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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________
Form 10-K/A
(Amendment
No. 1)
x ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31,
2019
OR
¨ TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-38731
______________________________________________________________
SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.
(Exact name of registrant as specified in
its charter)
Bermuda
(State or other jurisdiction of incorporation
or organization)
98-0529995
(I.R.S. Employer Identification No.)
14 Wesley Street, Hamilton HM 11, Bermuda
(Address of principal executive offices)
(441) 278-3140
(Registrant's telephone number, including
area code)
______________________________________________________________
Securities registered pursuant to Section 12(b)
of the Act:
| Title of each class |
|
Trading
Symbol(s) |
|
Name of each exchange on which
registered |
| Common shares, par value $0.01 per share |
|
SG |
|
Nasdaq Global Select Market |
Securities registered pursuant to Section 12(g)
of the Act: None
Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate by check
mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by
check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit such files). Yes x No ¨
Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,
or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated
filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller reporting company x Emerging growth company ¨
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check
mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x
The aggregate market value of the voting
and non-voting common equity held by non-affiliates, computed by reference to the closing price as reported by the Nasdaq Global
Select Market as of the last business day of the registrant’s most recently completed second fiscal quarter, was approximately
$52.4 million.
At April 1, 2020,
the number of outstanding common shares of the registrant was 115,299,341.
EXPLANATORY NOTE
This Amendment No.
1 on Form 10-K/A (the “Amendment”) amends the Annual Report on Form 10-K of Sirius International Insurance Group, Ltd.
(the “Company”) for the fiscal year ended December 31, 2019, as filed with the Securities and Exchange Commission (the
“SEC”) on March 5, 2020 (the “Original 10-K”). The Company is filing this Amendment to provide the information
required in Part III of Form 10-K. In addition, in connection with the filing of this Amendment and pursuant to the rules
of the SEC, we are including with this Amendment new certifications of our principal executive officer and principal financial
officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). Because no financial statements
are contained with this Amendment, certifications pursuant to Section 906 of Sarbanes-Oxley are not included. Accordingly, Item
15 of Part IV has also been amended to reflect the filing of these new certifications.
Except as described above,
this Amendment does not amend any other information set forth in the Original 10-K, and the Company has not updated disclosures
included therein to reflect any subsequent events.
SIRIUS INTERNATIONAL INSURANCE GROUP, LTD.
TABLE OF CONTENTS
PART III
ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS
Sirius Group’s global strategy is
overseen by the Board of Sirius Group. Our Board is currently composed of seven directors. The number of members on our Board may
be fixed by a majority vote of the members of our Board. Our directors are elected annually to serve until the next annual meeting
of shareholders, and each will hold office until his or her successor has been duly elected or appointed or his or her office is
otherwise vacated.
| |
Kernan (Kip) V. Oberting |
| |
|
Chief Executive Officer (“CEO”)
and President, Sirius Group
Age: 50
Director Since: February 2019
Committees:
• None
Other Current Public Directorships:
• None
Other Previous Public Directorships During
Last Five Years:
• None
|
Current and Past Positions:
• Mr.
Oberting was appointed as the CEO of Sirius Group on February 9, 2019. He also serves as the President of Sirius Group, a role
he has held since September 2018. He was previously the Chief Financial Officer of Sirius Group from 2016 to 2019 and President,
Sirius Capital Markets, Inc. since 2015.
• Prior
to that, Mr. Oberting served as a Senior Partner of White Mountains Capital, Inc. from July 2012 until April 2016.
• From
2008 to 2012, Mr. Oberting was the founder and Managing Member of Oakum Bay Capital (f/k/a KVO Capital Management).
• From
2004 to 2008, Mr. Oberting served as Executive Vice President and Chief Financial Officer of Montpelier Re Holdings, Ltd.
• Mr.
Oberting previously worked for White Mountains entities from 1995 to 2004 in various capacities.
• Prior
to White Mountains, Mr. Oberting was a trader at CS First Boston (Japan) from 1993 to 1995.
• Mr.Oberting
received his B.A. from Dartmouth College.
Key Qualifications, Experience and Attributes:
Our Board considered Mr. Oberting’s
extensive knowledge of Sirius Group’s business, having served as its CEO and President presently and as CFO in the past,
among other roles, and his overall reputation and experience in the insurance and reinsurance industry.
|
| |
Meyer (Sandy) Frucher |
| |
|
Strategic Advisor to Nasdaq, Inc. &
Non-Executive Chairman of the Board, Sirius Group
Age: 73
|
Current and Past Positions:
• Since
January 1, 2020, Mr. Frucher has been Strategic Advisor to Nasdaq Inc.
• He
was formerly Vice Chairman of Nasdaq, Inc., a corporation that owns and operates the Nasdaq Stock Market, a position he held from
2008 to 2019.
•
Mr. Frucher also serves as a director of The Options Clearing Corporation, a position he has held since 2000.
|
|
Director Since:
August 2016
Committees:
• Nominating
& Corporate Governance (C)
• Compensation
Other Current Public Directorships:
• None
Other Previous Public Directorships During
Last Five Years:
• None
|
• From
1998 to 2008, Mr. Frucher served as Chairman and Chief Executive Officer of the Philadelphia Stock Exchange.
• Mr.
Frucher has also served in various government positions, including as the chief labor negotiator for New York State, Chief Executive
Officer of Battery Park City Authority and Chief Executive Officer of the School Construction Authority.
• He
received a B.A. from Columbia University and a M.P.A. from the John F. Kennedy School of Government, Harvard University.
Key Qualifications, Experience and Attributes:
Our Board considered Mr. Frucher’s
extensive capital markets and corporate finance experience, as well as his expertise in the areas of corporate governance and strategic
planning, and his qualification as an independent director.
|
| |
Sabrina Maguire |
| |
|
Head of Legal, Sun Hung Kai & Co. Limited
Age: 52
Director Since: February 2020
Committees:
• Finance
(C)
Other Current Public Directorships:
• None
Other Previous Public Directorships During
Last Five Years:
• None
|
Current and Past Positions:
• Ms.
Maguire has served as the Head of Legal for Sun Hung Kai & Co. Limited since January 2019.
• Prior
to joining Sun Hung Kai & Co., Ms. Maguire worked in various capacities at General Electric, including as Executive Counsel
Investigations, Asia at General Electric from January 2017 to December 2017, General Counsel – SE Asia & Greater China
at GE Capital from April 2014 to December 2016, General Counsel – Structured Finance & CDF HK/Singapore, GE Capital from
July 2011 – April 2014, and Senior Counsel – GES Asia & Capital Markets Asia, GE Capital from June 2008 –
July 2011.
• Ms.
Maguire also served as Partner, Structured Finance of Latham Watkins LLP (Hong Kong) where she worked from 1997 to 2008.
• Ms.
Maguire also serves on the Board of Directors of CMIG International Holding Pte. Limited as a representative of its minority investor,
Sun Hung Kai & Co. Limited.
• She
has a B.A. from Harvard University and a J.D. from Boston University School of Law.
Key Qualifications, Experience and Attributes:
Our Board considered Ms. Maguire’s
extensive legal experience in the specialty of structured finance in the Asian markets, her service as a director of CMIG International
Holding Pte. Ltd. (“CMIG International”), and the request of CMIG International for Ms. Maguire to serve as CMIG International’s
representative on the Board.
|
| |
Robert L. Friedman |
| |
|
Private Investor
Age: 60
Director Since: August 2016
Committees:
• Audit
& Risk Management
• Finance
Other Current Public Directorships:
• None
Other Previous Public Directorships During
Last Five Years:
• None
|
Current and Past Positions:
• He
served as the Chief Executive Officer and Chief Investment Officer of Savannah Baltimore Capital Management, LLC, an investment
firm, from 2005 until 2007.
• In
1988, Mr. Friedman joined the Mutual Series Funds as an insurance analyst, and later served as a Vice President.
• From
1996 until 2001, Mr. Friedman served as Senior Vice President of Franklin Mutual Series Funds, as well as a Portfolio Manager and,
from 1998 to 2000, as Chief Investment Officer.
• He
has a B.A. from Johns Hopkins University, an M.B.A. from the University of Pennsylvania’s Wharton School and an A.L.M. from
Harvard University Extension School.
Key Qualifications, Experience and Attributes:
Our Board considered Mr. Friedman’s
extensive experience with investment portfolio matters, having served as a Chief Investment Officer of two investment firms, his
lengthy experience as an insurance analyst as well as his knowledge of White Mountains Insurance Group (the former parent of Sirius
Group), and his qualification as an independent director.
|
| |
Alain M. Karaoglan |
| |
|
Senior Vice President, New York Life Insurance
Age: 57
Director Since: November 2018
Committees:
• Audit
& Risk Management
• Nominating
& Corporate Governance
• Finance
Other Current Public Directorships:
• None
Other Previous Public Directorships During
Last Five Years:
• None
|
Current and Past Positions:
• He
has served as Senior Vice President, New York Life Insurance since September 2019.
• Mr.
Karaoglan previously served as the Chief Operating Officer of Voya Financial, Inc. (“Voya”), a financial, retirement,
investment and insurance company, a position he had held from 2012 until 2018, and from 2011 to 2012, Mr. Karaoglan also served
as Executive Vice President, Finance and Strategy of Voya.
• Prior
to joining Voya, Mr. Karaoglan was Senior Vice President, Divestiture, for AIG from 2009 to 2011. Prior to AIG, from 2007 to 2009,
Mr. Karaoglan was Managing Director, Equity Research, for Bank of America Securities LLC.
• From
2000 to 2007, he was Managing Director, North American Equity Research, at Deutsche Bank Securities Inc.
• Previously,
from 1997 to 2000, he was an equity research analyst at Donaldson Lufkin & Jenrette after being in investment banking for approximately
10 years (1988 to 1997) at First Boston Corporation and, at Bear Stearns in the role of Managing Director.
• Mr.
Karaoglan received his bachelor’s degrees, both magna cum laude, in business administration and economics from Pepperdine
University, and received his M.B.A. from Dartmouth College’s Tuck School of Business.
Key Qualifications, Experience and Attributes:
Our Board considered Mr. Karaoglan’s
extensive leadership experience in global insurance and investment management companies, as well as his status as an Audit &
Risk Management Committee financial expert based on his role as Chief Operating Officer of Voya, and his qualification as an independent
director. |
| |
Rachelle C. Keller |
| |
|
Former COO for the Prime, Futures and Securities
Services division of Citigroup, NA
Age: 57
Director Since: November 2018
Committees:
• Audit
& Risk Management (C)
• Compensation
(C)
• Nominating
& Corporate Governance
Other Current Public Directorships:
• None
Other Previous Public Directorships During
Last Five Years:
• None
|
Current and Past Positions:
•
Ms. Keller previously served as a Managing Director for Citibank, NA (“Citi”), the institutional division of
the financial services multinational Citigroup, from 2011 to her retirement in 2018, as Global Chief Operating Officer for Prime,
Futures and Securities services from 2014 to 2018, and as Global Head of Costing and Analytics, from 2011 to 2013.
•
From 2008 to 2011, Ms. Keller served as Chief Financial Officer for the Institutional Product Group, the brokerage division
of Fidelity Investment LLC.
•
Prior to that, Ms. Keller was Managing Director at JP Morgan Chase & Co. and served in a variety of roles, including
Chief Financial Officer of Treasury & Securities services.
•
Prior to joining JP Morgan Chase & Co., Ms. Keller was a Certified Public Accountant at various public accounting firms.
She is a member of Arkansas State University’s Founder’s Circle, where she graduated with a bachelor’s degree
in accounting.
Key Qualifications, Experience and Attributes:
Our Board considered Ms. Keller’s
extensive experience in finance and accounting and her experience as the Chief Operating Officer for the Prime, Futures and Securities
Services division of Citi, and as the Chief Financial Officer of the Institutional Products Group of Fidelity Investments, LLC,
and the Treasury and Security Services division of JP Morgan Chase, all of which qualifies her as an Audit & Risk Management
Committee financial expert, as well as her qualification as an independent director.
|
| |
James (Jim) B. Rogers, Jr. |
| |
|
Private Investor
Age: 77
Director Since: November 2018
Committees:
• Compensation
• Other
Current Public Directorships:
• Four
publicly traded funds of Virtus Investment Partners, PJSC PhosAgro, Geo Energy Resources Limited, Ananti, Inc., Nanomedics Co.
Ltd.
Other Previous Public Directorships During
Last Five Years:
• Spanish
Mountain Gold Limited, Sinofortune Financial Holdings Limited; Crusader Resources Limited and Fab Universal Corp. |
Current and Past Positions:
• Mr.
Rogers is an active author, financial commentator and international investor. He has previously served as a professor of finance
at the Columbia University Graduate School of Business.
• Mr.
Rogers previously co-founded the Quantum Fund, is the author of several books, and also is a financial commentator worldwide. He
has been frequently featured in Time, The Washington Post, The New York Times, Barron’s, Forbes, Fortune, The Wall Street
Journal and many other media outlets worldwide.
• He
currently serves on the Board of four publicly traded funds operated by Virtus Investment Partners, as well as the Board of PJSC
PhosAgro, Geo Energy Resources Limited, Ananti, Inc. and Nanomedics Co. Ltd. Mr. Rogers serves on the Audit Committee of the Boards
of two of the publicly traded funds operated by Virtus Investment Partners and PJSC PhosAgro.
• Mr.
Rogers graduated from Yale University in 1964 with a bachelor’s degree in history and from Oxford University in 1966 with
a second bachelor’s degree in philosophy, politics and economics.
Key Qualifications, Experience and Attributes:
Our Board considered the breadth of his
experience on public company boards and his extensive experience as an author, financial commentator and international investor,
as well as his qualification as an independent director.
|
COMMITTEES OF THE BOARD
The standing committees of the Sirius Group
Board consist of an Audit & Risk Management Committee, a Compensation Committee, a Nominating & Corporate Governance Committee
and a Finance Committee. Each of the Audit & Risk Management, Compensation and Nominating & Corporate Governance Committees
are comprised entirely of independent directors. In addition, the members of the Audit & Risk Management Committee meet the
enhanced independence standards set forth in Nasdaq listing standards and Rule 10A-3 under the Securities Exchange Act of 1934
(the “Exchange Act”), and two members qualify as an “audit committee financial expert” as
such term is defined in applicable SEC rules. The written charters for each of these committees meet the requirements of Nasdaq
listing standards and are available on our website at ir.siriusgroup.com.
|
AUDIT & RISK MANAGEMENT COMMITTEE
– Robert L. Friedman
– Alain M. Karaoglan 
– Rachelle C. Keller
Number of Meetings in Fiscal 2019: 8
|
Responsibilities
The Audit & Risk Management Committee
is responsible for, among other things:
• the
appointment, compensation and oversight of the work of the independent auditor;
• reviewing
and discussing with management and the independent auditor the accounting practices and systems of internal accounting controls
of Sirius Group, as applicable;
• reviewing
financial reports, accounting and financial policies in general, and procedures and policies with respect to internal accounting
controls;
• reviewing
the independence qualifications and quality controls of the independent auditor;
• oversight
of the Company’s internal audit department
• overseeing
the Company’s compliance with legal and regulatory requirements;
• approving
all auditing services and permitted non-audit services to be performed by the independent auditor; and
• assisting
the Board with its oversight of the Company’s enterprise risk management, including the significant policies, procedures
and practices employed to manage cyber risk, liquidity risk, credit risk, market risk and insurance risk.
|
|
COMPENSATION COMMITTEE
– Meyer (Sandy)
Frucher
– Rachelle C. Keller
– James (Jim) B. Rogers, Jr.
Number of Meetings in Fiscal
2019: 6
|
Responsibilities
The Compensation Committee is responsible
for, among other things:
• reviewing
and developing general compensation policies;
• reviewing
and approving the compensation of the Chief Executive Officer and other executive officers, including salary, annual incentive,
long-term incentive and equity compensation and any other perquisites;
• granting
awards under equity incentive plans;
• overseeing
administration of other employee benefit plans; and
• making
recommendations regarding director compensation.
|
|
NOMINATING & CORPORATE GOVERNANCE COMMITTEE
– Meyer (Sandy) Frucher
– Alain M. Karaoglan
– Rachelle C. Keller
Number of Meetings in
Fiscal 2019: 4
|
Responsibilities
The Nominating & Corporate Governance
Committee is responsible for, among other things:
• identifying
individuals qualified for membership on the Board and its committees;
• recommending
individuals to the Sirius Group Board for nomination as members of the Board;
• advising
and making recommendations to the Sirius Group Board on corporate governance matters and the overall governance structure of Sirius
Group and the Board; and
• reviewing
Sirius Group’s position and policies that relate to current and emerging economic, social and governance public policy of
significance to Sirius Group.
|
|
FINANCE COMMITTEE
– Robert L. Friedman
– Alain M. Karaoglan
– Sabrina Maguire
Number of Meetings in Fiscal 2019: 4
|
Responsibilities
The Finance Committee is responsible for,
among other things:
• formulating
Sirius Group’s investment policy and investment guidelines;
• reviewing
the performance and asset allocation of Sirius Group’s investment portfolio on a regular basis; and
• monitoring
the capital, debt, and corporate structure of Sirius Group and, in coordination with the Audit & Risk Management Committee,
reviewing the adequacy of risk management.
|
KEY:
- Audit Committee Financial Expert - Committee Chair
CORPORATE GOVERNANCE
Corporate Governance Guidelines
The Board has adopted a set of Corporate
Governance Guidelines which describe the corporate governance policies of Sirius Group and, together with Sirius Group’s
other governing documents, provide a framework for the functioning of the Board and its committees. The Corporate Governance Guidelines
are available on our website at ir.siriusgroup.com.
Code of Business Conduct
Sirius Group has adopted a Code of Business
Conduct that applies to all directors, officers and employees in carrying out their responsibilities to, and on behalf of, Sirius
Group. The Code of Business Conduct is available on our website at ir.siriusgroup.com. If we make amendments to the Code
of Business Conduct or grant any waiver that we are required to disclose, we will disclose the nature of such amendment or waiver
on our website.
Independence of Directors
Our Board consists of seven directors.
