DEF 14A 1 d632182ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

Filed by the Registrant  

Filed by a Party other than the Registrant  

Check the appropriate box:

 

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 Section 240.14a-12

Verisk Analytics, Inc.

 

(Name of Registrant as Specified in its Charter)

 

 

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Table of Contents

 

Notice of 2019 Annual Meeting of Shareholders

   
When:    May 15, 2019, 8:00 AM, local time                                                                                                                                                                                                                                 
   
Where:   

The offices of the Company

545 Washington Boulevard

Jersey City, New Jersey 07310

 

 

 

April 1, 2019

To Our Shareholders:

NOTICE IS HEREBY GIVEN that the 2019 Annual Meeting of Shareholders of Verisk Analytics, Inc. will be held on Wednesday, May 15, 2019, at 8:00 a.m. local time, at 545 Washington Boulevard, Jersey City, New Jersey 07310, to:

 

   

elect three (3) members of the Board of Directors;

 

   

approve the compensation of the Company’s named executive officers on an advisory, non-binding basis (“say-on-pay”);

 

   

ratify the appointment of Deloitte & Touche LLP as independent auditor for the year ending December 31, 2019; and

 

   

transact such other business as may properly come before the meeting.

Our Board of Directors recommends that you vote “FOR” the election of directors, the approval of the compensation of the Company’s named executive officers on an advisory, non-binding basis, and the ratification of the appointment of the auditor.

We are pleased to take advantage of the SEC rule allowing companies to furnish proxy materials via the Internet. We believe this notice and access process expedites shareholders’ receipt of proxy materials and lowers the costs of our annual meeting of shareholders. Accordingly, we have mailed to certain of our beneficial owners the Notice of Internet Availability of Proxy Materials containing instructions on how to access the attached Proxy Statement and our Annual Report on Form 10-K via the Internet and how to vote online. The Notice of Internet Availability of Proxy Materials also contains instructions on how you can receive a paper copy of the proxy materials. We are mailing paper copies of our annual meeting materials to our shareholders of record, and to eligible participants in the ISO 401(k) Savings and Employee Stock Ownership Plan, or ESOP.

The Notice of Internet Availability of Proxy Materials is being mailed to certain of our shareholders beginning on or about April 1, 2019. The Proxy Statement is being made available to our shareholders and eligible ESOP participants beginning on or about April 1, 2019.

Very truly yours,

 

 

LOGO

Kenneth E. Thompson

Executive Vice President, General

Counsel and Corporate Secretary

                *****

 

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on May 15, 2019. Our Proxy Statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 are available at www.proxyvote.com. Upon written request to our Corporate Secretary, we will provide a copy of our Annual Report on Form 10-K without charge. Please mail any written request to Kenneth E. Thompson, Verisk Analytics, Inc., 545 Washington Boulevard, Jersey City, NJ 07310-1686.


Table of Contents

Table of Contents

 

     Page  

Proxy Statement

     1  

Annual Meeting Information

     1  

Voting Information

     1  

Item 1 — Election of Directors

     3  

Corporate Governance

     7  

Corporate Governance Strengths

     7  

Actions Taken in 2018 to Strengthen Corporate Governance

     7  

Proxy Access

     7  

Committee Leadership Refreshment

     7  

Leadership Structure, Chairman and Independent Lead Director

     8  

Director Independence

     8  

Board Meetings and Director Attendance

     9  

Director Attendance at Annual Meetings

     10  

Independent Executive Sessions

     10  

Communications with Directors

     10  

Mandatory Retirement

     10  

Compensation Governance

     10  

Compensation Committee Interlocks and Insider Participation

     11  

Criteria for Board Candidates, Including Board Diversity

     11  

Shareholder Recommendations for Board Candidates

     11  

Board Role in Risk Oversight

     11  

Board Evaluations

     12  

Succession Planning

     12  

Corporate Governance Documents

     13  

Directors’ Compensation and Benefits

     14  

Executive Officers of Verisk

     16  

Security Ownership of Certain Beneficial Owners and Management

     17  
     Page  

Principal Shareholders

     19  

Executive Compensation

     20  

Compensation Discussion and Analysis

     20  

Compensation Committee Report

     31  

2018 Summary Compensation Table

     32  

2018 Grants of Plan-Based Awards

     33  

2018 Outstanding Equity Awards at Fiscal Year-End

     34  

2018 Option Exercise and Stock Vested

     35  

2018 Pension Benefits

     35  

2018 Nonqualified Deferred Compensation

     36  

Potential Payments upon Termination or Change in Control

     36  

Equity Compensation Plan Information

     38  

CEO Pay Ratio

     38  

Certain Relationships and Related Transactions

     40  

Item 2 —  Approval of the Compensation of the Company’s Named Executive Officers on an Advisory, Non-Binding Basis

     41  

Item 3 —  Ratification of the Appointment of the Company’s Independent Auditor

     42  

Audit Committee Report

     43  

Other Matters

     47  

Appendix A – Reconciliation of GAAP and Non-GAAP Financial Measures

     48  
 


Table of Contents

Proxy Statement

We are making this Proxy Statement available in connection with the solicitation of proxies by our Board of Directors for the 2019 Annual Meeting of Shareholders (the “2019 Annual Meeting”). We are mailing the Notice of Internet Availability of Proxy Materials on or about April 1, 2019. This Proxy Statement is being made available to our shareholders on or about April 1, 2019. In this Proxy Statement, we refer to Verisk Analytics, Inc. as the “Company,” “Verisk,” “we,” “our” or “us” and the Board of Directors as the “Board.”

Annual Meeting Information

 

Date and Location

We will hold the annual meeting on Wednesday, May 15, 2019 at 8:00 AM, local time, at the offices of the Company, 545 Washington Boulevard, Jersey City, New Jersey 07310.

Admission

Only record or beneficial owners of our common stock as of the Record Date, as defined below, or their proxies, and eligible participants of the ISO 401(k) Savings and Employee Stock Ownership Plan, or ESOP, may attend the annual meeting in person. When you arrive at the annual meeting, you must present photo identification, such as a driver’s license. Beneficial owners must also provide evidence of stock holdings, such as a recent brokerage account or bank statement.

Record Date

The Record Date for the annual meeting is March 18, 2019. Record and beneficial owners may vote all shares of Verisk’s Common Stock they owned as of the close of business on that date. Each share of Common Stock entitles you to one vote on the election of each of the Directors nominated for election and one vote on each other matter voted on at the annual meeting. On the Record Date 163,511,776 shares of Common Stock were outstanding. We need a quorum consisting of a majority of the shares of Common Stock outstanding on the Record Date present, in person or by proxy, to hold the annual meeting.

Notice of Electronic Availability of Proxy Materials

Pursuant to the rules adopted by the SEC, we are making this Proxy Statement and our Annual Report on Form 10-K avail-

able to many of our shareholders electronically via the Internet. On or about April 1, 2019, we are mailing to our beneficial owners (other than ESOP participants) the Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access this Proxy Statement and our Annual Report on Form 10-K via the Internet and how to vote online. If you would like to receive a printed or electronic copy of our proxy materials, you should follow the instructions for requesting such materials included in the Notice. Your participation in this process enables us to save money on the cost of printing and mailing the documents to you.

Printed copies of the proxy materials are being sent to record holders of our stock and to eligible ESOP participants. All shareholders and eligible ESOP participants will be able to access the proxy materials at www.proxyvote.com.

Voting Information

Record and Beneficial Owners

If your shares are registered directly in your name with our transfer agent, Equiniti Trust Company (formerly known as Wells Fargo Shareowner Services), you are considered, with respect to those shares, to be a stockholder of record, and our annual meeting materials are being sent to you directly by us. As the stockholder of record, you have the right to grant your voting proxy or to attend the meeting and vote in person. If your shares are held in a brokerage account or by a bank or other nominee, you are considered a beneficial owner of those shares held in “street name” and your broker or nominee is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your broker or nominee on how to vote your shares.

 

 

Votes Required

 

     

  Proposals for Your Vote

 

 

Votes Required

 

 

Effect of

Abstentions

 

  

Effect of Broker

Non-Votes

 

     

 

  Proposal 1: Electing Three Members of the Board of Directors

 

 

Majority of votes cast

 

 

No effect

  

 

No effect

     

Proposal 2: Approving the Compensation of the Company’s Named
Executive Officers on an Advisory, Non-binding Basis (“Say-on-Pay”)

  Affirmative vote of a
majority of shares
present or repre
sented by proxy

 

  Vote against    No effect
     

Proposal 3: Ratifying the Appointment of Deloitte & Touche LLP as
Independent Auditor for 2019

  Affirmative vote of a
majority of shares
present or repre
sented by proxy

 

  Vote against    None -

Brokers have

discretion to vote

 

Verisk 2019 Proxy Statement  |  1


Table of Contents

Voting Information

 

Votes Required to Elect Directors

In uncontested elections, each director will be elected by a majority of the votes cast, meaning that the number of shares voted “for” a director must exceed the number of shares voted “against” that director for the director to be elected. The Company has adopted a director resignation policy providing that an incumbent director who did not receive a majority of votes cast must promptly tender his or her resignation to the Board. The Nominating Committee will consider the resignation and make a recommendation to the Board whether to accept or reject the resignation. If the Board decides not to accept the resignation, the director will continue to serve on the Board until such director’s successor is elected and qualified or until such director’s earlier resignation or removal. If the Board accepts the resignation, the Nominating Committee may recommend to the Board, and the Board will thereafter decide, whether to fill the resulting vacancy or to reduce the size of the Board. The Board, excluding the director in question, will act on the Nominating Committee’s recommendation and publicly disclose its decision and the rationale supporting it within 90 days following the date of the certification of the election results.

Votes Required to Approve the Compensation of the Company’s Named Executive Officers on an Advisory, Non-Binding Basis

The approval of the compensation of the Company’s named executive officers on an advisory, non-binding basis requires the affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the annual meeting and entitled to vote thereon.

Votes Required to Ratify the Auditor

The ratification of the appointment of Deloitte & Touche LLP requires the affirmative vote of a majority of the shares of common stock present in person or represented by proxy at the annual meeting and entitled to vote thereon.

“Abstaining” and “Broker Non-Votes”

You may also “abstain” from voting for the director nominees and the other proposals. Shares voting “abstain” and broker non-votes with respect to any nominee for director will have no effect on the election of directors. Shares voting “abstain” on the other proposals will have the effect of a vote against the proposal. Broker non-votes will not be counted in determining the results of the vote on the say-on-pay proposal but both abstentions and broker non-votes will be counted as present at the annual meeting for purposes of determining a quorum.

 

 

2  |  Verisk 2019 Proxy Statement


Table of Contents

Item 1 — Election of Directors

 

Our Board of Directors is divided into three classes each serving staggered terms. The number of directors is fixed by our Board of Directors, subject to the terms of our amended and restated certificate of incorporation. Our Board of Directors currently consists of twelve directors and each director who is elected will be elected for a three-year term.

The nominees for election at the 2019 Annual Meeting are set forth below and will serve terms continuing until 2022. John F. Lehman, Jr., a director currently serving a term expiring at the 2019 Annual Meeting, will retire from the Board effective as of

the 2019 Annual Meeting and therefore is not standing for re-election. Accordingly, if each director nominee for election at the 2019 Annual Meeting is elected, our Board of Directors will consist of a total of eleven directors. All of the director nominees are current directors of Verisk as of April 1, 2019, and each nominee has indicated that he or she will serve if elected. We do not anticipate that any nominee will be unable or unwilling to stand for election, but if that happens, your proxy may be voted for another person nominated by the Board or the Board may reduce its size.

 

 

Board Qualifications and Diversity

We believe that each of the nominees listed below possesses key attributes that we seek in a director, including strong and effective decision-making, communication and leadership skills.

We also believe that the continuing Board members as a whole possess the right diversity of backgrounds, experience, qualifications and skills to oversee and address the key issues facing the Company.

 

LOGO   LOGO  

Tenure

 

LOGO

 
3 out of 11 are women   10 out of 11 are independent   3 new directors appointed since 2015

 

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO     8 of 11
   Other Public Company Board Experience

 

 

 

LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO    LOGO     8 of 11
   Prior or Current CEO Experience
 

 

Verisk 2019 Proxy Statement  |  3


Table of Contents

Item 1

 

Nominees for Election at the 2019 Annual Meeting

Nominees for terms continuing until 2022

 

  LOGO   

 

Scott G. Stephenson

 

Chairman, President and CEO

Age 61

 

Committees: Executive (Chair)

 

Scott G. Stephenson has been our Chief Executive Officer since April 2013 and has been our President since March 2011. Mr. Stephenson has also served on our Board of Directors since April 2013 and effective April 2016, Mr. Stephenson was appointed as the Chairman of our Board. Mr. Stephenson also previously served as our Chief Operating Officer and prior to that led our Decision Analytics segment. From 2002 to 2008, Mr. Stephenson served as our Executive Vice President, and he served as President of our Intego Solutions business from 2001 to 2002. Mr. Stephenson joined the Company from Silver Lake Partners, a technology-oriented private equity firm, where he was an advisor from 2000 to 2001. From 1989 to 1999 Mr. Stephenson was a partner with The Boston Consulting Group, eventually rising to senior partner and member of the firm’s North American operating committee. In assessing Mr. Stephenson’s skills and qualifications to serve on our Board, our directors considered the in-depth operations and management experience and knowledge gained by Mr. Stephenson from his various senior management and executive positions held by him within Verisk since 2001, including serving as our Chief Executive Officer since April 2013.

 

  LOGO   

 

Andrew G. Mills

 

Independent Director

Age 66

 

Committees: Audit, Finance and Investment

 

Andrew G. Mills has served as one of our directors since 2002. Mr. Mills has served as Executive Chairman of Archegos Capital Management since June 2014 and Co-Chief Executive Officer since January 2019. Mr. Mills also currently serves as the Co-Chairman of the Grace & Mercy Foundation. Mr. Mills has also served as the interim President of The King’s College in New York, New York from October 2012 to July 2013 and from May 2007 to December 2008 and also served as Chairman of the Board of Trustees from 2004 to 2014. He is the former Chairman of Intego Solutions LLC, which he founded in 2000. Mr. Mills previously served as Chief Executive Officer of The Thomson Corporation’s Financial and Professional Publishing unit and as a member of Thomson’s Board of Directors. In 1984, he led the start-up operations of Business Research Corporation and was responsible for overseeing its sale and integration into The Thomson Corporation. He began his career with Courtaulds Ltd. and joined The Boston Consulting Group in 1979. Mr. Mills is on the Board of Directors of Camp of the Woods, is a member of the Massachusetts State Board of the Salvation Army and is co-chairman of the Theology of Work Project. In assessing Mr. Mills’ skills and qualifications to serve on our Board, our directors considered his management expertise gained through senior executive positions with diverse businesses and his expertise in acquisitions and integration of acquired businesses.

  LOGO   

 

Constantine P. Iordanou

 

Independent Director

Age 69

 

Committees: Nominating and Corporate Governance, Compensation

 

Constantine P. Iordanou has served as one of our directors since 2001. Mr. Iordanou has served as Chairman and Senior Advisor of Arch Capital Group Limited, or ACGL, since March 2018 and served as President and Chief Executive Officer from August 2003 until March 2018. Mr. Iordanou has served as a director of ACGL since January 2002 and currently serves as non-executive Chairman of the Board. From January 2002 through July 2003, he was Chief Executive Officer of Arch Capital (U.S.) Inc., a wholly owned subsidiary of ACGL. Prior to joining ACGL in 2002, Mr. Iordanou served in various capacities for Zurich Financial Services and its affiliates, including as Senior Executive Vice President of Group Operations and Business Development of Zurich Financial Services, President of Zurich-American Specialties Division, Chief Operating Officer and Chief Executive Officer of Zurich American and Chief Executive Officer of Zurich North America. Prior to joining Zurich in March of 1992, he served as President of the Commercial Casualty division of Berkshire Hathaway Inc. and served as Senior Vice President with the American Home Insurance Company, a member of the American International Group. In assessing Mr. Iordanou’s skills and qualifications to serve on our Board, our directors considered his experience as director and Chief Executive Officer of another public company, ACGL, as well as his extensive experience as a senior executive of various global insurance businesses.

