EX-99.1
Exhibit 99.1
ASPEN
INSURANCE HOLDINGS LIMITED
Notice
of 2011 Annual General Meeting of Shareholders
and
Proxy Statement
TABLE OF CONTENTS
ASPEN
INSURANCE HOLDINGS LIMITED
Maxwell Roberts Building
1 Church Street
Hamilton HM11
Bermuda
NOTICE
OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 2011
To our Shareholders:
The annual general meeting of shareholders (the
Shareholders) of Aspen Insurance Holdings Limited
(the Company or Aspen Holdings) will be
held at the offices of the Company, Maxwell Roberts Building, 1
Church Street, Hamilton HM11, Bermuda on April 28, 2011 at
12.00 p.m. Bermuda time (the Annual General
Meeting) for the following purposes:
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1.
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To put to the shareholders a non-binding advisory
Say-On-Pay
vote;
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2.
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To re-elect Mr. Christopher OKane, Mr. John
Cavoores, Mr. Liaquat Ahamed, and Ms. Heidi Hutter and
to elect Mr. Albert Beer as Class I directors of the
Company;
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3.
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To re-appoint KPMG Audit plc, London, England, to act as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2011 and to authorize
the Board of Directors through the Audit Committee to set the
remuneration for the independent registered public accounting
firm;
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4.
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To approve the 2011 Share Incentive Plan; and
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5.
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To consider such other business as may properly come before the
Annual General Meeting or any adjournments thereof.
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The Company will also lay before the meeting the financial
statements of the Company for the year ended December 31,
2010 pursuant to the provisions of the Bermuda Companies Act of
1981 and the Companys Bye-Laws.
The close of business on March 1, 2011 has been fixed as
the record date for determining the Shareholders entitled to
notice of and to vote at the Annual General Meeting or any
adjournments thereof. For a period of at least 10 days
prior to the Annual General Meeting, a complete list of
Shareholders entitled to vote at the Annual General Meeting will
be open for examination by any Shareholder during ordinary
business hours at the offices of the Company at Maxwell Roberts
Building, 1 Church Street, Hamilton HM11, Bermuda.
Shareholders are urged to complete, date, sign and return the
enclosed proxy card to Aspen Insurance Holdings Limited,
c/o BNY
Mellon Shareowner Services, P.O. Box 3550, South
Hackensack, NJ
07606-9250,
in the accompanying envelope, which does not require postage if
mailed in the United States. Shareholders who appear on the
Companys register may also vote their ordinary shares by
telephone or over the Internet. Signing and returning a proxy
card will not prohibit you from attending the Annual General
Meeting. Please note that the person designated as your proxy
need not be a shareholder. Persons who hold their ordinary
shares in a brokerage account or through a nominee will also
likely have the added flexibility of directing the voting of
their ordinary shares by telephone or over the Internet.
By Order of the Board of Directors,
Secretary
Hamilton, Bermuda
March 18, 2011
ASPEN
INSURANCE HOLDINGS LIMITED
Maxwell Roberts Building
1 Church Street
Hamilton HM11
Bermuda
PROXY
STATEMENT
ANNUAL GENERAL MEETING OF SHAREHOLDERS
April 28,
2011
Important
Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be
Held on April 28, 2011
The proxy
statement and annual report to security holders are available at
www.aspen.bm
GENERAL
INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies on behalf of the Board of Directors (the
Board) of Aspen Insurance Holdings Limited (the
Company) to be voted at our annual general meeting
of shareholders (the Shareholders) to be held at the
offices of the Company, Maxwell Roberts Building, 1 Church
Street, Hamilton HM11 Bermuda on April 28, 2011 at
12:00 p.m. Bermuda time, or at such other meeting upon any
postponement or adjournment thereof (the Annual General
Meeting). Directions to the meeting may be obtained by
contacting the Company at
441-295-8201.
This Proxy Statement, the Notice of Annual General Meeting of
Shareholders and the accompanying form of proxy are being first
mailed to Shareholders on or about March 18, 2011. These
proxy materials, along with a copy of the Companys Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2010, are also
available for viewing at www.aspen.bm.
As of March 1, 2011, the record date for the determination
of persons entitled to receive notice of, and to vote at, the
Annual General Meeting, there were 70,593,412 ordinary shares of
the Company, par value U.S. 0.15144558¢ per share (the
ordinary shares), issued and outstanding. The
ordinary shares are our only class of equity securities
outstanding currently entitled to vote at the Annual General
Meeting.
Holders of ordinary shares are entitled to one vote for each
share held on each matter to be voted upon by the Shareholders
at the Annual General Meeting. Pursuant to our Bye-Laws 63 to
67, the voting power of all ordinary shares is adjusted to the
extent necessary so that there is no 9.5% U.S. Shareholder.
For the purposes of our Bye-Laws, a 9.5% U.S. Shareholder
is defined as a United States Person (as defined in the Internal
Revenue Code of 1986, as amended, of the United States (the
Code)) whose controlled shares (as
defined below) constitute nine and one-half percent or more of
the voting power of all ordinary shares of the Company and who
would be generally required to recognize income with respect to
the Company under Section 951(a)(1) of the Code, if the
Company were a controlled foreign corporation as defined in
Section 957 of the Code and if the ownership threshold
under Section 951(b) of the Code were 9.5%.
Because the applicability of the voting power reduction
provisions to any particular Shareholder depends on facts and
circumstances that may be known only to the Shareholder or
related persons, the Company requests that any holder of
ordinary shares with reason to believe that it is a 9.5%
U.S. Shareholder (as described above) contact the Company
promptly so that the Company may determine whether the voting
power of such holders ordinary shares should be reduced.
By submitting a proxy, unless the Company has otherwise been
notified or made a determination with respect to a holder of
ordinary shares, a holder of ordinary shares will be deemed to
have confirmed that, to its knowledge, it is not, and is not
acting on behalf of, a 9.5% U.S. Shareholder.
In order to determine the number of controlled shares owned by
each Shareholder, we are authorized to require any Shareholder
to provide such information as the Board may deem necessary for
the purpose of determining whether any Shareholders voting
rights are to be adjusted pursuant to the Companys
Bye-Laws. We may, in our reasonable discretion, disregard the
votes attached to ordinary shares of any Shareholder failing to
respond to such a request or submitting incomplete or inaccurate
information.
Controlled shares will include, among other things,
all ordinary shares that a person is deemed to beneficially own
directly, indirectly or constructively (as determined pursuant
to Sections 957 and 958 of the Code).
The presence of one or more Shareholders in person or by proxy
holding at least 50% of the voting power (that is the number of
maximum possible votes of the Shareholders entitled to attend
and vote at a general meeting, after giving effect to the
provision of our Bye-Laws 63 to 67) of all of the issued
and outstanding ordinary shares of the Company throughout the
meeting shall form a quorum for the transaction of business at
the Annual General Meeting.
Pursuant to our Bye-Laws 63 to 67, it is currently expected that
there will be no adjustments to the voting power of any of the
Companys Shareholders. Therefore, every Shareholder will
be entitled to one vote for each ordinary share held by such
Shareholder on each matter to be voted upon.
At the Annual General Meeting, Shareholders will be asked to
take the following actions:
1. To vote FOR the approval of compensation of the
Companys Named Executive Officers, as disclosed in our
annual report on
Form 10-K
for the year ended December 31, 2010, filed with the
Securities and Exchange Commission (the SEC) on
February 25, 2011, as part of the non-binding advisory vote
for
Say-On-Pay.
2. To vote FOR the re-election of
Mr. Christopher OKane, Mr. John Cavoores,
Mr. Liaquat Ahamed, and Ms. Heidi Hutter and the
election of Mr. Albert Beer as Class I directors of
the Company.
3. To vote FOR the appointment of KPMG Audit plc
(KPMG), London, England, to act as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2011 and to authorize
the Board through the Audit Committee (the Audit
Committee) to set the remuneration for the independent
registered public accounting firm.
4. To vote FOR the adoption of the 2011 Share
Incentive Plan.
At the Annual General Meeting, Shareholders will also receive
the report of our independent registered public accounting firm
and may be asked to consider and take action with respect to
such other matters as may properly come before the Annual
General Meeting.
Each of the proposals requires an affirmative vote of the
majority of the voting power of the votes cast at the Annual
General Meeting (taking into account Bye-Laws 63 to 67). The
Company intends to conduct all voting at the Annual General
Meeting by poll as requested by the Chairman of the meeting, in
accordance with our Bye-Laws.
PRESENTATION
OF FINANCIAL STATEMENTS
In accordance with the Companies Act 1981 of Bermuda and Bye-Law
139 of the Company, the Companys financial statements for
the year ended December 31, 2010 will be presented at the
Annual General Meeting. The Board has approved these statements.
There is no requirement under Bermuda law that these statements
be approved by Shareholders, and no such approval will be sought
at the meeting.
SOLICITATION
AND REVOCATION
PROXIES IN THE FORM ENCLOSED ARE BEING SOLICITED BY, OR ON
BEHALF OF, THE BOARD. THE BOARD HAS DESIGNATED THE PERSONS NAMED
IN THE ACCOMPANYING FORM OF PROXY AS PROXIES. Such persons
designated as proxies serve as officers of the Company. Any
Shareholder desiring to appoint another person to represent him
or her at the Annual General Meeting may do so either by
inserting such persons name in the blank space provided on
the accompanying form of proxy, or by completing another form of
proxy and, in either case, delivering an executed proxy to the
Secretary of the Company at the address indicated above, before
the time of the Annual General Meeting. It is the responsibility
of the Shareholder appointing such other person to represent him
or her to inform such person of this appointment.
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Each ordinary share represented by a properly executed proxy
which is returned and not revoked will be voted in accordance
with the instructions, if any, given thereon. If no instructions
are provided in a properly executed proxy, it will be voted FOR
each of the proposals described herein and set forth on the
accompanying form of proxy, and in accordance with the
proxyholders best judgment as to any other business as may
properly come before the Annual General Meeting. If a
Shareholder appoints a person other than the persons named in
the enclosed form of proxy to represent him or her, such person
will vote the shares in respect of which he or she is appointed
proxyholder in accordance with the directions of the Shareholder
appointing him or her. Any Shareholder who executes a proxy may
revoke it at any time before it is voted by delivering to the
Secretary of the Company a written statement revoking such
proxy, by executing and delivering a later-dated proxy, or by
voting in person at the Annual General Meeting. Attendance at
the Annual General Meeting by a Shareholder who has executed and
delivered a proxy to us shall not in and of itself constitute a
revocation of such proxy. For ordinary shares held in
street name by a broker, bank or other nominee, new
voting instructions must be delivered to the broker, bank or
nominee prior to the Annual General Meeting.
To the extent that beneficial owners do not furnish voting
instructions with respect to any or all proposals submitted for
shareholder action, member brokerage firms of The New York Stock
Exchange, Inc. (the NYSE) that hold ordinary shares
in street name for such beneficial owners may not vote in their
discretion upon any of the proposals. Any broker
non-votes and abstentions will be counted toward the
presence of a quorum at, but will not be considered votes cast
on any proposal brought before the Annual General Meeting.
Generally, broker non-votes occur when ordinary
shares held for a beneficial owner are not voted on a particular
proposal because the broker has not received voting instructions
from the beneficial owner, and the broker does not have
discretionary authority to vote the ordinary shares on a
particular proposal. If a quorum is not present, the
Shareholders who are represented may adjourn the Annual General
Meeting until a quorum is present. The time and place of the
adjourned meeting will be announced at the time the adjournment
is taken, and no other notice need be given. An adjournment will
have no effect on the business that may be conducted at the
adjourned meeting.
We will bear the cost of solicitation of proxies. We have
engaged Phoenix Advisory Partners to be our proxy solicitation
agent. For these services, we will pay Phoenix Advisory Partners
a fee of approximately $6,000, plus reasonable expenses. Further
solicitation may be made by our directors, officers and
employees personally, by telephone, Internet or otherwise, but
such persons will not be specifically compensated for such
services. We may also make, through bankers, brokers or other
persons, a solicitation of proxies of beneficial holders of the
ordinary shares. Upon request, we will reimburse brokers,
dealers, banks or similar entities acting as nominees for
reasonable expenses incurred in forwarding copies of the proxy
materials relating to the Annual General Meeting to the
beneficial owners of ordinary shares which such persons hold of
record.
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MANAGEMENT
Board of
Directors of the Company
Pursuant to provisions that were in our bye-laws and a
shareholders agreement by and among us and certain
shareholders prior to our initial public offering in 2003,
certain of our shareholders had the right to appoint or nominate
and remove directors to serve on our Board of Directors.
Mr. Cormack was appointed director by Candover, one of our
founding shareholders. After our initial public offering, no
specific shareholder has the right to appoint or nominate or
remove one or more directors pursuant to an explicit provision
in our bye-laws or otherwise.
Our bye-laws provide for a classified Board of Directors,
divided into three classes of directors, with each class elected
to serve a term of three years. Our incumbent Class I
Directors were elected at our 2008 annual general meeting (with
the exception of Albert Beer who was recently appointed by the
Board) and are scheduled to serve until our 2011 annual general
meeting. Our incumbent Class II Directors were elected at
our 2009 annual general meeting and are scheduled to serve until
our 2012 annual general meeting. Our incumbent Class III
Directors were elected at our 2010 annual general meeting and
will be subject for re-election at our 2013 annual general
meeting.
We have provided information below about our directors including
their ages, committee positions, business experience for the
past five years and the names of other publicly-held companies
on which they serve, or have served, as director for the past
five years. We have also provided information regarding each
directors specific experience, qualifications, attributes
and skills that led the Board of Directors to conclude that each
should serve as a director.
As of February 15, 2011, we had the following directors on
our Board of Directors and committees:
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Corporate
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Governance
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Name
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Age
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Director Since
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Audit
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Compensation
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& Nominating
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Investment
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Risk
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Class I Directors:
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Christopher OKane
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2002
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Heidi Hutter
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2002
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ü
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Chair
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David Kelso
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2005
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ü
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ü
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ü
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John Cavoores
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2006
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ü
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Liaquat Ahamed
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2007
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Chair
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ü
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Albert Beer
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2011
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ü
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(1)
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ü
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(1)
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Class II Directors:
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Julian Cusack
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60
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2002
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ü
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ü
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Glyn Jones
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2006
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ü
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Richard Houghton
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2007
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ü
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Class III Directors:
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Ian Cormack
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2003
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Chair
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Matthew Botein
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2007
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Richard Bucknall
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2007
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Chair
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Peter OFlinn
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2009
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Chair
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(1) |
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Effective February 4, 2011. |
Glyn Jones. With effect from May 2, 2007,
Mr. Jones was appointed as Chairman. Mr. Jones has
been a director since October 30, 2006. He also has served
as a non-executive director of Aspen U.K. since December 4,
2006. Since July 25, 2008, Mr. Jones has served as
Chairman of Hermes Fund Managers. Mr. Jones is also
the Chairman of Towry Holdings Limited and was recently
appointed as Chairman of BT Pension Scheme Management Ltd.
Mr. Jones was most recently the Chief Executive Officer of
Thames River Capital.
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From 2000 to 2004, he served as Chief Executive
Officer of Gartmore Investment Management in the U.K. Prior to
Gartmore, Mr. Jones was Chief Executive of Coutts NatWest
Group and Coutts Group, which he joined in 1997, and was
responsible for strategic leadership, business performance and
risk management. In 1991, he joined Standard Chartered, later
becoming the General Manager of Global Private Banking.
Mr. Jones was a consulting partner with Coopers &
Lybrand/Deloitte Haskins & Sells Management
Consultants from 1981 to 1990.
Mr. Jones has over 23 years of experience within the
financial services sector. He is the former CEO of a number of
large, regulated, international financial services groups, such
as Gartmore Investment Management and Coutts Natwest Group and
currently serves as chairman of the board in a number of other
financial services companies. As a result, Mr. Jones
provides the Board leadership for a complex, global and
regulated financial services business such as ours.
Christopher OKane. Mr. OKane
has been our Chief Executive Officer and a director since
June 21, 2002. He was also the Chief Executive Officer of
Aspen U.K. until January 2010 and was Chairman of Aspen Bermuda
until December 2006. Prior to the creation of Aspen Holdings,
from November 2000 until June 2002, Mr. OKane served
as a director of Wellington and Chief Underwriting Officer of
Lloyds Syndicate 2020 where he built his specialist
knowledge in the fields of property insurance and reinsurance,
together with active underwriting experience in a range of other
insurance disciplines. From September 1998 until November 2000,
Mr. OKane served as one of the underwriting partners
for Syndicate 2020. Prior to joining Syndicate 2020,
Mr. OKane served as deputy underwriter for Syndicate
51 from January 1993 to September 1998. Mr. OKane
began his career as a Lloyds broker.
Mr. OKane has 30 years of experience in the
specialty re/insurance industry and is both a co-founder of our
Companys business and its founding CEO.
Mr. OKane brings his market experience and industry
knowledge to Board discussions and is also directly accountable
to the Board for the
day-to-day
management of the Company and the implementation of business
strategy.
Richard Houghton. Mr. Houghton joined us
as our Chief Financial Officer on April 30, 2007 and has
been a director since May 2, 2007. He was previously at
Royal Bank of Scotland Group plc (RBS), where he was
Chief Operating Officer, RBS Insurance from 2005 to March 2007,
responsible for driving operational efficiency across the
finance, IT, risk, HR, claims and actuarial functions of this
division. Previously, he was Group Finance Director, RBS
Insurance from 2004 to 2005. Mr. Houghton was also Group
Finance Director of Ulster Bank, another subsidiary of RBS from
2003 to 2004. While at RBS, Mr. Houghton was also a member
of the Board of various of its subsidiaries. He began his
professional career as an accountant at Deloitte &
Touche where he spent 10 years working in audit, corporate
finance and recovery. He is a Fellow of the Institute of
Chartered Accountants in England and Wales.
Mr. Houghton is a qualified accountant with over
22 years of broad industry experience. He has held a number
of finance and operations roles across the financial services
industry. As our Chief Financial Officer, it is important for
the Board to have direct interaction with Mr. Houghton to
understand the financial performance of the Company and the
impact of underwriting and investment performance on the
Companys results.
Liaquat Ahamed. Mr. Ahamed has been a
director since October 31, 2007. Mr. Ahamed has a
background in investment management with leadership roles that
include heading the World Banks investment division. From
2004, Mr. Ahamed has been an adviser to the Rock Creek
Group, an investment firm based in Washington D.C. From 2001 to
2004, Mr. Ahamed was the Chief Executive Officer of Fischer
Francis Trees & Watts, Inc., a subsidiary of BNP
Paribas specializing in institutional single and multi-currency
fixed income investment portfolios. Mr. Ahamed is a
director of the Rohatyn Group and related series of funds, and a
member of the Board of Trustees at the Brookings Institution.
Mr. Ahamed has over 27 years of experience in
investment management and has previously served as a Chief
Investment Officer and Chief Executive Officer of Fischer
Francis Trees & Watts, Inc., an international fixed
income business. Mr. Ahameds investment management
experience provides the Board with experience
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to oversee the Companys investment decisions, strategies
and investment risk appetite. As a result of this,
Mr. Ahamed also serves as the Chair of the Investment
Committee.
Albert J. Beer. Mr. Beer has been a
director since February 1, 2011. Since 2006, Mr. Beer
has been the Michael J Kevany/XL Professor of Insurance and
Actuarial Science at St Johns University School of Risk
Management. From 1992 to 2006, Mr. Beer held various senior
executive positions at American Re-Insurance Corporation (Munich
Re America). Previously, from 1989 to 1992, Mr. Beer held
various positions at Skandia America Reinsurance
Company, including that of Chief Actuary. Mr. Beer has been
a member of the Actuarial Standards Board, which promulgates
standards for the actuarial profession in the United States,
since 2008 and its Chair since 2010. Mr. Beer is also a
director of the Casualty Actuary Society since 2008. He is also
the Vice-Chair of United Educators Insurance Company since 2006.
Mr. Beer previously served as a member of the Board of the
American Academy of Actuaries and the Actuarial Foundation,
where he has been a trustee emeritus since 2009.
Mr. Beer has over 30 years of actuarial experience in
the insurance industry. Mr. Beers roles at American
Re-Insurance Corporation included the active supervision of
principal financial and accounting officers. In addition,
Mr. Beer has extensive experience in reserving matters,
which constitute the principal subjective assessments within the
Companys accounts. As a result, Mr Beer also serves as a
designated financial expert on the Companys Audit
Committee.
Matthew Botein. Mr. Botein has been a
director since July 25, 2007. Mr. Botein is currently
a Managing Director and is head of BlackRock Alternative
Investors (BAI). BAI includes BlackRocks hedge funds and
opportunistic funds, funds of hedge funds, private equity, funds
of private funds, real estate, real asset, currency and
commodity funds. Mr. Botein is also head of
BlackRocks Special Situations Investment Group. From 2003
until June 30, 2009, Mr. Botein was associated with
Highfields Capital Management LP, a Boston-based private
investment partnership, most recently as a Managing Director and
a member of the firms Management Committee, where he was
responsible for a portfolio of financial services investments,
as well as certain other private equity holdings. Prior to
joining Highfields, he was a member in the private equity
department of The Blackstone Group from March 2000 to March
2003. He currently serves on the Boards of CoreLogic, Inc.,
PennyMac Mortgage Investment Trust and its sponsor, Private
National Mortgage Acceptance Company, LLC. He was previously a
member of the Board of Integro Limited, an insurance broker and
Cyrus Reinsurance Holdings Limited, Cyrus Reinsurance
Holdings II Limited, sidecars Highfields formed
with XL Capital (as well as its operating subsidiary) and First
American Corporation. He was also previously a member of our
Board from our formation until 2003. Mr. Botein also serves
on the Board of Trustees of Beth Israel Deaconess Medical
Center, the CareGroup/CJP Board of Managers and the Exceptional
Care Without Exception Trust of Boston Medical Center.
Mr. Botein has over 10 years of experience within the
spheres of corporate finance, private equity and asset
management. As a result, Mr. Botein provides the Board with
a broad range of relevant business experience with specific
focus on investor relations matters, capital management
initiatives and investment decisions.
Richard Bucknall. Mr. Bucknall has been a
director since July 25, 2007, a director of Aspen U.K.
since January 14, 2008 and a director of AMAL since
February 28, 2008. Mr. Bucknall retired from Willis
Group Holdings Limited where he was Vice Chairman from February
2004 to March 2007 and Group Chief Operating Officer from
January 2001 to December 2006. While at Willis,
Mr. Bucknall served as director on various Boards within
the Willis Group. He was also previously Chairman/Chief
Executive Officer of Willis Limited from May 1999 to March 2007.
Mr. Bucknall is currently the non-executive Chairman of FIM
Services Limited and the non-executive Chairman of the XIS Group
(Ins-Sure Holdings Limited, Ins-Sure Services Limited, London
Processing Centre Ltd and LSPO Limited).He is also a
non-executive director of Tokio Marine Europe Insurance Limited.
He was also previously a director of Kron AS. He is a Fellow of
the Chartered Insurance Institute.
Mr. Bucknall has over 40 years of experience within
the re/insurance broking industry and latterly served as Group
Chief Operating Officer of the Willis Group. Since our revenues
are primarily derived from brokers, Mr. Bucknalls
background in the insurance broking industry provides the Board
with an experienced
6
perspective on broking relationships and their ability to impact
our trading operations. Given his broad background across a
number of operational disciplines, Mr. Bucknall serves as
the Chair of our Compensation Committee.
John Cavoores. Mr. Cavoores has been a
director since October 30, 2006. As of October 5,
2010, Mr. Cavoores was also appointed as Co-CEO of Aspen
Insurance, focusing on Aspen Insurances casualty and
professional lines and U.S. property businesses.
Mr. Cavoores has executive oversight for Aspen
Insurances U.S. platform. Mr. Cavoores was
previously an advisor to Blackstone (from September 2006 until
March 15, 2010). During 2006, Mr. Cavoores was a
Managing Director of Century Capital, a Boston-based private
equity firm. Mr. Cavoores previously served as President
and Chief Executive Officer of OneBeacon Insurance Company, a
subsidiary of the White Mountains Insurance Group, from 2003 to
2005. He was employed with OneBeacon from 2001 to 2005. Among
his other positions, Mr. Cavoores was President of National
Union Insurance Company, a subsidiary of AIG, Inc. He spent
19 years at Chubb Insurance Group, where he served as Chief
Underwriting Officer, Executive Vice President and Managing
Director of overseas operations, based in London.
Mr. Cavoores served as a director of Cyrus Reinsurance
Holdings from 2007 through 2009 and currently is a director of
Alliant Insurance Holdings.
Mr. Cavoores has over 30 years of experience within
the insurance industry having formerly served as CEO of
OneBeacon Insurance, a subsidiary of White Mountains. As a
result, Mr. Cavoores provides the Board with broad ranging
business experience with particular focus on insurance matters
and strategies within the U.S.
Ian Cormack. Mr. Cormack has been a
director since September 22, 2003 and has served also as a
non-executive director of Aspen U.K. since 2003. From 2000 to
2002, he was Chief Executive Officer of AIG Inc.s
insurance financial services and asset management division in
Europe. From 1997 to 2000, he was Chairman of Citibank
International plc and Co-Head of the Global Financial
Institutions Client Group at Citigroup. He was also Country Head
of Citicorp in the United Kingdom from 1992 to 1996.
Mr. Cormack is also a director of Phoenix Group Holdings
Ltd (previously Pearl Group Ltd.), Phoenix Life Holdings Ltd and
Qatar Financial Centre Authority. Mr. Cormack is also a
non-executive chairman and audit committee member of Maven
Income and Growth VCT 4 plc. He also serves as chairman of
Entertaining Finance Ltd. and Carbon Reductions Ltd and deputy
chairman of Qatarlyst. He previously served as Chairman of
CHAPS, the high value clearing system in the United Kingdom, as
a member of the Board of Directors of Clearstream (Luxembourg),
Bank Training and Development Ltd., Klipmart Corp and as a
member of Millennium Associates AGs Global Advisory Board.
He was also previously a non-executive director of MphasiS BFL
Ltd. (India), Europe Arab Bank Ltd., Pearl Assurance, London
Life Assurance, National Provident Insurance and National
Provident Life. He was a member of the U.K. Chancellors
City Advisory Panel from 1993 to 1998.
Mr. Cormack has over 40 years of broad ranging
international experience in both the banking and insurance
sectors having held senior roles at both Citigroup and AIG, Inc.
Mr. Cormack also serves on the boards of a number of
internationally focused companies and brings his broad ranging
global experience to Board debate. Given his wide ranging
experience, Mr. Cormack also serves as Chair of our Audit
Committee.
Julian Cusack, Ph.D. Mr. Cusack has
been our Chief Risk Officer since January 14, 2010. He was
our Chief Operating Officer from May 1, 2008 to
January 14, 2010, and has been a director since
June 21, 2002. He has also been the Chief Executive Officer
of Aspen Bermuda since 2002 and was appointed Chairman of Aspen
Bermuda in December 2006. Previously Mr. Cusack was our
Chief Financial Officer from June 21, 2002 to
April 30, 2007. From 2002 until March 31, 2004, he was
also Finance Director of Aspen U.K. Mr. Cusack previously
worked with Wellington where he was Managing Director of
Wellington Underwriting Agencies Ltd. (WUAL) from
1992 to 1996, and in 1994 joined the Board of Directors of
Wellington Underwriting Holdings Limited. He was Group Finance
Director of Wellington Underwriting plc from 1996 to 2002.
Mr. Cusack is a director and audit committee member of
Hardy Underwriting Bermuda Limited. He is also a director of
Parhelion Capital Limited, in which we have a minority
investment, and Parhelion Underwriting Limited.
7
Mr. Cusack has over 28 years experience within
the re/insurance industry having held a number of senior roles
previously at Wellington. Mr. Cusack, a qualified
accountant, is also a co-founder of our Company. Mr. Cusack
currently serves as the Companys Chief Risk Officer and
has been Chair of our Reserve Committee (a management committee)
until January 2011. Accordingly, he provides the Board with
valuable input on the Companys risk framework, risk
tolerances and risk mitigation efforts, as well as providing an
insight on our reserving practices.
Heidi Hutter. Ms. Hutter has been a
director since June 21, 2002 and has served as a
non-executive director of Aspen U.K. since June 2002. On
February 28, 2008, Ms. Hutter was appointed as a
director and Chair of AMAL. She has served as Chief Executive
Officer of Black Diamond Group, LLC since 2001 and Manager of
Black Diamond Capital Partners since 2005. Ms. Hutter began
her career in 1979 with Swiss Reinsurance Company in New York,
where she specialized in the then new field of finite
reinsurance. From 1993 to 1995, she was Project Director for the
Equitas Project at Lloyds which became the largest run-off
reinsurer in the world. From 1996 to 1999, she served as Chief
Executive Officer of Swiss Re America and was a member of the
Executive Board of Swiss Re in Zurich. She was previously a
director of Aquila, Inc. and Talbot Underwriting and related
corporate entities. Ms. Hutter currently serves as a
director of Amerilife Group LLC and United Prosperity Life
Insurance Company.
Ms. Hutter is a qualified actuary with over 30 years
of experience within the re/insurance industry. Ms. Hutter
is a recognized industry leader with relevant experience both in
the U.S. and internationally. Ms. Hutter has
particular experience of insurance at Lloyds having served
as Project Director for the Equitas Project at Lloyds from
1993 to 1995, and having previously served on the Board of
Talbot Underwriting Ltd. (corporate member and managing agent of
Lloyds syndicate) from 2002 to 2007. As a result of her
experience, Ms. Hutter provides the Board with insight on
numerous matters relevant to insurance practice. Ms. Hutter
also serves as Chair of AMAL, the managing agency of our
Lloyds Syndicate 4711 and as Chair of our Risk Committee.
David Kelso. Mr. Kelso has been a
director since May 26, 2005. He was a founder, in 2003, of
Kelso Advisory Services and currently serves as its Senior
Financial Advisor. He also currently serves as a director of
ExlService Holdings, Inc., Assurant Inc. and Sound Shore
Fund Inc. From 2001 to 2003, Mr. Kelso was an
Executive Vice President of Aetna, Inc. From 1996 to 2001, he
was the Executive Vice President, Chief Financial Officer and
Managing Director of Chubb Corporation. From 1992 to 1996, he
first served as the Executive Vice President and Chief Financial
Officer and later served as the Executive Vice President, Retail
and Small Business Banking, of First Commerce Corporation. From
1982 to 1992, he was a Partner and the Head of North American
Banking Practice of Gemini Consulting Group.
Mr. Kelso has over 30 years of experience in the
financial services sector, where he previously served as the CFO
at Chubb Corporation and has experience in accounting and
finance impacting insurance companies. As a result of his
experience, Mr. Kelso is also the designated financial
expert on the Companys Audit Committee.
Mr. Kelsos term as director ends at the
Companys next annual general meeting on April 28,
2011 and will not be standing for re-election.
Peter OFlinn. Mr. OFlinn has
been a director since April 29, 2009. He currently serves
as a director and audit committee member of Sun Life Insurance
and Annuity Company of New York, and of Euler ACI Holdings, Inc.
From 1999 to 2003, Mr. OFlinn was Co-Chair of
LeBoeuf, Lamb, Greene and MacRae (now Dewey & LeBoeuf).
Mr. OFlinn is a qualified lawyer with over
25 years of private practice experience.
Mr. OFlinn is a corporate lawyer and former
Co-Chairman of LeBoeuf, Lamb, Greene & MacRae as well
as former Chair of their Corporate Practice and provides
extensive experience on legal matters relevant to both the
re/insurance industry and public company legal matters
generally. Mr. OFlinn also provides the Board with
input on corporate initiatives, regulatory and governance
matters. As a result of his experience, Mr. OFlinn
serves as the Chair of our Corporate Governance and Nominating
Committee.
8
Related
Transactions
The review and approval of any direct or indirect transactions
between Aspen and related persons is governed by the
Companys Code of Conduct, which provides guidelines for
any transaction which may create a conflict of interest between
us and our employees, officers or directors and members of their
immediate family. Pursuant to the Code of Conduct, we will
review personal benefits received, personal financial interest
in a transaction and certain business relationships in
evaluating whether a conflict of interest exists. The Audit
Committee is responsible for applying the Companys policy
and approving certain individual transactions.
On January 22, 2010, we entered into a sale and purchase
agreement to purchase APJ Continuation Limited (APJ)
and its subsidiaries for an aggregate consideration of
$4.8 million. The business writes a specialist book of
K&R insurance which would complement our existing political
and financial risk line of business. Mr. Villers, one of
our executive officers, was previously a director of APJ and was
a 30% shareholder of APJ.
Director
Independence
Under the NYSE Corporate Governance Standards applicable to
U.S. domestic issuers, a majority of the Board of Directors
(and each member of the Audit, Compensation and Nominating and
Corporate Governance Committees) must be independent. The
Company currently qualifies as a foreign private issuer, and as
such is not required to meet all of the NYSE Corporate
Governance Standards. The Board of Directors may determine a
director to be independent if the director has no disqualifying
relationship as enumerated in the NYSE Corporate Governance
Standards and if the Board of Directors has affirmatively
determined that the director has no direct or indirect material
relationship with the Company. Independence determinations are
made on an annual basis at the time the Board of Directors
approves director nominees for inclusion in the annual proxy
statement and, if a director joins the Board of Directors
between annual meetings, at such time.
