SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

 

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Filed by a party other than the Registrant o

 

Check the appropriate box:

 

o  Preliminary Proxy Statement

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to §240.14a-12

 

PLATINUM UNDERWRITERS HOLDINGS, LTD.

(Name of Registrant as Specified In Its Charter)

 

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

þ  No fee required.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Belvedere Building

69 Pitts Bay Road

Pembroke HM 08 Bermuda

 

 

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD ON APRIL 27, 2011

 

 

To the Shareholders of Platinum Underwriters Holdings, Ltd.:

 

Notice is hereby given that the 2011 Annual General Meeting of Shareholders (the “Annual Meeting”) of Platinum Underwriters Holdings, Ltd. (the “Company”) will be held at the Fairmont Hamilton Princess Hotel, 76 Pitts Bay Road, Pembroke HM 11 Bermuda, on Wednesday, April 27, 2011 at 9:00 a.m., local time, for the following purposes:

 

 

At the Annual Meeting, shareholders will receive the audited consolidated financial statements of the Company and its subsidiaries as of and for the year ended December 31, 2010 with the Company’s independent registered public accounting firm’s report thereon, and may also be asked to consider and take action with respect to such other business as may properly come before the meeting, or any postponement or adjournment thereof.

 

The Company’s Board of Directors has fixed the close of business on March 11, 2011 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting and any postponement or adjournment thereof. You are cordially invited to be present. Shareholders who do not expect to attend in person are requested to sign and return the enclosed form of proxy in the envelope provided. At any time prior to their being voted at the Annual Meeting, proxies are revocable by written notice to the Secretary of the Company, by a duly executed proxy bearing a later date or by voting in person at the Annual Meeting.

 

By order of the Board of Directors,

 

Michael E. Lombardozzi

Executive Vice President, General Counsel,

Chief Administrative Officer and Secretary

 

Pembroke, Bermuda

March 25, 2011

 

 

Important Notice Regarding the Availability of Proxy Materials for the Platinum Underwriters

Holdings, Ltd. 2011 Annual General Meeting of Shareholders to be Held on April 27, 2011:

 

The proxy statement, proxy and 2010 Annual Report to Shareholders are available at

www.platinumre.com/proxymaterials.

 

 

PLATINUM UNDERWRITERS HOLDINGS, LTD.
The Belvedere Building
69 Pitts Bay Road
Pembroke HM 08 Bermuda

 

 

PROXY STATEMENT
FOR
ANNUAL GENERAL MEETING OF SHAREHOLDERS

April 27, 2011

 

 

TABLE OF CONTENTS

 

 

This proxy statement and the accompanying form of proxy are being furnished to holders of the common shares (the “Common Shares”) of Platinum Underwriters Holdings, Ltd. (the “Company,” “we,” “us,” or “our”) to solicit proxies on behalf of the Board of Directors of the Company (the “Board”) for the 2011 Annual General Meeting of Shareholders (the “Annual Meeting”) to be held at the Fairmont Hamilton Princess Hotel, 76 Pitts Bay Road, Pembroke HM 11 Bermuda, on Wednesday, April 27, 2011 at 9:00 a.m., local time. These proxy materials are first being mailed to shareholders on or about March 25, 2011.

 

The Board has fixed the close of business on March 11, 2011 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting. As of such date, there were 37,269,612 Common Shares outstanding and entitled to vote. Each shareholder is entitled to one vote for each Common Share held of record on the record date with respect to each matter to be acted upon at the Annual Meeting, provided that, pursuant to our Amended and Restated Bye-laws (our “Bye-laws”), the voting power of any shareholder shall be adjusted in circumstances in which the “Controlled Shares” (as defined below) held by any person constitute 9.5% or more of the voting power of all issued shares of the Company (such person, a “9.5% Member”), to the extent necessary so that there is no 9.5% Member. “Controlled Shares” means all shares of the Company (i) directly owned, (ii) directly, indirectly or constructively owned by a United States person as determined pursuant to sections 957 and 958 of the United States Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), and the treasury regulations promulgated thereunder or (iii) beneficially owned directly or indirectly within the meaning of Rule 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder.

 

Pursuant to our Bye-laws, any direct or indirect holder of shares shall notify us within ten days following the date that such person acquires actual knowledge that such person is the direct or indirect holder of Controlled Shares constituting 9.5% or more of the voting power of the issued shares of the Company. Accordingly, we request that any holder of Common Shares with reason to believe that it is a 9.5% Member or that it holds Common Shares characterized as Controlled Shares of a 9.5% Member contact us promptly so that we may determine whether the voting power of such holder’s Common Shares should be reduced. By submitting a proxy, a holder of Common Shares will be deemed to have confirmed that, to its knowledge, it is not, and is not acting on behalf of, a 9.5% Member. The directors of the Company are empowered to require any direct or indirect shareholder to provide information the directors may reasonably request to determine whether such shareholder’s voting power should be adjusted. The directors may disregard the votes attached to Common Shares of any holder who fails to respond to such a request or who, in their judgment, submits incomplete or inaccurate information. The directors retain certain discretion to make such final adjustments that they consider fair and reasonable in all circumstances as to the aggregate number of votes attaching to the Common Shares of any shareholder to ensure that no person shall be, or shall be acting on behalf of, a 9.5% Member.

 

The presence of two or more persons in person and representing in person or by proxy holders of more than 50% of the Common Shares outstanding and entitled to vote on the matters to be considered at the Annual Meeting is required to constitute a quorum for the transaction of business at the Annual Meeting. The proposals set forth in this proxy statement will be decided by the affirmative vote of a majority of the voting power of the Common Shares present, in person or by proxy, at the Annual Meeting, and entitled to vote thereon, and a hand vote will be taken on each proposal unless a poll is requested pursuant to our Bye-laws. Please note, however, that the votes on proposals 2 and 3 are advisory and non-binding, as discussed in more detail under “Proposal 2 — Advisory Vote on Named Executive Officer Compensation” and “Proposal 3 — Advisory Vote on the Frequency of the Named Executive Officer Compensation Advisory Vote.” Nevertheless, we will consider our shareholders’ views, as expressed by their votes on these proposals, in any future actions concerning the matters dealt with in such proposals.

 

Proxies in the form enclosed are being solicited on behalf of the Board.  Common Shares may be voted at the Annual Meeting by returning the enclosed proxy card or by attending the Annual Meeting and voting in person. The enclosed proxy card authorizes each of Dan R. Carmichael, Michael D. Price and Michael E. Lombardozzi to vote the Common Shares represented thereby in accordance with the instructions given or, if no instructions are given, in their discretion. They may also vote such Common Shares to adjourn or postpone the meeting and will be authorized to vote such Common Shares at any adjournment or postponement of the Annual Meeting. Common Shares held in “street name” by a broker, bank or other nominee (hereinafter referred to as a “broker”) must be voted by the broker according to the instructions given by the beneficial owner of the Common Shares or, if no instructions are given and the particular proposal to be voted on is considered to be a routine matter, in the broker’s discretion. In this proxy statement, proposal 4 (approval of the independent registered public accounting firm for the 2011 fiscal year) is considered to be routine. We believe that the following proposals will be considered non-routine under the rules of the New York Stock Exchange (the “NYSE”), and therefore a broker will not have discretionary authority to vote if no instructions are given by the beneficial owner of the Common Shares: proposal 1 (election of directors), proposal 2 (advisory vote on named executive officer compensation) and proposal 3 (advisory vote on the frequency of the named executive officer compensation advisory vote).

 

Proxies may be revoked at any time prior to the Annual Meeting by giving written notice to the Secretary of the Company, by a duly executed proxy bearing a later date or by voting in person at the Annual Meeting. For Common Shares held in “street name” by a broker, new voting instructions must be delivered to the broker prior to the Annual Meeting.

 

If a shareholder abstains from voting on a particular proposal, or if a shareholder’s Common Shares are treated as a broker non-vote, those Common Shares will not be considered as votes cast in favor of or against the proposal but will be included in the number of Common Shares represented for the purpose of determining whether a quorum is present. Generally, broker non-votes occur when Common 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 Common Shares on the particular proposal because it is non-routine. If a quorum is not present, the shareholders who are represented may adjourn the Annual 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 all costs of this proxy solicitation. Proxies may be solicited by mail, in person, by telephone or by facsimile by our officers, directors, and employees. We may also reimburse brokerage firms, banks, custodians, nominees and fiduciaries for their expenses incurred in forwarding proxy materials to beneficial owners. We have retained Mellon Investor Services, LLC to assist in the solicitation of proxies and will pay a fee of $7,500 plus reimbursement of out-of-pocket expenses for those services.

 

We provide property and marine, casualty and finite risk reinsurance coverages, through reinsurance intermediaries, to a diverse clientele of insurers and select reinsurers on a worldwide basis. We operate through two licensed reinsurance subsidiaries: Platinum Underwriters Bermuda, Ltd. (“Platinum Bermuda”) and Platinum Underwriters Reinsurance, Inc. (“Platinum US”).

 

The Board currently consists of the following nine members, each of whom was elected as a director on April 29, 2010 at our 2010 Annual General Meeting of Shareholders (the “2010 Annual Meeting”): H. Furlong Baldwin, Dan R. Carmichael, A. John Hass, Antony P. D. Lancaster, Edmund R. Megna, Michael D. Price, Peter T. Pruitt, James P. Slattery and Christopher J. Steffen. The term of office of each of the current directors will expire at the Annual Meeting. Mr. Baldwin and Mr. Pruitt have each informed the Board that they will be

retiring from the Board at the Annual Meeting. The Board voted to decrease the authorized number of directors from nine to seven as of the Annual Meeting and, after considering the recommendation of the Governance Committee, nominated each of the current directors other than Mr. Baldwin and Mr. Pruitt for reelection as directors at the Annual Meeting to serve until our 2012 Annual General Meeting of Shareholders.

 

The Board has no reason to believe that any of its nominees would be unable or unwilling to serve if elected. If a nominee becomes unable or unwilling to accept nomination or election, the Board may select a substitute nominee and the Common Shares represented by proxies may be voted for such substitute nominee unless shareholders indicate otherwise.

 

Set forth below is biographical and other information regarding the nominees for election as directors, including their principal occupations during the past five years.

 

 

THE BOARD RECOMMENDS A VOTE “FOR” ALL NOMINEES TO THE COMPANY’S BOARD OF DIRECTORS.

 

 

The NYSE listing standards require us to have a majority of independent directors serving on the Board. A member of the Board qualifies as independent if the Board affirmatively determines that the director has no material relationship with the Company either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company. The Board has determined that each of Messrs. Baldwin, Carmichael, Hass, Lancaster, Megna, Pruitt, Slattery and Steffen, constituting a majority of the Board, has no material relationship with the Company other than in his capacity as a member of the Board and committees thereof, and thus each is an independent director of the Company.