 

 

Our Board unanimously recommends a vote “FOR” the election of all three (3) nominees. Proxies solicited by our Board will be voted “FOR” these nominees unless otherwise instructed.

 

4  |  Verisk 2019 Proxy Statement


Table of Contents

Item 1

 

Continuing Directors

Directors with terms continuing until 2020

 

  LOGO   

 

Frank J. Coyne

 

Independent Lead Director

Age 70

 

Committees: Executive

 

Frank J. Coyne has served as one of our directors since 2002 and has served as our independent Lead Director since April 2016. Previously, Mr. Coyne served as the Chairman of our Board from 2002 until April 2016 and served as our Chief Executive Officer from 2002 until his retirement in April 2013. From 2000 to 2002, Mr. Coyne served as our President and Chief Executive Officer and he served as our President and Chief Operating Officer from 1999 to 2000. Mr. Coyne joined the Company from Kemper Insurance Cos., where he was Executive Vice President, Specialty and Risk Management Groups. Previously, he served in a variety of positions with General Accident Insurance and was elected its President and Chief Operating Officer in 1991. He has also held executive positions with Lynn Insurance Group, Reliance Insurance Co. and PMA Insurance Co. Mr. Coyne also serves on the Board of Directors of Strategic CAT Holdings LLC, a privately-held independent adjusting company, the Board of Trustees of Underwriters Laboratories, and the Board of Directors of Duquesne University. In assessing Mr. Coyne’s skills and qualifications to serve on our Board, our directors considered the in-depth operations and management experience and knowledge gained by Mr. Coyne as Chief Executive Officer of Verisk from 2002 until his retirement in 2013.

 

  LOGO   

 

Christopher M. Foskett

 

Independent Director

Age 61

 

Committees: Audit (Chair), Executive, Finance and Investment

 

Christopher M. Foskett has served as one of our directors since 1999. Mr. Foskett currently serves as a member of the Management Committee of First Data Corporation and also oversees Corporate and Business Development at First Data Corporation. From 2011 to April 2014, Mr. Foskett served as the Managing Director — Co-Head of North American Banking and Global Head of Sales for Treasury Services at JPMorgan Chase Bank. He was Managing Director — Global Head of Financial Institutions of National Australia Bank from 2008 to 2011 and Managing Director and Global Head of the Financial Institutions Group in Citigroup’s Corporate Bank from 2007 to 2008. From 2003 to 2007, Mr. Foskett was Head of Sales and Relationship Management for Citigroup Global Transaction Services. He also served as Global Industry Head for the Insurance and Investment Industries in Citigroup’s Global Corporate Bank from 1999 to 2003. Previously, he held various roles in Citigroup’s mergers and acquisitions group. In assessing Mr. Foskett’s skills and qualifications to serve on our Board, our directors considered his more than 30 years in the banking and financial services industries, and experience gained as a senior executive with global financial institutions.

  LOGO   

 

David B. Wright

 

Independent Director

Age 70

 

Committees: Audit, Compensation

 

David B. Wright has served as one of our directors since 1999. Since August 2014, Mr. Wright has served as Managing Partner of Innovative Capital Ventures, Inc. From July 2012 to May 2014, Mr. Wright served as the Chief Executive Officer of ClearEdge Power, a privately held company. From February 2010 to July 2011, Mr. Wright served as the Executive Vice Chairman and Chief Executive Officer of GridIron Systems. Mr. Wright served as Chief Executive Officer and Chairman of Verari Systems, Inc., from June 2006 to December 2009. He was Executive Vice President, Office of the CEO, Strategic Alliances and Global Accounts of EMC Corporation from July 2004 until August 2006. From October 2000 to July 2004, Mr. Wright served as President, Chief Executive Officer and Chairman of the Board of Legato Systems. Prior to joining Legato Systems, Mr. Wright had a 13-year career with Amdahl Corporation, where he served as President and Chief Executive Officer from 1997 to 2000. Mr. Wright also previously served on the Board of Directors of ClearEdge Power, GridIron Systems, ActivIdentity Corp., Aspect Communications Corp., Boole and Babbage Inc. and GeekNet, Inc. In assessing Mr. Wright’s skills and qualifications to serve on our Board, our directors considered the operations and management experience he gained in leadership positions in diverse businesses.

 

  LOGO   

 

Annell R. Bay

 

Independent Director

Age 63

 

Committees: Compensation, Nominating and Corporate Governance

 

Annell R. Bay has served as one of our directors since August 2016. Ms. Bay has more than 35 years of experience in the oil and gas industries. Ms. Bay most recently served as vice president of global exploration for Marathon Oil Corporation, from June 2008 until her retirement in April 2014. Ms. Bay was previously Vice President of Americas exploration for Shell Exploration and Production Company and Vice President of worldwide exploration at Kerr McGee Oil and Gas Corporation. Earlier in her career, Ms. Bay held positions in operations and applied research at Chevron, Sohio, and Oryx Energy. Ms. Bay serves on the advisory boards for the Jackson School of Geology at the University of Texas at Austin and the Houston Education Center for the Independent Petroleum Association of America. Ms. Bay has served on the Board of Directors of the Apache Corporation, a publicly traded company, since 2014, and Hunting PLC, a UK-listed energy company, since 2015. In assessing Ms. Bay’s skills and qualifications to serve on our Board, our directors considered her deep knowledge of the oil and gas industries and her extensive experience in the exploration of conventional and unconventional oil and gas reservoirs and in exploration portfolio risk management.

 

 

Verisk 2019 Proxy Statement  |  5


Table of Contents

Item 1

 

Directors with terms continuing until 2021

 

  LOGO   

 

Samuel G. Liss

 

Independent Director

Age 62

 

Committees: Finance and Investment (Chair), Audit

 

Samuel G. Liss has served as one of our directors since 2005. Mr. Liss is the principal of WhiteGate Partners LLC, a financial services advisory firm, and an Adjunct Professor at both Columbia University Law School and New York University Stern Graduate School of Business. Previously, Mr. Liss served as Executive Vice President at The Travelers Companies, overseeing corporate business development and one of three operating divisions — Financial, Professional Lines and International Insurance. Earlier in his career, Mr. Liss was a Managing Director in the Investment Banking and the Equities divisions at Credit Suisse, working with financial and business services companies. Mr. Liss began his career in the equities division at Salomon Brothers. Mr. Liss has served on the Board of Directors of Argo Group International Holdings, Ltd., a publicly-traded company, since February 2019. Mr. Liss formerly served on the Boards of DST Systems, Inc., Ironshore, Inc. and Nuveen Investments Inc. In assessing Mr. Liss’ skills and qualifications to serve on our Board, our directors considered his management and operational experience gained as a senior executive of a global insurance business, his expertise in investment banking and the capital markets and his Board governance experience.

 

  LOGO   

 

Therese M. Vaughan

 

Independent Director

Age 62

 

Committees: Nominating and Corporate Governance (Chair), Executive, Audit

 

Therese M. Vaughan has served as one of our directors since February 2013. Dr. Vaughan is currently the Robb B. Kelley Visiting Distinguished Professor of Insurance and Actuarial Science at Drake University. From June 2014 to June 2017, Dr. Vaughan served as the Interim Dean and then the Dean of Drake’s College of Business and Public Administration. Dr. Vaughan is a leading expert in insurance regulation having served as Chief Executive Officer of the National Association of Insurance Commissioners from February 2009 to November 2012 and as Commissioner of the Iowa Insurance Division, directing all insurance business transacted in the State of Iowa, from August 1994 to December 2004. Dr. Vaughan is an Associate of the Society of Actuaries (ASA), a Chartered Property Casualty Underwriter (CPCU), an Associate of the Casualty Actuarial Society (ACAS), and a Member of the American Academy of Actuaries (MAAA). Dr. Vaughan has served on the Board of Directors of Wellmark Blue Cross and Blue Shield since May 2013. Dr. Vaughan has previously served on the Board of Directors of Validus Holdings, Ltd., Principal Financial Group, Inc. and Endurance Specialty Holding Ltd. In assessing Dr. Vaughan’s skills and qualifications to serve on our Board, our directors considered her deep knowledge of the insurance industry and regulatory environment gained from her experience with the National Association of Insurance Commissioners and as Commissioner of the Iowa Insurance Division.

  LOGO   

 

Bruce Hansen

 

Independent Director

Age 59

 

Committees: Audit, Compensation

 

Bruce Hansen has served as one of our directors since May 2015. From 2002 to 2012, Mr. Hansen served as Chairman and CEO of ID Analytics, a company he co-founded in 2002. Prior to that, Mr. Hansen served as President of HNC Software, Inc., a publicly traded company. Mr. Hansen has also held executive roles at CASA Inc., CitiGroup, ADP and JPMorgan Chase. Mr. Hansen currently serves on the Board of Directors of two publicly traded companies, Performant Financial Corporation and MITEK Systems Inc., as well as one privately held company, RevSpring, Inc. Mr. Hansen is also an active member of the National Association of Corporate Directors. In assessing Mr. Hansen’s skills and qualifications to serve on our Board, our directors considered his management and operations experience gained as a senior executive of multiple data analytics businesses, as well as his experience gained by his current and past service on other public company boards.

 

 

 

  LOGO   

 

Kathleen A. Hogenson

 

Independent Director

Age 58

 

Committees: Finance and Investment, Nominating and Corporate Governance

 

Kathleen A. Hogenson has served as one of our directors since August 2016. Ms. Hogenson is an accomplished executive and entrepreneur with more than 30 years of energy experience. Ms. Hogenson has served as the President and Chief Executive Officer of Zone Oil & Gas, LLC, a company providing advisory and valuation services in energy, since 2007. Ms. Hogenson served as President and Chief Executive Officer of Zone Energy, LLC, a company she founded in 2009 and sold in 2015. Previously, Ms. Hogenson was President of Santos USA Corporation and Vice President of exploration and production technology for Unocal Corporation. Ms. Hogenson currently serves on the Board of Directors of First Quantum Minerals Ltd., a Canadian-listed mining company, and has previously served on the Board of Directors of Petrofac Limited and Parallel Petroleum LLC. Ms. Hogenson has also served on the advisory Board of Samsung Oil & Gas USA Corporation. In assessing Ms. Hogenson’s skills and qualifications to serve on our Board, our directors considered her proven entrepreneurial track record and extensive commercial and strategic knowledge of the oil and gas industry.

 

 

6  |  Verisk 2019 Proxy Statement


Table of Contents

Corporate Governance

 

Corporate Governance Strengths

We are committed to good corporate governance, which promotes the long-term interests of our stockholders and strengthens our Board and management accountability. Highlights of our corporate governance practices include the following:

Corporate Governance Highlights

 

    Proxy access for qualifying shareholders to nominate directors

 

    Majority voting in uncontested director elections

 

    Lead independent director

 

    100% independent members on the Audit, Compensation, Finance and Investment, and Nominating and Corporate Governance Committees

 

    Four new directors in last six years

 

    Annual Say-on-Pay vote

 

    No Poison Pill

 

    Robust stock ownership guidelines for directors and executive officers

 

    Robust “clawback” policy

 

    Policy of no hedging or pledging of Company securities

 

    Annual Board and Committee Evaluations

 

    Code of Business Conduct and Ethics

 

    Periodic reviews of Committee Charters, Corporate Governance Guidelines and Code of Business Conduct and Ethics

Actions Taken in 2018 to Strengthen Corporate Governance

Our Board, in coordination with our Nominating and Corporate Governance Committee, deliberates on and discusses the appropriate governance structure of our Company. During 2018, the Nominating and Corporate Governance Committee reviewed and made recommendations to the Board, and the Board approved changes and updates to the following governance documents and practices of the Company:

Corporate Governance changes implemented in 2018

 

    Adopted By-law Amendment to introduce Proxy Access
    Refreshed Committee Leadership and Membership

 

    Updated each of the Charters for the Audit, Compensation, Finance and Investment, and Nominating and Corporate Governance Committees

 

    Updated Corporate Governance Guidelines

 

    Updated Code of Business Conduct and Ethics

 

    Refined Annual Board Self-Assessment Process and Tools

Proxy Access

During 2018, our Nominating and Corporate Governance Committee proactively evaluated the desirability of adopting an amendment to our Amended and Restated By-Laws to provide for certain of our shareholders to nominate director nominees and have such shareholder-nominated director candidates be included in our proxy materials. Upon recommendation of the Nominating and Corporate Governance Committee, at its meeting in February 2019 the Board adopted a proxy access bylaw provision to be included in the Company’s Amended and Restated By-laws. As a result, the Company’s Amended and Restated By-Laws now permit one or a group of up to 20 shareholders who, in the aggregate, own continuously for at least three years, shares of our company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, to nominate up to the greater of two or 20% of our Board and have such nominations included in our proxy materials, provided that the shareholder(s) and nominee(s) meet the requirements in our By-Laws. Shareholders who wish to nominate directors for inclusion in next year’s Proxy Statement or directly at the 2019 Annual Meeting should follow the instructions set forth in the section titled “Shareholder Proposals” in this Proxy Statement.

Committee Leadership Refreshment

Our Board believes it is important that Board Committee leadership roles be filled by directors with appropriate skills and experience, and that succession planning is necessary in order to ensure continuity of Board leadership. The Independent Lead Director and Committee Chairs are appointed for one-year terms. On an annual basis, the Nominating and Corporate Governance Committee reviews the selection of the Independent Lead Director and the Chairs of each Committee to evaluate the utility of any changes for the coming year. Based on the recommendations of the Nominating and Corporate Governance Committee, the Board has approved the following changes which will become effective at the 2019 Annual Meeting.

 

    Independent Lead Director: Christopher M. Foskett will become Independent Lead Director. Mr. Foskett has been Chair of our Audit Committee since 2015.
 

 

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    Audit Committee: Bruce Hansen will become Chair of the Audit Committee. Mr. Hansen has been a member of our Audit Committee since 2015.

 

    Compensation Committee: Annell R. Bay will become Chair of our Compensation Committee. Ms. Bay has been a member of our Compensation Committee since 2017.

Leadership Structure, Chairman and Independent Lead Director

On April 1, 2016, we combined the roles of Chairman and CEO and we created the new role of Independent Lead Director. We believe that giving Mr. Stephenson the additional role of Chairman, effective upon his third anniversary as CEO, promoted efficiency. In addition, we have established the role of Independent Lead Director. We believe having an Independent Lead Director promotes a more robust corporate governance program and aligns our Company with an increasing number of leading public companies. Frank J. Coyne has served as Independent Lead Director since 2016. Effective at the 2019 Annual Meeting of Shareholders, Christopher M. Foskett will assume the role of Independent Lead Director.

Our Corporate Governance Guidelines establish a robust role for the Independent Lead Director. The Corporate Governance Guidelines provide that the Lead Director shall:

 

    preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors;

 

    encourage and facilitate active participation of all directors;

 

    serve as liaison between the Chairman and the independent directors when requested to do so by the independent directors;

 

    approve Board meeting agendas after conferring with the Chairman and other members of the Board, as appropriate, and add agenda items at his or her discretion;

 

    approve Board meeting schedules to assure that there is sufficient time for discussion of all agenda items;
    have the authority to call meetings of the independent directors;

 

    be available for consultation and direct communication with shareholders, as appropriate, upon reasonable request;

 

    provide leadership to the Board if circumstances arise in which the role of the Chairman may be, or may be perceived to be, in conflict, and respond to any reported conflicts of interest, or potential conflicts of interest, arising for any director;

 

    lead the independent directors in the annual evaluation of the performance of the CEO and communicate that evaluation to the CEO;

 

    be available to advise the chairs of the committees of the Board in fulfilling their designated roles and responsibilities to the Board and attend meetings of the committees of the Board; and

 

    engage with the Chairman between Board meetings and assist with informing or engaging with non-employee directors, as appropriate.

