9, 2023,February 1, 2024, and not earlier than February 7, 2023.January 2, 2024. Recommendations must also includesatisfy certain other procedural requirements as specified in our Bylaws.
When filling a vacancy on the Board, the Compensation and Governance Committee identifies the desired skills and experience of a new director and, subject to the Director Nomination Agreement, nominates individuals who it believes can strengthen the Board’s capabilities and further diversify the collective experience represented by the then-current directors. The Compensation and Governance Committee may engage third parties to assist in the search and provide recommendations. Also, directors are generally asked to recommend candidates for the position. The candidates are then evaluated based on the process outlined in our Corporate Governance Guidelines and the Compensation and Governance Committee charter, and the same process is used for all candidates, including candidates recommended by stockholders.
Compensation Committee Interlocks and Insider Participation
None ofPatrick G. Ryan, our executive officers currentlyCEO, serves or in the past fiscal year has served, as a member of the Board orand as a member of the compensation committee of any entity that has one or more executive officers servingGeneva Re, a joint venture. The Executive Chairman of Geneva Re, Michael D. O’Halleran, serves on our Board or compensation committee.Board. For more information relating to Geneva Re, please see the section entitled “2022 Related Party Transactions — Ryan Re and Geneva Re.”
Board Matrix
Each director possesses certain personal qualities and attributes that we believe are essential for the proper functioning of the Board to fulfill its duties to our stockholders. The following matrix provides information regarding each nominee for election as a director and each continuing director, including certain types of experiences and skills that the Board has determined are important. The matrix does not encompass all the experiences and skills of our directors, and the fact that a particular experience or skill is not listed does not mean that a director does not possess it. In addition, the director biographies below include a non-exhaustive list of other key experiences and qualifications that further qualify the individual to serve on our Board. These collective qualities, skills, experiences, and attributes are essential to our Board’s ability to exercise its oversight function for us and our stockholders and guide our long-term sustainable, dependable performance.
Director Name | Leadership Experience | Financial or Accounting Acumen | Industry Experience | Operational Experience | Public Company
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Patrick G. Ryan | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||
Henry S. Bienen | ü | ü | ü | ü | |||||||||||||||||||||||||||||||||
David P. Bolger | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||
Michelle L. Collins | ü | ü | ü | ü | |||||||||||||||||||||||||||||||||
Nicholas D. Cortezi | ü | ü | ü | ||||||||||||||||||||||||||||||||||
William J. Devers | ü | ü | ü | ||||||||||||||||||||||||||||||||||
D. Cameron Findlay | ü | ü | ü | ü | |||||||||||||||||||||||||||||||||
Robert Le Blanc | ü | ü | ü | ü | |||||||||||||||||||||||||||||||||
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Michael D. O’Halleran | ü | ü | ü | ü | |||||||||||||||||||||||||||||||||
John W. Rogers, Jr. | ü | ü | ü | ||||||||||||||||||||||||||||||||||
Timothy W. Turner | ü | ü | ü | ||||||||||||||||||||||||||||||||||
2023 Proxy Statement 14 | ||||||
Governance Policies
Corporate Governance Guidelines
We have adopted a set of Corporate Governance Guidelines, which are available on our website at www.ryansg.com.www.ryanspecialty.com. To access the Corporate Governance Guidelines, go to our website, click on the “Investors” tab and then click on “Governance/Governance Documents” to download or view the Corporate Governance Guidelines.
Code of Conduct
We have adopted a Code of Conduct that applies to all of our employees, contractors, officers, and directors, including those officers responsible for financial reporting. The Code of Conduct is available on our website at www.ryansg.com.www.ryanspecialty.com. To access our Code of Conduct, go to our website, click on the “Investors” tab and then click on “Governance/Governance Documents” to download or view the code.
We intend to disclose any amendments to the code, or any waivers of its requirements, on our website. Since our IPO, we have not amended the code or waived any of its provisions.
Anti-Hedging and Anti-Pledging Policies
The Company prohibits directors and executive officersemployees from pledging any Company shares including by entering into margin accounts, and prohibits directors and all employees from engaging in hedging transactions with respect to ownership in the Company’s securities (including prepaid variable forward contracts, equity swaps, collars and exchange funds, except as explicitly approved byin accordance with our CEOinsider trading policy.
Diversity
At Ryan Specialty, inclusion is one of our foundational values. To help us incorporate this value into our everyday lives, we are developing a plan to support our Diversity, Equity & Inclusion (DEI) journey. We are committed to building, growing, and General Counsel).
Diversity
sustaining a diverse workforce reflective of society throughout the entirety of the organization. Our vision is an inclusive and equitable workplace where all employees are valued and evaluated based on their performance and contributions. Differences in race, ethnicity, creed, color, religious beliefs, gender identity, sexual orientation, and other diversity demographics are considered corporate assets because bringing together varied perspectives, backgrounds, and experiences better serves our clients, trading partners, workforce, and communities. The Company is committed to fostering diversity within our organization and throughout the insurance industry.
We have achieved some measure of success in accomplishing gender diversity at Ryan Specialty with more than half of our workforce identifying as female, including in senior management positions.female. Our Board is 16.6%approximately 18% African American, with Michelle L. Collins and John W. Rogers, Jr. serving as directors and as members of our Audit and Compensation and Governance Committees, respectively. We fully recognize, however, that we have more work to do.
In 2020, motivated in part by the events that unfolded in the aftermath of the killing of George Floyd, we formed a Diversity, Equity and Inclusion Council comprised of executive leaders and non-executive employees. The Council’s mission is to guide Ryan Specialty in further building and sustaining a diverse workforce reflective of society throughout the entirety of the organization. Our vision is of a workplace free of consciousThe Council advanced our DEI initiatives and unconscious bias where all employees are valued and evaluated based on their performance and contributions. Differences in race, creed, color, religious beliefs, background, physical ability, gender identity or sexual orientation are consideredhas since been supplanted by a corporate assetDEI function. This function is led by bringing together varied perspectivesour recently appointed Head of DEI and Vice President of DEI who will further evolve our DEI program to better serve our clients, trading partners,where everyone will have the opportunity to be involved and communities.contribute to create a culture and environment where people can be their best selves and do their best work.
We have also engaged Korn Ferry, a recognized leader in Diversity, Equity and Inclusion consulting, to assist us with further developing our short- and long-term goals as well as the methodology for achieving those goals. We are confident that Korn Ferry’s thorough and immersive process will yield sustainable and enduring results.
With the Council’s guidance, support of the Company’s leadership and Korn Ferry’s consultation, we have supported several significant initiatives with the primary purpose of enhancing diversity within our Company and in the insurance industry. We have partnered with the Ryan Insurance Program for Success and Equal Opportunity (R.I.S.E ), established by the familyAs part of our Chairman and CEO Pat Ryan, in launching a Risk Management Program at the Historically Black College Fisk University. One objective of that programDEI journey, our strategy is to collaborate with otherspromote DEI at Ryan Specialty, in addition to building strong DEI alliances and partnerships within the insurance industry in placing Fisk students in internship programs and assisting them in finding post-graduate employment in the insurance industry, including at Ryan Specialty. We have also initiated a professional development program for two inner-city high schools in Chicago, Leo High Schoolour communities to attract, support, develop, and Providence St. Mel, with the goal of raising the awareness of their students about career opportunities in the insurance industry. We believe that through these effortsretain diverse talent. By doing this, we can makebuild a lasting impact towards attracting more diverse talent to our industry while also positively impacting the life opportunities and trajectories of these young people.
Ryan Specialty also has joined a broader insurance industry initiative as an inaugural member of the Insurance Industry Executive of Color Leadership Roundtable. The intent of the Leadership Roundtable is to seek opportunities and areas of growth to ensure that our industry is properly positioned to attract, retain and support the advancement and development of people of color in our industry and within their respective companies.better future together.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
As described below, and in accordance with the Director Nomination Agreement, the Board has nominated Henry S. Bienen, William J. Devers, MichaelDavid P. Bolger, Nicholas D. O’HalleranCortezi, and Timothy W. TurnerRobert Le Blanc for election as Class III directors at the Annual Meeting. Messrs. Bienen, Devers, O’HalleranBolger, Cortezi, and TurnerLe Blanc have each indicated their willingness to serve if elected.
Nomination of Directors
The Compensation and Governance Committee of our Board identifies, evaluates, and recommends to the Board potential nominees for election to the Board, subject to the Director Nomination Agreement. In reviewing potential nominees, the Compensation and Governance Committee considers the qualifications of each potential nominee with the qualification standards set forth in its committee charter and in our Corporate Governance Guidelines. Specifically, the Compensation and Governance Committee considers, among other things, (i) each potential nominee’s past attendance and performance at Board meetings and committee meetings, if applicable, (ii) the nominee’s ability to represent all stockholders without a conflict of interest, (iii) the nominee’s ability to work in and promote a productive environment, (iv) whether the nominee has sufficient time and willingness to fulfill the substantial duties and responsibilities of a director, (v) whether the nominee has demonstrated the high level of character, ethics, and integrity expected by the Company, (vi) whether the nominee possesses the broad professional and leadership experience and skills necessary to effectively respond to the complex issues encountered by a publicly-traded company, (vii) the nominee’s ability to apply sound and independent business judgment, and (viii) the diverse attributes of the nominee. The Board membership criteria are set forth in our Corporate Governance Guidelines and Compensation and Governance Committee charter, copies of which are available under the tabs “Investors > Governance > Governance Documents” on our website at www.ryansq.com.www.ryanspecialty.com. After reviewing the qualifications of potential Board candidates, the Compensation and Governance Committee presents its recommendations to the Board, which selects the final director nominees, subject to the Director Nomination Agreement.
Upon the recommendation of the Compensation and Governance Committee, and subject to the Director Nomination Agreement, the Board has nominated Henry S. Bienen, William J. Devers, MichaelDavid P. Bolger, Nicholas D. O’HalleranCortezi and Timothy W. TurnerRobert Le Blanc for election as Class III directors. The Company did not pay any fees to any third parties to identify or assist in identifying or evaluating nominees for the Annual Meeting. The Compensation and Governance Committee considers stockholder nominees using the same criteria set forth above. Stockholders who wish to present a potential nominee to the Compensation and Governance Committee for consideration for election at a future annual meeting of stockholders must provide the Compensation and Governance Committee with notice of the recommendation and certain information regarding the candidate as described in our Bylaws and within the time periods set forth under the caption “Advance Notice“Proposals of Stockholder BusinessStockholders and Director Nominations.Communications with our Board.”
Pursuant to our Corporate Governance Guidelines, the Company endeavors to have a Board consisting of directors who possess the highest personal and professional ethics, integrity and values and who are committed to representing the long-term interests of the Company and its stockholders. The Compensation and Governance Committee will also considertake into account such factors as diversity, including but not limited to differences in viewpoints, perspectives, background, education, race,race/ethnicity, creed, color, religious beliefs, physical ability, gender identity, or sexual orientation, age, geography, competencies, experience and other individual qualifications and attributes.diversity demographics. The Company is committed to considering candidates for the Board regardless of gender, race, ethnicity, national origin or other diverse attributes.diversity, equity, and inclusion.
Nominees and Incumbent Directors
Subject to the Director Nomination Agreement, the Compensation and Governance Committee has recommended, and the Board has nominated, Messrs. Bienen, Devers, O’HalleranBolger, Cortezi, and TurnerLe Blanc to be reelected as Class III directors at the virtual Annual Meeting.
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Class III Directors: Nominees
DAVID P. BOLGER David P. Bolger has served on our Board since 2012 and is the chairman of the Audit Committee. Mr. Bolger served as Chief Operating Officer of Chicago 2016, the effort to bring the 2016 Olympic and Paralympic Games to Chicago. From 2004 to 2019, Mr. Bolger served on the Board of Directors of MB Financial, Inc. From 2003 to 2008, he served as Executive Vice President and Chief Financial Officer of Aon Corporation. Prior to joining Aon, Mr. Bolger served in multiple executive positions at Bank One Corporation and its predecessor companies. He earned a Bachelor of Science in Accounting and Finance from Marquette University and a Master of Management from Northwestern University Kellogg School of Management. We believe Mr. Bolger is qualified to serve on our Board due to his extensive insurance industry, accounting and finance experience. |
Dr. Bienen has served on our Board since 2012 and is a member of the Audit Committee. Dr. Bienen served as Northwestern University’s president from 1995 through 2009 and currently serves as president emeritus of Northwestern University. He was the James S. McDonnell Distinguished University Professor and dean of the Woodrow Wilson School of Public and International Affairs at Princeton University prior to his appointment at Northwestern. Dr. Bienen is Emeritus Trustee of the Chicago Council on Global Affairs. Additionally, Dr. Bienen is on the Boards of Directors of Hedge Fund Guided Portfolio Solutions and Grosvenor Multi Strategy Funds, chairs the Advisory Committee of The Vistria Group’s Education Investments, serves as Chairman of the Board of Directors for Rasmussen College, and is a lifetime member of the Board of MetroSquash, an urban squash and education program in Chicago. Furthermore, Dr. Bienen is Chairman of the Board of the Crown Center on the Middle East Studies at Brandeis University and a member of the Board of the Lucas Museum of Narrative Art. Dr. Bienen is also a consultant for Academic Partnerships, an online project manager for regional public universities. Dr. Bienen served on the Board of Bear Stearns Companies, Inc. He earned a Bachelor of Arts from Cornell University with honors, as well as a Master of Political Science and a PhD in Political Science from the University of Chicago. We believe Dr. Bienen is qualified to serve on our Board due to his extensive experience as a director on the boards of other for-profit companies.
