UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
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Definitive Proxy Statement
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SEABRIGHT INSURANCE HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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SeaBright
Insurance Holdings, Inc.
1501
4
th
Avenue, Suite 2600
Seattle, Washington 98101
To our Stockholders:
We are pleased to invite you to attend the annual meeting of
stockholders of SeaBright Insurance Holdings, Inc. to be held on
Tuesday, May 20, 2008, at 9:00 a.m. Pacific Time
in the Alki Room on the
3
rd
floor of the Century Square Building located at 1501 4th Avenue,
Seattle, WA 98101.
Details regarding admission to the meeting and the business to
be conducted are more fully described in the accompanying notice
of annual meeting of stockholders and proxy statement. The
notice of annual meeting of stockholders, proxy statement and
proxy are being mailed to stockholders on or about
April 17, 2008.
Your vote is important. Whether or not you plan to attend the
annual meeting, we hope you will vote as soon as possible by
following the instructions on the enclosed proxy card or voting
instruction card. Voting by written proxy will ensure your
representation at the annual meeting regardless of whether you
attend in person.
Thank you for your ongoing support of and continued interest in
SeaBright.
Sincerely,
John G. Pasqualetto
Chairman, President and Chief Executive Officer
2008
ANNUAL MEETING OF STOCKHOLDERS
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
TABLE OF CONTENTS
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The annual meeting of stockholders of SeaBright Insurance
Holdings, Inc. (SeaBright or the
Company) will be held on Tuesday, May 20, 2008,
at 9:00 a.m. Pacific Time in the Alki Room on the 3rd
floor of the Century Square Building located at 1501 4th Avenue,
Seattle, WA 98101, for the following purposes:
1. To elect seven directors to the Board of Directors;
2. To ratify the Audit Committees appointment of KPMG
LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2008; and
3. To transact any other business as may properly come
before the meeting or any adjournment or postponement thereof.
Our Board of Directors recommends you vote
FOR
the election of directors and
FOR
the
ratification of the appointment of KPMG LLP as our independent
registered public accounting firm.
Stockholders of record at the close of business on
March 26, 2008, are entitled to notice of and to vote at
the annual meeting and any adjournment or postponement thereof.
Whether or not you expect to be present at the meeting, please
vote your shares by following the instructions on the enclosed
proxy card or voting instruction card. If your shares are held
in the name of a bank, broker or other record holder, telephone
or Internet voting may be available to you only if offered by
them. Their procedures should be described on the voting form
they send to you. Any person voting by proxy has the power to
revoke it at any time prior to its exercise at the meeting in
accordance with the procedures described in the accompanying
proxy statement.
IF YOU
PLAN TO ATTEND:
Please note that space limitations make it necessary to
limit attendance to stockholders. Registration will begin at
8:00 a.m. Each stockholder may be asked to present
valid picture identification, such as a drivers license or
passport. Stockholders holding stock in brokerage accounts
(street name holders) will need to bring a copy of
the voting instruction card or a brokerage statement reflecting
stock ownership as of the record date. Cameras, recording
devices and other electronic devices will not be permitted at
the meeting.
By Order of the Board of Directors,
D. Drue Wax
Senior Vice President, General Counsel and
Secretary
Seattle, Washington
April 17, 2008
QUESTIONS
AND ANSWERS
Proxy
Materials
Why am
I receiving this proxy statement?
SeaBright is soliciting proxies for the 2008 annual meeting of
stockholders. You are receiving a proxy statement because you
owned shares of SeaBright common stock on March 26, 2008,
the record date, and that entitles you to vote at the meeting.
By use of a proxy, you can vote whether or not you attend the
meeting. This proxy statement describes the matters on which we
would like you to vote and provides information on those matters
so that you can make an informed decision.
What
information is contained in this proxy statement?
The information in this proxy statement relates to the proposals
to be voted on at the annual meeting, the voting process,
SeaBrights Board of Directors (the Board of
Directors or the Board) and Board committees,
the compensation of directors and executive officers for the
2007 fiscal year and other required information.
Will I
receive a copy of SeaBrights annual report?
A copy of our 2007 Annual Report on
Form 10-K
and a letter from John G. Pasqualetto, our Chairman, President
and Chief Executive Officer, are enclosed.
Stockholders may request another free copy of our 2007 Annual
Report on
Form 10-K
from:
SeaBright Insurance Holdings, Inc.
Attn: Investor Relations
1501 4th Avenue, Suite 2600
Seattle, Washington 98101
(206) 269-8500
Alternatively, stockholders can access the 2007 Annual Report on
Form 10-K
and other financial information in the Investor Relations
section of SeaBrights web site at www.sbic.com. SeaBright
will also furnish any exhibit to the 2007
Form 10-K
if specifically requested.
Voting
Information
What
will I be voting on?
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Election of directors (see Proposals to be Voted
On Proposal No. 1: Election of
Directors).
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Ratification of the Audit Committees appointment of KPMG
LLP as independent registered public accounting firm for the
year ending December 31, 2008 (see Proposals to be
Voted On Proposal No. 2: Ratification of
the Audit Committees Appointment of KPMG LLP as
Independent Registered Public Accounting Firm for the Year
Ending December 31, 2008).
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How
does the Board of Directors recommend that I vote?
SeaBrights Board recommends that you vote your shares
FOR each of the nominees to the Board and
FOR the ratification of our independent registered
public accounting firm for the 2008 fiscal year.
How do
I vote?
If you are a holder of record (that is, your shares are
registered in your own name with our transfer agent at the close
of business on March 26, 2008), you can vote either
in
person
at the annual meeting or
by proxy
without
attending the annual meeting. We urge you to vote by proxy even
if you plan to attend the annual meeting so that we will know as
soon as possible that enough votes will be present for us to
hold the meeting. If you attend the meeting in person, you may
vote at the meeting and your proxy will not be counted.
If you hold your shares in street name, you must
either direct the bank, broker or other record holder of your
shares as to how to vote your shares, or obtain a proxy from the
bank, broker or other record holder to vote at the meeting.