Director Independence

Currently, our Board of Directors has twelve directors. Under our bylaws, our Board may consist of between seven and fifteen directors, as the Board may determine. Upon Mr. Lehman’s retirement effective as of the 2019 Annual Meeting and if all director nominees for election at the 2019 Annual Meeting are elected, our Board will consist of eleven directors. Eleven of our current twelve directors are “independent” as determined by the Board, consistent with the Nasdaq listing rules: Annell R. Bay, Frank J. Coyne, Christopher M. Foskett, Bruce Hansen, Kathleen A. Hogenson, Constantine P. Iordanou, John F. Lehman, Jr., Samuel G. Liss, Andrew G. Mills, David B. Wright, and Therese M. Vaughan. Scott G. Stephenson, our current Chairman and Chief Executive Officer, is not considered independent. As of April 1, 2016, the Board determined that Frank J. Coyne is independent under Nasdaq listing rules as three years had passed since Mr. Coyne retired as our Chief Executive Officer.

 

 

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Board Meetings and Director Attendance

Our bylaws provide that the Board of Directors may designate one or more committees. We currently have five committees: Executive Committee, Audit Committee, Compensation Committee, Finance and Investment Committee, and Nominating and Corporate Governance Committee. Our Board met four times in 2018. In 2018, all directors attended at least 75% of the meetings of the Board and of the committees on which the directors served that were held while such directors were members.

 

Member

 

  

Executive Committee

 

  

Audit Committee

 

  

Compensation Committee

 

  

 

Finance

and

Investment Committee

 

  

 

Nominating

and Corporate

Governance

Committee

 

 

Annell R. Bay

            

 

*

       

 

 

Frank J. Coyne

  

 

                   

 

Christopher M. Foskett

  

 

  

 

CHAIR

       

 

    

 

Bruce Hansen

       

 

*

  

 

         

 

Kathleen A. Hogenson

                 

 

  

 

 

Constantine P. Iordanou

            

 

       

 

 

John F. Lehman, Jr.

  

 

       

 

CHAIR

       

 

 

Samuel G. Liss

       

 

       

 

CHAIR

    

 

Andrew G. Mills

       

 

       

 

    

 

Scott G. Stephenson

  

 

CHAIR

                   

 

Therese M. Vaughan

  

 

  

 

            

 

CHAIR

 

David B. Wright

       

 

  

 

         
              

 

Meetings in 2018

  

 

0

  

 

7

  

 

9

  

 

3

  

 

4

 

*

To become Committee Chair effective as of the 2019 Annual Meeting

 

The Executive Committee currently consists of Scott G. Stephenson (Chair), Frank J. Coyne (Lead Director), Christopher M. Foskett, John F. Lehman, Jr., and Therese M. Vaughan. The Executive Committee exercises all the power and authority of the Board of Directors (except those powers and authorities that are reserved to the full Board of Directors under Delaware law) between regularly scheduled Board of Directors meetings. The Executive Committee also makes recommendations to the full Board of Directors on various matters. The Executive Committee meets as necessary upon the call of the Chairman of the Board. The Executive Committee did not meet in 2018 as all relevant matters were handled at meetings of the full Board of Directors.

The Audit Committee currently consists of Christopher M. Foskett (Chair), Bruce Hansen, Samuel G. Liss, Andrew G. Mills, Therese M. Vaughan and David B. Wright, all of whom are “independent” as defined under Nasdaq listing rules. Effective as of the 2019 Annual Meeting, Bruce Hansen will become Chair of the Audit Committee. The Audit Committee is established in accordance with Section 3(a)(58) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Each member of our Audit Committee is financially literate, as such term is interpreted by our Board. In addition, each member of the Audit Committee meets the qualifications of an “audit committee financial expert” in accordance with SEC rules, as determined by our Board. The Audit Committee reviews the internal accounting and financial controls for the Company and the accounting principles and

auditing practices and procedures to be employed in preparation and review of the financial statements of the Company. The Audit Committee also provides assistance to our Board of Directors in fulfilling its responsibilities with respect to our compliance with legal and regulatory requirements. In addition, the Audit Committee makes recommendations to the Board of Directors concerning the engagement of the independent accounting firm and the scope of the audit to be undertaken by such auditors. The Audit Committee met seven times in 2018.

The Compensation Committee currently consists of John F. Lehman, Jr. (Chair), Annell R. Bay, Bruce Hansen, Constantine P. Iordanou and David B. Wright, all of whom are “independent” as defined under Nasdaq listing rules and qualify as “non-employee directors” within the meaning of Section 16b-3 under the Exchange Act. Effective as of the 2019 Annual Meeting, Annell R. Bay will become Chair of the Compensation Committee. The Compensation Committee reviews and, as it deems appropriate, recommends to the Board of Directors policies, practices and procedures relating to the compensation of the CEO and of each of the Company’s other executive officers and directors and the establishment and administration of employee benefit plans. The Compensation Committee also exercises all authority under the Company’s employee equity incentive plans and advises and consults with the officers of the Company as may be requested regarding managerial personnel policies. The Compensation Committee may delegate its authority to sub-

 

 

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committees or the Chair of the Compensation Committee when it deems it appropriate and in the best interests of the Company. The Compensation Committee met nine times in 2018.

The Finance and Investment Committee currently consists of Samuel G. Liss (Chair), Christopher M. Foskett, Kathleen A. Hogenson, and Andrew G. Mills. The Finance and Investment Committee meets as necessary to establish, monitor and evaluate the Company’s investment policies, practices and advisors and to advise management and the Board of Directors on the financial aspects of strategic and operational directions, including financial plans, capital planning, financing alternatives, stock repurchases and acquisition opportunities. The Finance and Investment Committee met three times in 2018.

The Nominating and Corporate Governance Committee currently consists of Therese M. Vaughan (Chair), Annell R. Bay, Kathleen A. Hogenson, Constantine P. Iordanou, and John F. Lehman, Jr., all of whom are “independent” as defined under Nasdaq listing rules. Dr. Vaughan was elected Chair of the Nominating and Corporate Governance Committee in January 2018. The Nominating and Corporate Governance Committee reviews and, as it deems appropriate, recommends to the Board of Directors policies and procedures relating to director and committee nominations, including consideration of shareholder nominees, and corporate governance policies. The Nominating and Corporate Governance Committee met four times in 2018.

Our Board has adopted a written charter for each of the Audit Committee, Compensation Committee, Executive Committee, Finance and Investment Committee and Nominating and Corporate Governance Committee setting forth the roles and responsibilities of each committee.

Director Attendance at Annual Meetings

Pursuant to the Company’s Corporate Governance Guidelines, directors are expected to attend annual meetings of shareholders. All of our directors attended the 2018 Annual Meeting of Shareholders (the “2018 Annual Meeting”).

Independent Executive Sessions

The Company’s Corporate Governance Guidelines provide that non-employee directors may meet in executive sessions and the Independent Lead Director will preside over these executive sessions. If any non-employee directors are not independent, then the independent directors will meet in executive sessions and the Independent Lead Director will preside over these executive sessions. In 2018, after every Board and committee meeting an executive session consisting of independent directors was convened.

Communications with Directors

Shareholders and other interested parties may contact any member (or all members) of the Board by mail. To communi-

cate with the Board, the Independent Lead Director, any individual director or any group or committee of directors (including the independent directors as a group), correspondence should be addressed to the Board or any such individual director or group or committee of directors by either name or title. All such correspondence should be sent to Kenneth E. Thompson, Executive Vice President, General Counsel and Corporate Secretary, Verisk Analytics, Inc., 545 Washington Blvd., Jersey City, NJ 07310. Items that are unrelated to a director’s duties and responsibilities as a Board member, such as junk mail, may be excluded by the Corporate Secretary. Any communication to report potential issues regarding accounting, internal controls and other auditing matters should be marked “Personal and Confidential” and sent to Verisk Analytics, Inc., 545 Washington Blvd., Jersey City, NJ 07310, Attention: Chair of the Audit Committee of Verisk Analytics, Inc., in care of Kenneth E. Thompson, Executive Vice President, General Counsel and Corporate Secretary. Our Policy for Reporting Concerns Related to Accounting and Ethical Violations (Whistleblower Policy) is available on our website at the “Corporate Governance —Governance Documents” link under the “Investors” link at www.verisk.com.

Mandatory Retirement

John F. Lehman, Jr. is currently serving as a director for a three-year term ending in 2019. Mr. Lehman has passed the Company’s mandatory retirement age of 75 for directors under our Corporate Governance Guidelines and accordingly, Mr. Lehman is not standing for re-election and will retire effective as of the 2019 Annual Meeting.

Compensation Governance

The Compensation Committee will consist of at least three members, all of whom must be independent directors meeting the independence requirements of the Nasdaq listing rules. The Compensation Committee currently consists of five members, each of whom is an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and qualifies as a “non-employee director” within the meaning of Section 16b-3 under the Exchange Act. The Compensation Committee has the responsibility and authority to approve performance-based compensation for the Company’s executive officers.

The Compensation Committee is responsible for determining, or recommending to the Board for determination, annually all compensation awarded to the Company’s executive officers, including the CEO and the other executive officers named in the “Summary Compensation Table” herein (“named executive officers” or “NEOs”). In addition, the Compensation Committee administers the Company’s equity incentive plans, including reviewing and approving equity grants to executive officers. Information on the Compensation Committee’s processes, procedures and analysis of NEO compensation for fiscal 2018 is addressed in the “Compensation Discussion and Analysis” section herein.

 

 

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The Compensation Committee actively engages in its duties and follows procedures intended to ensure excellence in compensation governance, including those described below:

 

    Identifying corporate goals and objectives relevant to executive officer compensation.

 

    Evaluating each executive officer’s performance in light of such goals and objectives and setting each executive officer’s compensation based on such evaluation and such other factors as the Compensation Committee deems appropriate and in the best interests of the Company (including the cost to the Company of such compensation).

 

    Determining any long-term incentive component of each executive officer’s compensation.

 

    Identifying corporate goals and objectives relevant to director compensation.

 

    Evaluating each director’s performance in light of such goals and objectives and setting each director’s compensation, including any long-term incentive component, based on such evaluation and such other factors as the Compensation Committee deems appropriate and in the best interests of the Company (including the cost to the Company of such compensation).

Additional information about our executive compensation plans and arrangements and their administration is described in the “Compensation Discussion and Analysis” section herein and the accompanying executive compensation tables. The Compensation Committee may delegate the administration of these plans as appropriate, including to one or more officers of the Company, to subcommittees of the Board or to the Chairperson of the Compensation Committee when it deems it appropriate and in the best interests of the Company.

The Compensation Committee has the sole authority to retain and terminate any advisor, including any compensation consultant assisting the Compensation Committee in the evaluation of CEO or other executive officer compensation, including authority to approve all such fees and other retention terms. As further described in the “Compensation Discussion and Analysis” section herein, during 2018, the Compensation Committee retained a compensation consultant. In developing its views on compensation matters and determining the compensation awarded to our NEOs, the Compensation Committee also obtains input from the Company’s Human Resources department, which collects information and prepares materials for the Compensation Committee’s use in compensation decisions.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee is a current or former officer of the Company or any of our subsidiaries. In

addition, there are no compensation committee interlocks with the Board of Directors or compensation committee of any other company.

Criteria for Board Candidates, Including Board Diversity

The Board seeks individuals with backgrounds and qualities that, when combined with those of our incumbent directors, enhance the Board’s effectiveness and result in the Board having a broad range of skills, expertise and industry knowledge relevant to the Company’s business. In addition, the Nominating and Corporate Governance Committee and the Board include diversity of viewpoints, background, experience and other demographics among the criteria they consider in connection with selecting candidates for the Board. While neither the Board nor the Nominating and Corporate Governance Committee has a formal diversity policy, two of many factors the Board and the Nominating and Corporate Governance Committee carefully considers in the selection of new directors are the importance to the Company of race/ethnicity and gender diversity in board composition. In conducting its search for new directors in 2016 and in 2018, the Board utilized, and is utilizing in 2019, a process that requires the final pool of candidates to include potential directors who would increase the Board’s race/ethnicity/national origin and/or gender diversity. We anticipate utilizing a similar process in future searches for Board candidates.

Shareholder Recommendations for Board Candidates

The Nominating and Corporate Governance Committee will consider any director candidates recommended by shareholders who submit a written request to the Corporate Secretary of the Company. The candidates should meet the director qualification criteria. The Nominating and Corporate Governance Committee evaluates all director candidates and nominees in the same manner regardless of the source.

Shareholders may make recommendations at any time by writing to the Nominating and Corporate Governance Committee, c/o Kenneth E. Thompson, Corporate Secretary, Verisk Analytics, Inc., 545 Washington Blvd., Jersey City, NJ 07310-1686. Nominations for the annual meeting of shareholders must be received pursuant to the deadlines set forth in the Company bylaws as discussed under “Shareholder Proposals.”

Board Role in Risk Oversight

The Board of Directors oversees the Company’s enterprise-wide approach to the major risks facing the Company and, with the assistance of the Audit and Compensation Committees, oversees the Company’s policies for assessing and managing its exposure to risk.

Board. The Company’s Enterprise Risk and Compliance Group conducts an annual risk assessment, the results of

 

 

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which are reported to the full Board. The risk assessment process seeks to identify, and segregate risks based on their nature and/or potential significance. In conducting its risk assessment process for the Board, the Company uses the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Board reviews the prioritization of risks such as cyber risk, compliance risk and others, and the Company’s mitigation actions related to those risks.

Audit Committee. The Audit Committee reviews financial and reporting risk with management and the auditors. The Company’s Internal Audit department also uses the COSO framework in assessing risk and reviews the results of the Enterprise Risk and Compliance risk assessment in establishing the annual Internal Audit Plan. The Internal Audit Plan is reviewed and approved by the Audit Committee. The Chief Internal Auditor reports both to the Chair of the Audit Committee and to the General Counsel. The Audit Committee reviews and discusses with the Chief Internal Auditor the Company’s internal system of audit and financial controls, enterprise risk information, and the periodic report of audit activities. Finally, on a quarterly basis, management reviews its progress on the testing and mitigation of any identified risks with the Audit Committee.

Compensation Committee. The Compensation Committee considers risk in establishing and evaluating compensation policies. For a more detailed discussion, please see “Risk Assessment Regarding Compensation Policies and Practices”.

The Board’s role in risk oversight has not had any effect on the Board’s leadership structure.

Board Evaluations

Our Board is committed to continuous improvement and recognizes the fundamental role a robust Board and Committee evaluation process plays in ensuring that our Board maintains an optimal composition and is functioning effectively.

Board Self-Evaluations. The Nominating and Corporate Governance Committee conducts an annual self-evaluation of our Board’s effectiveness in order to identify opportunities where an enhancement or change in practices may lead to further improvement. In our Board self-evaluation process, all directors provide responses to a written questionnaire, and the Company’s General Counsel interviews all directors on the following Board effectiveness topics:

Board Effectiveness Topics evaluated in 2018

 

    Board Composition & Structure

 

    Meeting Dynamics

 

    Leadership & Individual Contributions

 

    Access to Information
    Interaction with Management

 

    Strategic Planning and Goal Setting

 

    Fostering Innovation

 

    Operational Matters

 

    Financial Matters

 

    Risk Oversight

 

    Governance

In addition, the Chair of the Nominating and Corporate Governance Committee conducts one-on-one interviews with each director. The results of the interviews and the responses provided are analyzed and presented to the full Board in a report that includes both strengths in Board effectiveness and opportunities for enhancing Board effectiveness. The Nominating and Corporate Governance Committee uses the results of the evaluation in determining the characteristics and skills required of prospective candidates for election to the Board. It also uses these results to make recommendations to the Board with respect to assignments of Board members to various Board Committees.

Committee Self-Evaluations. Each Committee of the Board (other than the Executive Committee) annually evaluates its performance as a Committee. The evaluation process is similar to that of the Board and is also facilitated by the Company’s General Counsel. Each Committee’s evaluation is focused on the Committee’s effectiveness in performing its key functions. The outcome of each Committee’s self-evaluation is reported to the respective Committee, the Nominating and Corporate Governance Committee and the full Board. The Chair of each Committee or the Nominating and Corporate Governance Committee may make recommendations for improvement to the Board.

Succession Planning

Our Board recognizes that one of its most critical responsibilities is to guarantee excellence and stability in our Company’s senior leadership. As a result, our Board is actively engaged in talent management. Our Board oversees the development of executive talent and plans for the succession of our Board, our Independent Lead Director, our Committee Chairs, our Chairman and Chief Executive Officer and other senior members of executive management.