The Board has determined that each of Messrs. Friedman, Frucher, Karaoglan and Rogers and Ms. Keller qualifies as an independent
director, as the term is currently defined under Nasdaq Listing Rule 5605(a)(2). The Board considered that Sirius Group common
shares are listed on Nasdaq, and Mr. Frucher’s previous service as Vice Chairman of, and current service as strategic advisor
to, Nasdaq, Inc. Mr. Frucher has notified Nasdaq, Inc. of this relationship. Mr. Oberting is not an independent director because
he currently serves as CEO of Sirius Group. Ms. Maguire was determined to not be an independent director due to her appointment
to the Board of Sirius Group as the representative director of CMIG International, which owns 100% of CM Bermuda, our majority
shareholder.
The independent directors meet in regularly
scheduled executive sessions, without management participation.
Mr. Allan L. Waters served as a director
during 2019 and was not an independent director because he served as CEO of Sirius Group during the time he served as director.
Mr. Laurence Liao served as a director
during 2019 and Mr. Raymond Tan served as a director from August 2019 to February 2020 and both Messrs. Liao and Tan were not independent
directors due to their service as executive officers of CMIG International.
Shareholders Agreement
The Company entered into a shareholders
agreement (the “Shareholders Agreement”) with certain investors that purchased the Series B Preference
Shares (the “Preference Share Investors”) and CM Bermuda with respect to the governance of Sirius Group,
the voting of CM Bermuda’s common shares, the repurchase of CM Bermuda’s common shares and certain other matters.
Pursuant to the Shareholders Agreement,
until November 5, 2021: (i) CM Bermuda will vote in favor of the election of the number of Independent Directors (as such term
is defined in the Shareholders Agreement) as is necessary to provide that at least a majority of the Board of Sirius Group is comprised
of Independent Directors; and (ii) CM Bermuda will not vote in favor of the removal of any director (other than any director affiliated
with CM Bermuda) other than for cause. After November 5, 2021 (or earlier in the event of an increase to the size of the Board),
CM Bermuda will not vote in favor of the election of any director not then serving on the Board (including any election to fill
a vacancy then existing on the Board as a result of death, resignation, removal, expansion of the Board or otherwise) who is not
an Agreed Director. “Agreed Director” means an Independent Director mutually agreeable to CM Bermuda and Preference
Share Investors representing a majority of the Sirius Group Series B preference shares; provided, that if CM Bermuda and the Preference
Share Investors have not identified an Agreed Director after negotiating in good faith for a period of 60 days, then an Agreed
Director means any Independent Director recommended for election by the Nominating & Corporate Governance Committee of the
Sirius Group Board.
Pursuant to the Shareholders Agreement,
CM Bermuda will also agree to vote (i) in favor of a Qualified Sale Transaction (as such term is defined in the Shareholders Agreement)
that is approved by a majority of Independent Directors and 80% of Sirius Group’s voting shares after November 5, 2019, and
(ii) against any merger, amalgamation, consolidation or similar transaction or any sale or transfer of all or substantially all
of Sirius Group’s consolidated assets, in each case where the per share value of the consideration received by CM Bermuda
in such transaction is greater than the per share value of the consideration received by any other holder of Sirius Group common
shares.
The Shareholders Agreement also grants
the Preference Share Investors tag-along rights to the extent Sirius Group agrees to repurchase or redeem any common shares held
by CM Bermuda.
The Shareholders Agreement terminates on
the date that fewer than 25% of the Sirius Group Series B preference shares issued in the Sirius Group Private Placement are outstanding,
and earlier with respect to any Preference Share Investor at the time that it or its affiliates or permitted assigns ceases to
own any Sirius Group Series B preference shares.
Board Leadership Structure
The Board reviews the Company’s leadership
structure from time to time. As part of the transition of the role of CEO from Mr. Waters to Mr. Oberting in early 2019, the Board
determined that a split in the role of Chairman of the Board and CEO was appropriate and in the best interests of our shareholders.
At that time, Mr. Frucher was elected as Interim Non-Executive Chairman of the Board. In November 2019, our Board determined that
Mr. Frucher should continue serving in that role on an ongoing basis and was affirmed as Non-Executive Chairman of the Board. Our
Board has no policy requiring that the positions of the Chairman of the Board and the CEO be separate or that they be occupied
by the same individual. Our Board believes that this matter is properly addressed as part of the succession planning process and
that it is in the best interests of the Company for our Board to determine whether to combine the positions from time to time.
At this time, our Board believes that the independent Non-Executive Chairman arrangement serves the Company well. In addition to
chairing meetings of the Board and meetings of the shareholders, the Non-Executive Chairman of the Board has significant additional
responsibilities, including (i) having the authority to call meetings of the Board; (ii) setting the agendas for the Board meetings
and executive sessions in consultation with the chairs of applicable committees of the Board; (iii) leading executive sessions
of the Board; (iv) briefing the CEO on issues arising in the executive sessions, as appropriate; (v) facilitating discussion among
the independent directors on key issues and concerns outside of a Board meeting and serving as a non-executive conduit to the CEO
of the views, concerns and issues of the independent directors; (vi) overseeing that orders and resolutions of the Board are carried
into effect; and (vii) performing such other duties and responsibilities as requested by the Board.
Succession Planning
The Compensation Committee reviews short-and
long-term succession plans for the CEO and other senior management positions and reports its recommendations to the Board (or,
in the committee’s discretion, to the non-management members of the Board). The Compensation Committee works with the Board
in identifying potential successors. In February 2019, the Compensation Committee and Board implemented its succession plan to
transition the role of CEO from Mr. Waters to Mr. Oberting.
Nomination of Directors
At an appropriate time prior to each annual
general meeting of shareholders at which directors are to be elected, the Nominating & Corporate Governance Committee recommends
to the Board for nomination by the Board such candidates as the Nominating & Corporate Governance Committee, in the exercise
of its judgment, has found to be well qualified and willing and available to serve. In addition, the Nominating & Corporate
Governance Committee recommends candidates to serve on the Board at other times during the year, as needed.
As set forth in the Company’s Corporate
Governance Guidelines, in evaluating the suitability of director candidates, the Nominating & Corporate Governance Committee
and the Board may take into account many factors such as business and industry experience, educational and professional background,
analytical ability, diversity of experience, backgrounds and viewpoint and willingness to devote adequate time to Board duties.
The Nominating & Corporate Governance Committee will also consider whether the candidate would be independent under Nasdaq
listing standards and take into account any other applicable law, regulation or rule. The Board evaluates each individual in the
context of the Board as a whole with the objective of retaining a group that can best perpetuate the Company’s success and
represent shareholder interests through sound judgment. While the Board does not have a formal policy for the consideration of
diversity in identifying nominees for directors, the Nominating & Corporate Governance Committee evaluates the composition
of the Board to ensure that the Board encompasses a broad range of skills, expertise, industry knowledge and diversity of background
and experience.
The Nominating & Corporate Governance
Committee will identify and consider candidates suggested by outside directors, management and/or shareholders and evaluate them
in accordance with its established criteria. In addition, CM Bermuda has certain rights to nominate directors and the Nominating
& Corporate Governance Committee must follow those requirements as long as the Company is subject to those requirements. Ms.
Maguire was identified by CM Bermuda as a nominee for membership on the Board pursuant to these rights. See “Shareholders
Agreement” above.
Director candidates recommended by shareholders
will be considered in the same manner as recommendations received from other sources. If a shareholder desires to recommend a director
candidate for consideration by the Nominating & Corporate Governance Committee, recommendations should be sent in writing to
the Secretary, Sirius International Insurance Group, Ltd., 14 Wesley Street, 5th Floor, Hamilton HM 11, Bermuda, together with
appropriate biographical information concerning each proposed director candidate, consistent with the biographical information
requested for director nominees as set forth in the Bye-Laws of the Company. The Nominating & Corporate Governance Committee
may request additional information concerning the director candidate as it deems reasonably necessary to determine the eligibility
and qualification of the director candidate to serve as a member of our Board.
Board and Committee Self-Evaluations
The Board conducts an annual self-evaluation
of the Board as a whole and each of its committees to determine whether they are functioning effectively and meeting their objectives
and goals. Our processes enable directors to provide anonymous and confidential feedback, which is then reviewed and addressed
by the independent directors led by the Non-Executive Chairman of the Board. In addition, each committee’s chair reviews
the feedback with each of their respective Committees in order to promote the effectiveness of the Board and each committee. Following
the review, changes in practices or procedures are considered and implemented, as appropriate. The Board finds that this process
generates robust comments, and provides the Board the opportunity to make changes designed to increase Board effectiveness and
efficiency. The Nominating & Corporate Governance Committee in conjunction with the Non-Executive Chairman of the Board oversees
the annual self-evaluation process.
Board Meetings
During 2019, our Board held nine meetings
(including regularly scheduled and special meetings). Also, during 2019, the Audit & Risk Management Committee met eight times,
the Compensation Committee met six times, the Nominating & Corporate Governance Committee met four times and the Finance Committee
met four times.
During 2019, each person currently serving
as a director attended at least 75% of the aggregate of (i) the total number of meetings of our Board held during the period
for which he or she was a director and (ii) the total number of meetings held by all committees of our Board on which such director
served during the period for which he or she served. As set forth in our Corporate Governance Guidelines, our directors are expected
to attend the annual general meetings of shareholders. All of but one of our then current directors attended the 2019 annual general
meeting of shareholders (the “2019 annual meeting”).
Compensation Committee Interlocks
and Insider Participation
During the fiscal year ended December 31,
2019, there were no compensation committee interlocks or insider participation. During 2019, the members of the Compensation Committee
were James (Jim) B. Rogers, Jr., Meyer (Sandy) Frucher and Rachelle C. Keller. None of the members of the Compensation Committee
during fiscal year 2019 was an officer or employee of the Company, and, during fiscal year 2019, no executive officer of the Company
served on the board and/or compensation committee of any company that employed as an executive officer any member of the Board
and/or the Compensation Committee. None of the members of the Compensation Committee during fiscal year 2019 had any relationships
requiring disclosure under Item 404 of Regulation S-K for fiscal year 2019.
Board Role in Risk Oversight
Our Board takes an enterprise-wide approach
to risk management that seeks to complement our organizational objectives, strategic objectives, long-term organizational performance
and the overall enhancement of shareholder value. Our Board assesses and considers the risks we face on an ongoing basis, including
risks that are associated with our financial position, our competitive position, catastrophic events and other risks germane to
the insurance and reinsurance industry. In addition, our Board reviews and assesses information regarding cybersecurity risks with
management. Our Board’s approach to risk management includes understanding the risks we face, analyzing them with the latest
information available and determining the steps that should be taken to manage those risks, with a view toward the appropriate
level of risk for a company of our size and financial condition.
Our committees assist the Board in its
risk oversight function as follows:
•
Our Audit & Risk Management Committee is responsible for oversight of our enterprise risk management including the Company’s
management over cyber risk, liquidity risk, credit risk, market risk, operation risk, financial risk, and compliance risk. In exercising
its oversight responsibilities, the Audit & Risk Management Committee oversees management’s process of identifying areas
of major risk exposure facing Sirius Group and the steps management has taken to monitor and control those risk exposures.
•
Our Compensation Committee is responsible for oversight of risk associated with our compensation plan.
•
Our Nominating & Corporate Governance Committee is responsible for oversight of risk associated with Board processes
and corporate governance. The Nominating & Corporate Governance Committee also reports to the Board the Company’s position
and policies that relate to current and emerging economic, social and governance issues for purposes of risk management, long-term
business strategy and otherwise.
As needed at regular meetings of our Board,
the committee members report to the full Board regarding matters reported and discussed at any committee meetings, including any
matters relating to risk assessment or risk management. Our Chief Executive Officer, Chief Financial Officer and Chief Risk Officer
regularly attend meetings of these committees when they are not in executive session, and often report on matters that may not
be otherwise addressed at these meetings. In addition, our directors are encouraged to communicate directly with members of management
regarding matters of interest, including matters related to risk, at times when meetings are not being held.
Communications with the Board of Directors
Any shareholder who wishes to communicate
with our Board or any individual director may send written communications to our Board or such director c/o Secretary, Sirius International
Insurance Group, Ltd., 14 Wesley Street, 5th Floor, Hamilton HM 11, Bermuda. The communication must include the shareholder’s
name, address and an indication that the person is our shareholder. The Secretary will review any communications received from
shareholders and will forward such communications to the appropriate director or directors, or committee of our Board, based on
the subject matter.
The Board, on behalf of itself and our
other non-management directors, has established procedures to enable employees or other parties who may have a concern about conduct
or policies to communicate that concern. Our employees are encouraged and expected to report any conduct which they believe in
good faith to be an actual or apparent violation of our Code of Business Conduct. In addition, as required under the Sarbanes-Oxley
Act of 2002, the Audit & Risk Management Committee has established procedures pertaining to receiving, retaining and treating
complaints received regarding accounting, internal accounting controls or auditing matters, and with respect to the confidential,
anonymous submission by Company employees of concerns regarding, among other things, questionable accounting or auditing matters.
These communications may be anonymous, and may be submitted in writing, e-mailed or reported by phone through various internal
and external mechanisms. Our Code of Business Conduct prohibits any employee or director from retaliating or taking any adverse
action against anyone for raising or helping to resolve an integrity concern.
Delinquent Section 16(a) Reports
The members of our Board, executive officers
and beneficial holders of more than ten percent of our outstanding common shares comply with the reporting requirements of Section
16(a) of the Exchange Act which requires them to file reports with respect to their ownership of our securities. To our knowledge,
based solely upon our review of Section 16 reports filed with the SEC and written representations which we received from such persons
for their 2019 fiscal year transactions in our common shares and their common share holdings, we believe that all reporting requirements
under Section 16(a) for such fiscal year were met in a timely manner by our directors, executive officers and greater than ten
percent beneficial owners.
RELATED PERSON TRANSACTIONS
Transactions Related to the Merger
Sirius Group Private Placement
In connection with the closing of the Company’s
merger with Easterly Acquisition Corp., which resulted in Sirius Group becoming a publicly listed company (the “Merger”),
the Company completed a private placement of Series B preference shares, common shares and warrants (the “Sirius Group
Private Placement”) completed the Sirius Group Private Placement at a price per share equal to (i) 1.05 multiplied
by (ii) the Sirius Group September 30 Adjusted DBVPS, or $17.22447. Gross proceeds of the Sirius Group Private Placement, together
with cash in the Easterly Trust Account assumed by Sirius Group upon the closing of the Merger aggregated to $268 million. Sirius
Group’s previous Chief Executive Officer, Allan L. Waters, purchased 500,000 common shares in the Sirius Group Private Placement
for an aggregate purchase price of approximately $8.6 million. Sirius Group’s Executive Vice President, Chief Risk Officer
& Chief Actuary, Jeffrey W. Davis, purchased 41,000 common shares in the Sirius Group Private Placement for an aggregate purchase
price of approximately $0.7 million. Robert L. Friedman, a director of Sirius Group, purchased 28,000 common shares in the Sirius
Group Private Placement for an aggregate purchase price of approximately $0.5 million.
Shareholders Agreement
In connection with the closing of the Sirius
Group Private Placement, Sirius Group, CM Bermuda and the Preference Share Investors entered into the Shareholders Agreement, which
governs certain matters with respect to the governance of Sirius Group, the voting of CM Bermuda’s common shares, the repurchase
of CM Bermuda’s common shares and certain other matters. See “Corporate Governance — Shareholders Agreement”
for further information.
Common Shares Redemption Agreement
In connection with the Merger, the Company
and CM Bermuda, the sole holder of the Company’s common shares prior to the Merger, entered into a Redemption Agreement,
dated November 2, 2018, pursuant to which, effective as of the closing of the Merger, the Company redeemed 9,519,280 of the Company’s
common shares at a price per share equal to $17.22447, the payment for which was funded from cash distributed by Sirius Bermuda
(not out of the funds released from the Trust Account in connection with the consummation of the Merger) and paid in cash on November 16,
2018.
Also in connection with the Merger, after
the filing of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, the Company completed a post-closing
adjustment that was settled in cash to CM Bermuda. Based on the reported book value per share of $16.44 as of September 30, 2018,
pursuant to the Merger Agreement, CM Bermuda was paid $1.6 million.
Related Person Transaction Policies
and Procedures
The Board has approved policies and procedures
with respect to the review and approval of certain transactions between Sirius Group and a “Related Person,” or a “Related
Person Transaction,” which is referred to herein as the “Related Person Transaction Policy.” Under SEC rules,
a “Related Person” is a director, officer, nominee for director or 5% shareholder and their immediate family members.
Pursuant to the terms of the Related Person Transaction Policy, the Audit & Risk Management Committee or the disinterested
members of the Board will review and decide whether to approve or ratify any Related Person Transaction. Any Related Person Transaction
will be required to be reported to the Sirius Group legal department and the Sirius Group legal department will then determine
whether it should be submitted to the Audit & Risk Management Committee for concurrent consideration by its disinterested members.
A “Related Person Transaction”
is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) that would
be reportable by Sirius Group under Item 404(a) of Regulation S-K in which Sirius Group (including any of its subsidiaries) was,
is or will be a participant, the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct
or indirect material interest.
Other than as disclosed above, there were
no transactions between the Company and any Related Person since January 1, 2019, of the type or amount required to be disclosed
under the applicable SEC rules.
DIRECTOR COMPENSATION
The Compensation Committee is responsible
for reviewing and making recommendations to the Board regarding matters pertaining to compensation paid to directors for Board,
committee and committee chair services. In making non-employee director compensation recommendations, the Compensation Committee
takes various factors into consideration including, but not limited to, input received from the Compensation Committee’s
independent compensation consultant, the responsibilities of the directors generally, as well as committee chairs, and the form
and amount of compensation paid to directors by comparable companies. The Board reviews the recommendations of the Compensation
Committee and determines the form and amount of director compensation. The table below sets forth the elements of our annual compensation
program for our non-employee directors for the year ended December 31, 2019. The director compensation program has remained unchanged
since the prior year except with respect to the addition of an annual retainer paid to and the incremental grant of Company restricted
shares awarded to the Non-Executive Chairman of the Board. The Compensation Committee determined to award this additional retainer
based upon a report presented by its independent compensation consultant which included an analysis of peer group and general market
industry data.
| Annual Compensation Retainers | |
Annual Fee | |
| Board Retainer | |
$ | 130,000 | |
| Non-Executive Chairman of the Board | |
$ | 130,000 | |
| Audit & Risk Management Committee Chair | |
$ | 30,000 | |
| Audit & Risk Management Committee Member | |
$ | 10,000 | |
| Finance Committee Chair | |
$ | 20,000 | |
| Finance Committee Member | |
$ | 10,000 | |
| Compensation Committee Chair | |
$ | 20,000 | |
| Compensation Committee Member | |
$ | 7,500 | |
| Nominating & Corporate Governance Committee Chair | |
$ | 20,000 | |
| Nominating & Corporate Governance Committee Member | |
$ | 7,500 | |
All retainers are paid quarterly in arrears
in cash and are prorated based upon Board or chair service during the calendar year.