Please refer to the voting instruction cards used by your bank,
broker or other record holder for specific
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instructions on methods of voting, including by telephone or
using the Internet if such services are offered by your bank,
broker or other record holder.
Your shares will be voted as you indicate. If you return the
proxy card but you do not indicate your voting preferences, then
the individuals named on the proxy card will vote your shares in
accordance with the recommendations of the Board. The Board and
management do not now intend to present any matters at the
annual meeting other than those outlined in the notice of the
annual meeting. Should any other matter requiring a vote of
stockholders arise, stockholders returning the proxy card confer
upon the individuals named on the proxy card discretionary
authority to vote the shares represented by such proxy on any
such other matter in accordance with their best judgment.
Can I
change my vote?
Yes. If you are a holder of record, at any time before your
proxy is voted, you may change your vote by:
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revoking it by written notice to the Secretary of SeaBright at
the address on the cover of this proxy statement;
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delivering a later-dated proxy; or
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voting in person at the meeting.
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If you hold your shares in street name, please refer
to the information forwarded by your bank, broker or other
record holder for procedures on revoking or changing your proxy.
How
many votes do I have?
You will have one vote for every share of SeaBright common stock
that you owned on March 26, 2008.
How
many shares are entitled to vote?
There were 20,855,102 shares of SeaBright common stock
outstanding as of the record date and entitled to vote at the
meeting. Each share is entitled to one vote.
How
many shares must be present to hold the meeting?
Under SeaBrights Amended and Restated By-Laws, holders of
a majority of the outstanding shares of capital stock entitled
to vote must be present, in person or by proxy, to hold the
annual meeting.
How
many votes are needed for the proposals to pass?
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The seven nominees for director who receive the highest number
of votes at the annual meeting will be elected.
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The affirmative vote of a majority of the shares present in
person or by proxy must be cast in favor of the ratification of
the appointment of the independent registered public accounting
firm.
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What
if I vote withhold or
abstain?
In the election of directors, you may vote FOR all
or some of the nominees or you may vote to WITHHOLD
with respect to one or more of the nominees. A vote to
WITHHOLD on the election of directors will have no
effect on the outcome.
For the other items of business, you may vote FOR,
AGAINST or ABSTAIN. A vote to
ABSTAIN on the other items of business will have the
same effect of a vote AGAINST.
If you vote ABSTAIN, your shares will be counted as
present for purposes of determining whether enough votes are
present to hold the annual meeting.
Is
cumulative voting permitted for the election of
directors?
No.
What
if I dont return my proxy card and dont attend the
annual meeting?
If you are a holder of record and you dont vote your
shares, your shares will not be voted.
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If you hold your shares in street name, and you
dont give your bank, broker or other record holder
specific voting instructions, the votes will be broker
non-votes. Broker non-votes will have no
effect on the vote for the election of directors or any other
items of business because they are not counted or deemed to be
represented for determining whether stockholders have approved
the proposal.
What
happens if a nominee for director declines or is unable to
accept election?
If you vote by proxy, and if unforeseen circumstances make it
necessary for the Board to substitute another person for a
nominee, the individuals named on the proxy card will vote your
shares for that other person.
Is my
vote confidential?
Yes. Your voting records will not be disclosed to us except:
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as required by law;
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to the inspector of election; or
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if the election is contested.
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If you are a holder of record, and you write comments on your
proxy card, your comments will be provided to us, but your vote
will remain confidential.
Stock
Ownership Information
What
is the difference between holding shares as a stockholder of
record and as a beneficial owner?
Most SeaBright stockholders hold their shares through a bank,
broker or other record holder rather than directly in their own
name. As summarized below, there are some distinctions between
shares held of record and those owned beneficially.
Stockholder
of Record
If your shares are registered directly in your name with
SeaBrights transfer agent, Computershare
Trust Company, N.A. (Computershare), you are
considered, with respect to those shares, the stockholder of
record, and these proxy materials are being sent directly to you
by SeaBright. As the stockholder of record, you have the right
to grant your voting proxy directly to SeaBright or to a third
party, or to vote in person at the meeting. SeaBright has
enclosed a proxy card for you to use.
Beneficial
Owner
If your shares are held in a brokerage account or by another
nominee, you are considered the beneficial owner of shares held
in street name, and these proxy materials are being
forwarded to you together with a voting instruction card on
behalf of your bank, broker or other record holder. As the
beneficial owner, you have the right to direct your bank, broker
or other record holder how to vote and you also are invited to
attend the annual meeting. Your bank, broker or other record
holder has enclosed or provided voting instructions for you to
use in directing the bank, broker or other record holder how to
vote your shares.
Since a beneficial owner is not the stockholder of record, you
may not vote these shares in person at the meeting unless you
obtain a legal proxy from the bank, broker or other
record holder that holds your shares, giving you the right to
vote the shares at the meeting.
What
if I have questions for SeaBrights transfer
agent?
Please contact Computershare at the phone number or address
listed below, with questions concerning stock certificates,
transfer of ownership or other matters pertaining to your stock
account.
Computershare Trust Company, N.A.
c/o Computershare
Investor Services
P.O. Box 43078
Providence, RI
02940-3078
(781) 575-3400
4
PROPOSALS TO
BE VOTED ON
Proposal No. 1:
Election of Directors
There are seven nominees for election to our Board of Directors
this year. Messrs. Pasqualetto and Chung have served on our
Board of Directors since 2003. Messrs. Feldman, Josephson
and Morvis have served on our Board of Directors since 2004.
Mr. Edwards has served on our Board of Directors since 2006
and Mr. Rice has served on our Board of Directors since
2007. Information regarding the business experience of each
nominee is provided below. Each director is elected annually to
serve until the next annual meeting or until his or her
successor is elected and qualified or until his or her earlier
death, resignation or removal. There are no family relationships
among our executive officers and directors.
If you sign your proxy or voting instruction card but do not
give instructions with respect to voting for directors, your
shares will be voted for the seven persons recommended by the
Board. If you wish to give specific instructions with respect to
voting for directors, you may do so by indicating your
instructions on your proxy or voting instruction card.