Our Board of Directors reviews various transactions,
relationships and arrangements of individual directors in
determining whether they are independent. With respect to
Mr. Botein, the Board of Directors considered his recent
position with BlackRock, one of our investment advisors. In
addition, the Board of Directors considered
Mr. Cormacks role as a non-executive director of
Phoenix Group Holdings Ltd. (formerly Pearl Group Ltd.), Phoenix
Life Holdings and Qatar Financial Centre Authority, as well as
his positions as Chairman of Entertaining Finance Ltd., Carbon
Reductions Ltd., Maven Income, Growth VCT 4 plc,
and Deputy Chairman of Qatarlyst. With respect to
Mr. Bucknall, the Board of Directors considered his role as
a non-executive director of Tokio Marine Europe Insurance
Limited, as well as his roles within the XIS Group.
The Board of Directors has made the determination that
Messrs. Ahamed, Beer, Botein, Bucknall, Cormack, Kelso,
OFlinn and Ms. Hutter are independent and have no
material relationships with the Company.
The Board of Directors has determined that the Audit Committee
is comprised entirely of independent directors, in accordance
with the NYSE Corporate Governance Standards. The NYSE Corporate
Governance Standards require that all members of compensation
committees and nominating and corporate governance committees be
independent. As of the date of this report, all members of the
Compensation Committee are independent and all members of our
Corporate Governance and Nominating Committee are independent.
As described above, Mr. Cavoores was a member of the
Compensation Committee in 2010 until October 2010 where he
ceased to be an independent director of the Company following
his appointment as Co-CEO of Aspen Insurance. As a result,
Mr. Cormack was appointed to the Compensation Committee to
replace Mr. Cavoores.
Committees
of the Board of Directors
Audit Committee: Messrs. Cormack,
Bucknall, Kelso, OFlinn and Ms. Hutter. The Audit
Committee has general responsibility for the oversight and
supervision of our accounting, reporting and financial control
practices. The Audit Committee annually reviews the
qualifications of the independent auditors, makes
9
recommendations to the Board of Directors as to their selection
and reviews the plan, fees and results of their audit.
Mr. Cormack is Chairman of the Audit Committee. The Audit
Committee held four meetings during 2010. The Board of Directors
considers Mr. Kelso to be an audit committee
financial expert as defined in the applicable regulations
until his departure from the Audit Committee and the Board as of
April 28, 2011. The Board of Directors has made the
determination that Mr. Kelso is independent. Effective
February 4, 2011, Mr. Beer is a member of the Audit
Committee and the Board of Directors also considers
Mr. Beer to be an audit committee financial
expert as defined in the applicable regulations. Effective
February 4, 2011, Mr. Beer became an additional member
of our Audit Committee.
Compensation Committee: Messrs. Bucknall,
Botein, and Cormack. The Compensation Committee oversees our
compensation and benefit policies and programs, including
administration of our annual bonus awards and long-term
incentive plans. It determines compensation of the
Companys Chief Executive Officer, executive directors and
key employees. Mr. Bucknall is the Chairman of the
Compensation Committee. The Compensation Committee held five
meetings during 2010. Mr. Cavoores was a member of the
Compensation Committee in 2010 until October 2010 where he
ceased to be an independent director of the Company following
his appointment as Co-CEO of Aspen Insurance.
Investment Committee: Messrs. Ahamed,
Jones, Botein, Cusack and Houghton. The Investment Committee is
an advisory committee to the Board of Directors which formulates
our investment policy and oversees all of our significant
investing activities. Mr. Ahamed is Chairman of the
Investment Committee. The Investment Committee held four
meetings during 2010.
Corporate Governance and Nominating
Committee: Messrs. Kelso, Botein and
OFlinn. The Corporate Governance and Nominating Committee,
among other things, establishes the Board of Directors
criteria for selecting new directors and oversees the evaluation
of the Board of Directors and management. Mr. OFlinn
is the Chairman of the Corporate Governance and Nominating
Committee. The Corporate Governance and Nominating Committee
held four meetings during 2010. Effective February 4, 2011,
Mr. Bucknall has become a member of the Corporate
Governance and Nominating Committee.
Risk Committee: Ms. Hutter,
Messrs. Ahamed, Cavoores, Cormack, Cusack and Kelso. The
Risk Committees responsibilities include the establishment
of our risk management strategy, approval of our risk management
framework, methodologies and policies, and review of our
approach for determining and measuring our risk tolerances.
Ms. Hutter is the Chair of the Risk Committee. The Risk
Committee held four meetings during 2010. Effective
February 4, 2011 Mr. Beer became an additional member
of our Risk Committee.
The Board may also, from time to time, implement ad hoc
committees for specific purposes.
Leadership
Structure
We have separate CEO and Chairman positions in the Company. We
believe that while the CEO is responsible for the
day-to-day
management of the Company, the Chairman, who is not an employee
of the Company and who is not part of the Companys
management, provides the appropriate leadership role for the
Board and is able to effectively facilitate the contribution of
non-executive directors and constructive interaction between
management (including executive directors) and the non-executive
directors in assessing the Companys performance,
strategies and means of achieving them. As part of his
leadership role, the Chairman is responsible for the
Boards effectiveness and sets the Boards agenda in
conjunction with the Chief Executive Officer.
Role in
Risk Oversight
Risk Governance. The Board of Directors
considers effective identification, assessment, monitoring and
mitigation of the risks facing our business to be key elements
of its responsibilities and those of the CEO and management. The
Boards responsibility for oversight of the groups
risk management framework is enabled by management reporting
processes that are designed to provide visibility to the Board
and its Committees about key risks. Senior management regularly
attend the Board meetings and are available to address any
10
questions or concerns raised by the Board on risk management
matters. The Board and its Committees also receive presentations
from senior management on risk management efforts. In summary,
the Board through its Committees oversees key risks to the
business through a well established and comprehensive approach,
which is described in greater detail below.
Board Committees. The Board manages the key
risks to the organization primarily through its Risk, Audit and
Investment Committees. Each of the Committees is chaired by an
independent director of the Company who also reports to the
Board on the committees discussions and matters arising.
Every director also receives all of the papers for each of the
Committees.
The membership of the Board Committees is set out under
Item 10 Directors, Executive Officers of the
Registrant and Corporate Governance.
Risk Committee: The purpose of the Committee
is to assist the Board in its oversight duties in respect of the
management of risk, including:
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making recommendations to the Board regarding managements
proposals for the risk management framework, risk appetite, key
risk limits and the use of economic capital models;
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monitoring compliance with the agreed Group risk appetite and
risk limits; and
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oversight of the process of stress and scenario testing
established by management.
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Audit Committee: This Committee is primarily
responsible for assisting the Board in its oversight of the
integrity of the financial statements. It is also responsible
for reviewing the adequacy and effectiveness of the
Companys internal controls and receives regular reports
from both internal and external audit in this regard.
Investment Committee: This Committee is
responsible for, among other things, setting and monitoring the
groups investment risk and asset allocation policies and
ensuring that the Chairman of the Risk Committee is kept
informed of such matters.
Management Committees. The group also has a
number of executive management committees which have oversight
of risk and control effectiveness.
Group Executive Committee: This is the main
executive committee responsible for making proposals to the
Board relating to the strategy and conduct of the business of
the group. To assist in these duties, it receives regular
reports from the Group Chief Risk Officer.
Capital Allocation Group: This committee is
primarily responsible for determining and allocating capital for
the different lines of business. It also considers appropriate
levels of risk limits for underwriting and other exposures for
recommendation to the Risk Committee.
Reserve Committee: This committee is
responsible for managing reserving risk and recommending to
executive management who then recommend to the Board and the
Audit Committee the appropriate level of reserves to include in
the groups financial statements.
Underwriting Committee: The purpose of the
Underwriting Committee is to assist the Group Chief Executive
Officer in his oversight duties in respect of underwriting risk
and to advise insurance subsidiaries as to whether proposed
risks comply with group policies.
Reinsurance Credit Committee: This committee
sets credit limits, reviews our credit analysts evaluation
of insurance and reinsurance counterparties and approves
acceptable financial strength ratings of our counterparties. Our
risk management function monitors individual exposures in
addition to credit and market risk accumulations compared to set
tolerances.
Group Chief Risk Officer. Our Group Chief Risk
Officer, Julian Cusack, is a member of the Board and a member of
the Risk Committee. His role includes providing the Board of
Directors and the Risk Committee with input directly on risk
management issues.
11
Compensation
Consultants
The Compensation Committee appointed Towers Watson as its
compensation consultants (the 2010 Compensation
Consultants) for 2010. The 2010 Compensation Consultants
were engaged by the Compensation Committee to provide
(i) input on the Compensation Discussion and Analysis,
(ii) benchmarking analysis in respect of CEO, Chairman and
non-executive director compensation, (iii) input on peer
group filings, (iv) a review of the competitive market for
executive positions and (v) input on performance targets
under 2010 performance shares and bonus funding.
Executive
Officers of the Company
The table below sets forth certain information concerning our
executive officers as of February 15, 2011:
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Name
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Age
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Position
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Christopher OKane(1)
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56
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Chief Executive Officer of Aspen Holdings
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Richard Houghton(1)
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45
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Chief Financial Officer of Aspen Holdings
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Julian Cusack(1)
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60
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Chief Risk Officer of Aspen Holdings, Chief Executive Officer
and Chairman of Aspen Bermuda
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John Cavoores(1)
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53
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Co-CEO of Aspen Insurance
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Brian Boornazian
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50
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CEO of Aspen Reinsurance
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Michael Cain
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38
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Group General Counsel
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James Few
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39
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President of Aspen Reinsurance, Chief Underwriting Officer of
Aspen Bermuda
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Karen Green
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43
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President and Chief Operating Officer, Aspen U.K. and AMAL Group
Head of Corporate Development
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Emil Issavi
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38
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Head of Casualty Reinsurance, Executive Vice President of Aspen
Reinsurance
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Rupert Villers
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58
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Co-CEO of Aspen Insurance
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Stephen Postlewhite
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39
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Head of Risk
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Kate Vacher
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39
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Director of Underwriting
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Chris Woodman
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49
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Group Head of Human Resources and Marketing
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(1) |
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Biography available above under Board of
Directors of the Company above. |
Brian Boornazian. Mr. Boornazian was
appointed Head of Reinsurance in May 2006 and is CEO of Aspen
Reinsurance. Since October 2005, Mr. Boornazian has also
served as President of Aspen Re America. From January 2004 to
October 2005, he was President of Aspen Re America, Property
Reinsurance. Prior to joining us, from 1999 to January 2004,
Mr. Boornazian was at XL Re America, where during his
tenure there he acted in several capacities and was Senior Vice
President, Chief Property Officer, responsible for property
facultative and treaty, as well as marine, and Chief Marketing
Officer.
Michael Cain. Mr. Cain has served as our
Group General Counsel since March 3, 2008. Prior to joining
us, Mr. Cain served as Corporate Counsel and Company
Secretary to Benfield Group Limited from 2002 to 2008.
Previously, Mr. Cain worked at Barlow Lyde &
Gilbert and Ashurst, law firms in London.
James Few. Mr. Few is President of Aspen
Reinsurance and has been our Head of Property Reinsurance since
June 1, 2004 and Aspen Bermudas Chief Underwriting
Officer since November 1, 2004. Before joining Aspen
Bermuda, he had been an underwriter at Aspen U.K. since
June 21, 2002. Mr. Few previously worked as an
underwriter with Wellington from 1999 until 2002 and from 1993
until 1999 was an underwriter and client development manager at
Royal & Sun Alliance.
Karen Green. Ms. Green is President and
Chief Operating Officer of Aspen U.K. and Managing Director of
AMAL. She is also Group Head of Corporate Development and Office
of the CEO. Ms. Green had joined us in March 2005 as Head
of Strategy and Office of the CEO. In March 2008, Ms. Green
was also appointed as Managing Director of AMAL, the managing
agency of our Lloyds Syndicate 4711 and in
12
January 2010 as President and Chief Operating Officer of Aspen
U.K. From 2001 until 2005, Ms. Green was a Principal with
MMC Capital Inc. (now Stone Point Capital), a global private
equity firm (formerly owned by Marsh and McLennan Companies
Inc.). Prior to MMC Capital, Ms. Green was a director at GE
Capital in London from 1997 to 2001, where she co-ran the
Business Development team (responsible for mergers and
acquisitions for GE Capital in Europe).
Emil Issavi. Mr. Issavi was appointed
Head of Casualty Reinsurance in July 2008, and is also Executive
Vice President of Aspen Reinsurance. Since July 2006,
Mr. Issavi has also served as Head of Casualty Treaty of
Aspen Re America. Prior to joining us, from 2002 to July 2006,
Mr. Issavi was at Swiss Re America, where during his tenure
there he was Senior Treaty Account Executive responsible for
various Global and National Property Casualty clients.
Mr. Issavi began his reinsurance career at Gen Re as a
Casualty Facultative Underwriter.
Stephen Postlewhite. Mr. Postlewhite is
Head of Risk and Chair of the Reserve Committee since January
2011 and was appointed Head of Risk Capital in September 2009.
He was previously Deputy Chief Actuary and joined us in 2003.
Prior to joining us, Mr. Postlewhite spent a year at the
FSA working extensively on the development of the Individual
Capital Assessment process for non-life insurers and nine years
with KPMG, both in London and Sydney, working as a senior
general insurance actuarial consultant, predominately on London
market, Lloyds and reinsurance clients. He has been a
fellow of the Institute of Actuaries since 2001. Prior to
embarking on an actuarial career, Mr. Postlewhite worked as
a management consultant for Andersen Consulting.
Kate Vacher. Ms. Vacher is our Director
of Underwriting. Previously, she was our Head of Group Planning
from April 2003 to May 2006 and a property reinsurance
underwriter since joining Aspen U.K. on September 1, 2002.
Ms. Vacher previously worked as an underwriter with
Wellington Syndicate 2020 from 1999 until 2002 and from 1995
until 1999 was an assistant underwriter at Syndicate 51.
Chris Woodman. Since July 2005,
Mr. Woodman has served as Group Head of Human Resources. In
January 2010, Mr. Woodman took on additional
responsibilities for the group marketing function. Prior to
joining us, he was employed by Fidelity International from March
1995 to March 2005. He joined them as a Human Resources Manager,
and was subsequently Human Resources Director, Research and
Trading on secondment to Fidelity Management and Research
Company in Boston, MA. He then returned to the United Kingdom as
Director, Human Resources for the Investment and Institutional
business at Fidelity International. Most recently, he was
Managing Director, Human Resources, COLT Telecom from January
2003 to February 2005 on secondment from Fidelity International.
Rupert Villers. Mr. Villers is Co-CEO of
Insurance. He joined us in April 2009 as Global Head of
Professional and Financial Lines. He has held a number of
positions in the insurance industry. He co-founded SVB Holdings
(subsequently renamed Novae Holdings) in 1986, and in his
seventeen years there he was Chief Executive Officer from 1991
to 2002 and underwriter of Syndicate 1007 from January 1,
1997 to December 31, 1999. Most recently, he has been
Chairman of APJ Continuation Ltd, a company he co-founded in
2005, whose major subsidiary, APJ (Asset Protection Jersey
Limited) writes a specialist book of K&R insurance.
Mr. Villers is a director of CertaAsig Holdings S.A. which
is the parent of CertAsig Societate di Asigurare si Reasigurare
S.A. (a Romanian insurance company).
Non-Management
Directors
The Board of Directors has adopted a policy of regularly
scheduled executive sessions where non-management directors meet
independent of management. The non-management directors include
all our independent directors and Mr. Jones, our Chairman.
The non-management directors held four executive sessions during
2010. Mr. Jones, our Chairman, presided at each executive
session. Shareholders of the Company and other interested
parties may communicate any queries or concerns to the
non-management directors by sending written communications by
mail to Mr. Jones,
c/o Company
Secretary, Aspen Insurance Holdings Limited, Maxwell Roberts
Building, 1 Church Street, Hamilton HM11, Bermuda, or by fax to
1-441-295-1829.
In 2010, we held also one executive session comprised solely of
independent directors.
13
Attendance
at Meetings by Directors
The Board of Directors conducts its business through its
meetings and meetings of the committees. Each director is
expected to attend each of our regularly scheduled meeting of
the Board of Directors and its constituent committees on which
that director serves and our annual general meeting of
shareholders. All directors attended the annual general meeting
of shareholders in 2010. Four meetings of the Board of Directors
were held in 2010. All of the directors, other than
Mr. Ahamed, attended at least 75% of the meetings of the
Board of Directors and meetings of all committees on which they
serve.
Mr. Ahamed attended two of four Board and six of eight
Committee meetings during 2010, equating to a total attendance
of 67%. He planned to attend one further meeting of the Board
during the year which would have taken his attendance to 75%.
Heavy snow in the Washington area, however, closed the airport
and prevented Mr. Ahamed from travelling to the
Companys offices in Bermuda for this meeting. In light of
the Companys tax operating guidelines, we determined that
Mr. Ahamed should not attend the meeting by telephone in
accordance with our intention to manage our business so that our
holding company will operate in such a manner so as not to be
subject to U.S. federal income tax. Mr. Ahamed was
appointed to the Companys Board of Directors in October
2007 and he attended 100% of the meetings of the Board and its
committees in both 2008 and 2009.
Code of
Ethics, Corporate Governance Guidelines and Committee
Charters
We adopted a code of business conduct and ethics that applies to
all of our employees including our Chief Executive Officer and
Chief Financial Officer. We have also adopted corporate
governance guidelines. We have posted the Companys code of
ethics and corporate governance guidelines on the Investor
Relations page of the Companys website at
www.aspen.bm.
The charters for each of the Audit Committee, the Compensation
Committee and the Corporate Governance and Nominating Committee
are also posted on the Investor Relations page of our website at
www.aspen.bm. Shareholders may also request printed
copies of our code of business conduct and ethics, the corporate
governance guidelines and the committee charters at no charge by
writing to Company Secretary, Aspen Insurance Holdings Limited,
Maxwell Roberts Building, 1 Church Street, Hamilton, HM11,
Bermuda.
Differences
between NYSE Corporate Governance Rules and the Companys
Corporate Governance Practices
The Company currently qualifies as a foreign private issuer, and
as such is not required to meet all of the NYSE Corporate
Governance Standards. The following discusses the significant
ways in which our corporate governance practices differ from
those followed by companies under the NYSE Corporate Governance
Standards and the Companys corporate governance practices.
The NYSE Corporate Governance Standards require chief executive
officers of U.S. domestic issuers to certify to the NYSE
that he or she is not aware of any violation by the company of
NYSE corporate governance listing standards. Because as a
foreign private issuer we are not subject to the NYSE Corporate
Governance Standards applicable to U.S. domestic issuers,
the Company need not make such certification.
14
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
This section provides information regarding the compensation
program for our Chief Executive Officer, Chief Financial Officer
and the three other most highly-compensated named executive
officers (NEOs) for 2010.
This section describes the overall objectives of our
compensation program, each element of compensation and key
compensation decisions.
The Company has achieved considerable growth since its inception
in 2002 and our compensation programs and plans have been
designed to reward executives who contribute to the continuing
success of the Company.
The Compensation Committee of our Board of Directors (the
Compensation Committee) has responsibility for
approving the compensation program for our NEOs. The charter of
the Compensation Committee requires that there be three
independent members of the Board on the Compensation Committee.
We sought to appoint independent directors from the Board whose
prior experience would add both value and different perspectives
on compensation to the Compensation Committee. The current
Compensation Committee consists of three independent directors:
Richard Bucknall (Chair), Matthew Botein and Ian Cormack.
Mr. Cavoores was a member of the Compensation Committee in
2010 until October 2010 when he ceased to be an independent
director of the Company following his appointment as Co-CEO of
Aspen Insurance.
Executive
Summary
Our compensation policies continue to emphasize aligning our
executives pay with our performance. In 2010, we achieved
an ROE of 11.2% and a growth in book value of 15.6%, a sound
result in light of market conditions in the insurance industry
and taking into account that 2010 was the sixth largest loss
year for catastrophe insured losses since 1980. Moreover, we
made progress with regards to our strategic objectives,
including embedding a revised group structure which we had
announced in the beginning of 2010 and enhancing and building
our insurance platform, which included the acquisition of a
company which has licenses to write business on an admitted
basis, the establishment of a Swiss insurance branch and a UK
regional platform. Our key compensation outcomes reflected this
performance and were consistent with our pay for performance
philosophy.
The following highlights the key elements of our compensation
program in 2010:
|
|
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|
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Salary: In light of the labor market
conditions in the countries in which we operate and the state of
the insurance and reinsurance markets, none of our NEOs received
a salary increase in 2010;
|
|
|
|
Bonus: As we had an Operating ROE (as defined
below) of 9.4%, the bonus pool funding was at 67.1%, which
resulted in our paying bonuses generally below the individual
bonus potential except for circumstances which
warranted a higher payment for exceptional team and personal
performance. The Compensation Committee exercised its discretion
and approved an increase of $1 million dollars to the bonus
pool. The purpose of this increase was to ensure the retention
of key underwriting talent in both reinsurance and insurance;
|
|
|
|
Long-term incentive awards: Based on an ROE of
11.2%, 31.6% vested for the relevant portion of the 2007 and
2008 performance shares and 85.6% vested for the relevant
portion of the 2009 and 2010 performance shares; and
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|
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|
Clawback: The Compensation Committee adopted a
policy to clawback bonus and long-term incentive awards granted
to our executive officers in 2010 and going forward in the case
of a subsequent and material negative restatement of the
Companys published financial results as a result of fraud.
|
We encourage a performance-based culture throughout the Company,
and at senior levels we have developed an approach to
compensation that aligns the executives compensation with
his or her performance
15
and contribution to the results of the Company. As discussed
below, we believe that the three elements of total direct
compensation, base salary, annual bonus and long-term incentive
awards, should be balanced such that each executive has the
appropriate amount of pay that is performance contingent and
longer-term. This relationship is illustrated in the table below
which depicts each element of target and actual compensation; in
each case a majority of the executives pay is delivered
through performance-based compensation with a significant
portion realized over more than one year. Equity awards in
particular are intended to encourage aligning interests with
shareholders and align executive pay with the value created for
shareholders.
2010 NEO
Compensation (1)
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(1) |
|
Consists of salary, bonus and incentive awards valued using the
average of the high and low stock price on the date of grant;
excludes other compensation. |
Executive
Compensation Program
The Companys compensation program consists of the
following five elements which are common to the market for
executive talent and which are used by our competitors to
attract, reward and retain executives.
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base salary;
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annual cash bonuses;
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long-term incentive awards;
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other stock plans; and
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|
benefits and perquisites.
|
Our compensation policies are designed with the goal of
maximizing shareholder value creation over the long-term. The
basic objectives of our executive compensation program are to:
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attract and retain highly skilled executives;
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link compensation to achievement of the Companys financial
and strategic goals by having a significant portion of
compensation be performance-based;
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create commonality of interest between management and
shareholders by tying substantial elements of compensation
directly to changes in shareholder value over time in a
sustainable manner that does not reward or appear to reward
short-term behavior that may involve excessive risk taking;
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maximize the financial efficiency of the overall program to the
Company from a tax, accounting, and cash flow perspective;
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ensure compliance with the highest standards of corporate
governance; and
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16
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|
encourage executives to work hard for the success of the
business and work effectively with clients and colleagues for
the benefit of the business as a whole.
|
We seek to consider together all elements that contribute to the
total compensation of NEOs rather than consider each element in
isolation. This process ensures that judgments made in respect
of any individual element of compensation are taken in the
context of the total compensation that an individual receives,
particularly the balance between base salary, cash bonus and
stock programs. We actively seek market intelligence on all
aspects of compensation and benefits.
All employees, including senior executives, are set challenging
goals and targets both at an individual and team level, which
they are expected to achieve, taking into account the dynamics
that occur within the market and business environment. These
goals include quantitative and qualitative measures. Although
the bonus pool is funded through a formula, performance-related
pay decisions are not formulaic and are based on a variety of
indicators of performance, thus diversifying the risk associated
with any single indicator. In particular, individual bonus
awards are not tied to formulas that could focus NEOs,
executives and employees on specific short-term outcomes that
might encourage excessive risk taking.
Market Intelligence. We believe that
shareholders are best served when the compensation packages of
senior executives are competitive but fair. By fair we mean that
the executives will be able to understand that the compensation
package reflects their market value and their personal
contribution to the business. We seek to create a total
compensation opportunity for NEOs with the potential to deliver
actual total compensation at the upper quartile of peer
companies for high performance relative to competitors and the
Companys internal business targets.
We review external market data to ensure that our compensation
levels are competitive. Our sources of information include:
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research of peer company annual reports on
Form 10-K
and similar filings for companies in our sector in the markets
in which we operate;
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publicly available compensation surveys from reputable survey
providers;
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advice and tailored research from compensation
consultants; and
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|
experience from recruiting senior positions in the market place.
|
To assist in making competitive comparisons, the Committee
retained Towers Watson for 2010 as independent advisors to the
Compensation Committee and to provide information regarding the
compensation practices of our peer group (as defined below)
against which we compete. The consultants were appointed in 2009
for services beginning in 2010 by the Compensation Committee
following a selection process led by the Chair of the
Compensation Committee. Towers Watson was used for advice to the
Compensation Committee in respect of compensation practices both
in the U.S. and the U.K. They reported to the Chair of the
Compensation Committee and worked with management under the
direction of the Chair. They were asked to provide overviews of
our competitors compensation programs taken from public
filings and to comment on management proposals on compensation
awards for NEOs and recommendations on proposals relating to the
long-term incentive programs and the funding of the employee
bonus pool. We also participate in publicly available surveys
produced by Hewitt New Bridge Street, Towers Watson and
PricewaterhouseCoopers. These surveys are used to provide
additional data on salaries, bonus levels and long-term
incentive awards of other companies in our industry. Together
with data provided by the independent advisors drawn from public
filings of competitors, the survey data is used to assess the
competitiveness of the compensation packages provided to our
NEOs. We have also sought advice on specific ad hoc technical
benefit issues from PricewaterhouseCoopers who provide services
only to management in respect of advice on international
compensation and taxation and benefits issues.
The Company predominantly competes for talent with companies
based in Bermuda, the U.S. and the U.K., and we seek to
understand the competitive practices in those different markets
and the extent to which they apply to our senior executives. Our
peer group for compensation purposes was reviewed and agreed
upon by the Compensation Committee with consideration given to
our strategy and the advice from Towers Watson.
17
Based on our review of companies that are similar to us in terms
of size and business mix, we established a primary peer group of
12 companies to consider compensation against corporate
performance. The peer group consists of:
U.S.
& Bermuda
Allied World Assurance Company Holdings Limited
Arch Capital Group Ltd.
Axis Capital Holdings Ltd.
Endurance Specialty Holdings Ltd.
Everest Re Group, Ltd.
Alterra
Validus Holdings Limited
White Mountains Insurance Group
U.K.
Amlin Plc
Brit Insurance Holdings Plc
Catlin Group Limited
Hiscox Ltd.
We have also determined that it may be appropriate under certain
circumstances to look at other companies, which we have defined
as near peers to benchmark against very specific
roles. We also compete with the companies in both the peer and
near peer groups for talent and, thus, review compensation data
available from publicly available sources when considering the
competitiveness of the compensation of our executives and to
keep informed of their compensation structures and practices.
The near peer group consists of the following:
U.S.
& Bermuda
Montpelier Re Holdings Ltd.
PartnerRe Ltd.
Platinum Underwriters Holdings, Ltd.
RenaissanceRe Holdings Ltd.
Transatlantic Holdings, Inc.
U.K.
Beazley Group Plc
In respect of compensation awarded to our NEOs, benchmarking and
compensation recommendations may be informed by this peer group
although we will also consider specific features of the role of
an executive which may not be informed solely through
benchmarking.
Cash
Compensation
Base Salary. We pay base salaries to provide
executives with a predictable level of compensation over the
year to enable executives to meet their personal expenses and
undertake their roles. The Compensation Committee reviews the
compensation recommendations made by management, including base
salary, of the most senior employees in the Company, excluding
the CEO but including the other NEOs. In the case of the Chief
Executive Officer, the Chair of the Compensation Committee
develops any recommended changes to base salary and is provided
with information and advice by Towers Watson starting in 2010.
When reviewing base salaries, we consider a range of factors
including:
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the performance of the business;
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the performance of the executives in their roles over the
previous year;
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the historical context of the executives compensation
awards;
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the importance and responsibilities of the role;
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the experience, skills and knowledge brought to the role by the
executive;
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the function undertaken by the role; and
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analysis of the market data from competitors and more general
market data from labor markets in which we operate.
|
18
Executive officers have employment agreements with the Company
that specify their initial base salary. This salary cannot be
reduced unilaterally by the employer without breaching the
contract. Generally, they are entitled to a review on an annual
basis, with any changes effective as of April 1 of the relevant
year. Even though we conduct an annual review of base salaries,
we are not legally obligated to increase salaries; however, we
are not contractually able to decrease salaries. We are
generally mindful of our overall goal to pay base salaries for
experienced executives at around the median of the peer group
and the market for similar roles. We do not apply this principle
mechanistically, but take into account the factors outlined
above and the total compensation picture for each individual. We
ideally use the median since we wish to remain competitive
against peers (though we also take into account levels of
experience, contributions and other factors as described above),
but aim, where possible, for compensation which is above the
median to be delivered by variable pay (such as long-term
incentives and bonuses) and linked to performance with a view to
achieve overall upper quartile total compensation for upper
quartile performance as compared to our peer group.
Base salary is normally a fixed amount determined on the basis
of market comparisons and the experience of each employee
initially at the point of employment and thereafter at each
subsequent annual review date. The annual salary review process
is governed by an overall budget related to market conditions in
the relevant employment markets and broader economic
considerations. Our annual salary review process is not intended
to be solely a cost of living increase or a
contractual entitlement to salary increases. Within this overall
governing budget, individual salary reviews are discretionary,
and take into account the above-mentioned factors and internal
equity. We believe that this approach mitigates the risk
associated with linking salary increases to short-term outcomes.
In the last three years, the overall budget for salary increases
averaged 3.0% per annum.
For purposes of this discussion, compensation paid in British
Pounds has been translated into U.S. Dollars at the
exchange rate of $1.5458 to £1, i.e. the average exchange
rate for 2010.
Based on the 2010 budget for salary increases which took into
consideration the then labor market conditions in the countries
in which we operate and the state of the insurance and
reinsurance markets, employees who were earning above
£175,000 or $280,000 received no salary increase, except
for extenuating circumstances where there was a promotion or
where the individual was significantly below market salaries. As
a result, the Compensation Committee did not approve any salary
increases in 2010 for any of our NEOs.
The salaries for each of our NEOs in 2009 and 2010 and any
salary changes are illustrated in the table below (1):
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2009 Annual
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2010 Annual
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Name and Principal Position
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Salary
|
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Salary
|
|
% Increase
|
|
Christopher OKane, Chief Executive Officer
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£480,000
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£480,000
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0
|
%
|
Richard Houghton, Chief Financial Officer
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£360,000
|
|
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£360,000
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|
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|
0
|
%
|
Julian Cusack, Chief Risk Officer
|
|
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£360,000
|
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£360,000
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|
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0
|
%
|
Brian Boornazian, CEO of Aspen Reinsurance
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$500,000
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$500,000
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0
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%
|
James Few, President of Aspen Reinsurance
|
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$475,000
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$475,000
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0
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%
|
Annual Cash Bonuses. The Company operates a
bonus plan. Annual cash bonuses are intended to reward
executives for our consolidated annual performance and for
individual achievements and contributions to the success of the
business over the previous fiscal year. The Compensation
Committee approves the bonus pool based on the Companys
Operating Return on Annualized Equity (Operating
ROE). Operating ROE is a non-GAAP financial measure which
(1) is calculated using operating income and (2) excludes from
average equity, the average after-tax unrealized appreciation or
depreciation on investments and the average after-tax unrealized
foreign exchange gains or losses and the aggregate value of the
liquidation preferences of our preference shares. Unrealized
appreciation (depreciation) on investments is primarily the
result of interest rate movements and the resultant impact on
fixed income securities, and unrealized appreciation
(depreciation) on foreign exchange is the result of exchange
rate movements between the U.S. dollar and the British pound.
Such appreciation (depreciation) is not related to management
actions or operational performance (nor is it likely to be
realized). Therefore, Aspen believes that excluding these
unrealized appreciations (depreciations) provides a more
consistent and useful measurement of operating performance,
which supplements GAAP information.
19
Average equity is calculated as the arithmetic average on a
monthly basis for the stated periods. Based on the
Companys achievement of an Operating ROE of 9.4% in 2010,
the size of the bonus pool funding was $20.4 million. The
Compensation Committee exercised its discretion and approved an
increase to the bonus pool of $1 million dollars thereby
increasing the total pool to $21.4 million. The purpose of
this increase was to ensure the retention of key underwriting
talent in both reinsurance and insurance.