None of Messrs. Baldwin, Carmichael, Hass, Megna and Steffen has any relationship with the Company other than as a director and member of committees of the Board.

 

Mr. Pruitt’s son is a partner of the law firm of Dewey & LeBoeuf LLP, which provides legal services to us. Mr. Pruitt’s son is not involved in the provision of these legal services to us. In addition, payments made by us to Dewey & LeBoeuf LLP did not exceed the greater of $1 million or 2% of the consolidated gross revenues of such firm in any of the last three fiscal years. In addition, the Board reviewed and approved Mr. Pruitt’s relationship with Dewey & LeBoeuf LLP and determined that it does not constitute a conflict of interest under our Code of Business Conduct and Ethics because Mr. Pruitt does not have a significant financial interest in, and is not an affiliate of, a company with which the Company does business or proposes to do business. Based on the foregoing, the Board has determined that Mr. Pruitt has no material relationship with the Company.

 

Mr. Slattery was party to a letter agreement with us dated June 5, 2008 pursuant to which he provided consulting services to the Board and the Audit Committee from July 1, 2008 until he joined the Board on April 29, 2009. Mr. Slattery received a total of $90,000 in fees for these consulting services, paid in three equal installments on or about September 30, 2008, December 31, 2008 and March 31, 2009. Based on the foregoing, the Board has determined that Mr. Slattery has no material relationship with the Company.

 

Mr. Lancaster served as a non-executive director of Platinum Re (UK) Limited, a subsidiary of the Company, from December 2002 until December 2009. Mr. Lancaster received fees for his service as a director of Platinum Re (UK) Limited of £20,000 per year (or approximately $32,300 per year based on an exchange rate of 1.6149 United States dollars per British pound as of December 31, 2009) during the term of his service. Based on the foregoing, the Board has determined that Mr. Lancaster has no material relationship with the Company.

 

Our Corporate Governance Guidelines provide that the Board should have the flexibility to decide whether it is best for the Company at any given point in time for the roles of the Chief Executive Officer and Chairman of the Board to be separate or combined and, if separate, whether the Chairman of the Board should be selected from the independent directors. Currently, different individuals serve in the roles of Chairman of the Board and Chief Executive Officer. Mr. Carmichael, an independent director, is the non-executive Chairman of the Board and the Chairman of the Governance Committee and, as such, he presides at the meetings of the Board and at the meetings of independent directors that are held after each Board meeting. We believe that it is important for the Company to have independent, non-management leadership at the Board level, which enhances the Chief Executive Officer’s accountability to the Board and contributes to effective risk oversight and corporate governance. The separation of the Chief Executive Officer and Chairman of the Board roles provides a balance between management and independent, non-management leadership. However, the Board retains the flexibility to consider other structures that provide a similar balance of leadership, such as one that combines the roles of Chairman of the Board and Chief Executive Officer and includes the naming of a lead independent director. Accordingly, the Board periodically reviews its leadership structure.

 

Pursuant to its charter, the Audit Committee has the responsibility to discuss with management our guidelines and policies with respect to corporate risk assessment and risk management. Given the importance of these issues to our operations, the Audit Committee has determined that all Board members should be involved in discussions relating to these issues in order to foster a better understanding of our risk profile. Accordingly, at the request of the Audit Committee, our Chief Risk Officer, Kenneth A. Kurtzman, reports to the full Board on a quarterly basis with respect to our exposure to various types of risk on an aggregate and per risk basis, including exposure from our property and casualty reinsurance business and our investment portfolio. In addition, the Board participates in an annual strategy session with management that includes a discussion of risk led by the Chief Executive Officer and periodically participates in an assessment of our risk management procedures.

 

The Board maintains four standing committees: the Audit, Compensation, Governance and Executive Committees. Each of these committees operates pursuant to a charter, each of which is posted on our website at www.platinumre.com and may be found under the “Investor Relations” section by selecting “Corporate Governance.” Copies of these charters may also be obtained, without charge, upon written request to the Secretary of the Company at our principal executive offices.

 

Audit Committee

 

The Audit Committee presently consists of Messrs. Baldwin, Carmichael, Hass and Slattery (Chairman). The Board has determined that each member of the Audit Committee is independent as defined in the NYSE listing standards and meets the NYSE standards of financial literacy and accounting or related financial management expertise. The Board has also determined that each of Messrs. Baldwin and Slattery is an “audit committee financial expert” as defined in the rules of the United States Securities and Exchange Commission (the “SEC”).

 

The Audit Committee’s primary responsibilities, as set forth in its charter, are to:

 

 

Compensation Committee

 

The Compensation Committee presently consists of Messrs. Hass (Chairman), Megna, Pruitt and Steffen. The Board has determined that each member of the Compensation Committee is independent as defined in the NYSE listing standards.

 

The Compensation Committee’s primary responsibilities, as set forth in its charter, are to:

 

 

Compensation Process and Procedures.  The Compensation Committee charter provisions set forth above outline the scope of authority of the Compensation Committee. The Compensation Committee has the sole authority to set the Chief Executive Officer’s compensation. As noted above, the Compensation Committee consults with each of the other directors on the Board in setting such compensation. In determining any long-term incentive component of the Chief Executive Officer’s compensation, the Compensation Committee considers, among other factors, our financial performance and shareholder return, the value of similar incentive awards to chief executive officers at comparable companies and awards given to the Chief Executive Officer in past years. Compensation determinations for our other named executive officers are also made by the Compensation Committee. The Compensation Committee receives recommendations regarding such compensation from the Chief Executive Officer, who considers, among other factors, competitive compensation information. The Compensation Committee also consults with the Chief Executive Officer regarding the form of compensation and benefits to be provided to the other named executive officers. The Compensation Committee may request a report from a compensation consulting firm in support of such proposed

compensation and may consider comparative competitive data prepared by a compensation consulting firm or our human resources personnel.

 

Director compensation is reviewed by the Compensation Committee, which makes recommendations with respect to director compensation for discussion and approval by the Board. When making recommendations, the Compensation Committee considers the complexity and size of the Company. To create a direct linkage between director compensation and our performance, a portion of a director’s compensation is paid in share units which convert into Common Shares. The Chief Executive Officer is not involved in making decisions regarding director compensation.

 

Pursuant to its charter, the Compensation Committee may retain professional firms and outside experts to assist in the discharge of its duties. The Compensation Committee has the sole authority to retain, evaluate and replace such firms, including the sole authority to approve the firms’ fees and other retention terms. The Compensation Committee selects the peer group of companies used by compensation consulting firms it hires and reviews the methodology employed by such firms in their reports to the Compensation Committee.

 

In 2010, the Compensation Committee engaged Fredrick W. Cook & Co. (“FWC”), a professional compensation consulting firm, to review the terms of the 2010 Share Incentive Plan and to assist us in determining the number of our Common Shares that should be reserved thereunder. FWC also worked with us to develop the shareholder proposal for the approval of the 2010 Share Incentive Plan that was included in the proxy statement for our 2010 Annual Meeting. In addition, the Compensation Committee asked FWC to advise it with respect to a new form of award to be made under our Amended and Restated Executive Incentive Plan (the “Executive Incentive Plan”) providing for cash payment, which form of award was adopted by the Compensation Committee in October 2010, and discretionary bonuses that were approved by the Compensation Committee in October 2010, which offset the annual incentive bonuses in respect of 2010 that would otherwise have been paid pursuant to the Amended and Restated Annual Incentive Plan (the “Annual Incentive Plan”). In 2009 and early 2010, the Compensation Committee engaged FWC to provide a comprehensive review of the competitiveness of the compensation of our executive officers other than the Chief Executive Officer against our peer group of companies. Following this review, the Compensation Committee approved awards of restricted shares to certain of our named executive officers in April 2010. FWC did not provide any additional services to us or our affiliates during 2010.

 

Governance Committee

 

The Governance Committee presently consists of Messrs. Baldwin, Carmichael (Chairman), Lancaster and Megna. The Board has determined that each member of the Governance Committee is independent as defined in the NYSE listing standards.

 

The Governance Committee’s primary responsibilities, as set forth in its charter, are to:

 

 

 

Director Nomination Process.  The Governance Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or for other reasons, and is responsible for identifying and recommending to the Board qualified candidates for nomination to the Board. The Governance Committee believes that members of the Board should have the highest professional and personal ethics and values, consistent with our ethics and values. Directors should be committed to enhancing shareholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. While we value public company service and seek that experience in candidates for nomination to the Board, service on other boards of public companies should be limited to a number that permits our directors, given their individual circumstances, to perform responsibly all their duties to the Company. In identifying nominees, the Governance Committee seeks diversity in the viewpoints, skills, professional experience, expertise and other individual qualities and attributes of Board members in order to assure that specific talents, skills and other characteristics that are needed to promote the Board’s effectiveness are possessed by an appropriate combination of directors. The Board also considers the benefits of a Board with diverse skills, experience, and expertise when evaluating the Governance Committee’s recommendations. Each director must represent the interests of all shareholders.

 

Candidates may come to the attention of the Governance Committee through current Board members, professional search firms, shareholders or other persons. These candidates will be evaluated at regular or special meetings of the Governance Committee and may be considered at any point during the year. Candidates recommended by shareholders for nomination to the Board will be considered and evaluated by the Governance Committee using the same criteria that is used to evaluate all other candidates. Any shareholder recommendations should include the candidate’s name and qualifications for Board membership and should be submitted in writing to the Governance Committee in care of the Secretary of the Company at our principal executive offices.

 

Executive Committee

 

The Executive Committee presently consists of Messrs. Baldwin, Carmichael (Chairman) and Price. The Executive Committee is authorized to exercise all of the powers of the Board when the Board is not in session (i) upon a written determination of the Chairman of the Board that it is impracticable to convene a meeting of the Board to exercise such powers, (ii) only as specifically delegated to the Executive Committee by the Board in writing, and (iii) subject to additional limitations set forth in its charter or as may from time to time be established by resolution of the Board.

 

During 2010, the Board met four times, the Audit Committee met four times, the Compensation Committee met four times, the Governance Committee met two times and the Executive Committee did not meet. Each director nominee attended at least 75% of the aggregate number of meetings of the Board and meetings of the committees of the Board on which he served that were held in 2010.

 

Board members are encouraged to attend our Annual General Meetings of Shareholders. All directors attended our 2010 Annual Meeting held on April 29, 2010 in Bermuda.

 

We have adopted Corporate Governance Guidelines and a Code of Business Conduct and Ethics. Copies of these documents are available on our website at www.platinumre.com and may be found under the “Investor Relations” section by selecting “Corporate Governance.” Copies of these documents may also be obtained, without charge, upon request to the Secretary of the Company at our principal executive offices.

