SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Universal Insurance Holdings, Inc.
_____________________________________________________________
(Name of Registrant as Specified In Its Charter)
_____________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11:
1) Title of each class of securities to which transaction
applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement Number:
3) Filing Party:
4) Date Filed:
April [__], 2008
Dear Shareholder:
On behalf of the Board of Directors, I invite you to attend the 2008
Annual Meeting of Shareholders ("Annual Meeting") of Universal Insurance
Holdings, Inc. ("Company"). The Annual Meeting will be held at 9:00 a.m.,
Eastern Standard Time, on Friday, May 16, 2008 at the Westin Fort Lauderdale,
400 Corporate Drive, Fort Lauderdale, Florida 33334.
The shareholders will be asked (i) to elect six directors, each to hold
office until the 2009 annual meeting or until their successors have been elected
and qualified; (ii) to approve the formula used to calculate the performance
bonus in the amended employment agreement of the Executive Vice President of
Blue Atlantic Reinsurance Corporation, a wholly owned subsidiary of the Company;
and (iii) to ratify the appointment of Blackman Kallick LLP as the independent
registered public accounting firm of the Company for the year ending December
31, 2008. The Board of Directors has unanimously approved these proposals and
we urge you to vote in favor of these proposals and in accordance with the
Board's recommendation on such other matters as may be submitted to you for a
vote at the meeting.
Your vote is very important, regardless of the number of shares you own.
Please sign and return each proxy card that you receive in the enclosed postage-
paid envelope, which is provided for your convenience. The return of your proxy
card will not prevent you from voting in person but will assure that your vote
is counted if you are unable to attend the Annual Meeting. We look forward to
seeing you on May 16, 2008.
Sincerely,
DRAFT
---------------------------
Bradley I. Meier, President
1110 West Commercial Boulevard, Suite 100, Fort Lauderdale, Florida 33309,
(954) 958-1200
UNIVERSAL INSURANCE HOLDINGS, INC.
1110 WEST COMMERCIAL BOULEVARD, SUITE 100
FORT LAUDERDALE, FLORIDA 33309
NOTICE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 16, 2008
NOTICE IS HEREBY GIVEN that the 2008 Annual Meeting of Shareholders
("Annual Meeting") of Universal Insurance Holdings, Inc., a Delaware corporation
("Company"), will be held at 9:00 a.m., Eastern Standard Time, on Friday, May
16, 2008, at the Westin Fort Lauderdale, 400 Corporate Drive, Fort Lauderdale,
Florida 33334, for the following purposes:
1. To elect six directors, each to hold office until the 2009 annual
meeting or until their successors have been elected and qualified;
2. To approve the formula used to calculate the performance bonus in
the amended employment agreement of the Executive Vice President of
Blue Atlantic Reinsurance Corporation, a wholly owned subsidiary of
the Company;
3. To ratify the appointment of Blackman Kallick LLP as the independent
registered public accounting firm of the Company for the year ending
December 31, 2008; and
4. To transact any other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 31, 2008
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting and at any adjournment thereof. A complete
list of shareholders of record of the Company on the record date will be
available for examination by any shareholder, for any purpose germane to the
Annual Meeting, during ordinary business hours, for the ten-day period prior to
the Annual Meeting, at the executive offices of the Company, 1110 West
Commercial Boulevard, Suite 100, Fort Lauderdale, Florida 33309.
It is important that your shares be represented at the Annual Meeting.
Whether or not you expect to be present, please fill in, date, sign and return
the enclosed proxy form in the accompanying addressed, postage-prepaid envelope.
If you attend the meeting, you may revoke your proxy and vote in person.
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In the event that there are not sufficient votes to approve any one of the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned to permit further solicitation of proxies by the Company.
BY ORDER OF THE BOARD OF DIRECTORS
DRAFT
----------------------------------
Norman M. Meier, Secretary
Fort Lauderdale, Florida
April [__], 2008
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT AS PROMPTLY AS
POSSIBLE IN THE ACCOMPANYING POSTAGE-PREPAID ENVELOPE. SHAREHOLDERS WHO ATTEND
THE MEETING MAY REVOKE THEIR PROXIES AT THE MEETING AND VOTE IN PERSON.
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UNIVERSAL INSURANCE HOLDINGS, INC.
1110 WEST COMMERCIAL BOULEVARD, SUITE 100
FORT LAUDERDALE, FLORIDA 33309
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors ("Board") of Universal Insurance Holdings, Inc., a
Delaware corporation ("Company"), of proxies to be voted at the Annual Meeting
of Shareholders of the Company ("Annual Meeting"), to be held at the Westin Fort
Lauderdale, 400 Corporate Drive, Fort Lauderdale, Florida 33334, on Friday, May
16, 2008 at 9:00 a.m., Eastern Standard Time, and at any and all postponements
or adjournments thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting.
A copy of the Annual Report of the Company for its fiscal year ended
December 31, 2007 is included. This Proxy Statement, Notice of Annual Meeting,
accompanying proxy card, and Annual Report are first expected to be mailed to
shareholders on or about April 15, 2008.
INFORMATION RELATING TO VOTING AT THE ANNUAL MEETING
The close of business on March 31, 2008 has been fixed by the Board as the
record date ("Record Date") for determination of shareholders entitled to notice
of, and to vote at, the Annual Meeting. Therefore, only shareholders of record
as of the close of business on March 31, 2008 are entitled to notice of, and to
vote at, the Annual Meeting or any postponements or adjournments thereof. The
securities to be voted at the Annual Meeting consist of (i) shares of Common
Stock of the Company, $0.01 par value per share ("Common Stock"), with each
share entitling its record owner to one vote, (ii) shares of Series M Preferred
Stock of the Company, $0.01 par value per share ("Series M Preferred Stock"),
with each share entitling its record owner to one vote and (iii) shares of
Series A Preferred Stock of the Company, $0.01 par value per share ("Series A
Preferred Stock"), with each share entitling its record owner to one vote. The
holders of Series M Preferred Stock, voting separately as a series, are entitled
to elect two directors. The holders of Common Stock, Series M Preferred Stock
and Series A Preferred Stock, voting together as one class, are entitled to
elect the remaining directors.
If the accompanying proxy card is properly signed, returned to the Company
in time to be voted at the Annual Meeting, and not revoked, the shares
represented by such card will be voted in accordance with the instructions
contained on such card. Unless contrary instructions are given, the persons
designated as proxy holders in the proxy card will vote FOR Proposals 1, 2 and
3. If any other matters properly come before the Annual Meeting, the persons
named as proxy holders will vote upon such matters as determined by a majority
of the Board.
Each shareholder may revoke a previously granted proxy at any time before
it is exercised by filing with the Secretary of the Company a revoking
instrument or a duly executed proxy bearing a later date. The powers of the
proxy holders will be suspended if the person executing the proxy attends the
Annual Meeting in person and so requests. Attendance at the Annual Meeting will
not, in itself, constitute revocation of a previously granted proxy.
The table below sets forth the number and classes of Company stock
entitled to vote at the Annual Meeting.
Number of Record Number of Shares Amount of Votes
---------------- ---------------- ---------------
Holders Outstanding Entitled to be
------- ----------- --------------
as of the as of the Cast as of the
--------- --------- --------------
Class of Voting Stock Record Date Record Date Record Date
--------------------- ---------------- -------------- ----------------
Common Stock 45 39,922,157 39,922,157
Series M Preferred Stock 4 88,690 88,690
Series A Preferred Stock 3 44,950 44,950
The Company had no other class of voting securities outstanding on the
Record Date.