The table below illustrates the bonus pool funding levels for
2010 based on achievement of Operating ROE:
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Operating ROE
|
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% of Bonus Potential
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<7%
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0.0
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%
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7%
|
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50.0
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%
|
8%
|
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57.1
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%
|
9%
|
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64.3
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%
|
10%
|
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|
71.4
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%
|
11%
|
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|
78.6
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%
|
12%
|
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|
85.7
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%
|
13%
|
|
|
92.9
|
%
|
14%
|
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|
100.0
|
%
|
15%
|
|
|
106.7
|
%
|
16%
|
|
|
113.3
|
%
|
17%
|
|
|
120.0
|
%
|
18%
|
|
|
126.7
|
%
|
19%
|
|
|
133.3
|
%
|
20%
|
|
|
140.0
|
%
|
>20%
|
|
|
140.0
|
%
|
As the table indicates, in order for the bonus pool to be funded
at the full potential levels (i.e. 100% of all bonus
potentials), the Company would have to achieve an Operating ROE
of at least 14%. This level was established with reference to
our 2010 business plan and an assessment of the investment and
business cycle, but also included an element of
stretch in so far as it would not deliver on target
funding unless the 2010 Operating ROE was 14% or greater. We
believe that such returns over the long term would be attractive
to investors. The bonus pool available to our NEOs and employees
does not fund if the Operating ROE is below 7%, and the plan
retains an element of discretion for exceptional circumstances
enabling the Compensation Committee to apply its judgment where
the formula may produce a funding level that is not
representative of absolute and relative corporate performance.
The annual bonus component of compensation is intended to
encourage all management and staff to work to improve the
overall performance of the Company as measured by Operating ROE.
Each employee is allocated a bonus potential which
expresses the amount of bonus they should expect to receive if
the Company, the team to which they belong and they as
individuals perform well. While individual bonus potentials are
not capped, there is a cap on the total bonus payable in any one
year, though the Compensation Committee has the discretion to
vary the size of the bonus pool.
Once the bonus pool is established, underwriting and functional
teams are allocated portions of the bonus pool based on their
team performance as assessed by the CEO. The evaluation takes
into consideration risk data in addition to performance data.
The risk data available to the CEO includes internal audit
reviews, underwriting reviews and reports of compliance
breaches. Individuals, including the NEOs, are allocated bonuses
based on their individual contribution to the business and their
compliance with the Companys governance and risk control
requirements. Accomplishment of set objectives established at
the individuals annual performance review (as described in
more detail below), such as financial goals, enhanced
efficiencies, development of talent in their organizations and
expense reductions, and any other material achievements are
taken into account when assessing an individuals
contribution. We believe that basing awards on a variety of
20
factors diversifies the risk associated with any single
indicator. In particular, individual awards are not tied to
formulas that could focus executives on specific short-term
outcomes that might encourage excessive risk taking.
Due to the potentially significant external factors impacting
our business, where for example our business plan may be
reforecast quarterly, any quantitative measures indicated in an
individuals objectives may be adapted during the year to
reflect changes in circumstances. These revisions may occur more
than once throughout the year, and the revised plan would be
used in the executives assessment at year-end instead of
the quantification, if any, set out at the beginning of the
year. We take this approach in order to ensure that our goals
remain fair, relevant and responsive to the complex and dynamic
nature of our business and relative to market conditions. The
appraisal assesses the performance of each employee by reference
to a range of objectives and expected behavioral competencies
with no formulaic calculation based on revenue or quantitative
targets impacting bonus or salary decisions.
In the case of the Chief Executive Officer, the Chairman
assesses his performance against the Companys business
plan and other objectives established by the Board and makes
compensation recommendations to the Compensation Committee. The
Compensation Committee reviews the CEOs achievements and
determines the CEOs bonus without recommendation from
management.
The Compensation Committee reviews managements approach to
distributing the bonus pool and specifically approves the
bonuses for the senior executives including the NEOs. We
benchmark our bonus targets and payouts with our competitive
peer group (listed earlier) and other market data from the
surveys referred to earlier, to establish our position in the
market. We use this information to assist us in developing a
methodology for establishing the size of the bonus pool required
for the Company as a whole and to establish individual bonus
potentials for all employees, including the Chief Executive
Officer and the other NEOs. For 2010, the Compensation Committee
reviewed the bonus potentials which were in the range of 100% to
150% of base salary for our NEOs, including our Chief Executive
Officer; these levels are unchanged from 2009. The bonus
potentials are indicative and do not set a minimum or a maximum
limit. For example, in a loss-making year, employees may not get
any bonuses. Conversely, in profitable years, employees may
receive bonuses in excess of their bonus potentials.
The annual bonus awards for each of our NEOs in recent years are
illustrated in the table below (1):
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Bonus
|
|
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|
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|
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Name and Principal Position
|
|
Year
|
|
Potential %
|
|
Target ($)
|
|
Actual ($)
|
|
% of Base
|
|
% of Target
|
|
Christopher OKane,
|
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|
2010
|
|
|
|
150
|
%
|
|
$
|
1,112,976
|
|
|
$
|
881,106
|
|
|
|
119
|
%
|
|
|
79
|
%
|
Chief Executive Officer
|
|
|
2009
|
|
|
|
150
|
%
|
|
$
|
1,128,240
|
|
|
$
|
2,256,480
|
|
|
|
300
|
%
|
|
|
200
|
%
|
|
|
|
2008
|
|
|
|
150
|
%
|
|
$
|
1,250,370
|
|
|
$
|
0
|
|
|
|
0
|
%
|
|
|
0
|
%
|
Richard Houghton,
|
|
|
2010
|
|
|
|
100
|
%
|
|
$
|
556,488
|
|
|
$
|
367,128
|
|
|
|
66
|
%
|
|
|
66
|
%
|
Chief Financial Officer
|
|
|
2009
|
|
|
|
100
|
%
|
|
$
|
564,120
|
|
|
$
|
902,592
|
|
|
|
160
|
%
|
|
|
160
|
%
|
|
|
|
2008
|
|
|
|
100
|
%
|
|
$
|
648,340
|
|
|
$
|
0
|
|
|
|
0
|
%
|
|
|
0
|
%
|
Julian Cusack,
|
|
|
2010
|
|
|
|
100
|
%
|
|
$
|
556,488
|
|
|
$
|
333,893
|
|
|
|
60
|
%
|
|
|
60
|
%
|
Chief Risk Officer
|
|
|
2009
|
|
|
|
100
|
%
|
|
$
|
564,120
|
|
|
$
|
902,592
|
|
|
|
160
|
%
|
|
|
160
|
%
|
|
|
|
2008
|
|
|
|
100
|
%
|
|
$
|
648,340
|
|
|
$
|
0
|
|
|
|
0
|
%
|
|
|
0
|
%
|
Brian Boornazian,
|
|
|
2010
|
|
|
|
135
|
%
|
|
$
|
675,000
|
|
|
$
|
540,000
|
|
|
|
108
|
%
|
|
|
80
|
%
|
CEO of Aspen Reinsurance
|
|
|
2009
|
|
|
|
135
|
%
|
|
$
|
675,000
|
|
|
$
|
1,350,000
|
|
|
|
270
|
%
|
|
|
200
|
%
|
|
|
|
2008
|
|
|
|
135
|
%
|
|
$
|
634,500
|
|
|
$
|
245,000
|
|
|
|
52
|
%
|
|
|
39
|
%
|
James Few,
|
|
|
2010
|
|
|
|
115
|
%
|
|
$
|
546,250
|
|
|
$
|
437,000
|
|
|
|
92
|
%
|
|
|
80
|
%
|
President of Aspen Reinsurance
|
|
|
2009
|
|
|
|
115
|
%
|
|
$
|
546,250
|
|
|
$
|
1,092,500
|
|
|
|
230
|
%
|
|
|
200
|
%
|
|
|
|
2008
|
|
|
|
115
|
%
|
|
$
|
517,500
|
|
|
$
|
205,000
|
|
|
|
46
|
%
|
|
|
40
|
%
|
|
|
|
(1) |
|
All compensation information is taken from the Compensation
Discussion and Analysis for the year in which the compensation
was earned, and for those paid in British Pounds we have used
the applicable exchange rate for such year as disclosed in such
years Compensation Discussion and Analysis. |
21
Individual contributions to our corporate goals are taken into
consideration through our annual appraisal process, whereby at
the outset of each year, objectives are established and
achievement of these goals is assessed at the end of each
performance year. The 2010 performance objectives for Chris
OKane, our CEO, were to:
1. Achieve the 2010 business plan within the
groups risk tolerances and underwriting disciplines;
2. Embed the new group structure announced in 2010
(two distinct operations insurance and reinsurance);
3. Improve and develop the U.S. insurance
platform, by writing business on both an admitted and
non-admitted basis and selectively entering new lines of
business;
4. Develop a distinct identity for Aspen Insurance
and establish its strategy for the U.K. and Europe;
5. Develop and adopt a revised 5-10 year group
strategy; and
6. Undertake a review of the group underwriting structure
and enabling functions to cause the implementation of all
necessary measures for compliance with Solvency II by 2010,
including the approval of the Companys internal capital
model.
The bonus award reflected Mr. OKanes delivery
of solid results for the Company with $312.7 million of net
income in a tough environment as well as achievements in several
key areas of developing the business. Key achievements included
good progress on delivering a group strategy and progress
towards preparing the Company for Solvency II, good capital
management particularly the share repurchases and progress made
in reviewing the Companys brand. While significant work
was undertaken to improve and develop the U.S. insurance
platform, there were still areas of improvement in respect of
such goal.
The 2010 performance objectives for Richard Houghton, our Chief
Financial Officer, included optimizing tactical and strategic
balance sheet and investment returns in a low interest rate
environment, building our corporate development capability,
enhancing management information for underwriting units,
executing the Information Technology (IT) strategic plan and
reviewing and improving the claims function.
The bonus awarded to Mr. Houghton reflected his work on
significant capital management initiatives in 2010, including
$407.8 million of share repurchases, and the issuance of
$250.0 million 6% Senior Notes in light of favorable
market conditions. In respect of his corporate development role,
he led a number of acquisition evaluations which were well
handled. Mr. Houghtons bonus also reflects his
broader responsibilities over IT and Human Resources (HR).
The 2010 performance objectives for Julian Cusack, our Chief
Risk Officer and Chairman and CEO of Aspen Bermuda, included the
development and adoption of a revised group strategy with a
5-10 year horizon, development and adoption of a group risk
appetite statement, establishment of a succession plan for
Bermuda platform, consideration and assessment of a research and
development strategy and oversight for the achievement of the
objectives of his direct reports.
The bonus awarded to Mr. Cusack reflected the achievements
of his objectives, and in particular his contribution to
improving risk management with a focus on preparing the Company
for Solvency II.
The 2010 performance objectives for Brian Boornazian, CEO of
Aspen Reinsurance, included the delivery of the 2010 business
plan in respect of the reinsurance segment, ensuring a
consistent and responsible underwriting approach across all
reinsurance lines to include work with other disciplines to make
sure that underwriters have the best tools to make the most
informed underwriting decisions. As part of the reorganization
announced in early 2010, Mr. Boornazian was responsible for
taking all actions necessary to embed Aspen Reinsurance as a
cohesive and distinct business segment. As head of the
reinsurance segment, Mr. Boornazian was also expected to
communicate with investors effectively regarding his unit. In
addition, in his role as Chairman of our U.S. Executive
Committee, Mr. Boornazian, working in conjunction with
colleagues, was responsible for ensuring that the
U.S. businesses have the necessary plans and resources to
execute their plans and to help better establish Aspen in the
U.S. insurance and reinsurance markets.
22
The bonus awarded to Mr. Boornazian reflected his role
within the Company having the largest underwriting role both in
terms of premium written and employees managed across all
locations and the strong results delivered by the reinsurance
segment in a year which suffered two significant catastrophic
events the earthquakes in Chile and New Zealand.
The 2010 performance objectives for James Few, President of
Aspen Reinsurance, included working effectively and
collaboratively as a senior member of the executive team to
build Aspen, the delivery of the 2010 business plan for the
reinsurance segment and ensuring a consistent and responsible
underwriting approach across all reinsurance lines. As Vice
Chairman of our reinsurance executive committee, Mr. Few
was responsible for ensuring that the reinsurance business has
the necessary plans and resources to help better establish Aspen
Reinsurance in the reinsurance markets. As President of Aspen
Reinsurance, Mr. Few was also responsible along with
Mr. Boornazian to embed Aspen Reinsurance as a cohesive and
distinct business segment. He was also expected to communicate
with investors effectively as needed.
The bonus awarded to Mr. Few reflected the key role he
played in business planning and contributing significantly to
our international operations. The bonus also reflects
Mr. Fews increased responsibilities over recent
years, where he has business development responsibility, as well
as serving as Chief Underwriting Officer of Aspen Bermuda and
Head of Property Reinsurance.
Equity
Compensation
We believe that a substantial portion of each NEOs
compensation should be in the form of equity awards and that
such awards serve to align the interests of NEOs and our
shareholders. The opportunities for executives to build wealth
through stock ownership both attract talent to the organization
and also contribute to retaining that talent. Vesting schedules
require executives to stay with the organization for defined
periods before they are eligible to exercise options or receive
shares. Performance conditions are used to ensure that the share
awards are linked to the performance of the business. Equity
awards to our NEOs are made pursuant to the Aspen Insurance
Holdings Limited 2003 Share Incentive Plan, as amended
(2003 Share Incentive Plan).
Long-Term Incentive Awards. The Company
operates a Long-Term Incentive Plan (LTIP) for key
employees under which annual grants are made. We have
traditionally used a combination of both performance shares and
options for LTIP grants. As with 2009, in 2010 the Compensation
Committee approved grants of performance shares solely. We
believe that performance shares provide stronger retention for
executives across the cycle and provide strong incentives for
executives to meet the performance conditions required for
vesting. We believe that shares should remain subject to
performance criteria to ensure that executives do not receive
share awards if the business does not achieve pre-determined
levels of performance. The performance criteria are based on a
carefully considered business plan. In conjunction with views
expressed by their Compensation Consultants, the Compensation
Committee are in agreement that the criteria does not cause
executives to take undue risks or be careless in their actions
for longer term gain.
Employees are considered eligible for a long-term incentive
award based on seniority, performance and their longer-term
potential. Eligible employees are allocated to one of five
categories and target award levels have been established for
each category.
The number of performance shares and any other awards available
for grant each year are determined by the Compensation
Committee. The Compensation Committee takes into account the
cost and annual share usage under the 2003 Share Incentive
Plan, the number of employees who will be participating in the
plan, market data from competitors in respect of the percentage
of outstanding shares made available for annual grants to
employees and the need to retain and motivate key employees. In
2010, 750,137 performance shares were granted. Performance share
awards were made by grant value to all NEOs. In total, we
granted performance share awards to 164 employees.
As with awards granted in 2009, the performance shares granted
in 2010 are subject to a three-year vesting period with a
separate annual ROE test for each year. One-third of the grant
will be eligible for vesting each year. In response to the
economic environment on our business model and to ensure that
the targets for
23
our long-term incentive plan involve a degree of stretch, but
are not set at levels which are unlikely to be reached or that
may cause individuals to focus on top line results that could
create a greater risk to the Company, the Compensation Committee
agreed to establish the performance criteria for performance
share awards made in 2010 at the same level as the 2009 grants,
which are at a lower threshold than those awarded in 2008. The
2010 criteria are as follows:
|
|
|
|
|
if the ROE achieved in any given year is less than 7%, then the
portion of the performance shares subject to the conditions of
that year will be forfeited;
|
|
|
|
if the ROE achieved in any given year is between 7% and 12%,
then the percentage of the performance shares eligible for
vesting in that year will be between 10%-100% on a straight-line
basis;
|
|
|
|
if the ROE achieved in any given year is between 12% and 22%,
then the percentage of the performance shares eligible for
vesting in that year will be between 100%-200% on a
straight-line basis; provided however that if the ROE for such
year is greater than 12% and the average ROE for such year and
the previous year is less than 7%, then only 100% of the shares
eligible for vesting in such year shall vest.
|
Awards deemed to be eligible for vesting (i.e. with achievement
of 7% ROE or more) will be banked and all shares
which ultimately vest will be issued following the completion of
the three-year vesting period and approval of the 2012 ROE. The
performance share awards are designed to reward executives based
on the Companys performance. By ensuring that a minimum 7%
ROE threshold is established before shares can be banked, we
ensure executives are not rewarded for a performance that is
below the cost of capital. On the other hand, if we achieve an
ROE above 12%, executives are rewarded and will bank additional
shares. This approach aligns executives with the interests of
shareholders and encourages management to focus on delivering
strong results. A cap of 22% ROE is seen as a responsible
maximum in the current environment, given that returns above
such a level may require a level of risk-taking beyond the
parameters of our business model.
With respect to the 2009 and 2010 performance shares, of the
one-third of the grant subject to the 2010 ROE test, 85.6% are
eligible for vesting based on our 2010 ROE of 11.2% and as such
478,872 shares will be deemed eligible for vesting and
banked (before taking into account forfeitures for
departing employees under the terms of the awards). With respect
to the 2007 and 2008 performance shares, of the one-fourth and
one-third of the grant, respectively, subject to the 2010 ROE
test, 31.6% are eligible for vesting based on our 2010 ROE of
11.2%. The 2007 and 2008 performance shares are issuable upon
filing of this report; based on the performance conditions
(before taking into account employee departures), 82.9% of the
2007 performance shares have vested and 55.2% of the 2008
performance shares have vested.
The outcomes of the performance tests on our current performance
share plans are illustrated in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
Threshold ROE
|
|
|
10
|
%
|
|
|
10
|
%
|
|
|
7
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
Target ROE
|
|
|
15
|
%
|
|
|
15
|
%
|
|
|
12
|
%
|
|
|
12
|
%
|
|
|
|
|
|
|
|
|
Actual ROE
|
|
|
21.6
|
%
|
|
|
3.3
|
%
|
|
|
18.4
|
%
|
|
|
11.2
|
%
|
|
|
|
|
|
|
|
|
2007 Performance share awards(1)
|
|
|
166
|
%
|
|
|
0
|
%
|
|
|
134
|
%
|
|
|
31.6
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
2008 Performance share awards(2)
|
|
|
N/A
|
|
|
|
0
|
%
|
|
|
134
|
%
|
|
|
31.6
|
%
|
|
|
N/A
|
|
|
|
N/A
|
|
2009 Performance share awards(2)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
164
|
%
|
|
|
85.6
|
%
|
|
|
|
|
|
|
N/A
|
|
2010 Performance share awards(2)
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
85.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents annual performance test; percentage to be applied to
25.0% of the original grant |
|
(2) |
|
Represents annual performance test; percentage to be applied to
33.3% of the original grant |
24
The grants for the NEOs under the LTIP were made in February
2010 (at the time that bonus awards for 2009 were made) and were
as follows (fair values of the awards have been calculated in
accordance with FASB ASC Topic 718):
|
|
|
|
|
|
|
|
|
|
|
2010 LTIP Grants
|
|
|
Amount of
|
|
Fair Value
|
Name and Principal Position
|
|
Performance Shares
|
|
of Award
|
|
Christopher OKane, Chief Executive Officer
|
|
|
107,469
|
|
|
$
|
2,807,090
|
|
Richard Houghton, Chief Financial Officer
|
|
|
25,076
|
|
|
$
|
654,985
|
|
Julian Cusack, Chief Risk Officer
|
|
|
25,076
|
|
|
$
|
654,985
|
|
Brian Boornazian, CEO of Aspen Reinsurance
|
|
|
26,867
|
|
|
$
|
701,766
|
|
James Few, President of Aspen Reinsurance
|
|
|
26,867
|
|
|
$
|
701,766
|
|
Mr. OKanes award reflected his very strong
performance against his 2009 objectives, which included
substantial achievement of his 2009 business plan objectives.
Mr. OKane had fully delivered on his objective on
capital, solvency and liquidity, restoring balance sheet
strength in 2009 and enabling a share buy-back in early 2010.
The Compensation Committee noted that approximately 33% of the
grant was attributable to an excellent return reflecting a
successful year in 2009.
Mr. Houghtons award reflected his contribution in
respect of investment return and capital management in 2009.
Also taken into consideration were the successful
reorganizations in 2009 of the IT and claims functions, as well
as the implementation of several successful initiatives within
HR. The Committee noted that Mr. Houghtons grant was
just below the median for a U.S. CFO based on available
data.
Mr. Cusacks award reflected his contribution in 2009
towards the evaluation and review of Aspens underwriting
lines, as well as his considerable work in respect of the
strategic review of our business model, an objective which was
completed in 2010. Mr. Cusack was also recognized for his
work in delivering a comprehensive statement of risk tolerances
to the Risk Committee and his continued strengthening of the
actuarial and risk management functions, including the formation
of a separate capital risk team in 2009 and a successful
reorganization within the legal and compliance teams. The
Committee noted that Mr. Cusacks LTIP grant in 2010
was in line with the award granted in 2008 (whereas the 2009
award was significantly higher) and was above the market median
of the 2009 U.S./Bermuda peer group proxy data.
Mr. Boornazians award reflected the exceptional
performance of the reinsurance segment in 2009 and positive
results in respect of underwriting quality reviews and
compliance data. This award also recognized
Mr. Boornazians contribution to our
U.S. operations as a whole, and his role in marketing to
key clients and positive contributions in presentations with
investors and external constituents. While the Compensation
Committee recognized that Mr. Boornazians 2010 equity
award was between the lower quartile and the median, it noted
that Mr. Boornazians 2009 total compensation was at
the upper quartile reflecting our philosophy to aim to deliver
upper quartile variable compensation for commensurate
performance.
Mr. Fews award reflected his strong 2009 performance,
which included the then property reinsurance segment exceeding
the business plan and his successful ongoing development of
capability within the global property reinsurance team. While
the Compensation Committee recognized that Mr. Fews
2010 equity award was between the lower quartile and the median
against the 2009 U.S./Bermuda peer group data, it noted that
Mr. Fews 2009 total compensation was at the upper
quartile reflecting our philosophy to aim to deliver upper
quartile variable compensation for commensurate performance.
While the bulk of our performance share awards to NEOs have
historically been made pursuant to our annual grant program, the
Compensation Committee retains the discretion to make additional
awards at other times, in connection with the initial hiring of
a new officer, for retention purposes or otherwise. We refer to
such grants as ad hoc awards. No ad hoc
grants were made to NEOs in 2010.
Other Stock Grants. The Company awards
time-vesting restricted share units (RSUs)
selectively to employees under certain circumstances. RSUs vest
solely based on continued service and are not subject to
performance conditions. Typically, RSUs are used to compensate
newly hired executives for loss of stock
25
value from awards that were forfeited when they left their
previous company. The RSUs granted vest in one-third tranches
over three years. No RSU grants were made to the NEOs in 2010.
Employee Stock Purchase Plans. Plans were
established following shareholder approval for an Employee Share
Purchase Plan, a U.K. Sharesave Plan and an International Plan.
Alongside employees, NEOs are eligible to participate in the
appropriate plan in operation in their country of residence.
Participation in the plans is entirely optional.
Messrs. OKane and Houghton participate in the U.K.
Sharesave Plan, whereby they save up to £250 per month over
a three-year period, at the end of which they will be eligible
to purchase Company shares at the option price of £11.74
($18.90) (the price was determined based on the average of the
highest and lowest stock price on November 4, 2008).
Messrs. Boornazian and Few participate in the Employee
Share Purchase Plan, whereby they can save up to $500 per month
over a two-year period, at the end of which they will be
eligible to purchase Company shares at the option price of
$16.08 (the price was determined on based on the average of the
highest and lowest stock price on December 4, 2008).
Mr. Cusack elected not to participate in the plan.
Stock Ownership Guidelines. The Compensation
Committee approved the introduction of more stringent stock
ownership guidelines for senior executives in 2008. These
guidelines are intended to work in conjunction with our
established Policy on Insider Trading and Misuse of Inside
Information, which among other things, prohibits buying or
selling puts or call, pledging of shares, short sales and
trading of Company shares on a short term basis. The Stock
Ownership guidelines apply to all members of the Group Executive
Committee and adhere to the following key principles:
|
|
|
|
|
All Company shares owned by Group Executive Committee members
will be held in own name or joint with spouse;
|
|
|
|
All Company shares owned by Group Executive Committee members
should be held in a Merrill Lynch brokerage account or other
Company approved broker;
|
|
|
|
Executive Directors should inform the Chief Executive Officer
and the Chairman if they plan to trade Aspen shares, and should
provide detailed reasons for sale upon request;
|
|
|
|
Other Group Executive Committee members should obtain permission
to trade from the Chief Executive Officer and provide detailed
reasons for sale upon request;
|
|
|
|
The Compensation Committee will be informed on a quarterly basis
of all trading of stock by all Aspen employees;
|
|
|
|
Recommendation that sales by Group Executive Committee members
be undertaken using SEC
Rule 10b5-1
trading programs, where possible with the additional cost of
administration connected with such trades to be paid by the
Company;
|
|
|
|
It is prohibited for Company shares to be used as collateral for
loans, purchasing of Company stock on margin or pledging Company
stock in a margin account; and
|
|
|
|
The Chief Executive Officer should inform the Chairman of any
decision to sell stock.
|
In reviewing any request to trade, the Chief Executive Officer
will take into consideration:
|
|
|
|
|
the amount of stock that an executive holds, the duration of the
period over which that stock has been held and the amount of
stock being requested to be sold;
|
|
|
|
the nature of the role held by the executive;
|
|
|
|
any reasons related to hardship, retirement planning, divorce
etc. that would make a sale of stock required;
|
|
|
|
the history of trading by the executive;
|
|
|
|
the remaining stock holdings left after the sale; and
|
26
|
|
|
|
|
the market conditions and other factors which relate to the
Companys trading situation at the proposed time of sale.
|
Clawback
Policy
In 2010, the Compensation Committee adopted a clawback policy to
bonus and LTIP awards granted to our executive officers,
including our NEOs. In 2010 and going forward, in circumstances
where there is a subsequent and material negative restatement of
the Companys published financial results as a result of
fraud, the Company will seek to recover any erroneously paid
performance-based compensation.
Benefits
and Perquisites
Perquisites. Our Bermudian-based NEOs receive
various perquisites provided by or paid by the Company. James
Few, President, Aspen Reinsurance and Julian Cusack, our Chief
Risk Officer and Chairman and CEO of Bermuda, operate outside of
their home country and are based in Bermuda. They are provided
with the perquisites outlined below, which are consistent with
competitive practices in the Bermuda market and have been
necessary for recruitment and retention purposes.
|
|
|
|
|
Housing Allowance. Non-Bermudians are
restricted by law from owning certain property in Bermuda. This
has led to a housing market that is largely based on renting to
expatriates who work on the island. Housing allowances are a
near universal practice for expatriates and also, increasingly,
for local Bermudians in key positions. We base our housing
allowances on market information available through local
benefits surveys and from information available from the housing
market. The allowance is based on the level of the position
compared with market data.
|
|
|
|
Club Membership. This benefit is common
practice in the Bermudian market place and enables the
expatriate to settle into the community. It also has the benefit
of enabling our NEOs to establish social networks with clients
and executives in our industry in furtherance of our business.
|
|
|
|
Home Leave. This benefit is common practice
for expatriates who are working outside of their home country.
We believe that this helps the expatriate and
his/her
family keep in touch with the home country in respect of both
business and social networks. Such a benefit is provided by
other companies within our peer group, is necessary for both
recruitment and retention purposes and is important for the
success of the overseas assignment.
|
While we do provide a housing allowance to certain expatriate
executives, that is an almost universal business practice for
Bermuda-based executives. Tax
gross-ups on
Mr. Cusacks limited perquisites (i.e., housing
allowance and home leave) were implemented only after we had
required him to split his time between Bermuda and the U.K.,
which then caused Mr. Cusack to be a U.K. resident for tax
purposes, and therefore subjected him to taxation on such
perquisites, which are typically provided for expatriate
employees residing in Bermuda.
Change in
Control and Severance Benefits
In General. We provide the opportunity for
certain of our NEOs to be protected under the severance and
change in control provisions contained in their employment
agreements. We provide this opportunity to attract and retain an
appropriate caliber of talent for the position. Our severance
and change in control provisions for the named executive
officers are summarized in Employment
Agreements and Potential Payments upon
Termination or Change in Control.
27
EXECUTIVE
COMPENSATION
The following Summary Compensation Table sets forth, for the
years ended December 31, 2010, 2009 and 2008, the
compensation for services in all capacities earned by the
Companys Chief Executive Officer, Chief Financial Officer
and its next three most highly compensated executive officers.
These individuals are referred to as the named executive
officers.
Summary
Compensation Table (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Deferred
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
|
Name and Principal Position
|
|
Year
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
Earnings ($)
|
|
($)
|
|
Total ($)
|
|
Christopher OKane,
|
|
|
2010
|
|
|
$
|
741,984
|
|
|
$
|
881,106
|
|
|
$
|
2,807,090
|
|
|
|
|
|
|
|
|
|
|
$
|
148,397
|
|
|
$
|
4,578,577
|
|
Chief Executive
|
|
|
2009
|
|
|
$
|
740,408
|
|
|
$
|
2,256,480
|
|
|
$
|
2,792,710
|
|
|
|
|
|
|
|
|
|
|
$
|
133,273
|
|
|
$
|
5,922,871
|
|
Officer(6)
|
|
|
2008
|
|
|
$
|
817,835
|
|
|
|
|
|
|
$
|
1,405,257
|
|
|
|
|
|
|
|
|
|
|
$
|
147,210
|
|
|
$
|
2,370,302
|
|
Richard Houghton,
|
|
|
2010
|
|
|
$
|
556,488
|
|
|
$
|
367,128
|
|
|
$
|
654,985
|
|
|
|
|
|
|
|
|
|
|
$
|
89,038
|
|
|
$
|
1,667,639
|
|
Chief Financial
|
|
|
2009
|
|
|
$
|
560,203
|
|
|
$
|
902,592
|
|
|
$
|
930,903
|
|
|
|
|
|
|
|
|
|
|
$
|
79,248
|
|
|
$
|
2,472,946
|
|
Officer(7)
|
|
|
2008
|
|
|
$
|
631,359
|
|
|
|
|
|
|
$
|
655,783
|
|
|
|
|
|
|
|
|
|
|
$
|
88,390
|
|
|
$
|
1,375,532
|
|
Julian Cusack,
|
|
|
2010
|
|
|
$
|
556,887
|
|
|
$
|
333,893
|
|
|
$
|
654,985
|
|
|
|
|
|
|
|
|
|
|
$
|
440,475
|
|
|
$
|
1,986,240
|
|
Chief Risk Officer(8)
|
|
|
2009
|
|
|
$
|
560,203
|
|
|
$
|
902,592
|
|
|
$
|
1,396,355
|
|
|
|
|
|
|
|
|
|
|
$
|
426,239
|
|
|
$
|
3,285,389
|
|
|
|
|
2008
|
|
|
$
|
534,569
|
|
|
|
|
|
|
$
|
655,783
|
|
|
|
|
|
|
|
|
|
|
$
|
460,235
|
|
|
$
|
1,650,587
|
|
Brian Boornazian,
|
|
|
2010
|
|
|
$
|
500,000
|
|
|
$
|
540,000
|
|
|
$
|
701,766
|
|
|
|
|
|
|
|
|
|
|
$
|
32,935
|
|
|
$
|
1,774,701
|
|
CEO of Aspen
|
|
|
2009
|
|
|
$
|
492,500
|
|
|
$
|
1,350,000
|
|
|
$
|
1,163,629
|
|
|
|
|
|
|
|
|
|
|
$
|
31,434
|
|
|
$
|
3,037,563
|
|
Reinsurance(9)
|
|
|
2008
|
|
|
$
|
462,500
|
|
|
$
|
245,000
|
|
|
$
|
702,628
|
|
|
|
|
|
|
|
|
|
|
$
|
31,916
|
|
|
$
|
1,442,044
|
|
James Few,
|
|
|
2010
|
|
|
$
|
475,000
|
|
|
$
|
437,000
|
|
|
$
|
701,766
|
|
|
|
|
|
|
|
|
|
|
$
|
313,363
|
|
|
$
|
1,927,129
|
|
President of Aspen
|
|
|
2009
|
|
|
$
|
468,750
|
|
|
$
|
1,092,500
|
|
|
$
|
1,163,629
|
|
|
|
|
|
|
|
|
|
|
$
|
289,032
|
|
|
$
|
3,013,911
|
|
Reinsurance(10)
|
|
|
2008
|
|
|
$
|
446,667
|
|
|
$
|
205,000
|
|
|
$
|
930,903
|
|
|
|
|
|
|
|
|
|
|
$
|
281,523
|
|
|
$
|
1,864,093
|
|
|
|
|
(1) |
|
Unless otherwise indicated, compensation payments paid in
British Pounds have been translated into U.S. Dollars at the
average exchange rate of $1.5458 to £1, $1.567 to £1
and $1.8524 to £1 for 2010, 2009 and 2008, respectively. |
|
(2) |
|
The salaries provided represent earned salaries. |
|
(3) |
|
For a description of our bonus plan, see Compensation
Discussion and Analysis Cash
Compensation Annual Cash Bonuses above. |
|
(4) |
|
Consists of performance share awards and/or restricted share
units, as applicable. Valuation is based on the grant date fair
values of the awards calculated in accordance with FASB ASC
Topic 718, without regard to forfeiture assumptions. The
awards potential maximum value, assuming the highest level
of performance conditions are met $4,543,731, $1,060,185,
$1,060,185, $1,135,907 and $1,135,907 for
Messrs. OKane, Houghton, Cusack, Boornazian and Few,
respectively. |
|
(5) |
|
Consists of stock options. Valuation is based on the grant date
fair values of the awards calculated in accordance with FASB ASC
Topic 718, without regard to forfeiture assumptions. Please
refer to Note 16 of our financial statements for the
assumptions made with respect to our performance share and
option awards. For a description of the forfeitures during the
year, see Outstanding Equity Awards at Fiscal
Year-End below. |
|
(6) |
|
Mr. OKanes compensation was paid in British
Pounds. With respect to All Other Compensation, this
consists of the Companys contribution to the pension plan
of $148,397, $133,273 and $147,210 in 2010, 2009 and 2008,
respectively. |
|
(7) |
|
Mr. Houghtons compensation was paid in British
Pounds. With respect to All Other Compensation this
consists of the Companys contribution to the pension plan
of $89,038, $79,248 and $88,390 in 2010, 2009 and 2008,
respectively. |
|
(8) |
|
For 2008, Mr. Cusack was paid in U.S. Dollars until May
2008. Starting in May 2008, per his new employment agreement, he
was paid in British Pounds except for £70,000 which were
paid in U.S. Dollars and converted at the applicable exchange
rate at the time of payment. For 2009 and 2010, Mr. Cusack
was paid |
28
|
|
|
|
|
on the same basis except for £72,000 which were paid in
U.S. Dollars. For purposes of this table, we have used the
average exchange rate from May 1, 2008 to December 31,
2008 of $1.7896:£1 in respect of his salary paid in British
Pounds in 2008. With respect to All Other
Compensation, this includes (i) a housing allowance
in Bermuda of $180,000 for each of 2010, 2009 and 2008,
respectively, (ii) home leave travel expenses for
Mr. Cusack and his family of $5,238, $7,329 and $28,400,
for 2010, 2009 and 2008, respectively, (iii) a payroll tax
contribution in an amount of $16,247, $13,875 and $11,163 for
2010, 2009 and 2008, respectively, (iv) club membership
fees of $7,700, $7,350 and $7,000 for 2010, 2009 and 2008,
respectively, (v) the Companys contribution to the
pension plan of $111,298, $112,041 and $111,946 for 2010, 2009
and 2008, respectively, (vi) a tax
gross-up
payment in respect of Mr. Cusacks housing allowance
of $116,501, $101,511 and $114,193 for 2010, 2009 and 2008,
respectively and (vii) a tax
gross-up in
respect of Mr. Cusacks home leave of $3,492, $4,134
and $7,534 for 2010, 2009 and 2008, respectively. |
|
(9) |
|
Mr. Boornazians compensation was paid in U.S.