 

In accordance with our Corporate Governance Guidelines and the NYSE’s corporate governance rules, separate executive sessions of independent directors are held after each Board meeting. Mr. Carmichael, as non-executive Chairman of the Board and Chairman of the Governance Committee, presides at such sessions.

 

Messrs. Hass, Megna, Pruitt and Steffen served on the Compensation Committee of the Board during the 2010 fiscal year. Each member of the Compensation Committee is an independent director and no member of the Compensation Committee was an officer or an employee of the Company during 2010 or a former officer of the Company. Additionally, no member of the Compensation Committee had any relationship with the Company requiring disclosure under Item 404 of SEC Regulation S-K. No executive officer of the Company served on any board of directors or compensation committee of any other company for which any of our directors served as an executive officer at any time during the 2010 fiscal year.

 

Interested parties may communicate with the Board, anonymously if they wish, by writing to the General Counsel at Platinum Underwriters Holdings, Ltd., The Belvedere Building, 69 Pitts Bay Road, Pembroke HM 08 Bermuda. Communications that are intended specifically for non-management directors should be sent to the above address to the attention of the Chairman of the Board (as the independent director who presides at meetings of such directors), in care of the General Counsel. All such communications will be treated as confidential and delivered to the appropriate Board member or members.

 

The following information relates to compensation of each director who served on the Board in 2010, other than Mr. Price whose compensation as our President and Chief Executive Officer is reflected under “Executive Compensation — Summary Compensation Table” below.

 

Director Compensation for Fiscal Year ending December 31, 2010

 

 

 

 

Nonemployee Director Compensation Policy

 

Annual Retainers.  Each nonemployee director (a director who is not an employee of the Company or any of its affiliates) receives a $100,000 annual retainer. Mr. Carmichael receives an additional $75,000 annual retainer for his service as the non-executive Chairman of the Board and the Chairman of the Governance Committee, Mr. Slattery receives an additional $45,000 annual retainer for his service as the Chairman of the Audit Committee, and Mr. Hass receives an additional $25,000 annual retainer for his service as the Chairman of the Compensation Committee. All annual retainers are paid in cash, quarterly in arrears. Nonemployee directors do not receive per meeting attendance fees or fees for membership on Board committees.

 

Annual Share Unit Award.  On the date of each Annual General Meeting of Shareholders, each nonemployee director elected at such Annual General Meeting of Shareholders receives an annual grant under the 2010 Share Incentive Plan of that number of share units equal to $50,000 divided by the closing price of the Common Shares on the business day immediately preceding the date of such grant. These share units vest and convert on a one-to-one basis into Common Shares on the earlier to occur of the first anniversary of the date of grant and the date of our next Annual General Meeting of Shareholders following the date of grant, provided that the director continues to serve on the Board through the date of conversion. During the vesting period, we credit the directors with dividend equivalent rights with respect to these share units each time a dividend is paid on our Common Shares. The dividend equivalent rights are subject to the same vesting requirements as the share units and are paid in cash upon vesting.

 

On the date of our 2009 Annual General Meeting of Shareholders, each of the nonemployee directors received 1,769 share units, which vested and converted on a one-to-one basis into Common Shares on April 29, 2010. Dividend equivalent rights that were credited to the directors prior to vesting were paid in cash on April 29, 2010 upon the vesting of the share units. Each of the nonemployee directors received 1,362 share units on the date of our 2010 Annual Meeting.

 

Share Unit Plan for Nonemployee Directors.  Pursuant to the Share Unit Plan, prior to January 1, 2009, 50% of all fees earned by a nonemployee director (including annual retainers, committee retainers and per meeting attendance fees) during each calendar quarter were mandatorily converted into that number of share units equal to the amount of such fees divided by the closing price of the Common Shares on the last day of the calendar quarter and directors could elect to have up to 100% of their fees converted into share units. Pursuant to these provisions of the Share Unit Plan, a nonemployee director receives a distribution in respect of his share units upon the expiration of five calendar years following the year in which he was credited with such share units or upon termination of his service on the Board, if earlier, each such share unit valued at the closing price of one Common Share on the date of such expiration or termination. Each distribution under the Share Unit Plan is made, in the discretion of the Board, either in cash or Common Shares or a combination thereof. Prior to distribution, the directors are credited with dividend equivalent rights with respect to these

share units each time a dividend is paid on our Common Shares. These dividend equivalent rights are paid in cash upon a distribution under the Share Unit Plan in respect of the share units to which they relate. In January 2011, each of Messrs. Baldwin, Carmichael and Pruitt received a distribution of Common Shares and cash dividend equivalents with respect to share units credited to them as fees for 2005.

 

As a result of the enactment of Section 457A of the Internal Revenue Code, in order to eliminate the deferral of income tax on compensation for services performed after December 31, 2008 by any director of the Company who is a taxpayer in the United States, the Share Unit Plan was amended to provide that, beginning in the first quarter of 2009, no additional share units will be granted or credited under the Share Unit Plan. Dividend equivalent rights will continue to be credited on share units that were outstanding as of January 1, 2009 and such share units and all dividend equivalent amounts will be paid in cash in accordance with the terms of the Share Unit Plan. On February 22, 2010, the Board terminated the Share Unit Plan as to future awards, and all Common Shares that remained available for issuance under that plan on that date were no longer reserved for issuance thereunder.

 

Our Code of Business Conduct and Ethics, which is in writing and which was recommended by the Audit Committee and approved by the Board, provides that our employees and directors must avoid any interest that conflicts or appears to conflict with the interests of the Company. A conflict of interest exists if actions by an employee or director are, or could reasonably appear to be, influenced directly or indirectly by personal considerations, duties owed to or interests in persons or entities other than the Company, or by actual or potential personal benefit or gain. Although the Code of Business Conduct and Ethics states that it is not possible to describe every conceivable conflict of interest, conflicts may include an employee or director conducting Company business with family members; employees, directors or their family members having a financial interest in another company with which we do business or that competes with us in the reinsurance market; and an employee taking a second job in the reinsurance industry or serving as a director of another entity.

 

Any time that an employee believes that a conflict of interest may exist, the conflict must be reported to and approved by that employee’s compliance officer and reported to our General Counsel. A conflict of interest that involves an officer who is a Senior Vice President or more senior or its equivalent, including all of our named executive officers, must be approved by the Board.

 

The Code of Business Conduct and Ethics provides that nonemployee directors may not have significant financial interests in or be affiliated with any entity with which we do business or propose to do business unless the director:

 

 

Further, our Corporate Governance Guidelines, which are in writing and which were recommended by the Governance Committee and approved by the Board, provide that, except as authorized by the Board, no director shall have a direct economic relationship with the Company (other than fees for services as a member of the Board or any committee thereof).

 

In addition, the Governance Committee generally reviews existing transactions of the Company in which any of our officers or directors, family members of our officers or directors or beneficial holders of more than 5% of our Common Shares have an interest or potential interest.

BlackRock Inc. reported beneficial ownership of more than 5% of our Common Shares at December 31, 2010, reporting that various persons had the right to receive or the power to direct the receipt of dividends from, or the proceeds of the sale of, such Common Shares, and that no one person’s interest therein was more than 5% of our outstanding Common Shares. Affiliates of BlackRock Inc. provide investment management services, risk analysis services and investment accounting services to us. During 2010, we paid such affiliates approximately $3.0 million in fees relating to these services. These fees were at then-prevailing market rates determined pursuant to arm’s length negotiations between us and such affiliates.

 

During 2010, Platinum Bermuda was a party to three reinsurance contracts with PartnerRe Ltd., two of which were entered into in 2009 and one of which was entered into in 2010. These contracts were terminated in May 2010, resulting in aggregate premiums to us of approximately $2.6 million. Marvin Pestcoe, the husband of H. Elizabeth Mitchell, is an officer of a subsidiary of PartnerRe Ltd. and the head of the business unit at PartnerRe Ltd. that was involved in these transactions with Platinum Bermuda. We cannot determine whether Mr. Pestcoe had a material interest in these transactions or the amount of such interest, if any. As the President and Chief Executive Officer of Platinum US, Ms. Mitchell does not have any involvement in the business of Platinum Bermuda and was not involved in these transactions. Ms. Mitchell did not have a material interest in these transactions.

 

We have adopted share ownership guidelines intended to align the interests of our nonemployee directors, Chief Executive Officer and executive officers reporting directly to the Chief Executive Officer with shareholders. Of our executive officers, each of Michael D. Price, Michael E. Lombardozzi, H. Elizabeth Mitchell, Robert S. Porter, Kenneth A. Kurtzman and Neal J. Schmidt has achieved his or her target share ownership level. Of our nonemployee directors, each of Messrs. Baldwin, Carmichael and Pruitt has achieved his target share ownership level.

 

The persons subject to the guidelines are expected to retain a portion of the Common Shares received by them as compensation until they have accumulated Common Shares at target ownership levels established by the Compensation Committee. The target ownership levels are 100,000 Common Shares for our Chief Executive Officer, 50,000 Common Shares for the Chief Executive Officer of Platinum Bermuda, the Chief Executive Officer of Platinum US and our Executive Vice President, Chief Administrative Officer and General Counsel, 30,000 Common Shares for our Chief Financial Officer, the Executive Vice President and Chief Risk Officer of Platinum Administrative Services, Inc. (“PASI”) and the Executive Vice President and Chief Actuary of PASI and 10,000 Common Shares for our nonemployee directors. The Board may adjust the levels from time to time. Until the nonemployee directors and executive officers reach their target ownership levels, they must retain Common Shares with a fair market value on the date of exercise or vesting equal to at least a specified percentage of the after-tax gain from the exercise of options or the after-tax value upon the vesting of restricted shares and the vesting of share units. The specified percentages are 75% of the after-tax gain or after-tax value for the nonemployee directors and the Chief Executive Officer and 50% of the after-tax gain or after-tax value for the other executive officers. Once the target ownership level is attained, the nonemployee directors and executive officers are expected to maintain that level until termination of service or employment unless the Chairman of the Compensation Committee waives compliance with the specified share ownership level. Common Shares owned outright, including Common Shares held in street name accounts, jointly with a spouse, or in a trust for the benefit of a nonemployee director or an executive officer, are counted toward fulfilling such person’s share ownership requirement. Common Shares that are subject to unexercised share options, unvested restricted shares and unvested share units are not counted toward fulfilling this requirement.

 

Set forth below is biographical and other information regarding our executive officers, including their principal occupations during the past five years.