Board Succession Planning. The Nominating and Corporate Governance Committee considers the critical needs of the Company regularly, taking into account the results of the annual Board and Committee evaluations and other relevant data to assess Board skills and the leadership capabilities of existing directors, including to evaluate the appropriateness of new or different Committee service for our directors and to identify sitting directors who are ready to fill the role of Chair of each of our Committees should one of those directors vacate his or her position unexpectedly or upon retirement.

 

 

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Chief Executive Officer Succession Planning. Our Board is responsible for the selection of our Chief Executive Officer. Our Board regularly reviews leadership development initiatives and identifies and periodically updates the skills, experience and attributes that they believe are required to be an effective Chief Executive Officer in light of the Company’s business strategy, prospects and challenges. In furtherance of its succession planning efforts, during 2018 the Board requested and received from the Chief Executive Officer a detailed report on recommendations for short- and long-term succession plans for the Chief Executive Officer, including in the event of unanticipated vacancy.

Corporate Governance Documents

Verisk maintains a corporate governance website at the “Corporate Governance — Governance Documents” link under the “Investors” link at www.verisk.com.

Our Corporate Governance Guidelines (including our director independence standards); Code of Business Conduct and

Ethics; and Audit, Compensation and Nominating and Corporate Governance Committee charters are available on our website at the “Corporate Governance — Governance Documents” link under the “Investors” link at www.verisk.com and are available to any shareholder who requests them by writing to Verisk Analytics, Inc., 545 Washington Blvd., Jersey City, New Jersey 07310, Attention: Kenneth E. Thompson, Corporate Secretary.

Our Code of Business Conduct and Ethics applies to our directors, executive officers and employees. If we make any substantive amendment to, or grant a waiver from, a provision of the Code of Business Conduct and Ethics for our chief executive officer (CEO), chief financial officer (CFO), principal accounting officer or controller or persons performing similar functions, we will satisfy the applicable SEC disclosure requirement by disclosing within four business days the nature of the amendment or waiver on our website at the “Governance Documents” link under the “Investors” link at www.verisk.com.

 

 

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Directors’ Compensation and Benefits

 

Under the terms of the Company’s Director Compensation Plan approved by the Compensation Committee, each of the Company’s non-employee directors receives annual compensation in the form of (i) an annual retainer, and (ii) an annual equity grant.

Annual Retainer. In 2018 each non-employee director received an annual base retainer fee of $90,000 for membership on the Board of Directors. The chairpersons of the Audit Committee and Compensation Committee each received an additional $20,000 annual retainer fee, while each non-employee director who chairs any other committee received an additional $15,000 retainer fee. In 2018, Frank J. Coyne, who served as Independent Lead Director, received an additional $50,000 annual retainer fee.

Each non-employee director may elect to receive the annual retainer in the form of (i) cash, (ii) deferred cash, (iii) shares of common stock, (iv) deferred shares of common stock, (v) options to purchase common stock (not to exceed 25% of the total value of the retainer amounts) or (vi) a combination of the foregoing. Any options taken as a portion of the annual retainer are exercisable for a period of ten years from the date of grant (subject to earlier termination if the individual ceases to be a director of the Company), vest immediately, and have an exercise price equal to the fair market value of the common stock on the date of grant.

Equity Grants. In 2018, each non-employee director received an annual equity award having a value of $155,000 pursuant

to the Director Compensation Plan. Twenty-five percent (25%) of the value of the annual equity award was awarded in the form of options to purchase common stock based on the Black-Scholes value on the date of grant and seventy-five percent (75%) of the value of the annual equity award was awarded in the form of deferred stock units based on the value of a share of common stock on the date of grant. The options are exercisable for a period of ten years from the date of grant (subject to earlier termination if the individual ceases to be a director of the Company), vest on the first anniversary of the date of grant, and have an exercise price equal to the fair market value of the common stock on the date of grant. Shares of common stock in respect of deferred stock units will be distributed to the directors upon retirement or other separation from the Board of Directors. Such awards shall vest in equal monthly installments over a period of 12 months.

Any retainer amount payable or equity award granted to a director newly appointed or elected to the Board on a date other than July 1 (the annual scheduled payment and grant date for all directors) will be pro-rated to reflect the remaining portion of the compensation year in which such new director is appointed or elected.

Scott G. Stephenson, our Chairman and Chief Executive Officer, does not receive additional compensation for his service on the Board of Directors.

 

 

The table below shows compensation paid to or earned by the directors during 2018. As noted above, directors may elect to receive compensation in various forms other than cash.

2018 DIRECTOR COMPENSATION

 

Name

 

  

Fees Earned

or Paid in

Cash ($)

 

    

Stock

Awards

($)(1)(2)

 

    

Option

Awards

($)(1)(3)

 

    

Total

($)

 

 

 

Annell R. Bay

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

206,238

 

 

 

 

  

 

 

 

 

38,759

 

 

 

 

  

 

 

 

 

244,997

 

 

 

 

 

Frank J. Coyne

 

  

 

 

 

 

140,000

 

 

 

 

  

 

 

 

 

116,251

 

 

 

 

  

 

 

 

 

38,759

 

 

 

 

  

 

 

 

 

295,010

 

 

 

 

 

Christopher M. Foskett

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

226,259

 

 

 

 

  

 

 

 

 

38,759

 

 

 

 

  

 

 

 

 

265,018

 

 

 

 

 

Bruce Hansen

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

206,238

 

 

 

 

  

 

 

 

 

38,759

 

 

 

 

  

 

 

 

 

244,997

 

 

 

 

 

Kathleen A. Hogenson

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

116,251

 

 

 

 

  

 

 

 

 

128,772

 

 

 

 

  

 

 

 

 

245,023

 

 

 

 

 

Constantine P. Iordanou

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

116,251

 

 

 

 

  

 

 

 

 

128,772

 

 

 

 

  

 

 

 

 

245,023

 

 

 

 

 

John F. Lehman, Jr.

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

116,251

 

 

 

 

  

 

 

 

 

148,764

 

 

 

 

  

 

 

 

 

265,015

 

 

 

 

 

Samuel G. Liss

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

116,251

 

 

 

 

  

 

 

 

 

143,776

 

 

 

 

  

 

 

 

 

260,017

 

 

 

 

 

Andrew G. Mills

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

116,251

 

 

 

 

  

 

 

 

 

128,772

 

 

 

 

  

 

 

 

 

245,023

 

 

 

 

 

Therese M. Vaughan

 

  

 

 

 

 

105,000

 

 

 

 

  

 

 

 

 

116,251

 

 

 

 

  

 

 

 

 

38,759

 

 

 

 

  

 

 

 

 

260,010

 

 

 

 

 

David B. Wright

 

  

 

 

 

 

90,000

 

 

 

 

  

 

 

 

 

116,251

 

 

 

 

  

 

 

 

 

38,759

 

 

 

 

  

 

 

 

 

245,010

 

 

 

 

 

(1)

Represents the aggregate grant date fair value of stock and stock option awards granted in 2018 computed in accordance with ASC Subtopic 718-10,Compensation-Stock Compensation” (ASC Topic 718), excluding forfeiture estimates. For a discussion of the assumptions used to calculate the amounts shown in the option awards and stock awards columns, see note 17 of the notes to our audited consolidated financial statements included as part of our Annual Report on Form 10-K for the year ended December 31, 2018.

 

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Table of Contents

Directors’ Compensation and Benefits

 

(2)

At December 31, 2018, directors had outstanding stock awards as follows: (a) Annell R. Bay — 3,854; (b) Frank J. Coyne — 60,078; (c) Christopher M. Foskett — 10,981; (d) Bruce Hansen — 7,889; (e) Kathleen A. Hogenson — 3,779; (f) Constantine P. Iordanou — 228,989; (g) John F. Lehman, Jr. — 265,329; (h) Samuel G. Liss — 50,479; (i) Andrew G. Mills — 69,605; (j) Therese M. Vaughan — 6,537; (k) David B. Wright — 26,741.

(3)

At December 31, 2018, directors had outstanding option awards as follows: (a) Annell R. Bay — 9,885; (b) Frank J. Coyne — 25,823; (c) Christopher M. Foskett — 76,905; (d) Bruce Hansen — 15,225; (e) Kathleen A. Hogenson — 13,559; (f) Constantine P. Iordanou — 166,106; (g) John F. Lehman, Jr. — 155,346; (h) Samuel G. Liss — 123,727; (h) Andrew G. Mills — 111,947; (j) Therese M. Vaughan — 25,823; (k) David B. Wright — 90,512.

 

Where no information in the table is given as to a particular type of award with respect to any individual, such individual did not hold or receive such an award during or as of the end of the last fiscal year, as the case may be.

Stock Ownership Requirements for Directors

Directors are subject to minimum equity holding requirements. Each non-employee director is required to hold stock with a value equal to six times their respective annual base retainer (i.e., excluding additional retainer amounts for committee chairs). The “in-the-money” value of vested and unvested options held by such directors is not included in determining compliance with this requirement. Directors elected to the Board prior to December 20, 2011 (which was the date of the adoption of the director stock ownership requirement) were required to comply with this requirement by July 1, 2015. Directors elected to the Board after December 20, 2011 are

required to comply with this requirement no later than the sixth anniversary of their election to the Board.

Frank J. Coyne, Christopher M. Foskett, Bruce Hansen, Constantine P. Iordanou, John F. Lehman, Jr., Samuel G. Liss, Andrew G. Mills, Therese M. Vaughan and David B. Wright, each currently holds stock with a value in excess of six times their respective annual base retainer. Annell R. Bay and Kathleen A. Hogenson, each a director elected to the Board on August 17, 2016, have until the sixth anniversary of their respective election to the Board to comply with the director stock ownership requirement and have not yet reached such anniversary date. Scott G. Stephenson, our Chairman and Chief Executive Officer, does not receive an annual retainer for his service on the Board and is subject to and is in compliance with the stock ownership requirement for executive officers set forth on page 30.

 

 

Verisk 2019 Proxy Statement  |  15


Table of Contents

Executive Officers of Verisk

 

Information regarding the ages and past five years’ business experience of our executive officers is as follows:

Scott G. Stephenson (61) has been our Chief Executive Officer since April 2013 and has been our President since March 2011. Mr. Stephenson has also served on our Board of Directors since April 2013 and as of April 2016 has served as our Chairman of the Board. Mr. Stephenson also previously served as our Chief Operating Officer and, prior to that, led our Decision Analytics segment. From 2002 to 2008, Mr. Stephenson served as our Executive Vice President, and he served as President of our Intego Solutions business from 2001 to 2002. Mr. Stephenson joined the Company from Silver Lake Partners, a technology-oriented private equity firm, where he was an advisor from 2000 to 2001. From 1989 to 1999, Mr. Stephenson was a partner with The Boston Consulting Group, eventually rising to senior partner and member of the firm’s North American operating committee.

Lee Shavel (51) has been our Executive Vice President and Chief Financial Officer since November 2017. Mr. Shavel served as Chief Financial Officer and Executive Vice President, Corporate Strategy of Nasdaq, Inc. from May 2011 to March 2016. Before joining Nasdaq, Mr. Shavel was Americas Head of Financial Institutions Investment Banking at Bank of America Merrill Lynch. Previously, he was Head of Finance, Securities and Technology and Global COO for the Financial Institutions Group at Merrill Lynch. Mr. Shavel joined Merrill Lynch in 1993 as an Associate, coming from Citicorp where he worked as an Associate in the Financial Institutions Group. Since 2016, Mr. Shavel has served as a board director and chair of the Audit Committee of Investment Technology Group, Inc., a publicly-traded broker-dealer.

Mark V. Anquillare (53) has been our Chief Operating Officer since June 2016 and continues to serve as our Executive Vice President, a position he has held since March 2011. From 2007 to June 2016, Mr. Anquillare served as our Chief Financial Officer. Mr. Anquillare joined the Company as Director of Financial Systems in 1992 and since joining the Company, Mr. Anquillare has held various management positions, including Assistant Vice President, Vice President and Controller, and Senior Vice President and Controller. Prior to 1992, Mr. Anquillare was employed by the Prudential Insurance Company of America. Mr. Anquillare is a Fellow of the Life Management Institute.

Kenneth E. Thompson (59) has been our Executive Vice President, General Counsel and Corporate Secretary since March 2011, and was our Senior Vice President, General Counsel and Corporate Secretary from 2006 to March 2011. Prior to joining the Company in 2006, Mr. Thompson was a partner of McCarter & English, LLP from 1997 to 2006. Mr. Thompson served on the Board of Directors of Measurement Specialties, Inc. from November 2006 until October 2014.

Vincent de P. McCarthy (54) has been our Group President since August 2018 and previously served as our Senior Vice President, Corporate Development and Strategy since October 2009. Mr. McCarthy is responsible for providing guidance and support for the Verisk Financial Services, Verisk 3E, and Verisk Maplecroft businesses. Mr. McCarthy joined Verisk from Bank of America Merrill Lynch, where he was a Managing Director in the Investment Banking group in New York, advising companies in the financial technology, payments and processing, and analytics sectors. Mr. McCarthy joined Merrill Lynch in 1994, and across his career with that firm served in investment banking roles both in the United States and Europe.

 

 

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Table of Contents

Security Ownership of Certain Beneficial Owners and Management

 

Stock Ownership of Directors and Executive Officers.    We encourage our directors, officers and employees to own our common stock, as owning our common stock aligns their interests with your interests as shareholders. The following table sets forth the beneficial ownership of our

Common Stock by each of our named executive officers and directors, and by all our directors and executive officers as a group, as of March 18, 2019. Percentage of class amounts are based on 163,511,776 shares of our Common Stock outstanding as of March 18, 2019.

 

 

In accordance with the rules of the Securities and Exchange Commission, beneficial ownership includes voting or investment power with respect to securities and includes the shares issuable pursuant to stock options that are exercisable, or stock awards that may be settled, within 60 days of March 18, 2019. Shares issuable pursuant to such stock options or stock awards are deemed outstanding for computing the percentage of such person’s holdings but are not outstanding for computing the percentage of any other person. Unless otherwise indicated, the address for each listed shareholder is: c/o Verisk Analytics, Inc., 545 Washington Boulevard, Jersey City, New Jersey 07310. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock.

 

           

 

  Shares of Common Stock         

  Beneficially Owned         

 

 
            

 

  Number of  

  Shares  

 

           

        Percentage of    

  Class  

 

        

 

  NAMED EXECUTIVE OFFICERS

 

                                         

 

  Scott G. Stephenson(1)

 

          

 

 

 

 

1,718,888

 

 

 

 

          

 

 

 

 

1.05

 

 

 

       

 

  Lee M. Shavel(2)

 

          

 

 

 

 

29,975

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Mark V. Anquillare(3)

 

          

 

 

 

 

531,308

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Kenneth E. Thompson(4)

 

          

 

 

 

 

398,519

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Vincent de P. McCarthy(5)

 

          

 

 

 

 

228,821

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  DIRECTORS

 

                                         

 

  Frank J. Coyne(6)

 

          

 

 

 

 

85,505

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Annell R. Bay(7)

 

          

 

 

 

 

13,343

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Christopher M. Foskett(8)

 

          

 

 

 

 

87,490

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Bruce Hansen(9)

 

          

 

 

 

 

22,718

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Kathleen A. Hogenson(10)

 

          

 

 

 

 

16,942

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Constantine P. Iordanou(11)

 

          

 

 

 

 

394,699

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  John F. Lehman, Jr.(12)

 

          

 

 

 

 

417,161

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Samuel G. Liss(13)

 

          

 

 

 

 

173,810

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Andrew G. Mills(14)

 

          

 

 

 

 

181,156

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  Therese M. Vaughan(15)

 

          

 

 

 

 

31,964

 

 

 

 

          

 

 

 

 

*

 

 

 

 

       

 

  David B. Wright(16)

 

    

 

 

 

 

105,607

 

 

 

 

      

 

 

 

 

*

 

 

 

 

 
      

 

 

      

 

 

   

 

 

 

  ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP (16 PERSONS)

    

 

 

 

4,437,906

 

 

      

 

 

 

 

 

2.71

 

 

 
      

 

 

      

 

 

   

 

 

 

(1)

Includes (a) 876,984 shares subject to stock options exercisable within 60 days of March 18, 2019, and (b) 54,940 shares of restricted stock which vest in four equal installments on each anniversary of the shares’ respective grant dates. Mr. Stephenson also serves as the Chairman of our Board. Amount does not include 19,545 PSUs granted on April 1, 2018, which are not treated as beneficially owned under SEC rules because the holder does not have the right to acquire the underlying stock within 60 days of March 18, 2019 and, to the extent earned, PSUs will be settled in shares, cash, or a combination of both, at the sole discretion of the Compensation Committee.