All of the nominees have indicated to SeaBright that they will
be available to serve as directors. In the event that any
nominee should become unavailable, however, the proxy holders,
John G. Pasqualetto (our Chairman, President and Chief Executive
Officer), Joseph S. De Vita (our Senior Vice President, Chief
Financial Officer and Assistant Secretary) and D. Drue Wax (our
Senior Vice President, General Counsel and Secretary), will vote
for a nominee or nominees designated by the Board, unless the
Board chooses to reduce the number of directors serving on the
Board.
Our Board recommends a vote FOR the election to
the Board of the each of the following nominees.
Vote
Required
The seven persons receiving the highest number of
FOR votes represented by shares of SeaBright common
stock present in person or represented by proxy at the annual
meeting will be elected.
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John G. Pasqualetto
Director since 2003
Age 65
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Mr. Pasqualetto has served as the Chairman of our Board of
Directors since September 2004 and as our President and Chief
Executive Officer and one of our directors since July 2003. In
addition, he has served as Chairman of the Board of Directors,
President and Chief Executive Officer of our insurance company
subsidiary, SeaBright Insurance Company, since September 2003.
He was formerly President and Chief Executive Officer of Eagle
Pacific Insurance Company and Pacific Eagle Insurance Company
(the Eagle Entities), President of Kemper Employers
Group and Senior Vice President of the Kemper insurance
companies, holding these positions concurrently since joining
Kemper in 1998. Mr. Pasqualettos prior experience
includes serving as President of American International
Groups (AIG) workers compensation
specialty group, co-founding Great States Insurance Company, a
California-based specialty workers compensation company,
and holding executive positions with Argonaut Insurance Company
and the State Compensation Insurance Fund of California.
Mr. Pasqualetto has a B.A. from California State University
at Northridge.
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Peter Y. Chung
Director since 2003
Age 40
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Mr. Chung has served as a director since June 2003.
Mr. Chung is a managing partner and member of various
entities affiliated with Summit Partners, a private equity and
venture capital firm, where he has been employed since August
1994. Mr. Chung also serves as a director of NightHawk
Radiology Holdings, Inc., a provider of teleradiology services,
and several privately held companies. In addition, he has served
as a director of our insurance company subsidiary, SeaBright
Insurance Company, since September 2003. Mr. Chung received
an A.B. from Harvard University and an M.B.A. from Stanford
University.
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Joseph A. Edwards
Director since 2006
Age 57
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Mr. Edwards has served as a director since November 2006.
In addition, he has served as a director of our insurance
company subsidiary, SeaBright Insurance Company, since November
2006. He has been a workers compensation consultant since
1991. Mr. Edwards administers workers compensation
self-insured trusts in the State of Maine and is a consultant
for the American Insurance Association. He also is the Executive
Director of the Greater Portland Five Trust. From 1987 to 1991,
Mr. Edwards was Superintendent of Insurance for the State
of Maine. Mr. Edwards holds a J.D. degree from Yale Law
School and an S.B. degree from the Massachusetts Institute of
Technology.
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William M. Feldman
Director since 2004
Age 54
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Mr. Feldman has served as a director since November 2004.
In addition, he has served as a director of our insurance
company subsidiary, SeaBright Insurance Company, since November
2004. Mr. Feldman is the co-owner, Chairman and Chief
Executive Officer of Feldman, Ingardona & Co., a
registered investment advisor and securities broker/dealer that
provides asset management and investment advisory services to
high net worth families and institutions. He has held these
positions since organizing the company in 1997. Mr. Feldman
received a B.S. in Accountancy from the University of Illinois,
Urbana, and is a member of the American Institute of Certified
Public Accountants.
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Mural R. Josephson
Director since 2004
Age 59
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Mr. Josephson has served as a director since July 2004.
Following his retirement as Senior Vice President and Chief
Financial Officer of Lumbermens Mutual Casualty Company
(LMC) and as an officer and director of certain
affiliated entities including the Eagle Entities, Kemper
Employers Insurance Company and PointSure Insurance Services,
Inc. in October 2002, where he served for approximately four
years, Mr. Josephson has served as a consultant to various
financial institutions. Prior to his role at LMC,
Mr. Josephson retired as a partner at KPMG LLP after
28 years at the firm. Mr. Josephson also serves as a
director of HealthMarkets, Inc., a provider of health, life and
related insurance products to the self-employed, individual and
student insurance markets, and Argo Group International
Holdings, Ltd., which specializes in commercial insurance and
property reinsurance. In addition, he has served as a director
of our insurance company subsidiary, SeaBright Insurance
Company, since March 2004. Mr. Josephson is a licensed
Certified Public Accountant in the State of Illinois, and is a
member of the American Institute of Certified Public Accountants.
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George M. Morvis
Director since 2004
Age 67
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Mr. Morvis has served as a director since July 2004.
Mr. Morvis is the founder, President and Chief Executive
Officer of Financial Shares Corporation, a Chicago-based
strategic consulting firm that works with financial services
companies worldwide to build shareholder value through strategic
marketing planning, business assessment, business intelligence,
research and financial communications. He serves on the boards
of directors of two privately held companies and has served as a
director of our insurance company subsidiary, SeaBright
Insurance Company, since March 2004. Mr. Morvis is a past
chairman and current board member of the Illinois Council on
Economic Education and a past president of the University of
Illinois Alumni Association. Mr. Morvis received a B.S.
degree from the University of Illinois, Urbana, an M.B.A. from
The George Washington University, Washington, DC, and is a
graduate of the Harvard Business School owner-president
management program.
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Michael D. Rice
Director since 2007
Age 65
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Mr. Rice has served as a director since September 2007. In
addition, he has served as a director of our insurance company
subsidiary since September 2007. Mr. Rice is retired
following a career spanning over 40 years with the Aon
Corporation and its predecessor companies. He was most recently
Executive Vice President at Aon and served prior to that as CEO
of several subsidiaries specializing in national distribution of
insurance products via independent brokers, wholesale brokerage,
managing general underwriters and direct marketing.