 

 

Objectives of Our Compensation Program

 

We seek to achieve attractive long-term returns for our shareholders through disciplined risk management and market leadership in selected classes of property and marine, casualty and finite risk reinsurance by employing the following strategy:

 

 

Our executive compensation program provides for compensation to our executive officers, including Messrs. Price, Decleir, Lombardozzi and Porter, Ms. Mitchell and, until his retirement on August 10, 2010, James A. Krantz, all of whom comprise our named executive officers for purposes of this proxy statement. Except where noted, references to our named executive officers throughout this Compensation Discussion and Analysis refer only to our current named executive officers. The terms of Mr. Krantz’s retirement are described below under “Executive Compensation — Potential Payments Upon Termination or Change in Control — Payments and Benefits to Mr. Krantz Upon Retirement.”

 

The principal elements of our executive compensation program are base salary, annual incentive bonus awards under the Annual Incentive Plan, long-term incentive awards under the 2010 Share Incentive Plan and long-term incentive awards under the Executive Incentive Plan, each comprising roughly a quarter of the target compensation package. Our executive compensation program is designed to motivate our named executive officers to achieve both short-term and long-term financial results consistent with the strategies supporting our business goal of achieving attractive long-term returns for our shareholders. Accordingly, our program is significantly weighted toward performance-based compensation, and provides the named executive officers with an opportunity to ultimately earn total annual compensation equal to approximately three to five times their base salaries if financial targets are met and up to a maximum of approximately four to seven times their base salaries for superior financial results.

 

The principal financial performance measures on which we base our compensation program are our return on common shareholders’ equity and share price. The focus on share price provides a direct link to our business goal. In addition, we believe that sustained returns on equity contribute to share appreciation over time. Both our Annual Incentive Plan and our Executive Incentive Plan, which comprise roughly half of the target compensation package for our named executive officers, employ return on equity as the measure of corporate

performance. All our long-term incentive awards are paid in Common Shares or in cash based on the price of our Common Shares at vesting. These measures are described in more detail below under “Performance Measures.”

 

The Annual Incentive Plan and Executive Incentive Plan work in conjunction with the 2010 Share Incentive Plan or any successor plan. If we make awards under the Annual Incentive Plan and the Executive Incentive Plan in the form of share units, those share units are also awarded pursuant to the terms of the 2010 Share Incentive Plan or any successor plan and count towards the aggregate number of Common Shares that may be issued pursuant to all awards made under the 2010 Share Incentive Plan or any successor plan.

 

Our compensation program is also designed to retain highly qualified personnel. We promote the retention of our named executive officers by offering a level of compensation that we believe is competitive in the reinsurance industry and delayed vesting of the long-term incentive awards. These features are described below under “Retention.”

 

Performance Measures

 

Return on Equity

 

Currently, both our Annual Incentive Plan and our Executive Incentive Plan employ return on equity as the measure of financial performance. We believe return on equity, which takes into account both our net income and capital used to produce that net income, is an important measure of our profitability. Since premium volume and market share are not objectives of our business plan, none of our compensation programs utilize revenue as a measure of corporate performance. With respect to the Annual Incentive Plan, at the beginning of a plan year, the Compensation Committee may, in its discretion, select net income, return on equity, another measure of the Company’s performance, or a combination of these performance criteria as the measure of financial performance.

 

For each of the Annual Incentive Plan and the Executive Incentive Plan, return on equity is determined on an annual basis by dividing our net income or loss attributable to holders of our Common Shares by beginning shareholders’ equity, adjusted by the Compensation Committee for the weighted average effect of material capital transactions during the year, less the par value and capital attributable to preferred shares. Thus, for the Annual Incentive Plan there is one calculation for the year, and for the Executive Incentive Plan, one calculation will be done for each of the years in a performance cycle, which amounts will then be added together and divided by the number of years in the performance cycle.

 

In February 2010, the Compensation Committee determined that return on equity would be the measure of financial performance for 2010 under the Annual Incentive Plan and that in order for participants to receive payouts at target levels for awards made under our Annual Incentive Plan in respect of 2010 we would have to achieve a return on equity of at least 10%. In addition, the Compensation Committee determined that, in order for participants to receive payouts at target levels under our Executive Incentive Plan for the 2010-2012 performance cycle, we would have to achieve a return on equity of at least 12%. We believe that such returns over the long term would be attractive to investors. The Compensation Committee also determined that the bonus pool under the Annual Incentive Plan in respect of 2010 would fund at 100% of the sum of all participants’ target bonuses at a target return on equity for 2010 of 10% to 13%, with a range of funding from 50% of such sum (for return on equity of 4%) to 200% of such sum (for return on equity of 20% or more). The amounts below and above the target are determined through straight-line interpolation. The bonus pool available to our named executive officers does not fund if return on equity is below 4%. The long-term incentive awards made under the Executive Incentive Plan in 2010 for the 2010-2012 performance cycle provide for a payout at 100% if we achieve an average return on equity for the three-year period of 12%, with a range of payout from 0% (for return on equity of less than 6%) to 200% (for a return on equity of 18% or more), to be determined through straight-line interpolation.

 

In February 2011, the Compensation Committee determined that the same performance measures, targets and payout levels will apply for awards made under our Annual Incentive Plan in respect of 2011 and under our Executive Incentive Plan for the 2011-2013 performance cycle.

Share Price

 

Share price is a significant performance-based element of our compensation program, which is designed to result in the accumulation of Common Shares by our named executive officers in order to align their interests with those of our other shareholders. Changes in share price directly impact the value of our equity-based compensation. All of the long-term equity incentives granted under our 2010 Share Incentive Plan, including those granted under our Executive Incentive Plan, are either paid in Common Shares or in cash based on the price of our Common Shares at vesting, and we expect our named executive officers to attain a meaningful level of ownership of our Common Shares through our share ownership guidelines described in detail under “Share Ownership Guidelines” above. We believe the combination of share-based compensation and share ownership guidelines motivates our named executive officers to focus on increasing the market value of our Common Shares. In addition, our executive officers and directors are prohibited from hedging the economic risk of their share ownership.

 

We have granted long-term equity incentives under our 2010 Share Incentive Plan and predecessor plans in the form of restricted shares, share units that convert into Common Shares and options to purchase Common Shares. Our Executive Incentive Plan provides for awards of share units that are paid after a three-year performance cycle in cash, Common Shares or a combination of cash and Common Shares, in the discretion of the Compensation Committee. The number of share units is determined by dividing the dollar amount of the award by the fair market value of the Common Shares on the date of grant. The payment of awards of share units under our Executive Incentive Plan made in February 2010 or earlier will be made entirely in Common Shares. In October 2010, the Compensation Committee determined that awards of share units under our Executive Incentive Plan that are made after February 2010 may provide for payment in cash, provided that the award recipient has achieved his or her target share ownership level on the date of grant.

 

The specified levels of share ownership for our named executive officers are 100,000 Common Shares for Mr. Price, 50,000 Common Shares for Mr. Lombardozzi, Mr. Porter and Ms. Mitchell and 30,000 Common Shares for Mr. Decleir. The share ownership levels of 100,000, 50,000 and 30,000 Common Shares would represent an investment in the Company of about $4.5 million, $2.2 million and $1.3 million, respectively, based on the closing price of $44.97 per Common Share on December 31, 2010. We believe that the levels of share ownership specified above provide a meaningful alignment of the interests of our named executive officers with the interests of our shareholders, which furthers our business goal of achieving attractive long-term returns for our shareholders. As of the date hereof, all of our named executive officers other than Mr. Decleir have achieved their target share ownership levels.

 

Retention

 

We seek to employ senior executives having substantial experience and expertise in their fields, and who will maintain a high level of commitment to our business goal. The retention of such executives is an important objective of our compensation program, particularly in light of the competition for talented reinsurance professionals, especially in Bermuda and New York. Our retention strategies are discussed below.

 

Competitive Market Practices

 

With the assistance of compensation consultants engaged from time to time and our human resources personnel, the Compensation Committee considers several factors, including competitive compensation practices and trends and market demand for talent, to assess the effectiveness and competitiveness of our compensation structure. The Compensation Committee evaluates base salary and incentive compensation awards for named executive officers using available market data compiled by compensation consultants or our human resources personnel. This market data is derived from publicly available information relating to companies in the reinsurance industry with which we compete for business and talent. This group of companies can vary depending on changes in market dynamics and the extent to which the particular companies have business strategies and executive officer positions that compare to ours.

 

We consider compensation information for a group of public companies with significant operations in Bermuda, selected by the Compensation Committee. Although none of the companies fit our profile exactly,

we share similar characteristics such as location, public company status and certain elements of the business. Each company has reinsurance as at least a substantial component of its business. In 2010, those companies were Alterra Capital Holdings Limited, Arch Capital Group Ltd., Aspen Insurance Holdings Limited, Axis Capital Holdings Limited, Endurance Specialty Holdings Ltd., Everest Re Group, Ltd., Flagstone Reinsurance Holdings Limited, Montpelier Re Holdings Ltd., PartnerRe Ltd., RenaissanceRe Holdings Ltd., Transatlantic Holdings, Inc. and Validus Holdings, Ltd.

 

Delayed Vesting of Long-Term Incentives

 

Awards granted under our 2010 Share Incentive Plan and predecessor plans have been made in the form of restricted shares, share units that convert on a one-to-one basis into Common Shares and options to purchase Common Shares. All of these awards vest over a period of time. For example, share unit awards generally vest in equal annual installments on the first four anniversaries of the date of grant and restricted share awards generally vest in equal annual installments over three or four years. In addition, all of these awards are generally conditioned upon the continued employment of the recipient on each installment date. Share unit awards granted under our Executive Incentive Plan vest after completion of a three-year performance cycle, generally conditioned upon the continued employment of the recipient and the return on equity achieved throughout the three-year performance cycle.

 

The vesting of awards under the 2010 Share Incentive Plan and the Executive Incentive Plan may be accelerated under limited circumstances as discussed below under “Executive Compensation — Potential Payments Upon Termination or Change in Control — Accelerated Vesting and Prorated Payment of Incentives.”

 

Change in Control Severance Plan

 

In May 2007, with the assistance of FWC, the Compensation Committee adopted the Amended and Restated Change in Control Severance Plan (the “CIC Plan”), which provides severance benefits to certain of our employees, including our named executive officers, in the event of a termination of employment by us without cause or by the employee for good reason during the two-year period following a change in control. The purpose of the CIC Plan is to secure the continued services, dedication and objectivity of our employees in the event of any possible or actual change in control without concern as to whether such employees might be hindered or distracted by personal uncertainties and risks created thereby.

