On May 2, 2011, Greenlight Capital Re, Ltd. (the “Registrant”), issued a press release announcing its financial results for the first quarter ended March 31, 2011. A copy of the press release is attached hereto as Exhibit 99.1 to this Form 8-K and incorporated herein by reference.
In accordance with general instruction B.2 to Form 8-K, the information set forth in this Item 2.02 (including Exhibit 99.1) shall be deemed “furnished” and not “filed” with the Securities and Exchange Commission (the "SEC") for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Announcement of Chief Executive Officer Resignation and Successions Effective August 15, 2011.
On May 2, 2011, the Registrant issued a press release announcing the retirement of Leonard Goldberg as the Chief Executive Officer of the Registrant effective August 15, 2011. Mr. Goldberg will continue to be actively involved as a continuing member of each of the board of directors of the Registrant and Greenlight Reinsurance, Ltd. The Registrant also issued a press release announcing that Barton Hedges, the current President and Chief Underwriting Officer of the Registrant, will be promoted to Chief Executive Officer, succeeding Mr. Goldberg upon his retirement. Mr. Hedges is expected to become a member of each of the board of directors of the Registrant and Greenlight Reinsurance, Ltd.
Mr. Hedges' Employment Terms.
The Registrant, Greenlight Reinsurance, Ltd. (together with the Registrant, the “Employer”) and Barton Hedges have agreed to certain employment agreement terms (the “Employment Terms”), to become effective as of August 15, 2011 (the “Effective Date”). The Employment Terms will supersede the terms of Mr. Hedges’ current employment agreement. Pursuant to the Employment Terms, Mr. Hedges will become Chief Executive Officer, be employed “at will” and continue employment until terminated upon advance written notice by either the Employer or Mr. Hedges. As of the Effective Date, Mr. Hedges will be entitled to receive an annual salary of not less than $500,000, subject to increase as determined by the Registrant’s Board of Directors (the “Board”), and an annual performance-based bonus with a target equal to 100% of base salary. Mr. Hedges will also receive a Cayman Islands housing allowance of $6,000 per month and be entitled to participate in the Registrant’s employee benefit plans and insurance programs. Mr. Hedges will also be reimbursed for certain tax preparation expenses.
As soon as practicable following the Effective Date, Mr. Hedges will be granted a ten year option to acquire 100,000 Class A ordinary shares of the Registrant with a per share exercise price equal to the fair market value per share on the date of grant. Subject to Mr. Hedges’ continuing employment with the Employer on the relevant date of grant, for each year after 2011, on the third Nasdaq trading day following the Registrant’s release of earnings results for the quarterly periods ended on each of June 30, the Registrant will grant Mr. Hedges an additional ten year option as of such date with a value of $500,000 based on a Black Scholes valuation. Options granted to Mr. Hedges will vest as follows: 25% on the relevant date of grant and 25% on each of the first three anniversaries of such date, subject to Mr. Hedges’ continuing employment on the relevant vesting date.
In addition to perpetual confidentiality and non-disparagement requirements, Mr. Hedges will be subject to a six-month post-termination non-competition restriction, a twelve-month post-termination non-solicitation restriction with respect to employees and a twenty-four-month post-termination non-solicitation restriction with respect to customers and clients.
In the event that the Employer terminates Mr. Hedges’ employment without “cause”, or Mr. Hedges terminates for “good reason,” the Employer will pay Mr. Hedges a lump sum payment as soon as practicable following the date of termination, but in no event later than two and a half months following the date of termination, equal to accrued but unpaid base salary, bonus, and vacation pay; and a pro-rated portion of the target bonus that would have been paid for the year in which his employment terminated assuming the applicable targets have been achieved. In addition, the Employer will pay Mr. Hedges as severance in twelve monthly installments the sum of his annual base salary and target bonus provided that he does not breach certain restrictive covenants. If the Board determines, in its discretion, that severance payments due are “nonqualified deferred compensation” subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and that Mr. Hedges is a “specified employee” under the Code and the regulations and other guidance issued there under, then such severance payments shall commence on the first payroll date following the six month anniversary of the date of termination.
If Mr. Hedges’ employment terminates as a result of his death, Mr. Hedges’ beneficiary, legal representatives or estate will be entitled to accrued but unpaid base salary, bonus and vacation pay; and a pro-rated portion of the target bonus that would have been paid for the year in which his employment terminated assuming targets had been achieved, as soon as practicable, but not more than 90 days, following the date of such termination. In addition, if Mr. Hedges’ employment terminates as a result of his death, his spouse and dependents will be entitled to receive health benefits for one year. The Employer may terminate Mr. Hedges’ employment agreement upon 30 days’ prior written notice if he becomes disabled. If Mr. Hedges’ employment terminates because of disability, in addition to the accrued but unpaid compensation discussed above and pro-rated bonus, Mr. Hedges will be entitled to receive base salary and continued health benefits for the lesser of one year or until Mr. Hedges is eligible to receive long-term disability benefits under any long-term disability plan that the Registrant may establish. Continued base salary payments will be paid in accordance with the Employer’s regular payroll schedule.
The Employer may require that Mr. Hedges execute a release of claims against it as a condition for compensation or benefits payable upon any termination of employment.
Mr. Goldberg's Retirement Terms.
Pursuant to a resignation letter, dated April 28, 2011, tendered to and accepted by each of the board of directors of the Registrant and Greenlight Reinsurance, Ltd. (together, the “Companies”), Mr. Goldberg resigned as Chief Executive Officer of each of the Companies effective August 15, 2011. In connection therewith, Mr. Goldberg waived and forfeited any right to receive severance under his existing employment agreement and agreed that all other provisions, terms and conditions therein remain unmodified and in full force and effect, unless his employment is terminated by the Companies prior to August 15, 2011.