Dollars. With respect to All Other Compensation,
this consists of (i) the Companys contribution to the
401(K) plan (consisting of profit sharing and matching
contributions) of $22,050, $21,300 and $20,700 for 2010, 2009
and 2008, respectively, (ii) additional premium paid of
$3,778, $3,778 and $4,856 for 2010, 2009 and 2008, respectively
for additional life insurance and disability benefits and
(iii) club membership fees of $7,107, $6,356 and $6,360 for
2010, 2009 and 2008, respectively. |
|
(10) |
|
Mr. Fews compensation was paid in U.S. Dollars. With
respect to All Other Compensation, this includes
(i) a housing allowance in Bermuda of $180,000 for each of
2010, 2009 and 2008, (ii) home leave travel expenses for
Mr. Fews family of $23,181, $29,286 and $31,403 for
2010, 2009 and 2008, respectively, (iii) a payroll tax
contribution in an amount of $43,125, $16,625 and $11,163 for
2010, 2009 and 2008, respectively, (iv) club membership
fees of $9,260, $7,350 and $5,121 for 2010, 2009 and 2008,
respectively, and (v) the Companys contribution to
the pension plan of $57,797, $55,771 and $53,837 for 2010, 2009
and 2008, respectively. |
29
Grants of
Plan-Based Awards
The following table sets forth information concerning grants of
options to purchase ordinary shares and other awards granted
during the twelve months ended December 31, 2010 to the
named executive officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
Estimated Future Payout Under
|
|
|
Closing Price
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
Equity Incentive Plan Awards
|
|
|
on Date
|
|
|
of Stock
|
|
|
|
Grant
|
|
|
Approval
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
of Grant
|
|
|
Awards
|
|
Name
|
|
Date(1)
|
|
|
Date(1)
|
|
|
(#)(2)
|
|
|
(#)(2)
|
|
|
(#)(3)
|
|
|
($)
|
|
|
(#)(4)
|
|
|
Christopher OKane
|
|
|
02/11/2010
|
|
|
|
02/08/2010
|
|
|
|
0
|
|
|
|
107,469
|
|
|
|
173,956
|
|
|
$
|
27.93
|
|
|
$
|
2,807,090
|
|
Richard Houghton
|
|
|
02/11/2010
|
|
|
|
02/08/2010
|
|
|
|
0
|
|
|
|
25,076
|
|
|
|
40,589
|
|
|
$
|
27.93
|
|
|
$
|
654,985
|
|
Julian Cusack
|
|
|
02/11/2010
|
|
|
|
02/08/2010
|
|
|
|
0
|
|
|
|
25,076
|
|
|
|
40,589
|
|
|
$
|
27.93
|
|
|
$
|
654,985
|
|
Brian Boornazian
|
|
|
02/11/2010
|
|
|
|
02/08/2010
|
|
|
|
0
|
|
|
|
26,867
|
|
|
|
43,488
|
|
|
$
|
27.93
|
|
|
$
|
701,766
|
|
James Few
|
|
|
02/11/2010
|
|
|
|
02/08/2010
|
|
|
|
0
|
|
|
|
26,867
|
|
|
|
43,488
|
|
|
$
|
27.93
|
|
|
$
|
701,766
|
|
|
|
|
(1) |
|
In 2007, we adopted a policy whereby the Compensation Committee
approves annual grants at a regularly scheduled meeting.
However, if such a meeting takes place while the Company is in a
close period (i.e., prior to the release of our quarterly or
yearly earnings), the grant date will be the day on which our
close period ends. The approval date of February 8, 2010
was during our close period, and therefore the grant date was
February 11, 2010, the day our close period ended. |
|
|
|
In respect of ad hoc grants of RSUs (if not in a close period),
in particular with respect to new hires, the grant date is the
later of (i) the date on which the Compensation Committee
approves the grant or (ii) the date on which the employee
commences employment with the Company. |
|
(2) |
|
Under the terms of the 2010 performance share awards, one-third
of the grant is eligible for vesting each year. In any given
year, if the ROE is less than 7%, then the portion of the grant
for such year will not vest and is forfeited. If the ROE is
between 7% and 12%, the percentage of the performance shares
eligible for vesting in that year will be between 10% and 100%
on a straight-line basis. If the ROE is between 12% and 22%,
then the percentage of the performance shares eligible for
vesting in that year will be between 100% and 200% on a
straight-line basis. If in any given year, the shares eligible
for vesting are greater than 100% for the portion of such
years grant (i.e., the ROE was greater than 12% in such
year) and the average ROE over such year and the preceding year
is less than 7%, then only 100% of the shares that are eligible
for vesting in such year shall vest. The amounts provided
represent 100% of the performance shares vested at an ROE of 12%
each year. For a more detailed description of our performance
share awards granted in 2010, refer to Narrative
Description of Summary Compensation and Grants of Plan-Based
Awards Share Incentive Plan 2010
Performance Share Awards below. |
|
(3) |
|
Amounts provided represent 85.6% vesting in respect of one-third
of the initial grant as our ROE for 2010 was 11.2%, and assumes
a vesting of 200% for the remaining two-thirds of the
performance shares at an ROE of 22% each year. |
|
(4) |
|
Valuation is based on the grant date fair value of the awards
calculated in accordance with FASB ASC Topic 718, without regard
to forfeiture assumptions, which is $26.12 for the performance
shares granted on February 11, 2010. Refer to Note 16
of our financial statements for the assumptions made with
respect to our performance share awards. |
Narrative
Description of Summary Compensation and Grants of Plan-Based
Awards
Share
Incentive Plan
We have adopted the Aspen Insurance Holdings Limited
2003 Share Incentive Plan, as amended (the
2003 Share Incentive Plan) to aid us in
recruiting and retaining key employees and directors and to
motivate such employees and directors. The 2003 Share
Incentive Plan was amended at our annual general meeting in 2005
to increase the number of shares that can be issued under the
plan. The total number of ordinary shares that may be issued
under the 2003 Share Incentive Plan is 9,476,553. On
February 5, 2008, the Compensation Committee of the Board
approved an amendment to the 2003 Share Incentive Plan
providing delegated authority to subcommittees or individuals to
grant restricted share units to individuals who are not
insiders
30
subject to Section 16(b) of the Securities Exchange Act of
1934, as amended (the Exchange Act), or are not
expected to be covered persons within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as
amended.
The 2003 Share Incentive Plan provides for the grant to
selected employees and non-employee directors of share options,
share appreciation rights, restricted shares and other
share-based awards. The shares subject to initial grant of
options (the initial grant options) represented an
aggregate of 5.75% of our ordinary shares on a fully diluted
basis (3,884,030 shares), assuming the exercise of all
outstanding options issued to Wellington and the Names
Trustee. In addition, an aggregate of 2.5% of our ordinary
shares on a fully diluted basis (1,840,540 shares), were
reserved for additional grant or issuance of share options,
share appreciation rights, restricted shares
and/or other
share-based awards as and when determined in the sole discretion
of our Board of Directors or the Compensation Committee. No
award may be granted under the 2003 Share Incentive Plan
after the tenth anniversary of its effective date. The
2003 Share Incentive Plan provides for equitable adjustment
of affected terms of the plan and outstanding awards in the
event of any change in the outstanding ordinary shares by reason
of any share dividend or split, reorganization,
recapitalization, merger, consolidation, spin-off, combination
or transaction or exchange of shares or other corporate
exchange, or any distribution to shareholders of shares other
than regular cash dividends or any similar transaction. In the
event of a change in control (as defined in the 2003 Share
Incentive Plan), our Board of Directors or the Compensation
Committee may accelerate, vest or cause the restrictions to
lapse with respect to, all or any portion of an award (except
that shares subject to the initial grant options shall vest); or
cancel awards for fair value; or provide for the issuance of
substitute awards that substantially preserve the terms of any
affected awards; or provide that for a period of at least
15 days prior to the change in control share options will
be exercisable and that upon the occurrence of the change in
control, such options shall terminate and be of no further force
and effect.
Initial Options. The initial grant options
have a term of ten years and an exercise price of $16.20 per
share, which price was calculated based on 109% of the
calculated fair market value of our ordinary shares as of
May 29, 2003 and was determined by an independent
consultant. Sixty-five percent (65%) of the initial grant
options are subject to time-based vesting with 20% vesting upon
grant and 20% vesting on each December 31 of calendar years
2003, 2004, 2005 and 2006. The remaining 35% of the initial
grant options are subject to performance-based vesting
determined by achievement of ROE targets, and subject to
achieving a threshold combined ratio target, in each case, over
the applicable one or two-year performance period. Initial grant
options that do not vest based on the applicable performance
targets may vest in later years to the extent performance in
such years exceeds 100% of the applicable targets, and in any
event, any unvested and outstanding performance-based initial
grant options will become vested on December 31, 2009. Upon
termination of a participants employment, any unvested
options shall be forfeited, except that if the termination is
due to death or disability (as defined in the option agreement),
the time-based portion of the initial grant options shall vest
to the extent such option would have otherwise become vested
within 12 months immediately succeeding such termination
due to death or disability. Upon termination of employment,
vested initial grant options will be exercisable, subject to
expiration of the options, until (i) the first anniversary
of termination due to death or disability or, for nine members
of senior management, without cause or for good reason (as those
terms are defined in the option agreement), (ii) six months
following termination without cause or for good reason for all
other participants, (iii) three months following
termination by the participant for any reason other than those
stated in (i) or (ii) above or (iv) the date of
termination for cause. As provided in the 2003 Share
Incentive Plan, in the event of a change in control unvested and
outstanding initial grant options shall immediately become fully
vested. As at December 31, 2009, all of the options have
vested.
The initial grant options may be exercised by payment in cash or
its equivalent, in ordinary shares, in a combination of cash and
ordinary shares, or by broker-assisted cashless exercise. The
initial grant options are not transferable by a participant
during his or her lifetime other than to family members, family
trusts, and family partnerships.
2004 Options. In 2004, we granted a total of
500,113 nonqualified stock options to various employees of the
Company. Each nonqualified stock option represents the right and
option to purchase, on the terms and conditions set forth in the
agreement evidencing the grant, ordinary shares of the Company,
par value 0.15144558 cent per share. The exercise price of the
shares subject to the option is $24.44 per share, which as
31
determined by the 2003 Share Incentive Plan is based on the
arithmetic mean of the high and low prices of the ordinary
shares on the grant date as reported by the NYSE. Of the total
grant of 2004 options, 51.48% have vested. The remaining amounts
have been forfeited due to the performance targets not being met.
2005 Options. On March 3, 2005, we
granted an aggregate of 512,172 nonqualified stock options. The
exercise price of the shares subject to the option is $25.88 per
share, which as determined by the 2003 Share Incentive Plan
is based on the arithmetic mean of the high and low prices of
the ordinary shares on the grant date as reported by the NYSE.
We also granted an additional 13,709 nonqualified stock options
during 2005; the exercise price of those shares varied from
$25.28 to $26.46. The ROE target was not met in 2005, and as a
result, all granted options have been forfeited.
2006 Options. On February 16, 2006, we
granted an aggregate of 1,072,490 nonqualified stock options.
The exercise price of the shares subject to the option is $23.65
per share, which as determined by the 2003 Share Incentive
Plan is based on the arithmetic mean of the high and low prices
of the ordinary shares on February 17, 2006 as reported by
the NYSE. We granted an additional 142,158 options on
August 4, 2006, for an exercise price of $23.19. Of the
total grant, 92.2% have vested, with the remaining amounts
forfeited due to performance targets not being met.
2007 Options. On May 1, 2007, the
Compensation Committee approved a grant of an aggregate of
607,641 nonqualified stock options with a grant date of
May 4, 2007. The exercise price of the shares subject to
the option is $27.28 per share, which as determined by the
2003 Share Incentive Plan is based on the arithmetic mean
of the high and low prices of the ordinary shares on May 4,
2007 as reported by the NYSE. The Compensation Committee granted
an additional 15,198 options on October 22, 2007, for an
exercise price of $27.52.
The options became fully vested and exercisable upon the third
anniversary of the date of grant, subject to the optionees
continued employment with the Company (and lack of notice of
resignation or termination). The option grants are not subject
to performance conditions. In the event the optionee is
terminated for cause (as defined in the option agreement), the
vested option shall be immediately canceled without
consideration to the extent not previously exercised.
The optionee may exercise all or any part of the vested option
at any time prior to the earliest to occur of (i) the
seventh anniversary of the date of grant, (ii) the first
anniversary of the optionees termination of employment due
to death or disability (as defined in the option agreement),
(iii) the first anniversary of the optionees
termination of employment by the Company without cause (for any
reason other than due to death or disability), (iv) three
months following the date of the optionees termination of
employment by the optionee for any reason (other than due to
death or disability), or (v) the date of the
optionees termination of employment by the Company for
cause (as defined in the option agreement).
Restricted Share Units. In 2008, we granted
67,290 RSUs to our employees which vest in one-third tranches
over three years. In 2009, we granted 97,389 RSUs to our
employees which vest in one-third tranches over three years. In
2010, we granted 168,707 RSUs to our employees which vest in
one-third tranches over three years. Vesting of a
participants units may be accelerated, however, if the
participants employment with the Company and its
subsidiaries is terminated without cause (as defined in such
participants award agreement), on account of the
participants death or disability (as defined in such
participants award agreement), or, with respect to some of
the participants, by the participant with good reason (as
defined in such participants award agreement).
Participants will be paid one ordinary share for each unit that
vests as soon as practicable following the vesting date.
Recipients of the RSUs generally will not be entitled to any
rights of a holder of ordinary shares, including the right to
vote, unless and until their units vest and ordinary shares are
issued; provided, however, that participants will be entitled to
receive dividend equivalents with respect to their units.
Dividend equivalents will be denominated in cash and paid in
cash if and when the underlying units vest. Participants may,
however, be permitted by the Company to elect to defer the
receipt of any ordinary shares upon the vesting of units, in
which case payment will not be made until such time or times as
the participant may elect.
32
Payment of deferred share units would be in ordinary shares with
any cash dividend equivalents credited with respect to such
deferred share units paid in cash.
2004 Performance Share Awards. On
December 22, 2004, we granted an aggregate of 150,074
performance share awards to various employees of the Company.
Each performance share award represents the right to receive, on
the terms and conditions set forth in the agreement evidencing
the award, a specified number of ordinary shares of the Company,
par value 0.15144558 cent per share. Payment of performance
shares is contingent upon the achievement of specified ROE
targets. With respect to the 2004 performance share awards,
17.16% of the total grant has vested. The remainder of the 2004
performance share grants was forfeited due to the
non-achievement of performance targets.
2005 Performance Share Awards. On
March 3, 2005, we granted an aggregate of 123,002
performance share awards to various officers and other employees
and an additional 8,225 performance share awards were granted in
2005. Each performance share award represents the right to
receive, on the terms and conditions set forth in the agreement
evidencing the award, a specified number of ordinary shares of
the Company, par value 0.15144558 cent per share. Payment of
performance shares is contingent upon the achievement of
specified ROE targets. All 2005 performance share awards were
forfeited as the performance targets were not met.
2006 Performance Share Awards. On
February 16, 2006, we granted an aggregate of 316,912
performance share awards to various officers and other
employees. We granted an additional 1,042 performance share
awards on August 4, 2006. Each performance share award
represents the right to receive, on the terms and conditions set
forth in the agreement evidencing the award, a specified number
of ordinary shares of the Company, par value 0.15144558 cent per
share. Payment of performance shares is contingent upon the
achievement of specified ROE targets. Of the total grant, 92.2%
have vested, with the remaining amounts forfeited due to
performance targets not being met.
2007 Performance Share Awards. On May 1,
2007, the Compensation Committee approved a grant of an
aggregate of 427,796 performance share awards with a grant date
of May 4, 2007. The Compensation Committee granted an
additional 11,407 performance shares with a grant date of
October 22, 2007. Each performance share award represents
the right to receive, on the terms and conditions set forth in
the agreement evidencing the award, a specified number of
ordinary shares of the Company, par value 0.15144558 cent per
share. Of the total grant, 82.9% have vested and are issuable
upon the filing of this report, with the remaining amounts
forfeited due to performance targets not being met. Payment of
vested performance shares will occur as soon as practicable
after the date the performance shares become vested.
Participants may be required to pay to the Company, and the
Company will have the right to withhold, any applicable
withholding taxes in respect of the performance shares.
Performance shares may not be assigned, sold or otherwise
transferred by participants other than by will or by the laws of
descent and distribution.
2008 Performance Share Awards. On
April 29, 2008, the Compensation Committee approved a grant
of an aggregate of 587,095 performance share awards with a grant
date of May 2, 2008. Each performance share award
represents the right to receive, on the terms and conditions set
forth in the agreement evidencing the award, a specified number
of ordinary shares of the Company, par value 0.15144558 cent per
share. Payment of performance shares is contingent upon the
achievement of specified ROE tests each year. Of the total
grant, 55.2% have vested and are issuable upon the filing of
this report, with the remaining amounts forfeited due to
performance targets not being met.
Payment of vested performance shares will occur as soon as
practicable after the date the performance shares become vested.
Participants may be required to pay to the Company, and the
Company will have the right to withhold, any applicable
withholding taxes in respect of the performance shares.
Performance shares may not be assigned, sold or otherwise
transferred by participants other than by will or by the laws of
descent and distribution.
2009 Performance Share Awards. On
April 28, 2009, the Compensation Committee approved a grant
of an aggregate of 912,931 performance share awards with a grant
date of May 1, 2009. On October 27, 2009, the
Compensation Committee approved an additional grant of 15,221
performance share awards with a grant date of October 30,
2009. Each performance share award represents the right to
receive, on the terms and
33
conditions set forth in the agreement evidencing the award, a
specified number of ordinary shares of the Company, par value
0.15144558 cent per share. Payment of performance shares is
contingent upon the achievement of specified ROE tests each year.
One-third (1/3) of the performance shares will become eligible
for vesting upon the later of (i) the date the
Companys outside auditors complete the audit of the
Companys financial statements containing the information
necessary to compute its ROE for the fiscal year ended
December 31, 2009, or (ii) the date such ROE is
approved by the Board of Directors or an authorized committee
thereof (the 2009 Performance Award). No performance
shares will become eligible for vesting for the 2009 Performance
Award if the ROE for the 2009 fiscal year is less than 7%. If
the Companys ROE for the 2009 fiscal year is between 7%
and 12%, then 10% to 100% of the 2009 Performance Award will be
eligible for vesting on a straight-line basis. If the ROE for
the 2009 fiscal year is between 12% and 22%, then 100% to 200%
of the 2009 Performance Award will become eligible for vesting
on a straight-line basis. However, if the ROE for the 2009
fiscal year is greater than 12% and the average ROE over 2009
and the immediately preceding fiscal year is less than 7%, then
the percentage of eligible shares for vesting will be 100%. If
the ROE for the 2009 fiscal year is greater than 12% and the
average ROE over 2009 and the immediately preceding fiscal year
is 7% or greater, then the percentage of eligible shares for
vesting will vest in accordance with the schedule for vesting
described above. There is no additional vesting if the 2009 ROE
is greater than 22%. Based on the achievement of a 2009 ROE of
18.4%, 164% of one-third of the 2009 performance share award is
eligible for vesting.
One-third (1/3) of the performance shares will become eligible
for vesting upon the later of (i) the date the
Companys outside auditors complete the audit of the
Companys financial statements containing the information
necessary to compute its ROE for the fiscal year ended
December 31, 2010, or (ii) the date such ROE is
approved by the Board of Directors or an authorized committee
thereof (the 2010 Performance Award). No performance
shares will become eligible for vesting for the 2010 Performance
Award if the ROE for the 2010 fiscal year is less than 7%. If
the Companys ROE for the 2010 fiscal year is between 7%
and 12%, then 10% to 100% of the 2010 Performance Award will be
eligible for vesting on a straight-line basis. If the ROE for
the 2010 fiscal year is between 12% and 22%, then 100% to 200%
of the 2010 Performance Award will become eligible for vesting
on a straight-line basis. However, if the ROE for the 2010
fiscal year is greater than 12% and the average ROE over 2010
and 2009 is less than 7%, then the percentage of eligible shares
for vesting will be 100%. If the ROE for the 2010 fiscal year is
greater than 12% and the average ROE over 2010 and 2009 is 7% or
greater, then the percentage of eligible shares for vesting will
vest in accordance with the schedule for vesting described
above. There is no additional vesting if the 2010 ROE is greater
than 22%. Based on the achievement of a 2010 ROE of 11.2%, 85.6%
of one-third of the 2010 performance share award is eligible for
vesting.
One-third (1/3) of the performance shares will become eligible
for vesting upon the later of (i) the date the
Companys outside auditors complete the audit of the
Companys financial statements containing the information
necessary to compute its ROE for the fiscal year ended
December 31, 2011, or (ii) the date such ROE is
approved by the Board of Directors or an authorized committee
thereof (the 2011 Performance Award). No performance
shares will become eligible for vesting for the 2011 Performance
Award if the ROE for the 2011 fiscal year is less than 7%. If
the Companys ROE for the 2011 fiscal year is between 7%
and 12%, then 10% to 100% of the 2011 Performance Award will be
eligible for vesting on a straight-line basis. If the ROE for
the 2011 fiscal year is between 12% and 22%, then 100% to 200%
of the 2011 Performance Award will become eligible for vesting
on a straight-line basis. However, if the ROE for the 2011
fiscal year is greater than 12% and the average ROE over 2011
and 2010 is less than 7%, then the percentage of eligible shares
for vesting will be 100%. If the ROE for the 2011 fiscal year is
greater than 12% and the average ROE over 2011 and 2010 is 7% or
greater, then the percentage of eligible shares for vesting will
vest in accordance with the schedule for vesting described
above. There is no additional vesting if the 2011 ROE is greater
than 22%.
Performance shares which are eligible for vesting, as described
above, as part of the 2009 Performance Award, the 2010
Performance Award and the 2011 Performance Award will vest upon
the later of (i) the date the Companys outside
auditors complete the audit of the Companys financial
statements containing the
34
information necessary to compute its ROE for the fiscal year
ended December 31, 2011, or (ii) the date such 2011
ROE is approved by the Board of Directors or an authorized
committee thereof, subject to the participants continued
employment (and lack of notice of resignation or termination)
until such date.
Payment of vested performance shares will occur as soon as
practicable after the date the performance shares become vested.
Participants may be required to pay to the Company, and the
Company will have the right to withhold, any applicable
withholding taxes in respect of the performance shares.
Performance shares may not be assigned, sold or otherwise
transferred by participants other than by will or by the laws of
descent and distribution.
2010 Performance Share Awards. On
February 8, 2010, the Compensation Committee approved a
grant of an aggregate of 720,098 performance share awards with a
grant date of February 11, 2010. An additional 12,346
performance shares were granted on April 16, 2010. On
October 26, 2010, the Compensation Committee approved a
grant of 17,693 performance shares with a grant date of
November 1, 2010. Each performance share award represents
the right to receive, on the terms and conditions set forth in
the agreement evidencing the award, a specified number of
ordinary shares of the Company, par value 0.15144558 cent per
share. Payment of performance shares is contingent upon the
achievement of specified ROE tests each year.
One-third (1/3) of the performance shares will become eligible
for vesting upon the later of (i) the date the
Companys outside auditors complete the audit of the
Companys financial statements containing the information
necessary to compute its ROE for the fiscal year ended
December 31, 2010, or (ii) the date such ROE is
approved by the Board of Directors or an authorized committee
thereof (the 2010 Performance Award). No performance
shares will become eligible for vesting for the 2009 Performance
Award if the ROE for the 2010 fiscal year is less than 7%. If
the Companys ROE for the 2010 fiscal year is between 7%
and 12%, then 10% to 100% of the 2010 Performance Award will be
eligible for vesting on a straight-line basis. If the ROE for
the 2010 fiscal year is between 12% and 22%, then 100% to 200%
of the 2010 Performance Award will become eligible for vesting
on a straight-line basis. However, if the ROE for the 2010
fiscal year is greater than 12% and the average ROE over 2010
and the immediately preceding fiscal year is less than 7%, then
the percentage of eligible shares for vesting will be 100%. If
the ROE for the 2010 fiscal year is greater than 12% and the
average ROE over 2010 and the immediately preceding fiscal year
is 7% or greater, then the percentage of eligible shares for
vesting will vest in accordance with the schedule for vesting
described above. There is no additional vesting if the 2010 ROE
is greater than 22%. Based on the achievement of a 2010 ROE of
11.2%, 85.6% of one-third of the 2010 performance share award is
eligible for vesting.
One-third (1/3) of the performance shares will become eligible
for vesting upon the later of (i) the date the
Companys outside auditors complete the audit of the
Companys financial statements containing the information
necessary to compute its ROE for the fiscal year ended
December 31, 2011, or (ii) the date such ROE is
approved by the Board of Directors or an authorized committee
thereof (the 2011 Performance Award). No performance
shares will become eligible for vesting for the 2011 Performance
Award if the ROE for the 2011 fiscal year is less than 7%. If
the Companys ROE for the 2011 fiscal year is between 7%
and 12%, then 10% to 100% of the 2011 Performance Award will be
eligible for vesting on a straight-line basis. If the ROE for
the 2011 fiscal year is between 12% and 22%, then 100% to 200%
of the 2011 Performance Award will become eligible for vesting
on a straight-line basis. However, if the ROE for the 2011
fiscal year is greater than 12% and the average ROE over 2011
and 2010 is less than 7%, then the percentage of eligible shares
for vesting will be 100%. If the ROE for the 2010 fiscal year is
greater than 12% and the average ROE over 2011 and 2010 is 7% or
greater, then the percentage of eligible shares for vesting will
vest in accordance with the schedule for vesting described
above. There is no additional vesting if the 2010 ROE is greater
than 22%.
One-third (1/3) of the performance shares will become eligible
for vesting upon the later of (i) the date the
Companys outside auditors complete the audit of the
Companys financial statements containing the information
necessary to compute its ROE for the fiscal year ended
December 31, 2012, or (ii) the date such ROE is
approved by the Board of Directors or an authorized committee
thereof (the 2012 Performance Award). No performance
shares will become eligible for vesting for the 2012 Performance
Award if the ROE
35
for the 2012 fiscal year is less than 7%. If the Companys
ROE for the 2012 fiscal year is between 7% and 12%, then 10% to
100% of the 2012 Performance Award will be eligible for vesting
on a straight-line basis. If the ROE for the 2012 fiscal year is
between 12% and 22%, then 100% to 200% of the 2012 Performance
Award will become eligible for vesting on a straight-line basis.
However, if the ROE for the 2012 fiscal year is greater than 12%
and the average ROE over 2012 and 2011 is less than 7%, then the
percentage of eligible shares for vesting will be 100%. If the
ROE for the 2012 fiscal year is greater than 12% and the average
ROE over 2011 and 2010 is 7% or greater, then the percentage of
eligible shares for vesting will vest in accordance with the
schedule for vesting described above. There is no additional
vesting if the 2012 ROE is greater than 22%.
Performance shares which are eligible for vesting, as described
above, as part of the 2010 Performance Award, the 2011
Performance Award and the 2012 Performance Award will vest upon
the later of (i) the date the Companys outside
auditors complete the audit of the Companys financial
statements containing the information necessary to compute its
ROE for the fiscal year ended December 31, 2012, or
(ii) the date such 2012 ROE is approved by the Board of
Directors or an authorized committee thereof, subject to the
participants continued employment (and lack of notice of
resignation or termination) until such date.
Payment of vested performance shares will occur as soon as
practicable after the date the performance shares become vested.
Participants may be required to pay to the Company, and the
Company will have the right to withhold, any applicable
withholding taxes in respect of the performance shares.
Performance shares may not be assigned, sold or otherwise
transferred by participants other than by will or by the laws of
descent and distribution.
2011 Performance Share Awards. On
February 3, 2011, the Compensation Committee approved a
grant of an aggregate of 853,223 performance share awards with a
grant date of February 9, 2011. The performance shares will
be subject to a three-year vesting period with a separate annual
ROE test for each year. One-third of the grant will be eligible
for vesting each year based on a formula, and will only be
issuable at the end of the three-year period. If the ROE
achieved in 2011 is less than 6%, then the portion of the
performance shares subject to the vesting conditions in such
year will be forfeited (i.e. 33.33% of the initial grant). If
the ROE achieved in 2011 is between 6% and 11%, then the
percentage of the performance shares eligible for vesting will
be between 10% and 100% on a straight-line basis. If the ROE
achieved in 2011 is between 11% and 21%, then the percentage of
the performance shares eligible for vesting will be between 100%
and 200% on a straight-line basis. The Compensation Committee
will determine the vesting conditions for the 2012 and 2013
portions of the grant in such years taking into consideration
the market conditions and the Companys business plans at
the commencement of the years concerned. Notwithstanding the
vesting criteria for each given year, if in any given year, the
shares eligible for vesting are greater than 100% for the
portion of such years grant and the average ROE over such
year and the preceding year is less than the average of the
minimum vesting thresholds for such year and the preceding year,
then only 100% (and no more) of the shares that are eligible for
vesting in such year shall vest. If the average ROE over the two
years is greater than the average of the minimum vesting
thresholds for such year and the preceding year, then there will
be no diminution in vesting and the shares eligible for vesting
in such year will vest in accordance with the vesting schedule
without regard to the average ROE over the two-year period.