 

In determining whether to adopt the CIC Plan, the Compensation Committee reviewed estimates of the total cost of the CIC Plan to us and considered the recommendations of FWC regarding the CIC Plan with respect to the scope of participation, the provision for excise tax gross-ups for any “parachute payments” under Section 280G of the Internal Revenue Code, and restrictive covenants applicable to participants. By adopting the CIC Plan, we increased the severance multiples for our named executive officers to levels in line with those typically provided to senior executives of our peer group of companies in change in control situations. We believe that the CIC Plan, when combined with our other retention strategies, further strengthens our ability to retain our senior executive officers. The severance benefits provided under the CIC Plan are described in more detail under “Executive Compensation — Potential Payments Upon Termination or Change in Control — Change in Control Severance Plan” below.

 

Elements of Compensation

 

The principal elements of executive compensation are base salary, annual incentive bonus awards under the Annual Incentive Plan, long-term incentive awards under the 2010 Share Incentive Plan and long-term incentive awards under the Executive Incentive Plan. These elements, as well as perquisites and other compensation, are reviewed by the Compensation Committee on an annual basis at a meeting generally held in February of each year, and may be reviewed at other times if the Board or the Compensation Committee determines a review is necessary and appropriate. Pursuant to the charter of the Compensation Committee, the Compensation Committee determines the Chief Executive Officer’s compensation after consultation with each

of the directors on the Board, and reviews the recommendations of the Chief Executive Officer concerning the compensation of the other named executive officers and makes determinations with respect thereto.

 

In 2010, the Board and the Compensation Committee took a number of actions to increase the retention and stability of the executive team. In April 2010, following a comprehensive review by FWC in 2009 and early 2010 of the competitiveness of our executive officer compensation, the Compensation Committee approved awards of restricted shares to Mr. Porter, Mr. Lombardozzi and Ms. Mitchell which will vest in July 2012 and 2013. These awards are discussed in more detail under “Long-Term Incentives” below. Also in April 2010, the Board appointed Mr. Decleir to serve as Executive Vice President effective in April 2010 and Chief Financial Officer effective in June 2010, and we entered into an employment agreement with Mr. Decleir providing for a term of employment through April 29, 2013 and for automatic one-year extensions thereafter. In connection with this promotion, Mr. Decleir received an award of share units which will vest in four equal annual installments beginning in April 2011. In July 2010, the Compensation Committee determined that it was in the best interests of the Company to make certain adjustments to Mr. Price’s and Mr. Lombardozzi’s employment and compensation arrangements, and to extend the term of Mr. Lombardozzi’s employment to September 1, 2013 and to provide for automatic one-year extensions thereafter. In October 2010, the Compensation Committee determined to extend the term of Ms. Mitchell’s and Mr. Porter’s employment to July 31, 2013, and in each case to provide for automatic one-year extensions thereafter. In addition, the severance benefits provided to Mr. Lombardozzi, Mr. Porter and Ms. Mitchell pursuant to their employment arrangements were modified for certain termination events. These actions are reflected in new or amended and restated employment agreements with the named executive officers, which are described below under “Executive Compensation — Employment Agreements and Arrangements with Named Executive Officers.”

 

The elements of compensation are discussed below.

 

Base Salary

 

The Compensation Committee reviews and determines the base salary of the Chief Executive Officer and reviews and makes determinations with respect to the base salaries of the other named executive officers based on the recommendations of the Chief Executive Officer. Base salaries are generally adjusted to reflect promotions, increases in responsibilities and competitive considerations. Otherwise, we do not generally make annual increases in the base salaries of our named executive officers, preferring instead to focus on the performance-based elements of our compensation program.

 

Mr. Decleir’s base salary was increased from $245,000 to $325,000 on April 29, 2010 in connection with his promotion to Executive Vice President and Chief Financial Officer of the Company. In February 2011, the Compensation Committee determined to increase Mr. Decleir’s base salary to $375,000 effective March 1, 2011 to bring his base salary more in line with the base salaries of our other Executive Vice Presidents with similar levels of responsibility. Beginning on August 1, 2011, Mr. Price’s base salary will decrease from $980,000 to $900,000. This decrease, along with other compensation adjustments, was considered by the Compensation Committee to offset the estimated cost of travel by corporate jet from the United States to Bermuda as set forth in his amended and restated employment agreement. The other named executive officers’ base salaries were not changed in 2010.

 

Awards granted to our named executive officers under each of the Annual Incentive Plan, the 2010 Share Incentive Plan and the Executive Incentive Plan, as discussed below, are generally based on a specified percentage of base salary. Adjustments in base salary would generally be considered in determining the value of future awards under those plans.

 

Annual Incentive Plan

 

Our Annual Incentive Plan is structured to reward our named executive officers based on short-term corporate performance, subject to adjustment in the discretion of the Compensation Committee based on individual performance. The Compensation Committee established return on equity as the corporate performance measure under the Annual Incentive Plan for the years 2010 and 2011.

The Annual Incentive Plan provides for the determination of an aggregate bonus pool in respect of the prior year equal to the sum of all participants’ target bonuses, which is a percentage of the participants’ base salaries, multiplied by the performance bonus multiplier that applies based on return on equity for the year. The actual annual incentive bonuses payable to our named executive officers out of the bonus pool are determined in the discretion of the Compensation Committee and reflect the individual performance of the named executive officers.

 

In February 2010, the Compensation Committee confirmed its October 2009 determination that the 2010 target bonus for Mr. Price would be 150% of his base salary earned in 2010. The Compensation Committee also determined that the 2010 target bonus for each of Mr. Porter and Ms. Mitchell would be 125% of his or her base salary earned in 2010 and that the 2010 target bonus for each of Messrs. Lombardozzi and Krantz would be 100% of his base salary earned in 2010. A target bonus was also determined for Mr. Decleir in February 2010, prior to his appointment as Executive Vice President and Chief Financial Officer. In April 2010, in connection with such appointment, the Compensation Committee determined that the 2010 target bonus for Mr. Decleir would be increased to 75% of his base salary earned in 2010. Mr. Decleir’s increased target bonus level was determined based on his duties and responsibilities as the Company’s Executive Vice President and Chief Financial Officer and is consistent with the target bonus level of our other Executive Vice Presidents with similar levels of responsibility. The Compensation Committee also determined that the performance bonus multiplier for 2010 would be 100% if return on equity was between 10% and 13%, 0% if return on equity was below 4%, 50% to 100% if return on equity was between 4% and 10%, and 100% to 200% if return on equity was between 13% and 20% or more, in each case determined through straight-line interpolation.

 

At its February 2010 meeting, in addition to the financial objectives discussed above, the Compensation Committee approved non-financial individual objectives for the Chief Executive Officer for 2010 which included monitoring tax legislation that may be considered in the United States, monitoring developments that may suggest the need for alternative domiciles for the Company and Platinum Bermuda, maintaining our current A.M. Best and Standard & Poor’s ratings, continuing personal on-site meetings with investors, continuing the fostering of teamwork in the executive group by conducting at least two executive management meetings outside the United States and managing any excess capital that may have developed in 2010.

 

In October 2010, the Compensation Committee determined to pay all of our employees who participate in the Annual Incentive Plan, including the named executive officers, a discretionary bonus in cash prior to December 31, 2010 in an amount equal to up to 100% of their 2010 target bonuses under the Annual Incentive Plan if an estimate of return on equity for 2010 resulted in a performance bonus multiplier equal to or greater than 100%. This discretionary bonus equaled and offset the amount of the annual incentive bonus each employee would otherwise have received in February 2011 under the Annual Incentive Plan in respect of 2010 and was paid on or about December 30, 2010. The Compensation Committee determined that the payment of such discretionary bonus in December 2010 would provide a benefit to the Annual Incentive Plan participants, who would typically have been paid in the first quarter of 2011, with minimal impact on the Company.

 

At its meeting in February 2011, the Compensation Committee determined that return on equity for 2010 was 11.2% and thus the performance bonus multiplier for the year was 100%. In addition, the Chief Executive Officer made a recommendation to the Compensation Committee that Mr. Decleir receive an annual incentive bonus for 2010 equal to 75% of his earned base salary in 2010 multiplied by the performance bonus multiplier of 100%, that Mr. Lombardozzi receive an annual incentive bonus for 2010 equal to 100% of his earned base salary in 2010 multiplied by the performance bonus multiplier of 100%, and that each of Mr. Porter and Ms. Mitchell receive an annual incentive bonus for 2010 of 125% of his or her earned base salary in 2010 multiplied by the performance bonus multiplier of 100%. The Chief Executive Officer’s recommendation was based on our financial performance and reflects his assessment of the individual performance of each named executive officer. The Compensation Committee approved the Chief Executive Officer’s recommendation. The Compensation Committee also determined that Mr. Price substantially met his non-financial individual objectives for 2010. As a result, Mr. Price’s annual incentive bonus for 2010 was determined to be $1,470,000, which equals 150% of his earned base salary of $980,000 multiplied by the Company’s performance bonus multiplier of 100% for 2010. As described above, the actual amounts of the annual incentive bonuses received

by the named executive officers in respect of 2010 were offset by the amount of the discretionary bonus paid to each named executive officer on or about December 30, 2010. As these amounts were equal, no additional amounts were paid in the first quarter of 2011. Mr. Krantz was not eligible to receive an annual incentive bonus under the Annual Incentive Plan in respect of 2010 because he was no longer employed by us at the time the annual incentive bonuses were paid. A discussion of separation and other payments made to Mr. Krantz in connection with his retirement is included below under “Executive Compensation — Potential Payments Upon Termination or Change in Control — Payments and Benefits to Mr. Krantz Upon Retirement.”

 

Pursuant to his employment agreement, Mr. Decleir’s annual incentive bonus would generally be paid half in share units and half in cash until he achieves his target share ownership level. In October 2010, the Compensation Committee determined that Mr. Decleir would receive an amount equal to up to 100% of his target annual incentive bonus in respect of 2010 in cash and the remainder in share units. Because the amount of Mr. Decleir’s annual incentive bonus for 2010 was equal to target, his annual incentive bonus would have been paid entirely in cash. The annual incentive bonus in respect of 2010 for each of our other named executive officers would have been paid entirely in cash because each had achieved his or her target share ownership level. As mentioned above, the discretionary bonuses paid in December 2010 were paid in cash.

 

In February 2011, the Compensation Committee determined that the 2011 target bonuses for the named executive officers would be the same percentage of base salary earned in 2011 as the 2010 target bonuses (150% for Mr. Price, 125% for each of Mr. Porter and Ms. Mitchell, 100% for Mr. Lombardozzi and 75% for Mr. Decleir). The Compensation Committee also determined that the range for the performance bonus multiplier for 2011 would be the same as the range for 2010 (0% to 200%).