In addition, our non-employee directors
are entitled to receive the following awards under the Company’s 2018 Omnibus Incentive Plan:
| • | an automatic annual grant of restricted shares with a value of $90,000 based on the closing
price of our common shares on the Nasdaq Global Select Market on the date of grant, which will generally vest one year from the
date of grant. |
| • | a pro-rated restricted shares grant if he or she joins the Board following the date of the annual
restricted share grant, but during the calendar year of the grant. |
| • | with respect to the Non-Executive Chairman of the Board, an annual grant of restricted shares with
a value of $20,000 based on the closing price of our common shares on the Nasdaq Global Select Market on the date of grant, which
will generally vest one year from the date of grant. |
The table below summarizes the compensation
paid by Sirius Group to our non-employee directors for the year ended December 31, 2019. Mr. Waters who served on the Board until
February 2019 and Mr. Oberting did not receive any additional compensation for their service on the Board during 2019. Please see
the “2019 Summary Compensation Table” for a summary of the compensation paid to Messrs. Waters and Oberting
with respect to 2019. In addition, Mr. Tan and Mr. Liao did not receive any fees for their service on the Board during 2019.
Ms. Maguire was appointed in February 2020 and does not receive compensation for her service.
| 2019 Director Compensation |
| Name | |
Fees
Earned or Paid
in Cash ($)(1) | | |
Share Awards
($)(2) | | |
All Other
Compensation
($) | | |
Total ($) | |
| Meyer (Sandy) Frucher | |
$ | 276,667 | | |
$ | 110,000 | | |
| — | | |
$ | 386,667 | |
| Robert L. Friedman | |
$ | 150,000 | | |
$ | 90,000 | | |
| — | | |
$ | 240,000 | |
| Alain Karaoglan | |
$ | 157,500 | | |
$ | 90,000 | | |
| — | | |
$ | 247,500 | |
| Rachelle C. Keller | |
$ | 167,500 | | |
$ | 90,000 | | |
| — | | |
$ | 257,500 | |
| James (Jim) B. Rogers, Jr. | |
$ | 157,500 | | |
$ | 90,000 | | |
| — | | |
$ | 247,500 | |
| (1) | Reflects amounts earned in 2019 for the annual Board retainer, committee chair retainers, and committee
member retainers. The amount for Mr. Frucher reflects the additional retainer he receives as Non-Executive Chairman of the Board,
pro-rated from January 30, 2019. |
| (2) | These amounts reflect the grant date fair value determined in accordance with Financial Accounting
Standards Board Codification Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”),
of the annual grant of restricted shares to each non-employee director listed above under the 2018 Omnibus Incentive Plan. |
The following table shows the number of
restricted shares held by each of the non-employee directors as of December 31, 2019. Ms. Keller and Messrs. Friedman Frucher,
Karaoglan and Rogers received a grant of 6,923 restricted shares on May 23, 2019 which vests on May 21, 2020, the date of the annual
meeting, and, Mr. Frucher received an additional grant of 2,424 restricted shares on August 22, 2019 in connection with his appointment
as Non-Executive Chairman of the Board which also vests on the date of the annual meeting. Messrs. Liao and Tan and Ms. Maguire
are excluded from this table because they did not hold outstanding equity awards with respect to Sirius Group as of December 31,
2019.
| Name | |
Number of
Restricted Shares | |
| Meyer (Sandy) Frucher | |
9,347 | |
| Robert L. Friedman | |
6,923 | |
| Alain Karaoglan | |
6,923 | |
| Rachelle C. Keller | |
6,923 | |
| James (Jim) B. Rogers, Jr. | |
6,923 | |
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table sets forth information
regarding the individuals who serve as our executive officers, excluding Mr. Oberting’s biographical information. Mr. Oberting’s
biographical information can be found in the section entitled “Directors.”
|
Name |
|
Age |
|
Position |
| Kernan (Kip) V. Oberting |
|
50 |
|
President and CEO, Sirius Group |
| Ralph A. Salamone |
|
53 |
|
Executive Vice President, Chief Financial Officer, Sirius Group |
| Gene Boxer |
|
45 |
|
Executive Vice President, Chief Strategy Officer & Group General Counsel, Sirius Group |
| Monica Cramér Manhem |
|
60 |
|
President, Global Reinsurance and Managing Director, Sirius International Insurance Corporation (“Sirius International”) |
| Jeffrey W. Davis |
|
55 |
|
Executive Vice President, Chief Risk Officer & Chief Actuary, Sirius Group |
Mr. Salamone serves as Chief Financial
Officer of Sirius Group, since February 2019. He also serves as the President and Chief Executive Officer of Sirius Global Services
LLC, a position he has held since 2010. Ralph also served as the Senior Vice President, Chief Financial Officer and Treasurer at
Sirius America Insurance Company from 2012 to 2019. Since joining Sirius Group in 1997, Mr. Salamone has been a key member of the
Group’s executive financial team. Prior to joining Sirius Group, Mr. Salamone served as the Assistant Controller at Assurant.
Mr. Salamone began his career in public accounting at PricewaterhouseCoopers, serving a variety of insurance clients as an
audit manager.
Mr. Boxer serves as Executive Vice
President, Chief Strategy Officer & Group General Counsel of Sirius Group. Mr. Boxer was appointed Chief Strategy Officer
of Sirius Group in September 2018 and Executive Vice President and Group General Counsel of Sirius Group in August 2016. In August
2019, Mr. Boxer also assumed the additional responsibilities of overseeing the Sirius Group human resources function. From 2011
until 2015, Mr. Boxer served as Global General Counsel of Cushman & Wakefield, a commercial real estate services firm. From
2006 until 2011, Mr. Boxer served as a senior member of the Restructuring Group and Legal Mergers & Acquisitions Group
of American International Group, Inc. (AIG). Prior to 2006, Mr. Boxer practiced at Milbank, Tweed, Hadley & McCloy LLP, focusing
on mergers and acquisitions and securities offerings.
Ms. Cramér Manhem serves
as President, Global Reinsurance since August 2019 and Managing Director of Sirius International. Ms. Cramér Manhem previously
served as Chief Operating Officer of Sirius Group from September 2018 to August 2019. Ms. Cramér Manhem has been the
Chief Executive Officer of Sirius International since March 2014, and also serves as the Chairperson of Sirius Bermuda. Prior to
March 2014, Ms. Cramér Manhem served as Senior Vice President and Business Unit Head of Sirius International from January
2004 until March 2014. Ms. Cramér Manhem served in various positions at Sirius International prior to 2004, having joined
a predecessor to Sirius Group in 1985.
Mr. Davis serves as Executive Vice
President, Chief Risk Officer & Chief Actuary of Sirius Group. Mr. Davis has served as Executive Vice President, Chief Risk
Officer & Chief Actuary of Sirius Group since April 2016. Mr. Davis previously served also as Senior Vice President and Chief
Actuary at White Mountains from October 2008 until April 2016. In April 2016, Mr. Davis assumed the additional responsibilities
as Chief Risk Officer for Sirius Group. Prior to joining Sirius Group, Mr. Davis served as Head of Central Reserving for Munich
Re from 2005 until September 2008, and previously in various capacities at American Re-Insurance Company since 1999. Mr. Davis
previously served as an actuary for Nationwide Insurance from 1991 until 1999.
ITEM 11. EXECUTIVE
COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis
(“CD&A”) provides an overview of our executive compensation philosophy and the compensation provided
to our named executive officers (“NEOs”) for 2019. As used in this CD&A, “we,” “our,”
and “us” refer to Sirius Group.
Our NEOs for 2019 consist of our current
principal executive officer (“CEO”), former CEO, principal financial officer (“CFO”)
and the three most highly compensated executive officers other than the CEO and CFO, for the year ended December 31, 2019. References
in our CD&A to “NEOs” refer to our NEOs other than our former CEO, unless the context suggests otherwise. For
2019, our NEOs were:
| Name |
|
Title |
| Kernan (Kip) V. Oberting |
|
President and CEO and Former Executive Vice President, CFO |
| Ralph A. Salamone |
|
Executive Vice President, CFO |
| Monica Cramér Manhem |
|
President, Global Reinsurance, Sirius Group and Managing Director, Sirius International Insurance Corp. (“Sirius International”) |
| Gene Boxer |
|
Executive Vice President, Chief Strategy Officer (“CSO”) & Group General Counsel |
| Jeffrey W. Davis |
|
Executive Vice President, Chief Risk Officer (“CRO”) & Chief Actuary |
| Allan L. Waters |
|
Former Chairman of the Board and CEO* |
| * | As of February 9, 2019, Mr. Waters departed from the Company and Mr. Oberting was appointed CEO. |
Unless otherwise stated, references to
CEO and CFO throughout the CD&A refer to Messrs. Oberting and Salamone, respectively, as each served in such capacity during
the majority of 2019.
Executive Summary
Sirius Group’s Fiscal 2019 Compensation
Highlights
Sirius Group’s fiscal 2019 executive
compensation program was designed to be consistent with its executive compensation principles, pay-for-performance philosophy and
commitment to sound corporate governance, as summarized below.
| • | Significant Majority of NEOs’ Direct Compensation was At-Risk Compensation. The graphics
below show that the fiscal 2019 target direct compensation for each NEO was weighted toward at-risk, variable incentive awards
(in the form of both short-term cash incentives and equity incentives). |
| • | No gross-ups. With the elimination of Mr. Waters’ employment agreement the Company
is not contractually required to pay 280G gross-ups. |
| • | Elimination of Bermuda Housing Costs. The Company eliminated the payment of Bermuda housing
costs for its executive officers effective as of June 2019. |
| • | Focused Cash Compensation Increases. The only changes in target cash compensation for the
NEOs in fiscal 2019 were base salary increases of approximately 25% and 3%, respectively, for each of Messrs. Salamone and Davis,
with Mr. Salamone’s increase driven by his promotion to the position of CFO. |
| • | Annual Incentive and Long Term Incentive Compensation Payouts. Commensurate with our performance,
paid annual cash incentive payments at 55% of the aggregate target pool amount, with individual NEO payouts based on business segment,
functional and individual performance, and 2017-2019 long term incentive compensation at 2% of target. |
| • | Successful Management Transition. The Compensation Committee and the Board have taken several
actions in recent years to facilitate long-term succession planning and recognize key executives who have made significant contributions
to the Company’s success and retention. As further discussed on page 22, during 2019, the Board focused on CEO succession
planning in fiscal 2019, culminating with the promotion of Mr. Oberting to the position of CEO and Mr. Salamone to the position
of CFO. |
| • | Paid Retention Awards to senior executives, including the NEOs, to retain talent. Based
on an analysis of peer data by Frederick W. Cook & Co. Inc. (“F.W. Cook”), the Compensation Committee’s
independent consultant, and considering incentive compensation realized by and the forecasted long-term incentive compensation
payout values for employees of Sirius Group, the Compensation Committee awarded certain employees of the Company cash and equity
retention awards to support the continuity of such employees’ service to the Company, including certain of the NEOs. See
Retention Awards below. |
2019 Target Compensation Pay Mix*
*The graphics above display the annual
direct compensation program applicable to our NEOs, which includes base salary, annual cash incentive and long-term incentive compensation.
These graphics do not include or otherwise take into account the value of any retention awards or other compensation that were
paid to our NEOs in 2019.
Summary of Our Executive Compensation
Practices
The table below highlights certain executive
compensation practices we have implemented that are designed to incentivize and drive performance as well as certain practices
we have not implemented because we do not believe they would serve our shareholders’ interests.
| What We Do |
|
What We Don’t Do |
 We tie pay to performance by designing a significant portion of executive pay to be at-risk, 91% of the CEO’s 2019 compensation and, on average 76% of the other NEOs’ compensation, is at-risk |
|
 We do not reprice underwater stock options without stockholder approval |
| We mitigate undue risk in compensation programs through informed performance goal-setting that considers multiple financial and non-financial inputs |
|
We do not award stock options with an exercise price below 100% of fair market value |
Results of Say-on-Pay Vote and Frequency
of Say-on-Pay Outcomes
We held a non-binding advisory shareholder
vote on the compensation of our NEO’s, commonly referred to as “say-on-pay” vote at our 2019 annual meeting.
At our 2019 annual meeting, more than 99% of the votes cast were case in favor of the “say-on-pay” proposal. The Compensation
Committee considered the result of this advisory vote to be an endorsement of our executive compensation program, policies, practices
and philosophy and did not make any compensation changes to the 2019 compensation program as a result of the say-on-pay voting
results. The Board and Compensation Committee will continue to consider the outcome of our say-on-pay votes when making future
executive compensation decisions for our NEOs.
In light of the voting results with respect
to the frequency of holding a non-binding advisory vote on executive compensation, the Board has determined that the Company will
hold future non-binding advisory votes of shareholders to approve the compensation of the NEOs every year until the next non-binding
advisory vote of shareholders on the frequency of shareholder votes on executive compensation in 2025, or until the Board otherwise
determines a different frequency for such non-binding advisory votes.
Executive Compensation Philosophy
We believe that Sirius Group’s executive
compensation program should be designed to align management incentives with the creation of shareholder returns over the long-term.
For that reason, and as illustrated in the chart above, our senior executives have typically received the majority of their total
target direct compensation (i.e., annual base salary, annual cash incentive awards and long-term incentive awards) in the form
of long-term incentive compensation. We believe that delivering a significant portion of total direct compensation in the form
of long-term incentive compensation, a significant portion of which is performance-based, focuses management on making decisions
linked to optimizing the long-term economic performance of Sirius Group. The Compensation Committee believes that compensation
goals should be predominantly objective and clearly measurable. We believe that effective compensation programs should be designed
so that participants understand how their performance will be assessed and how performance will impact payouts under our incentive
programs. Accordingly, Sirius Group has designed its long-term incentive compensation program with payouts based on financial performance
compared to objective performance targets. Our annual cash incentive program is designed in a similar manner, but with Compensation
Committee ability to adjust payouts to reflect individual performance, based on measurable individual and team performance achievements
and a subjective assessment of performance. Sirius Group believes this design incentivizes management and employees to think like
owners. The Compensation Committee also retains the ability to grant additional incentives as it deems appropriate to support the
Company’s overall compensation philosophy and achievement of other business objectives.
Management Transition Compensation
The compensation of certain executive officers
was revised in connection with the departure of Mr. Waters from the Company effective as of February 9, 2019. As Mr. Waters’
separation was a termination without cause (as defined in his employment agreement with the Company) in accordance with his employment
agreement, Mr. Waters received a severance benefit equal to (i) one times his base salary immediately before his separation, (ii)
an annual cash incentive payment for 2018 based on actual performance targets, and (iii) a payment in connection with his 2019
annual cash incentive based on actual performance but no less than his target cash incentive opportunity of one half of his base
salary. Mr. Waters will provide advisory services to the Company for a period of time, during which period he will continue to
vest in pending long-term incentive awards in accordance with his employment agreement. In connection with such services, Mr. Waters
receives a fee of $30,000 per year and certain health care benefits. Unless earlier terminated by the Company for cause or due
to his death or disability, the term of Mr. Waters’ advisory services under his employment agreement continues until the
later of (i) the first date on which the expiration of his COBRA participation under Sirius Group’s applicable health
plan would result in immediate Medicare eligibility (April 2021) and (ii) the last date on which his outstanding long-term incentive
awards are earned in accordance with their terms.
Mr. Oberting was appointed CEO of the Company,
effective as of February 9, 2019. In connection with this appointment, the Company entered into an employment agreement with Mr.
Oberting, effective as of February 9, 2019. The employment agreement has an initial three-year term and automatically extends for
one-year terms, unless either party provides notice of non-renewal at least 90 days prior to the expiration of the then-current
term. Under the employment agreement. Mr. Oberting will receive an annual base salary of not less than $500,000, increasing to
$1,000,000 on January 1, 2020, and is eligible to receive an annual cash incentive with a target opportunity of no less than 50%
of base salary, increasing to 100% of base salary on January 1, 2020. In connection with his promotion, on February 27, 2019, the
Compensation Committee granted Mr. Oberting a stock option award with a grant date value of $3,150,000, which will vest
upon his continued employment through the third anniversary of the grant date, and a performance share unit equity award with three-year,
cliff-vesting and a target payout level of $1,350,000, with vesting terms consistent with the annual equity grants made
to the other NEOs. The employment agreement binds Mr. Oberting to certain non-solicitation and non-competition restrictions during
the term of his employment and for a period of one year thereafter. If Mr. Oberting’s employment is terminated by the Company
without cause or Mr. Oberting resigns for good reason, as such terms are defined in the employment agreement, he will receive a
severance benefit equal to one times his base salary immediately before his termination and an annual cash incentive for the year
of termination that is not less than his target annual cash incentive. In addition, if Mr. Oberting provides post-termination advisory
services to the Company following such a termination or his retirement in order to facilitate a transition to his successor, he
will continue to vest in outstanding long-term incentive awards. The terms of Mr. Oberting’s employment agreement were determined
after considering the input of the Compensation Committee’s independent consultant, peer data and the compensation arrangements
of the prior CEO.
Following Mr. Oberting’s appointment
as CEO of the Company, Mr. Salamone was appointed as CFO of the Company. In connection with this appointment, Mr. Salamone received
an increase in his base salary from $400,000 to $500,000.
Components of 2019 NEO Compensation
The primary components of Sirius Group’s
2019 NEO compensation are:
| 3. | Long-Term Incentive awards granted in the form of time based restricted share units, performance
share units and stock options under the 2018 Omnibus Incentive Plan |
In addition, as described further below,
our NEOs participate in our corporate-wide benefits programs and receive perquisites and other benefits that we believe are commensurate
with their positions and the competitive market.
Base Salary
Base salaries are designed to provide basic
levels of compensation to our NEOs based upon their experience, duties and scope of responsibilities. While Sirius Group emphasizes
variable, long-term compensation, it pays base salaries because they provide a basic level of compensation at a level that we believe
is appropriate to retain high-caliber executives. In 2019, Sirius Group’s NEOs received base salaries ranging from $465,000
to $500,000.