Mr. Rice presently serves as Regent Emeritus and Chairman
of the Ten Year Plan Committee for Loras College, Dubuque, Iowa.
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Proposal No. 2:
Ratification of the Audit Committees Appointment of KPMG
LLP as Independent Registered Public Accounting Firm for the
Year Ending December 31, 2008
The Audit Committee of the Board has appointed KPMG LLP as the
independent registered public accounting firm to audit
SeaBrights consolidated financial statements for the
fiscal year ending December 31, 2008. During fiscal year
2007, KPMG LLP served as SeaBrights independent registered
public accounting firm and also provided certain tax and other
audit-related services to us. See Audit Committee
Disclosure Principal Accounting Fees and
Services. Representatives of KPMG LLP are expected to
attend the annual meeting, where they will be available to
respond to appropriate questions and, if they desire, to make a
statement.
This proposal is put before the shareholders because, though the
shareholder vote is not binding on the Audit Committee, the
Board believes that it is good corporate practice to seek
shareholder ratification of the Audit Committees
appointment of the independent registered public accounting
firms. If the appointment of KPMG LLP is not ratified, the Audit
Committee will evaluate the basis for the shareholders
vote when determining whether to continue the firms
engagement, but may ultimately determine to continue the
engagement of the firm or another audit firm without
re-submitting the matter to shareholders. Even if the
appointment of KPMG LLP is ratified, the Audit Committee may in
its sole discretion terminate the engagement of the firm and
direct the appointment of another independent registered public
accounting firm at any time during the year.
Our Board recommends a vote FOR the ratification
of the appointment of KPMG LLP as SeaBrights independent
registered public accounting firm for fiscal year 2008. If the
appointment is not ratified, our Audit Committee will consider
whether it should select another independent registered public
accounting firm.
Vote
Required
Ratification of the appointment of KPMG LLP as SeaBrights
independent registered public accounting firm for fiscal year
2008 requires the affirmative vote of a majority of the shares
of SeaBright common stock present in person or represented by
proxy at the annual meeting.
7
BOARD OF
DIRECTORS AND CORPORATE GOVERNANCE
Board
Composition
Our amended and restated certificate of incorporation provides
that our Board of Directors shall consist of such number of
directors as determined from time to time by resolution adopted
by a majority of the total number of directors then in office.
Our Board of Directors currently consists of seven members.
Newly created directorships resulting from any increase in the
number of directors or any vacancies in the Board of Directors
may be filled only by the Board of Directors. The term of office
for each director will be until his successor is elected and
qualified or until his earlier death, resignation or removal.
Elections for directors will be held annually.
The Board has determined that each of the directors, with the
exception of Mr. Pasqualetto, is an independent
director, as independence is defined in Rule 4200(a)(15) of
the Nasdaq Stock Market LLC (Nasdaq) marketplace
rules. The Board has not adopted categorical standards in making
its determination of independence and instead relies on
standards set forth in the Nasdaq marketplace rules. In making
this determination, the Board of Directors considered the fact
that Mr. Josephson is on the board of directors of ARGO
Group International Holdings, which owns Argonaut Insurance
Company, from which we have a recoverable of approximately
$1.8 million pursuant to an agreement that was put in place
prior to the time that Mr. Josephson served on the board of
either company, and the Board found that this relationship is
not material to Mr. Josephsons service as a director
and did not impair his independence.
Our Board of Directors met eight times in
2007. Directors are expected to attend Board meetings
and meetings of committees on which they serve, and to spend the
time needed and meet as frequently as necessary to properly
discharge their responsibilities. During 2007, all of the
directors attended 75% or more of the meetings of the Board and
the committees on which they served. Directors are encouraged to
attend the annual meeting of stockholders and in 2007 all of the
directors then serving on the Board attended the annual meeting.
Communication
with the Board of Directors
Stockholders may communicate with the Board by directing
communications to the Secretary and should prominently indicate
on the outside of the envelope that the communication is
intended for the Board or for individual directors. In
accordance with instructions from the Board, the Secretary will
review all communications, will organize the communications for
review by the Board and will promptly forward communications
(other than communications unrelated to the operation of the
Company, such as advertisements, mass mailings, solicitations
and job inquiries) to the Board or individual directors.
Board
Committees
We currently have an Audit Committee, a Compensation Committee
and a Nominating and Corporate Governance Committee. Each
committee consists of three or four persons. All of the members
of our Audit Committee, Nominating and Corporate Governance
Committee and Compensation Committee are independent
as defined by Nasdaq marketplace rules and all of the members of
the Audit Committee are independent under the heightened
independence standards for Audit Committee members under the
Nasdaq marketplace rules and the rules of the
U.S. Securities and Exchange Commission (SEC).
Audit
Committee
The Audit Committee is comprised of Messrs. Josephson
(Chairman), Feldman and Morvis. The Audit Committee oversees our
accounting, financial reporting and control processes and the
audits of our financial statements, including: the preparation,
presentation and integrity of our financial statements; our
compliance with legal and regulatory requirements; our
independent registered public accounting firms
qualifications and independence; and the performance of our
independent registered public accounting firm. Our Audit
Committee, among other things:
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has sole responsibility to retain and terminate our independent
registered public accounting firm;
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pre-approves all audit and non-audit services performed by our
independent registered public accounting firm and the fees and
terms of each engagement; and
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8
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reviews our quarterly and annual audited financial statements
and related public disclosures, earnings press releases and
other financial information provided to analysts or rating
agencies.
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Each member of the Audit Committee has the ability to read and
understand fundamental financial statements. Our Board of
Directors has determined that Mural R. Josephson meets the
requirements for an audit committee financial expert
as defined by the rules of the SEC.
The charter of the Audit Committee, as amended on
February 21, 2007 and reviewed and approved without further
amendment on February 11, 2008, is available in the
Investor Relations section of our website at www.sbic.com.