 

The Compensation Committee also approved non-financial individual objectives for the Chief Executive Officer for 2011 at its February 2011 meeting, which include monitoring tax legislation that may be considered in the United States, monitoring developments that may suggest the need for alternative domiciles for the Company and Platinum Bermuda, maintaining our current A.M. Best and Standard & Poor’s ratings, continuing personal on-site meetings with investors, continuing the fostering of teamwork in the executive group by conducting at least two executive management meetings outside the United States and appropriately allocating capital to underwriting and investments and managing any excess capital that may develop in 2011.

 

Long-Term Incentives

 

2010 Share Incentive Plan.  The 2010 Share Incentive Plan, which replaced a predecessor plan and was approved by shareholders at our 2010 Annual Meeting, provides that the Compensation Committee has authority to grant equity awards in the form of restricted shares, share units, options to purchase Common Shares and share appreciation rights. These equity awards, which vest over time, focus our named executive officers on improving our share price over the long term and provide a significant retention incentive.

 

From time to time we grant equity awards under the 2010 Share Incentive Plan to our named executive officers, which typically vest over a number of years. Ordinarily, equity awards are made at the Compensation Committee’s February meeting. In recent years, equity awards have been made in the form of restricted shares or share units. The value of share units and restricted shares provides an incentive for our named executive officers to preserve and increase the Company’s share price and also provides a significant incentive to remain with the Company during the vesting period.

 

In July 2008, in connection with entering into a new employment agreement and the Compensation Committee’s review of the competitiveness of our executive officer compensation, Mr. Price received an award of 100,000 restricted shares which vest in equal installments on each of July 31, 2009, 2010 and 2011 (the first three anniversaries of the date of grant). This award had a value of approximately $3.6 million on the date of grant. In addition, in October 2009, in connection with an amendment of his employment agreement, Mr. Price received an award of 65,682 restricted shares which will vest in two equal installments on each of July 31, 2012 and 2013. This award had a value of approximately $2.4 million on the date of grant.

 

In July 2008, in connection with the Compensation Committee’s review of the competitiveness of our executive officer compensation, Messrs. Lombardozzi, Krantz and Porter and Ms. Mitchell received awards of

restricted shares which vest in equal installments on each of July 24, 2009, 2010 and 2011, the first three anniversaries of the date of grant. Mr. Lombardozzi and Mr. Porter each received an award of 40,000 restricted shares valued at approximately $1.4 million on the date of grant; Ms. Mitchell received an award of 35,000 restricted shares valued at approximately $1.2 million on the date of grant; and Mr. Krantz received an award of 30,000 restricted shares valued at approximately $1.1 million on the date of grant. In addition, in April 2010, in connection with an additional review of executive officer compensation in 2009, Mr. Lombardozzi, Mr. Porter and Ms. Mitchell received awards of restricted shares valued at two times the executive officer’s base salary which vest in equal installments on each of July 24, 2012 and 2013. Mr. Lombardozzi and Mr. Porter each received an award of 27,226 restricted shares valued at approximately $1.0 million on the date of grant and Ms. Mitchell received an award of 25,865 restricted shares valued at approximately $950,000 on the date of grant. In making these awards, the Compensation Committee and the Chief Executive Officer desired to increase the retention and stability of our executive management team for the next several years and considered restricted shares to be the best form of equity award for this purpose. Because of the restricted share awards granted in July 2008 and April 2010, no equity awards were made to these named executive officers in February 2010 or February 2011.

 

In February 2010, prior to his promotion to the position of Chief Financial Officer, Mr. Decleir received an annual equity award of 2,711 share units valued at approximately $100,000 on the date of grant. In April 2010, in connection with his promotion, Mr. Decleir received an additional award of 5,772 share units valued at approximately $212,000 on the date of grant. Mr. Decleir’s employment agreement provides that, commencing in 2011, he will be eligible to receive annual equity awards under the 2010 Share Incentive Plan, each with a target value equal to 50% of his earned base salary. In February 2011, Mr. Decleir received an annual equity award of 4,580 share units valued at approximately $200,000, on the date of grant. Each of these share unit awards vests in equal annual installments on the first four anniversaries of the date of grant.

 

The named executive officers are credited with dividend equivalent rights in respect of share units held by them each time a dividend is paid on our Common Shares. These dividend equivalent rights are subject to the same vesting requirements as the share units and will be paid in cash upon vesting. Any dividends paid on our Common Shares during the vesting period in respect of restricted shares held by a named executive officer are paid to such named executive officer in cash at the time the dividend is paid.

 

Equity Award Policy.  The 2010 Share Incentive Plan provides that equity awards may be granted by the Compensation Committee, by an officer of the Company pursuant to delegation of authority by the Compensation Committee and, for grants to nonemployee directors, by the Board. In order to provide uniformity among awards, and to establish certainty with respect to certain award terms, in October 2006 the Compensation Committee adopted an equity award policy that applies to all awards made under the 2010 Share Incentive Plan to nonemployee directors (other than formula grants, the timing of which is predetermined), executive officers and other employees (including equity awards made pursuant to our Annual Incentive Plan and Executive Incentive Plan).

 

The equity award policy provides that, in general, awards shall be granted to eligible persons once per year, at a meeting of the Compensation Committee (or, in the case of awards to nonemployee directors, the Board) held around the time of the public release of our year-end financial results in February. Awards may also be granted at other times if the Compensation Committee or the Board determines necessary, provided that the date of grant and fair market value of any such awards shall be determined in accordance with the equity award policy, as described below.

 

The equity award policy provides that each award shall have a date of grant and fair market value that are determined in a consistent manner and that the date of grant of each award may be any day falling within our “open window” periods for securities trading on or after the date the award is made. The fair market value, for purposes of determining the initial value of an award, including the exercise price of an award of options, is determined using the closing sales price of our Common Shares on the trading day immediately preceding the date of grant. The equity award policy is designed to ensure that the value of each award, which is based on the market price of our Common Shares, is determined at a time when there is no material non-public information relating to the Company and when our most recent financial results have been released to the

public, with the opportunity for those results to be disseminated to the market over at least one full business day and reflected in the market price of our Common Shares. We believe that this removes any concern that material non-public information could be a factor in the timing and consequent valuation of equity awards.

 

The equity award policy also documents the Compensation Committee’s delegation of authority to make awards. This delegation authorizes the Chief Executive Officer to grant awards to our employees or prospective employees with the title of Vice President or below, provided that the maximum number of Common Shares that the Chief Executive Officer may grant in any calendar year may not exceed 10,000 Common Shares to any one individual or 50,000 Common Shares to all such individuals. For purposes of calculating these maximums, each Common Share that may be issued pursuant to an award of options will be deemed to be one Common Share, and each Common Share that may be issued pursuant to an award of restricted shares or share units will be deemed to be 2.67 Common Shares (for example, an award of 1,000 share units would be deemed to be 2,670 Common Shares). The policy provides that the Chief Executive Officer may grant awards at any time that he determines to be necessary under the circumstances, provided that the date of grant and fair market value of any such awards shall be determined as described above.

 

The equity award policy provides that once a date of grant has been specified for an award, it may not be changed. Also, promptly following the date of grant of an award, an award agreement, which shall identify the date of grant and the fair market value, the vesting and the term, and any other relevant terms and conditions of the award, shall be prepared and signed by the Company and the recipient. These provisions are designed to avoid any ambiguity regarding the terms of an award.

 

Executive Incentive Plan.  Our compensation program includes as an important element a long-term incentive for our named executive officers that measures performance over a three-year period in the form of share unit awards made under our Executive Incentive Plan in conjunction with our 2010 Share Incentive Plan. Our Executive Incentive Plan focuses our executive officers on profitability over a longer term than our Annual Incentive Plan, which is oriented toward single-year results. We believe that a portion of the compensation earned by our executive officers should be based upon the multi-year financial impact of their decisions. A longer term view is important for the success of our casualty business where, due to the greater time lag between the occurrence, reporting and payment of claims (as compared with property damage claims), results are not known for several years. We also believe that the Executive Incentive Plan provides a significant benefit in the retention of named executive officers over time. Average return on equity is the performance measure under the Executive Incentive Plan for each performance cycle.

 

The Executive Incentive Plan provides for awards of share units pursuant to the terms of the Executive Incentive Plan and the 2010 Share Incentive Plan. The number of share units awarded is determined by dividing the dollar amount of the award by the fair market value of the Common Shares on the date of grant. After the completion of the three-year performance cycle and determination of the average return on equity, the number of share units will be multiplied by the performance percentage that applies based on that average return on equity for the cycle. In February 2010, for the 2010-2012 performance cycle, the Compensation Committee granted an award of share units to Messers. Krantz, Lombardozzi, Porter and Price and Ms. Mitchell with a value approximately equal to 100% of their 2010 base salaries. The Compensation Committee also determined that the share units will be multiplied by a performance percentage of 0% for average return on equity of less than 6% and 1% to 200% for average return on equity of between 6% and 18% or more, determined through straight-line interpolation.

 

In February 2011, the Compensation Committee granted an award of share units under the Executive Incentive Plan for the 2011-2013 performance cycle to Messers. Lombardozzi, Porter and Price and Ms. Mitchell with a value equal to 100% of their 2011 base salaries and to Mr. Decleir with a value equal to 75% of his 2011 base salary. The Compensation Committee considered Mr. Decleir’s level of experience in the role of Chief Financial Officer when making this award. The Compensation Committee also determined that the share units will be multiplied by a performance percentage of 0% for average return on equity of less than 6% and 1% to 200% for average return on equity of between 6% and 18% or more, determined through straight-line interpolation.

Although the Executive Incentive Plan provides that share units may be paid in cash, Common Shares or a combination of cash and Common Shares as determined by the Compensation Committee in its sole discretion, pursuant to their terms, all share units awarded under the Executive Incentive Plan in February 2010 and earlier will be paid in Common Shares by multiplying the number of share units awarded by the applicable performance percentage and converting that number of share units into Common Shares on a one-to-one basis. In October 2010, the Compensation Committee determined that it would consider making share unit awards under our Executive Incentive Plan that provide for payment in cash, provided that the award recipient has achieved his or her target share ownership level at the time the award is granted. Accordingly, share units awarded under the Executive Incentive Plan in February 2011 to all of our named executive officers other than Mr. Decleir (who has not yet met his target ownership level) will be paid in cash by multiplying the number of share units awarded by the applicable performance percentage and the fair market value of our Common Shares on the vesting date. In general, vesting of Executive Incentive Plan awards is conditioned upon the continued employment of the participant. Share units awarded under the Executive Incentive Plan do not carry dividend equivalent rights.

