BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Argo to pay $900,000 SEC fine related to undisclosed CEO perks

Mark Watson

Argo Group International Holdings Ltd. has agreed to pay a $900,000 civil fine to settle U.S. Securities and Exchange Commission charges that it failed to disclose millions of dollars in executive perks provided to former CEO Mark Watson.

In an order issued Thursday, the SEC said that the Bermuda-based insurer and reinsurer had failed to disclose over $5.3 million of perks and personal benefits paid to Mr. Watson over a five-year period from 2014 to 2018.

Argo failed to disclose the perks even after an institutional shareholder in 2019 alleged that the former CEO had misused corporate assets and run up excessive expenses, including undisclosed use of corporate aircraft.

Items that Argo paid for but did not disclose included Mr. Watson’s personal use of corporate aircraft, helicopter trips, housing costs, trips for family members, personal services, club memberships, and tickets and travel to sports and entertainment events, the SEC said in a statement.

In its proxy statements for 2014 through 2018, Argo disclosed that it had provided a total of about $1.2 million in perks and personal benefits, such as retirement and financial planning benefits, to the then-CEO, the SEC found.

The SEC found that Argo failed to disclose $5.3 million paid to Mr. Watson, "thereby understating the perquisites and personal benefits portion of Watson’s compensation by an annual average of over $1 million, or 400%.”

“Even after being made aware of potential inaccuracies in its disclosures related to executive compensation, Argo did not accurately and adequately inform shareholders about the perks and benefits it provided its highest-ranking executive over a five-year period,” Kelly Gibson, director of the SEC’s Philadelphia regional office, said in the statement.

The SEC order also charges Argo with violating federal securities law provisions relating to proxy solicitation, reporting, books and records, and internal controls.

Argo failed to “devise and maintain internal accounting controls” relating to payments made to Mr. Watson that were “sufficient to provide reasonable assurances that transactions were recorded as necessary to maintain the accountability of assets,” the SEC order said.

These failures included providing expense reimbursements to Mr. Watson without requiring an adequate explanation of a business purpose for the expense and allowing the former CEO to approve his own expense reimbursements, the order said.

Argo did not admit to or deny the SEC’s findings but has agreed to pay $900,000 under the SEC’s cease and desist order.

Mr. Watson resigned his position in November 2019.

“We are pleased to have this matter behind us,” an Argo spokesman said in an email.