With the exception of Messrs. Salamone
and Davis, the base salary of the NEOs remained unchanged in 2019. The Compensation Committee determined to increase Mr. Salamone’s
base salary by 25% in connection with his appointment as Chief Financial Officer of the Group in 2019 based on a review of market
data, compensation received by Mr. Salamone’s predecessor at Sirius Group and the input of the Compensation Committee’s
independent consultant. Mr. Davis received a 3% increase in connection with the Company’s annual merit increase process.
The table below sets forth the 2019 base
salary level for each of our NEOs as compared to the prior year. Mr. Waters’ base salary of $500,000 did not change as compared
to 2018 in light of his February 2019 departure.
| NEOs | |
Base Salary 2018 | | |
Base Salary 2019 | | |
% Change | |
| Kernan V. Oberting | |
$ | 500,000 | | |
$ | 500,000 | | |
| 0 | % |
| Ralph A. Salamone | |
$ | 400,000 | | |
$ | 500,000 | | |
| 25 | % |
| Gene Boxer | |
$ | 500,000 | | |
$ | 500,000 | | |
| 0 | % |
| Monica Cramér Manhem | |
$ | 497,000 | | |
$ | 475,000 | | |
| 0 | %* |
| Jeffrey W. Davis | |
$ | 450,000 | | |
$ | 465,000 | | |
| 3 | % |
* Ms. Cramér Manhem
is paid in Swedish Krona. The year-over-year changes in her 2018 and 2019 base salary reflects fluctuations in the currency exchange
rates as of December 31, 2018 and 2019.
Annual Cash Incentives
Annual cash incentive awards are designed
to create a “pay-for-performance” environment while providing competitive levels of compensation to our NEOs based
upon their experience, duties and scope of responsibilities. Target cash incentives for our NEOs in 2019 equaled 50% of their respective
base salaries.
2019 Annual Cash Incentive Design
For 2019, the target annual cash incentive
pool was $15.8 million for 242 participants, including the NEOs. The overall awarded cash incentive pool size can range from 20%
to 200% of target, depending upon Sirius Group’s performance as compared to each of the financial metrics and strategic objectives
established for 2019.
For the 2019 annual cash incentive program,
there were two quantitative financial performance metrics established by the Compensation Committee, as set forth in the table
below and six strategic corporate objectives, with the financial and strategic objectives each weighed 50%. The strategic objectives
were introduced in 2019 and are designed to incentivize the NEOs to achieve strategic objectives during the financial year. Performance
against strategic objectives is evaluated during the first quarter of the following year. For each of the financial metrics and
the overall strategic objectives, payouts can range from 20% to 200% of target. The financial metrics are measured formulaically,
whereas the achievement of the strategic objectives are measured on a qualitative basis after a discussion between management and
the Compensation Committee following the completion of the previous fiscal year.
2019 Strategic Objectives
In early 2019, the Compensation Committee
approved six qualitative strategic objectives outlined below. The NEO and Company performance objectives in 2019 were as follows:
| • | Increase float and/or achieve significant M&A |
| • | Simplify our management structure around our segments to promote efficiency |
| • | Simplify our corporate entity structure and reduce regulatory overlap and improve capital efficiency |
| • | Achieve individual business profitability |
| • | Achieve $10 million in run rate savings |
| • | Increase relative Return on Equity (“ROE”) of the Company versus its
peers |
In early 2020, Mr. Oberting discussed his
assessment of the performance of each NEO (other than himself) with the Compensation Committee. The Compensation Committee then
met in executive session to consider Mr. Oberting’s performance, as well as his recommendations with respect to the other
NEOs and to make final payout determinations.
After reviewing Mr. Oberting’s recommendations,
the Compensation Committee, determined that for the qualitative strategic objectives of the annual cash incentive pool, the funding
would be set at 90% achievement. Although 2019 results for most business units were lower than expected in part due to extreme
catastrophe insured losses, the Compensation Committee believed that the NEOs successfully achieved a significant portion of the
objectives within their control, including with respect to “year one” of Sirius Group’s multi-year transformation
as follows:
| • | We reoriented the management structure to focus on segment centric profitability and publicly announced
the new management structure in August 2019; |
| • | We globalized our corporate functions to support our business segment realignment; |
| • | We simplified our legal entity structure, reduced regulatory overlap and improved capital efficiency
and investment flexibility; |
| • | We achieved $10 million in run rate expense savings; and |
| • | We had varying results in achieving individual business unit profitability with Global A&H
being our most profitable segment in 2019. |
While the Company did not increase its
float and/or achieve significant M&A during the 2019 calendar year, the Compensation Committee believed that this was largely
outside the control of the NEOs given the ownership structure and dynamics around how such ownership structure has impacted the
Company’s stock price.
2019 Financial Performance Objectives
The following table sets forth the pre-established
financial performance criteria and the weighting for each of the NEOs under the formulaic portion of the 2019 annual cash incentive
program which was weighted 50%:
| | |
| | |
| | |
| | |
Weighting(3) | |
| 2019 Financial Performance Metrics | |
Threshold
(20% Payout) | | |
Target
(100% Payout) | | |
Maximum (200% Payout) | | |
Oberting,
Boxer, Davis
& Salamone | | |
Cramér
Manhem | |
| ABVPS (1) (% achieved) | |
| 0.4 | % | |
| 7.4 | % | |
| 14.4 | % | |
| 100 | % | |
| 25 | % |
| UROAE (2) (% achieved) | |
| 0.7 | % | |
| 7.7 | % | |
| 14.7 | % | |
| 0 | % | |
| 75 | % |
| (1) | Adjusted Book Value Per Share (“ABVPS”) is derived by dividing adjusted
book value by the adjusted shares outstanding. Adjusted shares outstanding is derived by summing common shares outstanding, Series
B preference shares outstanding, and the earned portion of share-based compensation awards. Adjusted book value is derived by summing
total common shareholders’ equity, the Series B preference share amount reflected in mezzanine equity, and the earned portion
of future proceeds from stock option awards. Outstanding warrants are excluded as they are anti-dilutive as of the respective reporting
dates. |
| (2) | Underwriting Return on Average Equity (“UROAE”) is a measure driven principally
by bottom-line underwriting profits and transaction gains, net of operating expenses, plus a standardized investment return on
capital and float, measured against full legal entity capital. UROAE differs from Underwriting Return on Capital (“UROC”)
used in the 2017- 2019 LTIP in that it is measured on full legal entity capital, as opposed to deployed capital. |
| (3) | The Compensation Committee determined in 2019 that the incentive compensation paid to Ms. Cramér
Manhem, as the executive management head of the underwriting group, would be more heavily weighted by underwriting profits. |
Annual Cash Incentive Results
Base
Salary |
x |
Target Annual
Cash Incentive
% |
x |
Company
Performance Metrics
x 50% Weighting |
x |
Corporate Strategic
Objectives x 50%
Weighting |
= |
Actual Cash
Incentive |
Financial results for 2019 were lower than
expected and lower than the targets noted above. The primary compensation metrics for the annual cash incentive program for 2019
were Growth in ABVPS and UROAE. For 2019, ABVPS decreased and was below the minimum threshold. Actual UROAE achieved was approximately
0%, similarly below the minimum threshold. Accordingly, the financial performance portion of the annual cash incentive was funded
at the minimum 20% funding level. This portion of the annual cash incentive was combined with the relevant achievement of the strategic
objectives for each respective NEO as noted below; resulting in the 2019 cash incentive pool being funded at 55% of target. Based
on performance, the Compensation Committee allocated $1,062,340 of the cash incentive pool to our NEOs, with individual NEOs receiving
allocations based on: (i) the overall pool funding for Mr. Oberting, (ii) the relative segment and underwriting performance for
Ms. Cramér Manhem, and (iii) function and individual performance for Messrs. Salamone, Boxer and Davis. Mr. Waters’
separation agreement provided that his annual cash incentive would be no less than his target cash incentive opportunity.
| | |
Target Cash Incentive Opportunity | |
Actual Cash Incentive Paid |
| NEO | |
Actual % of Base
Salary | |
($) | | |
As a % of Target
Cash Incentive
Opportunity | |
($) | |
| Kernan V. Oberting | |
50% | |
$ | 250,000 | | |
55% | |
$ | 137,500 | |
| Ralph A. Salamone | |
50% | |
$ | 250,000 | | |
80% | |
$ | 200,000 | |
| Gene Boxer | |
50% | |
$ | 250,000 | | |
90% | |
$ | 225,000 | |
| Monica Cramér Manhem | |
50% | |
$ | 237,500 | | |
32% | |
$ | 75,840 | |
| Jeffrey Davis | |
50% | |
$ | 232,500 | | |
75% | |
$ | 174,375 | |
| Allan Waters | |
50% | |
$ | 250,000 | | |
100% | |
$ | 250,000 | |
Long-Term Incentive Compensation
The objectives for Sirius Group’s
long-term incentive program are to:
| • | Align the interests of our executives with the interests of our shareholders by focusing on objectives
that support stock price appreciation; |
| • | Increase cross-functional executive focus in the coming years on key performance metrics through
performance share units; and |
| • | Retain the services of executives through multi-year vesting provisions. |
Sirius Group’s long-term incentive
program allows the Compensation Committee to award various forms of long-term incentive grants, including stock options, time-based
restricted share units, performance-based equity and performance-based cash awards. The Compensation Committee approves all equity
grants made to our senior executives.
2018 Omnibus Incentive Plan Awards
– 2019 Equity Awards
In determining the 2019 long-term incentive
award levels for NEOs, the Compensation Committee compared the target total direct compensation of each NEO to the competitive
market median. In addition, the Compensation Committee evaluated the expected payouts of its current long term incentive awards.
Consistent with the Company’s long-standing compensation philosophy of aligning executive officers’ interests with
shareholders through the risks and rewards of equity ownership and balancing such risk and rewards with the Company’s need
to retain its talented and experienced executive team during a time of the Company’s transformation from a private Company
to a public Company, the Compensation Committee determined to award, on average, approximately 72% of the total target direct compensation
of each of our NEOs in the form of equity awards.
The table below sets forth the target award
value, as of the date of grant, of the long-term incentive award received by each NEO under our 2019 long-term incentive program,
which was delivered 30% in performance share units and 70% in time based restricted share units for all NEOs, except Mr. Oberting.
The Compensation Committee approved a higher percentage of the long-term incentive award in the form of restricted share units
as compared to the Company’s peers in 2019 given the significantly lower recent long-term incentive payout values and projected
payout values of long-term incentive compensation paid to our NEOs relative to the named executive officers of the Company’s
peers. Mr. Oberting received 70% of his award in stock options and 30% of his award in performance share units.
| NEO | |
Targeted Grant Date Value
of 2019 Long Term Incentive
Award
|
|
| Kernan V. Oberting(1) | |
$ | 4,500,000 |
(1) |
| Ralph A. Salamone | |
$ | 1,350,000 |
(2) |
| Gene Boxer | |
$ | 1,350,000 |
(2) |
| Monica Cramér Manhem | |
$ | 1,350,000 |
(2) |
| Jeffrey W. Davis | |
$ | 1,027,000 |
(2) |
| (1) | The
grant date value of Mr. Oberting’s stock option award was $3,150,000 and the performance
share unit award was $1,350,000. The option award cliff vests on the third anniversary
of the grant date and the performance share unit award is subject to three-year cliff
vesting based on performance and continued service through the end of the performance
period. |
| (2) | The
grant date value of the time based restricted share units granted to Messrs. Salamone,
Boxer and Ms. Cramér Manhem was $945,000 of time based restricted share units
and $405,000 performance share units, and with respect to Mr. Davis, $719,000 and $308,000,
respectively. The time based restricted share units cliff vest on the third anniversary
of the grant date and the performance share unit awards are subject to three year cliff
vesting based on performance and continued service through the end of the performance
period. |
Performance Share Units. The 2019
performance share unit awards will vest if and only to the extent that specific performance goals relating to growth in ABVPS and
UROAE are met during the 2019-2021 performance period. The Compensation Committee selected ABVPS and UROAE because it believed
that these metrics are aligned with the Company’s business plans.
Under the terms of the 2019 performance
share unit awards, vesting may range from 0% to 200% of target based on the Company’s performance with respect to the pre-established
performance goals. Except as otherwise described in the —2019 Potential Payments Upon a Termination or a Change in Control,
in order to vest in the award, the award recipient must generally remain employed through the end of the performance period. The
performance goals for the performance share units were designed to be challenging but achievable with the coordinated, cross-functional
focus and effort of the executives.
Restricted Share Unit Awards. Time-vesting
restricted share unit awards were granted to our NEOs (other than Mr. Oberting) as part of the annual long-term incentive grants
to support retention and alignment of our NEOs’ interests with the interests of our shareholders. The annual restricted share
unit awards cliff vests on the third anniversary of the grant date, subject to the NEO’s continued service or as otherwise
provided for under the award agreements.
Stock Option Award. In connection
with his appointment to the position of CEO, Mr. Oberting received a stock option award having a grant date value of $3,150,000
as part of his 2019 long-term incentive award, which will cliff vest upon his continued employment through the third anniversary
of the grant date. The stock option award was granted to Mr. Oberting to further emphasize the achievement of long-term objectives
and encourage long-term value creation because the stock options will have value to Mr. Oberting only if the Company’s stock
price appreciates from the date of grant. The Compensation Committee believes that Mr. Oberting’s 2019 long-term incentive
design supports retention and represents a balanced reflection of shareholder returns and financial performance.
Prior Equity Awards
Sirius Group historically awarded long-term
incentive compensation in the form of three-year, cliff-vested, performance units or phantom performance shares that can be paid
in cash, or upon Sirius Group becoming public, Sirius Group common shares, at the discretion of the Compensation Committee. A new
long-term incentive award was granted each year so that there were multiple performance cycles outstanding at any given time.
The 2017 – 2019 and
2018 – 2020 grants were governed by the Sirius Group Long Term Incentive Plan (the “2016 LTIP”),
and were granted in the form of phantom performance shares based upon the BVPS of Sirius Group on the date of grant and earned
(or “harvested”) based on specific, objective financial performance measures established at the beginning
of the three-year performance cycle. Upon vesting of awards made under the legacy 2016 LTIP, (i) each phantom performance share
will be valued at the market price of a common share at time of payout and (ii) the Compensation Committee has discretion to settle
these awards in common shares rather than cash.
For the three-year performance cycle beginning
in 2017, the performance metrics and relative weightings for the NEOs were Underwriting Return on Capital (“UROC”),
Average ROE, Total Assets Average Growth and Chinese Premium Growth. The number of phantom shares earned can range from 0% to 200%
of the target number granted based on proscribed threshold, target and maximum performance levels.
| 2017 – 19 LTIP Payouts as a % of Target | |
Threshold | | |
Target | | |
Maximum | |
| Average Underwriting Return on Capital(1) | |
| 2.5 | % | |
| 9.5 | % | |
| 16.5 | % |
| Average Return on Equity (2) | |
| 0.7 | % | |
| 7.7 | % | |
| 14.7 | % |
| Total Assets Average Growth (3) | |
| 0 | % | |
| 63 | % | |
| 126 | % |
| Chinese Premium Growth (4) | |
| 0 | % | |
| 40 | % | |
| 80 | % |
| (1) | Average
UROC represents the after-tax, leveraged underwriting return on average “Deployed
Capital” in the Sirius Group. For purposes of this performance metric, “Deployed
Capital” is defined as GAAP capital less excess rating agency capital plus
an internal safety margin. GAAP comprehensive income results are adjusted to reflect:
(i) reduction of investments equal to un-deployed capital; (ii) application of a standard
investment crediting rate on remaining investment assets; (iii) removal of the impact
of currency fluctuations; and (iv) adjustment of income taxes related to (i), (ii) and
(iii). Average UROC is determined by determining the simple average the UROC from each
of 2017, 2018, and 2019 performance years. |
| (2) | Average
ROE is calculated as follows: (50% GAAP Comprehensive Income plus 50% GAAP Net Income)
divided by time-averaged common shareholders’ equity. Both Comprehensive Income
and Net Income include gains and losses from acquisitions. Time-averaged common shareholders’
equity equals beginning equity plus time-weighted capital contributions during the year
less time-weighted capital distributions during the year plus simple average of accumulated
profit (loss) during the year. |
| (3) | Total
Assets Average Growth refers to the yearly average growth percentage from January 1,
2017 to December 31, 2019 and is determined by dividing the 2019 ending total assets
by the 2017 beginning total assets. |
| (4) | Chinese
Premium Growth refers to yearly average growth percentage measured in Renminbi from January
1, 2017 to December 31, 2019 and is determined by dividing (i) the difference of the
2019 Chinese Premium and the 2016 Chinese Premium by (ii) the 2016 Chinese Premium. |
The following table sets forth the weighting
of the various performance measures for each of the NEOs:
| NEO | |
Average UROC | | |
Average ROE | | |
Total Assets
Average Growth | | |
Chinese Premium
Growth | |
| Kernan V. Oberting | |
| 25 | % | |
| 25 | % | |
| 40 | % | |
| 10 | % |
| Ralph A. Salamone | |
| 50 | % | |
| 50 | % | |
| 0 | % | |
| 0 | % |
| Gene Boxer | |
| 50 | % | |
| 50 | % | |
| 0 | % | |
| 0 | % |
| Monica Cramér Manhem | |
| 25 | % | |
| 25 | % | |
| 40 | % | |
| 10 | % |
| Jeffrey W. Davis | |
| 50 | % | |
| 50 | % | |
| 0 | % | |
| 0 | % |
| Allan C. Waters | |
| 25 | % | |
| 25 | % | |
| 40 | % | |
| 10 | % |
Based upon a three-year average UROC and
ROE performance were below threshold, while Total Assets Average Growth achieved 12.8% of target and Chinese Premium Growth performed
at 48.9% of target. As a result, with the exception of Messrs. Oberting and Waters and Ms. Cramér Manhem, the NEOs did not
receive payouts for the three-year performance cycle based on the formulaic payout percentage described above. The following table
sets forth the value received by each of the NEOs with respect to the 2017 – 2019 performance cycle. The Compensation Committee
determined that the 2017-2019 performance share awards would be settled in cash.
| NEO | |
Payout Value of 2017-
2019 Long Term
Incentive Award | |
| Kernan V. Oberting | |
$ | 78,375 | |
| Ralph A. Salamone | |
$ | 0 | |
| Gene Boxer | |
$ | 0 | |
| Monica Cramér Manhem | |
$ | 37,749 | |
| Jeffrey W. Davis | |
$ | 0 | |
| Allan C. Waters | |
$ | 181,552 | |
2018 Omnibus Incentive Plan Awards
– IPO Incentive Program
In connection with the Merger, the Compensation
Committee approved grants of performance share unit awards to members of management, including the NEOs (the “IPO Incentive
Program”). The IPO Incentive Program was designed to further align the compensation of a select group of executives
of Sirius Group, including our NEOs, with the long-term performance of Sirius Group’s common shares following the Merger
and shareholder interests.