 

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Table of Contents

Security Ownership of Certain Beneficial Owners and Management

 

(2)

Includes (a) 4,418 shares subject to stock options exercisable within 60 days of March 18, 2019, (b) 3,606 shares of restricted stock which vest in four equal installments on each anniversary of the shares’ respective grant dates, and (c) 16,464 shares of restricted stock which vest in four equal installments on each anniversary of Mr. Shavel’s employment commencement date of November 14, 2017. Amount does not include 5,330 PSUs granted on April 1, 2018, which are not treated as beneficially owned under SEC rules because the holder does not have the right to acquire the underlying stock within 60 days of March 18, 2019 and, to the extent earned, PSUs will be settled in shares, cash, or a combination of both, at the sole discretion of the Compensation Committee.

(3)

Includes (a) 469,789 shares subject to stock options exercisable within 60 days of March 18, 2019, and (b) 21,979 shares of restricted stock which vest in four equal installments on each anniversary of the shares’ respective grant dates. Amount does not include 7,527 PSUs granted on April 1, 2018, which are not treated as beneficially owned under SEC rules because the holder does not have the right to acquire the underlying stock within 60 days of March 18, 2019 and, to the extent earned, PSUs will be settled in shares, cash, or a combination of both, at the sole discretion of the Compensation Committee.

(4)

Includes (a) 354,354 shares subject to stock options exercisable within 60 days of March 18, 2019, and (b) 14,561 shares of restricted stock which vest in four equal installments on each anniversary of the shares’ respective grant dates. Amount does not include 4,620 PSUs granted on April 1, 2018, which are not treated as beneficially owned under SEC rules because the holder does not have the right to acquire the underlying stock within 60 days of March 18, 2019 and, to the extent earned, PSUs will be settled in shares, cash, or a combination of both, at the sole discretion of the Compensation Committee.

(5)

Includes (a) 192,653 shares subject to stock options exercisable within 60 days of March 18, 2019, and (b) 12,575 shares of restricted stock which vest in four equal installments on each anniversary of the shares’ respective grant dates. Amount does not include 4,140 PSUs granted on April 1, 2018, which are not treated as beneficially owned under SEC rules because the holder does not have the right to acquire the underlying stock within 60 days of March 18, 2019 and, to the extent earned, PSUs will be settled in shares, cash, or a combination of both, at the sole discretion of the Compensation Committee.

(6)

Includes (a) 25,427 shares subject to stock options exercisable within 60 days of March 18, 2019, (b) 26,305 deferred stock units that entitle Mr. Coyne to 26,305 shares of Common Stock at the end of his service to the Board, and (c) 2,484 deferred stock awards that entitle Mr. Coyne to 2,484 shares of Common Stock at the end of his service to the Board.

(7)

Includes (a) 9,489 shares subject to stock options exercisable within 60 days of March 18, 2019, and (b) 2,712 deferred stock units that entitle Ms. Bay to 2,712 shares of Common Stock at the end of her service to the Board.

(8)

Includes (a) 76,509 shares subject to stock options exercisable within 60 days of March 18, 2019, (b) 5,860 deferred stock units that entitle Mr. Foskett to 5,860 shares of Common Stock at the end of his service to the Board, and (c) 4,450 deferred stock awards that entitle Mr. Foskett to 4,450 shares of Common Stock at the end of his service to the Board.

(9)

Includes (a) 14,829 shares subject to stock options exercisable within 60 days of March 18, 2019, (b) 3,743 deferred stock units that entitle Mr. Hansen to 3,743 shares of Common Stock at the end of his service to the Board, and (c) 3,015 deferred stock awards that entitle Mr. Hansen to 3,015 shares of Common Stock at the end of his service to the Board.

(10)

Includes (a) 13,163 shares subject to stock options exercisable within 60 days of March 18, 2019, (b) 2,712 deferred stock units that entitle Ms. Hogenson to 2,712 shares of Common Stock at the end of her service to the Board, and (c) 1,067 deferred stock awards that entitle Ms. Hogenson to 1,067 shares of Common Stock at the end of her service to the Board.

(11)

Includes (a) 165,710 shares subject to stock options exercisable within 60 days of March 18, 2019, and (b) 5,860 deferred stock units that entitle Mr. Iordanou to 5,860 shares of Common Stock at the end of his service to the Board.

(12)

Includes (a) 133,200 shares subject to stock options exercisable within 60 days of March 18, 2019, (b) 5,860 deferred stock units that entitle Mr. Lehman to 5,860 shares of Common Stock at the end of his service to the Board, and (c) 3,500 deferred stock awards that entitle Mr. Lehman to 3,500 shares of Common Stock at the end of his service to the board.

(13)

Includes (a) 123,333 shares subject to stock options exercisable within 60 days of March 18, 2019, and (b) 5,860 deferred stock units that entitle Mr. Liss to 5,860 shares of Common Stock at the end of his service to the Board.

(14)

Includes (a) 111,551 shares subject to stock options exercisable within 60 days of March 18, 2019, and (b) 5,860 deferred stock units that entitle Mr. Mills to 5,860 shares of Common Stock at the end of his service to the Board.

(15)

Includes (a) 25,427 shares subject to stock options exercisable within 60 days of March 18, 2019, and (b) 5,860 deferred stock units that entitle Dr. Vaughan to 5,860 shares of Common Stock at the end of her service to the Board.

(16)

Includes (a) 78,866 shares subject to stock options exercisable within 60 days of March 18, 2019, (b) 5,860 deferred stock units that entitle Mr. Wright to 5,860 shares of Common Stock at the end of his service to the Board and (c) 4,171 deferred stock awards that entitle Mr. Wright to 4,171 shares of Common Stock at the end of his service to the Board.

*

Indicates less than 1% ownership.

 

18  |  Verisk 2019 Proxy Statement


Table of Contents

Principal Shareholders

The following table contains information regarding each person we know of that beneficially owns more than 5% of our Common Stock. The information set forth in the table below and in the related footnotes was furnished by the identified persons to the U.S. Securities and Exchange Commission (the “SEC”).

 

Name and address   

Shares of Common Stock

Beneficially Owned

 
  

Number of

Shares

    

Percentage of

Class

 
   

The Vanguard Group

100 Vanguard Blvd.

Malvern, PA 19355

     16,559,112 (1)       10.05
   

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055

     11,426,119 (2)       6.9

 

(1)

As of December 31, 2018, based on a Schedule 13G/A Information Statement filed with the SEC on January 10, 2019 by The Vanguard Group (“Vanguard”). The Schedule 13G/A reported that Vanguard has sole voting power as to 199,720 shares of our Common Stock and sole dispositive power as to 16,322,239 shares of our Common Stock.

(2)

As of December 31, 2018, based on a Schedule 13G/A Information Statement filed with the SEC on February 6, 2019 by BlackRock, Inc. (“BlackRock”). The Schedule 13G/A reported that BlackRock has sole voting power as to 10,099,092 shares of our Common Stock and sole dispositive power as to 11,426,119 shares of our Common Stock.

 

Verisk 2019 Proxy Statement  |  19


Table of Contents

Executive Compensation

Compensation Discussion and Analysis

 

 

Roadmap to our CD&A

 

  

 

20

 

 

Overview

 

  

 

20

 

 

Introduction

 

  

 

20

 

 

Overall Compensation Philosophy

 

   21

 

 

 

Compensation Philosophy as it Applies to our NEOs

 

   21

 

 

 

What We Paid in 2018 and Why

 

  

 

21

 

 

 

Key Compensation Decisions in 2018 for our NEOs

 

   21

 

 

 

Key Business Performance Highlights

 

   22

 

 

 

Shareholder Engagement

 

   22

 

 

 

Executive Compensation Program Highlights

 

   24

 

 

 

Fiscal 2018 Executive Compensation Program

 

   24

 

 

 

2018 NEO Pay Mix

 

   25

 

 

 

Base Salary

 

   25

 

 

 

Annual STI Awards

 

   26

 

 

 

2018 STI Financial Metrics and Individual Targets

 

   26

 

 

 

2018 STI Performance

 

   26

 

 

 

CEO 2018 STI Outcome

 

  

 

26

 

 

Other NEOs’ 2018 STI Outcome

 

  

 

27

 

 

Annual LTI Awards

 

   27

 

 

 

Pre-2018 LTI Awards

 

   27

 

 

 

2018 LTI Awards

 

   27

 

 

 

Summary of 2018 STI and LTI Programs

 

   29

 

 

 

Health, Welfare and Retirement Plans

 

   29

 

 

 

Change in Control Severance Agreements and Employment Agreements

 

   30

 

 

 

Policies and Practices

 

  

 

30

 

 

Overview

Introduction

This section discusses the principles underlying our policies and decisions relating to the compensation of our named executive officers for 2018 (our “named executive officers” or “NEOs”). The information in this section describes the manner and context in which compensation is earned by and awarded to our NEOs, and provides perspective on the tables and narrative that follow. Our NEOs for the 2018 fiscal year are:

 

 

  Scott G. Stephenson

 

  

 

Chairman, President and Chief Executive Officer

 

 

  Lee M. Shavel

 

  

 

Executive Vice President and Chief Financial Officer

 

 

  Mark V. Anquillare

 

  

 

Executive Vice President and Chief Operating Officer

 

 

  Kenneth E. Thompson

 

  

 

Executive Vice President, General Counsel and Corporate Secretary

 

 

  Vincent de P. McCarthy

 

  

 

Group President

 

 

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Table of Contents

Executive Compensation

 

This section also presents key compensation decisions made during 2018 and a summary of our business performance supporting these decisions. Additionally, as presented under “Shareholder Engagement,” we discuss critical steps we took in 2018 to strengthen the performance orientation of our executive compensation program in response to the results of our 2017 say-on-pay vote and discussions with our shareholders and to more closely align our program to our strategic goals.

Overall Compensation Philosophy

Our business is characterized by high incremental and total margins and relatively low capital intensity. Moreover, we enjoy strong relationships with most, if not all, of the participants in the vertical markets we serve. Given those qualities, the key to long-term value creation for Verisk is organic revenue growth leading to scaled margins and better returns on invested capital. In turn, our organic growth depends on:

 

    deepening the reach and quality of our analytics so that our existing solutions yield more insight and value for customers;

 

    creating a steady stream of new solutions that meet customers’ emerging needs; and

 

    reaching new customers through geographic expansion

Our focus on organic growth — which in our case necessarily requires innovation — means our leadership and workforce must be second to none. Therefore, the primary focus of our compensation philosophy is to attract and retain the highest level of talent in line with our specific needs. Most of our critical roles are in categories where the competition for talent is most fierce, including machine-learning methods, cloud-based computing, statistical modeling, software development and technical sales. In many cases, the talent marketplace determines the compensation required to attract and retain such talent.

In addition to ensuring our compensation is competitive, we also work to ensure it is responsible. Our goal is to make compensation for individuals consistent with their personal contributions, tied to the context of overall corporate performance; in other words, pay-for-performance is at the heart of our philosophy. We also guard against our compensation levels becoming excessive relative to market norms by referencing relevant benchmark data. To that end, our Compensation Committee generally seeks to achieve compensation outcomes at market competitive levels, with differentiation by executive based on individual factors such as proficiency in role, tenure, criticality to the Company and scope of responsibility.

We believe in a mix of three types of compensation for our executives: base salaries, annual cash awards under our short-term incentive (“STI”) program, and annual awards of equity under our long-term incentive (“LTI”) program. Further,

we require vesting of equity awards to occur over multiple years with an element of our LTI program vesting based solely on the attainment of Company performance goals, which we believe more closely and objectively aligns our executives’ compensation to shareholder returns. The mix of compensation types and requirement of multi-year vesting of equity incents our executives to take a balanced view on short and long-term performance.

In the most general sense, we know we are in the right position on compensation when we retain a high-level of our critical talent, have tied their annual outcomes to metrics which align with value creation and show differentiation for different levels of performance, and are sensible relative to established market norms.

Compensation Philosophy as it Applies to our NEOs

All of the above statements apply to our philosophy for compensating our NEOs and other executive leaders. The primary customization for NEOs is to set a high percentage of their compensation in the form of equity awards, so that their outcomes most closely mirror those of our shareholders. As seniority increases at Verisk, the percentage of compensation coming in the form of equity increases. In particular, 71% of our CEO’s 2018 annual compensation package was comprised of equity awards.

What We Paid in 2018 and Why

Key Compensation Decisions in 2018 for our NEOs

During 2018, we made the following key compensation decisions for our NEOs:

 

    No base salary increase for our CEO; modest base salaries increases for our other NEOs of 1% on average from 2017 levels.

 

    Annual STI awards to all our NEOs in the aggregate were decreased by 13% over their 2017 levels (excluding Mr. Shavel as he was granted a pro-rated STI award amount in 2017 due to his November 2017 hire date).

 

    Long-term incentive awards to our NEOs in April of 2018 were increased by approximately 10% over their 2017 levels (excluding the one-time equity award granted to Mr. Shavel in connection with his hire as our CFO in November 2017).

 

    We instituted a new formulaic annual bonus program design (discussed further under “Annual STI Awards — 2018 STI Financial Metrics and Individual Target Amounts”) in order to more closely and objectively align annual awards to our business performance.

 

    We instituted a new long-term incentive program (discussed further under “Annual LTI Awards — 2018 LTI Awards”), which included for the first time performance share units (“PSUs”) linked to our relative total shareholder return performance compared to companies that comprise the S&P 500 Index to strengthen the link between the compensation of our executives under the program with the return of our shareholders.
 

 

Verisk 2019 Proxy Statement  |  21


Table of Contents

Executive Compensation

 

Key Business Performance Highlights

Our Company had another solid performance year in 2018, with total revenue increasing 11.6%, net income increasing 7.9% and total adjusted EBITDA increasing 9.1%, from the previous year. Adjusted organic constant currency revenue increased 6.1% and adjusted organic constant currency EBITDA increased 5.4% in 2018 compared to 2017. In addition to solid financial performance, we positioned ourselves strongly for the future through developing and bringing new

products to market, expanding our investment and focus on innovation and improving our approach to capital management.

Our share price continued to perform strongly, and we delivered 13.6%, 12.4% and 10.7% total shareholder return over the 1, 3 and 5-years ending December 31, 2018.

 

 

The table below summarizes the Company’s financial and stock price performance during 2018.

 

Metric

      

Consolidated Revenue Growth

     11.6

Adjusted Organic Constant Currency Revenue Growth

     6.1

Net Income Growth

     7.9

Adjusted EBITDA Growth

     9.1

Adjusted Organic Constant Currency EBITDA Growth

     5.4

1-year TSR

     13.6

3-year TSR

     12.4

5-year TSR

     10.7

 

See Appendix A for a reconciliation of the non-GAAP measures discussed herein to the most directly comparable GAAP measure.

Shareholder Engagement

Following the results of the advisory, non-binding vote on the compensation of our NEOs held at our 2017 Annual Meeting of Shareholders (the “2017 Annual Meeting”) (in which 69.4% of our shareholders voted in favor of the proposal), we decided to launch a comprehensive shareholder engagement campaign in order to gain a better understanding of our shareholders’ concerns and to identify areas for improvement within our executive compensation programs.

We commenced our shareholder outreach efforts in May of 2017, prior to our 2017 Annual Meeting. We reached out to our 50 largest shareholders (who at the time owned approximately 75% of our issued and outstanding common stock) and offered to listen to their concerns regarding our compensation practices and policies. Of those shareholders, six accepted our invitation to meet with us. We continued our shareholder engagement efforts during early 2018 prior to our 2018 Annual Meeting. During this round our General Counsel met with seven of our largest shareholders (who at the time owned approximately 17% of our issued and outstanding common stock) and our Chief Financial Officer met with 28 of our largest shareholders (who at the time owned approximately 36% of our issued and outstanding common stock).

