| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
On December 17, 2018, Universal Insurance Holdings, Inc. (the “Company”) entered into aone-year employment agreement with Jon W. Springer, the Company’s President and Chief Risk Officer (the “Agreement”), which is effective as of January 1, 2019. Mr. Springer and the Company are parties to an employment agreement dated as of April 11, 2018, which expires on December 31, 2018. The following summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference thereto.
Term
Mr. Springer’s Agreement provides that he will continue to serve as President and Chief Risk Officer of the Company for aone-year term beginning on January 1, 2019 and ending on December 31, 2019, unless earlier terminated in accordance with its terms (the “Term”).
Base Salary
Mr. Springer will receive a base salary of $1,000,000, which will not be increased or decreased during the Term.
Annual Bonus
Mr. Springer is eligible to receive an annual cash bonus which will be calculated based on the Company’s Return on Average Equity (as defined in the Agreement, “ROAE”) with a target value of $3.25 million at ROAE of 25.0%. Mr. Springer’s annual bonus is subject to adjustments by the Compensation Committee for certain extraordinary or special items and contingent on continued employment.
Performance Share Units
Mr. Springer is eligible to receive a grant of performance share units with a target value of $1 million on the grant date (the “PSU Grant”) payable under and subject to the Company’s 2009 Omnibus Incentive Plan, as may be amended from time to time (the “Omnibus Plan”). The PSU Grant will be subject to a three-year award cycle commencing on the date of grant as well as performance-vesting and time-vesting conditions set forth in the Agreement.
Options
Mr. Springer will receive a grant of options to purchase the Company’s common stock in the sole discretion of the Compensation Committee (the “Option Grant”). The Option Grant will be made pursuant to the Omnibus Plan and will be subject to the terms of the Omnibus Plan and any applicable award agreement evidencing the Option Grant.
Termination
If Mr. Springer is terminated without cause or resigns for good reason (as such terms are defined in the Agreement), he would be entitled to alump-sum cash amount equal to 12 months’ base salary and 12 months of COBRA coverage, subject to his execution of a general release of claims in favor of the Company. He would also be entitled to receive a pro rata portion of his annual incentive award for the year of termination, calculated on the basis of the Company’s actual performance for such year. Any stock options that would have vested had he been continuously employed through the end of theone-year period following the termination date will fully vest as of the termination date and shall remain exercisable for one year. In addition, any PSUs that would have vested had he been continuously employed through the end of theone-year period following the termination date will vest based on actual performance for the full performance year, determined after the end of the performance year.
Change in Control
In the event of a change in control (as defined in the Agreement) and Mr. Springer is terminated without cause or resigns for good reason within 24 months after such change in control, Mr. Springer would be entitled to alump-sum cash amount equal to 48 months’ base salary, plus two times any bonus paid for the calendar year prior to the change in control, subject to his execution of a general release of claims in favor of the Company. All stock options would immediately vest and all PSUs would immediately vest and become payable within 30 days following their regularly scheduled vesting. All such change in control payments would be reduced to the extent they would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, if such reduction would result in Mr. Springer receiving a higher netafter-tax amount.