One fourth of the number of these performance
share units granted to each participant under the IPO Incentive Program will become earned and vested based on ROE performance
goals approved by the Compensation Committee with respect to each of 2019, 2020 and 2021, and an additional one-fourth of the number
of performance share units will become earned and vested based on Sirius Group’s average annual ROE performance over 2019,
2020 and 2021. The vesting of the awards will also be subject to the participant’s continued employment with Sirius Group
through the end of the applicable performance period, provided that a participant who has a qualifying termination of employment
will become vested in a prorated portion of the award earned in the then-current performance period, subject to actual performance
results. The performance goals were designed to be challenging but achievable with strong management and Company performance.
Based on the Company’s attainment
of ROE below the minimum threshold for 2019, the NEOs did not vest in the 2019 portion of the IPO Incentive Program and such portion
was forfeited.
Retention Awards
Time Based Restricted Share
Unit Awards
During 2019, the Compensation Committee
evaluated the compensation program and determined that there were some concerns regarding the structure of the program. While the
Compensation Committee strongly believes that the compensation should be weighed heavily on performance, it found that the incentive
compensation realized by and the forecasted long-term compensation payout values under outstanding awards for our NEOs were significantly
lower than compensation realized by named executive officers of peer companies, even when factoring the Company’s performance
relative to peers. As a result, in early 2019, the Compensation Committee determined to award the NEOs additional time-based restricted
share units as a supplemental retentive award. This restricted share unit award cliff vests on the third anniversary of the grant
date, subject to continued employment through the applicable vesting date. These awards were granted in recognition of their efforts
during 2018 and for retention purposes.
In determining to approve these grants,
the Compensation Committee considered, in particular, the highly performance based design of the Company’s executive compensation
program, with all historic long-term incentive awards subject to performance based vesting conditions, and the desire to provide
an additional retentive incentive for the NEOs.
The table below sets forth the grant date
fair value of the February 2019 restricted share unit awards:
| NEO | |
Grant Date Value of
2019 Supplemental
Restricted Share Unit
Awards | |
| Kernan V. Oberting | |
$ | 200,000 | |
| Ralph A. Salamone | |
$ | 240,000 | |
| Gene Boxer | |
$ | 300,000 | |
| Monica Cramér Manhem | |
$ | 198,645 | |
| Jeffrey W. Davis | |
$ | 135,000 | |
Cash Retention Awards
In November 2019, the Compensation Committee
requested that its independent consultant evaluate actual realized pay of our NEOs and compare it to the targeted pay set by the
Compensation Committee for 2019 as well as the peer data. The analysis noted that the ratios of realized to target long term incentive
compensation and realized to target total direct compensation for Sirius Group’s CEO and CFO were both low relative to peer
companies. In addition, the November 2019 study found that the compensation program for our senior executives is generally
more variable than that at many of our peer companies. Specifically, the salaries and other fixed compensation components of Sirius
Group’s senior executives tend to be somewhat lower than that of Sirius Group’s peers, while variable compensation
opportunities tend to be greater than the average of Sirius Group’s peers. Additionally, incentive compensation realized
by and the forecasted long-term incentive compensation payout values under outstanding awards for our NEOs was significantly lower
than named executive officers of peer companies, even when factoring the Company’s performance relative to peers. Given the
changes to the business circumstances, the Compensation Committee sought to ensure the continued service of our NEOs. Based on
these factors, the Compensation Committee determined that special cash retention awards were necessary in order to continue to
incentivize and retain executives. The Compensation Committee delegated authority to the CEO to determine cash retention awards
to be paid over a period of time to our NEOs, other than Mr. Oberting. Awards under the program have vested or will vest in equal
installments on or prior to March 15, 2020 and March 15, 2021, subject to continued employment through the applicable vesting date.
In the event of a termination of employment without cause (as defined in the applicable award agreement) or, in the case of participants
in the Sirius Group Severance and Change in Control Plan, a resignation for good reason (as defined in the Sirius Group Severance
and Change in Control Plan) prior to either vesting date, the vesting and payment of the full award will be accelerated. In the
event of a termination of employment for any reason other than a termination without cause or, if applicable, a resignation for
good reason, any unvested portion of the award will be forfeited and any portion of the award vested within 12 months prior to
such termination or resignation will be required to be repaid.
In determining to grant these cash awards,
the Compensation Committee considered the impact on the “at risk” compensation of the Company from the recent severity
of natural disasters, including Hurricanes Irma, Michael and Dorian, California wildfires, and Typhoon Jebi, among others, resulting
in extreme catastrophe insured losses. We believe that each of the NEOs are critical to our ongoing success and to achieve our
goals. In addition, we believe that the pool of candidates that meet our criteria is small and that compensation for talent has
increased during recent years. In light of this, the continued employment of our NEOs is critical to the Company and thus, the
Compensation Committee granted the cash retention awards to all NEOs (except Mr. Oberting) in order to ensure the continuity of
service to our Company by talented executives during this time. At the time, the Compensation Committee deferred approving Mr.
Oberting’s cash retention award. In February 2020, after an evaluation of Mr. Oberting’s outstanding long term incentive
awards and determining that the projections of actual payout were only 6% of target, the Compensation Committee determined to award
Mr. Oberting a cash retention award equal to 68% of his 2019-2021 long term incentive grant in an amount of $3,060,000 under the
same payment and other conditions noted above with respect to the other NEO’s previously granted cash retention award.
The table below sets forth the cash retention
awards granted to certain of our NEOs in November 2019 and February 2020:
| NEO | |
Cash Retention Award | |
| Kernan V. Oberting | |
$ | 3,060,000 | |
| Ralph A. Salamone | |
$ | 800,000 | |
| Gene Boxer | |
$ | 1,000,000 | |
| Monica Cramér Manhem | |
$ | 800,000 | |
| Jeffrey W. Davis | |
$ | 800,000 | |
Other Components of Executive Compensation
Employment Agreements/Executive
Severance Plan
Prior to the Merger, Mr. Waters and Ms.
Cramér Manhem entered into employment agreements in July 2015, which were entered into in conjunction with our acquisition
by CMIG International. In January 2019, Mr. Oberting entered into an employment agreement with the Company in connection with his
appointment as CEO. These employment agreements granted certain rights for termination without cause and other customary rights.
See the “Employment Arrangements” and “2019 Potential Payments Upon a Termination or a Change in Control”
sections below for a more detailed discussion of these employment agreements and estimate of the potential compensation and benefits
provided pursuant to these arrangements. In September 2018, Sirius Group adopted the Sirius Group Severance and Change in Control
Plan (the “Executive Severance Plan”) which provides for terms applicable to each of our NEOs relating
to severance and post-employment benefits provided upon certain termination events. As a condition of participation under the Executive
Severance Plan, participants are required to execute a restrictive covenant agreement. The terms of the Executive Severance Plan
were determined after consulting with the Compensation Committee’s independent consultant, FW Cook, regarding market practices.
The Compensation Committee believes that the Executive Severance Plan is competitive with typical industry practices and that the
severance opportunities provide appropriate levels of compensation for executive separations. Further, the Compensation Committee
believes that these arrangements are an important component of our compensation packages in terms of attracting and retaining top
caliber talent in senior leadership roles and in defining terms and conditions of executive separation events. Each of our NEOs
has executed participation agreements under the Executive Severance Plan. Mr. Waters elected not to participate in the Executive
Severance Plan, and severance paid out to him in connection with his separation was made under the terms of his employment agreement.
The Executive Severance Plan provides that,
to the extent that Mr. Oberting or Ms. Cramér Manhem’s employment agreements provide additional severance protections,
they will each continue to receive the employment agreement severance protections, to the extent such protections do not result
in duplicative benefits under the Executive Severance Plan.
For a discussion of the benefits awarded
to NEOs in the event of a qualifying termination under the Executive Severance Plan, see the section entitled “2019 Potential
Payments Upon a Termination or a Change in Control – Executive Severance Plan.”
Retirement Benefits
Sirius Group maintains a tax qualified
401(k) plan for our U.S. employees, including Messrs. Waters, Oberting, Boxer, Salamone and Davis. Additionally, Ms. Cramér
Manhem participates in a Swedish statutory pension scheme and, consistent with competitive practices in Sweden, receives supplemental
retirement benefits from Sirius Group in the form of annual contributions to a non-qualified deferred compensation program. The
Compensation Committee believes these benefits encourage retention and are part of delivering an overall competitive pay package
necessary to recruit and retain talented executives. Please refer to the “2019 Summary Compensation Table,”
“2019 Nonqualified Deferred Compensation” table and related footnotes for additional information.
Perquisites
Sirius Group provides the NEOs certain
perquisites that the Compensation Committee believes are generally consistent with those provided to executives at similar levels
at companies within our industry. The Compensation Committee believes that providing certain additional perquisites to our NEOs
enhances retention while strengthening our relationships with our NEOs. In addition, certain of our NEOs received housing allowances
relating to their service in Bermuda, which housing allowances were terminated in 2019. Please refer to the “2019 Summary
Compensation Table” and related footnotes for additional information.
Other Benefits
Our NEOs participate in our corporate-wide
benefit programs. Our NEOs are offered benefits that generally are commensurate with the benefits provided to all of our full-time
employees. Please refer to the “2019 Summary Compensation Table” and related footnotes for additional information.
Other Executive Compensation Matters
Compensation Committee
The Compensation Committee is responsible
for determining and approving the individual elements of total compensation paid to the CEO and our other executive officers and
for administering compensation practices affecting such other employees of the Company as the Compensation Committee deems appropriate,
including the methodologies for determining employee and executive officer incentive compensation. The Compensation Committee also
oversees the administration of executive compensation plans and certain employee benefits.
Our CEO annually presents the Compensation
Committee with his evaluation of our executive officers (other than himself), considering their individual performances, responsibilities,
and the contributions they made to the Company’s accomplishments and his expectations for their future performance and succession
plans. In connection with this evaluation, the CEO presents the Compensation Committee with his recommendations for the compensation
of these executives. The Compensation Committee sets executive officer compensation, considering the CEO’s recommendations
as well as its own assessment of performance.
Clawback Policy
In November 2018, the Board voluntarily
adopted a recoupment or “clawback” policy. In the event that during the 12-month period following the filing with the
SEC of Company financial statements that are later the subject of a material negative restatement (a “Restatement”),
the Board may, and to the extent legally permitted, require the return, repayment or forfeiture of any annual or long-term incentive
compensation payment or award (including any cash incentive or equity-based award) if:
| • | the payment or award was predicated upon achieving certain financial results that were subsequently
the subject of the Restatement; |
| • | the Board determines that the executive officer engaged in misconduct (including having actual
knowledge of misconduct on the part of any other employee of the Company) that significantly contributed to the need for the Restatement;
and |
| • | a lower payment or award would have been made to the executive officer based upon the restated
financial results. |
Policy on Hedging Transactions,
Margin Accounts and Pledging
In November 2018, the Board adopted an
Insider Trading and Confidentiality Policy (the “Insider Trading Policy”). The Insider Trading Policy
prohibits directors, employees, executive officers, and their respective family members who share their household from entering
into hedging or monetization transactions or similar arrangements with respect to common shares of the Company, including the purchase
or sale of puts and calls or the use of any other derivative instrument. In addition, the Insider Trading Policy prohibits directors,
employees, executive officers and their respective family members who share their household from holding securities of the Company
in a margin account or pledging securities as collateral for a loan.
Compensation and Risk Management
The Compensation Committee evaluates the
relationship between our executive and company-wide compensation programs and policies and risk management on an annual basis.
As discussed in this CD&A, we design our compensation program to incorporate a range of components that we believe help to
mitigate potential risks while rewarding employees for pursuing our strategic and financial objectives through appropriate risk
taking, risk management and prudent tactical and strategic decision making. Senior executives representing our risk, legal and
compliance, human resources, finance and audit functions, are each involved in the review process, which is conducted under the
oversight of the Compensation Committee. Based on this review, we do not believe that there are any risks arising from our compensation
policies and practices for our employees that are reasonably likely to have a material adverse effect on us.
For additional information regarding our
risk management practices, see “Board Role over Risk Oversight.”
Guidance from Independent Compensation
Consultant
FW Cook provides executive compensation
consulting services to the Compensation Committee. In 2019, FW Cook provided:
| · | services related to the review of 2019 peer group compensation data, |
| · | awards under our long-term incentive program, |
| · | the setting of performance goals in our variable incentive plans including the payout leverage
for results above and below the target performance levels, |
| · | an analysis of the relationship between the Company’s pay and performance relative to peers,
trends and tax and regulatory developments with respect to executive compensation, |
| · | our compensation peer group, |
| · | the compensation adjustments made in connection with the retention awards discussed above, and
our non-employee director compensation program, |
| · | preparation for and attendance at selected Compensation Committee meetings, and |
| · | assistance with this CD&A. |
FW Cook was retained by and
reports to the Compensation Committee and, at the request of the Compensation Committee, participates in committee meetings. FW
Cook did not provide any other services to the Company with respect to 2019. The Compensation Committee reviewed the independence
of FW Cook under Nasdaq and SEC rules and concluded that the work of FW Cook has not raised any conflict of interest.
Comparison to Peer Group
To obtain a broad view of competitive practices
among industry peers and competitors for executive talent, the Compensation Committee reviews market data for peer group companies.
In selecting companies for our peer group, the Compensation Committee considers companies that meet one or more of the following
peer group selection criteria established by the Compensation Committee:
| • | approximate to Sirius Group’s scope of business and that of its subsidiaries, including revenue
and market capitalization, |
| • | similar to Sirius Group in the importance to their business of capital allocation, investments
and risk management, |
| • | compete with Sirius Group for a comparable pool of talent, and |
| • | reflect Sirius Group’s global presence. |
During
2019, the Compensation Committee engaged FW Cook to perform a competitive analysis of Sirius Group's compensation program. The
2019 study found that our compensation program for our senior executives is generally more variable than that at many of our peer
companies. Specifically, the salaries and other fixed compensation components of Sirius Group's senior executives tend to be somewhat
lower than that of Sirius Group's peers, while variable compensation opportunities tend to be greater than the average of Sirius
Group's peers. The peers included in the 2019 study were: Alleghany, Arch Capital, Argo Group, Aspen Insurance, Axis Capital, Enstar
Group, Everest Re Group, RenaissanceRe, W.R. Berkley and White Mountains Insurance Group. As compared to 2018, the peer companies
for 2019 included the additions of Alleghany, Enstar Group and W.R. Berkley, while removing Global Indemnity, Hiscox, James River
Group, Maiden Holdings and Validus. The peer company changes reflected acquisitions as well as a more indicative list of companies
with respect to the peer group criteria described above. Since Sirius Group’s size measures (e.g., premiums, assets
and market capitalization) relative to the 2019 peer study were on the smaller side, the Compensation Committee viewed the 25th
percentile compensation levels as the “size adjusted” market rate.
REPORT OF THE COMPENSATION COMMITTEE
ON THE COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Committee reviewed and
discussed the “Compensation Discussion and Analysis” section included in this Annual Report with management.
Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the “Compensation
Discussion and Analysis” section be included in the 2019 Annual Report for filing with the SEC.
COMPENSATION COMMITTEE
Rachelle C. Keller (Chair)
Meyer (Sandy) Frucher
James (Jim) B. Rogers,
Jr.
EXECUTIVE COMPENSATION TABLES AND NARRATIVES
2019 Summary Compensation Table
The following table provides compensation
information for Sirius Group’s principal executive officer, principal financial officer and other NEOs (including our former
principal executive officer) for services in their capacities as such during 2019.
| Name and Principal Position | |
Year | |
Salary | |
Bonus(1) | |
Share
Awards(2) | |
Option
Awards (3) | |
Non-Equity
Incentive Plan
Compensation(4) | |
All Other
Compensation(5) | |
Total | |
| Kernan
(Kip) V. Oberting, | |
2019 | |
$ | 500,000 | |
| — | |
$ | 1,549,993 | |
$ | 3,148,624 | |
$ | 215,875 | |
$ | 12,256 | |
$ | 5,426,748 | |
| President and CEO (Former CFO), Sirius Group | |
2018 | |
$ | 499,615 | |
$ | — | |
$ | 1,600,000 | |
| — | |
$ | 516,676 | |
$ | 149,768 | |
$ | 2,766,059 | |
| | |
2017 | |
$ | 471,154 | |
$ | 2,186,736 | |
| — | |
| — | |
$ | 707,491 | |
$ | 225,635 | |
$ | 3,591,016 | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Ralph
A. Salamone, | |
2019 | |
$ | 469,231 | |
| — | |
$ | 1,590,002 | |
| — | |
$ | 200,000 | |
$ | 12,256 | |
$ | 2,271,489 | |
| Executive Vice President and Chief Financial Officer | |
2018 | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| | |
2017 | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| — | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Gene
Boxer, | |
2019 | |
$ | 500,000 | |
| — | |
$ | 1,649,991 | |
| — | |
$ | 225,000 | |
$ | 12,256 | |
$ | 2,387,247 | |
| Executive Vice President,
CSO & Group General Counsel, Sirius Group | |
2018 | |
$ | 499,231 | |
$ | 325,000 | |
$ | 1,600,000 | |
| — | |
$ | 197,926 | |
$ | 12,056 | |
$ | 2,634,213 | |
| | |
2017 | |
$ | 450,000 | |
$ | 325,000 | |
| — | |
| — | |
$ | 225,000 | |
$ | 11,700 | |
$ | 1,011,700 | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Monica
Cramér Manhem, | |
2019 | |
$ | 475,000 | |
| — | |
$ | 1,548,641 | |
| — | |
$ | 113,589 | |
$ | 161,351 | |
$ | 2,298,581 | |
| President, Global Reinsurance(6) | |
2018 | |
$ | 496,607 | |
| — | |
$ | 1,600,000 | |
| — | |
$ | 290,215 | |
$ | 171,134 | |
$ | 2,557,956 | |
| | |
2017 | |
$ | 439,025 | |
$ | 2,305,348 | |
| — | |
| — | |
$ | 356,104 | |
$ | 141,370 | |
$ | 3,241,847 | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Jeffrey
W. Davis, | |
2019 | |
$ | 462,116 | |
| — | |
$ | 1,162,163 | |
| — | |
$ | 174,375 | |
$ | 150,256 | |
$ | 1,948,910 | |
| Executive Vice President,
CRO & Chief Actuary, Sirius Group | |
2018 | |
$ | 450,000 | |
| — | |
$ | 700,000 | |
| — | |
$ | 254,572 | |
$ | 287,556 | |
$ | 1,692,128 | |
| | |
2017 | |
$ | 450,000 | |
$ | 583,094 | |
| — | |
| — | |
$ | 533,621 | |
$ | 296,264 | |
$ | 1,862,979 | |
| | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| Allan
L. Waters, | |
2019 | |
| 95,307 | (7) |
$ | 250,000 | |
| — | |
| — | |
$ | 181,552 | |
$ | 595,567 | |
$ | 1,122,426 | |
| Former Chairman and CEO, Sirius
Group | |
2018 | |
$ | 500,000 | |
$ | — | |
$ | 2,200,000 | |
| — | |
$ | 1,207,050 | |
$ | 292,793 | |
$ | 4,199,843 | |
| | |
2017 | |
$ | 500,000 | |
$ | 6,827,486 | |
| — | |
| — | |
$ | 2,525,764 | |
$ | 208,514 | |
$ | 10,061,764 | |
| (1) | The amount reported in this column for 2019 represents the guaranteed annual cash incentive paid
to Mr. Waters in connection with his separation. For more information, see “—Compensation Discussion and Analysis—Management
Transition.” |
| (2) | The amounts reported in this column for 2019 represent the performance share
units and time based restricted share units granted to the NEOs under the 2018 Omnibus Incentive Plan. The amounts reported
in this column are valued based on the aggregate grant date fair value computed in accordance with FASB ASC Topic 718, and
are calculated based on the probable satisfaction of the performance conditions for such awards as of the date of grant.