We welcomed the feedback we received during our engagement with our shareholders. A number of our shareholders had similar reactions to our compensation programs and provided instructive feedback for how we might improve those programs. Capitalizing on those conversations, we elected to

make design changes that we believe better align our NEO compensation programs with current best practices and better reflect the interests of our shareholders. In February 2018, our Compensation Committee approved those compensation design changes which became effective for the 2018 performance year. We described these compensation design changes in our 2018 Proxy Statement and received 93.7% shareholder say-on-pay approval in favor of the compensation of our NEOs at our 2018 Annual Meeting. We believe that the significantly improved result in our say-on-pay vote from our 2017 Annual Meeting to our 2018 Annual Meeting underscores the effectiveness of our shareholder outreach efforts and the positive reaction of our shareholders to the changes that we made to our executive compensation programs in early 2018.

 

 

LOGO

 

 

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Executive Compensation

 

Our primary focus for 2018 was to ensure that executive pay decisions were more quantitative, transparent and performance-based than had historically been our practice since we became a public company in 2009. The table below describes what we heard from our shareholders in 2017 and 2018 and how we implemented improvements to achieve these goals beginning in 2018 and going forward.

 

 

What We Heard

 

  

 

How We Responded

 

 

  Long-term incentive awards should be more performance-based

  

 

Annual equity grants in 2018 for our NEOs were 50% in the form of PSUs, which vest at the end of a three-year performance period based on the achievement of Total Shareholder Return (“TSR”) compared to the S&P 500 constituents.

 

The remaining 50% were comprised 25% of stock options and 25% of restricted stock awards, thereby making 75% of the overall annual equity grant value delivered in the form of performance-based equity.

 

 

  Short-term incentive awards are too discretionary

  

 

Annual cash incentive awards for our NEOs for the 2018 performance year were formulaic.

 

A significant portion of annual cash incentive awards was based on financial performance.

 

•  Mr. Stephenson’s awards were based 50% on achievement of pre-established adjusted organic revenue targets and 50% on achievement of pre-established adjusted organic EBITDA targets.

 

•  Other NEOs’ awards were based 40% on achievement of pre-established adjusted organic revenue targets, 40% on achievement of pre-established adjusted organic EBITDA targets and 20% based on individual performance.

 

Achievement of 2018 target performance goals required improved performance over 2017 results.

 

 

  CEO’s base pay increased disproportionately

  to Company performance

  

 

Consistent with prior year disclosure, Mr. Stephenson did not receive a base salary increase in 2018 and will not receive a salary increase for the 2019 fiscal year.

 

Throughout 2018 we continued our shareholder outreach efforts and by the end of the year we met with a total of 70 institutional shareholders (who at the time owned approximately 47% of our issued and outstanding common stock) to obtain their input and discuss their views on, among other things, our compensation practices and policies, board diversity and corporate governance practices.

 

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Executive Compensation

 

Executive Compensation Program Highlights

The following table describes the highlights of our executive compensation practices, each of which is described in more detail elsewhere in this proxy:

 

 

WHAT WE DO

 

 

 

WHAT WE DON’T DO

 

 

v   Require our compensation committee to be comprised solely of independent board members

 

 

 

v   Do not accelerate equity awards on a “single-trigger” basis

 

 

v   Utilize an independent compensation consultant

 

 

v   Do not provide excise tax gross-ups to our executive officers

 

 

v   Maintain and enforce robust stock ownership and retention guidelines

 

 

 

v   Do not provide excess perquisites and personal benefits

 

v   Maintain and enforce a robust “clawback” policy

 

 

v   Do not allow for the repricing of stock options without our shareholders’ consent

 

 

v   Establish target and maximum awards for our NEOs

 

 

 

v   Do not provide employment agreements to our NEOs

 

 

v   Apply a formulaic framework to determine our NEO’s short-term incentive awards

 

   

 

v   Employ rigorous goal setting tied to annual and multi-year targets for our NEOs

 

   

 

v   Prohibit our directors and employees from hedging or pledging Company securities

 

   

 

Fiscal 2018 Executive Compensation Program

Role of Compensation Committee and Management

Our Compensation Committee is responsible for making decisions regarding the compensation of our executive officers, including our NEOs. Our Compensation Committee determines the compensation levels for our CEO, and approves the compensation of our other NEOs based on the recommendations of our CEO. In addition, our Compensation Committee establishes and approves the financial goals and performance for the Company’s annual STI and LTI programs.

Role of Compensation Consultant

To ensure that our compensation program design, policies and practices remain competitive and in line with current market practice, our Compensation Committee has engaged FW Cook as an independent compensation consultant. In respect of 2018 compensation, the independent compensation consultant advised our Compensation Committee on various executive compensation matters including the compensation levels for senior management with respect to 2018. The independent compensation consultant also advised our Compensation Committee with respect to its implementation of the design changes that we made for 2018. The independent compensation consultant’s advice is one of several inputs into our Compensation Committee’s decision-making process.

Peer Group

Our Compensation Committee has historically used a benchmarking peer group, as one of many factors, to inform pay decisions for our NEOs. The peer group below is reviewed annually by our Compensation Committee with the assistance of the independent compensation consultant and is comprised of companies in comparable industries to ours (focusing on information software and services companies) and within a size range comparable to ours (focusing on both revenue and market capitalization as they influence compensation levels). Because the majority of our incentive compensation is provided in the form of equity awards and due to our historically high market capitalization to revenue ratio, the Compensation Committee focused heavily on the market capitalization comparison to peer group companies so that the resulting compensation data would accurately reflect the size and scope of our operations.

In early 2018, our Compensation Committee used twelve of the thirteen-company peer group noted in the table below (excluding CoStar Group, Inc.) to inform its decisions regarding senior executive base salary changes as well as annual cash awards made under our STI program and annual equity awards granted under our LTI program.

 

 

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For performance year 2018, our Compensation Committee, with the assistance of the independent compensation consultant, added CoStar Group, Inc. to our peer group because it is a comparable industry peer within the standard size range used by the independent compensation consultant that positions the Company at the peer median for operating income and market capitalization and slightly below the peer median for revenue. The companies listed in the table below represent those with comparable revenue and market capitalizations to ours during and throughout 2018.

 

 

Alliance Data Systems

 

  

 

Fiserv

 

  

 

MSCI

 

 

CoStar Group

 

  

 

Gartner

 

  

 

Nielsen Holdings

 

 

Equifax

 

  

 

IHS Markit

 

  

 

S&P Global

 

 

FactSet Research Systems

 

  

 

Moody’s

 

  

 

TransUnion

 

 

Fidelity National Information Services

 

         

 

For 2018, the median revenue and market capitalization of our peer group was $3,901 million and $13,690 million, respectively, versus the Company’s revenue and market capitalization of $2,395 million and $17,771 million, respectively.

When conducting its annual market competitive compensation review, the independent compensation consultant supplemented the peer group proxy information with national, proprietary technology industry survey data. The survey data are intended to be representative of each executive’s revenue responsibility, inclusive of adjustments to reflect our Company’s high operating margins relative to comparable companies, and functional role within the Company.

2018 NEO Pay Mix

We currently provide the following elements of compensation to our NEOs, each of which fulfills one or more of our compensation program objectives:

 

    base salary;

 

    short-term cash incentive awards;

 

    long-term equity incentive awards; and

 

    health, welfare and retirement plans.

The percentage of a Verisk employee’s compensation that is variable increases with seniority, because the decisions of more senior executives have a greater impact on our performance. We have designed our compensation programs so that a majority of each NEO’s compensation is variable rather than fixed.

Variable compensation for our NEOs consists of an annual cash payment pursuant to our STI program and a long-term equity incentive award pursuant to our LTI program. We believe the design of our compensation programs effectively encourages our senior managers, including our NEOs, to act in a manner that benefits the Company by creating long-term value for our shareholders. In evaluating NEO compensation awards, our Compensation Committee generally seeks to achieve compensation outcomes at market competitive levels,

with differentiation by executive based on individual factors such as proficiency in role, tenure, criticality to the Company and scope of responsibility.

Base Salary

We pay base salaries to attract, reward and retain senior executives in a competitive landscape. Each year, our Compensation Committee reviews the salaries of our NEOs and makes appropriate adjustments as necessary to maintain competitive market levels, which are based on the experience and scope of responsibilities of each NEO. In addition, each year we perform our own internal analysis of prevailing market levels of salary for comparable positions. This analysis utilizes our general knowledge of the industry, information gained by our human resources professionals in the hiring and termination process and, when available, commercially prepared market surveys obtained by our human resources professionals. We also review the percentage of each of our NEOs’ base salaries as a percentage of their total compensation in light of the executive’s position and function.

Annual adjustments to base salaries are determined by our Compensation Committee (in the case of Mr. Stephenson), and by Mr. Stephenson with the approval of our Compensation Committee (in the case of other NEOs), based on the assessment of prevailing market compensation practices as described above, and based on the evaluation of individual performance factors.

Mr. Stephenson’s 2018 base salary remained unchanged from 2017. In general, the view of the Compensation Committee is that progression in Mr. Stephenson’s compensation package, and the total value of Mr. Stephenson’s compensation package, should be tied to the progression of his equity awards (described below under “Annual LTI Awards”) and the performance of those awards in relation to the performance of Verisk’s stock. In 2018, base salaries for NEOs other than Mr. Stephenson were modestly increased by approximately 1% on average to maintain competitive market salary levels. As discussed in “Shareholder Engagement” above, Mr. Stephenson will not be receiving any salary increase for 2019.

 

 

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Executive Compensation

 

The table below sets forth the annual base salaries for our NEOs for the 2017, 2018 and 2019 fiscal years:

 

Named Executive Officer

 

  

 

2017 Base Salary

($)

 

    

 

2018 Base Salary

($)

 

    

 

2019 Base Salary

($)

 

 

 

Scott G. Stephenson

 

  

 

 

 

 

$1,000,000

 

 

 

 

  

 

 

 

 

$1,000,000

 

 

 

 

  

 

 

 

 

$1,000,000

 

 

 

 

 

Lee M. Shavel

 

  

 

 

 

 

$   550,000

 

 

 

 

  

 

 

 

 

$   550,000

 

 

 

 

  

 

 

 

 

$   650,000

 

 

 

 

 

Mark V. Anquillare

 

  

 

 

 

 

$   600,000

 

 

 

 

  

 

 

 

 

$   625,000

 

 

 

 

  

 

 

 

 

$   650,000

 

 

 

 

 

Kenneth E. Thompson

 

  

 

 

 

 

$   465,800

 

 

 

 

  

 

 

 

 

$   465,800

 

 

 

 

  

 

 

 

 

$   470,800

 

 

 

 

 

Vincent de P. McCarthy

 

  

 

 

 

 

$   450,000

 

 

 

 

  

 

 

 

 

$   450,000

 

 

 

 

  

 

 

 

 

$   455,000

 

 

 

 

 

Annual STI Awards

2018 STI Financial Metrics and Individual Target Amounts

In response to the feedback we received from our shareholders, we amended our annual STI program to enhance our pay-for-performance objectives by improving the program’s alignment with our communicated financial goals and improving clarity for our employees and shareholders. The financial metrics that we chose for our 2018 STI program were adjusted organic constant currency revenue growth and adjusted organic constant currency EBITDA growth, because we believe that growing organic revenue and EBITDA streams on a constant currency basis are the most important forms for performance and the best measure of our NEOs’ performance. Awards are paid out based on the achievement of pre-established threshold, target and maximum performance levels. As may be applicable, in calculating adjusted organic constant currency revenue and adjusted organic constant currency EBITDA, the Compensation Committee had discretion to eliminate the financial impact of certain items including, among others, the cost of earn-out payments related to acquisitions, the effect of new accounting pronouncements,

certain non-recurring expenses and the impact of changes in foreign currency. We believe the ability of the Compensation Committee to make adjustments for these items is appropriate because we do not think our NEOs’ short term incentive compensation should be impacted by events that do not reflect the underlying operating performance of the business.

Payouts under the 2018 STI program were determined on a formulaic basis. Mr. Stephenson’s annual STI award payout for 2018 was based 50% on achievement of adjusted organic constant currency revenue targets, and 50% on achievement of adjusted organic constant currency EBITDA targets, as we felt it was important to directly align his incentive payout to these critical financial performance measures. For our other NEOs, STI award payouts for 2018 were based 40% on achievement of adjusted organic constant currency revenue amounts, 40% on adjusted organic constant currency EBITDA amounts and 20% on individual performance which allowed our Compensation Committee to consider substantial individual performance in addition to the attainment of Company financial performance objectives.

 

 

The following table sets forth the levels for each of our financial metrics, as well as the resulting performance multiplier (from 0% to 200%) that were applied to the individual NEO bonus award targets, with linear interpolation applied between performance levels.

 

  Performance Levels

 

 

Adjusted Organic
Constant Currency
Revenue Growth %

 

 

Adjusted Organic
Constant Currency
EBITDA Growth %

 

Multiplier

(as a % of target)

 

 

  Below Threshold

 

 

< 3.0%

 

 

< 3.5%

 

 

0%

 

 

  Threshold

 

 

3.0%

 

 

3.5%

 

 

50%

 

 

  Target

 

 

7.0%

 

 

7.5%

 

 

100%

 

 

  Above Target

 

 

11.0%

 

 

11.5%

 

 

150%

 

 

  Maximum

 

 

15.0%

 

 

15.5%

 

 

200%

 

 

2018 STI Performance

During 2018, we achieved an adjusted organic constant currency revenue growth rate of 6.1%, which implies an interpolated funding multiplier of 89.2%, and an adjusted organic constant currency EBITDA growth rate of 5.4%, which implies an interpolated funding multiplier of 73.8%, yielding a combined funding multiplier of 81.5%.

CEO 2018 STI Outcome

In 2018, the Compensation Committee established the CEO’s targeted STI award at $1,500,000, which was unchanged

from 2017. In general, the view of the Compensation Committee is that progression in Mr. Stephenson’s compensation package, and the total value of Mr. Stephenson’s compensation package, should be tied to the progression of his equity awards (described below under “Annual LTI Awards”) and the performance of those awards in relation to the performance of Verisk’s stock.

 

 

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Executive Compensation

 

As set forth in the following table, the CEO’s STI award for 2018 calculated from the Company’s performance in relation to the performance grid described above was $1,222,500 (applying the funding multiplier of 81.5% against the target STI award of $1,500,000), as the CEO’s STI award outcome is 100% formulaic with no discretionary component.

 

Named Executive Officer

 

 

2018 Target STI
Amount

($)

 

 

2018 Actual STI
Amount

($)

 

 

2018 Actual STI
Amount

(as a % of target)

 

 

Scott G. Stephenson

 

 

 

 

 

$1,500,000

 

 

 

 

 

 

 

$1,222,500

 

 

 

 

 

 

 

81.5

 

 

%

 

 

Other NEOs’ 2018 STI Outcomes

For individual NEOs, other than Mr. Stephenson, the 2018 STI awards calculated from the Company’s performance in relation to the performance grid described above implied a funding multiplier of 81.5% of each NEO’s respective target STI award. However, for such NEO’s, 80% of their STI award is formulaic and 20% is discretionary based on individual performance. For the portion of the STI award which is discretionary, our NEOs are expected to behave as a team and large differentiation on the discretionary part of their annual STI award will be expected only when there are notable examples of individual overperformance or underperformance. Factors considered in evaluating such NEO’s individual performance are described below, although they were not given any specific weight.

 

    Mr. Shavel: introduced a new level of capital management discipline into business unit and corporate budgeting; advocated for new capital allocation approaches including the introduction of a dividend; successfully incorporated responsibility for the corporate development function.

 

    Mr. Anquillare: leadership of the insurance vertical to impressive, Verisk-leading levels of organic revenue growth; oversight of Verisk’s strategy of international expansion, including significant customer acquisition and growth in the UK; oversight of Verisk’s lean six sigma program to record levels of employee participation.