Employment-Related
Agreements
The following information summarizes the (i) service
agreements for Mr. OKane, which commenced on
September 24, 2004, (ii) amended and restated service
agreement for Mr. Cusack which became effective when he
assumed his duties as Chief Operating Officer in May 2008,
(iii) service agreement for Mr. Houghton dated
April 3, 2007, (iv) employment agreement for
Mr. Boornazian which commenced on January 12, 2004 (as
supplemented by addendum dated February 5, 2008 and as
further amended effective October 28, 2008,
December 31, 2008 and February 8, 2010) and
(v) service agreement for Mr. Few which commenced on
36
March 10, 2005. In respect of each of the agreements with
Messrs. OKane, Cusack, Houghton, Few and Boornazian:
(i) in the case of Messrs. OKane, Houghton and
Cusack, employment terminates automatically when the employee
reaches 65 years of age, but in the case of Mr. Few
employment will terminate automatically when the employee
reaches 60 years of age;
(ii) in the case of Messrs. OKane, Houghton,
Cusack and Few, employment may be terminated for cause if:
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the employee becomes bankrupt, is convicted of a criminal
offence (other than a traffic violation or a crime with a
penalty other than imprisonment), commits serious misconduct or
other conduct bringing the employee or Aspen Holdings or any of
its subsidiaries into disrepute;
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the employee materially breaches any provisions of the service
agreement or conducts himself in a manner prejudicial to the
business;
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the employee is disqualified from being a director in the case
of Messrs. OKane, Cusack and Houghton; or
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the employee breaches any code of conduct or ceases to be
registered by any regulatory body;
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(iii) in the case of Messrs. OKane, Cusack and
Few, employment may be terminated if the employee materially
breaches any provision of the shareholders agreement with
Aspen Holdings and such breach is not cured by the employee
within 21 days after receiving notice from the Company;
(iv) in the case of Mr. Boornazian, employment may be
terminated for cause if:
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the employees willful misconduct is materially injurious
to Aspen Re America or its affiliates;
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the employee intentionally fails to act in accordance with the
direction of the Chief Executive Officer or Board;
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the employee is convicted of a felony;
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the employee violates a law, rule or regulation that governs
Aspen Re Americas business, has a material adverse effect
on Aspen Re Americas business, or disqualifies him from
employment; or
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the employee intentionally breaches a non-compete or
non-disclosure agreement;
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(v) in the case of Messrs. OKane, Houghton,
Cusack and Few, employment may be terminated by the employee
without notice for good reason if:
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the employees annual salary or bonus opportunity is
reduced;
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there is a material diminution in the employees duties,
authority, responsibilities or title, or the employee is
assigned duties materially inconsistent with his position;
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the employee is removed from any of his positions (or in the
case of Mr. OKane is not elected or re-elected to
such positions);
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an adverse change in the employees reporting relationship
occurs in the case of Messrs. OKane, Cusack and
Few; or
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the employee is required to relocate more than 50 miles
from the employees current office;
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provided that, in each case, the default has not been cured
within 30 days of receipt of a written notice from the
employee;
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37
(vi) in the case of Mr. Boornazian, employment may be
terminated by the employee for good reason upon
90 days notice if:
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there is a material diminution in the employees
responsibilities, duties, title or authority;
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the employees annual salary is materially reduced; or
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there is a material breach by the Company of the employment
agreement;
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(vii) in the case of Mr. OKane, if the employee
is terminated without cause or resigns with good reason, the
employee is entitled (subject to execution of a release) to
(a) salary at his salary rate through the date in which his
termination occurs; (b) the lesser of (x) the target
annual incentive award for the year in which the employees
termination occurs, and (y) the average of the annual
incentive awards received by the employee in the prior three
years (or, number of years employed if fewer), multiplied by a
fraction, the numerator of which is the number of days that the
employee was employed during the applicable year and the
denominator of which is 365; (c) a severance payment to two
times the sum of (x) the employees highest salary
during the term of the agreement and (y) the average annual
bonus paid to the executive in the previous three years (or
lesser period if employed less than three years); and
(d) the unpaid balance of all previously earned cash bonus
and other incentive awards with respect to performance periods
which have been completed, but which have not yet been paid, all
of which amounts shall be payable in a lump sum in cash within
30 days after termination. Fifty percent of this severance
payment is paid to the employee within 14 days of the
execution by the employee of a valid release and the remaining
50% is paid in four equal installments during the 12 months
following the first anniversary of the date of termination,
conditional on the employee complying with the non-solicitation
provisions applying during that period;
(viii) in the case of Messrs. Houghton, Cusack and
Few, if the employee is terminated without cause or resigns with
good reason, the employee is entitled (subject to execution of a
release) to (a) salary at his salary rate through the date
in which his termination occurs; (b) the lesser of
(x) the target annual incentive award for the year in which
the employees termination occurs, and (y) the average
of the annual incentive awards received by the employee in the
prior three years (or, number of years employed if fewer),
multiplied by a fraction, the numerator of which is the number
of days that the employee was employed during the applicable
year and the denominator of which is 365; (c) a severance
payment of the sum of (x) the employees highest
salary rate during the term of the agreement and (y) the
average bonus under the Companys annual incentive plan
actually earned by the employee during the three years (or
number of complete years employed, if fewer) immediately prior
to the year of termination; and (d) the unpaid balance of
all previously earned cash bonus and other incentive awards with
respect to performance periods which have been completed, but
which have not yet been paid, all of which amounts shall be
payable in a lump sum in cash within 30 days after
termination. In the event that the employee is paid in lieu of
notice under the agreement (including if the Company exercises
its right to enforce garden leave under the agreement) the
severance payment will be inclusive of that payment;
(ix) in the case of Mr. Boornazian, if the employee is
terminated without cause or resigns with good reason, the
employee is entitled (subject to execution of a release) to
(a) salary at his salary rate through the date in which his
termination occurs, payable within 20 days after the normal
payment date; (b) payment in equal installments during the
remaining term of the employees employment of an amount
equal to (x) the employees highest salary rate during
the term of the agreement and (y) the average bonus under
the Companys annual incentive plan actually earned by the
employee during the three years immediately prior to the year of
termination; (c) a payment equal to the actual annual
incentive award for the year in which the employees
termination occurs, multiplied by a fraction, the numerator of
which is the number of days that the employee was employed
during the applicable year and the denominator of which is 365,
payable when bonuses are normally paid; and (d) any earned
but unpaid annual bonus, payable within 20 days after the
normal payment date;
(x) in the case of Messrs. OKane, Houghton,
Cusack, Boornazian and Few, if the employee is terminated
without cause or resigns for good reason in the six months prior
to a change of control or the
38
two-year period following a change of control, in addition to
the benefits discussed above, all share options and other
equity-based awards granted to the executive during the course
of the agreement shall immediately vest and remain exercisable
in accordance with their terms. In addition, in the case of
Mr. OKane, he may be entitled to excise tax
gross-up
payments;
(xi) the agreements contain provisions relating to
reimbursement of expenses, confidentiality, non-competition and
non-solicitation; and
(xii) in the case of Messrs. OKane, Houghton,
Cusack and Few, the employees have for the benefit of their
respective beneficiaries life insurance (and in the case of
Mr. Boornazian supplemental life insurance benefits). There
are no key man insurance policies in place.
Christopher OKane. Mr. OKane
entered into a service agreement with Aspen U.K. Services and
Aspen Holdings under which he has agreed to serve as Chief
Executive Officer of Aspen Holdings and Aspen U.K. and director
of both companies, terminable upon 12 months notice
by either party. The agreement originally provided that
Mr. OKane shall be paid an annual salary of
£346,830, subject to annual review.
Mr. OKanes service agreement also entitles him
to participate in all management incentive plans and other
employee benefits and fringe benefit plans made available to
other senior executives or employees generally, including
continued membership in the Companys pension scheme,
medical insurance, permanent health insurance, personal accident
insurance and life insurance. The service agreement also
provides for a discretionary bonus to be awarded annually as the
Compensation Committee of our Board of Directors may determine.
Effective April 1, 2009, Mr. OKanes salary
was £480,000. For 2010, no salary increase was approved.
Effective April 1, 2011, Mr. OKanes salary
will be £527,500.
Richard Houghton. Mr. Houghton entered
into a service agreement with Aspen U.K. Services under which he
agreed to serve as Chief Financial Officer of Aspen Holdings,
terminable upon 12 months notice by either party. The
agreement originally provided that Mr. Houghton shall be
paid an annual salary of £320,000, subject to annual
review. Mr. Houghtons service agreement also entitles
him to participate in all management incentive plans and other
employee benefits and fringe benefit plans made available to
other senior executives or employees generally, including
continued membership in the Companys pension scheme and to
medical insurance, permanent health insurance, personal accident
insurance and life insurance. The service agreement also
provides for a discretionary bonus, based on a bonus potential
of 100% of salary which may be exceeded, to be awarded annually
as the Compensation Committee of our Board of Directors may
determine. Effective April 1, 2009,
Mr. Houghtons salary was £360,000. For 2010, no
salary increase was approved. Effective April 1, 2011,
Mr. Houghtons salary will be £370,000.
Julian Cusack. Mr. Cusack entered into
service agreements with effect from May 1, 2008 to serve as
Group Chief Operating Officer and to continue to serve as Chief
Executive Officer and Chairman of Aspen Bermuda, terminable upon
12 months notice by either party. With his more
recent appointment as Chief Risk Officer, his employment
agreement has not changed. The agreements provide that
Mr. Cusack shall be paid an annual salary of £350,000,
subject to annual review. Mr. Cusack is also entitled to
reimbursement of housing costs in Bermuda, up to a maximum of
$180,000 per annum, two return airfares per annum for him and
his family from Bermuda to the U.K. as well as reimbursement of
reasonable relocation expenses. The service contracts also
provide for the payment by the Company of U.K. income tax
attributable to the reimbursement of Bermuda housing expenses
and home leave. Mr. Cusacks service agreement also
entitles him to participate in all management incentive plans
and other employee benefits and fringe benefit plans made
available to other senior executives or employees generally,
including continued membership in the Companys pension
scheme and to medical insurance, permanent health insurance,
personal accident insurance and life insurance. The service
agreement also provides for a discretionary bonus based on a
bonus potential of 100% of his salary to be awarded annually as
the Compensation Committee of our Board of Directors may
determine. Effective April 1, 2009, Mr. Cusacks
salary was £360,000. For 2010, no salary increase was
approved. Effective April 1, 2011, Mr. Cusacks
salary will be £370,000.
Brian Boornazian. Mr. Boornazian entered
into an employment agreement with Aspen U.S. Services under
which he has agreed to serve as President and Chief Underwriting
Officer, Property Reinsurance, of Aspen Re America for a
three-year term, with annual extensions thereafter. The
agreement originally provided
39
that Mr. Boornazian will be paid an annual salary of
$330,000, subject to review from time to time, as well as a
discretionary bonus, and shall be eligible to participate in all
incentive compensation, retirement and deferred compensation
plans available generally to senior officers. Effective
April 1, 2009, Mr. Boornazians salary was
$500,000. For 2010, no salary increase was approved. Effective
April 1, 2011, Mr. Boornazians salary will be
$540,000.
On February 5, 2008, the Compensation Committee approved an
amendment to Mr. Boornazians employment agreement to
include a clause in respect of change of control. Senior
executives reporting to the Chief Executive Officer of the
Company have service agreements that are consistent in their
principal terms, including with respect to
change-of-control
provisions; however, this clause was not included in
Mr. Boornazians original service agreement. The
clause provides that if Mr. Boornazian is terminated
without cause or resigns for good reason in the six-month period
prior to a change in control or the two-year period after a
change in control, all share options and other equity-based
awards granted to Mr. Boornazian during the course of the
agreement will immediately vest and remain exercisable in
accordance with their terms. Mr. Boornazians
agreement was further amended on October 28, 2008 and
December 31, 2008 to reflect compliance with Internal
Revenue Code Section 409A (409A) and on
February 11, 2010 reflecting the Compensation
Committees approval on October 27, 2009 to amend his
severance provision to more closely resemble the severance
provisions of our other executives who head our business lines.
James Few. Mr. Few entered into a service
agreement with Aspen Bermuda under which he has agreed to serve
as Head of Property Reinsurance and Chief Underwriting Officer
of Aspen Bermuda. The agreement may be terminated upon
12 months notice by either party. The agreement
originally provided that Mr. Few will be paid an annual
salary of $400,000, subject to annual review. Mr. Few is
also provided with an annual housing allowance of $180,000, two
return airfares between Bermuda and the U.K. per annum for
himself and his family and reasonable relocation costs. The
agreement also entitles him to private medical insurance,
permanent health insurance, personal accident insurance and life
assurance. Under the agreement Mr. Few remains a member of
the Aspen U.K. Services pension scheme. The service agreement
also provides for a discretionary bonus to be awarded at such
times and at such level as the Compensation Committee of our
Board of Directors may determine. Effective April 1, 2009,
Mr. Fews salary was $475,000. For 2010, no salary
increase was approved. Effective April 1, 2011,
Mr. Fews salary will be $515,000.
40
Retirement
Benefits
We do not have a defined benefit plan. Generally, retirement
benefits are provided to our named executive officers according
to their home country.
United Kingdom. In the U.K. we have a defined
contribution plan which was established in 2005 for our U.K.
employees. All permanent and fixed term employees are eligible
to join the plan. Messrs. OKane, Houghton, Cusack and
Few were all participants in the plan during 2008. The employee
contributes 3% of their base salary into the plan. The employer
contributions made to the pension plan are based on a percentage
of base salary based on the age of the employee. There are two
scales: a standard scale for all U.K. participants; and a
directors scale which applies to certain key senior
employees who were founders of the Company or who are executive
directors of our Board of Directors. Messrs OKane,
Houghton and Cusack were paid employer contributions based on
the directors scale.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee
|
|
|
|
Company
|
|
|
Contribution
|
|
|
|
Contribution
|
|
|
Percentage of
|
|
|
|
Percentage of
|
Scale
|
|
Salary
|
|
Age of Employee
|
|
Employees Salary
|
|
Standard Scale
|
|
|
3
|
%
|
|
|
18 - 19
|
|
|
|
5
|
%
|
|
|
|
3
|
%
|
|
|
20-24
|
|
|
|
7
|
%
|
|
|
|
3
|
%
|
|
|
25 - 29
|
|
|
|
8
|
%
|
|
|
|
3
|
%
|
|
|
30-34
|
|
|
|
9.5
|
%
|
|
|
|
3
|
%
|
|
|
35 - 39
|
|
|
|
10.5
|
%
|
|
|
|
3
|
%
|
|
|
40-44
|
|
|
|
12
|
%
|
|
|
|
3
|
%
|
|
|
45 - 49
|
|
|
|
13.5
|
%
|
|
|
|
3
|
%
|
|
|
50-54
|
|
|
|
14.5
|
%
|
|
|
|
3
|
%
|
|
|
55 plus
|
|
|
|
15.5
|
%
|
Director Scale
|
|
|
3
|
%
|
|
|
20-24
|
|
|
|
7
|
%
|
|
|
|
3
|
%
|
|
|
25 - 29
|
|
|
|
8
|
%
|
|
|
|
3
|
%
|
|
|
30-34
|
|
|
|
9.5
|
%
|
|
|
|
3
|
%
|
|
|
35 - 39
|
|
|
|
12
|
%
|
|
|
|
3
|
%
|
|
|
40-44
|
|
|
|
14
|
%
|
|
|
|
3
|
%
|
|
|
45 - 49
|
|
|
|
16
|
%
|
|
|
|
3
|
%
|
|
|
50-54
|
|
|
|
18
|
%
|
|
|
|
3
|
%
|
|
|
55 plus
|
|
|
|
20
|
%
|
The employee and employer contributions are paid to individual
investment accounts set up in the name of the employee.
Employees may choose from a selection of investment funds
although the
day-to-day
management of the investments are undertaken by professional
investment managers. At retirement this fund is then used to
purchase retirement benefits.
If an employee leaves the Company before retirement all
contributions to the account will cease. If an employee has at
least two years of qualifying service, the employee has the
option of (i) keeping his or her account, in which case the
full value in the pension will continue to be invested until
retirement age, or (ii) transferring the value of the
account either to another employers approved pension plan
or to an approved personal pension plan. Where an employee
leaves the Company with less than two years of service, such
employee will receive a refund equal to the part of their
account which represents their own contributions only. This
refund is subject to U.K. tax and social security.
In the event of death in service before retirement, the pension
plan provides a lump sum death benefit equal to four times the
employees basic salary, plus, where applicable, a
dependents pension equal to 30% of the employees
basic salary and a childrens pension equal to 15% of the
employees basic salary for one child and up to 30% of the
employees basic salary for two or more children. Under
U.K. legislation, these benefits are subject to notional
earnings limits (currently £108,600 for 2006/2007,
£112,800 for 2007/2008 and
41
£117,600 for 2008/2009 and £123,600 for 2009/10 and
2010/11). From April 2011, the notional earnings limit has been
removed due to a change in our life insurance provider whereby
the standard life assurance cover has been combined with the
accepted life assurance cover, which has the impact of removing
the notional earnings limit. Where an employees basic
salary is greater than the notional earnings maximum, an
additional benefit is provided through a separate cover outside
the pension plan.
In 2010, we established an Employer-Financed Retirement Benefits
Scheme which was particularly suitable for our U.K. employees.
All employees between the ages of 18 and 60 whose duties are
performed outside of Guernsey are eligible to participate.
Messrs. OKane and Houghton participated in the plan
during 2010. The plan is a trust based, defined contribution
pension vehicle, whereby the funds are invested by the trustees
in order to provide retirement benefits. Funds are held in a
trust in Guernsey.
Employer contributions are made in respect of employees, as
agreed between us and the employee, in return for a reduction in
his or her remuneration. Each participating employee will have a
separate account under the plan, reflecting the value of
employer contributions on his or her behalf, the investment
return and charges.
At retirement on or after reaching the age of 55, an employee
may receive up to 25% of the value of his or her account as a
lump sum, and the remainder of the account will be used to
purchase a lifetime annuity or to fund an unsecured pension, at
the employees election. If an employee terminates
employment with us earlier (other than in the case of
incapacity), the employee will receive his or her retirement
benefits at the time of his or her retirement on or after
reaching the age of 55. Upon an employees death, the value
of his or her retirement account will be paid in a lump sum or
in the form of a lifetime annuity or other pension, in the
discretion of the plans trustees, to his or her
beneficiaries.
Due to changing tax conditions within the U.K. it is our
intention to close this plan in 2011.
United States. In the U.S., we operate a
401(k) plan. Employees of Aspen U.S. Services are eligible
to participate in this plan. Mr. Boornazian participates in
this plan.
Participants may elect a salary reduction contribution into the
401(k) plan. Their taxable income is then reduced by the amount
contributed into the plan. This lets participants reduce their
current federal and most state income taxes. The 401(k) safe
harbor plan allows employees to contribute a percentage of their
salaries (up to the maximum deferral limit set forth in the
plan). We make a qualified matching contribution of 100% of the
employees salary reduction contribution up to 3% of their
salary, plus a matching contribution of 50% of the
employees salary reduction contribution from 3% to 5% of
their salary for each payroll period. The employers
matching contribution is subject to limits based on the
employees earnings as set by the IRS annually.
Participants are always fully vested in their 401(k) plan with
respect to their contributions and the employers matching
contributions.
Discretionary profit sharing contributions are made annually to
all employees by Aspen U.S. Services and are based on the
following formula:
|
|
|
|
|
|
|
Contribution
|
|
|
by the
|
|
|
Company as a
|
|
|
Percentage of
|
|
|
Employees
|
Age of Employee
|
|
Salary
|
|
20 29
|
|
|
3
|
%
|
30 39
|
|
|
4
|
%
|
40 49
|
|
|
5
|
%
|
50 and older
|
|
|
6
|
%
|
42
Profit sharing contributions are paid in the first quarter of
each year in respect the previous fiscal year. The profit
sharing contributions are subject to a limit based on the
employees earnings as set by the IRS annually. The profit
sharing contributions are subject to the following vesting
schedule:
|
|
|
|
|
|
|
Vesting
|
Years of Vesting Service
|
|
Percentage
|
|
Less than 3 years
|
|
|
0
|
%
|
3 years
|
|
|
100
|
%
|
Once the employee has three years of service, his or her profit
sharing contributions are fully vested and all future
contributions are vested.
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information concerning
outstanding options to purchase ordinary shares and other stock
awards by the named executive officers during the twelve months
ended December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Awards:
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
Market
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Value or
|
|
|
|
|
Number of
|
|
Number of
|
|
Plan Awards:
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Unearned
|
|
Payout Value
|
|
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Shares,
|
|
of Unearned
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Units of
|
|
Units of
|
|
Units or
|
|
Shares, Units or
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
|
|
|
|
Stock That
|
|
Stock That
|
|
Other Rights
|
|
Other Rights
|
|
|
|
|
Options (#)
|
|
Options (#)
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Have Not
|
|
Have Not
|
|
That Have
|
|
That Have
|
|
|
Year of
|
|
Exercisable
|
|
Unexer-
|
|
Unearned
|
|
Exercise
|
|
Expiration
|
|
Vested (#)
|
|
Vested
|
|
Not Vested
|
|
Not Vested
|
Name
|
|
Grant
|
|
(1)
|
|
cisable
|
|
Options (#)(1)
|
|
Price ($)
|
|
Date
|
|
(1)
|
|
($)(2)
|
|
(#)(1)
|
|
($)(2)
|
|
Christopher OKane
|
|
|
2003
|
|
|
|
991,830
|
|
|
|
|
|
|
|
|
|
|
$
|
16.20
|
|
|
|
08/20/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
23,603
|
(3)
|
|
|
|
|
|
|
|
|
|
$
|
24.44
|
|
|
|
12/23/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
25.88
|
|
|
|
03/03/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
|
|
|
|
|
|
|
2006
|
|
|
|
87,719
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
23.65
|
|
|
|
02/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
75,988
|
|
|
|
|
|
|
|
|
|
|
$
|
27.28
|
|
|
|
05/04/2014
|
|
|
|
|
|
|
|
|
|
|
|
47,281
|
(7)
|
|
$
|
1,353,182
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,694
|
(8)
|
|
$
|
907,082
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
146,399
|
(9)
|
|
$
|
4,189,939
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
102,310
|
(10)
|
|
$
|
2,928,112
|
|
Richard Houghton
|
|
|
2007
|
|
|
|
12,158
|
|
|
|
|
|
|
|
|
|
|
$
|
27.28
|
|
|
|
05/04/2014
|
|
|
|
|
|
|
|
|
|
|
|
7,565
|
(7)
|
|
$
|
216,510
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,790
|
(8)
|
|
$
|
423,290
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,800
|
(9)
|
|
$
|
1,396,656
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,873
|
(10)
|
|
$
|
683,245
|
|
Julian Cusack
|
|
|
2003
|
|
|
|
133,474
|
|
|
|
|
|
|
|
|
|
|
$
|
16.20
|
|
|
|
08/20/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
14,162
|
(3)
|
|
|
|
|
|
|
|
|
|
$
|
24.44
|
|
|
|
12/23/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
25.88
|
|
|
|
03/03/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
|
|
|
|
|
|
|
2006
|
|
|
|
59,033
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
23.65
|
|
|
|
02/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
18,997
|
|
|
|
|
|
|
|
|
|
|
$
|
27.28
|
|
|
|
05/04/2014
|
|
|
|
|
|
|
|
|
|
|
|
11,820
|
(7)
|
|
$
|
338,288
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,790
|
(8)
|
|
$
|
423,290
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,199
|
(9)
|
|
$
|
2,094,955
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,873
|
(10)
|
|
$
|
683,245
|
|
Brian Boornazian
|
|
|
2004
|
|
|
|
7,868
|
(3)
|
|
|
|
|
|
|
|
|
|
$
|
24.44
|
|
|
|
12/23/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
25.88
|
|
|
|
03/03/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
|
|
|
|
|
|
|
2006
|
|
|
|
51,862
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
23.65
|
|
|
|
02/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
45,593
|
|
|
|
|
|
|
|
|
|
|
$
|
27.28
|
|
|
|
05/04/2014
|
|
|
|
|
|
|
|
|
|
|
|
28,369
|
(7)
|
|
$
|
811,921
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,847
|
(8)
|
|
$
|
453,541
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,999
|
(9)
|
|
$
|
1,745,791
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,578
|
(10)
|
|
$
|
732,042
|
|
James Few
|
|
|
2003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
16.20
|
|
|
|
08/20/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
|
|
|
|
35,404
|
(3)
|
|
|
|
|
|
|
|
|
|
$
|
24.44
|
|
|
|
12/23/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
|
|
(4)
|
|
|
|
|
|
|
|
|
|
$
|
25.88
|
|
|
|
03/03/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
(6)
|
|
|
|
|
|
|
|
2006
|
|
|
|
63,409
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
23.65
|
|
|
|
02/16/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
41,793
|
|
|
|
|
|
|
|
|
|
|
$
|
27.28
|
|
|
|
05/04/2014
|
|
|
|
|
|
|
|
|
|
|
|
26,005
|
(7)
|
|
$
|
744,263
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,678
|
(8)
|
|
$
|
362,844
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,999
|
(9)
|
|
$
|
1,745,791
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,578
|
(10)
|
|
$
|
732,042
|
|
|
|
|
(1) |
|
For a description of the terms of the grants and the related
vesting schedule, see Narrative Description of Summary
Compensation and Grants of Plan-Based Awards Share
Incentive Plan above. |
43
|
|
|
(2) |
|
Calculated based upon the closing price of $28.62 per share of
the Companys ordinary shares at December 31, 2010. |
|
(3) |
|
As the performance targets for the 2004 options were not fully
met based on the 2004 ROE achieved, 51.48% of the grant vested
and the remaining portion of the grant was forfeited. |
|
(4) |
|
As the performance targets have not been met, the 2005 options
were forfeited. |
|
(5) |
|
As the performance targets for the 2006 options were not fully
met, 92.2% of the grant vested and the remaining portion of the
grant was forfeited. |
|
(6) |
|
With respect to the 2005 performance shares, of which one-third
of the grant is earned based on the achievement of the 2005 ROE
target and two-thirds have a performance condition based on an
average three-year
(2005-2007)
ROE, one-third of the grants has been forfeited as the 2005 ROE
target has not been met. As the performance target for 2005, and
the average performance target for
2005-2007
were not met, the entire grant has been forfeited. |
|
(7) |
|
With respect to the 2007 performance shares, amount represents
(i) 166% vesting in respect of one-fourth of the initial
grant as our ROE for 2007 was 21.6%, (ii) no vesting for
one-fourth of the grant in respect of the 2008 ROE as it was
less than 10%, (iii) 134% vesting in respect of one-fourth
of the grant as our ROE for 2009 was 18.4% and (iv) 31.6%
vesting in respect of one-fourth of the grant as our ROE for
2010 was 11.2%. These performance shares vest and become
issuable upon the filing of this report. |
|
(8) |
|
With respect to the 2008 performance shares, amount represents
(i) no vesting in respect of one-third of the initial grant
as our ROE for 2008 was less than 10%, (ii) 134% vesting in
respect of one-third of the grant as our ROE for 2009 was 18.4%
and (iii) 31.6% vesting in respect of one-fourth of the
grant as our ROE for 2010 was 11.2%. These performance shares
vest and become issuable upon the filing of this report. |
|
(9) |
|
With respect to the 2009 performance shares, amount represents
(i) 164% vesting in respect of one-third of the grant as
our ROE for 2009 was 18.4%, (ii) 85.6% vesting in respect
of one-third of the grant as our ROE for 2010 was 11.2% and
(iii) assumes a vesting of 100% for the remaining one-third
of the grant. |
|
(10) |
|
With respect to the 2010 performance shares, amount represents
(i) 85.6% vesting in respect of one-third of the grant as
our ROE for 2010 was 11.2%, and (ii) assumes a vesting of
100% for the remaining two-thirds of the grant. |
Option
Exercises and Stock Vested
The following table summarizes stock option exercises and share
issuances by our named executive officers during the twelve
months ended December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
|
|
Shares
|
|
|
|
|
Acquired on
|
|
Value Realized on
|
|
Acquired on
|
|
Value Realized
|
Name
|
|
Exercise (#)
|
|
Exercise ($)
|
|
Vesting (#)
|
|
on Vesting ($)(2)
|
|
Christopher OKane
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard Houghton
|
|
|
|
|
|
|
|
|
|
|
2,667
|
|
|
$
|
76,916
|
|
Julian Cusack
|
|
|
75,000
|
|
|
$
|
930,107
|
|
|
|
|
|
|
|
|
|
Brian Boornazian
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James Few
|
|
|
97,930
|
|
|
$
|
1,355,616
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Value realized is calculated based on the sale price on the date
of exercise less the exercise price. |
|
(2) |
|
The restricted share units for Mr. Houghton vested on
March 31, 2010. The market value was calculated based on
the closing price of $28.84 on March 31, 2010. The amounts
reflect the amount vested (gross of tax). |
44
Potential
Payments Upon Termination or Change in Control
Assuming the employment of our named executive officers were to
be terminated without cause or for good reason (as defined in
their respective employment agreements), each as of
December 31, 2010, the following individuals would be
entitled to payments and to accelerated vesting of their
outstanding equity awards, as described in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher OKane(1)
|
|
|
Richard Houghton(1)
|
|
|
Julian Cusack(1)
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
Value of
|
|
|
|
|
|
Value of
|
|
|
|
Total Cash
|
|
|
Accelerated
|
|
|
Total Cash
|
|
|
Accelerated
|
|
|
Total Cash
|
|
|
Accelerated
|
|
|
|
Payout
|
|
|
Equity Awards
|
|
|
Payout
|
|
|
Equity Awards
|
|
|
Payout
|
|
|
Equity Awards
|
|
|
Termination without Cause (or other than for Cause) or for
Good Reason(2)
|
|
$
|
4,853,812
|
(6)
|
|
|
|
|
|
$
|
1,407,708
|
(8)
|
|
|
|
|
|
$
|
1,566,742
|
(10)
|
|
|
|
|
Death(3)
|
|
$
|
1,112,976
|
|
|
$
|
6,129,311
|
|
|
$
|
556,488
|
|
|
$
|
1,841,719
|
|
|
$
|
556,488
|
|
|
$
|
2,462,100
|
|
Disability(4)
|
|
$
|
370,992
|
|
|
$
|
6,129,311
|
|
|
$
|
278,244
|
|
|
$
|
1,841,719
|
|
|
$
|
278,244
|
|
|
$
|
2,462,100
|
|
Change in Control(5)
|
|
$
|
4,853,812
|
(6)
|
|
$
|
9,378,310
|
(7)
|
|
$
|
1,407,708
|
(8)
|
|
$
|
2,719,666
|
(9)
|
|
$
|
1,566,742
|
(10)
|
|
$
|
3,539,796
|
(11)
|
|
|
|
(1) |
|
The calculation for the payouts for Messrs. OKane,
Houghton and Cusack were converted from British Pounds into U.S.
