ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
As previously disclosed, Bradley I. Meier resigned from his positions as
Chairman, President and Chief Executive Officer of Universal Insurance Holdings,
Inc. ("Company"), effective as of the close of business on February 22, 2013, to
pursue opportunities outside the residential homeowners insurance industry.
As expected, the Board of Directors appointed Sean P. Downes to succeed
Mr. Meier as President and Chief Executive Officer of the Company, effective as
of the close of business on February 22, 2013. Mr. Downes will remain a director
of the Company.
In addition, effective as of the close of business on February 22, 2013, Norman
M. Meier resigned as Secretary and a director of the Company. There was no
disagreement or dispute between Mr. Norman Meier and the Company which led to
his decision to resign.
Mr. Downes, age 43, has been the Company's Senior Vice President, Chief
Operating Officer and a director since January 2005, and Chief Operating Officer
and a director of Universal Property & Casualty Insurance Company, a wholly
owned subsidiary of the Company, since July 2003. Mr. Downes was Chief Operating
Officer of Universal Adjusting Corporation, a wholly owned subsidiary of the
Company, from July 1999 to July 2003. During that time Mr. Downes created the
Company's claims operation. Before joining the Company in July 1999, Mr. Downes
was Vice President of Downes and Associates, a multi-line insurance claims
adjustment corporation.
Mr. Downes and the Company entered into an amended and restated employment
agreement, effective as of February 22, 2013 ("Downes Agreement"). The Downes
Agreement replaces Mr. Downes' prior employment agreement with the Company and
provides that Mr. Downes will serve as the Company's President and Chief
Executive Officer and perform all duties commensurate with such positions or as
assigned to him from time to time by the Board of Directors.
The Downes Agreement is effective through December 31, 2015, unless earlier
terminated in accordance with its terms. During the term, Mr. Downes will
receive an annual base salary of $2,000,000, which will increase by 7.25% on
each of January 1, 2014 and January 1, 2015 over the rate then in effect.
Mr. Downes will also receive an annual performance bonus of 3% of the Company's
pre-tax income up to $5,000,000 and 4% of the Company's pre-tax income over
$5,000,000, subject to the Company's shareholders approving the bonus formula at
the Company's 2013 annual meeting of shareholders. Should the Company's
shareholders fail to approve the bonus formula, Mr. Downes will receive an
annual performance bonus equal to 3% of the Company's pretax income, as provided
in Mr. Downes' prior employment agreement. Mr. Downes will receive a total of
1,500,000 restricted shares of Company common stock in three separate grants.
The shares will vest over a period of three years, with 500,000 of the shares
also subject to the achievement of performance-based vesting standards.
Mr. Downes' receipt of such shares is subject to his continued employment
through the applicable vesting date.
Mr. Downes will also receive health and welfare benefits, an automobile
allowance, annual paid vacation of up to thirty (30) days per year, and
reimbursement for travel and related expenses.
In the event of a change in control of the Company during the term of the Downes
Agreement, and Mr. Downes is involuntarily terminated without cause or resigns
for good reason within twenty-four (24) months after such change in control, the
Company will be obligated to pay Mr. Downes a lump sum cash amount equal to 48
months base salary, plus two times any bonuses paid for the preceding fiscal
year. Such amounts are subject to adjustment pursuant to certain sections of the
Internal Revenue Code. Further, in the event of a change in control, all options
held by Mr. Downes vest and become immediately exercisable.
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The Downes Agreement includes confidentiality, non-competition and
non-solicitation provisions that will apply for two years following termination
of Mr. Downes' employment and other customary provisions.
Also as expected, the Board of Directors appointed Jon W. Springer as Senior
Vice President and Chief Operating Officer of the Company, effective as of the
close of business on February 22, 2013. The Board of Directors also elected
Mr. Springer a director of the Company to fill the vacancy created by
Mr. Bradley Meier's resignation, effective as of the close of business on
February 22, 2013. Mr. Springer, age 43, was Executive Vice President of
Universal Risk Advisors, Inc., a wholly-owned subsidiary of the Company, from
June 2006 through March 2008, and has been the Executive Vice President of Blue
Atlantic Reinsurance Corporation, a wholly-owned subsidiary of the Company,
since March 2008. Before joining Universal Risk Advisors, Inc., Mr. Springer was
an Executive Vice President of Willis Re, Inc. and was responsible for managing
property and casualty operations in its Minneapolis office.
