Subsequent Event

9 Months Ended

Sep. 30, 2019

On November 5, 2019, Mark E. Watson III retired from his position as President and Chief Executive Officer of Argo Group International Holdings, Ltd. (the “Company”), effective immediately. Mr. Watson will resign from the Board of Directors, effective December 30, 2019. Additionally, the Company’s Board of Directors appointed Kevin J. Rehnberg, 56, to serve as the Company’s Interim President and Chief Executive Officer, effective immediately and subject to Bermuda regulatory approval.

On November 5, 2019, the Company and Mr. Watson entered into a binding term sheet (the “Term Sheet”) that will form the basis of a separation agreement between the parties that will be negotiated and is expected to be finalized during the fourth quarter of 2019 (the “Separation Agreement”). Upon executing the Separation Agreement, the Company expects to recognize certain expenses related to cash and stock compensation payable to Mr. Watson in accordance with the provisions of the Term Sheet, which are summarized as follows:

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Effective as of the date on which the Separation Agreement becomes fully enforceable and binding, Mr. Watson will fully vest in 77,396 shares from his restricted stock grants awarded between 2016 through 2019. At that time, the Company will recognize stock compensation expense associated with the vesting of these shares based on the closing price of the Company's common stock on that date (approximately $4 million based on the November 6, 2019 closing price). Additionally, Mr. Watson forfeits his unvested market-based stock awards upon his retirement, resulting in the reversal of previously recognized stock compensation expense of approximately $1 million, to be recorded during the fourth quarter of 2019.

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Mr. Watson will place 35,296 of the aforementioned vested shares into an escrow account, all or a portion of which will be used to satisfy his reimbursing the Company for certain of his personal expenses that were paid for by the Company, in an amount to be determined after the Company concludes its investigation into such expenses. Any shares not needed to satisfy Mr. Watson's reimbursement obligation to the Company will be released to Mr. Watson.


•	The Company will pay Mr. Watson $1,750,000 within ten days after he executes the Separation Agreement, and an additional $750,000 upon re-execution of the Separation Agreement on or following December 31, 2019.

Due to the above, there will be tax impacts that the Company is currently evaluating.