Nicholas D. Cortezi has served on our Board since our IPO in July 2021 and as the Chairman of Ryan Specialty Underwriting Managers since September 2020. Mr. Cortezi is a member of our Executive Committee. In 1987, Mr. Cortezi joined All Risks and was promoted to CEO in 1999. He served as CEO of All Risks until its acquisition by Ryan Specialty in September 2020. Mr. Cortezi has served on the boards of the Independent Insurance Agents of Baltimore, Independent Insurance Agents of Maryland, the National Association of Surplus Lines Offices (“NAPSLO”) (now known as the Wholesale & Specialty Insurance Association (“WSIA”)) and was President of NAPSLO between 2002 and 2003. Mr. Cortezi earned a Bachelor of Arts in International Relations and a Masters in International Public Policy from Johns Hopkins University. We believe that Mr. Cortezi's extensive and industry-leading experience in the area of insurance and his insight into our business as Chairman of Ryan Specialty Underwriting Managers qualifies him to serve on our Board. | ||
William J. Devers has served on our Board since 2013 and is a member of the Audit Committee. Since 1983, Mr. Devers has been president of Devers Group, Inc., a venture capital firm specializing in early stage investments. He also served on the Boards of Directors of the following public and private companies: Schwarz Paper Company, Wallace Computer Services, Inc., Lake Shore National Bank, Ryan Insurance Group, Click Commerce and Merge Inc. Mr. Devers has also served as a director of, or advisor to, numerous educational institutions, charities and hospitals, including the Arts and Letters Advisory Counsel of the University of Notre Dame, Catholic Charities of Chicago, Big Shoulders Fund of the Archdiocese of Chicago, Ann and Robert H. Lurie Children’s Hospital, St. Francis Hospital and Rosary College. He earned his Bachelor of Arts in Economics from Pennsylvania State University. We believe Mr. Devers is qualified to serve on our Board due to his extensive finance industry experience.
Michael D. O’Halleran has served on our Board since 2018. Mr. O’Halleran has been Executive Chairman of Geneva Re Limited and a Senior Advisor at Ryan Specialty Group since 2019. Mr. O’Halleran was the founder, and for twenty-four years served as Executive Chairman, of Aon Re, a reinsurance brokerage and capital advisory firm. Additionally, Mr. O’Halleran was previously President and COO of Aon Corporation from 1999 to 2005. He also served on the following Boards of Directors: NuVasive, Inc., CareFusion, Inc., Cardinal Health, Inc. and Allegiance Corp. Mr. O’Halleran earned his Bachelor of Science from the University of Wisconsin - Whitewater. We believe Mr. O’Halleran is qualified to serve on our Board due to his extensive insurance industry experience.
ROBERT (BOBBY) LE BLANC
Robert (Bobby) Le Blanc has served on our Board since 2018 and is a member of the Compensation and Governance Committee. Mr. Le Blanc joined Onex in 1999 and currently serves as its President and the head of Onex Partners, its large-cap private equity platform. Prior to joining Onex, Mr. Le Blanc worked for Berkshire Hathaway and General Electric. He earned his Bachelor of Science from Bucknell University and his Master of Business Administration from New York University. We believe Mr. Le Blanc is qualified to serve on our Board due to his extensive insurance and finance industry experience.
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Timothy W. Turner has served as our President since March 2021, as the Chairman and CEO of RT Specialty since RT’s founding in 2010 and has been a member of our Board of Directors since 2012. Mr. Turner is a member of our Executive Committee. Prior to co-founding RT Specialty, Mr. Turner was with CRC Insurance Services, Inc. (“CRC”) for 10 years and was President of CRC at the time of his departure. Prior to CRC, Mr. Turner worked for the Crump Group and was named President of its Chicago Office. Mr. Turner began his insurance career as a casualty broker with A.J. Renner & Associates in 1987. He has received a number of awards, and in 2020, one of the insurance industry’s most respected media outlets, the Insurance Insider, named Mr. Turner the Distribution Leader of the Year, honoring him as the year’s most influential and outstanding individual in insurance distribution. In 2019, Mr. Turner received the prestigious Insurance Industry “Good Scout” Award from the Boy Scouts of America, Greater New York Councils. Additionally, Mr. Turner received the 2021 Spirit of Life Award from the City of Hope, National Insurance Industry Counsel. Before joining the insurance industry, Mr. Turner graduated from the Detroit Police Academy, served on the Wayne County SWAT Team, and was an undercover narcotics officer with the Narcotics Cocaine Task Force with the Michigan State Police. Mr. Turner earned a Bachelor of Science in Criminal Justice from Madonna University. We believe that Mr. Turner’s extensive and industry-leading experience in the area of insurance and his insight into our business as our President and the Chairman and CEO of RT Specialty qualifies him to serve on our Board.
Class IIIII Directors: Continuing in Office Until 20232024
Patrick G. Ryan is a widely respected entrepreneur and global insurance leader who founded Ryan Specialty in 2010. Mr. Ryan has served as the Chairman and Chief Executive Officer of Ryan Specialty since its inception and is the chairperson of the Executive Committee. Prior to launching Ryan Specialty, Mr. Ryan founded Aon and served as its Chairman and/or CEO for 41 years. At the time of Mr. Ryan’s retirement, Aon had more than 500 offices in 120 countries, generating revenues then in excess of $7 billion. Mr. Ryan has received a number of accolades throughout his career. In 1987, Mr. Ryan received the esteemed Horatio Alger Award, which honors those who are dedicated to the principles of integrity, hard work, perseverance and compassion for others. In 2008, Mr. Ryan was inducted into the American Academy of Arts and Sciences, one of the nation's oldest and most prestigious honorary societies and independent research centers, founded in 1780. Also in 2008, he was elected to the International Insurance Society | ||
Hall of Fame and received the Ernst and Young Entrepreneur of the Year Lifetime Achievement Award. He was named by Brigham Young University International Executive of the Year for Corporate Integrity. Other career tributes include the College of Insurance’s Insurance Leader of the Year and the Insurance Federation of New York’s Free Enterprise Award. Most recently, in July 2019, Mr. Ryan was inducted into the Automotive Hall of Fame for his contribution to the Finance and Insurance Specialists sector of the automotive industry. Mr. Ryan has been a member of Northwestern University’s board of trustees for 42 years, 14 years of which he served as Chairman. Mr. Ryan served on the boards of directors of 1st National Bank of Chicago and its successors and the Tribune Company. Mr. Ryan earned a Bachelor of Business Administration from Northwestern in 1959 and, in 2009, Northwestern awarded Mr. Ryan a Doctor of Humane Letters degree. Also in 2009, Mr. Ryan was inducted into the Northwestern Athletic Hall of Fame. Four years later, in 2013, Mr. Ryan received the Northwestern Alumni Association Medal of Honor. This award is the highest award granted by the Northwestern Alumni Association to an alumnus who combines superior professional distinction and/or exemplary volunteer service to society, with an outstanding record of service to Northwestern. Mr. Ryan also served as Chairman of Chicago 2016, the effort to bring the 2016 Olympic and Paralympic Games to Chicago. We believe that Mr. Ryan’s extensive and industry-leading experience in the area of insurance, his experience as the founder, Chairman and CEO of Aon Corporation, and his insight into our business as our Founder and Chief Executive Officer qualifies him to serve on our Board. |
David P. Bolger has served on our Board since 2012 and is the chairman of the Audit Committee. Mr. Bolger served as Chief Operating Officer of Chicago 2016, the effort to bring the 2016 Olympic and Paralympic Games to Chicago. From 2004 to 2019, Mr. Bolger served on the Board of Directors of MB Financial, Inc. From 2003 to 2008, he served as Executive Vice President and Chief Financial Officer of Aon Corporation. Prior to joining Aon, Mr. Bolger served in multiple executive positions at Bank One Corporation and its predecessor companies. He earned a Bachelor of Science in Accounting and Finance from Marquette University and a Master of Management from Northwestern University Kellogg School of Management. We believe Mr. Bolger is qualified to serve on our Board due to his extensive insurance industry, accounting and finance experience.
Michelle Collins has served on our Board since our IPO in July 2021 and is a member of the Audit Committee. Since 2007, she has served as the president of Cambium LLC, a consulting firm. Ms. Collins was co-founder of Svoboda Capital Partners, LLC and served as Managing Director from 1998 to 2006. Prior to that, Ms. Collins was a principal in the Corporate Finance Department at William Blair & Company, LLC. Since 2014, Ms. Collins has served on the board of Ulta Beauty, Inc. She has also served on the boards of Canadian Imperial Bank of Commerce (“CIBC”) and CIBC Bancorp USA/CIBC Bank U.S. since 2017. Previously, she was a member of the mutual fund boards of Columbia Acorn and Wanger Advisors Trusts and the boards of directors of the following public and private companies: PrivateBankcorp, Inc., Integrys Energy Group, Inc., Molex, Inc., Bucyrus International, CDW Corporation, Coldwater Creek, Inc., McWhorter Technologies, Inc., the Mutual Reserve Company, and Health Care Service | ||
Corporation. She earned a Bachelor of Arts from Yale University and a Master of Business Administration from Harvard Business School. We believe Ms. Collins is qualified to serve on our Board due to her extensive finance industry experience and experience as a director on the boards of other for-profit companies. |
Nicholas D. Cortezi has served on our Board since our IPO in July 2021 and as the Chairman RSG Underwriting Managers since September 2020. Mr. Cortezi is a member of our Executive Committee. In 1987, Mr. Cortezi joined All Risks and was promoted to CEO in 1999. He served as CEO of All Risks until its merger with Ryan Specialty in September 2020. Mr. Cortezi has served on the Boards of the Independent Insurance Agents of Baltimore, Independent Insurance Agents of Maryland, the National Association of Surplus Lines Offices (“NAPSLO”) (now known as the Wholesale & Specialty Insurance Association (“WSIA”)) and was President of NAPSLO between 2002 and 2003. Mr. Cortezi earned a Bachelor of Arts in International Relations and a Masters in International Public Policy from Johns Hopkins University. We believe that Mr. Cortezi’s extensive and industry-leading experience in the area of insurance and his insight into our business as our Chairman of RSG Underwriting Managers qualifies him to serve on our Board.
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D. Cameron Findlay has served on our Board since 2012 and is the chairperson of the Compensation and Governance Committee, a member of the Executive Committee and our Lead Director. Since 2013, Mr. Findlay has been the Senior Vice President, General Counsel and Secretary of Archer Daniels Midland Company. From 2009 to 2013, he was Senior Vice President and General Counsel of Medtronic, Inc., and from 2003 to 2009 he served as Executive Vice President and General Counsel of Aon Corporation. He earned his B.A. from Northwestern University, his Master of Arts (Oxon.) from Oxford University, and his Juris Doctor from Harvard Law School. We believe Mr. Findlay is qualified to serve on our Board due to his expertise in legal, compliance, and government regulatory matters and extensive insurance industry experience. | ||
Robert (Bobby) Le Blanc has served on our Board since 2018 and is a member of the Compensation and Governance Committee. Mr. Le Blanc joined Onex in 1999 and currently serves as its President and the head of Onex Partners, its large-cap private equity platform. Prior to joining Onex, Mr. Le Blanc worked for Berkshire Hathaway and General Electric. He earned his Bachelor of Science from Bucknell University and his Master of Business Administration from New York University. We believe Mr. Le Blanc is qualified to serve on our Board due to his extensive insurance and finance industry experience.