Compensation
Committee
The Compensation Committee is comprised of Messrs. Chung
(Chairman), Feldman, Josephson and Rice. The Compensation
Committee oversees the administration of our benefit plans,
reviews and administers all compensation arrangements for
executive officers and establishes and reviews general policies
relating to the compensation and benefits of our officers and
employees. Certain of our executive officers, including the
Chief Executive Officer and the Secretary, may from time to time
attend Compensation Committee meetings when executive
compensation is discussed and evaluated by Compensation
Committee members. Each year, the Compensation Committee
receives from the Chief Executive Officer recommendations on
compensation for executive officers other than the Chief
Executive Officer, but the Compensation Committee retains full
discretion in determining executive officer compensation. The
Compensation Committee has the authority to retain and terminate
legal, accounting or other consultants or experts, including
compensation consultants, as it deems necessary in the
performance of its duties.
In April 2006, the Compensation Committee retained a nationally
recognized compensation consulting firm, Pearl Meyer &
Partners (PM&P), to provide information
regarding executive and director compensation practices and to
assist with review of compensation programs for executive
officers and directors. In February 2008, the Compensation
Committee retained Mercer Human Resource Consulting, a
nationally recognized consulting firm, to assist with a
comprehensive review of our overall compensation programs.
The charter of the Compensation Committee, as amended on
January 24, 2007 and reviewed and approved without further
amendment on February 15, 2008, is available in the
Investor Relations section of our website at www.sbic.com.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee is comprised
of Messrs. Morvis (Chairman), Chung, Edwards and Rice. The
Nominating and Corporate Governance Committees
responsibilities include identifying and recommending to the
Board appropriate director nominee candidates and providing
oversight with respect to corporate governance matters.
The policy of the Nominating and Corporate Governance Committee
is to consider individuals recommended by stockholders for
nomination as a director in accordance with the procedures
described under Other Matters Stockholder
Proposals and Director Nominations. The Nominating and
Corporate Governance Committee will consider all nominees for
election as directors of SeaBright, including all nominees
recommended by stockholders, in accordance with the mandate
contained in its charter. In evaluating candidates, the
Nominating and Corporate Governance Committee considers the
persons judgment, skills, experience, age, independence,
understanding of SeaBrights business or other related
industries as well as the needs of the Board, and will review
all candidates in the same manner, regardless of the source of
the recommendation. The Nominating and Corporate Governance
Committee will select qualified candidates and review its
recommendations with the Board.
SeaBright has not paid a fee to any third party to identify or
assist in identifying or evaluating potential nominees.
The charter of the Nominating and Corporate Governance
Committee, as amended on February 21, 2007 and reviewed and
approved without further amendment on February 13, 2008, is
available in the Investor Relations section of our website at
www.sbic.com.
9
The following table shows the current membership of each
committee and the number of meetings held by each committee in
2007:
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Nominating
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and Corporate
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Audit
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Compensation
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Governance
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Name of Director
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Committee
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Committee
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Committee
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Peter Y. Chung
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Chairman
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Member
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Joseph A. Edwards
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Member
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William M. Feldman
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Member
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Member
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Mural R. Josephson
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Chairman
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Member
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George M. Morvis
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Member
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Chairman
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Michael D. Rice
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Member
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Member
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Number of meetings in 2007
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11
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9
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4
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Compensation
Committee Interlocks and Insider Participation
No member of our Compensation Committee serves as a member of
the board of directors or compensation committee of any entity
that has one or more executive officers serving as a member of
our Board of Directors or Compensation Committee.
Code of
Ethics
We have adopted a code of ethics for senior financial employees
that applies to our Chief Executive Officer, Chief Financial
Officer, Principal Accounting Officer and other employees. The
code of ethics is available in the Investor Relations section of
our website at www.sbic.com and is available in print to any
stockholder who requests it. If we waive any material provision
of our code of ethics or substantively change the code, we will
disclose that fact on our website within four business days.
10
EXECUTIVE
OFFICERS AND KEY EMPLOYEES
The following table sets forth information concerning our
executive officers and key employees. Executive officers serve
at the request of the Board of Directors.
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Name
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Age
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Positions
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John G. Pasqualetto
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65
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Chairman, President and Chief Executive Officer
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Richard J. Gergasko
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49
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Executive Vice President Operations
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Joseph S. De Vita
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66
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Senior Vice President, Chief Financial Officer and Assistant
Secretary
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Marc B. Miller, M.D.
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51
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Senior Vice President and Chief Medical Officer
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Richard W. Seelinger
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48
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Senior Vice President Policyholder Services
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Jeffrey C. Wanamaker
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41
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Senior Vice President Underwriting
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D. Drue Wax
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57
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Senior Vice President, General Counsel and Secretary
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M. Philip Romney
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53
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Vice President Finance, Principal Accounting Officer
and Assistant Secretary
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James L. Borland, III
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46
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Vice President and Chief Information Officer
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Craig A. Pankow
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48
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President PointSure Insurance Services, Inc.
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Set forth below is information concerning our executive officers
who are not directors.
Richard J. Gergasko
has served as our Executive Vice
President Operations since July 2003. He also served
in this capacity and as the head of underwriting and research
and development at the Eagle Entities from May 1999 until
September 2003. Prior to joining the Eagle Entities,
Mr. Gergasko held a variety of positions in the insurance
industry, including Underwriting Vice President of AIGs
workers compensation specialty group, as well as various
actuarial positions at Crum and Forster, William M. Mercer, Inc.
and MBA, Inc. Mr. Gergasko holds a B.A. in Statistics from
Rutgers College, is a Fellow of the Casualty Actuarial Society
and a Member of the American Academy of Actuaries.
Joseph S. De Vita
has served as our Senior Vice President
and Chief Financial Officer since July 2003 and as our Assistant
Secretary since January 2005. From January 2003 until June 2003,
Mr. De Vita served as a consultant to the Eagle Entities.