Dollars at the average exchange rate of $1.5458 to £1 for
2010. |
|
(2) |
|
For a description of termination provisions, see Narrative
Description of Summary Compensation and Grants of Plan-Based
Awards Employment-Related Agreements above. |
|
(3) |
|
In respect of death, the executives are entitled to the pro
rated annual bonus based on the actual bonus earned for the year
in which the date of termination occurs. This amount represents
100% of the bonus potential for 2010. In addition, the
Compensation Committee approved amendments to the terms of the
awards granted under the 2003 Share Incentive Plan where in
the event of death or disability, the amount of performance
share awards that have already met their vesting criteria but
have not vested yet, would vest and be issued. Any options
granted would continue to vest under the terms of their
agreement. Similarly, restricted share unit awards will
accelerate and vest upon death or disability. |
|
(4) |
|
In respect of disability, the executive would be entitled to six
months salary after which he would be entitled to
long-term disability benefits under our health insurance
coverage. In addition, the Compensation Committee approved
amendments to the terms of the awards granted under the
2003 Share Incentive Plan where in the event of death or
disability, the amount of performance share awards that have
already met their vesting criteria but have not vested yet,
would vest and be issued. Any options granted would continue to
vest under the terms of their agreement. Similarly, restricted
share unit awards will accelerate and vest upon death or
disability. |
|
(5) |
|
The total cash payout and the acceleration of vesting are
provided only if the employment of the above named executive is
terminated by the Company without Cause or by the executive with
Good Reason (as described above under Employment-Related
Agreements and as defined in each of the individuals
respective employment agreement) within the six-month period
prior to a change in control or within a two-year period after a
change in control. The occurrence of any of the following events
constitutes a Change in Control: |
|
|
|
|
(A)
|
the sale or disposition, in one or a series of related
transactions, of all or substantially all, of the assets of the
Company to any person or group (other than (x) any
subsidiary of the Company or (y) any entity that is a
holding company of the Company (other than any holding company
which became a holding company in a transaction that resulted in
a Change in Control) or any subsidiary of such holding company);
|
|
|
|
|
(B)
|
any person or group is or becomes the beneficial owner, directly
or indirectly, of more than 30% of the combined voting power of
the voting shares of the Company (or any entity which is the
beneficial owner of more than 50% of the combined voting power
of the voting shares of the Company), including by way of
merger, consolidation, tender or exchange offer or otherwise;
excluding, however, the following: (i) any acquisition
directly from the Company, (ii) any acquisition by the
|
45
|
|
|
|
|
Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (iv) any
acquisition by a person or group if immediately after such
acquisition a person or group who is a shareholder of the
Company on the effective date of our 2003 Share Incentive
Plan continues to own voting power of the voting shares of the
Company that is greater than the voting power owned by such
acquiring person or group;
|
|
|
|
|
(C)
|
the consummation of any transaction or series of transactions
resulting in a merger, consolidation or amalgamation, in which
the Company is involved, other than a merger, consolidation or
amalgamation which would result in the shareholders of the
Company immediately prior thereto continuing to own (either by
remaining outstanding or by being converted into voting
securities of the surviving entity), in the same proportion as
immediately prior to the transaction(s), more than 50% of the
combined voting power of the voting shares of the Company or
such surviving entity outstanding immediately after such merger,
consolidation or amalgamation; or
|
|
|
|
|
(D)
|
a change in the composition of the Board such that the
individuals who, as of the effective date of the 2003 Share
Incentive Plan, constitute the Board of Directors (such Board of
Directors shall be referred to for purposes of this section only
as the Incumbent Board) cease for any reason to
constitute at least a majority of the Board; provided, however,
that for purposes of this definition, any individual who becomes
a member of the Board of Directors subsequent to the Effective
Date, whose election, or nomination for election, by a majority
of those individuals who are members of the Board of Directors
and who were also members of the Incumbent Board (or deemed to
be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; and,
provided further, however, that any such individual whose
initial assumption of office occurs as the result of or in
connection with either an actual or threatened election contest
or other actual or threatened solicitation of proxies or
consents by or on behalf of an entity other than the Board of
Directors shall not be so considered as a member of the
Incumbent Board.
|
|
|
|
(6) |
|
Represents the lesser of the target annual incentive for the
year in which termination occurs and the average of the bonus
received by Mr. OKane for the previous three years
($1,112,976) plus twice the sum of the highest salary paid
during the term of the agreement ($741,984) and the average
bonus actually earned during three years immediately prior to
termination ($1,128,434). Mr. OKanes agreement
includes provisions with respect the treatment of
parachute payments under the U.S. Internal Revenue
Code. As Mr. OKane is currently not a U.S. taxpayer,
the above amounts do not reflect the impact of such provisions. |
|
(7) |
|
Represents the acceleration of vesting of the entire grant of
the 2007 performance shares (other than 1/4 of the grant which
will be forfeited on vesting for non-achievement of the 2008
performance test), the 2008 performance shares (other than 1/3
of the grant which will be forfeited on vesting for
non-achievement of the 2008 performance test), the 2009
performance shares and the 2010 performance shares. For the
portions of the 2007, 2008 and 2009 performance shares which
have exceeded the performance threshold, we have assumed the
greater percentage amount for calculation purposes. With respect
to performance shares, the value is based on the closing price
of our shares on December 31, 2010. The amounts do not
include the (i) 2003 options as they have fully vested on
December 31, 2009, (ii) 2005 options, as the
performance targets were not met and the options were forfeited,
(iii) 2005 performance share awards as the performance
targets were not met and the performance shares were forfeited,
(iv) 2004 options as the earned portion has vested and any
remaining unearned portions of the grant were forfeited due to
non-achievement of performance targets, (v) 2006 options
and performance as the earned portions have vested and any
remaining unearned portions of the grant were forfeited due to
non-achievement of performance tests and (vi) the 2007
options as those have vested. |
|
(8) |
|
Represents the lesser of the target annual incentive for the
year in which termination occurs and average of
Mr. Houghtons bonuses for the previous three years
($425,610), plus the sum of the highest salary paid during the
term of the agreement ($556,488) and the average bonus actually
earned during the three years immediately prior to termination
($425,610). |
46
|
|
|
(9) |
|
Represents the acceleration of vesting of the entire grant of
the 2007 performance shares (other than 1/4 of the grant which
will be forfeited on vesting for non-achievement of the 2008
performance test), the 2008 performance shares (other than 1/3
of the grant which will be forfeited on vesting for
non-achievement of the 2008 performance test), the 2009
performance shares and the 2010 performance shares. For the
portions of the 2007, 2008 and 2009 performance shares which
have exceeded the performance threshold, we have assumed the
greater percentage amount for calculation purposes. The amounts
do not include the 2007 options as those have vested. With
respect to performance shares, the value is based on the closing
price of our shares on December 31, 2010. |
|
(10) |
|
Represents the lesser of the target annual incentive for the
year in which termination occurs and the average of the bonus
received by Mr. Cusack for the previous three years
($505,127) plus the sum of the highest salary paid during the
term of the agreement ($556,488) and the average bonus actually
earned during three years immediately prior to termination
($505,127). |
|
(11) |
|
Represents the acceleration of vesting of the entire grant of
the 2007 performance shares (other than 1/4 of the grant which
will be forfeited on vesting for non-achievement of the 2008
performance test), the 2008 performance shares (other than 1/3
of the grant which will be forfeited on vesting for
non-achievement of the 2008 performance test), the 2009
performance shares and the 2010 performance shares. With respect
to performance shares, the value is based on the closing price
of our shares on December 31, 2010. The amounts do not
include the (i) 2003 options as they have fully vested on
December 31, 2009, (ii) 2005 options, as the
performance targets were not met and the options were forfeited,
(iii) 2005 performance share awards as the performance
targets were not met and the performance shares were forfeited,
(iv) 2004 options as the earned portion has vested and any
remaining unearned portions of the grant were forfeited due to
non-achievement of performance targets, (v) 2006 options
and performance as the earned portions have vested and any
remaining unearned portions of the grant were forfeited due to
non-achievement of performance tests and (vi) the 2007
options as those have vested. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Boornazian
|
|
|
James Few
|
|
|
|
|
|
|
Value of
|
|
|
|
|
|
Value of
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
Accelerated
|
|
|
|
Total Cash
|
|
|
Equity
|
|
|
Total Cash
|
|
|
Equity
|
|
|
|
Payout
|
|
|
Awards
|
|
|
Payout
|
|
|
Awards
|
|
|
Termination without Cause (or other than for Cause) or for
Good Reason(1)
|
|
$
|
1,838,333
|
(5)
|
|
|
|
|
|
$
|
1,695,417
|
(7)
|
|
|
|
|
Death(2)
|
|
$
|
675,000
|
|
|
$
|
2,731,296
|
|
|
$
|
546,250
|
|
|
$
|
2,572,932
|
|
Disability(3)
|
|
$
|
250,000
|
|
|
$
|
2,731,296
|
|
|
$
|
237,500
|
|
|
$
|
2,572,932
|
|
Change in Control(4)
|
|
$
|
1,838,333
|
(5)
|
|
$
|
3,743,289
|
(6)
|
|
$
|
1,695,417
|
(7)
|
|
$
|
3,584,925
|
(8)
|
|
|
|
(1) |
|
For a description of termination provisions, see Narrative
Description of Summary Compensation and Grants of Plan-Based
Awards Employment-Related Agreements above. |
|
(2) |
|
In respect of death, the executives are entitled to the pro
rated annual bonus based on the actual bonus earned for the year
in which the date of termination occurs. This amount represents
100% of the bonus potential for 2010. In addition, the
Compensation Committee approved amendments to the terms of the
awards granted under the 2003 Share Incentive Plan where in
the event of death or disability, the amount of performance
share awards that have already met their vesting criteria but
have not vested yet, would vest and be issued. Any options
granted would continue to vest under the terms of their
agreement. Similarly, restricted share unit awards will
accelerate and vest upon death or disability. |
|
(3) |
|
In respect of disability, the executive would be entitled to six
months salary after which he would be entitled to
long-term disability benefits under our health insurance
coverage. In addition, the Compensation Committee approved
amendments to the terms of the awards granted under the
2003 Share Incentive Plan where in the event of death or
disability, the amount of performance share awards that have
already met their vesting criteria but have not vested yet,
would vest and be issued. Any options granted would continue to
vest under the terms of their agreement. Similarly, restricted
share unit awards will accelerate and vest upon death or
disability. |
|
(4) |
|
Same as Footnote 5 in table above. |
47
|
|
|
(5) |
|
On October 28, 2009, the Compensation Committee approved an
amendment to Mr. Boornazians employment agreement to
amend the basis for calculation of termination amounts.
Represents the sum of the highest salary paid during the term of
the agreement ($500,000) and the average bonus actually earned
during three years immediately prior to termination ($798,333),
plus a prorated annual bonus based on the actual bonus earned
for the year in which his termination occurs ($675,000, which
represents 100% of the bonus potential for 2010). |
|
(6) |
|
Represents the acceleration of vesting of the entire grant of
the 2007 performance shares (other than 1/4 of the grant which
will be forfeited on vesting for non-achievement of the 2008
performance test), the 2008 performance shares (other than 1/3
of the grant which will be forfeited on vesting for
non-achievement of the 2008 performance test), the 2009
performance shares and the 2010 performance shares. For the
portions of the 2007, 2008 and 2009 performance shares which
have exceeded the performance threshold, we have assumed the
greater percentage amount for calculation purposes. With respect
to performance shares, the value is based on the closing price
of our shares on December 31, 2010. The amounts do not
include the (i) 2005 options, as the performance targets
were not met and the options were forfeited, (ii) 2005
performance share awards as the performance targets were not met
and the performance shares were forfeited, (iii) 2004
options as the earned portion has vested and any remaining
unearned portions of the grant were forfeited due to
non-achievement of performance targets, (iv) 2006 options
and performance as the earned portions have vested and any
remaining unearned portions of the grant were forfeited due to
non-achievement of performance tests and (v) the 2007
options as those have vested. |
|
(7) |
|
Represents the lesser of the target annual incentive for the
year in which termination occurs and the average of the bonus
received by Mr. Few for the previous three years ($546,250)
plus the sum of the highest salary paid during the term of the
agreement ($475,000) and the average bonus actually earned
during three years immediately prior to termination ($674,167). |
|
(8) |
|
Represents the acceleration of vesting of the entire grant of
the 2007 performance shares (other than 1/4 of the grant which
will be forfeited on vesting for non-achievement of the 2008
performance test), the 2008 performance shares (other than 1/3
of the grant which will be forfeited on vesting for
non-achievement of the 2008 performance test), the 2009
performance shares and the 2010 performance shares. The amounts
do not include the (i) 2003 options as they have fully
vested on December 31, 2009, (ii) 2005 options, as the
performance targets were not met and the options were forfeited,
(iii) 2005 performance share awards as the performance
targets were not met and the performance shares were forfeited,
(iv) 2004 options as the earned portion has vested and any
remaining unearned portions of the grant were forfeited due to
non-achievement of performance targets, (v) 2006 options
and performance shares as the earned portions have vested and
any remaining unearned portions of the grant were forfeited due
to non-achievement of performance tests and (vi) the 2007
options as those have vested. |
We are not obligated to make any cash payments to these
executives if their employment is terminated by us for cause or
by the executive not for good reason. A change in control does
not affect the amount or timing of these cash severance payments.
48
Non-Employee
Director Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
2010
|
|
2010
|
|
|
|
|
|
|
or Paid in
|
|
Stock
|
|
Option
|
|
All Other
|
|
|
Name
|
|
Cash ($)(1)
|
|
Awards ($)(2)
|
|
Awards ($)
|
|
Compensation ($)
|
|
Total ($)
|
|
Liaquat Ahamed(3)
|
|
$
|
80,000
|
|
|
$
|
99,989
|
|
|
|
|
|
|
|
|
|
|
$
|
179,989
|
|
Matthew Botein(4)
|
|
$
|
70,000
|
|
|
$
|
99,989
|
|
|
|
|
|
|
|
|
|
|
$
|
169,989
|
|
Richard Bucknall(5)
|
|
$
|
137,035
|
|
|
$
|
99,989
|
|
|
|
|
|
|
|
|
|
|
$
|
237,024
|
|
John Cavoores(6)
|
|
$
|
71,640
|
|
|
$
|
99,989
|
|
|
|
|
|
|
$
|
132,000
|
|
|
$
|
303,629
|
|
Ian Cormack(7)
|
|
$
|
135,000
|
|
|
$
|
99,989
|
|
|
|
|
|
|
|
|
|
|
$
|
234,989
|
|
Heidi Hutter(8)
|
|
$
|
156,517
|
|
|
$
|
99,989
|
|
|
|
|
|
|
|
|
|
|
$
|
256,506
|
|
Glyn Jones(9)
|
|
$
|
309,160
|
|
|
$
|
500,003
|
|
|
|
|
|
|
|
|
|
|
$
|
809,163
|
|
David Kelso(10)
|
|
$
|
85,000
|
|
|
$
|
99,989
|
|
|
|
|
|
|
|
|
|
|
$
|
184,989
|
|
Peter OFlinn(11)
|
|
$
|
116,052
|
|
|
$
|
99,989
|
|
|
|
|
|
|
|
|
|
|
$
|
216,041
|
|
Albert Beer(12)
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
|
|
|
|
(1) |
|
Effective July 2007, for directors who are paid for their
services to Aspen Holdings in British Pounds rather than U.S.
Dollars such as Messrs. Bucknall and Cormack, their
remuneration is converted at an exchange rate of $1.779:£1.
Similarly, Heidi Hutter, who is paid in British Pounds for her
services to AMAL, her remuneration for such services is
converted at the same exchange rate of $1.779:£1. For fees
paid to directors in British Pounds such as Mr. Jones for
his salary of £200,000, and Mr. Bucknall, for his
services to AMAL, for reporting purposes, an exchange rate of
$1.5458:£1 has been used for 2010, the average rate of
exchange. |
|
(2) |
|
Consists of restricted share units. Valuation is based on the
grant date fair values of the awards calculated in accordance
with FASB ASC Topic 718, without regard to forfeiture
assumptions. |
|
(3) |
|
Represents the annual board fee of $50,000, $25,000 attendance
fee ($5,000 for each board meeting or separate committee meeting
not scheduled around the Board meeting, attended by a director)
and $5,000 for serving as the Chair of the Investment Committee.
Mr. Ahamed holds 8,908 ordinary shares, which includes
2,983 ordinary shares of the 3,580 restricted share units
granted on February 11, 2010 which have vested and are
issued. |
|
(4) |
|
Represents the annual board fee of $50,000, $20,000 attendance
fee ($5,000 for each board meeting or separate committee meeting
not scheduled around the Board meeting, attended by a director).
Mr. Botein holds 9,561 ordinary shares, which includes
2,983 ordinary shares of the 3,580 restricted share units
granted on February 11, 2010 which have vested and are
issued. |
|
(5) |
|
Represents the annual board fee of $50,000, $25,000 attendance
fee ($5,000 for each board meeting or separate committee meeting
not scheduled around the Board meeting, attended by a director),
$10,000 for serving on the Audit Committee, $5,000 for serving
as the Chair of the Compensation Committee, $10,000 for serving
as director of Aspen U.K., and the pro rata amount of the annual
fee of £20,000 (through March 17, 2010) and the
pro rata fee of £25,000 (commencing March 17,
2010) for serving as director of AMAL. Mr. Bucknall
holds 15,061 ordinary shares, which includes 2,983 ordinary
shares of the 3,580 restricted share units granted on
February 11, 2010 which have vested and are issued. |
|
(6) |
|
Represents the annual board fee of $50,000 and $25,000
attendance fee ($5,000 for each board meeting or separate
committee meeting not scheduled around the Board meeting,
attended by a director) and $5,000 for one additional meeting
attended by Mr. Cavoores. Mr. Cavoores ceased to be a
Non-Executive director effective November 1, 2010 and a pro
rata reduction was applied to the annual board fee.
Mr. Cavoores holds 9,506 ordinary shares, which includes
2,583 ordinary shares of the 3,580 restricted share units
granted on February 11, 2010 which have vested and are
issued (the remaining of which were cancelled upon
Mr. Cavoores ceasing to be a Non-Executive director).
Mr. Cavoores also holds 2,012 vested options.
Mr. Cavoores also received consulting fees of $132,000
prior to being appointed as an executive. The table does not
reflect Mr. Cavoores salary paid and performance
shares awarded upon his being appointed as an executive. |
49
|
|
|
(7) |
|
Represents the annual board fee of $50,000, $25,000 attendance
fee ($5,000 for each board meeting or separate committee meeting
not scheduled around the Board meeting, attended by a director),
$25,000 fee for serving as the Audit Committee Chairman, $10,000
for serving on the Board of Aspen U.K. and $25,000 for serving
as the Chair of the Audit Committee of Aspen U.K.
Mr. Cormack holds 12,076 ordinary shares, which includes
2,983 ordinary shares of the 3,580 restricted shares options
granted on February 11, 2010 which have vested and are
issued. Mr. Cormack holds a total of 45,175 vested options
as at December 31, 2010. |
|
(8) |
|
Represents the annual board fee of $50,000, $25,000 attendance
fee ($5,000 for each board meeting or separate committee meeting
not scheduled around the Board meeting, attended by a director),
$10,000 for serving as a member of the Audit Committee, $5,000
for serving as the Chair of the Risk Committee, $10,000 for
serving on the Board of Aspen U.K. and the pro rata amount of
the annual fee of £25,000 (through March 17,
2010) and the pro rata fee of £30,000 (commencing
March 17, 2010) for serving as the Chair of AMAL.
Eighty percent of the total compensation is paid to The Black
Diamond Group LLC, of which Ms. Hutter is the Chief
Executive Officer. Ms. Hutter holds a total of 85,925
vested options as at December 31, 2010. Ms. Hutter
(including the awards held by The Black Diamond Group) holds
14,248 ordinary shares, which includes 2,983 ordinary shares of
the 3,580 restricted share units granted on February 11,
2010 which have vested and are issued. |
|
(9) |
|
Represents Mr. Jones annual salary of £200,000.
Mr. Jones holds 33,196 ordinary shares. Mr. Jones also
holds 2,012 unvested options. |
|
(10) |
|
Represents the annual board fee of $50,000, $25,000 attendance
fee ($5,000 for each board meeting or separate committee meeting
not scheduled around the Board meeting, attended by a director)
and $10,000 for serving as a member of the Audit Committee.
Mr. Kelso holds 4,435 vested options as at
December 31, 2010. Mr. Kelso holds 11,906 ordinary
shares, which includes 2,983 ordinary shares of the 3,580
restricted share units granted on February 11, 2010 which
have vested and are issued. |
|
(11) |
|
Represents the annual board fee of $50,000, $25,000 attendance
fee ($5,000 for each board meeting or separate committee meeting
not scheduled around the Board meeting, attended by a director),
$10,000 for serving as a member of the Audit Committee, $5,000
for acting as Chair of the Corporate Governance and Nominating
Committee and a pro rata portion of the annual board fee for
serving on the Board of Aspen Bermuda of $30,000 with effect
from February 16, 2010. Mr. OFlinn holds 6,148
ordinary shares, which includes 2,983 ordinary shares of the
3,580 restricted share units granted on February 11, 2010
which have vested and are issued. |
|
(12) |
|
Mr. Beer was appointed to the Board effective
February 1, 2011. As a result, he was not paid any fees in
2010. |
Summary
of Non-Employee Director Compensation
Annual Fees. The compensation of non-executive
directors is benchmarked against peer companies and companies
listed on the FTSE 250, taking into account complexity, time
commitment and committee duties. With effect from
February 6, 2008, the annual director fee is $50,000, plus
a fee of $5,000 for each board meeting (or single group of board
and/or
committee meetings) attended by the director. Directors who are
not employees of the Company, other than the Chairman, are
entitled to an annual grant of $50,000 in restricted share
units. In 2010, the Board approved an increase in the value of
the annual grant to directors to $100,000. The Chairman is
entitled to an annual grant of not less than $200,000 in
restricted share units.
For 2011, the Board approved an increase in fees for Committee
Chairs as follows:
|
|
|
|
|
Audit Committee Chair increase from $25,000 to
$30,000
|
|
|
|
Compensation Committee Chair increase from $5,000 to
$15,000
|
|
|
|
Risk Committee Chair increase from $5,000 to $15,000
|
|
|
|
Corporate Governance and Nominating Committee Chain
increase from $5,000 to $10,000
|
|
|
|
Investment Committee Chair increase from $5,000 to
$10,000
|
50
The chairman of each committee of our Board of Directors (other
than if the Chair is also the Chairman of the Board) other than
the Audit Committee receives an additional $5,000 per annum and
the Audit Committee chairman receives an additional $25,000 per
annum. Other members of the Audit Committee also receive an
additional $10,000 per annum for service on that Committee. In
addition, members of our Board of Directors who are also members
of the Board of Directors of Aspen U.K. receive an additional
$10,000 (Messrs. Bucknall and Cormack and Ms. Hutter).
Mr. Cormack also receives an additional $25,000 for serving
as the Chairman of the Audit Committee of Aspen U.K.
Ms. Hutter also receives £30,000 for serving as the
Chair of AMAL and Mr. Bucknall receives £25,000 for
serving as a director of AMAL. Mr. OFlinn receives
$30,000 for serving on the Board of Aspen Bermuda.
Mr. Jones, our Chairman, received an annual salary of
£200,000 for 2010. For 2010, the Board changed the
compensation terms for our Chairman; he is no longer eligible
for consideration for an annual bonus and was granted a greater
amount of restricted share units, an increase from $200,000 to
$500,000. The Board retained its right to vary the yearly grant
of restricted share units to the Chairman depending on market
conditions, time commitment and performance of the Company. The
Chairman is entitled to an annual grant of not less than
$200,000 in restricted share units. The Board approved the same
compensation amounts for 2011.
Non-Employee Directors Stock Option Plan. At
our annual general meeting of shareholders held on May 25,
2006, our shareholders approved the 2006 Stock Option Plan for
non-employee directors of the Company (2006 Stock Option
Plan) under which a total of 400,000 ordinary shares may
be issued in relation to options granted under the 2006 Stock
Option Plan. At our annual general meeting on May 2, 2007,
the 2006 Stock Option Plan was amended and renamed the 2006
Stock Incentive Plan for Non-Employee Directors (the
Amended 2006 Stock Option Plan) to allow the
issuance of restricted share units.
Following the annual general meeting of our shareholders, on
May 25, 2006, our Board of Directors approved the grant of
4,435 options under the 2006 Stock Option Plan for each of the
non-employee directors at the time. Eighty percent of the
options granted to Ms. Hutter were issued to The Black
Diamond Group LLC, of which she is the Chief Executive Officer.
Messrs. Cavoores and Jones were not members of the Board of
Directors at the time of grant, and therefore did not receive
any options until following their appointment. The exercise
price is $21.96, the average of the high and low prices of the
Companys ordinary shares on the date of grant
(May 25, 2006). Each of Messrs. Jones and Cavoores
were granted 2,012 options on July 30, 2007, representing a
pro rated amount of the options granted to the directors in
2006, as they joined the Board on October 30, 2006 and did
not receive options in such year. The options vested on the
third anniversary of the grant date.
Following the annual general meeting on May 2, 2007, our
Board of Directors approved the grant of 1,845 restricted share
units under the Amended 2006 Stock Option Plan for each of our
non-employee directors at the time, other than Mr. Jones,
our Chairman. The date of grant of the restricted share units
was May 4, 2007 (being the day on which our close period
ended following the release of our earnings). With respect to
Ms. Hutter, 80% of the restricted share units were issued
to The Black Diamond Group LLC, of which she is the Chief
Executive Officer. In addition, Mr. Ahamed was granted 847
restricted share units on February 8, 2008, representing a
pro rated amount of the restricted share units granted to the
directors in 2007, as he joined the Board on October 31,
2007 and did not receive any restricted share units in such
year. Subject to the director remaining on the Board,
one-twelfth (1/12) of the restricted share units vested on each
one month anniversary of the date of grant, with 100% of the
restricted share units becoming vested on the first anniversary
of the grant date. The shares under the restricted share units
were paid out on the first anniversary of the grant date. If a
director leaves the Board for any reason other than
Cause (as defined in the award agreement), then the
director would receive the shares under the restricted share
units that had vested through the date the director leaves the
Board. Subject to the terms of the award, all restricted share
units granted in 2007 have vested and were issued. In connection
with Mr. Jones appointment as our Chairman, he was
granted 7,380 ordinary shares with a grant date of May 4,
2007, one-third of which vested annually over a three-year
period from the date of grant and are now vested and issued.
51
On April 30, 2008, our Board of Directors approved the
grant of 1,913 restricted share units under the Amended 2006
Stock Option Plan for each of our non-employee directors at the
time, other than Mr. Jones, our Chairman. The date of grant
of the restricted share units was May 2, 2008 (being the
day on which our close period ended following the release of our
earnings). With respect to Ms. Hutter, 80% of the
restricted share units were issued to The Black Diamond Group
LLC, of which she is the Chief Executive Officer. Subject to the
director remaining on the Board, one-twelfth (1/12) of the
restricted share units vested on each one month anniversary of
the date of grant, with 100% of the restricted share units
becoming vested on the first anniversary of the grant date. If a
director leaves the Board for any reason other than
Cause (as defined in the award agreement), then the
director would receive the shares under the restricted share
units that have vested through the date the director leaves the
Board. Subject to the terms of the award, all restricted share
units granted in 2007 have vested and were issued.
Mr. Jones was granted 7,651 ordinary shares with a grant
date of May 2, 2008, one-third of which vests annually over
a three-year period from the date of grant. Two-thirds of the
grant awarded to Mr. Jones has vested and is issued.
On April 29, 2009, our Board of Directors approved the
grant of 3,165 restricted share units under the Amended 2006
Stock Option Plan for each of our non-employee directors at the
time, other than Mr. Jones, our Chairman. The date of grant
of the restricted share units was May 1, 2009 (being the
day on which our close period ended following the release of our
earnings). With respect to Ms. Hutter, 80% of the
restricted share units were issued to The Black Diamond Group
LLC, of which she is the Chief Executive Officer. Subject to the
director remaining on the Board, one-twelfth (1/12) of the
restricted share units vested on each one month anniversary of
the date of grant, with 100% of the restricted share units
becoming vested on the first anniversary of the grant date. All
restricted share units which vested as of December 31, 2009
were issued as soon as practicable after year-end, with the
remainder being issued on the first anniversary of the grant
date. If a director leaves the Board for any reason other than
Cause (as defined in the award agreement), then the
director would receive the shares under the restricted share
units that have vested through the date the director leaves the
Board. Mr. Jones was granted 8,439 ordinary shares with a
grant date of May 1, 2009, one-third of which vests
annually over a three-year period from the date of grant.
One-third of the grant vested and is issued.
On February 9, 2010, our Board of Directors approved the
grant of 3,580 restricted share units under the Amended 2006
Stock Option Plan to each of our non-employee directors, other
than Mr. Jones, our Chairman. The Board increased the size
of the grant from $75,000 to $100,000 for each non-executive
director. The Board also approved a grant of 17,902 for
Mr. Jones, our Chairman, in which they increased the size
of the annual grant from $200,000 to $500,000. The Board also
approved a change in the vesting schedule regarding
Mr. Jones grant to be consistent with the vesting
schedule of the grants awarded to the other non-executive
directors, in which one-twelfth of the grant will vest on each
one month anniversary of the date of grant. The date of grant of
the restricted share units was February 11, 2010 (being the
day on which our close period ends following the release of our
earnings). With respect to Ms. Hutter, 80% of the
restricted share units were issued to The Black Diamond Group
LLC, of which she is the Chief Executive Officer. Subject to the
director remaining on the Board, one-twelfth (1/12) of the
restricted share units vested on each one month anniversary of
the date of grant, with 100% of the restricted share units
becoming vested on the first anniversary of the grant date.
On February 4, 2011, our Board of Directors approved the
grant of 3,344 ($100,000) restricted share units under the
Amended 2006 Stock Option Plan to each of our non-employee
directors, other than Mr. Jones, our Chairman. The Board
also approved a grant of 16,722 for Mr. Jones, our
Chairman, representing a grant of $500,000 per year. The date of
grant of the restricted share units is February 9, 2011
(being the day on which our close period ends following the
release of our earnings). With respect to Ms. Hutter, 80%
of the restricted share units will be issued to The Black
Diamond Group LLC, of which she is the Chief Executive Officer.
Subject to the director remaining on the Board, one-twelfth
(1/12) of the restricted share units will vest on each one month
anniversary of the date of grant, with 100% of the restricted
share units becoming vested on the first anniversary of the
grant date. The shares under the restricted share units will be
paid out on the first anniversary of the grant date, however,
all restricted share units which vest as of December 31,
2010 will be issued as soon as practicable after year-end, with
the remainder being issued on the first anniversary of the grant
date.
52
If a director leaves the Board for any reason other
than Cause, then the director will receive the
shares under the restricted share units that have vested through
the date the director leaves the Board.
Compensation
Policies and Risk
Our compensation program, which applies to all employees
including executive officers, is designed to provide competitive
levels of reward that are responsive to group and individual
performance, but that do not incentivize risk taking that is
reasonably likely to have a material adverse effect on the
Company.
In reaching our conclusion that our compensation practices do
not incentivize risk taking that is reasonably likely to have a
material adverse effect on the Company, we examined the various
elements of our compensation programs and policies as well as
(i) the potential risks that management and or individual
underwriters can take to increase the Companys results or
the underwriting results of a particular line of business and
(ii) risk mitigation controls. We believe that the most
important mitigating factor for these risks is our risk culture,
which is characterized by a top-down commitment to a disciplined
process for the identification, measurement, management and
reporting of risks. For example, as a company which provides
catastrophe cover, one of the risks we face is having excessive
natural catastrophe exposure, which if not managed would create
a high ROE in a low catastrophe year and capital impairment in a
year where excess catastrophe occurs. We manage this risk by
having natural catastrophe tolerances approved by our Board as
part of our annual business plan. Adherence to these limits are
independently monitored and reported monthly by the Chief Risk
Officer to management with any breaches of set tolerances being
reported to the Risk Committee. We also note that in making
bonus determinations, our CEO takes into consideration risk data
in addition to performance data. The risk data available to the
CEO includes internal audit reviews, underwriting reviews and
reports of compliance breaches. Therefore, if there is evidence
of material breaches of our risk controls which has exposed us
to excessive risks, it is likely that such individual would be
adversely impacted in his or her compensation rather than
benefit.
53
COMPENSATION
COMMITTEE REPORT
The following report is not deemed to be soliciting
material or to be filed with the SEC or
subject to the liabilities of Section 18 of the Exchange
Act, and the report shall not be deemed to be incorporated by
reference into any prior or subsequent filing by the Company
under the Securities Act of 1933, as amended (the
Securities Act), or the Exchange Act.
Our Compensation Committee has reviewed the Compensation
Discussion and Analysis required by Item 402(b) of
Regulation S-K
under the Securities Act with management.
Based on the review and discussions with management, the
Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in the
Companys Annual Report on
Form 10-K.
Compensation Committee
Matthew Botein
Ian Cormack
February 25, 2011
54
AUDIT
COMMITTEE REPORT
The following report is not deemed to be soliciting
material or to be filed with the SEC or
subject to the liabilities of Section 18 of the Exchange
Act, and the report shall not be deemed to be incorporated by
reference into any prior or subsequent filing by the Company
under the Securities Act or the Exchange Act.
This report is furnished by the Audit Committee of the board of
directors with respect to the Companys financial
statements for the year ended December 31, 2010. The Audit
Committee held four meetings in 2010.
The Audit Committee has established a Charter which outlines its
primary duties and responsibilities. The Audit Committee
Charter, which has been approved by the Board, is reviewed at
least annually and is updated as necessary.
The Companys management is responsible for the preparation
and presentation of complete and accurate financial statements.
The Companys independent registered public accounting
firm, KPMG Audit Plc, is responsible for performing an
independent audit of the Companys financial statements in
accordance with standards of the Public Company Accounting
Oversight Board (United States) and for issuing a report on
their audit.
In performing its oversight role in connection with the audit of
the Companys financial statements for the year ended
December 31, 2010, the Audit Committee has:
(1) reviewed and discussed the audited financial statements
with management; (2) reviewed and discussed with the
independent registered public accounting firm the matters
required by Statement of Auditing Standards No. 61, as
amended; and (3) received the written disclosures and the
letter from the independent registered public accounting firm
and reviewed and discussed with the independent registered
public accounting firm the matters required by the Public
Accounting Oversight Board regarding the independent registered
public accounting firms communications with the Audit
Committee concerning independence. Based on these reviews and
discussions, the Audit Committee has determined its independent
registered public accounting firm to be independent and has
recommended to the Board that the audited financial statements
be included in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 for filing with
the United States Securities and Exchange Commission
(SEC) and for presentation to the shareholders at
the 2011 Annual General Meeting.
Audit Committee
Albert Beer
Richard Bucknall
Heidi Hutter
David Kelso
Peter OFlinn
February 25, 2011
55
POLICY ON
SHAREHOLDER PROPOSALS FOR DIRECTOR CANDIDATES
AND EVALUATION OF DIRECTOR CANDIDATES
Our Board of Directors has adopted policies and procedures
relating to director nominations and shareholder proposals, and
evaluations of director candidates.
Submission of Shareholder
Proposals. Shareholder recommendations of
director nominees to be included in the Companys proxy
materials will be considered only if received no later than the
120th calendar day before the first anniversary of the date
of the Companys proxy statement in connection with the
previous years annual general meeting. The Company may in
its discretion exclude such shareholder recommendations even if
received in a timely manner. Accordingly, this policy is not
intended to waive the Companys right to exclude
shareholder proposals from its proxy statement.
If shareholders wish to nominate their own candidates for
director on their own separate slate (as opposed to recommending
candidates to be nominated by the Company in the Companys
proxy), shareholder nominations for directors at the annual
general meeting of shareholders must be submitted at least 90
calendar days before the annual general meeting of shareholders.
A shareholder who wishes to recommend a person or persons for
consideration as a Company nominee for election to the Board of
Directors should send a written notice by mail,
c/o Company
Secretary, Aspen Insurance Holdings Limited, Maxwell Roberts
Building, 1 Church Street, Hamilton HM11, Bermuda, or by fax to
1-441-295-1829 and include the following information:
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the name of each person recommended by the shareholder(s) to be
considered as a nominee;
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the name(s) and address(es) of the shareholder(s) making the
nomination, the number of ordinary shares which are owned
beneficially and of record by such shareholder(s) and the period
for which such ordinary shares have been held;
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a description of the relationship between the nominating
shareholder(s) and each nominee;
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biographical information regarding such nominee, including the
persons employment and other relevant experience and a
statement as to the qualifications of the nominee;
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a business address and telephone number for each nominee (an
e-mail
address may also be included); and
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the written consent to nomination and to serving as a director,
if elected, of the recommended nominee.
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In connection with the Corporate Governance and Nominating
Committees evaluation of director nominees, the Company
may request that the nominee complete a Directors and
Officers Questionnaire regarding such nominees
independence, related parties transactions, and other relevant
information required to be disclosed by the Company.