Assuming the highest level of performance is achieved for the performance share unit grants, the maximum value would be as
follows: Mr. Oberting — $2,699,991; Mr. Salamone — $810,008; Mr. Boxer —
$810,008; Ms. Cramér Manhem — $810,008; and Mr. Davis — $616,310. See Note 14
to the Consolidated Financial Statements included in Sirius Group’s Annual Report on Form 10-K for the year ended
December 31, 2019 for a discussion of the relevant assumptions used in calculating the amounts reported for 2019. |
| (3) | The amounts reported in this column for 2019 represent the value of the stock options received
by Mr. Oberting in connection with the execution of his employment agreement. The amounts reported in this column are valued based
on the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. See Note 14 to the Consolidated Financial
Statements included in Sirius Group’s Annual Reports on Form 10-K for the year-ended December 31, 2019 for a discussion of
the relevant assumptions used in calculating the amounts reported for 2019. |
| (4) | Amounts reported in this column represent payouts under the Sirius Group
2017-2019 LTIP, whereby participants were paid in cash, as follows, Mr. Waters —$181,552; Mr. Oberting —$78,375;
and Ms. Cramér Manhem —$37,749, and payouts under the annual cash incentive program as follows, Mr. Oberting
—$137,500; Mr. Salamone —$200,000; Mr. Boxer —$225,000; Ms. Cramér Manhem — $75,840; and Mr.
Davis — $174,375. |
| (5) | The amounts reported in this column consist of (i) housing allowances in Bermuda for
Messrs. Waters and Davis in the amounts of $91,667 and $137,500, respectively, (ii) a car allowance, food reimbursement and outside
director fees earned for serving on the board of directors of an affiliate of the Company for Ms. Cramér Manhem, (iii)
health club reimbursements for Mr. Davis, (iv) group life insurance premiums in the amount of $1,056 paid for the benefit
of Messrs. Oberting, Boxer and Davis and $88.00 paid for the benefit of Mr. Waters, (v) $11,200 in employer 401(k) contributions
on behalf of Mr. Oberting, Mr. Boxer and Mr. Davis and $3,812 for Mr. Waters, (vi) $139,283 in Sirius Group contributions
to a deferred compensation plan maintained for Ms. Cramér Manhem in Sweden, and (vii) separation benefits of $500,000
paid to Mr. Waters upon his separation of employment on February 9, 2019. The housing allowances were valued on the basis of the
aggregate incremental cost to the Company and represent the amount accrued for payment or paid directly to the applicable NEO.
With respect to the other perquisites, the aggregate incremental cost to the Company was generally determined based on the amount
paid to the applicable outside provider. |
| (6) | Ms. Cramér Manhem is a Swedish resident and paid in Swedish Krona. Her 2019 salary, annual
cash incentive and other compensation were awarded in U.S. dollars, paid in Swedish Krona and converted herein at the December
31, 2018 spot rate of 8.94. The 2017-2019 LTIP award was awarded in U.S. dollars, paid in Swedish Krona and converted herein at
the December 31, 2016 spot rate of 9.05. |
| (7) | The amounts reported for Mr. Waters in this column for 2019 represents his salary through the date
of termination of his role as Chief Executive Officer (February 9, 2019) and includes a pro-rated salary ($30,000) he received
as a Senior Advisor to the Company pursuant to his employment agreement. See “—Compensation Discussion and Analysis—Waters
Separation Agreement.” |
2019 Grants of Plan-Based Awards
The following table provides information
regarding the possible payouts to our NEOs in 2019 under the annual cash incentive program and the performance shares units, restricted
share units and stock options received by our NEOs in 2019.
| | |
| |
| |
| |
Estimated Future Payouts
Under
Non-Equity Incentive Plan Awards(1) | | |
Estimated Future Payouts
Under
Equity Incentive Plan Awards | | |
| | |
| | |
| | |
| |
| Name | |
Grant
Date | |
Approval
Date (1) | |
Type of Award | |
Threshold
($)(2) | | |
Target
($)(2) | | |
Maximum
($)(2) | | |
Threshold
#(3) | | |
Target
#(3) | | |
Maximum
#(3) | | |
All other stock
awards;
number
of shares of
stock or
units(4) | | |
All other
options
awards;
number of
securities
underlying
options | | |
Exercise or
base price
of option
award | | |
Grant date
fair value
of stock
and option
awards(5) | |
Kernan
(Kip) V. Oberting | |
2/27/2019 | |
2/27/2019 | |
Annual Cash
Incentive | |
$ | 0 | | |
$ | 250,000 | | |
$ | 500,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
2/27/2019 | |
1/30/2019 | |
Stock Options | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| | | |
| 1,374,945 | | |
$ | 12.75 | | |
$ | 3,148,624 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 PSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| 105,882 | | |
| 211,764 | | |
| | | |
| | | |
| | | |
$ | 1,349,996 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 RSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| 15,686 | | |
| | | |
| | | |
$ | 199.997 | |
Ralph
A. Salamone | |
2/27/2019 | |
2/27/2019 | |
Annual Cash Incentive | |
$ | 0 | | |
$ | 250,000 | | |
$ | 500,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 PSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| 31,765 | | |
| 63,530 | | |
| | | |
| | | |
| | | |
$ | 405,004 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 RSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| 74,117 | | |
| | | |
| | | |
$ | 944,992 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 Retention RSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| 18,824 | | |
| | | |
| | | |
$ | 240,006 | |
| Gene Boxer | |
2/27/2019 | |
2/27/2019 | |
Annual Cash Incentive | |
$ | 0 | | |
$ | 250,000 | | |
$ | 500,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 PSU | |
| | | |
| | | |
| | | |
| | | |
| 31,765 | | |
| 63,530 | | |
| | | |
| | | |
| | | |
$ | 405,004 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 RSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| 74,117 | | |
| | | |
| | | |
$ | 944,992 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 Retention RSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| 23,529 | | |
| | | |
| | | |
$ | 299,995 | |
Monica
Cramér Manhem | |
2/27/2019 | |
2/27/2019 | |
Annual Cash Incentive | |
$ | 0 | | |
$ | 237,500 | | |
$ | 475,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 PSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| 31,765 | | |
| 63,530 | | |
| | | |
| | | |
| | | |
$ | 405,004 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 RSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| 74,117 | | |
| | | |
| | | |
$ | 944,992 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 Retention RSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| 15,580 | | |
| | | |
| | | |
$ | 198,645 | |
| Jeffrey W. Davis | |
2/27/2019 | |
2/27/2019 | |
Annual Cash Incentive | |
$ | 0 | | |
$ | 232,500 | | |
$ | 465,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 PSU | |
| | | |
| | | |
| | | |
| | | |
| 24,169 | | |
| 48,338 | | |
| | | |
| | | |
| | | |
$ | 308,155 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 RSU | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| 56,393 | | |
| | | |
| | | |
$ | 719,011 | |
| | |
2/27/2019 | |
2/27/2019 | |
2019 Retention RSU | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 10,588 | | |
| | | |
| | | |
$ | 134,997 | |
Allan
L. Waters(6) | |
— | |
— | |
Annual Cash Incentive | |
$ | 00 | | |
$ | 250,000 | | |
$ | 500,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| (1) | The “Approval Date” refers to the date on which the Compensation Committee approved
the equity grant. See “—Compensation Discussion and Analysis—Elements of 2019 NEO Compensation—Long-Term
Equity Incentive Compensation.” |
| (2) | The amounts reported for the annual cash incentive represent threshold, target and maximum cash
award levels set in 2019 under the 2019 annual cash incentive program. Please see Components of NEO 2019 Compensation – Annual
Cash Incentive for further information regarding the 2019 annual cash incentive program. |
| | |
| (3) | The amounts reported for the 2019 – 2021 LTIP represent the threshold, target
and maximum cash-denominated performance share awards payable under the 2018 Omnibus Incentive Plan with respect to the 2019 – 2021
performance cycle. For actively employed NEOs, these performance shares are scheduled to vest on December 31, 2021 based on ABVPS
and UROAE performance goals over the 2019 – 2021 performance cycle. |
| | |
| (4) | The grant of time based restricted share units cliff vests three years from the date of grant. |
| | |
| (5) | The amounts reported in this column reflect the fair value on the date of grant, and, for awards
subject to performance-based vesting conditions, based upon the probable outcome of the performance conditions as of the grant
date of the awards reported in the table, in all cases, calculated in accordance with FASB ASC Topic 718, Compensation—Stock
Compensation. |
| | |
| (6) | The amount reported for Mr. Waters reflects the 2019 cash incentive he received in connection with
his termination pursuant to his employment agreement. See “—Compensation Discussion and Analysis—Waters Separation
Agreement.” |
2019 Outstanding Equity Awards at
Fiscal Year-End
The following table sets forth information
concerning the outstanding equity awards held by the NEOs as of December 31, 2019.
| | |
| |
Option Awards | | Stock
Awards | |
| Name | |
Grant Date | |
Number of
securities
underlying
unxercised
options (#)
exercisable | | |
Number of
securities
underlying
unxercised
options (#)
unexercisable | | |
Equity
incentive
plan
awards;
number
of
securities
underlying
unexercised
unearned
options (#) | | |
Option
Exercise
Price | | |
Option
Exercise
Date | | |
Number
of Shares
or Units
That Have
Not
Vested (#) | | |
Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($) | | |
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
(#)(1) | | |
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)(1) | |
| Kernan V. Oberting. | |
8/6/2018(2) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 69,668 | | |
| 608,901 | |
| | |
2/27/2019(3) | |
| — | | |
| 1,374,945 | | |
| — | | |
| 12.75 | | |
| 2/27/2024 | | |
| — | | |
| — | | |
| — | | |
| — | |
| | |
2/27/2019(4) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 105,882 | | |
| 925,409 | |
| | |
2/27/2019(5) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 15,686 | | |
| 137,096 | | |
| — | | |
| — | |
| Ralph A. Salamone.. | |
8/6/2018(2) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 34,834 | | |
| 304,447 | |
| | |
2/27/2019(4) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 31,765 | | |
| 277,626 | |
| | |
2/27/2019(5) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 92,941 | | |
| 812,304 | | |
| — | | |
| — | |
| | |
| |
| | | |
| | | |
| — | | |
| — | | |
| — | | |
| — | | |
| | | |
| | | |
| | |
| Gene Boxer | |
8/6/2018(1) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 69,668 | | |
| 608,901 | |
| | |
2/27/2019(4) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 31,765 | | |
| 277,626 | |
| | |
2/27/2019(5) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 97,646 | | |
| 853,426 | | |
| — | | |
| — | |
Monica Cramèr
Manhem | |
8/6/2018(2) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 69,668 | | |
| 608,901 | |
| | |
2/27/2019(4) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 31,765 | | |
| 277,626 | |
| | |
2/27/2019(5) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 89,697 | | |
| 783,952 | | |
| — | | |
| — | |
| Jeffrey W. Davis | |
8/6/2018(2) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 30,479 | | |
| 266,389 | |
| | |
2/27/2019(4) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 24,169 | | |
| 211,237 | |
| | |
2/27/2019(5) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 66,981 | | |
| 585,414 | | |
| — | | |
| — | |
| Allan L Waters | |
8/6/2018(2) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 95,794 | | |
| 837,239 | |
| (1) | Market value is determined based on the December 31, 2019 closing stock price of $8.74 per
share. |
| | |
| (2) |
The awards reported in this row vest as follows: one-third on December 31, 2020; and two-thirds at the end of the performance period on December 31, 2021. These awards performance vest upon the ROE achieved for each performance period, except for the last performance period which one-third vests on the three-year average ROE. The awards, for the purposes of this table, are reported at target value. |
| |
|
| (3) | The stock options vest on the third anniversary of the grant date, February 27, 2022 and expire
on the fifth anniversary of the grant date, February 27, 2024. |
| | |
| (4) | The award reported in this row cliff-vests on December 31, 2021, the end of the performance period,
subject to the relevant performance conditions, ABVPS and UROAE, being satisfied and continued service. The awards for the purposes
of this table are reported at target value. |
| | |
| (5) | The award reported in this row cliff-vests on the third anniversary of the grant date, February
27, 2022. |
2019 Option Exercises and Shares Vested
There were no options exercised or common
shares vested in 2019.
2019 Pension Benefits
The Company does not provide any qualified
or nonqualified defined benefit pension plan participation to its NEOs.
2019 Nonqualified Deferred Compensation
Except as described below, none of our
NEOs participated in a nonqualified deferred compensation arrangement in 2019. The following table provides information regarding
a nonqualified deferred compensation plan provided to Ms. Cramér Manhem in Sweden for the year ended December 31, 2019.
| Name | |
Registrant Contributions in
Last Fiscal Year | | |
Aggregate Earnings in Last
Fiscal Year | | |
Aggregate Balance at Last
Fiscal Year End | |
| Monica Cramér Manhem | |
$ | 139,283 | | |
$ | 57,163 | | |
$ | 1,068,819 | (1) |
| (1) | Ms. Cramér Manhem is a Swedish resident and paid in Swedish Krona. The aggregate balance
at last fiscal year end has been converted to U.S. dollars using the December 31, 2018 spot rate of 8.94. |
Ms. Cramér Manhem participates in
a nonqualified deferred compensation plan for select employees in Sweden. Pursuant to the terms of Ms. Cramér Manhem’s
employment agreement, beginning in March 2014, Sirius Group makes an annual contribution to the plan in a minimum amount equal
to SEK 1,100,004 (or $121,482, based on a December 30, 2016 conversion rate), but adjusted to reflect cost of living adjustments
in Sweden. As noted above, the contribution rate for 2019 was $139,283. Ms. Cramér Manhem does not make any corresponding
contributions to the plan. Contributions are invested in a variety of generally available mutual funds and indexes, as selected
by Ms. Cramér Manhem. Payments from the plan will occur following Ms. Cramér Manhem’s retirement over
a payment period as selected by Ms. Cramér Manhem.