From November 2000 until December 2002, Mr. De Vita served
as the Vice President and Chief Financial Officer of Lifeguard,
Inc., a health plan provider based in California. Lifeguard,
Inc. was placed in receivership by the California Department of
Managed Care in October 2002. Mr. De Vita started his
career in the insurance industry in 1972 with INA Corporation
(Cigna). In 1978, he joined Fremont General Corporation as Vice
President of Finance. In 1987, Mr. De Vita co-founded Great
States Insurance Company, a specialty workers compensation
insurer, with Mr. Pasqualetto. Mr. De Vita has held
executive positions with managed care organizations, and began
his financial career with PricewaterhouseCoopers. Mr. De
Vita holds a B.A. in Accounting from St. Josephs
University, an M.B.A. in Finance from Drexel University, is a
licensed Certified Public Accountant in the Commonwealth of
Pennsylvania and is a member of the American Institute of
Certified Public Accountants.
Marc B. Miller, M.D.
has served as our Senior Vice
President and Chief Medical Officer since August 2004. Since
1998, Dr. Miller has been an independent consultant serving
in various capacities for several businesses, including: acting
as Vice President of Customer Relations for ExactCost, Inc., a
healthcare cost analysis technology company; representing
various foreign healthcare services, biotech, medical device,
and pharmaceutical companies in connection with partnerships,
investment and business development; acting as medical director
charged with revamping Orange Countys Medical Services
Indigents Program; and acting as medical director advising on
quality assurance and credentialing for MedLink HealthCare
Networks, Inc., a diagnostic managed care organization.
Dr. Miller also co-founded ConflictSolvers, LLC, a
start-up
venture which develops dispute resolution products, and held
various positions with ConflictSolvers from 1998 until 2001,
most recently serving as its Chief Executive Officer.
Dr. Miller is board certified in preventive medicine,
public health and medical management. Dr. Miller holds a
B.A. from Stanford University, an M.B.A. from Golden Gate
University, an M.P.H. from the University of California, Los
Angeles and an M.D. from Rush University.
11
Richard W. Seelinger
has served as our Senior Vice
President Policyholder Services since July 2003. He
served in the same capacity with the Eagle Entities, which he
joined in 2000. From 1985 through 1999, Mr. Seelinger held
a series of executive positions of increasing responsibility at
Kemper insurance companies, including Workers Compensation
Claims Officer. Mr. Seelinger holds a B.A. in History from
Western Illinois University.
Jeffrey C. Wanamaker
has served as our Senior Vice
President Underwriting since March 2006. From July
2003 through March 2006, Mr. Wanamaker served as our Vice
President Underwriting. He served as Vice
President Underwriting at the Eagle Entities, which
he joined in May 1999. Prior to 1999, Mr. Wanamaker served
as a Vice President of Alaska National Insurance Company. From
1989 to 1999, while employed by Alaska National Insurance
Company, he underwrote most commercial lines and ultimately
specialized in accounts with a combination of state act
workers compensation, longshore and maritime employment
exposures. Mr. Wanamaker holds Bachelor of Business
Administration degrees in Finance and Economics from the
University of Alaska and has earned the Chartered Property
Casualty Underwriter and Associate in Reinsurance professional
designations.
D. Drue Wax
has served as our Senior Vice President,
General Counsel and Secretary since January 2005. Prior to that,
she, through her law firm, represented us on various regulatory
and corporate issues. From 1998 through March 2004, she served
as senior counsel in the corporate legal department of the
Kemper insurance companies, where her responsibilities involved
regulatory and corporate work for the various Kemper
corporations, including the Eagle Entities and KEIC. Prior to
1998, Ms. Wax advised on insurance regulatory matters for
Davidson, Goldstein, Mandell & Menkes, and was an
associate in the Chicago office of Sidley & Austin.
She received her J.D. from Chicago Kent College of Law, and her
B.A. from Middlebury College.
M. Philip Romney
has served as our Vice
President Finance and Principal Accounting Officer
since November 2004 and as our Assistant Secretary since January
2005. From February 2000 until October 2004, Mr. Romney
served as Director of Finance, Controller and Assistant
Secretary for Eden Bioscience Corporation, a biotechnology
company in Washington. Prior to that, Mr. Romney served in
various positions (most recently as Deputy Treasurer and Senior
Manager, Risk Management and Treasury Services) at Public
Utility District No. 1 of Snohomish County, Washington, a
public water and electric utility. Mr. Romney began his
financial career with the Seattle office of KPMG LLP.
Mr. Romney holds B.S. and MAcc. degrees from Brigham Young
University, is a licensed Certified Public Accountant in the
State of Washington and is a member of the American Institute of
Certified Public Accountants and of the Washington Society of
Certified Public Accountants.
Set forth below is information concerning our key employees.
James L. Borland, III
has served as our Vice
President and Chief Information Officer since November 2003. He
served in the same capacity with the Eagle Entities, which he
joined in 2000. From January 1998 until the time he joined the
Eagle Entities, Mr. Borland served as the principal network
analyst for PacifiCare Health Systems. From December 1991 until
January 1998, Mr. Borland held several positions with Great
States Insurance Company. Mr. Borland holds a B.S. in
Business Management from Pepperdine University.
Craig A. Pankow
has served as the President of PointSure
Insurance Services, Inc., one of our wholly-owned subsidiaries,
since May 2007. From 2005 until May 2007, Mr. Pankow served
as Executive Vice President of PointSure with responsibilities
for business development. Prior to joining PointSure,
Mr. Pankow was the Western Region Marketing Officer for
Willis of North America overseeing the marketing efforts of a
$2 billion region with staff in 12 offices. Mr. Pankow
has 25 years of insurance industry experience. He holds a
Bachelor of Science degree in Business Administration and an
M.B.A. degree from City University. He also has earned the
Associates in Risk Management professional designation.
12
EXECUTIVE
COMPENSATION
Compensation
Discussion and Analysis
This section provides information regarding the compensation
program in place for our Principal Executive Officer, Principal
Financial Officer and the three most highly-compensated
executive officers other than the Principal Executive Officer
and Principal Financial Officer for 2007. We refer to these five
executive officers as Named Executive Officers
(NEOs). It includes information regarding, among
other things, the overall objectives of our compensation program
and each element of compensation that we provide.