 

    Mr. Thompson: oversight of Verisk’s risk and security posture, which in 2018 yielded an environment free of major security incidents; repositioning of Verisk’s contractual practices in light of GDPR; oversight of widely revamped corporate governance practices performed in partnership with Verisk’s Chairman of the Board and Chair of the Nominating and Corporate Governance Committee.

 

    Mr. McCarthy: assumption of line leadership responsibility for Verisk Financial Services, Verisk 3E and Verisk Maplecroft; half-year leadership of the corporate development function which resulted in four successful international acquisitions.
 

 

Accordingly, the Compensation Committee approved, based on Mr. Stephenson’s evaluation of each NEO’s individual performance and recommendation, that each NEO, other than the CEO, be awarded the following amounts in respect of their 2018 STI awards:

 

Named Executive Officer

 

 

2018 Target STI
Amount

($)

 

 

2018 Actual STI
Amount

($)

 

 

2018 Actual STI
Amount

(as a % of target)

 

 

Lee M. Shavel

 

 

 

 

 

$687,500

 

 

 

 

 

 

 

$586,000

 

 

 

 

 

 

 

85

 

 

%

 

 

Mark V. Anquillare

 

 

 

 

 

$656,250

 

 

 

 

 

 

 

$559,000

 

 

 

 

 

 

 

85

 

 

%

 

 

Kenneth E. Thompson

 

 

 

 

 

$447,168

 

 

 

 

 

 

 

$381,000

 

 

 

 

 

 

 

85

 

 

%

 

 

Vincent de P. McCarthy

 

 

 

 

 

$504,000

 

 

 

 

 

 

 

$429,000

 

 

 

 

 

 

 

85

 

 

%

 

 

Annual LTI Awards

Pre-2018 LTI Awards

Long-term equity incentive awards have historically been granted on an annual basis to eligible employees, including our NEOs, pursuant to our LTI program. For grants made in 2017 and in prior years, LTI awards were comprised 50% of stock options and 50% of time-based restricted stock awards, and were granted in April of each fiscal year in amounts that were based on the Company’s prior year performance.

In prior years, at the conclusion of each performance year, our Compensation Committee determined the aggregate value of the stock options and restricted stock issuable to all

eligible participants under the LTI program by evaluating the same performance goals used to determine the aggregate funding amount under the STI program. Our Compensation Committee then determined Mr. Stephenson’s individual amount based on the achievement of the Company’s financial measures, and his individual performance, while also seeking to increase the percentage of the equity award component compared to his overall compensation mix. Awards for our other NEOs were recommended by Mr.  Stephenson, and approved by our Compensation Committee.

2018 LTI Awards

Beginning in April 2018 in response to the feedback we received from our shareholders, our LTI program included

 

 

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Executive Compensation

 

grants of PSUs to our executive officers, including our NEOs, such that awards under our LTI program were comprised of 50% PSUs, 25% stock options and 25% time-based restricted stock awards. PSUs vest over a three-year performance period, subject to the recipient’s continued service with our Company, with potential payouts ranging from 0% to 200% of target levels based on the Company’s achievement of relative TSR as compared to the companies that comprise the S&P 500 Index. Stock options and time-based restricted stock awards vest ratably on each of the first four anniversaries of the grant date.

 

We chose to include PSUs in our mix of equity awards because these awards more closely align our executives’ payments to shareholder returns, and reward superior performance over companies with whom we compete for capital, while also retaining a retentive element through time-based vesting requirements. We believe the S&P 500 Index is the appropriate comparator group for these awards because the index provides a sufficient number of comparator companies and represents the universe of companies with which the Company competes for investor capital.

 

 

The performance period for PSUs granted in 2018 is January 1, 2018 through December 31, 2020. PSUs will be paid at the end of the three-year performance period in the form of (i) shares of our common stock, (ii) cash in an amount equal to the then fair market value of the number of shares corresponding to the number of vested PSUs on such vesting date, or (iii) a combination of both, in accordance with the table below. The following table sets forth the performance multiplier (from 0% to 200%) that will be applied to the target PSUs at the end of the performance period for each performance level, with linear interpolation applied between performance levels.

 

Performance Level

 

  

 

TSR Percentile Rank Relative to

Comparator Group

 

  

 

TSR Multiplier

(as a % of target)

 

 

 

Below Threshold

 

  

 

< 25th percentile

 

  

 

 

 

 

0

 

 

 

 

Threshold

 

  

 

25th percentile

 

  

 

 

 

 

50

 

 

 

 

Target

 

  

 

Median

 

  

 

 

 

 

100

 

 

 

 

Above Target

 

  

 

75th percentile

 

  

 

 

 

 

150

 

 

 

 

Maximum

 

  

 

> 90th percentile

 

  

 

 

 

 

200

 

 

 

The size of Mr. Stephenson’s and each of our NEO’s annual grant amount for the 2018 LTI awards were determined individually, benchmarking their positions against available market data.

 

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Summary of 2018 NEO STI and LTI Programs

The chart below summarizes the program features of our STI and LTI programs for our NEOs in 2018 which closely align these programs to our strategic objectives and shareholder interests.

 

          

 

2018 Program

   Rationale    

 

  STI

 

  

 

Company Financial Metrics

 

  

 

Adjusted Organic Constant Currency Revenue Growth

 

Adjusted Organic Constant Currency EBITDA Growth

  

 

Simple to communicate

 

Aligns to strategic plan

 

Requires year-over-year top-line growth

   
    

 

Individual Awards

 

  

 

Formulaic based on Company performance relative to pre-established threshold, target and maximum performance levels

 

CEO — 50% weighting on each Company Financial Metric

 

Other NEOs — 40% weighting on each Company Financial Metric and 20% individual performance

  

 

More transparent for employees and shareholders

 

Retains heavy weight on Company performance, but allows for differentiation for NEOs (other than our CEO) based on individual achievement

 

Formulaic approach (versus prior discretionary plan), which is more consistent with market practice

   

 

  LTI

 

  

 

Award Mix

 

  

 

50% PSUs, 25% stock options and 25% restricted stock

 

  

 

Adds an additional performance-based long-term component (PSUs) into executive compensation program

 

Balance absolute and relative stock price performance

   
    

 

Performance Metric

 

  

 

Relative TSR versus S&P 500 constituents, measured over a three-year period

 

  

 

Creates alignment with our shareholders’ interest in superior returns

 

   

 

Health, Welfare and Retirement Plans

We offer standard health and welfare benefit programs including medical, dental, life, accident and disability insurance, to which we make contributions as a percentage of the associated costs. These benefits are available to substantially all of our employees and the percentage of the Company’s contribution is the same for all.

Our tax-qualified retirement plans during 2018 included:

 

    a combined 401(k) Savings Plan and ESOP,

 

    a defined benefit pension plan with (i) a traditional final pay formula applicable to employees who were 49 years old with 15 years of service as of January 1, 2002, and (ii) a cash balance formula applicable to other employees hired prior to March 1, 2005 (effective February 29, 2012, the Company implemented a “hard freeze” of such benefits under the pension plan), and

 

    a profit sharing plan (as a component of the 401(k) Savings Plan), which is available to employees hired
   

on or after March 1, 2005 (the Company did not make any contribution during 2018).

Our nonqualified retirement plans include a supplemental pension and a supplemental savings plan for highly compensated employees, including our NEOs. The combined 401(k) Savings Plan and ESOP and the pension/profit sharing plans are broad-based plans available to substantially all of our employees, including our NEOs. The supplemental retirement plans are offered to our highly-paid employees, including our NEOs, to restore to them amounts to which they would be entitled under our tax-qualified plans but which they are precluded from receiving under those plans by Internal Revenue Service limits. The supplemental retirement plans are unsecured obligations of the Company. Effective February 29, 2012, the Company implemented a “hard freeze” of the benefits under the supplemental pension plan.

We established our ESOP at the time we converted from not-for-profit to for-profit status, in order to foster an ownership culture in the Company and to strengthen the link between compensation and value created for stockholders.

 

 

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This plan has enabled our employees to hold an ownership interest in the Company as well as provide a stock vehicle for Company matching contributions to our 401(k) and profit sharing plans, which has allowed employees to monitor directly, and profit from, the increasing value of our stock.

Change in Control Severance Agreements and Employment Agreements

In October 2009, in connection with our initial public offering or IPO, we entered into Change in Control Severance Agreements with Mr. Stephenson, Mr. Anquillare, Mr. McCarthy and Mr. Thompson. In connection with the hiring of Mr. Shavel as our CFO in November 2017, we entered into a Change in Control Severance Agreement with Mr. Shavel effective as of such time. We believe that these agreements are desirable to retain the services of these individuals in whom the Company has a significant investment. For information about the provisions of the NEOs’ change in control severance agreements, please see “Potential Payments upon Termination or Change in Control.” We have not entered in any other type of employment agreement with any of our NEOs.

Policies and Practices

Executive Stock Ownership Guidelines

Our Compensation Committee has adopted strict minimum equity holding requirements applicable to our executive officers, including our NEOs, as a percentage of their base salary, to further align their interests with those of our long-term shareholders. If any of our NEOs have not met this ownership level, he or she is required to retain 50% of the after-tax value of stock acquired upon the vesting of restricted stock awards, PSUs or a stock option exercise. The “in-the-money” value of vested and unvested stock options and unvested restricted stock and PSUs held by the NEO is not included in determining compliance with the stock ownership requirement. The value of vested Company stock held by NEOs in their respective 401(k) accounts or ESOP accounts are included in determining compliance with the stock ownership requirement.

Mr. Stephenson currently holds stock with a value in excess of the six times base salary requirement for the CEO. Mr. Anquillare, Mr. Thompson, and Mr. McCarthy each currently hold stock with a value in excess of the three times base salary requirement for other NEOs. Mr. Shavel, who was appointed Chief Financial Officer in November 2017, currently does not yet hold stock with a value in excess of the three times base salary requirement but he has satisfied the requirement to retain 50% of the after-tax value of stock acquired upon the vesting of restricted stock awards or stock option exercises since the date he was appointed an executive officer.

“Clawback” Policy

The Company maintains a “clawback” policy that permits the Board of Directors to recover bonus or incentive compensation from executive officers whose fraud or misconduct resulted in a significant restatement of financial results. The

policy allows for the recovery or cancellation of any bonus or incentive payments (including profits realized from the sale of Company securities) made to an executive officer on the basis of having met or exceeded performance targets during a period of fraudulent activity or a material misstatement of financial results if the Board of Directors determines that such a recovery or cancellation is appropriate due to intentional misconduct by the executive officer that resulted in performance targets being achieved that would not have been achieved absent such misconduct. The Board of Directors intends to review this policy when the proposed regulations promulgated by the U.S. Securities and Exchange Commission implementing the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to clawbacks are finalized.

Anti-Hedging and Pledging Policies

The Company prohibits its directors and employees, including its NEOs, from pledging Company securities, hedging Company securities, selling short or trading options or futures in Company securities, or purchasing Company securities on margin or holding Company securities in a margin account.

Tax and Accounting Considerations

Our Compensation Committee takes into consideration the accounting and tax implications of our compensation and benefit programs, including with respect to the tax deductibility of compensation paid under Section 162(m) of the Internal Revenue Code (the “Code”).

Section 162(m) of the Code generally limits the tax deductibility of annual compensation paid by public companies to certain executive officers to $1 million. Prior to the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”), Section 162(m) of the Code provided an exemption from this limitation for “qualified performance-based compensation”, which we historically relied on to obtain a tax deduction for performance-based compensation paid to our NEOs.

However, the TCJA repealed the “qualified performance-based compensation” exception under Section 162(m) of the Code, effective for taxable years beginning after December 31, 2017. The TCJA provides transition relief for certain contractual arrangements in place as of November 2, 2017. In August 2018, the Internal Revenue Service issued initial guidance on certain aspects of Section 162(m), as amended by the TCJA, effective for taxable years ending on or after September 10, 2018. The Internal Revenue Service also indicated that it anticipates proposing rules on the amended Section 162(m) and requested additional comments from the public.

In the exercise of its business judgment, and in accordance with its compensation philosophy, our Compensation Committee continues to have the flexibility to award compensation that is not tax deductible if it determines that such award is in our shareholders’ best interests.

 

 

30  |  Verisk 2019 Proxy Statement


Table of Contents

Executive Compensation

 

Risk Assessment Regarding Compensation Policies and Practices

When reviewing our compensation programs and approving awards under them, the Compensation Committee considers the potential risks associated with these policies and practices. We selected adjusted organic constant currency revenue and adjusted organic constant currency EBITDA achievement as the primary criteria for the funding of the aggregate STI award pool in 2018 because we believe that growing organic revenue and EBITDA streams are the most important forms for performance and the best measure of our employees’ performance. We believe these financial metrics appropriately aligns the interests of management with those of our shareholders, while providing an appropriate balance of risk and reward that does not encourage excessive or unnecessary risk-taking behavior. As a result, we do not believe that risks relating to our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on the Company.

In reaching this determination we also considered the following attributes of our programs:

 

    balance between annual and longer-term performance opportunities;
    alignment of annual and long-term incentives to ensure that the awards encourage consistent behaviors and achievable performance results;

 

    beginning in 2018, using a combination of 10-year stock options, restricted stock awards and performance-based stock units, all of which vest over time;

 

    generally providing senior executives with long-term equity-based compensation on an annual basis, as we believe that accumulating equity over a period of time encourages executives to take actions that promote the long-term sustainability of our business;

 

    stock ownership guidelines that are reasonable and align the interests of the executive officers with those of our shareholders, which discourages executive officers from focusing on short-term results without regard for longer-term consequences; and

 

    a “clawback” policy that permits the Board of Directors to recover bonus or incentive compensation from executive officers whose fraud or misconduct resulted in a significant restatement of financial results, as more fully described above.
 

 

Compensation Committee Report

We, the Compensation Committee of the Board of Directors of Verisk Analytics, Inc., have reviewed and discussed with management the Compensation Discussion and Analysis above. Based on our review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission.

Respectfully submitted,

John F. Lehman, Jr. (Chair)

Annell R. Bay

Bruce Hansen

Constantine P. Iordanou

David B. Wright

 

Verisk 2019 Proxy Statement  |  31


Table of Contents

Executive Compensation

 

Executive Compensation and Benefits

The following table sets forth information concerning the compensation paid to and earned by the Company’s NEOs for the years ended December 31, 2016, 2017 and 2018.