2019 Potential Payments Upon a Termination
or a Change in Control
The following table reflects the potential
payments and benefits to which each of our NEOs would be entitled in the event of a termination of his or her employment or change
in control of Sirius Group as of December 31, 2019. The amounts shown in the table below are estimates and were calculated assuming
that the termination of employment or change in control was effective as of December 31, 2019 based on the employment arrangement
that existed between Sirius Group and the respective NEO at such date. The actual amounts that would be paid to a NEO can only
be determined at the time of the termination of employment or change in control. The section entitled “Employment Arrangements”
below contains a summary of the material terms of the employment arrangements we have with each of our NEOs shown in the table
below, including terms related to any payments to which the NEO would be entitled in connection with a termination of his or her
employment or change in control of Sirius Group. In addition, as discussed below, the 2016 LTIP and the 2018 Omnibus Incentive
Plan provide for certain benefits upon a qualifying termination of employment. Please see the narrative following this table for
a summary of the compensation payable to Mr. Waters in connection with his separation.
| Name | |
Cash
Severance(1) | | |
Cash Incentive(2) | | |
Continuation
of Medical
Benefits(3) | | |
LTIP
Awards(4) | | |
Equity
Incentive
Awards(5) | | |
Other(6) | | |
Total | |
| Kernan (Kip) V. Oberting (7) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Death/Disability | |
| — | | |
$ | 137,500 | | |
| — | | |
$ | 691,940 | | |
$ | 1,513,200 | | |
| — | | |
$ | 2,342,460 | |
| Termination without Cause/for Good Reason | |
$ | 500,000 | | |
$ | 250,000 | | |
$ | 258,543 | | |
$ | 173,331 | | |
$ | 1,348,889 | | |
$ | 393,000 | | |
$ | 2,923,763 | |
| Retirement | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| CIC Qualifying Termination | |
$ | 1,000,000 | | |
$ | 250,000 | | |
$ | 258,543 | | |
$ | 1,729,849 | | |
$ | 2,183,466 | | |
$ | 393,000 | | |
$ | 5,814,858 | |
| Ralph A. Salamone | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Death/Disability | |
| — | | |
| — | | |
| — | | |
$ | 141,325 | | |
$ | 681,687 | | |
| — | | |
$ | 823,012 | |
| Termination without Cause/for Good Reason | |
$ | 1,300,000 | | |
$ | 200,000 | | |
| — | | |
$ | 35,402 | | |
$ | 576,464 | | |
| — | | |
$ | 2,111,866 | |
| Retirement | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| CIC Qualifying Termination | |
$ | 1,800,000 | | |
$ | 250,000 | | |
| — | | |
$ | 353,314 | | |
$ | 1,588,856 | | |
| — | | |
$ | 3,992,170 | |
| Name | |
Cash
Severance(1) | | |
Cash
Incentive(2) | | |
Continuation
of Medical
Benefits(3) | | |
LTIP
Awards(4) | | |
Equity
Incentive
Awards(5) | | |
Other(6) | | |
Total | |
| Gene Boxer | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Death/Disability | |
| — | | |
| — | | |
| — | | |
$ | 381,581 | | |
$ | 706,824 | | |
| — | | |
$ | 1,088,405 | |
| Termination without Cause/for Good Reason | |
$ | 1,500,000 | | |
$ | 225,000 | | |
$ | 32,971 | | |
$ | 95,586 | | |
$ | 601,596 | | |
| — | | |
$ | 2,455,153 | |
| Retirement | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| CIC Qualifying Termination | |
$ | 2,000,000 | | |
$ | 250,000 | | |
$ | 65,942 | | |
$ | 953,952 | | |
$ | 2,036,044 | | |
| — | | |
$ | 5,305,938 | |
| Monica Cramèr Manhem(8) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Death/Disability | |
| — | | |
$ | 47,500 | | |
| — | | |
$ | 333,247 | | |
$ | 1,476,455 | | |
| — | | |
$ | 1,857,202 | |
| Termination without Cause/for Good Reason | |
$ | 1,275,000 | | |
$ | 237,500 | | |
$ | 18,228 | | |
$ | 83,478 | | |
$ | 1,698,073 | | |
$ | 231,000 | | |
$ | 3,543,279 | |
| Retirement | |
| — | | |
| — | | |
$ | 18,228 | | |
$ | 83,478 | | |
$ | 1,698,073 | | |
$ | 231,000 | | |
$ | 2,030,779 | |
| CIC Qualifying Termination | |
$ | 1,750,000 | | |
$ | 237,500 | | |
$ | 18,228 | | |
$ | 833,117 | | |
$ | 1,966,550 | | |
$ | 231,000 | | |
$ | 5,036,395 | |
| Jeffrey W. Davis | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Death/Disability | |
| — | | |
| — | | |
| — | | |
$ | 290,333 | | |
$ | 498,720 | | |
| — | | |
$ | 789,053 | |
| Termination without Cause/for Good Reason | |
$ | 1,265,000 | | |
$ | 174,375 | | |
$ | 18,019 | | |
$ | 72,728 | | |
$ | 418,663 | | |
| — | | |
$ | 1,948,785 | |
| Retirement | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| CIC Qualifying Termination | |
$ | 1,730,000 | | |
$ | 232,500 | | |
$ | 36,038 | | |
$ | 725,831 | | |
$ | 1,222,598 | | |
| — | | |
$ | 3,946,967 | |
| (1) | For each NEO the amount payable upon a “CIC Qualifying Termination” represents a lump
sum payment equal to two times annual base salary in the event of a termination without cause or for good reason within 24 months
following a change in control in accordance with the Executive Severance Plan and the full payment of their cash retention award.
For each of Messrs. Oberting, Salamone, Boxer and Davis, the amount payable upon a termination without cause or for good reason
that is not a CIC Qualifying Termination represents continued annual base salary paid for one year and the full payment of their
cash retention awards in accordance with the Executive Severance Plan. Pursuant to the terms of their employment agreements, for
each of Mr. Oberting and Ms. Cramér Manhem, the amount payable upon a termination without cause or for good reason
that is not a “CIC Qualifying Termination” represents a lump sum payment equal to one times annual base salary and
for Ms. Cramér Manhem the payment of her cash retention award. |
| (2) | These amounts represent payments of each NEO’s annual cash incentive for the year in which
termination occurs, calculated based on actual performance through the end of such year. The cash incentives are paid in the fiscal
year following the year in which termination occurred and are paid at the same time that annual cash incentives are paid to other
cash incentive-eligible employees. For Messrs. Salamone Boxer and Davis, in the event of a termination without cause or for good
reason, payment is prorated based on the number of days worked in the year of termination. Pursuant to the terms of the employment
agreements for Mr. Oberting and Ms. Cramér Manhem, payment is not prorated in the event of such a termination, and
the NEO is eligible to receive the full amount. For all NEOs, payment is not prorated in the event of a CIC Qualifying Termination.
Ms. Cramér Manhem’s payments additionally will be no lower than target in the event of a termination without
cause or for good reason, whether or not following a change in control. Furthermore, Ms. Cramér Manhem’s representative
would be entitled to receive such a cash incentive in the event of her death. |
| (3) | These amounts represent payments to compensate Messrs. Salamone, Boxer and Davis for the difference
between monthly COBRA health continuation coverage premiums paid by the NEO and the monthly premiums paid by similarly situated
active participants. Such payments continue for a period of two years in the event of a CIC Qualifying Termination and one
year in the event of a termination without cause or for good reason that is not a CIC Qualifying Termination. With respect to Mr.
Oberting the amounts represent the cost to the Company for his share of the premium costs to continue medical benefits during the
term of the advisory period, and with respect to Ms. Cramér Manhem, this cost represents costs to the Company to continue
medical benefits during the term of the advisory period. The advisory period concludes, for Ms. Cramér Manhem, two years
from the date of termination, and for Mr. Oberting, on the date he becomes eligible for Medicare. |
| (4) | In the event of death/disability, the amounts reported for all NEOs, represent the pro-rata value
of the outstanding 2018 – 2020 LTIP awards at target. In the event of retirement, the amounts reported for
Ms. Cramér Manhem represent the full 2018 – 2020 LTIP awards at the forecasted value. In the event
of termination without cause or for good reason, the amounts reported in this column for all NEOs represent the 2018 – 2020
LTIP awards at the forecasted value, and with respect to Mr. Oberting and Ms. Cramér Manhem the full value of the 2018 – 2020
LTIP awards at the forecasted value pursuant to their employment agreements. In the event of a CIC Qualifying Termination, the
amounts reported represent the full 2018 – 2020 LTIP awards at the maximum value for the years earned
and the target amount for the years unearned. The amounts reported in this column do not include the value of the vesting
of the 2017 – 2019 LTIP awards, which awards were deemed vested and earned as of December 31, 2019. |
| (5) | The amounts reported in this column represent the treatment of the IPO Incentive Grant and the
2019 – 2021 restricted share units and performance shares in the event of: (i) death/disability or termination without
cause or for good reason, in which the full award is reported at the target value for each of Messrs. Oberting and Waters and Ms. Cramér
Manhem pursuant to their employment agreements; (ii) retirement, in which case the full award is reported at the target value for
each of Mr. Waters and Ms. Cramér Manhem pursuant to their employment agreements; and (iii) a CIC Qualifying Termination,
in which case the full award is reported at the target value for each of the NEOs pursuant to the 2018 Omnibus Incentive Plan. |
| (6) | For Mr. Oberting and Ms. Cramér Manhem, pursuant to the terms of their employment agreements,
these amounts represent payments that the NEO would receive under the advisory services arrangement following an applicable termination
of employment. For Ms. Cramér Manhem, the amounts additionally include the sum of the monthly payments she would receive
as consideration for her entering into non-compete restrictions for a period of six months after termination. For purposes
of this table, it is assumed that Ms. Cramér Manhem does not obtain any other employment and therefore receives monthly
payments equal to the maximum of 60% of her base salary calculated at the time of termination. If Ms. Cramér Manhem
does obtain employment during the post-termination non-compete period, these payments would be reduced by the amount of compensation
received from such other employment. |
| (7) | Mr. Oberting was awarded 1,374,945 stock options relating
to Sirius Group common shares. These options are not reflected in this table because the exercise price thereof ($12.75) exceeded
the closing stock price of our common shares on December 31, 2019 ($8.74). |
| (8) | Ms. Cramér Manhem’s employment agreement does not provide for any type of severance
in the event of the termination of her employment due to her disability. Therefore, while she would be entitled to the more favorable
severance benefits if her employment terminates due to her disability under the Executive Severance Plan. |
Employment Arrangements for Our NEOs
As of December 31, 2019, we had entered
into employment agreements with Mr. Oberting and Ms. Cramér Manhem that generally provide for minimum base salaries,
annual cash incentive and long term incentive opportunities under the Company’s annual cash incentive program and long term
incentive plans (subject to the achievement of annual performance goals) and severance benefits in the case of certain termination
events. As of December 31, 2019, Messrs. Boxer, Davis and Salamone were not parties to an employment agreement.
Kernan (Kip) V. Oberting
On January 30, 2019, the Company entered
into an employment agreement with Mr. Oberting, effective February 9, 2019.
Mr. Oberting’s employment agreement
has an initial three-year term and automatically extends for one-year terms, unless either party provides notice of non-renewal
at least 90 days prior to the expiration of the then-current term. The employment agreement binds Mr. Oberting to certain non-solicitation
and non-competition restrictions during the term of his employment and any period during which he provides advisory services (as
described below) and for a period of 12 months after the termination of his employment (or his advisory services, if any).
The employment agreement provides, among
other things, that if Sirius Group terminates Mr. Oberting due to disability, or the employment agreement terminates automatically
due to his death, Mr. Oberting will receive a pro-rata cash incentive for the year of termination based on actual performance,
and subject to his or his representative’s execution of a release, his outstanding equity awards will be treated in accordance
with the 2016 LTIP and the 2018 Omnibus Incentive Plan. In the event Mr. Oberting’s employment is terminated by Sirius Group
without “cause,” or Mr. Oberting terminates his employment for “good reason” (each, as defined in
the employment agreement), subject to his execution of a release, Sirius Group will pay to Mr. Oberting a lump sum equal to his
then-current annual base salary, and Mr. Oberting will receive an annual cash incentive (without pro ration for time) based on
actual performance but no less than the target cash incentive opportunity for the year of termination. In addition, if Mr. Oberting’s
employment terminates without cause or for good reason, or he retires with the consent of Sirius Group after attaining age 62 and
completing at least 10 years of service, subject to his execution of a release, he will be eligible to remain as an advisor to
Sirius Group under his employment agreement. The term of Mr. Oberting’s advisory services under his employment agreement
commences on a qualifying termination of employment and continues until the later of (i) the first date on which the expiration
of his COBRA participation under Sirius Group’s applicable health plan would result in immediate Medicare eligibility and
(ii) the last date on which his outstanding long-term incentive awards are eligible to vest in accordance with their terms. However,
the advisory services period will terminate automatically if Mr. Oberting obtains employment during such period, and the advisory
services period may also be terminated early for cause, due to death or disability, or by Mr. Oberting for any reason. During the
advisory services period, Mr. Oberting will receive an annual base salary of $30,000 and continued health care coverage,
and his outstanding long-term incentive awards will continue to vest in accordance with their terms. As of December 31, 2019, Mr.
Oberting was not eligible for this additional retirement payment.
Mr. Oberting commenced participation in
the Executive Severance Plan in February 2019. The Executive Severance Plan provides that, to the extent that Mr. Oberting’s
employment agreement entitles him to additional severance protections, he will continue to be eligible for the severance under
the employment agreement to the extent such severance does not result in duplicative benefits under the Executive Severance Plan.
Monica Cramér Manhem
In connection with our acquisition by CMIG
International, we entered into an employment agreement with Ms. Cramér Manhem, effective July 24, 2015. The employment agreement
does not have a fixed term. The employment agreement binds Ms. Cramér Manhem to certain non-solicitation and non-competition
restrictions during the term of her employment and any period during which she provides advisory services (as described below)
and for a period of six months after the termination of her employment (or her advisory services, if any). During the post-termination
non-compete period, Ms. Cramér Manhem is eligible to receive additional monthly payments from Sirius Group equal to the
difference between compensation received from any other employment and her base salary from Sirius Group, with no payment to exceed
60% of her monthly base salary at the time of such termination of employment, and which payments will equal 60% of such base salary
if she is not employed during such period. However, no monthly payments are available during any period during which Ms. Cramér
Manhem receives severance from Sirius Group or if her employment is terminated due to retirement or her material breach of the
employment agreement.
The employment agreement provides that
if Ms. Cramér Manhem’s employment terminates due to death, Ms. Cramér Manhem will receive a pro-rata cash incentive
for the year of termination based on actual performance, and her outstanding 2016 LTIP awards will be treated in accordance with
the 2016 LTIP. In the event Ms. Cramér Manhem’s employment is terminated by Sirius Group without “cause,”
or Ms. Cramér Manhem terminates her employment for “good reason” (each, as defined in the employment agreement),
subject to her execution of a release, Sirius Group will pay Ms. Cramér Manhem a lump sum equal to her then-current
annual base salary, and she will receive an annual cash incentive (without pro-ration for time) based on actual performance but
no less than the target cash incentive opportunity for the year of termination. In addition, if Ms. Cramér Manhem’s
employment terminates without cause or for good reason, or she retires with the consent of Sirius Group, subject to her execution
of a release, she will be eligible to remain as an advisor to Sirius Group under her employment agreement. The term of Ms. Cramér
Manhem’s advisory services under her employment agreement commences on a qualifying termination of employment and continues
until the earlier of the second anniversary of such termination and the last date on which her outstanding long-term incentive
awards are eligible to vest in accordance with their terms. However, the advisory services period will terminate automatically
if Ms. Cramér Manhem obtains employment during such period, and the advisory services period may also be terminated early
for cause, due to death, or by Ms. Cramér Manhem for any reason. During the advisory services period, Ms. Cramér
Manhem will receive an annual base salary of $30,000 and continued health care coverage, and her outstanding long-term incentive
awards will continue to vest in accordance with their terms. The employment agreement also provides that in the event of Ms. Cramér
Manhem’s retirement between the ages of 64 and 65, Ms. Cramér Manhem will receive an additional payment equal
to 75% of her pensionable salary, as determined under the occupational pension plan provided in Sweden. As of December 31, 2019,
Ms. Cramér Manhem was not eligible for this additional retirement payment.
As of December 31, 2019, Ms. Cramér
Manhem was a participant in the Company’s Executive Severance Plan, as described below. The Executive Severance Plan provides
that, to the extent that Ms. Cramér Manhem’s employment agreement entitles her to additional severance protections,
she will continue to be eligible for the severance under the employment agreement to the extent such severance does not result
in duplicative benefits under the Executive Severance Plan.
Executive Severance Plan
In September 2018, Sirius Group adopted
the Executive Severance Plan, which provides for severance terms applicable to each of our participating NEOs relating to severance
and post-employment benefits provided upon certain termination events. All of our NEOs currently participate in the Executive Severance
Plan. In general, the Executive Severance Plan provides our NEOs with severance in the event of an involuntary termination without
cause or a resignation by the NEO for good reason. For these qualifying terminations of employment prior to a change in control,
our NEOs will receive severance benefits equal to one times base salary, any earned but unpaid annual cash incentive for the year
prior to termination, a pro-rata annual cash incentive for the year of termination with the payout
for such cash incentive based
on actual performance, and medical continuation benefits for 12 months. In the event of such a qualifying termination of employment
within 24 months following a change in control, the severance benefits are the same, except (i) the severance pay is increased
to two times base salary; (ii) the medical continuation period is increased to two years for the NEOs; (iii) the prorated annual
cash incentive for the year of termination is paid at the target level of performance; and (iv) all outstanding equity compensation
awards will become fully vested, with the attainment or deemed attainment of any applicable performance conditions determined under
the terms of the applicable equity compensation plan or award agreements. Our NEOs may also be entitled to more limited severance
benefits in the event the Company chooses to enforce the non-compete restrictive covenant upon a resignation of the NEO without
good reason. In such event, our NEOs will receive base salary and health benefits during the term of the non-compete. In all cases,
in order to be eligible to receive severance payments, pursuant to the Executive Severance Plan, the NEO must execute a release
in the Company’s favor.
The Executive Severance Plan provides that,
to the extent that Mr. Oberting’s or Ms. Cramér Manhem’s employment agreements provide additional severance
protections, they will continue to receive the employment agreement severance protections, to the extent they do not result in
duplicative benefits under the Executive Severance Plan.
Waters Separation Agreement
On January 30, 2019, the Board approved
a succession plan pursuant to which Mr. Oberting replaced Mr. Waters as CEO of the Company, effective as of February 9, 2019. As
Mr. Waters’ separation was a termination without “cause” (as defined in his employment agreement), he received
a lump sum payment equal to his annual base salary immediately before his separation ($500,000). Additionally, at the time that
2019 annual cash incentives were paid to other cash incentive-eligible employees, Mr. Waters received a payment equal to his target
incentive ($250,000). Pursuant to Mr. Waters’ employment agreement and in accordance with the terms relating to advisory
services as described in the foregoing paragraph, he will provide advisory services to the Company for a period of time during
which period he will continue to vest in pending long-term incentive awards in accordance with his employment agreement (estimated
value of $9,812,295, based on the closing stock price of $14.50 on January 30, 2019), be paid $30,000 per year and receive continued
health care coverage (estimated value of $8,596 for the advisory period).
2016 LTIP
The 2016 LTIP under which the NEOs hold
outstanding performance shares provides for accelerated or continued vesting of outstanding equity awards upon certain qualifying
terminations of employment. In general, each performance share award is subject to a three-year performance cycle but may be accelerated
in the case of a termination due to disability, retirement or death. If a participant dies or becomes disabled, the performance
shares will immediately accelerate on a pro-rata basis. If a participant retires, then the 2016 LTIP provides that the Compensation
Committee may accelerate vesting in its sole discretion. In addition, as noted in the “Employment Arrangements” section
above, Mr. Oberting and Ms. Cramér Manhem’s employment agreements provide for continued vesting during a period of
service as an advisor following a termination without cause, a resignation for good reason or retirement with the consent of Sirius
Group (and in the case of Mr. Oberting, retirement also requires him to meet certain age and service requirements). In the event
that an NEO experiences a termination without cause or constructive termination or there is an adverse change to the 2016 LTIP,
each within 24 months following a change in control, the portion of each outstanding award for which time-based vesting has already
occurred will pay out at the maximum, and the remaining portion will immediately accelerate on a pro-rata basis at the greater
of actual performance and target, with the underlying share value determined based on the greatest of the value of a common share:
(A) immediately prior to the change in control; (B) five business days after the change in control; and (C) on the date of termination.