Objectives
of Our Compensation Program
The Compensation Committee of our Board of Directors, which we
refer to in this section as the Committee, has
responsibility for overseeing and determining the compensation
program of our Chief Executive Officer and our other NEOs. The
Committee acts pursuant to a charter that has been approved by
our Board.
The compensation program for our NEOs is designed to attract,
retain and reward talented executives in a manner which aligns
their short- and long-term interests with those of our
stockholders. We believe that the compensation program should
offer compensation that is competitive and equitable and
provides an effective balance between fixed components and
variable short-term and long-term components. An NEOs
total compensation consists of a base salary, which is fixed,
and incentive compensation, which is variable. We establish a
total compensation package for each NEO based upon several
considerations and inputs, including executive compensation
program design advice and benchmarking information we received
from PM&P. The total compensation package is designed to
reward each NEO for the achievement of company and individual
performance goals and objectives and to be competitive with
total compensation for comparable positions within similar
companies. Each year, the Committee receives from our Chief
Executive Officer recommendations on NEO compensation other than
for the Chief Executive Officer, but the Committee retains full
discretion in determining NEO compensation. The Committee
intends to evaluate regularly the compensation packages for our
NEOs. SeaBright is a rapidly growing company that operates in a
dynamic competitive environment. In developing compensation
programs for our NEOs, we plan to maintain an emphasis on goal
alignment with our stockholders, a balance of short- and
long-term incentives, and flexibility in the structure of the
programs so that they may evolve with our continued development.
In February 2008, the Compensation Committee retained Mercer
Human Resource Consulting, a nationally recognized consulting
firm, to assist with a comprehensive review of our overall
compensation programs.
Our compensation program is organized around three fundamental
principles and utilizes components that have a clearly
determinable value base salary, cash bonuses and
participation in an equity program consisting of restricted
stock and stock option grants:
Our Compensation Program is
Performance-Based.
Our compensation program is
designed to create incentives for our NEOs to build long-term
stockholder value. We create incentives by providing variable
compensation that is linked to company and individual
performance. One of the principal components of performance, as
we view it, is the achievement of results that we believe will
lead to increased long-term stockholder value. Variable
compensation places a meaningful percentage of the NEOs
compensation at risk, with future payouts
and/or
realization of value dependent upon performance. If we
and/or
an
individual fails to meet minimum levels of performance, he or
she will not earn any variable compensation. Our variable
compensation includes short-term compensation under the 2007
Bonus Plan and long-term compensation under our Amended and
Restated 2005 Long-Term Equity Incentive Plan (the 2005
Equity Plan). The Committee set target cash bonuses under
our 2007 Bonus Plan at a level that put 39% of our Chief
Executive Officers annual cash compensation package at
risk and approximately 31%, on average, of our other NEOs
annual cash compensation packages at risk. In the view of the
Committee, at-risk variable compensation, both short-term bonus
compensation and long-term equity based compensation, should
consistently represent the majority of any years total
compensation plan for the Chief Executive and the NEOs. While
actual proportions will vary from year to year, our long-term
approach intends to produce variable compensation greater than
50% of total compensation.
Equity Awards Should Represent A Meaningful Portion of NEO
Compensation.
The Committee believes that a
meaningful portion of total compensation should be delivered in
the form of equity awards in order to align the
13
NEOs incentives with those of our stockholders and to
reinforce the ownership culture within our leadership. These
equity awards are intended to focus the NEOs on the achievement
of both the annual and long-term financial performance
objectives of SeaBright by linking the ultimate compensation
realized by the NEOs directly to the price of our common stock
over a period of time. In 2007, NEOs received equity
compensation in the form of restricted stock and stock option
grants. We do not currently maintain specific stock ownership
guidelines for our executive officers. The Committee may
consider prior compensation outcomes, including equity incentive
compensation gains, in setting future compensation levels.
Our Compensation Program for NEOs Should Enable Us to Attract
and Retain the Most Talented Executives in our
Industry.
We believe our stockholders
long-term interests are addressed in part by our ability to
attract and retain the most talented executives in the
workers compensation insurance industry and related
fields. In furtherance of this belief, the Committee seeks to
create a compensation package for each NEO that delivers total
compensation that is better than the average of the total
compensation for the same role delivered by comparable companies
with which we compete for executive talent. To assist in making
this comparison, we retained PM&P to provide information
regarding compensation levels and programs for executives and
directors of comparable companies. The Committee believes that
offering competitive compensation packages with significant
long-term compensation components enhances our ability to retain
existing executive talent, and, when necessary, to attract new
executive talent from the external marketplace.
To ensure that our compensation is competitive in the
marketplace, we compare our compensation to that of a group of
peer companies with businesses similar to ours and with which we
may compete for executive talent. In 2007, we identified the
following companies as our comparable companies for this
purpose: Affirmative Insurance Holdings, Inc., AMCOMP
Incorporated, American Physicians Capital, Inc., AMERISAFE,
Inc., Baldwin & Lyons, Inc., Donegal Group, Inc., EMC
Insurance Group, Inc., FPIC Insurance Group, Inc., James River
Group, Inc., Meadowbrook Insurance Group, Inc., National
Interstate Corporation, The Navigators Group, Inc., NYMAGIC,
INC., PMA Capital Corporation, Procentury Corporation, Republic
Companies Group, Inc., SCPIE Holdings, Inc., and Tower Group,
Inc. (the comparable company group). We also
reviewed executive compensation information for Argonaut Group,
Inc. and Zenith National Insurance Corp., but did not include
them in the comparable company group for benchmarking purposes
because of their relative size. The comparable company group was
selected by the Committee from a group of companies identified
by management. The Committee regularly reviews the comparable
company group for relevancy and changes it as necessary.