John W. Rogers, Jr., has served on our Board since 2014 and is a member of both the Compensation and Governance Committee and the Executive Committee. He is the Founder, Chairman, Co-CEO (since 2019; from 1983-2019 he served as Chief Executive Officer), and Chief Investment Officer of Ariel Investments. Mr. Rogers is a member of the mutual fund board of Ariel Investments Trust, serves as vice chair of the board of trustees of the University of Chicago, and as a member of the boards of directors of the following public companies: McDonald’s Corporation, NIKE, Inc. and The New York Times Company. From 2000 to 2019, he served on the board of Exelon Corp. Following the election of President Barack Obama, Mr. Rogers served as co-chair for the Presidential Inaugural Committee 2009, and in 2016 he joined the Barack Obama Foundation's board of directors. He earned his Bachelor of Arts from Princeton University and in 2008 was awarded Princeton University's highest honor, the Woodrow Wilson | ||
Award, presented each year to the alumnus or alumna whose career embodies a commitment to national service. We believe Mr. Rogers is qualified to serve on our Board due to his extensive finance industry experience and experience as a director on the boards of other for-profit companies. |
Andrew J. McKenna has served on our Board since 2012 and is our Lead Director and a member of both the Compensation and Governance Committee and the Executive Committee. Mr. McKenna is the Chairman Emeritus of the Board of Directors of McDonald’s Corporation and the Chairman of Bunzl Retail Services. Mr. McKenna served on the Board of McDonald’s Corporation for 25 years, 12 as Chairman, as well as serving on the Boards of Directors of the following NYSE companies: 1st National Bank of Chicago and its successors, Tribune Company, Dane Foods, Skyline Corporation, Sargent-Welch Scientific and Aon Corporation. Mr. McKenna has served over the years on many civic, community and philanthropic boards and currently serves as a trustee of Ronald McDonald House Charities, the Museum of Science and Industry (Chairman Emeritus), and the University of Notre Dame (Chairman Emeritus). Mr. McKenna is also a director of Big Shoulders Fund of the Archdiocese of Chicago and Ann and Robert H. Lurie Children’s Hospital of Chicago, among others. Mr. McKenna earned his Bachelor of Science degree from the University of Notre Dame and a Juris Doctor from DePaul University. We believe Mr. McKenna is qualified to serve on our Board due to his extensive experience as a director on the boards of many for profit companies and as a board member and/or trustee for civic, community and philanthropic organizations.
Class I Directors: Continuing in Office Until 2025
HENRY S. BIENEN, PH.D Dr. Bienen has served on our Board since 2012 and is a member of the Audit Committee. Dr. Bienen served as Northwestern University’s president from 1995 through 2009 and currently serves as president emeritus of Northwestern University. He was the James S. McDonnell Distinguished University Professor and Dean of the Woodrow Wilson School of Public and International Affairs at Princeton University prior to his appointment at Northwestern. Dr. Bienen is Emeritus Trustee of the Chicago Council on Global Affairs. Additionally, Dr. Bienen is on the boards of directors of Hedge Fund Guided Portfolio Solutions and Grosvenor Multi Strategy Funds, chairs the Advisory Committee of The Vistria Group’s Education Investments, serves as chairman of the board of directors for Rasmussen College, and is a lifetime member of the board of MetroSquash, an urban squash and education program in Chicago. Furthermore, Dr. Bienen is a member of the board of the Lucas Museum of Narrative Art and was the | ||
chairman of the board of the Crown Center on the Middle East Studies at Brandeis University. Dr. Bienen is also a consultant for Academic Partnerships, an online project manager for regional public universities. Dr. Bienen served on the board of Bear Stearns Companies, Inc. He earned a Bachelor of Arts from Cornell University with honors, as well as a Master of Political Science and a PhD in Political Science from the University of Chicago. We believe Dr. Bienen is qualified to serve on our Board due to his extensive experience as a director on the boards of other for-profit companies. |
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Class III Directors: Continuing in Office Until 2024
Represents benefits continuation payments under the Severance Plan. Mr. Ryan does not receive benefits through any health, dental, or vision plan of the Company. |
Represents the value of equity awards held by our NEOs as of December 31, |
2023 Proxy Statement 44 | ||||||
“Cause,” due to death or disability, or as a result of a Qualified Retirement, |
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Represents amounts payable upon a termination by us without “Cause” or, for purposes of cash severance and benefits continuation under the Severance Plan only, upon a resignation by the NEO for “Good Reason,” in each case, other than during the Change in Control Period. Amounts in the “Equity Acceleration” row of this column represent amounts payable on a termination without “Cause” only. |
(6) | Represents amounts and benefits payable pursuant to the Severance Plan upon a termination by us without “Cause” or upon a resignation by the Named Executive Officer for “Good Reason,” in each case, during the Change in Control Period. |
(7) | Represents amounts payable upon a termination due to death, disability, or a Qualified Retirement. As of December 31, |
Named Executive Officer Employment Agreements
Agreement with Timothy W. Turner
In January 2010, we entered into an employment agreement with Mr. Turner. The agreement provided for an initial five-year term that automatically renews for successive five-year periods until terminated by either party at least 30 days prior to a renewal date. The agreement provides Mr. Turner with an annual base salary of $800,000 or such higher amount as determined by the Board, and eligibility to earn an annual target bonus of $700,000. Mr. Turner’s employment agreement also provides for a car allowance and condominium allowance, in each case, of $2,000 per month.
Under the terms of Mr. Turner’s employment agreement, in the event that his employment with us is terminated by us without “cause,” he will be entitled to receive, subject to his execution and non-revocation of a release of claims in favor of the Company, continued payment of his base salary through the end of the then-current five-year term. In addition, if Mr. Turner’s employment is terminated by us without “cause” or due to his death or disability and the applicable performance metrics are achieved, Mr. Turner will be entitled to receive a prorated portion of his annual bonus, with 50% of the estimated amount of such prorated bonus to be paid on July 31 of the year it is earned and the remaining portion paid on January 31 of the following year.
Under the Company’s Severance Plan, Mr. Turner would be entitled to payments in excess of those set forth in his employment agreement under certain circumstances. See “— Termination Benefits” below.
Agreement with Mark S. Katz
In January 2019, we entered into an employment agreement with Mr. Katz. The agreement initially had a three-year term ending on December 31, 2021. The agreement provides Mr. Katz with a minimum annual base salary of $500,000 and a guaranteed semi-annual bonus of at least $150,000 during the term of the agreement. Mr. Katz’s employment agreement also provides for a car allowance of $500 per month.
Under the terms of Mr. Katz’s employment agreement, in the event that his employment with us is terminated by us without “cause,” he will be entitled to receive, subject to his execution and non-revocation of a release of claims in favor of the Company, continued payment of his base salary and bonus through the end of the term of the agreement.
In October 2019, the employment agreement was amended to extend the term of the agreement to and including December 31, 2022. The agreement is now expired.
Under the Company’s Severance Plan, Mr. Katz would be entitled to payments in excess of those set forth in his employment agreement under certain circumstances. See “— Termination Benefits” below.
2023 Proxy Statement 45 | ||||||
CEO Pay Ratio
Under the SEC rules adopted pursuant to the Dodd-Frank Act of 2010, the Company is required to calculate and disclose the total compensation paid to its median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to the Company’s CEO.
We calculated our median employee’s fiscal year 20212022 total compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, the same way we calculated the total compensation of our CEO as disclosed in our Summary Compensation Table. Using this methodology, we determined that our median employee’s fiscal year 20212022 total compensation was $81,955.$84,950. Based on this information, we estimate that for 2021,2022 our CEO’s annual total compensation was approximately 3053 times that of the median employee’s total compensation.
Although the calculation of the ratio should be considered an estimate, we believe the ratio is a reasonable estimate calculated in a manner consistent with SEC rules (Item 402(u) of Regulation S-K). We caution stockholders and other readers against comparing our ratio to those of other companies. The SEC has stated that it did not believe a purpose of the pay ratio rule was to facilitate comparisons among companies and, in adopting the rule, the SEC stated its belief that comparability of the ratio across registrants has significant limits due to the variety of factors that could influence the ratio.
The discussion below describes our methodology for how we determined our median employee for 2021.2022.
Determining Our Median Employee
We determined there was no change in our employee population or employee compensation arrangements during the last completed fiscal year that we believe would significantly impact the pay ratio disclosure for 2022. Accordingly, we used the same median employee we identified in 2021 for purposes of calculating our pay ratio disclosure for 2022.
To identify the median employee in 2021, we used our global population of regular and temporary employees, as of December 31, 2021, in accordance with applicable SEC rules. In compliance with the “de minimis” exemption of Item 402(u) of Regulation S-K, we excluded all employees outside the United States, comprising 75 employees in six non-US countries (or approximately 2% of our total workforce of 3,546 on December 31, 2021). Employees in the following countries were excluded:
Country | Headcount | ||||
Great Britain | 53 | ||||
Sweden | 11 | ||||
Spain | 6 | ||||
Canada | 2 | ||||
Netherlands | 2 | ||||
Denmark | 1 |
We did not annualize or otherwise adjust compensation for temporary employees and did not make any full-time adjustments for anyone. Additionally, we made no cost-of-living adjustments in our calculations. We collected 2021 W-2 data from our payroll system for all U.S. employees, whether employed on a full-time, part-time, or temporary basis and used this data as our consistently applied compensation measure.
We determined the 10 median employees based on the W-2 data that we collected. From that group, we removed anyone who was no longer currently employed by the Company and selected as our median employee a reasonably representative colleague who had relatively consistent total compensation history.
2023 Proxy Statement 46 | ||||||
Value of Initial Fixed $100 Investment Based On: | ||||||||||||||||||||||||||||||||
Year (1) | Summary Compensation Table Total for PEO ($) (2) | Compensation Actually Paid to PEO ($) (3) | Average Summary Compensation Table Total for Non-PEO NEOs ($) (4) | Average Compensation Actually Paid to Non-PEO NEOs ($) (5) | Total Stockholder Return ($) (6) | Peer Group Total Stockholder Return ($) (7) | Net Income ($ ,000) | Organic Revenue Growth (%) (8) | ||||||||||||||||||||||||
2022 | $ | 4,478,995 | $ | 4,478,995 | $ | 2,530,394 | $ | 3,369,573 | $ | 151 | $ | 97 | $ | 163,257 | 16.4 | % | ||||||||||||||||
2021 | 2,456,731 | 2,456,731 | 8,972,955 | 22,246,054 | 147 | 109 | 56,632 | 22.4 | % |
(1) | Only two years of compensation and performance history are provided since the Company’s IPO was on July 21, 2021. |
(2) | Patrick G. Ryan was our PEO in both 2021 and 2022 . |
(3) | Since our PEO has never received incentive equity grants and the Company does not have a pension plan, Compensation Actually Paid (“CAP”) to our PEO is the same amount as reported as total compensation in our Summary Compensation Table (“SCT”) for each year. |
(4) | Our NEOs (other than our PEO) for 2022 included Timothy W. Turner, Jeremiah R. Bickham, Brendan M. Mulshine and Mark S. Katz. Our NEOs (other than our PEO) for 2021 included Timothy W. Turner, Jeremiah R. Bickham, Mark S. Katz, Michael T. VanAcker, and Diane M. Aigotti. Diane M. Aigotti was our Chief Financial Officer until she resigned from the Company on March 1, 2021. |
(5) | The following table provides a reconciliation calculation of the average Non-PEO NEOs’ CAP back to the averageNon-PEO NEOs’ SCT total: |
Year | Average SCT Total | SCT Grant Date Fair Value Deduction | Year End Value of Equity Granted During Year and Unvested at End of Year | Fair Value as of Vesting Date of Equity Granted During Year and Vested During Year | Change in Fair Value of Equity Granted in Prior Year and Unvested at End of Year | Change in Fair Value of Equity Granted in Prior Year and Vested During Year | Average CAP | |||||||||||||||||||||
2022 | $ | 2,530,394 | $ | (308,222 | ) | $ | 367,125 | $ | — | $ | 928,526 | $ | (148,250 | ) | $ | 3,369,573 | ||||||||||||
2021 | 8,972,955 | (4,324,316 | ) | 17,418,303 | 179,112 | — | — | 22,246,054 |
(6) | Total Stockholder Return (“TSR”) is calculated based on a fixed investment of $100 at the applicable measurement point on the same cumulative basis as is used in Item 201(e) of Regulation S-K. The TSR is calculated from July 22, 2021, the first trading date of our Class A Common Stock after our IPO, through the end of the applicable year. |
(7) | Our Peer Group TSR for the relevant fiscal year represents the cumulative TSR of the S&P 500 Financials Sector Index, consistent with the industry index used in our “Performance Graph” pursuant to Section 201(e) of regulation S-K as presented in Item 5 of our annual report on Form 10-K. The Peer Group TSR is calculated from July 22, 2021, the first trading date of our Class A Common Stock after our IPO, through the end of the applicable year. |
(8) | Ryan Specialty’s most important financial performance measure used to link CAP to our NEOs to C ompany performance for fiscal year 2022 is Organic Revenue Growth. Organic Revenue Growth is aNon-GAAP Measure. For a definition and a reconciliation of Organic Revenue Growth Rate to the most directly comparable GAAP measure, see “Appendix A” to this Proxy Statement. |
2023 Proxy Statement 47 | |||||||
2023 Proxy Statement 48 | ||||||
2023 Proxy Statement 49 | ||||||
Most Important Financial Performance Measures |
Organic Revenue Growth |
Adjusted EBITDAC Margin |
Total Stockholder Return |
Plan Category |
Number of |
Weighted |
Number of | |||||||||
Equity Compensation Plans Approved by Security Holders | 40,542,864 | 23.50 | 9,286,447 | |||||||||
Equity Compensation Plans Not Approved by Security Holders | — | — | — | |||||||||
Total | | 40,542,864 | | 23.50 | | 9,286,447 | |
Plan Category | Number of Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (2) | Number of Shares Remaining Available for Future Issuance (3) | |||||||||
Equity Compensation Plans Approved by Security Holders | 39,743,419 | $ | 23.96 | 12,887,571 | ||||||||
Equity Compensation Plans Not Approved by Security Holders | — | — | — | |||||||||
Total | 39,743,419 | 23.96 | 12,887,571 |
(1) | These amounts include the number of securities to be issued upon exercise, conversion, or settlement of |
(2) | The weighted average exercise price |
(3) | Represents the number of securities remaining available under the Ryan Specialty |
2023 Proxy Statement 50 | ||||||
ADVISORY (NON-BINDING) VOTE ON THE FREQUENCY OF FUTURE VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
The Dodd-Frank Act enables our stockholders to indicate how frequently they believe we should conduct the advisory vote on the compensation of our NEOs (say-on-pay vote), as disclosed in accordance with SEC rules. Stockholders may indicate whether they would prefer an advisory vote on the compensation of our NEOs every one, two or three years. Stockholders may also abstain from the vote.