The presence, in person or by proxy, of at least a majority of the total
number of outstanding shares of the Series M Preferred Stock entitled to vote at
the Annual Meeting for those matters where a separate vote of the Series M
Preferred Stock is required, and of at least a majority of the total number of
outstanding shares of the Common Stock, Series M Preferred Stock and Series A
Preferred Stock entitled to vote at the Annual Meeting for those matters where
the Common Stock, Series M Preferred Stock and Series A Preferred Stock, voting
together as a class, is required, is necessary to constitute a quorum at the
Annual Meeting. If a quorum is not present at the Annual Meeting, a majority of
the shares so represented may vote to adjourn the Annual Meeting from time to
time without further notice. If a quorum is present, the affirmative vote of a
majority of the votes actually cast at the meeting, whether in person or by
proxy, is necessary to elect the nominees for directors. There is no cumulative
voting in the election of directors. With respect to the approval of the
formula used to calculate performance bonus, or any other matter properly
brought before the Annual Meeting or any adjournment of the Annual Meeting, the
vote required for approval shall be the affirmative vote of a majority of the
total number of votes that those present at the Annual Meeting, in person or by
proxy, are entitled to cast.
Under Delaware law, shares represented at the Annual Meeting (either by
properly executed proxies or in person) that reflect abstentions or "broker non-
votes" (i.e., shares held by a broker or nominee that are represented at the
Annual Meeting, but with respect to which such broker or nominee is not
empowered to vote on a particular proposal) will be counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions as to any proposal will have the same effect as votes
against the proposal. With respect to Proposals 1 and 3, broker non-votes will
be treated as unvoted for purposes of determining approval of such proposals
(and therefore will reduce the absolute number - although not the percentage -
of votes needed for approval) and will not be counted as votes for or against
the proposals. With respect to Proposal 2, however, broker non-votes will have
the same effect as votes against the proposal.
A shareholder may revoke his or her proxy at any time prior to its
exercise by (i) filing with Norman M. Meier, Secretary, Universal Insurance
Holdings, Inc., 1110 West Commercial Boulevard, Suite 100, Fort Lauderdale,
Florida 33309, written notice thereof, (ii) submitting a duly executed proxy
bearing a later date, or (iii) appearing at the Annual Meeting and giving the
Secretary notice of his or her intention to vote in person. Unless previously
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revoked or otherwise instructed thereon, proxies will be voted at the Annual
Meeting on the proposals as described above.
The Company will bear the cost of soliciting proxies in the enclosed form.
Officers and regular employees of the Company may solicit proxies by a further
mailing or personal conversations or via telephone or facsimile, provided that
they do not receive compensation for doing so. The Company will, upon request,
reimburse brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of stock.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board has the ultimate authority for the management of the Company's
business, objectives and operations. It selects the Company's executive
officers, delegates responsibilities for the conduct of the Company's day-to-day
operations to those officers, and monitors the performance of the officers.
Meetings of the Board are held regularly each quarter and as required.
The Board held four meetings during 2007. During 2007, each director attended
all of the Board meetings and meetings of the Board committees on which he
served.
The Company encourages its Board members to attend the Company's Annual
Meeting of Shareholders.
The following table sets forth the total compensation paid to non-employee
directors during the fiscal year ended December 31, 2007.
-------------------------------------------------------------------------
DIRECTOR COMPENSATION
-------------------------------------------------------------------------
Name Fees Earned or Option Total
Paid in Cash Awards
-------------------------------------------------------------------------
Joel M. Wilentz $80,000 $107,016 $187,016
-------------------------------------------------------------------------
Norman M. Meier $80,000 $107,016 $187,016
-------------------------------------------------------------------------
Reed J. Slogff $80,000 $107,016 $187,016
-------------------------------------------------------------------------
Ozzie A. Schindler $80,000 $142,632 $222,632
-------------------------------------------------------------------------
For 2008, non-employee directors will receive annual compensation of
$80,000, paid quarterly, for serving on the Board and the reimbursement of
reasonable expenses incurred in attending meetings. Officers are elected
annually by the Board and serve at the discretion of the Board. The Company has
entered into indemnification agreements with its executive officers and
directors pursuant to which the Company has agreed to indemnify such
individuals, to the fullest extent permitted by law, for claims made against
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them in connection with their positions as officers, directors or agents of the
Company.
The Board has nominated Bradley I. Meier, Norman M. Meier, Sean P. Downes,
Ozzie A. Schindler, Reed J. Slogoff and Joel M. Wilentz for reelection to the
Board to serve as directors until the 2009 annual meeting or until their
successors are duly elected and qualified. The nominees have consented to be
named and have indicated their intent to serve if elected. The Board has no
reason to believe that the nominees will be unavailable or that any other
vacancy on the Board will occur. If any nominee becomes unavailable for any
reason, or if any other vacancy in the class of directors to be elected at the
Annual Meeting should occur before the election, the shares represented by the
proxy will be voted for the person, if any, who is designated by the Board to
replace the nominee or to fill such other vacancy on the Board.
The holders of Series M Preferred Stock, voting separately as a series,
are entitled to elect directors to fill the seats currently held by Bradley I.
Meier and Norman M. Meier, both of whom the Board recommends for reelection;
such directors shall be elected by a majority of votes in the affirmative of the
Series M Preferred Stock shares cast at the Annual Meeting. The holders of
Common Stock, the holders of Series M Preferred Stock and the holders of Series
A Preferred Stock, voting together as one class, are entitled to elect directors
to fill the seats currently held by Sean P. Downes, Ozzie A. Schindler, Reed J.
Slogoff and Joel M. Wilentz, all of whom the Board recommends for reelection;
such directors shall be elected by a majority of votes in the affirmative of the
Common Stock shares, Series M Preferred Stock shares and Series A Preferred
Stock shares, voting together as a class, cast at the Annual Meeting. If
elected, all nominees are expected to serve until the 2009 annual meeting or
until their successors are duly elected and qualified.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE NOMINEES DESCRIBED ABOVE BE
ELECTED AS DIRECTORS TO SERVE UNTIL THE 2009 ANNUAL MEETING OR UNTIL THEIR
SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of the Company are as
follows:
Name Age Position First Year as Director
---- --- -------- ----------------------
(Term Expires)
Bradley I. Meier 40 President, Chief Executive 1990
(Director Nominee) Officer and Director (2008)
Norman M. Meier 69 Director, Secretary 1992
(Director Nominee) (2008)
Ozzie A. Schindler 39 Director 2007
(Director Nominee) (2008)
Reed J. Slogoff 39 Director 1997
(Director Nominee) (2008)
4
Joel M. Wilentz, M.D. 74 Director 1997
(Director Nominee) (2008)
Sean P. Downes 38 Chief Operating Officer, 2005
(Director Nominee) Senior Vice President (2008)
and Director
James M. Lynch 53 Executive Vice President
and Chief Financial
Officer
BIOGRAPHICAL INFORMATION
Biographical information regarding the directors and executive officers of
the Company is as follows:
Bradley I. Meier has been President, Chief Executive Officer and a
Director of the Company since its inception in November 1990. He has served as
President of Universal Property and Casualty Insurance Company ("UPCIC"), a
wholly owned subsidiary of the Company, since its formation in April 1997. In
1990, Mr. Meier graduated from the Wharton School of Business with a B.S. in
Economics.