Minimum Qualifications for Director
Nominees. A nominee recommended for a position on
the Companys Board of Directors must meet the following
minimum qualifications:
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he or she must have the highest standards of personal and
professional integrity;
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he or she must have exhibited mature judgment through
significant accomplishments in his or her chosen field of
expertise;
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he or she must have a well-developed career history with
specializations and skills that are relevant to understanding
and benefiting the Company;
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he or she must be able to allocate sufficient time and energy to
director duties, including preparation for meetings and
attendance at meetings;
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he or she must be able to read and understand financial
statements to an appropriate level for the exercise of his or
her duties; and
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he or she must be familiar with, and willing to assume, the
duties of a director on the Board of Directors of a public
company.
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Process for Evaluation of Director
Nominees. The Corporate Governance and Nominating
Committee has the authority and responsibility to lead the
search for individuals qualified to become members of our
56
Board of Directors to the extent necessary to fill vacancies on
the Board of Directors or as otherwise desired by the Board of
Directors. The Corporate Governance and Nominating Committee
will identify, evaluate and recommend that the Board of
Directors select director nominees for shareholder approval at
the applicable annual meetings based on minimum qualifications
and additional criteria that the Corporate Governance and
Nominating Committee deems necessary, as well as the diversity
and other needs of the Board of Directors. As vacancies arise,
the Corporate Governance and Nominating Committee looks at the
overall Board and assesses the need for specific qualifications
and experience needed to enhance the composition and diversify
the viewpoints and contribution to the Board.
The Corporate Governance and Nominating Committee may in its
discretion engage a third-party search firm and other advisors
to identify potential nominees for director. The Corporate
Governance and Nominating Committee may also identify potential
director nominees through director and management
recommendations, business, insurance industry and other
contacts, as well as through shareholder nominations.
The Corporate Governance and Nominating Committee may determine
that members of the Board of Directors should have diverse
experiences, skills and perspectives as well as knowledge in the
areas of the Companys activities.
Certain additional criteria for consideration as director
nominee may include, but not be limited to, the following as the
Corporate Governance and Nominating Committee sees fit:
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the nominees qualifications and accomplishments and
whether they complement the Board of Directors existing
strengths;
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the nominees leadership, strategic, or policy setting
experience;
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the nominees experience and expertise relevant to the
Companys insurance and reinsurance business, including any
actuarial or underwriting expertise, or other specialized skills;
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the nominees independence qualifications, as defined by
NYSE listing standards;
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the nominees actual or potential conflict of interest, or
the appearance of any conflict of interest, with the best
interests of the Company and its shareholders;
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the nominees ability to represent the interests of all
shareholders of the Company; and
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the nominees financial literacy, accounting or related
financial management expertise as defined by NYSE listing
standards, or qualifications as an audit committee financial
expert, as defined by SEC rules and regulations.
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Shareholder
Communications to the Board of Directors
The Board of Directors provides a process for shareholders to
send communications to the Board of Directors or any of the
directors. Shareholders may send written communications to the
Board of Directors or any one or more of the individual
directors by mail,
c/o Company
Secretary, Aspen Insurance Holdings Limited, Maxwell Roberts
Building, 1 Church Street, Hamilton HM11, Bermuda, or by fax to
1-441-295- 1829. All communications will be referred to the
Board or relevant directors. Shareholders may also send
e-mails to
any of our directors via our website at www.aspen.bm.
Board of
Directors Policy on Directors Attendance at AGMs
Directors are expected to attend the Companys annual
general meeting of shareholders.
Compliance
with Section 16(a) of the Exchange Act
The Company, as a foreign private issuer, is not required to
comply with the provisions of Section 16 of the Exchange
Act relating to the reporting of securities transactions by
certain persons and the recovery of short-swing
profits from the purchase or sale of securities.
57
BENEFICIAL
OWNERSHIP
The following table sets forth information as of
February 15, 2011 (including, in this table only, options
that would be exercisable by April 15, 2011) regarding
beneficial ownership of ordinary shares and the applicable
voting rights attached to such share ownership in accordance
with our bye-laws by:
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each person known by us to beneficially own approximately 5% or
more of our outstanding ordinary shares;
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each of our directors;
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each of our named executive officers; and
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all of our executive officers and directors as a group.
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As of February 15, 2011, 70,588,074 ordinary shares were
outstanding.
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Percentage of Ordinary
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Number of Ordinary
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Shares
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Name and Address of Beneficial Owner(1)
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Shares(2)
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Outstanding(2)
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BlackRock, Inc.(3)
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5,544,788
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7.8
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%
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40 East 52nd Street
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New York, NY 10022 U.S.A.
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Greenlight Capital(4)
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4,140,000
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5.8
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%
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140 East 45th Street, 24th Floor
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New York, NY 10017 U.S.A.
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Royce & Associates LLC(5)
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3,449,633
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4.8
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%
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745 Fifth Avenue
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New York, NY 10151 U.S.A.
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Glyn Jones(6)
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35,208
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*
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Christopher OKane(7)
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1,292,865
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1.8
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%
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Richard Houghton(8)
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39,231
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Julian Cusack(9)
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254,625
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*
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Brian Boornazian(10)
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152,969
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*
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James Few(11)
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189,506
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*
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Liaquat Ahamed(12)
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9,505
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*
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Matthew Botein(13)
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10,158
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*
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Richard Bucknall(14)
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15,658
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*
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John Cavoores(15)
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11,518
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*
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Ian Cormack(16)
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57,848
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*
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Heidi Hutter(17)
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100,770
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*
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David Kelso(18)
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16,938
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*
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Peter OFlinn(19)
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6,745
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*
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Albert Beer
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*
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All directors and executive officers as a group (22 persons)
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2,420,583
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3.3
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%
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* |
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Less than 1% |
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(1) |
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Unless otherwise stated, the address for each director and
officer is
c/o Aspen
Insurance Holdings Limited, Maxwell Roberts Building, 1 Church
Street, Hamilton HM 11, Bermuda. |
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(2) |
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Represents the outstanding ordinary shares as at
February 15, 2011, except for unaffiliated shareholders,
whose information is disclosed as of the dates of their
Schedule 13G noted in their respective footnotes. With
respect to the directors and officers, includes ordinary shares
that may be acquired within 60 days of February 15,
2011 upon (i) the exercise of vested options and
(ii) awards issuable for ordinary shares, in each case,
held only by such person. The percentage of ordinary shares
outstanding reflects the amount outstanding as at
February 15, 2011. However, the beneficial ownership for
non-affiliates is as of the earlier dates referenced in their
respective notes below. Accordingly, the percentage ownership
may have changed following such Schedule 13G filings. |
58
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Our bye-laws generally provide for voting adjustments in certain
circumstances. |
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(3) |
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As filed with the SEC on Schedule 13G on February 2,
2011 by BlackRock, Inc. |
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(4) |
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Based upon information contained in the Scheduled 13G filed on
February 14, 2011 by (i) Greenlight Capital, L.L.C.;
(ii) Greenlight Capital, Inc.; (iii) DME Management
GP, LLC; (iv) DME Advisors, LP; (v) DME Capital
Management, LP; (vi) DME Advisors GP, LLC; and
(vii) David Einhorn (collectively, the Greenlight
Entities). Greenlight Capital, L.L.C. (Greenlight
LLC) may be deemed the beneficial owner of an aggregate of
1,496,328 shares of Common Stock held for the accounts of
Greenlight Capital, LP (Greenlight Fund) and
Greenlight Capital Qualified, L.P. (Greenlight
Qualified). Greenlight Capital, Inc. (Greenlight
Inc.) may be deemed the beneficial owner of an aggregate
of 3,333,452 shares of Common Stock held for the accounts
of Greenlight Fund, Greenlight Qualified and Greenlight Capital
Offshore Partners (Greenlight Offshore). DME
Management GP, LLC (DME Management GP) may be deemed
the beneficial owner of 169,105 shares of Common Stock held
for the account of Greenlight Capital (Gold), LP
(Greenlight Gold). DME Advisors, LP (DME
Advisors) may be deemed the beneficial owner of
547,378 shares of Common Stock held for the account of a
managed account (the Managed Account). DME Capital
Management, LP (DME CM) may be deemed the beneficial
owner of 259,170 shares of Common Stock held for the
accounts of Greenlight Gold and Greenlight Capital Offshore
Master (Gold), Ltd. (Greenlight Gold Offshore). DME
Advisors GP, LLC (DME GP) may be deemed the
beneficial owner of 806,548 shares of Common Stock held for
the accounts of Greenlight Gold, Greenlight Gold Offshore and
the Managed Account. Mr. Einhorn may be deemed the
beneficial owner of 4,140,000 shares of Common Stock. This
number consists of: (A) an aggregate of
1,496,328 shares of Common Stock held for the accounts of
Greenlight Fund and Greenlight Qualified,
(B) 1,837,124 shares of Common Stock held for the
account of Greenlight Offshore, (C) 169,105 shares of
Common Stock held for the account of Greenlight Gold,
(D) 90,065 shares of Common Stock held for the account
of Greenlight Gold Offshore, and (E) 547,378 shares of
Common Stock held for the Managed Account. Greenlight LLC is the
general partner for Greenlight Fund and Greenlight Qualified.
DME CM acts as investment manager for Greenlight Gold Offshore.
DME GP is the general partner of DME Advisors and DME CM. The
prinicipal business office of each of the Greenlight Entities is
140 East 45th Street, 24th Floor, New York, New York 10017.
Pursuant to
Rule 13d-4,
each of the Greenlight Entities disclaims all such beneficial
ownership except to the extent of their pecuniary interest in
any shares of common stock, if applicable. |
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(5) |
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As filed with the SEC on Schedule 13G by Royce &
Associates LLC on January 31, 2011. |
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(6) |
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Represents 33,196 ordinary shares and 2,012 vested options. |
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(7) |
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Includes 34,750 ordinary shares, 1,179,140 ordinary shares
issuable upon exercise of vested options, and 78,975 performance
shares that vest upon this filing and are issuable, held by
Mr. OKane. |
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(8) |
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Represents 4,718 ordinary shares and 12,158 ordinary shares
issuable upon exercise of vested options, and 22,355 performance
shares that vest upon this filing and are issuable, held by
Mr. Houghton. |
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(9) |
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Includes 2,349 ordinary shares and 225,666 ordinary shares
issuable upon exercise of vested options, and 26,610 performance
shares that vest upon this filing and are issuable, held by
Mr. Cusack. |
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(10) |
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Includes 3,430 ordinary shares and 105,323 ordinary shares
issuable upon exercise of vested options, and 44,216 performance
shares that vest upon this filing and are issuable, held by
Mr. Boornazian. |
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(11) |
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Includes 10,217 ordinary shares and 140,606 ordinary shares
issuable upon exercise of vested options, and 38,683 performance
shares that vest upon this filing and are issuable, held by
Mr. Few. |
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(12) |
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Represents 8,908 ordinary shares and 597 vested restricted share
units that are issuable. |
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(13) |
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Represents 9,561 ordinary shares and 597 vested restricted share
units that are issuable. |
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(14) |
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Represents 15,061 ordinary shares and 597 vested restricted
share units that are issuable. |
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(15) |
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Represents 9,506 ordinary shares and 2,012 ordinary shares
issuable upon exercise of vested options, held by
Mr. Cavoores. |
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(16) |
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Represents 12,076 ordinary shares, 597 restricted share units
that are issuable, and 45,175 ordinary shares issuable upon
exercise of vested options. |
59
|
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(17) |
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Ms. Hutter, one of our directors, is the beneficial owner
of 2,852 ordinary shares. As Chief Executive Officer of The
Black Diamond Group, LLC, Ms. Hutter has shared voting and
investment power over the 11,396 ordinary shares beneficially
owned by The Black Diamond Group, LLC The business address of
Ms. Hutter is
c/o Black
Diamond Group, 515 Congress Avenue, Suite 2220, Austin,
Texas 78701. Ms. Hutter also holds vested options
exercisable for 85,925 ordinary shares. Ms. Hutter also
holds 597 vested restricted share units that are issuable. |
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(18) |
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Represents 11,906 ordinary shares, 4,435 vested options and 597
vested restricted share units that are issuable. |
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(19) |
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Represents 6,148 ordinary shares and 597 vested restricted share
units that are issuable. |
The table below includes securities to be issued upon exercise
of options granted pursuant to the Companys
2003 Share Incentive Plan and the Amended 2006 Stock Option
Plan as of December 31, 2010. The 2003 Share Incentive
Plan, as amended, and the 2006 Stock Option Plan were approved
by shareholders at our annual general meetings.
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|
A
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B
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|
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C
|
|
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Number of Securities
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|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
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|
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Weighted-Average
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|
|
Future Issuance Under
|
|
|
|
Number of Securities to
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|
|
Exercise of Price of
|
|
|
Equity Compensation
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|
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|
Be Issued Upon Exercise
|
|
|
Outstanding
|
|
|
Plans (Excluding
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|
|
|
of Outstanding Options,
|
|
|
Options, Warrants and
|
|
|
Securities Reflected in
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|
Plan Category
|
|
Warrants and Rights
|
|
|
Rights(1)
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|
|
Column A)
|
|
|
Equity compensation plans approved by security holders
|
|
|
4,869,816
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|
|
$
|
10.42
|
|
|
|
2,051,434
|
|
Equity compensation plans not approved by security holders
|
|
|
|
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|
|
|
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Total
|
|
|
4,869,816
|
|
|
$
|
10.42
|
|
|
|
2,051,434
|
|
|
|
|
(1) |
|
The weighted average exercise price calculation includes option
exercise prices between $16.20 and $27.52 plus outstanding
restricted share units and performance shares which have a $Nil
exercise price. |
60
PERFORMANCE
GRAPH
The following information is not deemed to be
soliciting material or to be filed with
the SEC or subject to the liabilities of Section 18 of the
Exchange Act, and the report shall not be deemed to be
incorporated by reference into any prior or subsequent filing by
the Company under the Securities Act or the Exchange Act.
The following graph compares cumulative return on our ordinary
shares, including reinvestment of dividends of our ordinary
shares, to such return for the S&P 500 Composite Stock
Price Index and S&Ps Super Composite
Property-Casualty Insurance Index, for the period commencing
December 31, 2005 and ending on December 31, 2010,
assuming $100 was invested on December 31, 2005. The
measurement point on the graph below represents the cumulative
shareholder return as measured by the last sale price at the end
of each calendar month during the period from December 31,
2005 through December 31, 2010. As depicted in the graph
below, during this period, the cumulative total return
(1) on our ordinary shares was 36.1%, (2) for the
S&P 500 Composite Stock Price Index was 12.0% and
(3) for the S&P Super Composite Property-Casualty
Insurance Index was -12.2%.
61
ADVISORY
VOTE ON EXECUTIVE COMPENSATION
(Proposal No. 1)
Proposal No. 1 calls for an advisory vote
FOR the Companys executive compensation program as
disclosed in the Compensation Discussion and Analysis and
accompanying tables and narratives disclosed in the
Companys Annual Report on
Form 10-K,
filed on February 25, 2011, and in this Proxy Statement.
The Dodd-Frank Wall Street Reform and Consumer Protection Act,
enacted in July 2010, contains a requirement that certain public
companies provide a non-binding shareholder vote to approve
executive compensation. While we are not required to conduct
this vote, we believe that our compensation program would
benefit from the periodic feedback that our shareholders would
provide through an advisory vote, and have therefore decided to
seek this vote. This proposal, commonly known as a Say on
Pay proposal, gives the Companys shareholders the
opportunity to endorse or not endorse the Companys
executive pay program. This is an advisory vote, and as such is
not binding on the Company, the Board or the Compensation
Committee. However, the Board will take the results of the vote
into account when considering future compensation arrangements.
As discussed in the Compensation Discussion and
Analysis section of the Companys Annual Report on
Form 10-K
and in this Proxy Statement, we believe that our compensation
policies continue to emphasize aligning our executives pay
with our performance. In 2010, we achieved an ROE of 11.2% and a
growth in book value of 15.6%, which is a sound result in light
of market conditions in the insurance industry, and considering
that 2010 was the sixth largest loss year for catastrophe
insured losses since 1980. Moreover, we made progress with
regards to our strategic objectives, including embedding a
revised group structure which we had announced in the beginning
of 2010 and enhancing and building our insurance platform, which
included the acquisition of a company which has licenses to
write business on an admitted basis, the establishment of a
Swiss insurance branch and a UK regional platform. Our key
compensation outcomes reflected this performance and were
consistent with our pay for performance philosophy. We encourage
a performance-based culture throughout the Company, and at
senior levels we have developed an approach to compensation that
aligns the executives compensation with his or her
performance and contribution to the results of the Company. As
discussed in our Compensation Discussion and Analysis, we
believe that the three elements of total direct compensation,
base salary, annual bonus and long-term incentive awards, should
be balanced such that each executive has the appropriate amount
of pay that is performance contingent and longer-term. In 2010,
a majority of our NEOs pay was delivered through
performance-based compensation with a significant portion
realized over more than one year. In addition, we continually
seek to improve our compensation program. For example, in 2010,
our Compensation Committee adopted a policy to clawback bonus
and long-term incentive awards granted to our executive officers
in 2010 and going forward in the case of a subsequent and
material negative restatement of the Companys published
financial results as a result of fraud. We encourage you to read
the Compensation Discussion and Analysis and accompanying tables
and narratives in our Annual Report on
Form 10-K
and in this Proxy Statement for a detailed discussion of our
executive compensation program.
The Company presently intends to have future advisory votes on
the Companys executive compensation every three years. The
Company believes that a triennial advisory vote provides the
appropriate balance necessary to allow for periodic input by
shareholders while providing a sufficient period of time to
evaluate the effects of the Companys compensation program
and policies. The Company further believes that a triennial
advisory vote is appropriate because it would give our
shareholders sufficient time to consider the effectiveness of
our compensation program which emphasizes long-term performance,
while avoiding over-emphasis on short term variations in
compensation and business results.
Accordingly, we ask our shareholders to vote on the following
resolution at the Annual General Meeting:
RESOLVED, that the compensation paid to the Companys
named executive officers, as disclosed pursuant to Item 402
of
Regulation S-K,
including the Compensation Discussion & Analysis,
compensation tables and narrative discussion disclosed in the
Companys Annual Report on
Form 10-K
filed on February 25, 2011 and in this Proxy Statement, is
hereby APPROVED.
THE BOARD
RECOMMENDS A VOTE FOR THE APPROVAL OF THE
COMPENSATION OF THE COMPANYS NAMED EXECUTIVE OFFICERS, AS
DISCLOSED IN OUR ANNUAL REPORT ON
FORM 10-K,
FILED ON FEBRUARY 25, 2011.
62
PROPOSAL FOR
ELECTION OF DIRECTORS
(Proposal No. 2)
Proposal No. 2 calls for a vote FOR the
re-election of Messrs. Christopher OKane, John
Cavoores and Liaquat Ahamed and Ms. Heidi Hutter and the
election of Mr. Albert Beer as Class I directors at
the Annual General Meeting. If elected, each director will serve
until the Companys Annual General Meeting of Shareholders
in 2014 or until his successor is elected and qualified.
Biographical information relating to the directors under
Proposal No. 2 is presented in this Proxy Statement
under Management Board of Directors of the
Company.
Votes
Required
Proposal No. 2 requires by the affirmative vote of a
majority of the voting power of the votes cast at the Annual
General Meeting, subject to our Bye-Laws 63 to 67.
THE BOARD
RECOMMENDS VOTING FOR THE ELECTION OF
THE NOMINEES AS CLASS I DIRECTORS.
63
APPOINTMENT
OF THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
(Proposal No. 3)
Proposal No. 3 calls for a vote FOR the
appointment of KPMG Audit plc (KPMG) as the
Companys independent registered public accounting firm for
the fiscal year ending December 31, 2011. On
February 3, 2011, the Audit Committee selected, subject to
appointment by the Companys Shareholders, KPMG to continue
to serve as independent registered public accounting firm for
the Company and its subsidiaries for the fiscal year ending
December 31, 2011. KPMG has served as the Companys
independent auditor since 2002.
A representative of KPMG is expected to be present at the Annual
General Meeting and will have the opportunity to make statements
and to respond to appropriate questions raised at the Annual
General Meeting.
Fees
Billed to the Company by KPMG Audit plc
The following table represents aggregate fees billed to the
Company for fiscal years ended December 31, 2010 and 2009
by KPMG, the Companys principal accounting firm.
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
Twelve Months Ended
|
|
|
|
December 31, 2010
|
|
|
December 31, 2009
|
|
|
|
($ in millions)
|
|
|
Audit Fees(a)
|
|
$
|
2.5
|
|
|
$
|
3.0
|
|
Audit-Related Fees(b)
|
|
|
0.2
|
|
|
|
0.2
|
|
Tax Fees(c)
|
|
|
0.2
|
|
|
|
|
|
All Other Fees(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
2.9
|
|
|
$
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Audit fees related to the audit of the Companys
financial statements for the twelve months ended
December 31, 2010 and 2009, the review of the financial
statements included in our quarterly reports on
Form 10-Q
during 2010 and 2009 and for services that are normally provided
by KPMG in connection with statutory and regulatory filings for
the relevant fiscal years. |
|
(b) |
|
Audit-related fees are fees related to assurance and
related services for the performance of the audit or review of
the Companys financial statements (other than the audit
fees disclosed above). |
|
(c) |
|
Tax fees are fees related to tax compliance, tax advice
and tax planning services. |
|
(d) |
|
All other fees relate to fees billed to the Company by
KPMG for all other non-audit services rendered to the Company. |
The Audit Committee has considered whether the provision of
non-audit services by KPMG is compatible with maintaining
KPMGs independence with respect to the Company and has
determined that the provision of the specified services is
consistent with and compatible with KPMG maintaining its
independence. The Audit Committee approved all services that
were provided by KPMG.
Votes
Required
Proposal No. 3 requires approval by the affirmative
vote of a majority of the voting power of the votes cast at the
Annual General Meeting, subject to our Bye-Laws 63 to 67.
THE BOARD
RECOMMENDS VOTING FOR THE APPOINTMENT OF
KPMG AUDIT PLC AS THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM.
64
APPROVAL
OF THE 2011 SHARE INCENTIVE PLAN
(Proposal No. 4)
Proposal No. 4 calls for a vote FOR the
adoption of the Companys 2011 Share Incentive Plan
(the 2011 Share Incentive Plan). The Board
unanimously determined at its meeting held on February 4,
2011, that it is in the best interests of the Company and its
shareholders to adopt the 2011 Share Incentive Plan.
The full text of the 2011 Share Plan is attached to this
Proxy Statement as Appendix A. The following summary and
description of the 2011 Share Incentive Plan is qualified
in its entirety by the provisions of such text.
General. Our Board adopted the 2011 Share
Incentive Plan effective February 4, 2011. The total number
of shares that may be issued under the 2011 Share Incentive
Plan is 3,000,000 shares, which the Board anticipates will
support approximately three years of grants to the
Companys employees based on the Companys typical
share usage. The shares deliverable under the 2011 Share
Incentive Plan are our ordinary shares, and may be shares that
have been authorized but not yet issued or shares we previously
issued and have reacquired. The Board adopted the
2011 Share Incentive Plan because the number of shares
available for grant under the Companys 2003 Share
Incentive Plan is insufficient to support the Companys
desire to compensate its named executive officers
(NEOs) and other employees, as well as future
employees, with equity-based compensation.
In adopting the 2011 Share Incentive Plan and recommending
its approval to shareholders, the Board considered the
importance and efficiency of equity compensation in its overall
compensation program and philosophy. As part of its philosophy,
the Board believes that a substantial portion of the
Companys NEOs compensation should be in the form of
equity awards because equity awards align the interests of NEOs
and shareholders. In addition, the Board believes that equity
awards create opportunities for executives to build wealth
through stock ownership, which both attracts talent to the
organization and contributes to retaining that talent. In
adopting the 2011 Share Incentive Plan and recommending its
approval to shareholders, the Board also considered the
potential for shareholder dilution under the 2011 Share
Incentive Plan, based on dilution and share utilization models
used by proxy advisory companies. The Board understands that
certain models used by proxy advisory companies will be affected
by the Companys currently outstanding equity grants. The
Board, however, determined that these considerations were
outweighed by the benefits of providing equity-based
compensation to our NEOs and other employees as a significant
portion of our overall compensation program.
The Board believes that it is in the best interests of
shareholders to approve the 2011 Share Incentive Plan. If
the 2011 Share Incentive Plan is not approved, it will
restrict the Companys ability to compensate its NEOs and
other employees once there are no shares available under the
Companys 2003 Share Incentive Plan. If the Company
has no shares available for grant to its NEOs and other
employees, it may have to replace share-based compensation with
cash-based compensation in order to attract and retain talented
employees. If the Company needs to use cash in place of
equity-based awards, the Board believes that the Company would
not recognize the benefit of linking its NEOs and other
employees interests with those of shareholders through
increasing share ownership.
The Board further considered the strong
pay-for-performance
orientation of our programs and the challenging performance
expectations that the Company has set in the past in
administering this program. The Compensation
Discussion & Analysis points out that over the past
several years performance shares have been the equity instrument
of choice and that the level of payouts are commensurate with
the Companys performance overall.
Additional information about the 2011 Share Incentive Plan
follows.
Purpose. The 2011 Share Incentive Plan
provides for the granting of options (including options that are
intended to qualify as incentive stock options
(ISOs), as defined in Section 422 of the Code
(as defined in the 2011 Share Incentive Plan), and options
not intended to so qualify (NQSOs)), share
appreciation rights
65
(SARs), restricted share awards and other
share-based incentive awards (collectively, Awards)
to employees of the Company.
Administration. The 2011 Share Incentive
Plan may be administered by our Board or by the Compensation
Committee of our Board, as determined by our Board. References
herein to the Committee are to the Board or the
Compensation Committee, as the case may be, in its capacity as
2011 Share Incentive Plan administrator. The Committee
interprets the 2011 Share Incentive Plan, establishes rules
and regulations for the 2011 Share Incentive Plans
administration, determines who will receive Awards and
establishes the terms of Awards. The Committee may delegate its
responsibilities to a subcommittee thereof consisting solely of
at least two individuals who, if Section 16 of the
Securities Exchange Act of 1934, as amended (the Exchange
Act), is applicable, qualify as Non-Employee
Directors under Exchange Act
Rule 16b-3
and, if required for the Award to qualify as
performance-based compensation for purposes of
Section 162(m) of the Code, are outside
directors within the meaning thereof.
Share Limit. The total number of shares that
may be issued under the 2011 Share Incentive Plan is
3,000,000, of which up to 3,000,000 may be issued pursuant to
ISOs. The issuance of shares or the payment of cash upon the
exercise of an Award or in consideration of the cancellation or
termination of an Award shall reduce the total number of shares
that may be issued under the 2011 Share Incentive Plan.
Shares that are subject to Awards that are forfeited, are
cancelled, expire, terminate or lapse without payment of
consideration will not reduce the total number of shares that
may be issued under the 2011 Share Incentive Plan. In the
event of any share split, share dividend, reorganization,
recapitalization, merger, consolidation, spin-off or other such
change in our capitalization, the Committee has the discretion
to make adjustments to (i) the number or kind of shares
authorized for issuance or covered by outstanding Awards,
(ii) the exercise price of options and SARs, (iii) the
maximum number of shares for which Awards may be granted in any
calendar year
and/or
(iv) any other affected terms of such Awards in order to
prevent dilution or enlargement of benefits.
Change in Control. Upon a change in
control (as defined in the 2011 Share Incentive
Plan), the Committee may, but shall not be obligated to,
accelerate the vesting and exercisability of options and SARs
and the vesting of restricted shares and other share-based
awards, cancel Awards for fair value (as determined by the
Committee), provide for the issuance of substitute Awards with
substantially similar terms or, with respect to options, give
the Award recipients the opportunity to exercise their options
during the 15 days before the change in control and cancel
unexercised options at the time of the change in control. With
respect to any awards that constitute deferred
compensation under Section 409A of the Code, however,
no payment will be accelerated unless the change in control
constitutes a change in control event as defined
under the United States Treasury Departments regulations,
and if the change in control does constitute a change in
control event, the restrictions will lapse and the Award
will become vested, payable in full and immediately settled and
distributed.
Limitation on Transferability of
Awards. Except as otherwise provided in an award
agreement, Awards may not be sold, transferred, or assigned
other than by will or the laws of descent and distribution.
Awards exercisable after the death of Award recipients may be
exercised by their legatees, personal representatives or
distributees.
Resale Restrictions. The ordinary shares that
may be issued under the 2011 Share Incentive Plan may not
be resold except in compliance with the terms, conditions and
restrictions set forth in our bye-laws and applicable securities
laws. Shares acquired pursuant to the 2011 Share Incentive
Plan by one of our affiliates, as that term is
defined in Rule 405 of the Securities Act, may be resold
only pursuant to the registration requirements of that act or an
applicable exemption therefrom. In addition, acquisitions and
dispositions of our ordinary shares or derivative securities by
persons subject to Section 16 of the Exchange Act within
any period of less than six months, may permit us to recapture
any profit from such transactions pursuant to Section 16(b)
of that act. Although Section 16 does not apply as of the
date of this 2011 Share Incentive Plan information
document, it may apply in the future and would apply if the
Company no longer qualifies as a foreign private
issuer under the U.S. securities laws.
66
Expiration, Amendment and Termination of the Plan and
Awards. No Awards may be granted under the
2011 Share Incentive Plan after February 4, 2021. Our
Board or the Committee may amend or terminate the
2011 Share Incentive Plan at any time. The 2011 Share
Incentive Plan also gives the Committee the authority to waive
the terms and conditions of outstanding Awards; provided,
however, that the Award recipients consent is required of
any amendment that would adversely affect the Award
recipients rights under an outstanding Award, and
shareholder approval is required of any amendment that would
increase the number of shares that may be delivered under the
2011 Share Incentive Plan or that would permit the
reduction of the exercise price of options or SARs (except for
reductions in connection with anti-dilution adjustments made in
connection with stock splits, reorganizations or similar events,
as described above).
Certain U.S. Federal Income Tax
Consequences. The following is a brief
description of the U.S. federal income tax consequences of
the 2011 Share Incentive Plan and Awards that may be
granted under the 2011 Share Incentive Plan. It assumes
that Award recipients are U.S. citizens or are resident in
the U.S. For purposes of this section,
(i) Affiliate means any of our direct or
indirect subsidiaries, (ii) a
U.S. Affiliate means any Affiliate that is
domiciled or has an office in the United States, and
(iii) a Foreign Affiliate means any other
Affiliate.
The 2011 Share Incentive Plan is not qualified under
Section 401(a) of the Code. In general, we and our Foreign
Affiliates will not be subject to U.S. federal income tax
unless we or they engage in a trade or business in the United
States. We and our Foreign Affiliates, other than Aspen Re,
endeavor to operate and intend to continue operating so that we
and they will not be engaged in a trade or business in the
United States or have an office or fixed place of business in
the United States. Our U.S. Affiliates are
U.S. corporations and, consequently, are
U.S. taxpayers.
This summary does not address every tax consideration. This
summary is based upon current law and does not purport to be a
comprehensive discussion of all the tax considerations that may
be relevant with respect to the 2011 Share Incentive Plan.
The grant of ISOs or NQSOs and the exercise of ISOs do not
result in any U.S. federal income tax consequences for us
or our Affiliates (unless the ISO shares are sold in connection
with the exercise and such disposition results in a
disqualifying disposition).
If Award recipients have been granted an option, a SAR or other
equity award under the 2011 Share Incentive Plan and they
are employed by one of our U.S. Affiliates, we consider
such Award recipients to be U.S. grantees. As
U.S. grantees, if Award recipients recognize ordinary
income from the exercise of an NQSO, the U.S. Affiliate for
which Award recipients perform services should be entitled to a
U.S. federal income tax deduction in the amount of the
ordinary income Award recipients recognized. To the extent a
U.S. grantee recognizes ordinary income by reason of a
disqualifying disposition of the stock acquired upon exercise of
an ISO, the U.S. Affiliate should also be entitled to a
corresponding deduction for the year in which the disqualifying
disposition occurs.
The U.S. Affiliate will report to the Internal Revenue
Service (IRS) any ordinary income a
U.S. grantee realizes by reason of the exercise of an NQSO
or by reason of a disqualifying disposition of stock acquired
upon exercise of an ISO. If Award recipients are employees of
such U.S. Affiliate, the U.S. Affiliate will withhold
income and employment taxes (and pay the employers share
of employment taxes) with respect to ordinary income Award
recipients recognize upon the exercise of NQSO.
If Award recipients have been granted an Award under the
2011 Share Incentive Plan but are not U.S. grantees,
they will not be subject to any U.S. income or employment
tax withholding and any income recognized will not be reported
to the IRS.
Share Appreciation Rights (SARs). Grantees of
SARs will realize ordinary income in an amount equal to the
amount of cash and the fair market value of any shares received
upon exercise of a SAR. The U.S. Affiliate for which
U.S. grantees provide services (i) should be entitled
to a corresponding deduction for U.S. federal income tax
purposes, (ii) will report to the IRS any ordinary income
recognized by a U.S. grantee and (iii) will withhold
income taxes and employment taxes (and pay the employers
share of employment taxes) on any ordinary income recognized by
a U.S. grantee that is an employee of such
U.S. Affiliate.