 

The share unit awards made to each of Messrs. Price, Krantz, Lombardozzi and Porter and Ms. Mitchell under the Executive Incentive Plan for the 2007-2009 performance cycle vested in February 2010. In February 2010, the Compensation Committee determined that, for purposes of the Executive Incentive Plan, average return on equity over the 2007-2009 performance cycle was greater than 18%, resulting in a payout to each of these named executive officers of that number of Common Shares equal to the number of share units awarded for the performance cycle multiplied by the maximum performance percentage for the performance cycle of 200%.

 

In February 2005, the Compensation Committee made awards to Messrs. Price and Lombardozzi and Ms. Mitchell under the Executive Incentive Plan with a five year performance cycle, to be paid in Common Shares with a value based on the achievement of certain returns on equity and a percentage of the named executive officer’s average base salary over the performance cycle. These awards for the 2005-2009 performance cycle vested in February 2010. In February 2010, the Compensation Committee determined that, for purposes of the Executive Incentive Plan, average return on equity over the 2005-2009 performance cycle was 13.6%, resulting in a payout to each of these named executive officers of that number of Common Shares equal to his or her average base salary over the five year period covered by the award multiplied by the performance percentage for the performance cycle of 118.4% for Mr. Price and 44.4% for Mr. Lombardozzi and Ms. Mitchell, divided by the fair market value per share on the vesting date of $36.90 per share.

 

The share unit awards made to each of Messrs. Price, Lombardozzi and Porter and Ms. Mitchell under the Executive Incentive Plan for the 2008-2010 performance cycle vested in February 2011. In February 2011, the Compensation Committee determined that, for purposes of the Executive Incentive Plan, average return on equity over the 2008-2010 performance cycle was 15.5%, resulting in a payout to each of these named executive officers of that number of Common Shares equal to the number of share units awarded for the performance cycle multiplied by the performance percentage for the performance cycle of 159.1%.

 

Perquisites

 

All of our named executive officers except for Ms. Mitchell, who is the President and Chief Executive Officer of Platinum US, are expatriate employees based in Bermuda. We follow the practice of many Bermuda companies of providing allowances to and paying certain expenses of expatriate executives, including housing and automobile allowances and costs of airfare for a specified number of visits by them and their families to their home countries. The amounts paid in respect of these allowances are driven primarily by market conditions in Bermuda and the income taxes that may be assessed on such allowances. We also pay the membership fees associated with a club membership in Bermuda, which fees did not exceed $8,015 for any named executive officer in 2010.

 

In connection with the amendment and restatement of his employment agreement in July 2010, Mr. Price agreed to reduce his base salary, which also reduces the value of his target bonus and the target value of his Executive Incentive Plan awards, and to reduce his housing allowance and eliminate other expatriate benefits

he currently receives, effective in August 2011. The Compensation Committee considered that these actions offset the estimated cost to us of providing Mr. Price with round trip travel by corporate jet on up to twenty-four occasions per calendar year between his home in the United States and our corporate headquarters in Bermuda, which we will begin providing in August 2011.

 

In connection with his repatriation to the United States and employment by PASI beginning in September 2011, Mr. Lombardozzi’s expatriate benefits, including his housing and automobile allowances and home leave benefit, will be discontinued.

 

Other Items Comprising All Other Compensation

 

In addition to the elements of compensation discussed above, we make employer contributions to our various qualified and non-qualified defined contribution savings and profit-sharing plans totaling 10% of base salary for each of our employees, including our named executive officers. We do not have a defined benefit pension plan or any supplemental retirement benefits.

 

As a result of the enactment of Section 457A of the Internal Revenue Code, the non-qualified retirement savings plan of Platinum US was amended in 2008 to provide that our Bermuda-based named executive officers who are also United States taxpayers (Messrs. Price, Lombardozzi, Porter and Krantz) are, or were, not eligible to participate therein for any periods after December 31, 2008. Instead, each of those named executive officers receives or received an amount in cash equal to the amount we would have contributed to the non-qualified retirement savings plan for him.

 

Other Considerations

 

Benefits Upon Termination of Employment

 

Employment Agreements.  Each of our named executive officers also has an employment agreement that provides for a lump-sum separation payment and certain other severance benefits in the event that his or her employment is terminated by us without cause or by the executive for good reason or upon expiration of the term of employment. These benefits are described under “Executive Compensation — Potential Payments Upon Termination or Change in Control — Severance Arrangements Under Employment Agreements” below. These provisions were included in the employment agreements in order to attract qualified professionals and we believe that the provisions have continued utility for us in that the separation payment that is required to be made to each of our named executive officers is fixed in advance at a reasonable level and is payable only upon execution of a release by the named executive officer in favor of us. In addition, the lump-sum separation payment is approximately equal to one year’s base salary and target bonus, which we believe is a reasonable length of time for the named executive officer to secure employment in an equivalent executive position.

 

Accelerated Vesting.  As discussed above under “Retention,” our long-term incentives are subject to delayed vesting coupled with forfeiture for certain departures prior to vesting. These awards are also subject to accelerated vesting or prorated payment in the circumstances described under “Executive Compensation — Potential Payments Upon Termination or Change in Control — Accelerated Vesting and Prorated Payment of Incentives” below. These circumstances include a termination of employment after a change in control, death or disability, and termination of employment by us without cause or by the named executive officer with good reason, among other circumstances. We believe that these acceleration and proration provisions preserve previously-earned long-term incentive compensation, protect against uncertainty in change in control situations and promote named executive officer dedication and stability by reducing economic concerns in times of personal and Company change.

 

Change in Control Severance Plan.  Each of the named executive officers is entitled to certain severance benefits under the CIC Plan in the event of a termination of employment by us without cause or by the executive for good reason during the two-year period following a change in control. Any amounts payable to a participant in the CIC Plan under any other plan or agreement with us on account of the participant’s termination will be offset against payments made to the participant pursuant to the CIC Plan to the extent necessary to avoid duplication of benefits. We believe that the CIC Plan secures the continued services,

dedication and objectivity of our named executive officers in the event of any possible or actual change in control without concern as to whether such named executive officers might be hindered or distracted by personal uncertainties regarding their continued employment and risks created thereby. These severance benefits are described under “Executive Compensation — Potential Payments Upon Termination or Change in Control — Change in Control Severance Plan” below.

 

U.S. Tax Related Considerations

 

Section 162(m) of the Internal Revenue Code imposes a limitation of $1 million per year on the United States corporate income tax deduction for compensation paid to our named executive officers that are employees of our United States-based subsidiaries. Among other exceptions, the deduction limit does not apply to compensation that meets the specified requirements for “performance-based compensation.” Of our named executive officers, only Ms. Mitchell is employed by one of our United States-based subsidiaries. The 2010 Share Incentive Plan was designed to meet the requirements for performance-based compensation. Our Section 162(m) Performance Incentive Plan, which can be utilized for incentive compensation awards to Ms. Mitchell under the Annual Incentive Plan and the Executive Incentive Plan, was also designed to meet the requirements for performance-based compensation. Nevertheless, the Compensation Committee retains the flexibility under circumstances that it considers appropriate to pay compensation that may not be deductible by our United States-based subsidiaries under Section 162(m).

 

Conclusion

 

Our compensation program provides our named executive officers with an opportunity to ultimately earn total annual compensation equal to approximately three to five times their base salaries if financial targets are met and up to a maximum of approximately four to seven times their base salaries for superior financial results. Taken together, the elements of the program are designed to achieve several goals. Base salary, which is paid throughout the year in cash, provides a current stream of income to our named executive officers. Our Annual Incentive Plan promotes the achievement of short-term financial results. The Executive Incentive Plan promotes the achievement of long-term financial results over a multi-year period. All of the other long-term incentives are paid in Common Shares to promote a focus on the preservation and appreciation of our share price over time. Our compensation program is also designed to provide significant retention incentives by paying compensation that we believe is competitive in the industry and that vests over time. All of these elements work together, providing a balanced approach to achieving our business goal of attractive long-term returns for our shareholders, while establishing us as a disciplined risk manager and market leader in selected classes of property and casualty reinsurance.

 

The following table sets forth information relating to compensation of the Chief Executive Officer, the Chief Financial Officers who served during the fiscal year ended December 31, 2010 and our three next most highly compensated executive officers for 2010 who were serving as executive officers at the end of the fiscal year ended December 31, 2010, collectively referred to in this proxy statement as the “named executive officers.”

 

 

 

 

 

The following table shows the equity and non-equity awards granted to the named executive officers under our equity and non-equity incentive plans as well all other share and option awards during the fiscal year ended December 31, 2010.

 

 

 

 

 

The awards and other compensation items set forth in the Summary Compensation Table and the Grants of Plan-Based Awards Table are described in more detail above under “Executive Compensation — Compensation Discussion and Analysis” in this proxy statement. Following is a description of the material terms of our employment agreements and arrangements with each of our named executive officers except for severance arrangements, which are described under “Executive Compensation — Potential Payments Upon Termination or Change in Control — Severance Arrangements under Employment Agreements” below.

 

Michael D. Price

 

Mr. Price entered into an amended and restated employment agreement with us dated July 22, 2010 pursuant to which he serves as our Chief Executive Officer. The term of Mr. Price’s employment under his employment agreement commenced on July 22, 2010 and will end on July 31, 2013 (which date will be automatically extended from year to year unless written notice is provided by one party to the other, at least one hundred and twenty days prior to the end of the term, that the term shall not be extended). Pursuant to his employment agreement, Mr. Price receives a base salary at the rate of $980,000 per year through July 31, 2011 and will receive a base salary at the rate of $900,000 per year beginning on August 1, 2011. Mr. Price is also eligible to receive an annual incentive bonus pursuant to the terms of the Annual Incentive Plan with a target equal to 150% of earned base salary and a range of 0% to 200% of target, depending upon the achievement of performance objectives established under the Annual Incentive Plan, provided that the Compensation Committee in its sole discretion will determine the actual annual incentive bonus paid to Mr. Price. Mr. Price’s employment agreement also provides that on or prior to February 28 of each calendar year during the term of the agreement, he will participate in the Executive Incentive Plan, with an expected target annual award opportunity of 100% of his base salary if we achieve certain performance objectives over a three-year period. The actual amount, terms and conditions and the form of payment of any Executive Incentive Plan award will be determined by the Compensation Committee in its sole discretion. Mr. Price is required to maintain ownership of 100,000 Common Shares in accordance with our share ownership guidelines. In addition, he receives a housing and automobile allowance of $40,700 per month through July 31, 2011, a housing allowance of $10,000 per month thereafter and reimbursement for first-class roundtrip air travel for him and his family to the United States on up to four occasions in 2010 and up to two occasions in 2011 through July 31, 2011, and he is eligible to participate in the employee benefit plans, arrangements and perquisites that are generally available to our senior executives. Beginning on August 1, 2011, we will provide Mr. Price with travel by corporate jet for up to 24 round trips per year (prorated for any partial calendar year) for travel between Mr. Price’s home in the United States and our corporate headquarters.