Norman M. Meier has been a Director of the Company since July 1992. From
December 1986 until November 1999, Mr. Meier was President, Chief Executive
Officer and a Director of Columbia Laboratories, Inc., a publicly traded
corporation in the pharmaceuticals business. From 1971 to 1977, Mr. Meier was
Vice President of Sales and Marketing for Key Pharmaceuticals. From 1977 until
1986, Mr. Meier served as a consultant to Key Pharmaceuticals.
Ozzie A. Schindler has been a Director of the Company since January 2007.
Mr. Schindler is a partner with the law firm of Greenberg Traurig and
specializes in international tax, trusts and succession and planning. He has an
LL.M. in Taxation from New York University School of Law and graduated with
honors from the University of Florida School of Law. Mr. Schindler also
graduated with high honors from the University of Florida Fisher School of
Accounting. He is admitted to both the Florida and New York bars.
Reed J. Slogoff has been a Director of the Company since March 1997. Mr.
Slogoff is currently a principal with Pearl Properties Commercial Management,
LLC, a commercial real estate investment and management firm based in
Philadelphia, Pennsylvania. Mr. Slogoff was formerly with Entercom
Communications Corp., a publicly traded radio broadcasting company and was
previously a member of the corporate and real estate group of the law firm of
Dilworth, Paxson, LLP. Mr. Slogoff received a B.A. with Honors from the
University of Pennsylvania in 1990, and a J.D. from the University of Miami
School of Law in 1993.
Joel M. Wilentz, M.D. has been a Director of the Company since March 1997.
Dr. Wilentz is one of the founding members of Dermatology Associates in Florida,
founded in 1970. He is a member of the boards of the Neurological Injury
Compensation Association for Florida, the Broward County Florida Medical
Association, and the American Arm of the Israeli Emergency Medical Service for
5
the southeastern United States, of which he is also President. Dr. Wilentz is a
past member of the Board of Overseers of the Nova Southeastern University School
of Pharmacy.
Sean P. Downes has been Senior Vice President, Chief Operating Officer and
a Director of the Company since January 2005. He also has been Chief Operating
Officer and a Director of UPCIC since July 2003. Mr. Downes was Chief Operating
Officer of Universal Adjusting Corporation from July 1999 to July 2003. During
that time, Mr. Downes created the Company's claims operation. Before joining
the Company in July 1999, Mr. Downes was Vice President of Downes and
Associates, a multi-line insurance adjustment corporation.
James M. Lynch has been Executive Vice President and Chief Financial
Officer of the Company since August 1998. Before joining the Company in August
1998, Mr. Lynch was Chief Financial Officer of Florida Administrators, Inc., an
organization specializing in property and casualty insurance. Prior to working
at Florida Administrators, Inc., Mr. Lynch held the position of Senior Vice
President of Finance and Comptroller of Trust Group, Inc., which also
specialized in property and casualty insurance. Before his position at Trust
Group, Mr. Lynch was a Manager with the accounting and auditing firm of Coopers
& Lybrand, which later became PricewaterhouseCoopers LLC.
Norman M. Meier and Bradley I. Meier are father and son, respectively.
There are no other family relationships among the Company's executive officers
and directors.
All directors hold office until the next annual meeting of shareholders or
the election and qualification of their successors. Currently, the Company does
not have a procedure by which shareholders may recommend nominees to the
Company's Board of Directors. Officers are elected annually by the Board of
Directors and serve at the discretion of the Board.
COMMITTEES AND CORPORATE GOVERNANCE
AUDIT COMMITTEE
The Company has a separately designated Audit Committee, whose members are
Ozzie A. Schindler, Reed J. Slogoff and Joel M. Wilentz, each of whom was
determined by the Board to be independent under the applicable rules of the
Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory
Authority ("FINRA"). The Company's Board of Directors has determined that Ozzie
A. Schindler is an "audit committee financial expert" as defined by Item
407(d)(5) of Regulation S-B promulgated by the SEC.
The Audit Committee recommends the firm to be appointed as the independent
registered public accounting firm of the Company to audit the Company's
financial statements and to perform services related to the audit, review the
scope and results of the audit with the independent registered public accounting
firm, review with management and the independent registered public accounting
firm the Company's year-end operating results and consider the adequacy of the
internal accounting procedures.
The Audit Committee met separately seven times during 2007, and the full
Board, including the members of the Audit Committee, met several times during
the year to discuss the financial position of the Company, provide
6
recommendations and guidance to management and evaluate strategies and financial
opportunities and initiatives.
The Audit Committee operates under a written charter that was adopted by
the Board of Directors on January 9, 2007. The Audit Committee Charter will be
reviewed annually for changes, as appropriate.
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2007, which include the balance sheet of the Company as of December 31, 2007,
and the related statements of operations, changes in shareholders' equity and
cash flows for the years in the period ended December 31, 2007 and 2006 and the
notes thereto. The information contained in this report shall not be deemed to
be "soliciting material" or to be "filed" with the SEC, nor shall such
information be incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended ("Exchange Act"), except to the extent that the Company specifically
incorporates it by reference in such filing.
COMPOSITION
The Audit Committee of the Board of Directors is composed of the three
directors named below. Each member of the Audit Committee meets the
independence and financial experience requirements under the applicable rules of
the SEC and the FINRA.
REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has discussed with Blackman Kallick LLP, the Company's
independent registered public accounting firm for 2007, the matters required to
be discussed in accordance with the standards of the Public Company Accounting
Oversight Board which include, among other items, matters related to the conduct
of the audit of the Company's financial statements.
The Audit Committee has received written disclosures and the letter from
Blackman Kallick LLP required by Independence Standards Board Standard No. 1
(which relates to the accountant's independence from the Company and its related
entities) and has discussed with Blackman Kallick LLP its independence from the
Company.
CONCLUSION
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2007.
7
SUBMITTED BY THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Ozzie A. Schindler
Reed J. Slogoff
Joel M. Wilentz
COMPENSATION COMMITTEE
The Compensation Committee consists of Reed J. Slogoff and Joel M.
Wilentz, each of whom was determined by the Board to be independent under the
applicable rules of the SEC and the FINRA. Among its duties, the Compensation
Committee assists the Board in discharging its responsibilities relating to
corporate goals and objectives relevant to the compensation of the Company's
executive officers, evaluating the performance of executive officers in light of
those goals and objectives and determining compensation based on such
evaluation. The Compensation Committee operates under a written charter that
was adopted by the Board on March 13, 2007. The Compensation Committee Charter
will be reviewed annually for changes, as appropriate.
DIRECTOR NOMINATIONS
A director can be nominated by a member of the Board. The Company has not
established a Nominating Committee. Given the size of the Company, the Board
believes that this is appropriate.
CODE OF BUSINESS CONDUCT AND ETHICS
The Company adopted a Code of Business Conduct and Ethics on January 9,
2007 that is applicable to all directors, officers and employees of the Company.
The code is publicly available at the Company's headquarters in Fort Lauderdale,
Florida. Upon completion of the build-out of the Company's website, the code
will be posted there. A copy of the Company's Code of Business Conduct and
Ethics may be obtained free of charge by written request to James M. Lynch,
Universal Insurance Holdings, Inc., 1110 West Commercial Boulevard, Suite 100,
Fort Lauderdale, Florida 33309.
SHAREHOLDER COMMUNICATIONS
The Company has not established a set process for shareholders to send
communications to the Board. Given the size of the Company, the Board believes
that this is appropriate.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Downes and Associates, a multi-line insurance adjustment corporation based
in Deerfield Beach, Florida, performs certain claims adjusting work for UPCIC.
Downes and Associates is owned by Dennis Downes, who is the father of Sean P.