2018 SUMMARY COMPENSATION TABLE

 

Name and

Principal Position

Year 

Salary 

($)

Stock 

Awards 

($)(1) 

Option 

Awards 

($)(2) 

Non-Equity 

Incentive 
Plan 

Compensation 

($)(3) 

 

Change in 

Pension 

Value and 

Nonqualified 

Deferred 

Compensation 

Earnings 

($) 

All Other 

Compensation 

($) 

Total 

($) 

               

 

Scott G. Stephenson

 

 

 

 

2018

 

 

 

 

 

 

 

1,000,000

 

 

 

 

 

 

 

4,124,966   

 

 

 

 

 

 

 

1,375,035

 

 

 

 

 

 

 

1,222,500

 

 

 

 

 

 

 

3,343

 

 

 

 

 

 

 

17,913

 

 

(4)

 

 

 

 

 

7,744,757

 

 

 

Chairman, President and

Chief Executive Officer

 

 

 

2017

 

 

 

 

1,000,000

 

 

 

 

2,250,012   

 

 

 

 

2,249,996

 

 

 

 

1,500,000

 

 

 

 

74,267

 

 

 

 

20,561

 

(5)

 

 

 

7,094,836

 

 

 

 

2016

 

 

 

 

1,000,000

 

 

 

 

2,149,974   

 

 

 

 

2,150,024

 

 

 

 

1,575,000

 

 

 

 

39,490

 

 

 

 

12,714

 

(6)

 

 

 

6,927,202

 

 

 

Lee M. Shavel

 

 

 

 

2018

 

 

 

 

 

 

 

550,000

 

 

 

 

 

 

 

1,124,955   

 

 

 

 

 

 

 

375,042

 

 

 

 

 

 

 

586,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,617

 

 

(7)

 

 

 

 

 

2,649,614

 

 

 

Executive Vice President

and Chief Financial Officer

 

 

 

2017

 

 

 

 

68,750

 

(8) 

 

 

 

1,999,956(9

 

 

 

 

 

 

 

 

86,000

 

 

 

 

 

 

 

 

3,437

 

(10)

 

 

 

2,158,143

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark V. Anquillare

 

 

 

 

 

2018

 

 

 

 

 

 

 

618,750

 

 

 

 

 

 

 

1,588,513   

 

 

 

 

 

 

 

529,503

 

 

 

 

 

 

 

559,000

 

 

 

 

 

 

 

(9,859

 

 

)

 

 

 

 

 

24,259

 

 

(11)

 

 

 

 

 

3,310,166

 

 

 

Executive Vice President

and Chief Operating Officer

 

 

 

 

2017

 

 

 

 

600,000

 

 

 

 

999,969   

 

 

 

 

1,000,029

 

 

 

 

630,000

 

 

 

 

140,515

 

 

 

 

24,052

 

(12)

 

 

 

3,394,565

 

 

 

 

2016

 

 

 

 

530,200

 

 

 

 

799,975   

 

 

 

 

800,027

 

 

 

 

600,000

 

 

 

 

69,182

 

 

 

 

5,181

 

(13)

 

 

 

2,804,565

 

 

 

Kenneth E. Thompson

 

 

 

 

 

2018

 

 

 

 

 

 

 

465,800

 

 

 

 

 

 

 

975,034   

 

 

 

 

 

 

 

324,963

 

 

 

 

 

 

 

381,000

 

 

 

 

 

 

 

(8,413

 

 

)

 

 

 

 

 

16,005

 

 

(14)

 

 

 

 

 

2,154,389

 

 

 

Executive Vice President,

General Counsel and

Corporate Secretary

 

 

 

2017

 

 

 

 

465,800

 

 

 

 

614,960   

 

 

 

 

615,040

 

 

 

 

448,000

 

 

 

 

16,711

 

 

 

 

14,279

 

(15)

 

 

 

2,174,790

 

 

 

 

2016

 

 

 

 

451,800

 

 

 

 

599,982   

 

 

 

 

600,024

 

 

 

 

428,000

 

 

 

 

6,035

 

 

 

 

5,419

 

(16)

 

 

 

2,091,260

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vincent de P. McCarthy

 

 

 

 

 

2018

 

 

 

 

 

 

 

450,000

 

 

 

 

 

 

 

873,698   

 

 

 

 

 

 

 

291,287

 

 

 

 

 

 

 

429,000

 

 

 

 

 

 

 

973

 

 

 

 

 

 

 

14,889

 

 

(17)

 

 

 

 

 

2,059,847

 

 

 

Group President

 

 

 

2017

 

 

 

 

450,000

 

 

 

 

549,967   

 

 

 

 

550,033

 

 

 

 

500,000

 

 

 

 

348

 

 

 

 

13,241

 

(18)

 

 

 

2,063,589

 

 

 

 

2016

 

 

 

 

430,400

 

 

 

 

499,985   

 

 

 

 

500,023

 

 

 

 

475,000

 

 

 

 

54

 

 

 

 

4,239

 

(19)

 

 

 

1,909,701

 

 

 

(1)

This column represents the aggregate grant date fair value of (i) restricted stock awards granted in the relevant year, valued at the grant date based on the closing price of the Company’s common stock, and (ii) PSU awards granted in the relevant year, valued at the grant date based on the probable outcome of the performance conditions, in each case computed in accordance with ASC Subtopic 718, excluding forfeiture estimates. For a discussion of the assumptions used to calculate the amounts shown in this column see note 17 of the notes to our audited consolidated financial statements included as part of our Annual Report on Form 10-K for the year ended December 31, 2018. For the PSUs granted in 2018, the actual number of PSUs earned (0% up to the maximum level of 200%) will depend on the Company’s future total shareholder return performance compared to companies that comprise the S&P 500 Index over the three-year performance period. The values of each NEO’s 2018 PSU award as of the grant date, assuming maximum achievement of the performance conditions are: Mr. Stephenson: $5,499,963; Mr. Shavel: $1,499,862; Mr. Anquillare: $2,118,098; Mr. Thompson: $1,300,068; and Mr. McCarthy: $1,164,996.

(2)

This column represents the aggregate grant date fair value of stock option awards granted in the relevant year, computed in accordance with ASC Subtopic 718, excluding forfeiture estimates. For a discussion of the assumptions used to calculate the amounts shown in the option awards columns, see note 17 of the notes to our audited consolidated financial statements included as part of our Annual Report on Form 10-K for the year ended December 31, 2018.

(3)

The amounts in this column are cash incentive awards under the STI program in respect of performance for the years ended December 31, 2016, 2017 and 2018, as applicable.

(4)

Amount includes a 401(k) Savings Plan matching contribution of $12,765.

(5)

Amount includes a 401(k) Savings Plan matching contribution of $12,150.

(6)

Amount includes a 401(k) Savings Plan matching contribution of $6,450.

(7)

Amount includes a 401(k) Savings Plan matching contribution of $12,375.

(8)

Amount represents the pro-rata portion of Mr. Shavel’s annualized base salary of $550,000 paid in 2017.

(9)

Represents a one-time equity award of $1,999,956 in the form of shares of restricted stock that will vest ratably over four years on the respective anniversary dates of Mr. Shavel’s employment commencement date of November 14, 2017.

(10)

Amount includes a 401(k) Savings Plan matching contribution of $3,281.

(11)

Amount includes a 401(k) Savings Plan matching contribution of $13,434.

(12)

Amount includes a 401(k) Savings Plan matching contribution of $12,150.

(13)

Amount includes a 401(k) Savings Plan matching contribution of $3,939.

(14)

Amount includes a 401(k) Savings Plan matching contribution of $13,659.

(15)

Amount includes a 401(k) Savings Plan matching contribution of $12,150.

(16)

Amount includes a 401(k) Savings Plan matching contribution of $3,351.

(17)

Amount includes a 401(k) Savings Plan matching contribution of $13,685.

(18)

Amount includes a 401(k) Savings Plan matching contribution of $12,150.

(19)

Amount includes a 401(k) Savings Plan matching contribution of $3,191.

 

32  |  Verisk 2019 Proxy Statement


Table of Contents

Executive Compensation

 

Grants of Plan-Based Awards

The following table sets forth information concerning grants of plan-based awards made to the NEOs during the Company’s fiscal year ended December 31, 2018.

2018 GRANTS OF PLAN BASED AWARDS

 

Name

 

   

 

Grant

Date(1)

 

 

 

 

 

 

 

 

Estimated Future Payouts
Under Non-Equity

Incentive Plan Awards

 

 
 

 

   

Estimated Future Payouts
Under Equity


Incentive Plan Awards

 
 

 

   





 

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units

 

 
 
 
 
 
 
 

 

   





 

All Other
Option
Awards:
Number of
Securities
Underlying
Options

 

 
 
 
 
 
 
 

 

   




 

Exercise
or Base
Price of
Option
Awards
($/Sh)

 

 
 
 
 
 
 

 

 

 

 







 

 

Grant
Date

Fair
Value of
Stock
and
Option
Awards
($)(2)

 

 

 
 

 
 
 
 
 
 
 

 

   

 

Threshold

($)

 

 

 

 

   

 

Target

($)

 

 

 

 

   

 

Maximum

($)

 

 

 

 

   

 

Threshold

(#)

 

 

 

 

   

 

Target

(#)

 

 

 

 

   

 

Maximum

(#)

 

 

 

 

 

  Scott G. Stephenson

 

 

 

 

April 1, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

64,799

 

 

 

 

 

 

104.00

 

 

 

 

 

 

1,375,035

 

 

    April 1, 2018                                           13,221                   1,374,984  
    February 13, 2018       (3     (3     (3                                          
   

 

April 1, 2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

9,773

 

 

 

   

 

19,545

 

 

 

   

 

39,090

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

2,749,982

 

 

 

 

  Lee M. Shavel

 

 

 

 

April 1, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17,674

 

 

 

 

 

 

104.00

 

 

 

 

 

 

375,042

 

 

    April 1, 2018                                           3,606                   375,024  
    February 13, 2018       (3     (3     (3                                          
   

 

April 1, 2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

2,665

 

 

 

   

 

5,330

 

 

 

   

 

10,660

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

749,931

 

 

 

 

  Mark V. Anquillare

 

 

 

 

 

April 1, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,953

 

 

 

 

 

 

104.00

 

 

 

 

 

 

529,503

 

 

    April 1, 2018                                           5,091                   529,464  
    February 13, 2018       (3     (3     (3                                          
   

 

April 1, 2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

3,764

 

 

 

   

 

7,527

 

 

 

   

 

15,054

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

1,059,049

 

 

 

 

  Kenneth E. Thompson

 

 

 

 

 

April 1, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,314

 

 

 

 

 

 

104.00

 

 

 

 

 

 

324,963

 

 

    April 1, 2018                                           3,125                   325,000  
    February 13, 2018       (3     (3     (3                                          
   

 

April 1, 2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

2,310

 

 

 

   

 

4,620

 

 

 

   

 

9,240

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

650,034

 

 

 

 

  Vincent de P. McCarthy

 

 

 

 

April 1, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,727

 

 

 

 

 

 

104.00

 

 

 

 

 

 

291,287

 

 

    April 1, 2018                                           2,800                   291,200  
    February 13, 2018       (3     (3     (3                                          
   

 

April 1, 2018

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

2,070

 

 

 

   

 

4,140

 

 

 

   

 

8,280

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

582,498

 

 

 

 

(1)

All awards reflected in this table were approved by the Compensation Committee on February 13, 2018.

(2)

This column represents the aggregate grant date fair value of the following awards granted in the relevant year under the Verisk Analytics, Inc. 2013 Equity Incentive Plan, in accordance with ASC Subtopic 718, excluding forfeiture estimates, to the extent applicable: (i) restricted stock awards and stock option awards, valued at the closing price of the Company’s common stock, and (ii) performance stock unit awards, valued based on the probable outcome of the performance conditions. For a discussion of the assumptions used to calculate the amounts shown in this column see note 17 of the notes to our audited consolidated financial statements included as part of our Annual Report on Form 10-K for the year ended December 31, 2018.

(3)

As described in the “Compensation Discussion and Analysis,” our NEOs are eligible for an annual incentive compensation cash award under our STI program which will be paid out based on the achievement of pre-established threshold, target and maximum performance levels. For additional details regarding the NEO STI program, including the relevant performance factors for 2018, see “Compensation Discussion and Analysis — Annual STI Awards — 2018 STI Financial Metrics and Individual Targets” and “Compensation Discussion and Analysis — Summary of 2018 STI and LTI Programs.” For the actual amounts of cash incentive awards paid to each of our NEOs under our STI program in respect of performance for 2018, see the “Non-Equity Incentive Plan Compensation” column of our 2018 Summary Compensation Table.

 

Verisk 2019 Proxy Statement  |  33


Table of Contents

Executive Compensation

 

Outstanding Equity Awards at Fiscal Year End

The following table sets forth information concerning unexercised options, unvested restricted stock and unvested PSUs held by our NEOs as of the end of the Company’s fiscal year ended 2018 based on a market value of $109.04 per share (our closing market price on December 31, 2018).

2018 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

          Option Awards(1)     Stock Awards(2)  
  Name  

Date of

Award

Grant

   

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

   

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

   

Option

Exercise

Price ($)

   

Option

Expiration

Date

   

Number of

Shares or

Units of

Stock

That

Have Not

Vested

(#)

   

Market

Value of

Shares

or Units

of Stock

That

Have

Not

Vested

($)

    Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)(3)
    Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(3)
 

  Scott G. Stephenson

    4/1/2011       103,769             33.30       4/1/2021                          
    4/1/2012       54,744             46.97       4/1/2022                          
    4/1/2013       189,035             61.14       4/1/2023                          
    4/1/2014       168,352             59.74       4/1/2024                          
    4/1/2015       125,390       41,797       71.53       4/1/2025       7,515       819,436              
    4/1/2016       70,079       70,079       80.19       4/1/2026       13,406       1,461,790              
    4/1/2017       36,290       108,871       81.14       4/1/2027       20,798       2,267,814              
    4/1/2018             64,799       104.00       4/1/2028       13,221       1,441,618              
      4/1/2018                                           9,773       1,065,593  
                 

  Lee M. Shavel

    11/14/2017                               16,464 (4)      1,795,235              
    4/1/2018             17,674       104.00       4/1/2028       3,606       393,198              
      4/1/2018                                           2,665       290,592  
                 

  Mark V. Anquillare

    4/1/2010       105,000             28.20       4/1/2020                          
    4/1/2011       82,299             33.30       4/1/2021                          
    4/1/2012       43,796             46.97       4/1/2022                          
    4/1/2013       40,959             61.14       4/1/2023                          
    4/1/2014       61,027             59.74       4/1/2024                          
    4/1/2015       44,322       14,775       71.53       4/1/2025       2,657       289,719              
    4/1/2016       26,076       26,077       80.19       4/1/2026       4,988       543,892              
    4/1/2017       16,129       48,389       81.14       4/1/2027       9,243       1,007,857              
    4/1/2018             24,953       104.00       4/1/2028       5,091       555,123              
      4/1/2018                                           3,764       410,372  
                 

  Kenneth E. Thompson

    4/1/2010       79,000             28.20       4/1/2020                          
    4/1/2011       64,408             33.30       4/1/2021                          
    4/1/2012       34,671             46.97       4/1/2022                          
    4/1/2013       31,506             61.14       4/1/2023                          
    4/1/2014       47,055             59.74       4/1/2024                          
    4/1/2015       33,532       11,178       71.53       4/1/2025       2,010       219,170              
    4/1/2016       19,557       19,558       80.19       4/1/2026       3,741       407,919              
    4/1/2017       9,920       29,760       81.14       4/1/2027       5,685       619,892              
    4/1/2018             15,314       104.00       4/1/2028       3,125       340,750              
      4/1/2018                                           2,310       251,882  
                 

  Vincent de P. McCarthy

   

4/1/2011

4/1/2012

 

 

   

32,043

28,285

 

 

   


 

 

   

33.30

46.97

 

 

   

4/1/2021

4/1/2022

 

 

   


 

 

   


 

 

   


 

 

   


 

 

    4/1/2013       25,206             61,14       4/1/2023                          
    4/1/2014       35,775             59.74       4/1/2024                          
    4/1/2015       26,244       8,749       71.53       4/1/2025       1,573       171,520              
    4/1/2016       16,298       16,298       80.19       4/1/2026       3,118       339,987              
    4/1/2017       8,871       26,615       81.14       4/1/2027       5,084       554,359              
    4/1/2018             13,727       104.00       4/1/2028       2,800       305,312              
      4/1/2018                                           2,070       225,713  

 

34  |  Verisk 2019 Proxy Statement


Table of Contents

Executive Compensation

 

(1)

The right to exercise stock options vests ratably on the first, second, third and fourth anniversaries of the date of grant.

(2)

The stock awards shown in this column are restricted stock awards that vest ratably on the first, second, third and fourth anniversaries of the date of grant. The PSUs shown in this column are scheduled to vest on December 31, 2020 based on the achievement of the Company’s total shareholder return performance compared to companies that comprise the S&P 500 Index over the three-year performance period.

(3)

The number of unvested PSUs reported in this column reflects achievement of threshold performance goals.

(4)

Represents a one-time equity award in the form of shares of restricted stock that will vest ratably over four years on the respective anniversary dates of Mr. Shavel’s employment commencement date of November 14, 2017.

Option Exercises and Stock Vested

The following table sets forth information concerning each exercise of stock options and vesting of shares of restricted stock for the NEOs during 2018. Restricted stock awards are typically granted to our NEOs on April 1 of each year and vest in four equal installments on the first, second, third and four anniversaries of their grant date.

2018 OPTION EXERCISES AND STOCK VESTED

 

  Option Awards Stock Awards
       
  Name

Number of Shares

Acquired on

Exercise (#)

Value Realized

on Exercise ($)

Number of Shares

Acquired on

Vesting (#)

Value Realized

on Vesting ($)