Stockholders may choose among four choices (i.e., to conduct a say-on-pay vote every one, two or three years or abstain). Approval of the frequency of the advisory vote on NEO compensation requires a favorable vote of the majority. However, if no choice receives a majority of the voting power of the shares entitled to vote and present at the meeting or represented by proxy at the Annual Meeting and entitled to vote, then the choice of frequency that receives the highest number of votes will be considered the preference of our stockholders.
Although the stockholders’ vote on this proposal is not binding, the Board will consider the voting results in determining the frequency of future advisory votes. Notwithstanding the Board’s recommendation and the outcome of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.
Board’s Recommendation to Stockholders
The Board believes that the Company’s compensation practices are sound and embody an appropriate long-term perspective. An annual vote allows our stockholders to provide timely feedback regarding the Company’s compensation policies and practices and enables the Compensation and Governance Committee to evaluate any change in stockholder views as it conducts its annual compensation review. Therefore, the Board recommends that this vote occur every one year and that you should vote “ONE YEAR.”
Vote Required
Stockholders may choose among four choices (i.e., to conduct a say-on-pay vote every one, two or three years or abstain). Approval of the frequency of the advisory (non-binding) vote on NEO compensation requires a favorable vote of the majority of voting power of shares present or represented by proxy at the virtual Annual Meeting and entitled to vote. However, if no choice receives a majority of the vote cast, then the choice of frequency that receives the highest number of votes will be considered the preference of our stockholders Abstentions and broker non-votes will have no effect on the vote for Proposal 4.
Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the Proxy Card or, if no direction is given, then for the Company to conduct future advisory votes on executive compensation every “ONE YEAR”.
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ADVISORY (NON-BINDING) VOTE TO RETAIN THE SUPERMAJORITY VOTING STANDARDS SET FORTH IN OUR CHARTER AND BYLAWS
Background of the Proposal
Our Certificate and Bylaws provide that our Board is expressly authorized to make, alter, amend, change, add to, rescind or repeal, in whole or in part, our Bylaws without a stockholder vote regarding any matter not inconsistent with the General Corporation Law of the State of Delaware (the “DGCL”) and our Certificate. For as long as the Ryan Parties beneficially own, in the aggregate, at least 40% in voting power of the stock of the Company entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our Bylaws by our stockholders will require the affirmative vote of a majority in voting power of the then outstanding shares of our stock entitled to vote on such amendment, alteration, change, addition, rescission or repeal. As set forth in more detail herein below, at any time when the Ryan Parties beneficially own, in the aggregate, less than 40% in voting power of all outstanding shares of the stock of the Company entitled to vote generally in the election of directors, any amendment, alteration, rescission or repeal of our Bylaws by our stockholders will require the affirmative vote of the holders of at least 662⁄3% in voting power of all the then outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class.
The DGCL provides generally that the affirmative vote of a majority of the outstanding shares entitled to vote thereon, voting together as a single class, is required to amend a corporation’s certificate of incorporation, unless the certificate of incorporation requires a greater percentage.
Our Certificate provides that at any time when the Ryan Parties beneficially own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors, the following provisions in our Certificate may be amended, altered, repealed or rescinded only by the affirmative vote of the holders of at least 662⁄3% (as opposed to a majority threshold that would apply if the Ryan Parties beneficially own, in the aggregate, 40% or more) in voting power of all of the then outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class:
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the provisions providing for a classified board of directors (the election and term of our directors);
the provisions regarding filling vacancies on our Board and newly created directorships;
the provisions regarding resignation and removal of directors;
the provisions regarding stockholder action by written consent;
the provisions regarding calling special meetings of stockholders;
the provisions regarding entering into business combinations with interested stockholders; and
the provision regarding the exclusive forum for the resolution of specific stockholder disputes.
In addition, our Certificate provides that directors may be removed with or without cause upon the affirmative vote of a majority in voting power of all outstanding shares of stock entitled to vote thereon, voting together as a single class; provided, however, at any time when the Ryan Parties beneficially own, in the aggregate, less than 40% of the outstanding shares of our common stock, directors may only be removed for cause, and only by the affirmative vote of holders of at least 662⁄3% in voting power of all the then outstanding shares of stock of the Company entitled to vote thereon, voting together as a single class.
Finally, Article VIII of our Certificate provides that, to the fullest extent permitted by law, the Ryan Parties, Onex and their respective directors, partners, principals, officers, members, managers, family members, trustees, beneficiaries or employees shall have no fiduciary duty (i) to refrain from engaging in the same or similar business activities as the Company or (ii) to refrain from competing with the Company and will not be liable to the Company or its stockholders for any breach of any fiduciary duty solely by reason of an such activity. It further provides that the affirmative vote of 80% in voting power of all the then outstanding shares of stock of the Company entitled to vote thereon is needed to amend such Article VIII.
At the time of our IPO, the Board believed that the supermajority voting standards under our Certificate and Bylaws were an important aspect of the Company’s governance structure to safeguard the long-term interests of the Company and its stockholders once the Ryan Parties no longer hold at least 40% in voting power of the stock of the Company entitled to vote generally in the election of directors. At the same time, the Board recognized that some investors may view the supermajority voting standards as a means by which the status quo management could block initiatives supported by stockholders. Accordingly, at the Annual Meeting, the Company is asking our stockholders to vote, on an advisory basis, whether to retain the supermajority voting standards.
If this proposal is approved by a majority of the voting power of the stock of the Company entitled to vote on the proposal at the Annual Meeting, the Company will retain the supermajority voting standards. Conversely, if a majority of the voting power of the stock of the Company entitled to vote on the proposal at the Annual Meeting votes against the proposal, the vote against the proposal would not by itself remove the supermajority voting standards. Instead, rejection of the proposal would only advise the Board that a majority of our stockholders voting at the Annual Meeting desire to eliminate the supermajority voting standards. Consistent with its fiduciary duties, if stockholders vote against this proposal, the Board will reevaluate its position with respect to the retention of the supermajority voting standards. This reevaluation would include considering the percentage of stockholders voting against this proposal. An affirmative vote of not less than a majority of the then outstanding shares of the Company entitled to vote at a duly held meeting is required to amend the Certificate to remove the supermajority voting standards (or 662⁄3% if the Ryan Parties own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors). If stockholders representing less than a majority of the outstanding voting power of the stock of the Company reject this proposal, the Board likely will not take additional steps to reconsider removal of the supermajority voting standards.
If a majority of the voting power of the stock of the Company entitled to vote on the proposal vote against this proposal and the Board determines that the elimination of the supermajority voting standards are in the best interests of the Company and its stockholders, the Board will include a proposal in the proxy statement for the 2023 annual meeting of stockholders to amend our Certificate and Bylaws to eliminate the supermajority voting standards. An amendment to the Certificate and Bylaws must first be approved by the Board and then approved by the affirmative vote of not less than a majority of the outstanding voting power of the stock of the Company entitled to vote at a duly held meeting (or 662⁄3% if the Ryan Parties own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors). If such amendment were approved, the Certificate and Bylaws would be amended immediately thereafter to remove the supermajority voting standards.
Board’s Recommendation to Stockholders
The Board regularly reviews the corporate governance policies and practices of the Company to determine whether they are appropriate and will advance the Board’s and management’s goal of maximizing long-term stockholder value. As part of that review, the Board considered whether retention of the supermajority voting standards continues to be advisable. The Board evaluated both the advantages and disadvantages of maintaining the supermajority voting standards, and determined that retaining the supermajority voting standards continues to be in the best interests of the Company and our stockholders following the IPO for the following reasons:
the supermajority voting standards under our Certificate and Bylaws are appropriately limited and necessary with application only to extraordinary transactions and fundamental changes to corporate governance;
Delaware law permits supermajority voting requirements and a number of publicly-traded companies have adopted these provisions to preserve and maximize long-term value for all stockholders;
the Board believes that the supermajority vote requirements protect stockholders, particularly minority stockholders, against the potentially self-interested actions of short-term investors and, without these provisions, it would be possible for a group of short-
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these provisions mitigate the risks presented by a group of short-term stockholders, who may (i) only own their shares as of a voting record date or may have hedged their economic exposure and (ii) act in their own self-interests to the detriment of other stockholders;
these supermajority voting requirements encourage potential acquirers to deal directly with the Board, which in turn enhances the Board’s ability to consider the long-term interests of all stockholders; and
these supermajority voting requirements protect the ability of the Board to evaluate proposed offers, to consider alternatives, and to protect stockholders against abusive tactics during a takeover process.
Vote Required
The affirmative vote of the majority of the voting power of the shares present or represented by proxy at the Annual Meeting and entitled to vote is required for the approval of the advisory (non-binding) vote to retain the supermajority voting standards set forth in our Charter and Bylaws. Votes to “Abstain” are treated as cast “Against” Proposal 5. Broker non-votes will have no effect on the vote for this proposal.
Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the Proxy card or, if no direction is given, then FOR the advisory (non-binding) vote to retain the supermajority voting standards set forth in our Charter and Bylaws.
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ADVISORY (NON-BINDING) VOTE TO RETAIN THE CLASSIFIED STRUCTURE OF OUR BOARD
Background of the Proposal
In accordance with our Certificate, and as permitted under the DGCL, our Board is divided into three classes. Our current classified Board structure has been in place since our IPO. At each annual meeting of stockholders, commencing with this 2022 Annual Meeting, each director is elected to serve a term of three years, with each director’s term expiring at the third succeeding annual meeting of stockholders held after the director’s election. The directors designated as Class I have terms expiring at the 2022 Annual Meeting; the directors designated as Class II have terms expiring at the 2023 annual meeting of stockholders; and the directors designated as Class III have terms expiring at the 2024 annual meeting of stockholders. See “Proposal No. 1 Election of Directors” for additional information about the Directors serving in the various Board classes.
At the time of our IPO, the Board believed that a classified Board structure was an important aspect of the Company’s governance structure in order to promote continuity and stability and was in the best interests of the Company and its stockholders. The Board also believed that the classified Board structure would protect the Company against unfair or abusive takeover practices following the IPO and, given the nature of the Company (as discussed in more detail below), protect the long-term value of the Company. At the same time, the Board recognized that some investors may view classified boards as having the effect of reducing the accountability of directors to stockholders because classified boards limit the ability of stockholders to elect all directors on an annual basis. Accordingly, at this virtual Annual Meeting, the Company is asking our stockholders to vote, on an advisory basis, whether to retain the classified Board structure.