Downes, Chief Operating Officer and Senior Vice President of the Company. During
2007 and 2006, the Company expensed claims, adjusting fees of $675,237 and
$829,208, respectively, to Downes and Associates.
8
Transactions between the Company and its affiliates are on terms no less
favorable to the Company than can be obtained from third parties on an arm's
length basis. Transactions between the Company and any of its executive
officers or directors require the approval of a majority of disinterested
directors.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to or earned by the
Company's President and Chief Executive Officer and the Company's two other most
highly compensated executive officers (collectively, the "Named Executive
Officers") during each of the Company's last two fiscal years.
SUMMARY COMPENSATION TABLE
-------------------------------------------------------------------------------------------
Name and Non-Equity
Principal Stock Option Incentive Plan
Position Year Salary Bonus Awards Awards Compensation Total
-------------------------------------------------------------------------------------------
Bradley I. 2007 $977,228 $ - $ - $1,920,800 $3,835,271 $6,733,299
Meier, ------------------------------------------------------------------------------
President 2006 $830,324 $ - $ - $ - $1,091,899 $1,922,223
& CEO
-------------------------------------------------------------------------------------------
James M. 2007 $349,385 $100,000 $141,500 $145,134 $ - $736,019
Lynch, EVP ------------------------------------------------------------------------------
& CFO 2006 $251,250 $90,000 $42,582 $ - $ - $383,832
-------------------------------------------------------------------------------------------
Sean P. 2007 $691,500 $ - $ - $2,454,445 $2,913,953 $6,059,898
Downes, ------------------------------------------------------------------------------
SVP & COO 2006 $537,678 $ - $418,462 $ - $856,424 $1,812,564
-------------------------------------------------------------------------------------------
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with three of its
executive officers, Bradley I. Meier, Sean P. Downes and James M. Lynch.
The Company's employment agreement with Mr. Meier is dated as of August
11, 1999. The Company and Mr. Meier have amended the employment agreement, with
the most recent amendment dated July 12, 2007 (the employment agreement and the
amendments are collectively referred to as the "Meier Agreement"). Under the
terms of the Meier Agreement, Mr. Meier will serve as the Company's President
and Chief Executive Officer. Mr. Meier received a base salary of $977,228 in
2007, and he is entitled to a twenty percent (20%) increase in base salary each
year. Additionally, pursuant to the Meier Agreement, Mr. Meier is entitled to
an annual performance bonus equal to three percent (3%) of the pretax income of
the Company up to $5 million, and four percent (4%) of the pretax income of the
Company in excess of $5 million; provided, however, that any such bonus is
9
contingent upon the Company's shareholders approving such bonus formula, which
they have done. Mr. Meier is also eligible for other benefits customarily
provided by the Company to its executive employees, and the Meier Agreement
contains noncompete and nondisclosure provisions. In addition, in the event of
a Change in Control of the Company (as defined in the Meier Agreement), the
Company shall pay Mr. Meier an amount equal to 48 months base salary, plus two
times any bonus paid for the preceding fiscal year. Further, in the event of a
Change in Control, all options held by Mr. Meier vest and become immediately
exercisable. Also, in the event that the Company terminates the Meier
Agreement, the Company shall pay Mr. Meier 24 months total compensation. The
Meier Agreement expires on December 31, 2009; however, the agreement is
automatically extended each year thereafter unless the Company or Mr. Meier
provides written notice that the agreement is being terminated 60 days in
advance of the anniversary date of the Meier Agreement.
The Company's employment agreement with Mr. Downes is dated as of January
1, 2005 and provides that Mr. Downes will serve as Chief Operating Officer and
Senior Vice President of the Company. The Company and Mr. Downes have amended
the employment agreement, with the most recent amendment dated July 12, 2007
(the employment agreement and the amendments are collectively referred to as the
"Downes Agreement"). Mr. Downes received a base salary of $691,500 in 2007, and
he is entitled to a twenty percent (20%) increase in base salary each year.
Additionally, pursuant to the Downes Agreement, Mr. Downes is entitled to an
annual performance bonus equal to three percent (3%) of the pre-tax profits of
the Company; provided, however, that any such bonus is contingent upon the
Company's shareholders approving such bonus formula, which they have done.
Under the Downes Agreement, the Company may grant Mr. Downes options or warrants
to purchase the Company's Common Stock. Mr. Downes is also eligible for other
benefits customarily provided by the Company to its executive employees and the
Downes Agreement contains noncompete and nondisclosure provisions. In addition,
in the event of a Change in Control of the Company (as defined in the Downes
Agreement), the Company shall pay Mr. Downes an amount equal to 12 months base
salary, plus the annual bonus paid for the preceding fiscal year. Also,
effective January 1, 2009, if a Change in Control occurs, the Company shall pay
Mr. Downes an amount equal to 2.99 times Mr. Downes' "base amount," as defined
in Section 280G(b)(3) of the Internal Revenue Code. Further, in the event of a
Change in Control, all options held by Mr. Downes vest and become immediately
exercisable. The Downes Agreement expires on December 31, 2009 unless extended
in writing by the Company.
On October 11, 2006, the Company entered into an employment agreement (the
"Lynch Agreement") with Mr. Lynch, who has served as the Company's Executive
Vice President and Chief Financial Officer since August 1998. Under the terms
of the Lynch Agreement, Mr. Lynch will continue to serve in such capacity. Mr.
Lynch received a base salary of $349,385 in 2007, and he is entitled to a twenty
percent (20%) increase in base salary each year. Additionally, pursuant to the
Lynch Agreement, Mr. Lynch is entitled to an annual performance bonus determined
at the discretion of the Board of Directors of the Company; provided, however,
that such bonus shall be no less than $50,000. Mr. Lynch is also eligible for
other benefits customarily provided by the Company to its executive employees.
The Lynch Agreement contains noncompete and nondisclosure provisions. If Mr.
Lynch's employment is terminated (i) by the Company or a succeeding entity
without Cause (as defined in the Lynch Agreement) or (ii) by Mr. Lynch for Good
Reason (as defined in the Lynch Agreement) within one year following a Change in
Control of the Company (as defined in the Lynch Agreement), then the Company
shall pay Mr. Lynch an amount equal to the greater of Mr. Lynch's current base
10
salary (x) through December 31, 2009 or (y) for period of twelve (12) months,
and Mr. Lynch will also be entitled to receive payment for COBRA premiums. The
Lynch Agreement expires on December 31, 2009.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth information regarding outstanding equity
awards held by each Named Executive Officer at fiscal year ended December 31,
2007.
