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Argo Group International Holdings Ltd. has received a subpoena from the U.S. Securities and Exchange Commission over its executive pay compensation practices, and its independent directors are now conducting a governance and compensation review, the Bermuda-based insurer said Tuesday.
The subpoena from the SEC is seeking documents primarily with respect to “the company’s disclosure of certain compensation-related perquisites,” Argo said in a statement.
The insurer is working with outside counsel and “fully cooperating” with the SEC and “does not believe that the amounts involved are material to its financial position of results of operations,” Argo said.
“Argo is committed to governance practices that support continued value creation for all shareholders,” Argo added.
In August, the specialty insurer said it will present two proposals at its 2020 annual general meeting that would begin a process of “phased declassification” of Argo’s board of directors, after which the entire board will stand for election annually.
The second proposal would reduce the maximum size of the board from 13 to 11, the insurer said in an Aug. 8 statement.
The board has also approved a series of changes to the company’s executive compensation program, Argo said in the Aug. 8 statement.
Among other changes, performance awards under its long-term incentive plan would be measured over a three-year performance period, rather than one, Argo said.
The CEO’s stock ownership guideline will be equal to six times base salary, up from five times, the insurer said.
In May, Argo shareholders voted to re-elect board directors at the company’s 2019 annual meeting, but a resolution on executive compensation was only narrowly approved.
This vote followed months of back-and-forth between Argo and shareholder Voce Capital Management LLC, a San Francisco-based hedge fund with a 5.6% stake in the company, on the issue of executive compensation and what Voce regards as CEO Mark Watson’s “excessive expenses and misuse of corporate assets.”