The 2016 LTIP was amended in 2018 to provide
for continued vesting in the case of a termination by the Company without cause or by the participant for good reason other than
during the 24-month period following a change in control. For these qualifying terminations of employment, our NEOs will continue
to vest in outstanding awards for 12 months following such termination of employment. The ability to receive payments during these
vesting continuation periods will be subject to actual performance.
2018 Omnibus Incentive Plan
Subject to the terms of the applicable
award agreement, upon a “change in control” (as defined in the 2018 Omnibus Incentive Plan), the Board may, in its
discretion, determine whether some or all outstanding options and share appreciation rights will become exercisable in full or
in part, whether the restriction period and performance period applicable to some or all outstanding restricted share awards and
restricted share unit awards will lapse in full or in part and whether the performance measures applicable to some or all outstanding
awards will be deemed to be satisfied. The Board may further require that shares of stock of the surviving entity resulting from
such a change in control, or a parent thereof, be substituted for some or all of the common shares subject to an outstanding award
and that any outstanding awards, in whole or in part, be surrendered to us by the holder and be immediately cancelled by us in
exchange for a cash payment, shares of capital stock of the corporation resulting from or succeeding us or a combination of both
cash and such shares of stock.
CEO Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, the Company is providing the following disclosure about the relationship of the
annual total compensation of our coworkers to the annual total compensation of Mr. Oberting, our CEO.
We selected December 31, 2019 to identify
our median employee. To identify our median employee, we determined the sum of 2019 gross annual compensation, which included base
salary, annual cash incentive and equity-based incentive award for each individual, excluding Mr. Oberting, who were employed by
us on December 31, 2019. As of December 31, 2019, we employed 1,075 people worldwide. For our employees who were paid in currency
other than U.S. dollars, these amounts were converted into U.S. dollars at the applicable exchange rate on December 31, 2019.
We included all employees, whether full-time or part-time. We annualized the compensation for full-time and part-time employees
that were not employed by us for all of 2019. Once we identified the median employee, we calculated such employee’s compensation
in accordance with the rules used to calculate compensation for purposes of the 2019 Summary Compensation Table. Although Mr. Oberting
was promoted to the position of CEO following the commencement of 2019, we did not annualize his compensation, as he did not receive
a base salary, bonus or long-term incentives during 2019. The following table sets forth the ratio of Mr. Oberting’s annual
total compensation as reported in the 2019 Summary Compensation Table to the annual total compensation of our median employee,
calculated in accordance with the Summary Compensation Table rules, for fiscal year 2019.
| | |
Annual Total Compensation | |
| Kernan V. Oberting | |
$ | 5,426,748 | |
| Median Employee | |
$ | 95,010 | |
| Ratio | |
| 57:1 | |
ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information
regarding the beneficial ownership of Sirius Group common shares and Series B preference shares as of April 1, 2020, by:
| • | each person who is the beneficial owner of more than 5% of the Company’s common shares and
Series B preference shares; |
| • | each person who is a named executive officer or director; and |
| • | all executive officers and directors as a group. |
Beneficial ownership is determined according
to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses
sole or shared voting or investment power over that security, including options and warrants that are currently exercisable or
exercisable within 60 days. As of April 1, 2020, there were 115,299,341 common shares and 11,901,670 Series B preference shares
of Sirius Group outstanding. Unless otherwise indicated below, the address of each named person is c/o Sirius International Insurance
Group, Ltd., 14 Wesley Street, Hamilton HM 11, Bermuda.
Percentage of total voting power represents
voting power with respect to all shares of Sirius Group common shares and Series B preference shares, voting as a single class.
Each holder of common shares is entitled to one vote for each common share held on the record date. Each holder of Series B preference
shares is entitled to the number of votes equal to the number of common shares into which the preference shares are then convertible
as of the record date. As of the record date, each share of Series B preference shares was convertible into one common share.
| | |
Common Shares | | |
Series B Preference Shares | | |
| |
| Name of Beneficial Owner(1) | |
Number of
Shares | | |
% of Class | | |
Number of
Shares | | |
% of Class | | |
% of Total
Voting Power | |
CM Bermuda Ltd.(2)
Cannon’s Court
22 Victoria Street
Hamilton, HM12, Bermuda
CMIG International
8 Marina Boulevard #13-01,
Marina Bay Financial Centre, Tower 1
Singapore 018981. | |
| 110,480,720 | | |
| 96 | % | |
| — | | |
| — | | |
| 87 | % |
| Allan L. Waters (3) | |
| 500,000 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Kernan (Kip) V. Oberting | |
| 132,322 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Ralph A. Salamone | |
| 7,129 | | |
| | | |
| | | |
| | | |
| | |
| Gene Boxer | |
| 8,049 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Monica Cramér Manhem | |
| 20,267 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Jeffrey W. Davis(4) | |
| 63,474 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Sabrina Maguire | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Robert L. Friedman(5) | |
| 42,953 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Meyer (Sandy) Frucher(5) | |
| 17,377 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Alain Karaoglan(5) | |
| 9,728 | | |
| * | | |
| — | | |
| — | | |
| * | |
| Rachelle Keller(5) | |
| 9,728 | | |
| * | | |
| — | | |
| — | | |
| * | |
| James (Jim) B. Rogers, Jr.(5) | |
| 10,832 | | |
| * | | |
| — | | |
| — | | |
| * | |
Bain Capital Special Situations Asia, L.P.(6)
200 Clarendon Street
Boston, MA 02116 | |
| 832,127 | | |
| * | | |
| 1,451,423 | | |
| 12 | % | |
| 1.7 | % |
CCOF On-Shore Co-Borrower LLC(7)
1001 Pennsylvania Avenue, N.W.,
Suite 220 South Washington, D.C. 20004 | |
| 1,799,701 | | |
| 1.5 | % | |
| 3,483,416 | | |
| 29 | % | |
| 4 | % |
Centerbridge Credit Partners Master, LP(8)
375 Park Avenue, 11th Floor
New York, NY 10152 | |
| 1,247,757 | | |
| 1 | % | |
| 2,673,870 | | |
| 22 | % | |
| 3 | % |
Centerbridge Special Credit Partners III, LP(9)
375 Park Avenue, 11th Floor
New York, NY 10152 | |
| 377,773 | | |
| * | | |
| 809,546 | | |
| 7 | % | |
| * | |
GPC Partners Investments (Canis) LP(10)
660 Steamboat Road
Greenwich, CT 06830 | |
| 1,625,530 | | |
| 1.3 | % | |
| 3,483,415 | | |
| 29 | % | |
| 4 | % |
| All directors and executive officers as a group (12 individuals) | |
| 811,859 | | |
| * | | |
| — | | |
| — | | |
| * | |
| (1) | Except as described in the footnotes below and subject to applicable community property laws and
similar laws, Sirius Group believes that each person listed above has sole voting and investment power with respect to such shares. |
| (2) | CM Bermuda is a direct wholly owned subsidiary of CMIG International. The Board of CMIG International,
which is comprised of seven members exercises voting and dispositive control over the common shares held by CM Bermuda. |
| (3) | Information provided is based upon most recent records of the Company. |
| (4) | Mr. Davis shares voting and investment power with his spouse. |
| (5) | Includes the following restricted shares granted to Messrs. Friedman, 6,923, Frucher, 6,923, Karaoglan,
6,923, and Rogers, 6,923, and Ms. Keller, 6,923, on May 23, 2019 and 2,424 restricted shares granted to Mr. Frucher on August
22, 2019 and which will vest on the date of the annual meeting. |
| (6) | Includes 541,843 common shares issuable upon exercise of warrants. |
| (7) | Includes 1,625,531 common shares issuable upon exercise of warrants. CCOF Master LLP, an affiliate
of CCOF On-Shore Co-Borrower LLC, holds 174,170 common shares. |
| (8) | Includes 1,247,757 common shares issuable upon exercise of warrants. |
| (9) | Includes 377,773 common shares issuable upon exercise of warrants. |
| (10) | Includes 1,625,530 common shares issuable upon exercise of warrants. |
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth certain
information as of December 31, 2019 about our common shares that may be issued upon the settlement of equity awards under all compensation
plans under which equity securities are reserved for issuance.
| Plan Category | |
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights (a)(1) | | |
Weighted-average
exercise price of
outstanding
options,
warrants and
rights (b) | |
Number of
securities
remaining available
for future issuance
under equity
compensation
plans (excluding
securities reflected
in column (a)) (c)(2) | |
| Equity compensation plans approved by security holders | |
| 3,839,124 | | |
N/A | |
| 6,930,483 | |
| Equity compensation plans not approved by security holders | |
| N/A | | |
N/A | |
| N/A | |
| Total | |
| 3,839,124 | | |
N/A | |
| 6,930,483 | |
| (1) | Reflects the target number of common shares of the Company to be awarded upon the vesting of any
performance share units at target performance; actual vesting is based upon actual performance relative to target and can vary
between 0% and 150%. This column excludes shares that may be issued pursuant to outstanding performance shares under the 2016 LTIP.
When vested, (i) each performance share will be valued at the market price at time of payout and (ii) the Compensation Committee
has discretion to settle these awards in common shares, rather than cash. |
| (2) | Includes shares reserved for issuance under the 2018 Omnibus Incentive Plan and the 2016 LTIP.
As noted above, the Compensation Committee retains the discretion to settle outstanding awards under the 2016 LTIP in common shares.
No further equity awards will be made under the 2016 LTIP. The maximum number of shares that may be issued in connection with the
outstanding performance shares granted under the 2016 LTIP is 3,342,873. |
ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Related Person Transactions
The information required under this Item
regarding related person transactions is discussed above under “Item 10—Corporate Governance—Related Person Transactions.”
Independence of Directors
The information required under this Item
regarding the independence of directors is discussed above under “Item 10—Corporate Governance—Independence of
Directors.”
ITEM 14. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
REPORT OF THE AUDIT & RISK MANAGEMENT
COMMITTEE
The following Report of the Audit &
Risk Management Committee does not constitute “soliciting material” and shall not be deemed “filed” or
incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”),
or the Securities Exchange Act, except to the extent the Company specifically requests that the information be treated as soliciting
material or specifically incorporates such information by reference into a document filed under the Securities Act or the Exchange
Act.
Management is responsible for the preparation
and presentation of Sirius Group’s consolidated financial statements, its accounting and financial reporting principles and
for the establishment and effectiveness of internal controls and procedures designed to ensure compliance with accounting standards
and applicable laws and regulations. The independent auditor is responsible for performing an audit of the consolidated financial
statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”)
and expressing an opinion on the conformity of the audited consolidated financial statements with generally accepted accounting
principles of the United States of America and expressing an opinion on the effectiveness of internal control over financial reporting.
The independent auditors have free access to the Audit & Risk Management Committee to discuss any matters they deem appropriate.
The purposes of the Audit & Risk Management
Committee is to assist the Board in its oversight of:
| • | The Company’s accounting and financial reporting processes and the audit of the Company’s
financial statements; |
| • | The Company’s compliance with legal and regulatory requirements; |
| • | The qualifications, independence and performance of the Company’s external independent auditor; |
| • | The performance of the Company’s internal auditing department; and |
| • | The Company’s enterprise risk management, including the significant policies, procedures,
and practices employed to manage cyber risk, liquidity risk, credit risk, market risk, operational risk and insurance risk. |
The Audit & Risk Management Committee
has established a charter which outlines its primary duties and responsibilities. The Audit & Risk Management Committee Charter,
which has been approved by the Board, is reviewed at least annually, is updated as necessary and is available for viewing at http://ir.siriusgroup.com/.
In the performance of its oversight function,
the Audit & Risk Management Committee has considered and discussed with management and the Company’s independent auditor,
PricewaterhouseCoopers LLP (“PwC”), the Company’s audited consolidated financial statements for
the year ended December 31, 2019, and the Company’s disclosures in the section entitled “Management’s Discussion
and Analysis of Results of Operations and Financial Condition” in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2019. The Audit & Risk Management Committee has met with each of the Company’s Senior Vice President,
Global Head of Internal Audit and PwC’s senior engagement partner, with and without management present, to discuss audit
results, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting.
In addition, the Audit & Risk Management Committee has discussed with PwC the matters required to be discussed pursuant to
the applicable requirements of the PCAOB and the SEC. Finally, the Audit & Risk Management Committee has received the written
disclosures and the letter from PwC required by the applicable requirements of the PCAOB regarding the independent accountant’s
communications with the Audit & Risk Management Committee concerning independence, and has discussed with PwC the firm’s
independence from the Company.
Based upon the reports and discussion described
in this report, the Audit & Risk Management Committee, in accordance with its responsibilities, recommended to the Board, and
the Board approved, inclusion of the audited financial statements for the year ended December 31, 2019 in Sirius Group’s
2019 Annual Report on Form 10-K.
AUDIT & RISK MANAGEMENT COMMITTEE
Rachelle C. Keller (Chair)
Robert L. Friedman
Alain M. Karaoglan
INDEPENDENT REGISTERED CERTIFIED PUBLIC
ACCOUNTING FIRM
The services performed by PwC in 2019 and
2018 are described below. PwC does not provide any services to the Company prohibited under applicable laws and regulations. From
time to time, PwC may perform permissible consulting services for the Company, provided they have been pre-approved in accordance
with the policy described below. To the extent consulting services are provided by PwC, they are closely monitored and controlled
by both management and the Audit & Risk Management Committee to ensure that their nature and extent do not interfere with the
independence of PwC. The independence of PwC is also considered annually by the Audit & Risk Management Committee.
Aggregate fees for professional services
rendered by PwC for the years ended December 31, 2019 and 2018 were:
| | |
Total Fees Year Ended
December 31, | |
| | |
2019 | | |
2018 | |
| | |
(in thousands) | |
| Audit fees(a) | |
$ | 4,851,831 | | |
$ | 9,106,659 | |
| Audit-related fees(b) | |
| 89,165 | | |
| 100,688 | |
| Tax fees(c) | |
| 126,138 | | |
| 164,467 | |
| All other fees(d) | |
| 16,111 | | |
| 33,742 | |
| Total | |
$ | 5,083,246 | | |
$ | 9,405,556 | |
| (a) | The fees in this category were for professional services rendered in connection with (i) the audits
of the Company’s annual financial statements, (ii) the review of the Company’s quarterly financial statements included
in its Quarterly Reports on Form 10-Q, (iii) audits of the Company’s subsidiaries, (iv) engagements required by federal,
state or foreign regulatory agencies, and (v) services that generally only the Company’s independent registered public accounting
firm reasonably can provide, such as comfort letters and consents. Fees for fiscal year 2018 also consisted of professional services
rendered in connection with the filing of the Company’s Registration Statements on Forms S-1 and S-4 in connection with the
Merger. The fees reported include expense reimbursements of out-of-pocket expenses of $75,463 and $89,127 in 2019 and 2018,
respectively. |
| (b) | The fees in this category were for professional services rendered in connection with (i) actuarial
certifications of loss reserves in 2019 and 2018. |
| (c) | The fees in this category were for professional services rendered in connection with tax consulting,
planning and compliance services. |
| (d) | The fees in this category were for access to PwC’s proprietary technical research and actuarial
software. |
The Audit & Risk Management Committee,
pursuant to its policy, pre-approves the scope and fees for all services performed by PwC. Annually, the Audit & Risk Management
Committee receives and pre-approves a report describing the engagement terms and fees of audit services to be provided by PwC.
All other audit, audit-related and non-audit-related services rendered by PwC also require pre-approval. Such pre-approval can
be given as part of the Audit & Risk Management Committee’s approval of the scope of the engagement of the independent
registered certified public accounting firm or on an individual basis.
The Audit & Risk Management Committee
is authorized to delegate the pre-approval of audit and permitted non-audit services to one or more of its members and, pursuant
to this authority, provided that any decisions to pre-approve any audit or non-audit services must be presented to the full Audit
& Risk Management Committee at its next scheduled meeting. The Audit & Risk Management Committee pre-approved all of the
non-audit services provided by PwC in 2019 and 2018.
The Audit & Risk Management Committee
has considered and determined that the services provided by PwC are compatible with maintaining PwC’s independence.
PART IV
ITEM 15. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
(a) The consolidated financial statements
and financial statement schedule filed as part of the Original 10-K are listed in the Index accompanying the Consolidated Financial
Statements in the Original 10-K.
(b) The exhibits listed in Part IV, Item 15(b)
of the Original 10-K and the exhibits listed below are filed with, or incorporated by reference into, this report.
The following exhibits are filed as part
of this Amendment to Form 10-K.
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
| |
|
SIRIUS INTERNATIONAL INSURANCE GROUP, LTD. |
| |
|
(Registrant) |
| |
|
|
| |
By: |
/s/Ralph A. Salamone |
| |
|
Name: Ralph A. Salamone |
| |
|
Title: Chief Financial Officer |
Date: April 21, 2020
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/ Kernan (Kip) V. Oberting |
|
President, Chief Executive Officer and Director |
|
April 21, 2020 |
| Kernan (Kip) V. Oberting |
|
(Principal Executive Officer) |
|
|
| |
|
|
|
|
| /s/ Ralph A. Salamone |
|
Executive Vice President and Chief Financial Officer |
|
April 21, 2020 |
| Ralph A. Salamone |
|
(Principal Financial Officer and Chief Accounting Officer) |
|
|
| |
|
|
|
|
| /s/ Meyer (Sandy) Frucher |
|
Director |
|
April 21, 2020 |
| Meyer (Sandy) Frucher |
|
|
|
|
| |
|
|
|
|
| /s/ Sabrina Maguire |
|
Director |
|
April 21, 2020 |
| Sabrina Maguire |
|
|
|
|
| |
|
|
|
|
| /s/ Robert L. Friedman |
|
Director |
|
April 21, 2020 |
| Robert L. Friedman |
|
|
|
|
| |
|
|
|
|
| /s/ Alain M. Karaoglan |
|
Director |
|
April 21, 2020 |
| Alain M. Karaoglan |
|
|
|
|
| |
|
|
|
|
| /s/ Rachelle C. Keller |
|
Director |
|
April 21, 2020 |
| Rachelle C. Keller |
|
|
|
|
| |
|
|
|
|
| /s/ James (Jim) B. Rogers, Jr |
|
Director |
|
April 21, 2020 |
| James (Jim) B. Rogers, Jr. |
|
|
|
|