--------------------------------------------------------------------------------
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
--------------------------------------------------------------------------------
OPTIONS AWARDS
--------------------------------------------------------------------------------
Number of Securities Option
Underlying Unexercised Exercise Option Expiration
Name Options Exercisable Price Date
--------------------------------------------------------------------------------
Bradley Meier 250,000 $1.63 5/7/08
--------------------------------------------------------------------------------
Bradley Meier 1,500,000 $1.06 1/15/10(1)
--------------------------------------------------------------------------------
Bradley Meier 250,000 $1.06 1/15/10(1)
--------------------------------------------------------------------------------
Bradley Meier 150,000 $1.10 1/26/10
--------------------------------------------------------------------------------
Bradley Meier 20,000 $0.70 12/12/10
--------------------------------------------------------------------------------
Bradley Meier 325,000 $0.70 12/12/10
--------------------------------------------------------------------------------
Bradley Meier 150,000 $0.60 12/21/11
--------------------------------------------------------------------------------
Bradley Meier 700,000 $6.50 7/12/12
--------------------------------------------------------------------------------
Bradley Meier 1,000,000 $0.06 3/4/14
--------------------------------------------------------------------------------
James Lynch 25,000 $1.10 1/26/10
--------------------------------------------------------------------------------
James Lynch 15,000 $0.70 12/12/10
--------------------------------------------------------------------------------
James Lynch 100,000 $0.50 12/21/11
--------------------------------------------------------------------------------
James Lynch 35,000 $6.50 7/12/12
--------------------------------------------------------------------------------
James Lynch 25,000 $3.80 2/14/12
--------------------------------------------------------------------------------
Sean Downes 15,000 $1.10 1/26/10
--------------------------------------------------------------------------------
Sean Downes 100,000 $0.50 12/21/11
--------------------------------------------------------------------------------
Sean Downes 350,000 $3.80 2/14/12
--------------------------------------------------------------------------------
Sean Downes 700,000 $6.50 7/12/12
--------------------------------------------------------------------------------
(1) Expires on earlier of January 15, 2010 or a Change in Control of the
Company, as defined in the Option Agreement between Mr. Meier and the Company.
STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The close of business on March 31, 2008 has been fixed by the Board as the
Record Date for determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting. The number of shares of voting stock held as of March
31, 2008 by each holder of more than 5% of the outstanding voting stock of the
Company, each director of the Company, each nominee for reelection as a
director, each executive officer named in the Summary Compensation Table on page
11 of this Proxy Statement and all directors and executive officers of the
Company as a group is set forth below.
11
SERIES M PREFERRED STOCK OWNED BY MANAGEMENT
As of March 31, 2008, directors and named executive officers, individually
and as a group, beneficially owned Series M Preferred Stock as follows:
Name and Address of Amount and Nature of Percent of Class
Beneficial Owner(1) Beneficial Ownership ----------------
---------------- --------------------
Bradley I. Meier*(2) 48,890 48.0%
Norman M. Meier*(3) 53,000 52.0%
Officers and directors
as a group
(2 persons)(4) 86,890 98.0%
* Director
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Series M
Preferred Stock of the Company specified opposite his name. Unless
otherwise indicated, the mailing address of each shareholder is c/o
Universal Insurance Holdings, Inc., 1110 W. Commercial Blvd., Suite 100,
Fort Lauderdale, FL 33309.
(2) Consists of (i) 33,890 shares of Series M Preferred Stock and (ii) 15,000
shares of Series M Preferred Stock beneficially owned by Belmer Partners,
a dissolved Florida General Partnership ("Belmer"), of which Mr. Meier was
a general partner. (See the section entitled "Series M Preferred Stock
Held By Others" for a discussion of Belmer.) Excludes all shares of
Series M Preferred Stock owned by Norman M. Meier and Phylis R. Meier, Mr.
Meier's father and mother, respectively, as to which Mr. Meier disclaims
beneficial ownership.
(3) Consists of (i) 38,000 shares of Series M Preferred Stock and (ii) 15,000
shares of Series M Preferred Stock beneficially owned by Belmer, of which
Mr. Meier was a general partner. Excludes all shares of Series M
Preferred Stock owned by Bradley I. Meier and Phylis R. Meier, Mr. Meier's
son and former spouse, respectively, as to which Mr. Meier disclaims
beneficial ownership.
(4) See footnotes (1) - (3) above.
SERIES A PREFERRED STOCK OWNED BY MANAGEMENT
As of March 31, 2008, directors and named executive officers, individually
and as a group, beneficially owned Series A Preferred Stock as follows:
Name and Address of Amount and Nature of
Beneficial Owner(1) Beneficial Ownership Percent of Class
---------------- -------------------- ----------------
Norman M. Meier*(2) 9,975 20%
Officers and directors 9,975 20%
as a group
(1 person)(3)
12
* Director
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Series M
Preferred Stock of the Company specified opposite his name. Unless
otherwise indicated, the mailing address of each shareholder is c/o
Universal Insurance Holdings, Inc., 1110 W. Commercial Blvd., Suite 100,
Fort Lauderdale, FL 33309.
(2) Consists of 9,975 shares of Series A Preferred Stock beneficially owned by
Belmer, of which Mr. Meier was a general partner. Excludes all shares of
Series A Preferred Stock owned by Phylis R. Meier, Mr. Meier's former
spouse, as to which Mr. Meier disclaims beneficial ownership.
(3) See footnotes (1) - (2) above.
COMMON STOCK OWNED BY MANAGEMENT
As of March 31, 2008, directors and Named Executive Officers, individually
and as a group, beneficially owned Common Stock as follows:
Name and Address of Amount and Nature of
Beneficial Owner(1) Beneficial Ownership(2) Percent of Class
------------------- ----------------------- ----------------
Bradley I. Meier (3) 20,781,106 52.1%
Sean P. Downes (4) 3,437,490 8.6%
Norman M. Meier (5) 443,666 1.1%
Reed J. Slogoff (6) 282,447 0.7%
Joel M. Wilentz (7) 344,447 0.9%
James M. Lynch (8) 232,925 0.6%
Ozzie A. Schindler (9) 70,000 0.2%
Officers and directors 25,247,634 63.3%
as a group (7
people) (10)
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Common Stock of
the Company specified opposite his name. Unless otherwise indicated, the
mailing address of each shareholder is c/o Universal Insurance Holdings,
Inc., 1110 West Commercial Boulevard, Suite 100, Fort Lauderdale, Florida
33309.
(2) A person is deemed to be the beneficial owner of Common Stock that can be
acquired by such person within 60 days of the date hereof upon the
exercise of warrants or stock options or conversion of Series A Preferred
Stock, Series M Preferred Stock or convertible debt. Except as otherwise
specified, each beneficial owner's percentage ownership is determined by
assuming that warrants, stock options, Series A Preferred Stock, Series M
13
Preferred Stock and convertible debt that is held by such person (but not
those held by any other person) and that are exercisable or convertible
within 60 days from the date hereof, have been exercised or converted.
(3) Includes (i) options to purchase an aggregate of 4,345,000 shares of
Common Stock; (ii) 169,450 shares of Common Stock issuable upon conversion
of Series M Preferred Stock; (iii) an aggregate of 228,728 shares of
Common Stock issuable upon conversion of Series A and Series M Preferred
Stock beneficially owned by Belmer, of which Mr. Meier was a general
partner; and (iv) the following shares of Common Stock which are subject
to proxies granting voting power to Mr. Meier: (A) 333,792 shares owned by
Phylis Meier, Mr. Meier's mother, (B) 666,540 shares owned by Norman
Meier, Mr. Meier's father; (C) an additional 17,900 shares over which Mr.
Meier has voting power; and (D) options to purchase an aggregate of
650,000 shares of Common Stock owned by Norman Meier, Mr. Meier's father,
which are subject to a proxy granting voting power to Mr. Meier.
(4) Includes options to purchase an aggregate of 700,000 shares of Common
Stock.
(5) Includes (i) 214,938 shares of Common Stock issuable upon conversion of
Series A and Series M Preferred Stock, and (ii) an aggregate of 228,728
shares of Common Stock issuable upon conversion of Series A and Series M
Preferred Stock beneficially owned by Belmer, of which Norman Meier was a
general partner. Excludes (i) all securities owned by Bradley I. Meier or
Phylis Meier, Norman Meier's son and former spouse, respectively, as to
which Norman Meier disclaims beneficial ownership, and (ii) all securities
owned by Norman Meier for which Norman Meier has granted voting power to
his son, Bradley Meier.