If this proposal is approved by the majority of the voting power of the stock of the Company entitled to vote and present at the meeting or represented by proxy at the Annual Meeting the Company will retain a classified Board. However, if a majority of the voting power of the stock of the Company entitled to vote and present at the meeting or represented by proxy on the proposal at the Annual Meeting vote against the proposal, this vote against the proposal would not by itself declassify or begin the process of declassification of the Board. Instead, rejection of the proposal would only advise the Board that a majority of the voting power of the stock of the Company entitled to vote on the proposal at the Annual Meeting desire to end the classified Board structure. Consistent with its fiduciary duties, if stockholders vote against this proposal, the Board will reevaluate its position with respect to our classified Board structure. This reevaluation would include considering the percentage of voting power that voted against this proposal. An affirmative vote of not less than a majority of the then outstanding voting power of the stock of the Company entitled to vote at a duly held meeting is required to amend our Certificate to declassify the Board (or 662⁄3% if the Ryan Parties own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors). If stockholders representing less than a majority of the outstanding voting power of the stock of the Company reject this proposal, the Board likely will not take additional steps to declassify the Board.
If a majority of the voting power of the stock of the Company entitled to vote on the proposal vote against this proposal and the Board determines that the declassification of the Board is in the best interests of the Company and its stockholders, the Board will include a proposal in the proxy statement for the 2023 annual meeting of stockholders to amend the Certificate to declassify the Board. An amendment to the Certificate must first be approved by the Board and then approved by the affirmative vote of not less than majority of the outstanding voting power of the stock of the Company entitled to vote at a duly held meeting (or 662⁄3% if the Ryan Parties own, in the aggregate, less than 40% in voting power of the stock of the Company entitled to vote generally in the election of directors).
The amendment to the Certificate would provide for the phased-in elimination of the classified structure of the Board over a three-year period commencing with the 2024 annual meeting of stockholders. To comply with the DGCL, the amendment of the Certificate would not change the unexpired three-year terms of directors elected prior to the effectiveness of the amendment (including directors elected at the 2022 Annual Meeting). This would result in the Board being fully declassified (and all directors
standing for annual elections) commencing with the 2026 annual meeting of stockholders. Starting at the 2024 annual meeting of stockholders, directors would be elected to one-year terms, and until their successors are duly elected and qualified. Therefore, beginning with the 2026 annual meeting of stockholders, the entire Board would stand for election.
Additionally, under the DGCL, unless otherwise provided in a company’s certificate of incorporation, directors serving on a classified board may only be removed by stockholders for cause, while directors serving on a non-classified board may be removed by stockholders with or without cause. As a result, approval of an amendment to declassify the Board would also result in an amendment to the Certificate to give our stockholders the ability to remove a director from the Board with or without cause from and after the 2026 annual meeting of stockholders (at which point the Board would be fully declassified).
Board’s Recommendation to Stockholders
The Board regularly reviews the corporate governance policies and practices of the Company to determine whether they are appropriate and will advance the Board’s and management’s goal of maximizing long-term stockholder value. As part of that review, the Board considered whether the Board’s current structure continues to be advisable. The Board evaluated both the advantages and disadvantages of maintaining a classified Board structure and determined that the classified Board structure continues to be in the best interests of the Company and our stockholders following the IPO for the following reasons:
Long-Term Strategic Thinking and Consistency with Investment Horizons. We believe that the Company’s current Board structure allows its directors to develop a deeper familiarity of the Company’s business following the IPO and encourages long-term, strategic thinking, which enhances long-term stockholder value. Such a long-term strategic approach is critical for the Company. Additionally, we have a strong balance sheet with a significant amount of cash that we intend to use for mergers and acquisitions and other investments over the next several years that we believe will create long-term stockholder value. The Board believed this at the time of our IPO and continues to believe this today. Thus, we believe that three-year terms on a staggered basis are appropriate and consistent with an investment horizon for a company such as ours, and that our stockholders are best served by director terms that reflect the long-term nature of our business.
Continuity and Stability from Institutional Knowledge. We believe that three-year terms promote continuity and foster an appropriate institutional memory among directors and a deep knowledge of the business and competitive environment. The Board believed this at the time of our IPO and continues to believe this today. Thus, we believe that experienced directors who are knowledgeable about the Company’s fast-paced and complex business environment are a valuable resource and are better positioned to make decisions that are in the best interests of the Company and our stockholders. Staggered terms give the Company’s new directors an opportunity to gain knowledge about the Company’s business from its continuing directors. If all directors were elected annually, the Board could be composed entirely of directors who were unfamiliar with the Company and its business strategies. This could jeopardize our long-term strategies and growth plans.
Accountability to Stockholders. Under the DGCL, all of our directors are required to uphold their fiduciary duties to our stockholders, regardless of how often they stand for election. Under our classified Board structure, a majority of directors will stand for election during any two-year period. The Board has implemented broad measures to ensure accountability of our directors, including the adoption of our Code of Conduct. In addition, the Board requires an annual self-assessment of the performance of the Board and its committees, which is led by the Compensation and Governance committee. This committee also considers the performance of each current director when determining whether to recommend the nomination of such director for an additional term. Additionally, any director, or the entire Board, may be removed from office if there is “cause” for removal, subject to the terms of the Certificate. As a result, the Board believed this at the time of our IPO and continues to believe this today, that Ryan Specialty benefits from the stability and continuity of a classified Board structure, while retaining meaningful director accountability.
Protecting Stockholder Value in the Event of an Unsolicited Acquisition Offer.The Company’s current Board structure reduces its vulnerability to potentially unfair and abusive takeover tactics and encourages potential acquirers to negotiate with the Board. We believe that the classified Board structure may improve the relative bargaining power of the Company on behalf of its stockholders by providing leverage to negotiate for higher value bids or pursue third party suitors who may be able to offer a higher value. A classified board structure does not preclude unsolicited acquisition proposals. However, the Board believed this at the time of our
IPO and continues to believe this today, that by eliminating the threat of imminent removal, it allows the Board to maximize the value of a potential acquisition by giving the Company time and bargaining leverage to evaluate and negotiate the adequacy and fairness of any takeover proposal and to consider alternatives, including the continued operation of the Company’s business.
Vote Required
The affirmative vote of a majority of the voting power of the shares present or represented by proxy at the virtual Annual Meeting and entitled to vote is required for the approval of the advisory (non-binding) vote to retain the classified structure of the Board. Votes to “Abstain” are treated as cast “Against” Proposal 6. Broker non-votes will have no effect on the vote for this proposal.
Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the Proxy Card or, if no direction is given, then FOR the advisory (non-binding) vote to retain the classified structure of our board.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information about the beneficial ownership of our Class A common stock and Class B common stock as of April 11, 2022March 10, 2023, for:
each person or group known to us who beneficially owns more than 5% of our Class A common stock or Class B common stock;
• | each person or group known to us who beneficially owns more than 5% of our Class A common stock or Class B common stock; |
each of our directors;
• | each of our directors and each of our NEOs; and |
• | all of our directors and executive officers as a group. |
each of our NEOs; and
all of our directors and executive officers as a group.
The number of shares of Class A common stock and Class B common stock beneficially owned, and the percentages of beneficial ownership, set forth below are based on 110,275,625113,233,651 shares of Class A common stock issued and outstanding and 148,872,773146,421,917 shares of Class B common stock issued and outstanding on April 11, 2022.March 10, 2023. These numbers exclude 148,872,773146,421,917 shares of Class A common stock issuable in exchange for the same number of LLC Common Units and for the cancellation on a one-to-one ratio of the related shares of our Class B common stock. If all outstanding LLC Common Units were exchanged and all outstanding shares of Class B common stock were canceled as of April 11,March 10, 2022, we would have 259,148,398259,655,568 shares of Class A common stock outstanding.
Unless otherwise noted below, the address for each beneficial owner listed on the table is Two Prudential Plaza, 180 N. Stetson Avenue, Suite 4600, Chicago, Illinois 60601. We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the tables below have sole voting and investment power with respect to all Class A common stock and Class B common stock that they beneficially own, subject to applicable community property laws.
Name of Beneficial Owner |
Shares of |
% of |
Shares of |
% of |
% of | |||||||||||||||
5% Stockholders: |
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Patrick G. Ryan(2) | 13,669,153 | 12 | % | 112,048,184 | 75 | % | 71 | % | ||||||||||||
Onex(3) | 12,455,712 | 11 | % | — | * | * | ||||||||||||||
Kayne Anderson Rudnick Inv. Mgmt. LLC (4) | 10,800,113 | 7 | % | — | * | * | ||||||||||||||
Named Executive Officers, Directors and Director Nominees: | ||||||||||||||||||||
Patrick G. Ryan(2) | 13,669,153 | 12 | % | 112,048,184 | 75 | % | 71 | % | ||||||||||||
Henry S. Bienen(5) | 55,250 | * | — | * | * | |||||||||||||||
David P. Bolger(6) | 128,248 | * | — | * | * | |||||||||||||||
Michelle L. Collins | 3,000 | * | — | * | * | |||||||||||||||
Nicholas D. Cortezi(7) | — | * | 6,133,271 | 4 | % | 4 | % | |||||||||||||
William J. Devers(7) | 805,181 | * | — | * | * | |||||||||||||||
D. Cameron Findlay(9) | 92,763 | * | — | * | * | |||||||||||||||
Robert Le Blanc(10) | — | * | — | * | * | |||||||||||||||
Andrew J. McKenna | 124,361 | * | — | * | * | |||||||||||||||
Michael D. O’Halleran(11) | 775,222 | * | — | * | * | |||||||||||||||
John W. Rogers, Jr.(12) | 94,214 | * | — | * | * | |||||||||||||||
Timothy W. Turner | — | * | 5,198,792 | 3 | % | 3 | % | |||||||||||||
Jeremiah R. Bickham | — | * | 278,434 | * | * | |||||||||||||||
Mark S. Katz | 7,500 | * | 62,772 | * | * | |||||||||||||||
Michael T. VanAcker | — | * | 293,220 | * | * | |||||||||||||||
Diane M. Aigotti | — | * | — | * | * | |||||||||||||||
All executive officers, directors and director nominees as a group (17 individuals) | 15,758,552 | 14 | % | 124,954,829 | 84 | % |
Name of Beneficial Owner |
Shares of |
% of |
Shares of |
% of |
% of | |||||||||||||||
5% Stockholders: |
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Patrick G. Ryan(2) | 15,166,608 | 13.4 | % | 112,048,184 | 76.5 | % | 72.0 | % | ||||||||||||
Onex(3) | 12,455,712 | 11.0 | % | — | * | * | ||||||||||||||
Kayne Anderson Rudnick Inv. Mgmt. LLC(4) | 11,024,503 | 9.8 | % | — | * | * | ||||||||||||||
The Vanguard Group(5) | 7,612,196 | 7 | % | — | * | * | ||||||||||||||
Named Executive Officers, Directors and Director Nominees: | ||||||||||||||||||||
Patrick G. Ryan(2) | 15,166,608 | 13.4 | % | 112,048,184 | 76.5 | % | 72.0 | % | ||||||||||||
Henry S. Bienen(6) | 58,079 | * | — | * | * | |||||||||||||||
David P. Bolger(7) | 102,974 | * | — | * | * | |||||||||||||||
Michelle L. Collins(8) | 5,829 | * | — | * | * | |||||||||||||||
Nicholas D. Cortezi(9) | — | * | 6,133,271 | 4.2 | % | 3.9 | % | |||||||||||||
William J. Devers(10) | 808,010 | * | — | * | * | |||||||||||||||
D. Cameron Findlay(11) | 95,592 | * | — | * | * | |||||||||||||||
Robert Le Blanc(12) | — | * | — | * | * | |||||||||||||||
Michael D. O’Halleran(13) | 807,525 | * | — | * | * | |||||||||||||||
John W. Rogers, Jr.(14) | 97,043 | * | — | * | * | |||||||||||||||
Timothy W. Turner(15) | — | * | 4,853,074 | 3.3 | % | 3.1 | % | |||||||||||||
Jeremiah R. Bickham(16) | — | * | 280,266 | * | * | |||||||||||||||
Brendan M. Mulshine(17) | 74,592 | * | 779,096 | * | * | |||||||||||||||
Mark S. Katz(18) | 7,500 | * | 64,528 | * | * | |||||||||||||||
All executive officers, directors and director nominees as a | 17,227,412 | 15.2 | % | 124,304,349 | 84.9 | % | 79.9 | % |
2023 Proxy Statement 51 | ||||||
* | Denotes less than 1% |
(1) | Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 10 votes per share. Each share of Class B common stock then outstanding will be entitled to one vote per share (i) 12 months following the death or disability of Patrick G. Ryan or (ii) the first trading day on or after such date that the outstanding shares of Class B common stock represent less than 10% of the then-outstanding Class A and Class B common stock, which, in each instance, may be extended to 18 months upon affirmative approval of a majority of the Company’s independent directors. The Class A common stock and Class B common stock will vote as a single class on all matters except as required by law or the Certificate. |
(2) | Amounts |
(3) | Amounts are derived from the |
voting rights of the shares of Onex Corporation and, as such, may be deemed to beneficially own all of the shares of Class A common stock beneficially owned by Onex Corporation. Mr. Schwartz disclaims such beneficial ownership. The address for Onex Corporation and Mr. Schwartz is 161 Bay Street, Toronto, ON M5J 2S1 Canada. |
(4) |
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(5) |
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(6) | All shares of Class A common stock are held in trusts beneficially owned and attributed to Mr. Bienen and his |
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2,829 shares are RSUs that were fully vested upon grant for which the director has elected to defer settlement until her separation from service on the Board. The remaining shares of Class A common stock are held by Ms. Collins individually. |
(9) | Shares of Class B common stock held in trusts beneficially owned and attributed to Mr. Cortezi. |
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Shares of Class A common stock are held by Mr. Findlay individually and by Mr. Findlay and his |
Does not include shares of Class A common stock held by Onex. Mr. |
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Delinquent Section 16(a) Reports
(15) | 6,979 shares of Class B common stock and an equal number of LLC Common Units are issuable upon the vesting of an equal number of RLUs that vest within 60 days of March 10, 2023. The remaining shares of Class B common stock are held by Mr. Turner individually. |
Section 16(a) of the Exchange Act, as amended, requires our directors, executive officers, and persons who own more than ten percent (10%) of our outstanding shares of common stock to file reports of ownership and changes in ownership with the SEC. Directors, executive officers and 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file.