Mr. Springer and the Company entered into a new employment agreement, effective
as of February 22, 2013 ("Springer Agreement"). The Springer Agreement replaces
Mr. Springer's prior employment agreement with Blue Atlantic Reinsurance
Corporation and provides that Mr. Springer will serve as the Company's Senior
Vice President and Chief Operating Officer and perform all duties commensurate
with such positions and report to the Chief Executive Officer.
The Springer Agreement is effective through December 31, 2014, unless terminated
in accordance with its terms. During the term, Mr. Springer will receive an
annual base salary of $1,250,000, which will be increased by 7.25% on January 1,
2014. Mr. Springer will also receive an annual performance bonus of 2.5% of the
Company's pretax income, subject to the Company's shareholders approving the
bonus formula at the Company's 2013 annual meeting of shareholders. Mr. Springer
will receive a total of 500,000 restricted shares of Company common stock in two
separate grants vesting over the term of the Springer Agreement. Mr. Springer's
receipt of such shares is subject to his continued employment through the
applicable vesting date.
Mr. Springer will also receive health and welfare benefits, an automobile
allowance, annual vacation of up to three (3) weeks per year, and reimbursement
for travel and related expenses.
In the event that, in connection with a change in control of the Company during
the term of the Springer Agreement, Mr. Springer is involuntarily terminated
without cause or resigns for good reason within twenty-four (24) months after
such change in control, the Company will be obligated to pay Mr. Springer a lump
sum cash amount equal to 48 months base salary, plus two times any bonuses paid
for the preceding fiscal year. Such amounts are subject to adjustment pursuant
to certain sections of the Internal Revenue Code. Further, in the event of a
change in control, all options held by Mr. Springer vest and become immediately
exercisable.
The Springer Agreement includes confidentiality, non-disparagement,
non-solicitation and non-competition provisions that will apply for at least one
year following termination of Mr. Springer's employment and other customary
provisions.
Mr. Norman Meier and the Company entered into an employment agreement, effective
as of February 22, 2013 ("Meier Agreement"). The agreement provides that Mr.
Norman Meier shall continue to serve as an employee of the Company and provide
marketing and consulting services to the Company and report to the Chief
Executive Officer.
The Meier Agreement is effective through December 31, 2017, and thereafter is
renewable for successive one-year intervals upon the mutual agreement of Mr.
Norman Meier and the Company, but in no event will the term of the Meier
Agreement extend beyond December 31, 2022. The Agreement may be terminated in
accordance with its terms. During the term, Mr. Norman Meier will receive an
annual base salary of $85,000 and is eligible for an annual bonus as determined
in the Company's sole discretion. Mr. Norman Meier will also receive health and
welfare benefits and reimbursement for travel and related expenses.
The Meier Agreement includes confidentiality, non-disparagement,
non-solicitation and non-competition provisions that will apply for at least one
year following termination of Mr. Norman Meier's employment and other customary
provisions.
The preceding summary of the Meier Agreement does not purport to be complete and
is qualified in its entirety by reference to the full text of the Meier
Agreement, which is attached hereto as Exhibit 10.3 is incorporated herein by
reference.
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The preceding summaries of the Downes Agreement, Springer Agreement and Meier
Agreement do not purport to be complete and are qualified in their entirety by
reference to the full text of the Downes Agreement, Springer Agreement and Meier
Agreement, which are attached hereto as Exhibit 10.1, Exhibit 10.2 and Exhibit
10.3, respectively, and are incorporated herein by reference.
ITEM 7.01 Regulation FD Disclosure
The Company is disclosing under Item 7.01 of this Current Report on Form 8-K
information contained in the press release filed as Exhibit 99.1 to this report.
The information furnished pursuant to, and incorporated by reference in, this
Item 7.01 shall not be deemed to be "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended ("Exchange Act") or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, regardless of any general incorporation language in such filing,
except as shall be expressly set forth by specific reference in such filing.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits:
10.1 Amended and Restated Employment Agreement, dated February 22, 2013, by and
between Mr. Downes and the Company
10.2 Employment Agreement, dated February 22, 2013, by and between Mr. Springer
and the Company
10.3 Employment Agreement, dated February 22, 2013, by and between Mr. Norman
Meier and the Company
99.1 Press Release, dated February 22, 2013
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