(6) Includes options to purchase an aggregate of 134,000 shares of Common
Stock, of which 50,000 are held in a custodial account for Mr. Slogoff's
minor son.
(7) Includes options to purchase an aggregate of 175,000 shares of Common
Stock.
(8) Includes options to purchase an aggregate of 35,000 shares of Common
Stock.
(9) Consists of an option to purchase 70,000 shares of Common Stock.
(10) See footnotes (1) - (9) above.
SERIES M PREFERRED STOCK HELD BY OTHERS
As of March 31, 2008, the following table sets forth information regarding
the number and percentage of Series M Preferred Stock held by all persons, other
than those persons listed immediately above, who are known by the Company to
beneficially own or exercise voting or dispositive control over 5% or more of
the Company's outstanding Series M Preferred Stock:
Amount and Nature of
Name and Address(1) Beneficial Ownership Percent of Class
-------------------- -------------------- ----------------
Phylis R. Meier(2) 16,800 18.9%
Universal Insurance Holdings, Inc.
1110 West Commercial Boulevard
Fort Lauderdale, Florida 33309
14
Belmer Partners (3) 15,000 16.9%
c/o Phylis R. Meier
Managing General Partner
Universal Insurance Holdings, Inc.
1110 West Commercial Boulevard
Fort Lauderdale, Florida 33309
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Series M
Preferred Stock specified opposite her or its name.
(2) Consists of (i) 1,800 shares of Series M Preferred Stock and (ii) 15,000
shares of Series M Preferred Stock beneficially owned by Belmer, of which
Ms. Meier is the managing general partner. Excludes all securities owned
by Bradley I. Meier and Norman M. Meier, the son and former spouse,
respectively, as to which Ms. Meier disclaims beneficial ownership.
(3) Belmer was a Florida general partnership that was dissolved effective as
of May 31, 2007. Phylis R. Meier was the managing general partner, and
Bradley I. Meier, Norman M. Meier, Eric Meier and Lynda Meier were general
partners, of Belmer. The 15,000 shares of the Company's Series M Preferred
Stock beneficially owned by Belmer are currently being held by Phylis R.
Meier in constructive trust for Phylis R. Meier, Bradley I. Meier, Norman
M. Meier, Eric Meier and Lynda Meier, the former general partners of
Belmer, until such shares are distributed to them.
SERIES A PREFERRED STOCK HELD BY OTHERS
As of March 31, 2008, the following table sets forth information regarding
the number and percentage of Series A Preferred Stock held by all persons, other
than those persons listed immediately above, who are known by the Company to
beneficially own or exercise voting or dispositive control over 5% or more of
the Company's outstanding Series A Preferred Stock:
Amount and Nature of
Name and Address(1) Beneficial Ownership Percent of Class
------------------- -------------------- ----------------
Phylis R. Meier (2) 9,975 20.0%
Universal Insurance Holdings, Inc.
1110 West Commercial Boulevard
Fort Lauderdale, Florida 33309
Belmer Partners (3) 30,000 60.0%
c/o Phylis R. Meier
Managing General Partner
Universal Insurance Holdings, Inc.
1110 West Commercial Boulevard
Fort Lauderdale, Florida 33309
15
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Series A
Preferred Stock specified opposite her or its name.
(2) Consists of 9,975 shares of Series A Preferred Stock beneficially owned.
Excludes all shares of Series A Preferred Stock owned by Norman M. Meier,
Ms. Meier's former spouse, as to which Ms. Meier disclaims beneficial
ownership.
(3) Belmer was a Florida general partnership that was dissolved effective as
of May 31, 2007. Phylis R. Meier was the managing general partner, and
Bradley I. Meier, Norman M. Meier, Eric Meier and Lynda Meier were general
partners, of Belmer. The 30,000 shares of the Company's Series A Preferred
Stock beneficially owned by Belmer are currently being held by Phylis R.
Meier in constructive trust for Phylis R. Meier, Bradley I. Meier, Norman
M. Meier, Eric Meier and Lynda Meier, the former general partners of
Belmer, until such shares are distributed to them.
COMMON STOCK HELD BY OTHERS
As of March 31, 2008, the following table sets forth information regarding
the number and percentage of Common Stock held by all persons, other than those
persons listed immediately above, who are known by the Company to beneficially
own or exercise voting or dispositive control over 5% or more of the Company's
outstanding Common Stock:
Amount and Nature of
Name and Address Beneficial Ownership(1) Percent of Class
---------------- ----------------------- ----------------
Martin Steinberg, Esq., as the
receiver for Lancer Offshore 3,926,235 9.7%
Inc.(2)
c/o David E. Wells, Esq.
Hunton & Williams LLP
1111 Brickell Avenue,
Suite 2500
Miami, FL 33131 2,950,555 7.4%
Invesco Ltd. (3)
1360 Peachtree Street NE
Atlanta, GA 30309
(1) A person is deemed to be the beneficial owner of Common Stock that can be
acquired by such person within 60 days of the date hereof upon the
exercise of warrants or stock options or conversion of Series A and Series
M Preferred Stock or convertible debt. Except as otherwise specified, each
beneficial owner's percentage ownership is determined by assuming that
warrants, stock options, Series A and Series M Preferred Stock and
convertible debt that are held by such a person (but not those held by any
other person) and that are exercisable within 60 days from the date
hereof, have been exercised or converted.
16
(2) Consists of 3,926,235 shares of Common Stock as indicated on stockholders
list as of the Record Date obtained from stock transfer agent.
(3) Based on information contained in a report on Schedule 13G that Invesco
Ltd. filed with the SEC, which contained information as of December 31,
2007. According to such filing, Invesco Ltd. through its subsidiaries
provides investment management services to institutional and individual
investors.
APPROVAL OF FORMULA USED TO CALCULATE PERFORMANCE BONUS
(PROPOSAL 2)
The Company believes that linking the compensation of key employees to
corporate performance increases employee motivation to improve shareholder
value. Thus, the employee's reward is directly related to the Company's
success. The purposes of the performance-based bonuses for key employees is to
motivate the employees to improve shareholder value by linking a portion of
their cash compensation to the Company's financial performance, reward key
employees for improving the Company's financial performance and help attract and
retain key employees.
The Company is seeking shareholder approval of the material terms of the
performance goals under which an annual performance-based bonus is to be paid to
Jon W. Springer, the Executive Vice President and a key employee of the
Company's wholly owned subsidiary, Blue Atlantic Reinsurance Corporation ("Blue
Atlantic"). The material terms of the performance goals related to this bonus
arrangement are set forth in an amendment to Mr. Springer's employment
agreement. The following summary of this bonus arrangement is qualified in its
entirety by reference to the provisions of the arrangement contained in the
amendment to the employment agreement of Mr. Springer, which is attached to this
Proxy Statement as Appendix A.
The Company's wholly owned subsidiary, Universal Risk Advisors, Inc.