 

Allan C. Decleir

 

Mr. Decleir entered into an employment agreement with us dated April 29, 2010 in connection with his appointment as our Executive Vice President effective April 29, 2010 and Chief Financial Officer effective June 1, 2010. The term of Mr. Decleir’s employment under his employment agreement commenced on April 29, 2010 and will end on April 29, 2013 (which date will be automatically extended from year to year, unless written notice is provided by one party to the other at least thirty days prior to the end of the current term, that the term shall not be so extended). Pursuant to his employment agreement, Mr. Decleir receives a base salary at the rate of $325,000 per year and is eligible to receive an annual incentive bonus pursuant to the terms of the Annual Incentive Plan with a target equal to 75% of earned base salary and a range of 0% to 200% of target, depending upon the achievement of performance objectives established under the Annual Incentive Plan. In February 2011, Mr. Decleir’s base salary was increased to the rate of $375,000 per year as of March 1, 2011. The annual incentive bonus will be payable 50% in Common Shares and 50% in cash until Mr. Decleir meets his target share ownership level; thereafter, the annual incentive bonus will be payable 100% in cash. Pursuant to his employment agreement, on April 29, 2010, Mr. Decleir received an award of 5,772 share units under the

2010 Share Incentive Plan valued at approximately $212,000 on the date of grant. This award will vest in four equal installments on April 29 of each of 2011, 2012, 2013 and 2014. Mr. Decleir’s employment agreement also provides that, commencing in 2011, it is expected that Mr. Decleir will be eligible to receive annual equity awards under the 2010 Share Incentive Plan with a target equal to 50% of his earned base salary and that he will participate in the Executive Incentive Plan, with an expected target annual award opportunity of 50% of his base salary if we achieve certain performance objectives over a three-year period. The actual amount, terms and conditions and the form of payment of any Executive Incentive Plan award will be determined by the Compensation Committee in its sole discretion. Mr. Decleir is required to accumulate 30,000 Common Shares in accordance with our share ownership guidelines. In addition, he receives a housing and automobile allowance of $15,700 per month and reimbursement for business class roundtrip air travel to Brazil for him and his family on up to three occasions per year, and he is eligible to participate in the employee benefit plans, arrangements and perquisites that are generally available to our senior executives.

 

Robert S. Porter

 

Mr. Porter entered into an amended and restated employment agreement dated October 27, 2010 with Platinum Bermuda pursuant to which he serves as Chief Executive Officer of Platinum Bermuda. The term of Mr. Porter’s employment under his employment agreement commenced on March 1, 2006 and will end on July 31, 2013 (which date will be automatically extended from year to year, unless written notice is provided by one party to the other, at least ninety days prior to the end of the term, that the term shall not be so extended). Pursuant to his employment agreement, Mr. Porter receives a base salary at the rate of $500,000 per year and is eligible to receive an annual incentive bonus pursuant to the terms of the Annual Incentive Plan with a target equal to 125% of base salary and a range of 0% to 200% of target, depending upon the achievement of performance objectives established under the Annual Incentive Plan. Mr. Porter’s employment agreement also provides that he will participate in the Executive Incentive Plan, with an expected target annual award opportunity of 100% of his base salary if we achieve certain performance objectives over a three-year period. The actual amount, terms and conditions and the form of payment of any Executive Incentive Plan award will be determined by the Compensation Committee in its sole discretion. Mr. Porter is required to maintain ownership of 50,000 Common Shares in accordance with our share ownership guidelines. In addition, he receives a housing and living and automobile allowance of $36,700 per month and reimbursement for first-class roundtrip air travel to the United States for him and his family on up to four occasions per year, and he is eligible to participate in the employee benefit plans, arrangements and perquisites that are generally available to our senior executives.

 

Michael E. Lombardozzi

 

Mr. Lombardozzi entered into an amended and restated employment agreement with us dated July 22, 2010 pursuant to which he serves as our Executive Vice President, Chief Administrative Officer and General Counsel. The term of Mr. Lombardozzi’s employment under this employment agreement commenced on November 1, 2005 and will terminate on August 31, 2011. Pursuant to his employment agreement, Mr. Lombardozzi receives a base salary at the rate of $500,000 per year and is eligible to receive an annual incentive bonus pursuant to the terms of the Annual Incentive Plan with a target equal to 100% of base salary and a range of 0% to 200% of target, depending upon the achievement of performance objectives established under the Annual Incentive Plan. Mr. Lombardozzi’s employment agreement also provides that he will participate in the Executive Incentive Plan, with an expected target annual award opportunity of 100% of his base salary if we achieve certain performance objectives over a three-year period. The actual amount, terms and conditions and the form of payment of any Executive Incentive Plan award will be determined by the Compensation Committee in its sole discretion. Mr. Lombardozzi is required to maintain ownership of 50,000 Common Shares in accordance with our share ownership guidelines. In addition, he receives a housing and automobile allowance of $40,700 per month and reimbursement for first-class roundtrip air travel to the United States for him and his family on up to four occasions per year (prorated for any partial year during the term), and he is eligible to participate in the employee benefit plans, arrangements and perquisites that are generally available to our senior executives.

 

Mr. Lombardozzi’s current employment agreement provides that PASI and Mr. Lombardozzi will enter into an employment agreement effective September 1, 2011, pursuant to which Mr. Lombardozzi will serve as Chief Executive Officer and Chief Legal Officer of PASI and will be principally based in the offices of PASI located

in Stamford, Connecticut. The term of Mr. Lombardozzi’s employment under his employment agreement with PASI will end on September 1, 2013 (which date will be automatically extended from year to year, unless written notice is provided by one party to the other, at least ninety days prior to the end of the term, that the term shall not be so extended). In connection with the commencement of Mr. Lombardozzi’s employment with PASI, PASI will reimburse Mr. Lombardozzi up to a maximum of $50,000 for the costs and expenses incurred by him in connection with the relocation of his family from Bermuda. Pursuant to his employment agreement with PASI, Mr. Lombardozzi will receive the same base salary and will be eligible to receive the same annual incentive bonus under the Annual Incentive Plan and target annual award opportunity under the Executive Incentive Plan as he receives under his current employment agreement. In addition, he will be required to maintain ownership of 50,000 Common Shares in accordance with our share ownership guidelines. Mr. Lombardozzi will no longer receive expatriate benefits, including a housing or automobile allowance or reimbursement for air travel to the United States for him and his family, but he will continue to be eligible to participate in the employee benefit plans, arrangements and perquisites that are generally available to our senior executives.

 

H. Elizabeth Mitchell

 

Ms. Mitchell entered into an amended and restated employment agreement dated October 27, 2010 with Platinum US pursuant to which she serves as President and Chief Executive Officer of Platinum US. The term of Ms. Mitchell’s employment under her employment agreement commenced on October 27, 2010 and will end on July 31, 2013 (which date will be automatically extended from year to year, unless written notice is provided by one party to the other, at least ninety days prior to the end of the term, that the term shall not be so extended). Pursuant to her employment agreement, Ms. Mitchell receives a base salary at the rate of $475,000 per year and is eligible to receive an annual incentive bonus pursuant to the terms of the Annual Incentive Plan with a target equal to 125% of base salary and a range of 0% to 200% of target, depending upon the achievement of performance objectives established under the Annual Incentive Plan. Ms. Mitchell’s employment agreement also provides that she will participate in the Executive Incentive Plan, with an expected target annual award opportunity of 100% of her base salary if we achieve certain performance objectives over a three-year period. The actual amount, terms and conditions and the form of payment of any Executive Incentive Plan award will be determined by the Compensation Committee in its sole discretion. Ms. Mitchell is required to maintain ownership of 50,000 Common Share in accordance with our share ownership guidelines. In addition, she is eligible to participate in the employee benefit plans, arrangements and perquisites that are generally available to our senior executives.

 

James A. Krantz

 

Mr. Krantz entered into an employment agreement with us dated June 1, 2007 pursuant to which he served as our Executive Vice President and Chief Financial Officer. The term of Mr. Krantz’s employment under his employment agreement commenced on June 1, 2007 and ended on April 29, 2010, when it was superseded by the Retirement Agreement as described below. Pursuant to his employment agreement, Mr. Krantz received a base salary at a minimum rate of $365,000 per year and was eligible to receive an annual incentive bonus pursuant to the terms of the Annual Incentive Plan with a target equal to 75% of earned base salary and a range of 0% to 200% of target, depending upon the achievement of performance criteria established under the Annual Incentive Plan. In July 2008, Mr. Krantz’s base salary was increased to the rate of $425,000 per year as of March 1, 2008 and his target for the annual incentive bonus pursuant to the Annual Incentive Plan was increased to 100% of earned base salary with a range of 0% to 200% of target with respect to awards made in respect of 2009 and future years. Mr. Krantz’s employment agreement also provided that he would participate in the Executive Incentive Plan, with an expected target annual award opportunity of 75% of his base salary if we achieved certain performance objectives over a multi-year period. In July 2008, Mr. Krantz’s target annual award opportunity under the Executive Incentive Plan was increased to 100% of his base salary for awards made in respect of 2009 and future years. Mr. Krantz was also required to accumulate 30,000 Common Shares in accordance with our share ownership guidelines. In addition, he received certain expatriate benefits, including housing and automobile allowances, to compensate for the costs of living in Bermuda.

 

Mr. Krantz resigned as Chief Financial Officer on May 31, 2010 and retired from the Company on August 10, 2010 (the “Retirement Date”). On April 29, 2010 in connection with his retirement, Mr. Krantz entered into a

letter agreement with the Company dated April 29, 2010 (the “Retirement Agreement”), which superseded his employment agreement, and a consulting agreement with PASI dated April 29, 2010 (the “Consulting Agreement”). Pursuant to the Retirement Agreement, during the transition period from April 29, 2010 to the Retirement Date, Mr. Krantz continued to receive a base salary at the rate of $425,000 per year and to participate in our employee benefit plans, arrangements and perquisites and he continued to receive a housing and automobile allowance of $24,700 per month through July 31, 2010. The Retirement Agreement and the Consulting Agreement are more fully described below under “Executive Compensation — Potential Payments Upon Termination or Change in Control — Payments and Benefits to Mr. Krantz Upon Retirement.”

 

The following table sets forth information with respect to the named executive officers concerning the outstanding equity awards held as of December 31, 2010.

 

 

 

The following table sets forth information with respect to the named executive officers concerning option exercises and share units and restricted shares vested on an aggregated basis for the fiscal year ended December 31, 2010.

 

 

 

 

The following table sets forth information for the named executive officers with respect to each defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified for the fiscal year ended December 31, 2010.