67
If Award recipients receive shares upon exercise of a SAR,
the taxation of the post-exercise appreciation or depreciation
is treated as either a short-term or long-term capital gain or
loss, depending upon how long Award recipients hold the shares
before disposing of them.
Restricted Share Awards. Grantees of
restricted share awards will not be taxed and a
U.S. Affiliate for which U.S. grantees provide
services will not be entitled to a U.S. federal income tax
deduction, at the time of grant to a U.S. grantee. However,
when the restricted shares vest (i.e., are no longer subject to
a substantial risk of forfeiture), Award recipients will
recognize ordinary income in an amount equal to the fair market
value of the shares less the amount Award recipients paid, if
any, for the shares. Alternatively, Award recipients may file an
election with the IRS within 30 days of the date Award
recipients receive the restricted share award in which Award
recipients elect to recognize ordinary income at the time of
grant rather than at the time the restrictions lapse. The
U.S. Affiliate for which U.S. grantees provide
services should be entitled to a U.S. federal income tax
deduction at the time of income recognition in an amount equal
to the amount of income recognized by the U.S. grantee
related to the grant of restricted shares. The
U.S. Affiliate (i) will report to the IRS any ordinary
income recognized by a U.S. grantee and (ii) will
withhold income and employment taxes (and pay the
employers share of employment taxes) on the ordinary
income recognized by a U.S. grantee that is an employee of
such U.S. Affiliate.
Restricted Share Units. Grantees of restricted
share units will not be taxed, and a U.S. Affiliate for
which U.S. grantees provide services will not be entitled
to a U.S. federal income tax deduction, at the time of
grant to a U.S. grantee. However, when the restricted share
units (and any associated dividend equivalent rights) vest
(i.e., are no longer subject to a substantial risk of
forfeiture), Award recipients will recognize ordinary income at
that time equal to the amount of cash or fair market value of
shares received (and any cash received in payment of associated
dividend equivalent rights). The U.S. Affiliate for which
U.S. grantees provide services should be entitled to a
U.S. federal income tax deduction at the time of income
recognition in an amount equal to the amount of income
recognized by the U.S. grantee. The U.S. Affiliate
(i) will report to the IRS any ordinary income recognized
by a U.S. grantee and (ii) will withhold income and
employment taxes (and pay the employers share of
employment taxes) on the ordinary income recognized by a
U.S. grantee that is an employee of such
U.S. Affiliate.
Votes
Required
Proposal No. 4 requires approval by the affirmative
vote of a majority of the voting power of the votes cast at the
Annual General Meeting, subject to our Bye-Laws 63 to 67.
THE BOARD
RECOMMENDS A VOTE FOR THE APPROVAL
OF THE 2011 SHARE INCENTIVE PLAN.
68
Neither the Board nor management intends to bring before the
meeting any business other than the matters referred to in the
Notice of Annual General Meeting of Shareholders and this Proxy
Statement. If any other business should come properly before the
meeting, or any adjournment thereof, the proxyholders will vote
on such matters according to their best judgment.
By Order of the Board of Directors,
Patricia Roufca
Secretary
Hamilton, Bermuda
March 18, 2011
* * * * * * *
The Annual Report on
Form 10-K,
including financial statements for the fiscal year ended
December 31, 2010, has been posted on the Investor
Relations page of our website at www.aspen.bm. The Annual
Report does not form any part of the material for the
solicitation of proxies. Our process for distribution of our
proxy materials and the content of this Proxy Statement differ
in some respects from the distribution of proxy materials by a
U.S. domestic issuer and the content of a proxy statement
required to be filed by a U.S. domestic issuer because the
Company is a foreign private issuer. Certain
additional information relating to the Company may be found in
its Annual Report on
Form 10-K
for the year ended December 31, 2010. Upon written request
of a Shareholder, the Company will furnish, without charge, a
copy of the Companys Annual Report on
Form 10-K,
as filed with the SEC. If you would like a copy of the Annual
Report on
Form 10-K,
please contact Aspen Insurance Holdings Limited, Maxwell Roberts
Building, 1 Church Street, Hamilton HM11, Bermuda, Attn: Head of
Investor Relations. In addition, financial reports and recent
filings with the SEC, including the Annual Report on
Form 10-K,
are available on the Internet at
http://www.sec.gov.
Company information is also available on the Internet at
http://www.aspen.bm.
69
Appendix A
ASPEN
INSURANCE HOLDINGS LIMITED
2011
SHARE INCENTIVE PLAN
The purpose of the Plan is to aid the Company and its Affiliates
in recruiting and retaining key employees and to motivate such
employees to exert their best efforts on behalf of the Company
and its Affiliates by providing incentives through the granting
of Awards. The Company expects that it will benefit from the
added interest which such key employees will have in the welfare
of the Company as a result of their proprietary interest in the
Companys success.
The following capitalized terms used in the Plan have the
respective meanings set forth in this Section:
a. Act means The Securities
Exchange Act of 1934, as amended, or any successor thereto.
b. Affiliate means any entity
directly or indirectly controlling, controlled by, or under
common control with, the Company or any other entity designated
by the Board in which the Company or an Affiliate has an
interest.
c. Award means an Option, Share
Appreciation Right, Restricted Share or Other Share-Based Award
granted pursuant to the Plan.
d. Beneficial Owner means a
beneficial owner, as such term is defined in
Rule 13d-3
under the Act (or any successor rule thereto) (except that a
Person shall be deemed to have beneficial ownership
of all Shares that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage
of time).
e. Board means the Board of
Directors of the Company.
f. Change in Control means the
occurrence of any of the following events:
i. the sale or disposition, in one or a series of related
transactions, of all or substantially all of the assets of the
Company to any Person or Group (other than (x) any
subsidiary of the Company or (y) any entity that is a
holding company of the Company (other than any holding company
which became a holding company in a transaction that resulted in
a Change in Control) or any subsidiary of such holding company);
ii. any Person or Group is or becomes the Beneficial Owner,
directly or indirectly, of more than 30% of the combined voting
power of the voting shares of the Company (or any entity which
is the Beneficial Owner of more than 50% of the combined voting
power of the voting shares of the Company), including by way of
merger, consolidation, tender or exchange offer or otherwise;
excluding, however, the following: (A) any acquisition
directly from the Company, (B) any acquisition by the
Company, (C) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (D) any
acquisition by a Person or Group if immediately after such
acquisition a Person or Group who is a shareholder of the
Company on the Effective Date continues to own voting power of
the voting shares of the Company that is greater than the voting
power owned by such acquiring Person or Group;
iii. the consummation of any transaction or series of
transactions resulting in a merger, consolidation or
amalgamation, in which the Company is involved, other than a
merger, consolidation or amalgamation which would result in the
shareholders of the Company immediately prior thereto continuing
to own (either by remaining outstanding or by being converted
into voting securities of the surviving entity), in the same
proportion as immediately prior to the transaction(s),
A-1
more than 50% of the combined voting power of the voting shares
of the Company or such surviving entity outstanding immediately
after such merger, consolidation or amalgamation; or
iv. a change in the composition of the Board such that the
individuals who, as of the Effective Date, constitute the Board
(such Board shall be referred to for purposes of this subsection
(ii)(D) as the Incumbent Board) cease for any reason
to constitute at least a majority of the Board; provided,
however, that for purposes of this definition, any individual
who becomes a member of the Board subsequent to the Effective
Date, whose election, or nomination for election, by a majority
of those individuals who are members of the Board and who were
also members of the Incumbent Board (or deemed to be such
pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; and, provided
further, however, that any such individual whose initial
assumption of office occurs as the result of or in connection
with either an actual or threatened election contest or other
actual or threatened solicitation of proxies or consents by or
on behalf of an entity other than the Board shall not be so
considered as a member of the Incumbent Board.
For purposes of this definition of Change in Control,
(i) subsidiary shall mean, in respect of any
entity, any other entity that is, directly or indirectly, wholly
owned by the first entity; and (ii) holding
company shall mean, in respect of any entity, any other
entity that, directly or indirectly, wholly owns such first
entity.
g. Code means the Internal
Revenue Code of 1986, as amended, or any successor thereto.
h. Committee means the
Compensation Committee of the Board or the full Board, as
determined by the Board.
i. Company means Aspen Insurance
Holdings Limited, a Bermuda corporation.
j. Effective Date means the date
the Board approves the Plan.
k. Employment means a
Participants employment with the Company or any of its
Affiliates; provided, however, that unless otherwise determined
by the Committee, a change in a Participants status from
employee to non-employee (other than a director of the Company
or an Affiliate) shall constitute a termination of employment
hereunder.
l. Fair Market Value means, on a
given date, (i) if there is a public market for the Shares
on such date, the arithmetic mean of the high and low prices of
the Shares as reported on such date on the Composite Tape of the
principal national securities exchange on which such Shares are
listed or admitted to trading, or, if the Shares are not listed
or admitted on any national securities exchange, the arithmetic
mean of the per Share closing bid price and per Share closing
asked price on such date as quoted on the National Association
of Securities Dealers Automated Quotation System (or such market
in which such prices are regularly quoted) (the
NASDAQ), or, if no sale of Shares shall have been
reported on the Composite Tape of any national securities
exchange or quoted on the NASDAQ on such date, then the
immediately preceding date on which sales of the Shares have
been so reported or quoted shall be used, and (ii) if there
is not a public market for the Shares on such date, the Fair
Market Value shall be the value established by the Committee in
good faith.
m. Group means a
group, as such term is used for purposes of
Section 13(d)(3) or 14(d)(2) of the Act (or any successor
section thereto).
n. ISO means an Option that is
also an incentive stock option granted pursuant to
Section 6(d).
o. Option means a share option
granted pursuant to Section 6.
p. Option Price means the
purchase price per Share of an Option, as determined pursuant to
Section 6(a).
q. Other Share-Based Awards means
awards granted pursuant to Section 9.
r. Participant means an employee
who is selected by the Committee to participate in the Plan.
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s. Person means a
person, as such term is used for purposes of
Section 13(d) or 14(d) of the Act (or any successor section
thereto).
t. Plan means the Aspen Insurance
Holdings Limited 2011 Share Incentive Plan.
u. Restricted Shares means any
Share granted pursuant to Section 8.
v. Shares means ordinary shares,
par value 0.15144558 cent per share, in the capital of the
Company.
w. Share Appreciation Right means
a share appreciation right granted pursuant to Section 7.
x. Subsidiary means a subsidiary
corporation, as defined in Section 424(f) of the Code (or
any successor section thereto), of the Company.
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3.
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Shares Subject
to the Plan
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The total number of Shares that may be issued under the Plan is
3,000,000. The Shares may consist, in whole or in part, of
unissued Shares or previously issued Shares. The issuance of
Shares or the payment of cash upon the exercise of an Award or
in consideration of the cancellation or termination of an Award
shall reduce the total number of Shares available under the
Plan, as applicable. Shares that are subject to Awards (or
portions thereof) that are forfeited, are cancelled, expire,
terminate or lapse without the payment of consideration may be
granted again under the Plan.
a. The Plan shall be administered by the Committee. The
Committee may, as permitted by applicable laws, delegate to any
subcommittees or individuals as determined by and pursuant to
such conditions and limitations as the Committee may deem
appropriate in its sole discretion any of its authorities and
responsibilities (including the power and authority to make
awards to individuals who are not insiders subject
to Section 16(b) of the Securities Exchange Act of 1934 or
who are not expected to be covered employees within
the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended).
b. The Committee shall have the full power and authority to
make, and establish the terms and conditions of, any Award to
any person eligible to be a Participant, consistent with the
provisions of the Plan and to waive any such terms and
conditions at any time (including, without limitation,
accelerating or waiving any vesting conditions). Subject to
Section 5(b), Awards may, in the discretion of the
Committee, be made under the Plan in assumption of, or in
substitution for, outstanding awards previously granted by the
Company or its Affiliates or a company acquired by the Company
or with which the Company combines. The number of Shares
underlying such substitute awards shall be counted against the
aggregate number of Shares available for Awards under the Plan.
c. The Committee is authorized to interpret the Plan, to
establish, amend and rescind any rules and regulations relating
to the Plan, and to make any other determinations that it deems
necessary or desirable for the administration of the Plan, and
may delegate such authority, as it deems appropriate. The
Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan in the manner and to the
extent the Committee deems necessary or desirable. Any decision
of the Committee in the interpretation and administration of the
Plan, as described herein, shall lie within its sole and
absolute discretion and shall be final, conclusive and binding
on all parties concerned (including, but not limited to,
Participants and their beneficiaries or successors).
d. The Committee shall require payment of any amount it may
determine to be necessary to withhold for federal, state, local
or other taxes as a result of the exercise, grant or vesting of
an Award. Unless the Committee specifies otherwise, the
Participant may elect to pay a portion or all of such
withholding taxes by (a) delivery in Shares or
(b) having Shares withheld by the Company with a Fair
Market Value equal to the minimum statutory withholding rate
from any Shares that would have otherwise been received by the
Participant.
A-3
a. No Award may be granted under the Plan after the tenth
anniversary of the Effective Date, but Awards theretofore
granted may extend beyond that date.
b. Without the approval of the shareholders of the Company,
the Company shall not adjust an Option or Share Appreciation
Right or exchange an Option or Share Appreciation Right with
another Option or Share Appreciation Right that would result in
an Award with a lower Option Price or exercise price (except for
adjustments pursuant to Section 10 of the Plan).
c. Notwithstanding any provision of the Plan other than
Section 10, the number of Shares under the Plan that may be
issued in connection with grants of ISOs shall not exceed
3,000,000 Shares.
d. Notwithstanding any other provision of the Plan to the
contrary, Restricted Shares and Other Share-Based Awards
(i) that vest on the basis of the Participants
continued Employment shall be subject to a minimum vesting
schedule of at least three years and (ii) that vest on the
basis of the attainment of performance goals shall provide for a
minimum period that ends no earlier than the first anniversary
of the commencement of the period over which performance is
evaluated; provided, however, that the foregoing limitations
shall not preclude the acceleration of vesting of any such Award
upon the death, disability or retirement of the Participant or
upon an actual Change in Control. Notwithstanding the foregoing,
Restricted Shares and Other Share Based Awards with respect to
5% of the maximum aggregate number of Shares available for the
purpose of Awards under the Plan pursuant to Section 3 may
be granted under the Plan to any one or more Participants
without respect to such minimum vesting provisions.
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6.
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Terms and
Conditions of Options
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Options granted under the Plan shall be, as determined by the
Committee, nonqualified or incentive stock options for federal
income tax purposes, as evidenced by the related Award
agreements, and shall be subject to the foregoing and the
following terms and conditions and to such other terms and
conditions, not inconsistent therewith, as the Committee shall
determine
a. Option Price. The Option Price
per Share shall be determined by the Committee, but shall not be
less than 100% of the Fair Market Value of the Shares on the
date an Option is granted.
b. Exercisability. Options granted
under the Plan shall be exercisable at such time and upon such
terms and conditions as may be determined by the Committee, but
in no event shall an Option be exercisable more than ten years
after the date it is granted, except as may be provided pursuant
to Section 15.
c. Exercise of Options. Except as
otherwise provided in the Plan or in an Award agreement, an
Option may be exercised for all, or from time to time any part,
of the Shares for which it is then exercisable. For purposes of
this Section 6, the exercise date of an Option shall be the
date a notice of exercise is received by the Company, together
with payment (or to the extent permitted by applicable law,
provision for payment) of the full purchase price in accordance
with Section 6(c). The purchase price for the Shares as to
which an Option is exercised shall be paid to the Company, as
designated by the Committee, pursuant to one or more of the
following methods: (i) in cash or its equivalent (e.g., by
check); (ii) in Shares having a Fair Market Value equal to
the aggregate Option Price for the Shares being purchased and
satisfying such other requirements as may be imposed by the
Committee; (iii) partly in cash and partly in such Shares;
or (iv) if there is a public market for the Shares at such
time, through the delivery of irrevocable instructions to a
broker to sell Shares obtained upon the exercise of the Option
and to deliver promptly to the Company an amount out of the
proceeds of such sale equal to the aggregate Option Price for
the Shares being purchased. No Participant shall have any rights
to dividends or other rights of a shareholder with respect to
Shares subject to an Option until the Participant has given
written notice of exercise of the Option, paid in full for such
Shares and, if applicable, has satisfied any other conditions
imposed by the Committee pursuant to the Plan.
d. ISOs. The Committee may grant
Options under the Plan that are intended to be ISOs. Such ISOs
shall comply with the requirements of Section 422 of the
Code (or any successor section thereto), including without
limitation that the Option Price shall not be less than 100% of
the Fair Market Value of the Shares on
A-4
the date the ISO is granted. No ISO may be granted to any
Participant who at the time of such grant, owns more than ten
percent of the total combined voting power of all classes of
shares of the Company or of any Subsidiary, unless (i) the
Option Price for such ISO is at least 110% of the Fair Market
Value of a Share on the date the ISO is granted and
(ii) the date on which such ISO terminates is a date not
later than the day preceding the fifth anniversary of the date
on which the ISO is granted. Any Participant who disposes of
Shares acquired upon the exercise of an ISO either
(i) within two years after the date of grant of such ISO or
(ii) within one year after the transfer of such Shares to
the Participant, shall notify the Company of such disposition
and of the amount realized upon such disposition. All Options
granted under the Plan are intended to be nonqualified share
options, unless the applicable Award agreement expressly states
that the Option is intended to be an ISO. If an Option is
intended to be an ISO, and if for any reason such Option (or
portion thereof) shall not qualify as an ISO, then, to the
extent of such nonqualification, such Option (or portion
thereof) shall be regarded as a nonqualified share option
granted under the Plan; provided that such Option (or portion
thereof) otherwise complies with the Plans requirements
relating to nonqualified share options. In no event shall any
member of the Committee, the Company or any of its Affiliates
(or their respective employees, officers or directors) have any
liability to any Participant (or any other Person) due to the
failure of an Option to qualify for any reason as an ISO.
e. Attestation. Wherever in this
Plan or any agreement evidencing an Award a Participant is
permitted to pay the exercise price of an Option or taxes
relating to the exercise of an Option by delivering Shares, the
Participant may, subject to procedures satisfactory to the
Committee, satisfy such delivery requirement by presenting proof
of beneficial ownership of such Shares, in which case the
Company shall treat the Option as exercised without further
payment
and/or shall
withhold such number of Shares from the Shares acquired by the
exercise of the Option, as appropriate.
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7.
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Terms and
Conditions of Share Appreciation Rights
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a. Grants. The Committee may grant
(i) a Share Appreciation Right independent of an Option or
(ii) a Share Appreciation Right in connection with an
Option, or a portion thereof. A Share Appreciation Right granted
pursuant to clause (ii) of the preceding sentence
(A) may be granted at the time the related Option is
granted or at any time prior to the exercise or cancellation of
the related Option, (B) shall cover the same number of
Shares covered by an Option (or such lesser number of Shares as
the Committee may determine) and (C) shall be subject to
the same terms and conditions as such Option except for such
additional limitations as are contemplated by this
Section 7 (or such additional limitations as may be
included in an Award agreement).
b. Terms. The exercise price per
Share of a Share Appreciation Right shall be an amount
determined by the Committee but in no event shall such amount be
less than the Fair Market Value of a Share on the date the Share
Appreciation Right is granted, except that, notwithstanding the
foregoing, in the case of a Share Appreciation Right granted in
conjunction with an Option, or a portion thereof, the exercise
price may not be less than the Option Price of the related
Option. Each Share Appreciation Right granted independent of an
Option shall entitle a Participant upon exercise to an amount
equal to (i) the excess of (A) the Fair Market Value
on the exercise date of one Share over (B) the exercise
price per Share, times (ii) the number of Shares covered by
the Share Appreciation Right. Each Share Appreciation Right
granted in conjunction with an Option, or a portion thereof,
shall entitle a Participant to surrender to the Company the
unexercised Option, or any portion thereof, and to receive from
the Company in exchange therefor an amount equal to (i) the
excess of (A) the Fair Market Value on the exercise date of
one Share over (B) the Option Price per Share, times
(ii) the number of Shares covered by the Option, or portion
thereof, which is surrendered. Payment shall be made in Shares
or in cash, or partly in Shares and partly in cash (any such
Shares valued at such Fair Market Value), all as shall be
determined by the Committee. Share Appreciation Rights may be
exercised from time to time upon actual receipt by the Company
of written notice of exercise stating the number of Shares with
respect to which the Share Appreciation Right is being
exercised. The date a notice of exercised is received by the
Company shall be the exercise date. No fractional Shares will be
issued in payment for Share Appreciation Rights, but instead
cash will be paid for a fraction or, if the Committee should so
determine, the number of Shares will be rounded downward to the
next whole Share.
A-5
c. Limitations. The Committee may
impose, in its discretion, such conditions upon the
exercisability or transferability of Share Appreciation Rights
as it may deem fit.
a. Grant. Subject to the
provisions of the Plan, the Committee shall determine the number
of Restricted Shares to be granted to each Participant, the
duration of the period during which, and the conditions, if any,
under which, the Restricted Shares may be forfeited to the
Company, and the other terms and conditions of such Awards.
b. Transfer
Restrictions. Restricted Shares may not be
sold, assigned, transferred, pledged or otherwise encumbered,
except as provided in the Plan or the applicable Award
agreement. Certificates issued in respect of Restricted Shares
shall be registered in the name of the Participant and deposited
by such Participant, together with a stock power endorsed in
blank, with the Company. After the lapse of the restrictions
applicable to such Restricted Shares, the Company shall deliver
such certificates to the Participant or the Participants
legal representative.
c. Voting Rights. Unless otherwise
determined by the Committee and set forth in the applicable
Award agreement, to the extent permitted or required by
applicable law, Participants holding Restricted Shares granted
hereunder may exercise full voting rights with respect to those
Shares during the period in which the Restricted Shares are
subject to forfeiture to the Company.
d. Dividends. Dividends paid on
any Restricted Shares may be paid directly to the Participant,
withheld by the Company subject to vesting of the Restricted
Shares pursuant to the terms of the applicable Award agreement,
or may be reinvested in additional Restricted Shares, as
determined by the Committee in its sole discretion.
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9.
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Other
Share-Based Awards
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a. Generally. The Committee, in
its sole discretion, may grant or sell Awards of Shares and
Awards that are valued in whole or in part by reference to, or
are otherwise based on the Fair Market Value of, Shares
(Other Share-Based Awards). Such Other Share-Based
Awards shall be in such form, and dependent on such conditions,
as the Committee shall determine, including, without limitation,
the right to receive, or vest with respect to, one or more
Shares (or the equivalent cash value of such Shares) upon the
completion of a specified period of service, the occurrence of
an event
and/or the
attainment of performance objectives. Other Share-Based Awards
may be granted alone or in addition to any other Awards granted
under the Plan. Subject to the provisions of the Plan, the
Committee shall determine the number of Shares to be awarded
under (or otherwise related to) such Other Share-Based Awards;
whether such Other Share-Based Awards shall be settled in cash,
Shares or a combination of cash and Shares; and all other terms
and conditions of such Awards (including, without limitation,
the vesting provisions thereof and provisions ensuring that all
Shares so awarded and issued shall be fully paid and
non-assessable).
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10.
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Adjustments
Upon Certain Events
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Notwithstanding any other provisions in the Plan to the
contrary, the following provisions shall apply to all Awards
granted under the Plan:
a. Generally. In the event of any
change in the outstanding Shares after the Effective Date by
reason of any Share dividend or split, reorganization,
recapitalization, merger, consolidation, spin-off, combination,
combination or transaction or exchange of Shares or other
corporate exchange, or any distribution to shareholders of
Shares other than regular cash dividends or any transaction
similar to the foregoing, the Committee in its sole discretion
and without liability to any person shall make such
substitutions or adjustments as it deems to be equitable, in its
sole discretion, and necessary to preserve the benefits or
potential benefits intended to be made available under this Plan
as to (i) the number or kind of Shares or other securities
issued or reserved for issuance pursuant to the Plan or pursuant
to outstanding Awards, (ii) the maximum number of Shares
for which Awards (including limits established
A-6
for Restricted Shares or Performance-Based Awards) may be
granted during a calendar year to any Participant,
(iii) the Option Price or exercise price of any Share
Appreciation Right,
and/or
(iv) any other affected terms of such Awards.
b. Change in Control.
i. In the event of a Change in Control, the Committee may,
but shall not be obligated to, (A) accelerate, vest or
cause the restrictions to lapse with respect to, all or any
portion of an Award or (B) cancel Awards for fair value (as
reasonably determined in the discretion of the Committee) which,
in the case of Options and Share Appreciation Rights, may equal,
but in any event shall not be less than, the excess, if any, of
value of the consideration to be paid in the Change in Control
transaction to holders of the same number of Shares subject to
such Options or Share Appreciation Rights (or, if no
consideration is paid in any such transaction, the Fair Market
Value of the Shares subject to such Options or Share
Appreciation Rights) over the aggregate exercise price of such
Options or Share Appreciation Rights or (C) provide for the
issuance of substitute Awards that will substantially preserve
the otherwise applicable terms of any affected Awards previously
granted hereunder as determined by the Committee in its sole
discretion or (D) provide that for a period of at least
15 days prior to the Change in Control, such Options shall
be exercisable as to all Shares subject thereto and that upon
the occurrence of the Change in Control, such Options shall
terminate and be of no further force and effect.
ii. Notwithstanding the provisions of
Section 10(b)(i), (A) in the event of a Change in
Control, no payment shall be accelerated for any Award which
constitutes deferred compensation under Section 409A
of the Code unless such Change in Control is a change in
control event as defined in
Section 1.409A-3(i)(5)
of the United States Treasury Department Regulations and
(B) to the extent that a Change in Control does constitute
a change in control event as defined in Section
1.409A-3(i)(5) of the United States Treasury Department
Regulations, then, with respect to any Award which would be
considered deferred compensation under
Section 409A of the Code on the date of such Change in
Control, the restrictions and other conditions applicable to any
such Award shall lapse, and such Award shall become vested,
payable in full and immediately settled and distributed.
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11.
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No Right
to Employment or Awards
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The granting of an Award under the Plan shall impose no
obligation on the Company or any Affiliate to continue the
Employment of a Participant and shall not lessen or affect the
Companys or Affiliates right to terminate the
Employment of such Participant. No Participant or other Person
shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Participants, or
holders or beneficiaries of Awards. The terms and conditions of
Awards and the Committees determinations and
interpretations with respect thereto need not be the same with
respect to each Participant (whether or not such Participants
are similarly situated).
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12.
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Successors
And Assigns
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The Plan shall be binding on all successors and assigns of the
Company and a Participant, including without limitation, the
estate of such Participant and the executor, administrator or
trustee of such estate, or any receiver or trustee in bankruptcy
or representative of the Participants creditors.
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13.
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Nontransferability
of Awards
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Unless otherwise determined by the Committee, an Award shall not
be transferable or assignable by the Participant otherwise than
by will or by the laws of descent and distribution. An Award
exercisable after the death of a Participant may be exercised by
the legatees, personal representatives or distributees of the
Participant.
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14.
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Amendments
or Termination
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The Board or the Committee may amend, alter or discontinue the
Plan, but no amendment, alteration or discontinuation shall be
made, (a) without the approval of the shareholders of the
Company, if such action would (except as is provided in
Section 10 of the Plan), increase the total number of
Shares reserved for the
A-7
purposes of the Plan, (b) without the consent of a
Participant, if such action would diminish any of the rights of
the Participant under any Award theretofore granted to such
Participant under the Plan or (c) without the approval of
the shareholders of the Company, to Section 5(b), relating
to repricing of Options or Share Appreciation Rights, to permit
such repricing; provided, however, that the Committee may amend
the Plan in such manner as it deems necessary to permit the
granting of Awards meeting the requirements of the Code or other
applicable laws.
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15.
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Conflicts
of Law; International Participants
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The Committee may, in its sole discretion, amend the terms of
the Plan or Awards in order (i) to comply with United
States Federal law or the rules of any securities exchange in
the United States or (ii) with respect to Participants who
reside or work outside the United States of America, to conform
such terms with the requirements of local law or to obtain more
favorable tax or other treatment for a Participant, the Company
or an Affiliate, and the Committee may, where appropriate,
establish one or more
sub-plans to
reflect such amended or varied provisions.
All Awards shall constitute a special incentive payment to the
Participant and shall not be taken into account in computing the
amount of salary or compensation of the Participant for the
purpose of determining any benefits under any pension,
retirement, profit-sharing, bonus, life insurance or other
benefit plan of the Company or under any agreement between the
Company and the Participant, unless such plan or agreement
specifically provides otherwise.
The Plan shall be governed by and construed in accordance with
the laws of Bermuda, without regard to conflicts of laws
principles.
In the event of any controversy between a Participant and the
Company arising out of, or relating to, this Plan or an Award
granted hereunder which cannot be settled amicably by the
parties, such controversy shall be finally, exclusively and
conclusively settled by mandatory arbitration conducted
expeditiously in accordance with the American Arbitration
Association rules, by a single independent arbitrator. If the
parties are unable to agree on the selection of an arbitrator,
then either the Participant or the Company may petition the
American Arbitration Association for the appointment of the
arbitrator, which appointment shall be made within ten
(10) days of the petition therefor. Either party to the
dispute may institute such arbitration proceeding by giving
written notice to the other party. A hearing shall be held by
the arbitrator in New York, London or Bermuda as agreed by the
parties (or, failing such agreement, in Bermuda) within thirty
(30) days of his or her appointment. The decision of the
arbitrator shall be final and binding upon the parties and shall
be rendered pursuant to a written decision that contains a
detailed recital of the arbitrators reasoning. Judgment
upon the award rendered may be entered in any court having
jurisdiction thereof.
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19.
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Section 409A
Compliance
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The provisions of this Plan and any Awards made herein are
intended to comply with, and should be interpreted consistent
with, the requirements of Section 409A of the Code, and any
related regulations or other effective guidance promulgated
thereunder by the United States Department of the Treasury or
the Internal Revenue Service.
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20.
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Effectiveness
of the Plan
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The Plan shall be effective as of the Effective Date, subject to
the approval of the shareholders of the Company.
A-8
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to annual meeting day.
Aspen Insurance
Holdings Limited
INTERNET
http://www.proxyvoting.com/ahl
Use the Internet to vote your proxy. Have your proxy card
in hand when you access the web site.
OR
TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have
your proxy card in hand when you call.
If you vote your proxy by Internet or by telephone, you
do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and
return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named
proxies to vote your shares in the same manner as if you
marked, signed and returned your proxy card.
WO#
94315
6 FOLD AND DETACH HERE 6
The Board of Directors recommends a vote FOR each proposal listed below.
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Please mark your votes as
indicated in this example
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Please see description of proposals on bottom portion of this card.
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For |
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Against |
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Abstain |
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Proposal 1 |
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To approve the compensation of the Companys Named Executive Officers, as
disclosed in our annual report on Form
10-K, filed on February 25, 2011, as
part of the non-binding advisory vote
for Say-On-Pay. |
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Withhold All |
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For All Except |
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Proposal 2 |
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To re-elect (1) Mr. Christopher OKane, (2) Mr. John Cavoores, (3) Mr. Liaquat
Ahamed, and (4) Ms. Heidi Hutter and
elect (5) Mr. Albert Beer as Class I
directors of the Company. |
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Proposal 3 |
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To appoint KPMG Audit plc (KPMG), London, England, to act as the Companys
independent registered public accounting
firm for the fiscal year ending December
31, 2011 and to authorize the Board
through the Audit Committee (the Audit
Committee) to set the remuneration for
the independent registered public
accounting firm. |
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Proposal 4 |
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To approve the 2011 Share Incentive Plan. |
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To withhold authority for any individual nominee under Proposal 2, write the number of each nominee you wish to withhold on the
line(s) below: |
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Mark Here for
Address Change
or Comments
SEE REVERSE
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The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any
adjournment thereof.
Please sign exactly as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
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Choose MLinkSM for fast, easy and secure 24/7 online access to
your future proxy materials, investment plan statements, tax documents and
more. Simply log on to Investor ServiceDirect® at
www.bnymellon.com/shareowner/equityaccess where step-by-step instructions will
prompt you through enrollment.
6FOLD AND DETACH HERE6
ASPEN INSURANCE HOLDINGS LIMITED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 2011
The undersigned hereby appoints Christopher OKane and Richard Houghton, jointly and
severally, as proxies of the undersigned, with full power of substitution and with the authority in
each to act in the absence of the other, to vote on behalf of the undersigned, all Ordinary Shares
of the undersigned at the Annual General Meeting of Shareholders to be held on April 28, 2011, and
at any adjournment thereof, upon the subjects described in the letter furnished herewith, subject
to any directions indicated below.
Your vote is important! Please complete, date, sign and return this form to Aspen Insurance
Holdings Limited, c/o BNY Mellon Shareowner Services, attn: Proxy Processing, P.O. Box 3550, South
Hackensack, NJ 07606-9250, in the accompanying envelope.
This proxy when properly signed will be voted in accordance with the instructions, if any,
given hereon. If this form of proxy is properly signed and returned but no direction is given, the
proxy will vote FOR each proposal listed below and in accordance with the proxyholders best
judgment as to any other business as may properly come before the Annual General Meeting.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to
be Held on April 28, 2011.
The proxy statement and annual report to security holders are available at
http://www.aspen.bm.
Address Change/Comments
(Mark the corresponding box on the reverse side)
(Continued on reverse side)
BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
WO#
94315