("URA"), entered into an Employment Agreement with Mr. Springer on June 15,
2006. URA and Mr. Springer amended such agreement on March 14, 2007. On March
28, 2008, Blue Atlantic assumed such agreement ("Springer Agreement"). Under
the terms of the Springer Agreement, Mr. Springer will serve as Blue Atlantic's
Executive Vice President. Mr. Springer received a base salary of $480,000 in
2007, and he is entitled to a twenty percent (20%) increase in base salary each
year. Mr. Springer is also eligible for other benefits customarily provided by
the Company's subsidiaries to key employees, and the Springer Agreement contains
noncompete and nondisclosure provisions. The Springer Agreement expires on
December 31, 2009; however, if Mr. Springer remains employed by Blue Atlantic as
of December 31, 2009, the parties may enter into a new employment agreement. In
the event that within a year of a Change of Control (as defined in the Springer
Agreement), Blue Atlantic or a succeeding entity (a) terminates Mr. Springer
without Cause (as defined in the Springer Agreement) or (b) Mr. Springer
terminates his employment for Good Reason (as defined in the Springer
Agreement), Blue Atlantic or the succeeding entity shall pay Mr. Springer (1)
his unpaid base salary accrued up to the effective date of the termination, (2)
the prorated share of his bonus, (3) a lump sum payment equal to the greater of
(i) his then-current base salary through December 31, 2009 or (ii) his then-
current base salary for a period of twelve (12) months, and (4) his COBRA
premiums for a specified period of time.
17
Additionally, pursuant to the Springer Agreement, Mr. Springer is entitled
to receive an annual performance bonus ("Springer Performance Bonus") equal to
the greater of (A) One Hundred Thousand Dollars ($100,000) or (B) one and one-
half percent (1.5%) of the Company's after tax calendar year profit, for the
calendar years 2007, 2008, and 2009. The bonus is computed as at December 31
for each fiscal year and must be paid by December 31 of the year following the
year in which it is earned.
The Board unanimously approved the formula used to calculate the Springer
Performance Bonus, and the Compensation Committee of the Board unanimously
confirmed its approval of the Springer Performance Bonus for the 2007 fiscal
year as recently as March 26, 2008. The Benefits Table below sets forth the
amount of the Springer Performance Bonus determined for the most recent
completed fiscal year of the Company, of which $400,000has been paid and is not
subject to shareholder approval and of which $432,762 has not been paid and is
contingent on the Company obtaining shareholder approval of the performance goal
under Mr. Springer's employment agreement. Similarly, the Springer Performance
Bonus for fiscal years after 2007 is contingent on shareholder approval and will
not be payable if shareholder approval is not obtained. Accordingly, the
Company hereby seeks approval of the use of the Company's after tax calendar
year profit as the performance goal applicable to the remainder of the Springer
Performance Bonus payable for 2007, as well as the Springer Performance Bonus
for fiscal years thereafter.
Upon completion of each fiscal year, the Compensation Committee of the
Board will certify in writing prior to payment of the Springer Performance Bonus
that the applicable performance objective has been attained and the bonus is
payable. With respect to Compensation Committee certification, approved minutes
of the meeting in which the certification is made will be treated as written
certification.
The Company and Mr. Springer may agree to amend or terminate the bonus
arrangement at any time by entering into a written amendment or modification of
the applicable employment agreement.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, the
federal income tax deductibility of compensation paid to Mr. Springer may be
limited to the extent that it exceeds $1.0 million in any one year. The Company
can deduct compensation in excess of that amount if it qualifies as
"performance-based compensation" under Section 162(m). For the Springer
Performance Bonus to qualify as "performance-based compensation," the
performance-based formula used to determine it must be approved by the Company's
shareholders. The Springer Performance Bonus is intended to permit the Company
to pay incentive compensation which qualifies as "performance-based
compensation," thereby permitting the Company to receive a federal income tax
deduction for the payment of this incentive compensation.
18
NEW BENEFITS
The following table sets forth the total amount that would be payable with
respect to the Springer Performance Bonus for fiscal year 2007, in the event
shareholder approval of the performance goal is obtained:
NAME AND PRINCIPAL POSITION DOLLAR VALUE ($)
Jon W. Springer
Executive Vice President of Blue Atlantic $832,762(1)
(1) $400,000 of which has already been paid and is not subject to shareholder
approval.
Approval of the performance goal applicable to the Springer Performance
Bonus requires the affirmative vote of at least a majority in voting interest of
the shareholders present in person or by proxy and voting at the Annual Meeting,
assuming the presence of a quorum. If the shareholders do not approve the
performance goal, the remainder of the Springer Performance Bonus for 2007 and
for future fiscal years will not be payable, but the Company reserves the right
to pay such other compensation and approve other plans and arrangements as it
deems appropriate and in the best interests of the Company and its shareholders.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
SPRINGER PERFORMANCE BONUS.
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL 3)
The Audit Committee recommended and the Board approved the appointment of
the accounting firm Blackman Kallick LLP as the Company's independent registered
public accounting firm for the fiscal year 2008, subject to shareholder
ratification. Blackman Kallick LLP audited the Company's financial statements
for the fiscal years ended December 31, 2004, 2005, 2006 and 2007.
AUDIT FEES
Audit fees for the fiscal years ended December 31, 2007 and December 31,
2006 were $341,000 and $260,000, respectively.
AUDIT RELATED FEES
Audit related fees for the fiscal years ended December 31, 2007 and
December 31, 2006 were $28,000 and $0, respectively.
19
TAX FEES
Tax fees for the fiscal years ended December 31, 2007 and December 31,
2006 were $37,000 and $33,500, respectively.
ALL OTHER FEES
All other fees for products and services provided by the Company's
principal accountant for the fiscal years ended December 31, 2007 and December
31, 2006 were $0.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF THE INDEPENDENT AUDITOR
All audit related services were pre-approved by the Audit Committee, which
concluded that the provision of such services by Blackman Kallick LLP was
compatible with the maintenance of that firm's independence in the conduct of
its auditing functions. The Board has appointed Blackman Kallick LLP to serve
as the Company's independent registered public accounting firm for the fiscal
year ending December 31, 2008. Representatives of Blackman Kallick LLP will be
available at the Annual Meeting where they will have the opportunity to make a
statement if they desire to do so and where they will be available to respond to
any appropriate questions.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF BLACKMAN KALLICK LLP AS THE COMPANY'S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2008.
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, WITHOUT EXHIBITS,
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007 ACCOMPANIES THIS PROXY STATEMENT.
UPON WRITTEN REQUEST, THE COMPANY WILL PROVIDE TO ANY SHAREHOLDER, FREE OF
CHARGE, A COPY OF ITS ANNUAL REPORT ON FORM 10-KSB, WITHOUT EXHIBITS, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS FOR COPIES OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-KSB SHOULD BE DIRECTED TO JAMES M. LYNCH,
UNIVERSAL INSURANCE HOLDINGS, INC., 1110 WEST COMMERCIAL BOULEVARD, SUITE 100,
FORT LAUDERDALE, FLORIDA 33309.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, and persons who own more than 10% of the Company's Common
Stock to file initial reports of ownership and reports of changes in ownership
with the SEC. Directors, executive officers and greater than 10% shareholders
(collectively, "Reporting Persons") are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on the review of copies of Forms 3, 4 and 5 provided to the
Company and written representations by the Reporting Persons, the Company
believes that, for the year ended December 31, 2007, all Section 16(a) filing
requirements applicable to the Reporting Persons were met.
20
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 2009
annual meeting of shareholders must be received by the Company no later than
December 10, 2008 to be considered for inclusion in the Company's proxy
statement and form of proxy relating to such meeting. Shareholders wishing to
submit a proposal at the 2009 annual meeting of shareholders that do not intend
to include the proposal in the Company's proxy statement for that meeting must
provide appropriate notice to the Company by February 11, 2009.
OTHER MATTERS
The Company knows of no business that will be presented for action at the
Annual Meeting other than those matters referred to herein. If other matters do
come before the meeting, the persons named as proxies will act and vote
according to their best judgment on behalf of the shareholders they represent.