(16) | 1,832 shares of Class B common stock and an equal number of LLC Common Units are issuable upon the vesting of an equal number of RLUs that vest within 60 days of March 10, 2023. The remaining shares of Class B common stock are held by Mr. Bickham individually. |
Based solely on our review of such reports and written representations from reporting persons, we believe that during 2021, our directors, officers and 10% beneficial owners timely complied with all applicable filing requirements.
(17) | 1,227 shares of Class B common stock and an equal number of LLC Common Units are issuable upon the vesting of an equal number of RLUs that vest within 60 days of March 10, 2023. The remaining shares of Class B common stock are held by Mr. Mulshine individually. The shares of Class A common stock are jointly held by Mr. Mulshine and his spouse. |
(18) | 1,756 shares of Class B common stock and an equal number of LLC Common Units are issuable upon the vesting of an equal number of RLUs that vest within 60 days of March 10, 2023. The remaining shares of Class B common stock and the shares of Class A common stock are held by Mr. Katz individually. |
(19) | 31,589 shares are RSUs that were fully vested upon grant for which directors have elected to defer settlement until such time as the individual director’s separation from service on the Board. 12,285 shares of Class B common stock and an equal number of LLC Common Units are issuable upon the vesting of an equal number of RLUs that vest within 60 days of March 10, 2023. The remaining shares of Class A common stock and Class B common stock are held directly by the directors or officers other than as specified in the notes above. |
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policy for Approval of Related Party Transactions
We have adopted a written policy with respect to the review, approval, and ratification of related party transactions. Under the policy, our Audit Committee is responsible for reviewing and approving or ratifying related party transactions. In the course of its review and approval (or ratification) of related party transactions, our Audit Committee considers the relevant facts and circumstances and determines whether to approve or ratify such transactions. In particular, our policy requires our Audit Committee to consider, among other factors it deems appropriate:
the related person’s relationship to us and interest in the transaction;
• | the related person’s relationship to us and interest in the transaction; |
the material facts of the proposed transaction, including the proposed aggregate value of the transaction;
• | the material facts of the proposed transaction, including the proposed aggregate value of the transaction; |
the impact on a director’s independence in the event the related person is a director or an immediate family member of a director;
• | the impact on a director’s independence in the event the related person is a director or an immediate family member of a director; |
the benefits to us of the proposed transaction;
• | the benefits to us of the proposed transaction; |
if applicable, the availability of other sources of comparable products or services; and
• | if applicable, the availability of other sources of comparable products or services; and |
• | an assessment of whether the proposed transaction is on terms that are comparable to the terms available to an unrelated third party or to employees generally. |
an assessment of whether the proposed transaction is on terms that are comparable to the terms available to an unrelated third-party or to employees generally.
The Audit Committee may only approve or ratify those transactions that are in, or are not inconsistent with, our best interests and those of our stockholders, as the Audit Committee determines in good faith.
In addition, under our Code of Conduct, our employees and directors will have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest.
20212022 Related Party Transactions
We describe below transactions and series of similar transactions that occurred during our prior fiscal year or that were ongoing during the year or that are currently proposed, to which we were a party or will be a party, in which:
the amounts involved exceeded or will exceed $120,000; and
• | the amounts involved exceeded or will exceed $120,000; and |
• | any of our directors, executive officers, immediate family members of our directors or executive officers, or beneficial holders of more than 5% of any class of our capital stock had or will have a direct or indirect material interest. |
any of our directors, executive officers, immediate family members or our directors or executive officers, or beneficial holders of more than 5% of any class of our capital stock had or will have a direct or indirect material interest.
Other than as described below, there have not been, nor are there any currently proposed, transactions or series of similar transactions meeting thisthese criteria to which we have been or will be a party other than compensation arrangements, which are described where required under “Executive Compensation.”
Services Agreement with Ryan Specialty Group Risk Innovators
On June 28, 2018, RSG LLC entered into a services agreement with Ryan Specialty Group Risk Innovators, LLC (“RSGRI”), an entity wholly owned directly or indirectly by two trusts in which Mr. Ryan and his wife are trustees and beneficiaries. Reimbursable expenses due from RSGRI, inclusive of direct costs, for administrative services performed by RSG LLC and the related markup on the administrative services, were $0 as of December 31, 2021.
Ryan Re and Geneva Re
Ryan Re Joint Venture
RSGThe LLC is the Managing Member of Ryan Re Underwriting Manager,Managers, LLC (“Ryan Re”). When Ryan Re commenced operations in 2019, RSGthe LLC owned 47% of its common equity and Geneva RyanGeneva-Ryan Holdings, LLC (“GRH”) owned the remaining 53% of its common equity. GRH is an investment holding company that aggregates investment funds of Mr. Ryan and members of his family and other affiliated investors. On March 31, 2021, RSGthe LLC acquired the remaining 53% common equity interest held by GRH and its owners for approximately $48.4 million, which was a price based on a valuation of Ryan Re performed by a nationally recognized independent valuation firm. Mr. Ryan and his wife continue to hold preferred equity in Ryan Re with unreturned capital of $3.3 million as of December 31, 2021,2022, which accrues a preferred return at the rate of 10% annually. No payment has been made on account of the preferred equity since its inception. The acquisition was on arm’s-length terms and was approved by an independent special committee of the board of managers of RSG LLC.the LLC prior to the IPO.
2023 Proxy Statement 53 | ||||||
Geneva Re Joint Venture
Ryan Investment Holdings, LLC (“RIH”) is an investment holding company that aggregates the funds of RSGthe LLC and GRH. RSGThe LLC holds a 47% interest in RIH. GRH holds a 53% interest in RIH. RIH has a 50% non-controlling interest in Geneva Re Partners, LLC (“GRP”). GRP wholly owns Geneva Re, Ltd,Ltd., a Bermuda-regulated reinsurance company (“Geneva Re”).
Geneva Re is a wholly owned subsidiary of GRP. GRP was formed in 2019 as a joint venture between Nationwide Mutual Insurance Company (“Nationwide”) and RIH, with each retaining a 50% ownership interest in GRP. RSGThe Company has contributed $47.0 million to Geneva Re and has fully satisfied its capital commitments.
RIH has committed to contribute additional capital to GRP over the next fivefour years. Patrick G. Ryan, through a trust of which he is the beneficiary and co-trustee, has committed to personally fund any such additional capital contributions. In exchange for any such capital contributions, Mr. Ryan will receive promissory notes from RIH that will not affect the relative ownership of RIH’s common equity.
In accordance with the Master Transaction Agreement (“MTA”), Geneva Re is obligated to reimburse RSG LLC for any transaction expenses incurred by RSG LLC in connection with the formation of Geneva Re. RSG LLC had $0 due from Geneva Re under the MTA as of December 31, 2021. On January 1, 2021, the Company entered into a service agreement with Geneva Re to provide both administrative services to, as well disburse payments for costs directly incurred by, Geneva Re. These direct costs include compensation expenses incurred by employees of Geneva Re. The Company had $0.5$0.2 million due from Geneva Re under this agreement as of December 31, 2021.2022.
Ryan Re Services Agreement with Geneva Re
On June 13, 2019, Ryan Re entered into a services agreement with Geneva Re to provide, among other services, certain underwriting and administrative services to Geneva Re. Revenue earned from Geneva Re, net of applicable constraints, was $1.7$1.6 million as of December 31, 2021.2022. Receivables due from Geneva Re on the service agreement, net of applicable constraints, was $4.2$2.0 million as of December 31, 2021.2022.
Company Charter of Corporate Jets
In the ordinary course of its business, the Company charters executive jets for business purposes from a third-party service provider, Executive Jet Management (“EJM”). Mr. Ryan indirectly owns aircraft that he leases for remuneration to EJM and which EJM then charters to third parties. The Company pays market rates for chartering aircraft through EJM, unless the particular aircraft chartered is one which Mr. Ryan indirectly owns, in which case the Company receives a discount from market rates. Historically, the Company often has been able to charter Mr. Ryan’s aircraft through EJM thereby benefittingbenefiting from this discount as well as having confidence in the maintenance record of the aircraft and skill of the crew. The Company recognized an expense related to business usage of the aircraft of $0.7$1.3 million for the year ended December 31, 2021.
Loan Arrangements with Timothy W. Turner
RSG LLC entered into certain promissory notes with Timothy W. Turner, our President, in September 2015, January 2016, September 2016, January 2017, May 2017, and September 2017 in the aggregate amount of $7.0 million, of2022 (of which a certain amount is forgivable each year if he remains employed by RSG LLC. The aggregate principal amount of the notes outstanding was $4.3 million as of December 31, 2020, which notes accrue interest at 2.61%, 2.54%, 1.88%, 2.71%, 2.71%, and 1.88%, respectively, compounding annually. In 2020, 2019, and 2018, we forgaveMr. Ryan indirectly received $0.8 million $0.7 million, and $0.6 million of the loans, respectively. In June 2021, Mr. Turner repaid the outstanding balance of $4.1 million under the existing promissory notes.in remuneration).
Personal Guarantee by Patrick G. Ryan
In April 2021, Mr. Ryan personally guaranteed up to $10$10.0 million of the financial obligations of RSGthe LLC under an agency agreement with certain insurance companies that are affiliated with National Indemnity Company. The Company did not pay Mr. Ryan any consideration for this guarantee. Mr. Ryan’s guarantee may be replaced by the Company with a letter of credit at any time, subject to the prior approval of the insurance companies. It is expected that Mr. Ryan will not personally guarantee any additional financial obligations of the Company or any of its subsidiaries.
Consulting Arrangement with a Director
We have previously contracted with Michael O’Halleran, a director, to provide consulting services. Mr. O’Halleran received total cash compensation of $200,000$50,000 for consulting work performed during the year ended December 31, 2021.2022. Mr. O’Halleran’s compensation under the consulting agreement iswas based on external market practice of similar positions for consultants or employees who are not members of the Board of Directors. We terminated our consulting services with Mr. O’Halleran was also eligible for equity awards on the same general terms and conditionseffective as applicable to other non-employee members of the Board but does not receive any cash fees for his service on the Board.March 31, 2022.
2023 Proxy Statement 54 | ||||||
Employment of an Immediate Family Member of a Director
Michael O’Halleran’s son is an employee of the Company. He has beenwas an employee of the Company in 2022 and had been since August 11, 2014. His 20212022 total compensation was approximately $0.3$0.6 million, including a base salary of $0.2 million and production bonuses of approximately $0.1$0.4 million. He also received benefits generally available to all employees. His compensation was determined in accordance with our standard employment and compensation practices applicable to employees with similar responsibilities and positions.
Organizational Transactions
In connection with our IPO we effected certain organizational transactions, which we refer to collectively with the IPO as the “Organizational Transactions.” In connection with the Organizational Transactions, we entered into certain agreements with the existing RSG LLC unitholders (“LLC Unitholders”). The table below sets forth the consideration in LLC Common Units and Class B common stock received by our directors, officers and 5% equityholders in the Organizational Transactions:
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Amended and Restated Operating Agreement
In connection with the IPO, we amended and restated RSG LLC’s existing operating agreement, which we refer to as the “LLC Operating Agreement.” The operations of RSG LLC and the rights and obligations He is no longer an employee of the LLC Unitholders are set forth in the LLC Operating Agreement. See “Organizational Structure — Amended and Restated Operating Agreement of Holdings LLC.”Company.
Registration Rights Agreement
In connection with the IPO, we entered into the Registration Rights Agreement with the Ryan Parties and Onex. The Ryan Parties are entitled to request that we register their shares of capital stock on a long-form or short-form registration statement on any number of occasions in the future, which registrations may be “shelf registrations.” The Ryan Parties and Onex are entitled to participate in certain of our registered offerings, subject to the restrictions in the Registration Rights Agreement. We will pay expenses in connection with the exercise of these rights. The registration rights described in this paragraph apply to (1)(i) shares of our Class A common stock (including shares issuable to the Ryan Parties upon exchange of their LLC Common Units) held by the Ryan Parties and Onex and their affiliates and (2)(ii) any of our capital stock (or that of our subsidiaries) issued or issuable with respect to the Class A common stock described in clause (1)(i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities; provided that any particular securities will cease to be Registrable Securities
when they have been sold in a registered public offering, sold in compliance with Rule 144 of the Securities Act of 1933 (the “Securities Act”), or repurchased by us or our subsidiaries. In addition, with the consent of the Company and holders of a majority of Registrable Securities, certain Registrable Securities will cease to be Registrable Securities if they can be sold without limitation under Rule 144 of the Securities Act.
As of December 31, 2021,2022, the holders of approximately 24,664,235(i) 26,038,938 shares of outstanding Class A common stock and (ii) 106,004,466 shares of Class A common stock that will be issued upon the conversion of an equal number of outstanding LLC Common Units, or their transferees, have the right to require us to register the offer and sale of their shares.
Tax Receivable Agreement
We entered into a Tax Receivable Agreement with thecurrent and certain former LLC Unitholders certain former unitholders of RSG LLC and Onex that will provide for the payment from time to time by us to the LLC Unitholders,current and certain former unitholders of RSG LLC and Onex,Unitholders, collectively, of 85% of the amount of tax benefits, if any, that we actually realize or,(or under certainsome circumstances are deemed to realizerealize) as a result of (i) certain increases in the tax basis of assets of RSGthe LLC and its subsidiaries resulting from purchases of LLC Common Units with the proceeds of the IPO or exchanges of LLC Common Units, in the future, (ii) certain tax attributes of RSGthe LLC and its subsidiaries of RSG LLC that existed prior to the IPO, or to which we succeeded as a result of a series of transactions that resulted in Onex exchanging all of the equity interests in an entity for 20,680,420 shares of Class A common stock and a right to participate in the Tax Receivable Agreement, (iii) certain favorable “remedial” partnership tax allocations to which we become entitled (if any), and (iv) certain other tax benefits related to our entering into the Tax Receivable Agreement, including tax benefits attributable to payments that we make under the Tax Receivable Agreement. These payment obligations are obligations of Ryan Specialty Group Holdings, Inc. and not of RSGthe LLC.
Additionally, with respect to the holders of LLC Common Units who sold their LLC Common Units in connection with the IPO or had their LLC Common Units exchanged for shares of Class A common stock on a one-for-one basis in the Organizational Transactions, such holders received a one-time lump sum payment in an aggregate amount of $72.9 million, comprised of (i) $36.5 million of consideration for certain tax attributes arising as a result of the sale of any of their vested interest and (ii) $36.4 million of certain additional consideration related to the exchange of their LLC Common Units for Class A common stock (in amounts intended to approximate what the holders would have received had their exchange with us been taxable and provided us with additional tax attributes, although these exchanges will not relate to actual tax benefits obtained or to be obtained by us).
Purchases of Ownership Interests from Existing Holders
Prior to the IPO, an entity through which Onex held its common unit interest in RSG LLC (the “Common Blocker Entity”), engaged in a series of transactions that resulted in Onex exchanging all of the equity interests in the Common Blocker Entity for 20,680,420 shares of Class A common stock and a right to participate in the Tax Receivable Agreement (the “Common Blocker Mergers”).
After the IPO, we used approximately $343.5 million of the net proceeds from the IPO to acquire the equity of the entity through which Onex held its ownership of preferred units in RSG LLC. 260,000,000 preferred units in RSG LLC were converted to LLC Common Units based on an equivalent value through a series of transactions immediately after such acquisition.
In addition, we used approximately $795.7 million of the net proceeds from the IPO to acquire 35,641,682 outstanding LLC Common Units from certain existing holders of LLC Common Units. We also used the net proceeds to (i) purchase an additional 3,415,097 newly issued LLC Common Units in RSG LLC and (ii) repurchase and retire an additional 5,122,645 shares of Class A common stock held by Onex after the underwriters of the IPO elected to exercise their overallotment option.
Substantially concurrent with the IPO, RSG LLC repurchased 74,990,000 preferred units held by the Ryan Parties with cash on hand for approximately $78.3 million.
The table below sets forth the consideration in cash and Class A common stock received by our directors, officers and 5% equityholders in the Organizational Transactions and as a result of the underwriters exercising their overallotment option:
Directors & 5% Stockholders |
Cash | Shares of Class A Common Stock | ||||||
Patrick G. Ryan | 468,102,696 | 12,208,523 | ||||||
Onex | 183,616,606 | 12,455,712 | ||||||
Henry S. Bienen | 360,434 | 50,889 | ||||||
David P. Bolger | 1,119,180 | 123,887 | ||||||
Michelle L. Collins | — | — | ||||||
Nicholas D. Cortezi | — | — | ||||||
William J. Devers | 5,891,726 | 780,820 | ||||||
D. Cameron Findlay | 545,525 | 76,402 | ||||||
Robert Le Blanc | — | — | ||||||
Andrew J. McKenna | — | | — | | ||||
Michael D. O’Halleran | 4,015,544 | 571,861 | ||||||
John W. Rogers, Jr. | 543,268 | 79,853 | ||||||
Diane M. Aigotti | 30,374,122 | — | ||||||
Timothy W. Turner | 24,582,459 | — | ||||||
Jeremiah R. Bickham | 899,541 | — | ||||||
Brendan M. Mulshine | 3,198,056 | 74,592 | ||||||
Michael T. VanAcker | 929,926 | — | ||||||
Mark S. Katz | — | — | ||||||
Lisa J. Paschal | 440,696 | — |
Director Nomination Agreement
In connection with the IPO, we entered into a Director Nomination Agreement with the Ryan Parties and Onex. The Director Nomination Agreement provides the Ryan Parties the right to designate (in each instance, rounded up to the nearest whole number if necessary): (i) all of the nominees (with the exception of the nominee of Onex, if applicable) for election to our Board for so long as the Ryan Parties control, in the aggregate, 50% or more of the total number of shares of our common stock beneficially owned by the Ryan Parties upon completion of the IPO, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split, or similar changes in our capitalization (the “Original Amount”);, (ii) 50% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 40%, but less than 50%, of the Original Amount;Amount, (iii) 40% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 30%, but less
2023 Proxy Statement 55 | ||||||
than 40%, of the Original Amount;Amount, (iv) 30% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 20%, but less than 30%, of the Original Amount;Amount, and (v) 20% of the nominees for election to our Board for so long as the Ryan Parties control, in the aggregate, more than 10%, but less than 20%, of the Original Amount. Upon the death or disability of Patrick G. Ryan, or at such time that he is longer on the Board or actively involved in the operations of the Company, the Ryan Parties will no longer hold the nomination rights specified in (i) through (v); however, the Ryan Parties will have the right to designate one nominee for so long as the Ryan Parties control, in the aggregate, 10% or more of the Original Amount. In addition, for so long as the Ryan Parties hold the nomination rights specified in (i) through (v), the Ryan Parties have the right to nominate the chairmanchairperson of the Board. Onex has the right to designate one nominee for election to our Board for so long as Onex controls more than 50% or more of the total number of shares of our common stock beneficially owned by Onex upon completion of the IPO, as adjusted for any reorganization, recapitalization, stock dividend, stock split, reverse stock split, or similar changes in our capitalization. In any case, the Ryan Parties’ and Onex’s nominees must comply with applicable law and stock exchange rules. In addition, the Ryan Parties and Onex shall be entitled to designate the replacement for any of its Board designees whose Board service terminates prior to the end of the director’s term, regardless of the Ryan Parties’ and Onex’s beneficial ownership at that time. The Ryan Parties shall also have the right to have their designees participate on committees of our Board proportionate to
their stock ownership, subject to compliance with applicable law and stock exchange rules. The Director Nomination Agreement also prohibits us from increasing or decreasing the size of our Board without the prior written consent of the Ryan Parties. This agreement will terminate at such time as the Ryan Parties and Onex control, in the aggregate, less than 5% of the Original Amount.
Indemnification of Officers and Directors
Upon completion of IPO, weWe have entered into indemnification agreements with each of our officers, directors, and director nominees. The indemnification agreements provide the officers and directors with contractual rights to indemnification, expense advancement, and reimbursement, to the fullest extent permitted under the DGCL.Delaware General Corporation Law (“DGCL”). Additionally, we may enter into (i) indemnification agreements with any new directors or officers that may be broader in scope than the specific indemnification provisions contained in the DGCL and (ii) standard policies of insurance that provide coverage to (a) our directors and officers against loss arising from claims made by reason of breach of duty or other wrongful act and (b) usthe Company with respect to indemnification payments that we may make to such directors and officers. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our officers and directors pursuant to the foregoing agreements, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
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We are not aware of any matters other than those discussed in the foregoing materials contemplated for action at the Annual Meeting. The persons named in the Proxy Card will vote in accordance with the recommendation of the Board on any other matters incidental to the conduct of, or otherwise properly brought before, the Annual Meeting. The Proxy Card contains discretionary authority for them to do so.
The Audit Committee Report shall not be deemed soliciting material or filed with the SEC and shall not be deemed incorporated by reference into any prior or future filings made by us under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate such information by reference. In addition, this document includes website addresses, which are intended to provide inactive, textual references only. The information on these websites is not part of this document.
Proposals of Stockholders and Communications with our Board
Pursuant to applicable requirements of the Exchange Act, proposals of stockholders intended to be presented at the 20232024 annual meeting of stockholders must be received by us no later than [December 27, 2022],November 21, 2023, in order to be considered for inclusion in our proxy statement and form of proxy/voting instruction related to that meeting. Such proposals will need to be in writing and comply with SEC regulations regarding the inclusion of stockholder proposals in Company-sponsored proxy materials.
In addition, the Company’s Bylaws require that for a stockholder proposal or a nomination for director to be properly presented at the 20232024 annual meeting of stockholders, other than in compliance with SEC regulations, that the stockholder proposal or director nomination must comply with the requirements set forth in the Bylaws, and the Company must receive written notice of the matter no earlier than February 7, 2023January 2, 2024, and no later than March 9, 2023.February 1, 2024. Each such written notice must contain the information set forth in the Bylaws.
Any stockholder proposals or nominations should be sent to our Corporate Secretary at Ryan Specialty Group Holdings, Inc., Two Prudential Plaza, 180 NN. Stetson Avenue, Suite 4600, Chicago, IL 60601.
Stockholders and other interested parties may contact an individual director, the Board as a group, or a specified Board committee or group, including the non-employee directors as a group, by sending regular mail to: Ryan Specialty Group Holdings, Inc., Two Prudential Plaza, 180 N. Stetson Avenue, Suite 4600, Chicago, Illinois 60601, Attention: General Counsel. The General Counsel will forward the communication to the relativeapplicable directors or the Board as a whole, provided that we generally will not forward to the directors a communication that is primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information regarding the Company. Each communication should specify to which director or directors the communication is addressed, as well as the general topic of the communication. We will receive the communications and process them before forwarding them to the addressee. We may also refer communications to other departments within the Company.