BY ORDER OF THE BOARD OF DIRECTORS
DRAFT
--------------------------
Norman M. Meier, Secretary
Dated: April [__], 2008
21
APPENDIX A
AMENDMENT TO
EMPLOYMENT AGREEMENT OF JON W. SPRINGER
THIS AMENDMENT is made and entered into this 28th day of March,
2008, by and between Blue Atlantic Reinsurance Company (the "Company") and Jon
W. Springer ("Executive").
WHEREAS, Universal Risk Advisors, Inc. ("URA") and Executive entered
into an Employment Agreement effective as of June 15, 2006, as amended by the
Joint Unanimous Written Consent of the Compensation Committee of the Board of
Directors of Universal Insurance Holdings, Inc. ("UIH") and the Board of
Directors of URA dated March 14, 2007 (collectively, the "Agreement");
WHEREAS, pursuant to the Assumption and Novation Agreement, dated
March 28, 2008, by and among the Company, Executive, URA and UIH as guarantor,
the Company assumed the Agreement;
WHEREAS, the Company and Executive desire to modify certain
provisions of the Agreement; and
WHEREAS, capitalized terms not defined herein shall have the
meanings set forth in the Agreement.
NOW, THEREFORE, the parties hereto intending to be legally bound
hereby and upon receipt of other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, do hereby agree as follows:
1. Section 3(b) of the Agreement is hereby amended to read in its
entirety as follows:
"BONUS. During the Term, in addition to the Base Salary, the
Executive shall receive a bonus of (i) One Hundred Thousand Dollars
($100,000) for the period commencing with the Start Date and ending
on December 31, 2006 and (ii) thereafter, an annualized bonus equal
to the greater of (A) One Hundred Thousand Dollars $100,000 or (B)
one and one-half percent (1.5%) of the after tax calendar year
profit of Universal Insurance Holdings, Inc. ("UIH"), for the
calendar years 2007, 2008, and 2009, as applicable. The bonus
payment due and owing under Section 3(b)(i) and an amount equal to
One Hundred Thousand Dollars ($100,000) to be paid pursuant to
3(b)(ii)(A) shall be paid to the Executive within fifteen (15)
calendar days after the end of the applicable bonus year. Any
additional bonus payments due and owing pursuant to Section
3(b)(ii)(B) shall be paid to the Executive within fifteen (15)
calendar days after the Company's year end financial statements have
been calculated for the applicable bonus year; provided, however,
that in no event shall any bonus due and owing under Section
3(b)(ii)(B) be paid to Executive later than December 31 of the year
A-1
following the year in which it was earned; provided, further, that
the payment of any bonus pursuant to Section 3(b)(ii)(B) shall be
contingent upon the Company's shareholders approving the bonus
formula described in Section 3(b)(ii)(B), and should the Company's
shareholders fail to approve the bonus formula described in Section
3(b)(ii)(B), Executive shall forfeit his right to such bonus
compensation under Section 3(b)(ii)(B). The "bonus year" shall be
based on the calendar year. Executive shall be entitled to payment
for any earned bonus even if he is not employed by the Company on
the payment date. Additionally, notwithstanding anything herein to
the contrary, if the Executive's employment is terminated by his
death, by the Company without Cause, or if the Executive terminates
his employment for Good Reason, the Company shall pay the Executive
(or his legal representatives in the case of his death) a prorated
share (January 1 to Executive's last day of employment) of his
annualized bonus.
2. Except as expressly amended herein, the terms and conditions of the
Agreement are hereby ratified and affirmed.
WITNESS the due execution hereof as of the date first above written.
BLUE ATLANTIC REINSURANCE
CORPORATION
/s/ Bradley I. Meier
--------------------------------
Bradley I. Meier, President and Director
/s/ Jon W. Springer
------------------------------------
Jon W. Springer
A-2
REVOCABLE PROXY FOR HOLDERS OF SERIES M PREFERRED STOCK
UNIVERSAL INSURANCE HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS ON MAY 16, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James M. Lynch, with full power of substitution,
as the lawful proxy of the undersigned and hereby authorizes him to represent
and to vote as designated below all shares of Series M preferred stock of
Universal Insurance Holdings, Inc. ("Company") that the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders of
the Company to be held on May 16, 2008 at the Westin Fort Lauderdale, 400
Corporate Drive, Fort Lauderdale, Florida 33334, and at any adjournment thereof.
Holders of Series M preferred stock are entitled to one vote per share.
1. Proposal 1: Election of six directors for a term ending in 2009. Nominees:
Bradley I. Meier, Norman M. Meier, Sean P. Downes, Ozzie A. Schindler, Reed
J. Slogoff and Joel M. Wilentz.
FOR [ ] WITHHELD [ ]
(all nominees except as marked below)
____________________________________________________________________________
(Instruction: To withhold authority to vote for any individual
nominee(s), write the name(s) of the nominee(s) on the line above.)
2. Proposal 2: Approval of the formula used to calculate the performance bonus
in the amended employment agreement of the Executive Vice President of the
Company's wholly owned subsidiary, Blue Atlantic Reinsurance Corporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal 3: Ratification of the appointment of Blackman Kallick LLP,
independent registered public accounting firm, as the auditors of the
Company for the year ending December 31, 2008.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In the discretion of such proxy, to transact any other business as may
properly come before the annual meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE MATTERS LISTED ABOVE.
Whether or not you plan to attend the meeting, you are urged to execute and
return this proxy, which may be revoked at any time prior to its use.
Change of Address or Comments Mark Here [ ]
Please sign your name exactly as it appears
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please
sign in full corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
Date ______, 2008 ________________________________________
Signature of Shareholder
________________________________________
Signature of Additional Shareholder(s)
REVOCABLE PROXY FOR HOLDERS OF SERIES A PREFERRED STOCK AND COMMON STOCK
UNIVERSAL INSURANCE HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS ON MAY 16, 2008
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James M. Lynch, with full power of
substitution, as the lawful proxy of the undersigned and hereby authorizes him
to represent and to vote as designated below all shares of Series A preferred
stock and all shares of common stock of Universal Insurance Holdings, Inc.
("Company") that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Shareholders of the Company to be held on May 16, 2008
at the Westin Fort Lauderdale, 400 Corporate Drive, Fort Lauderdale, Florida
33334, and at any adjournment thereof. Holders of Series A preferred stock and
common stock are entitled to one vote per share.
1. Proposal 1: Election of four directors for a term ending in 2009. Nominees:
Sean P. Downes, Ozzie A. Schindler, Reed J. Slogoff and Joel M. Wilentz.
FOR [ ] WITHHELD [ ]
(all nominees except as marked below)
____________________________________________________________________________
(Instruction: To withhold authority to vote for any individual
nominee(s), write the name(s) of the nominee(s) on the line above.)
2. Proposal 2: Approval of the formula used to calculate the performance bonus
in the amended employment agreement of the Executive Vice President of the
Company's wholly owned subsidiary, Blue Atlantic Reinsurance Corporation.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal 3: Ratification of the appointment of Blackman Kallick LLP,
independent registered public accounting firm, as the auditors of the
Company for the year ending December 31, 2008.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In the discretion of such proxy, to transact any other business as may
properly come before the annual meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE MATTERS LISTED ABOVE.
Whether or not you plan to attend the meeting, you are urged to execute and
return this proxy, which may be revoked at any time prior to its use.
Change of Address or Comments Mark Here [ ]
Please sign your name exactly as it appears
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please
sign in full corporate name by President or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
Date: __________, 2008 _______________________________________
Signature of Shareholder
________________________________________
Signature of Additional Shareholder(s)