We are subject to the informational requirements of the Exchange Act and, in accordance therewith, we file annual, quarterly and current reports and other information with the SEC. Copies of our reports on Forms 10-K, 10-Q, 8-K and all amendments to those reports filed with the SEC, and any reports of beneficial ownership of our Common Stock filed by executive officers, directors and beneficial owners of more than 10% of our outstanding common stock are posted on, and may be obtained through, our investor relations website, ir.ryansg.com,ir.ryanspecialty.com, or may be requested in print, at no cost, by email at ir@ryansg.comir@ryanspecialty.com or by mail at Ryan Specialty Group Holdings, Inc., Two Prudential Plaza, 180 N. Stetson Avenue, Suite 4600, Chicago, Illinois 60601, Attention: Investor Relations.
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Where to Find Additional Information
These documents will be provided upon request as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. We are an electronic filer, and the SEC maintains an Internet site that contains the reports and other information, so such information may also be accessed electronically by means of the SEC’s home page on the Internet at www.sec.gov. Please note that our website address is provided as an inactive textual reference only. The information provided on or accessible through our website is not part of this proxy statement.
Ryan Specialty is paying the expenses of this solicitation. We will also make arrangements with brokerage houses and other custodians, nominees and fiduciaries to forward proxy materials to beneficial owners of stock held as of the Record Date by such persons, and Ryan Specialty will reimburse such persons for their reasonable out-of-pocket expenses in forwarding such proxy materials. In addition to solicitation by mail, directors, officers, and other employees of Ryan Specialty may solicit proxies in person or by telephone, facsimile, email, or other similar means.
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APPENDIX A
Non-GAAP Financial Measures
In assessing the performance of our business, we use non-GAAP financial measures that are derived from our consolidated financial information, but which are not presented in our consolidated financial statements prepared in accordance with GAAP. We use these non-GAAP financial measures when planning, monitoring, and evaluating our performance. We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period to period by excluding potential differences caused by variations in capital structures, tax positions, depreciation, amortization, and certain other items that we believe are not representative of our core business. Non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, the consolidated financial statements prepared and presented in accordance with GAAP. The footnotes to the reconciliation tables below should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K filed with the SEC (the “10-K”). Industry peers may provide similar supplemental information but may not define similarly named metrics in the same way we do and may not make identical adjustments.
Organic Revenue Growth: Organic Revenue Growth represents the percentage change in Total revenue, as compared to the same period for the year prior, adjusted for revenue attributable to acquisitions during their first 12 months of the Company’s ownership, and other adjustments such as contingent commissions, fiduciary investment income, and foreign exchange rates. The most directly comparable GAAP financial metric is Total revenue growth rate.
Adjusted EBITDAC: Adjusted EBITDAC is defined as Net income before Interest expense, net, Income tax expense, Depreciation, Amortization and Change in contingent consideration, adjusted to reflect items such as (i) equity-based compensation, (ii) acquisition and restructuring related expenses, and (iii) other exceptional or non-recurring items, as applicable. The most directly comparable GAAP financial metric is Net income.
Adjusted EBITDAC Margin: Adjusted EBITDAC Margin is defined as Adjusted EBITDAC as a percentage of Total revenue. The most directly comparable GAAP financial metric is Net income margin.
Reconciliation of Organic Revenue Growth to Total Revenue Growth
Year Ended December 31, | ||||||||||
2022 | 2021 | |||||||||
Total Revenue Growth (GAAP)(1) | 20.4% | 40.7% | ||||||||
Less: Mergers and Acquisitions(2) | (2.8) | (18.3) | ||||||||
Change in Other(3) | (1.2) | 0.0 | ||||||||
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Organic Revenue Growth (Non-GAAP) | 16.4% | 22.4% | ||||||||
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(1) | December 31, 2022 revenue of $1,725.2 million less December 31, 2021 revenue of $1,432.8 million is a $292.4 million year-over-year change. The change, $292.4 million, divided by the December 31, 2021 revenue of $1,432.8 million, is a total revenue change of 20.4%. December 31, 2021 revenue of $1,432.8 million less December 31, 2020 revenue of $1,018.3 million is a $414.5 million year-over-year change. The change, $414.5 million divided by the December 31, 2020 revenue of $1,018.3 million, is a total revenue change of 40.7%. See “Comparison of the Year Ended December 31, 2022 and 2021” in the 10-K for further details. |
(2) | The mergers and acquisitions adjustment excludes net commission and fees revenue generated during the first 12 months following an acquisition. The total adjustment for the years ended December 31, 2022 and 2021 was $40.0 million and $186.4 million, respectively. |
(3) | The other adjustments exclude the year-over-year change in contingent commissions, fiduciary investment income, and foreign exchange rates. The total adjustment for the years ended December 31, 2022 and 2021 was $16.0 million and $0.6 million, respectively. |
2023 Proxy Statement A-1 | ||||||
Reconciliation of Adjusted EBITDAC to Net Income
Ryan Specialty Group is a service provider
of specialty products and solutions for
insurance brokers, agents and carriers,
providing distribution, underwriting,
product development, administration and risk
management services by acting as a wholesale
broker and a managing underwriter.
Year Ended December 31, | ||||||||||||
(in thousands, except percentages) | 2022 | 2021 | ||||||||||
Total Revenue | $ | 1,725,193 | $ | 1,432,771 | ||||||||
Net Income | $ | 163,257 | $ | 56,632 | ||||||||
Interest expense, net | 104,829 | 79,354 | ||||||||||
Income tax expense | 15,935 | 4,932 | ||||||||||
Depreciation | 5,690 | 4,806 | ||||||||||
Amortization | 103,601 | 107,877 | ||||||||||
Change in contingent consideration | 442 | 2,891 | ||||||||||
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EBITDAC | $ | 393,754 | $ | 256,492 | ||||||||
Acquisition-related expense(1) | 4,599 | 4,275 | ||||||||||
Acquisition related long-term incentive compensation(2) | 22,093 | 38,405 | ||||||||||
Restructuring and related expense(3) | 5,717 | 14,661 | ||||||||||
Amortization and expense related to discontinued prepaid incentives(4) | 6,738 | 7,209 | ||||||||||
Other non-operating loss (income)(5) | 5,073 | 44,947 | ||||||||||
Equity-based compensation(6) | 23,390 | 13,639 | ||||||||||
Other non-recurring expense(7) | — | 351 | ||||||||||
IPO related expenses(8) | 55,636 | 79,493 | ||||||||||
(Income) / loss from equity method investments in related party | 414 | 759 | ||||||||||
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Adjusted EBITDAC(9) | $ | 517,414 | $ | 460,231 | ||||||||
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Net Income Margin(10) | 9.5% | 4.0% | ||||||||||
Adjusted EBITDAC Margin | 30.0% | 32.1% |
(1) | Acquisition-related expense includes diligence, transaction-related, and integration costs. Compensation and benefits expenses were $0.1 million for the year ended December 31, 2022, while General and administrative expenses contributed $4.5 million and $4.3 million of the acquisition-related expense for the years ended December 31, 2022 and 2021, respectively. |
(2) | Acquisition related long-term incentive compensation arises from long-term incentive plans associated with acquisitions. |
(3) | Restructuring and related expense consists of compensation and benefits of $0.7 million and $9.9 million for the years ended December 31, 2022 and 2021, respectively, and General and administrative costs including occupancy and professional services fees of $5.0 million and $4.7 million for the years ended December 31, 2022 and 2021, respectively, related to the restructuring plan. The compensation and benefits expense includes severance as well as employment costs related to services rendered between the notification and termination dates. See “Note 5, Restructuring” of the audited consolidated financial statements in the 10-K for further details. The remaining costs that preceded the restructuring plan were associated with organizational design, other severance, and non-recurring lease costs. |
(4) | Amortization and expense related to discontinued prepaid incentive programs – see “Note 15, Employee Benefit Plans, Prepaid and Long-Term Incentives” of the audited consolidated financial statements in the 10-K for further details. |
Prudential Plaza
(5) | For the year ended December 31, 2022, Other non-operating loss includes a $5.6 million charge related to the change in the Tax Receivable Agreement liability caused by a change in our blended state tax rates. For the year ended December 31, 2021, Other non-operating loss includes the change in fair value of the embedded derivatives on the preferred equity. This change in fair value of $36.9 million was due to the occurrence of our IPO. The loss in 2021 also includes expense of $8.6 million associated with the extinguishment of a portion of our deferred debt issuance costs on the term debt. |
180 N. Stetson Ave., Suite 4600
(6) | Equity-based compensation reflects non-cash equity-based expense. |
Chicago, IL 60601
(7) | Other non-recurring expense includes one-time impacts that do not reflect the core performance of the business, including General and administrative expenses of $0.4 million for the year ended December 31, 2021 and de minimis Compensation and benefits expense for the years ended December 31, 2022 and 2021, respectively. Other non-recurring items include one-time professional services costs associated with term debt repricing and one-time non-income tax charges and tax and accounting consultancy costs associated with potential structure changes. |
(8) | IPO related expenses includes $1.5 million and $3.6 million for the years ended December 31, 2022 and 2021, respectively, of General and administrative expense associated with the preparations for Sarbanes-Oxley compliance, tax, and accounting advisory services on IPO-related structure changes, and Compensation-related expense of $54.1 million and $75.9 million for the years ended December 31, 2022 and 2021, respectively, related primarily to the revaluation of existing equity awards at the IPO, as well as expense for new awards issued at the IPO. |
(9) | Consolidated Adjusted EBITDAC does not reflect a deduction for the Adjusted EBITDAC associated with the non-controlling interest in Ryan Re for the period of time prior to March 31, 2021 when the Company did not own 100% of Ryan Re. |
(10) | Net income margin is Net income as a percentage of Total revenue. |
2023 Proxy Statement A-2 | ||||||
P.O. BOX 8016, CARY, NC 27512-9903
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: | ||
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INTERNET
Go To: www.proxypush.com/RYAN • Cast your vote online • Have your Proxy Card ready • Follow the simple instructions to record your vote
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PHONE Call1-866-430-3449
• Use any touch-tone telephone • Have your Proxy Card ready • Follow the simple recorded instructions
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• Mark, sign and date your Proxy Card • Fold and return your Proxy Card in the postage-paid envelope provided
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You must register to attend the meeting online and/or participate at www.proxydocs.com/RYAN
Ryan Specialty |
Annual Meeting of Stockholders
For Stockholdersstockholders of record as of April 11, 2022March 10, 2023
TIME: |
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PLACE: | Annual Meeting to be held live via the internet - please visit |
www.proxydocs.com/RYAN for more |
This proxy is being solicited on behalf of the Board of Directors
The undersigned hereby appoints Patrick G. Ryan, Timothy W. Turner and Mark S. Katz (the “Named Proxies”), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Ryan Specialty Group Holdings, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORSDIRECTORS’ RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof.
You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
Ryan Specialty Group Holdings, Inc.
Annual Meeting of Stockholders
Please make your marks like this:
Please make your marks like this: | ||
THE BOARD OF DIRECTORS RECOMMENDS A VOTE:
FOR ON PROPOSALS 1, 2 3, 5 AND 6
THE BOARD RECOMMENDS THAT THE FREQUENCY OF AN ADVISORY VOTE ON THE COMPENSATION FOR NAMED EXECUTIVE OFFICERS BE HELD EVERY ONE YEAR.3
BOARD OF | ||||||||||
DIRECTORS | ||||||||||
PROPOSAL | YOUR VOTE | RECOMMENDS | ||||||||
1. Election of Directors |
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FOR | WITHHOLD | |||||||||
1.01 | ☐ | ☐ | FOR | |||||||
1.02 | ☐ | ☐ | FOR | |||||||
1.03 | ☐ | ☐ | FOR | |||||||
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FOR | AGAINST | ABSTAIN | ||||||||
2. To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm | ☐ | ☐ | ☐ | FOR | ||||||
3. To approve, by a non-binding advisory vote, the compensation of our named executive | ☐ | ☐ | ☐ | FOR | ||||||
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You must register to attend the meeting online and/or participate at www.proxydocs.com/RYAN Authorized Signatures - Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. |
Signature (and Title if applicable) | Date | Signature (if held jointly) | Date |
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Ryan Specialty Group Holdings, Inc.
Annual Meeting of Stockholders
THE BOARD OF DIRECTORS RECOMMENDS A VOTE:
FOR ON PROPOSALS 1, 2, 3, 5 AND 6
THE BOARD RECOMMENDS THAT THE FREQUENCY OF AN ADVISORY VOTE ON THE COMPENSATION FOR NAMED EXECUTIVE OFFICERS BE HELD EVERY ONE YEAR.
PROPOSAL
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1.01 Henry S. Bienen
1.02 William J. Devers
1.03 Michael D. O’Halleran
1.04 Timothy W. Turner
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