Although we consider compensation data for the comparable
company group when establishing total compensation, we do not
target a percentile rank for total compensation within the
comparable company group data set. Instead, we use the data as a
guide in determining the appropriate levels of each form of
compensation and the total level of compensation for each
executive. We may adjust certain elements of an executives
compensation based on the experience of the individual, market
factors or other relevant considerations.
The
Elements of Our Compensation Program
Our executive compensation for 2007 consists of the following
components:
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Base salary
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Cash bonuses under our 2007 Bonus Plan
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Restricted stock grants and stock option grants under our 2005
Equity Plan
|
Base Salary
.
The first element of our
cash compensation program for NEOs in 2007 was an annual base
salary. The Committee sets base salary for NEOs based on the
experience of the individual NEO as well as market salary levels
for similar positions within the comparable company group. The
Committee believes it is appropriate that a portion of each
NEOs compensation be provided in a form that is fixed and
liquid to compensate them for their services during the year.
The Committee reviews and determines base salary for NEOs in the
first fiscal quarter of each year. In each case, the Committee
takes into account the executive officers skills, the
executive officers performance level, the executive
officers contribution to the business and the scope of
responsibilities of the position, the expertise and experience
required for the position, the period of time over which the
executive officer has performed these responsibilities, the
executive officers anticipated contribution to our
financial performance
14
and current economic and market factors relating to our ability
to attract and retain top leadership talent. The determination
of base salaries, and any adjustment thereto, is discretionary
and is not based on set formulas. Any adjustments to base
salaries normally take effect on April 1st of each
year.
In March, 2007, we increased base salaries of all of our NEOs,
including our Chief Executive Officer, whose base salary was
increased by $100,000. The base salary adjustments for our NEOs
were effective on April 1, 2007 and resulted in the
following annual base salaries:
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Annual Base
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Percentage
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Name
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Salary
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|
Increase
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John G. Pasqualetto
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$
|
500,000
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|
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25.0
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%
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Richard J. Gergasko
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|
322,000
|
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|
7.3
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%
|
Joseph S. De Vita
|
|
|
295,000
|
|
|
|
7.3
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%
|
Richard W. Seelinger
|
|
|
236,250
|
|
|
|
5.0
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%
|
Jeffrey C. Wanamaker
|
|
|
222,600
|
|
|
|
6.0
|
%
|
The Committee approved the adjustments to base salaries based on
a number of factors, including the fact that base salaries for
the NEOs were generally lower than the median base salaries for
comparable positions in the comparable company group. The
Committee also considered our financial performance in 2006,
which exceeded our plan, and individual NEO contributions based
on their positions. Although no particular weight is assigned to
these factors, significant emphasis is placed on external
competitiveness based on comparisons with the comparable company
group and the Boards assessment of the long-term potential
for the executive. When reviewing our Chief Executive
Officers annual base salary, the Committee considered
current market factors, including the median of base salaries of
chief executive officers in the comparable company group. The
Committee also evaluated Mr. Pasqualettos previous
industry experience, his individual contribution to the
Companys performance and his responsibility as Chief
Executive Officer for overall Company performance. The Committee
also considered the internal pay equity of the Chief Executive
Officer relative to our other executive officers. After
considering all these factors, the Committee approved a 25%
increase in Mr. Pasqualettos annual base salary as
set forth above.
On March 27, 2008, the Committee approved increases in the
annual base salaries for our executive officers, other than our
Chief Executive Officer, and recommended to the Board the Chief
Executive Officers annual base salary increase, which the
Board approved in a meeting of independent directors on
March 27, 2008. The following table sets forth the new
annual base salaries to be paid to the NEOs, effective as of
April 1, 2008, as approved by the Committee and the Board
in a meeting of independent directors on March 27, 2008.
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|
|
|
|
|
|
|
|
|
Annual Base
|
|
|
Percentage
|
|
Name
|
|
Salary
|
|
|
Increase
|
|
|
John G. Pasqualetto
|
|
$
|
550,000
|
|
|
|
10.0
|
%
|
Richard J. Gergasko
|
|
|
342,000
|
|
|
|
6.2
|
%
|
Joseph S. De Vita
|
|
|
309,000
|
|
|
|
4.7
|
%
|
Richard W. Seelinger
|
|
|
255,000
|
|
|
|
7.9
|
%
|
Jeffrey C. Wanamaker
|
|
|
250,000
|
|
|
|
12.3
|
%
|
Cash bonuses under our 2007 Bonus
Plan
.
The second element of our cash
compensation program for NEOs in 2007 was a cash bonus awarded
under our 2007 Bonus Plan. The Committee develops the annual
cash bonus opportunities for NEOs by considering, among other
factors, cash bonuses paid to executives in the comparable
company group. The 2007 Bonus Plan rewarded NEOs for achievement
of pre-determined companywide performance goals and individual
objectives. We believe these cash bonuses motivate our NEOs to
pursue specific objectives the Committee and Board believe are
consistent with the overall goals and strategic direction of our
company. The 2007 Bonus Plan rewarded NEOs for achieving
companywide performance by providing for a bonus pool that is
linked to the achievement of a pre-determined target of GAAP net
income (adjusted to exclude capital gains and losses). Under the
terms of the 2007 Bonus Plan, no payments would have been made
unless we achieved a threshold level of GAAP net income
(excluding capital gains and losses), and bonuses were capped at
a maximum percentage of base salary. The amount contributed to
the bonus pool ranges from 0% to 200% of the target bonus pool
amount. There is no bonus pool if the threshold is not met, and
the maximum bonus pool is 200% of the target
15
amount. In calculating the GAAP net income achievement measure,
the Committee includes the impact of the bonus pool on earnings.
If a bonus pool is earned, the bonus pool is then allocated to
each participant based on: the individuals annual bonus
award opportunity for the fiscal year; the performance of the
individuals business unit or department measured against
pre-determined business unit or department goals; and the
participants individual performance during the year,
measured against selected individual personal achievement goals.
The Chief Executive Officers individual goal in 2007 was
achievement of the companywide GAAP net income (adjusted to
exclude capital gains and losses) target. For the other NEOs,
business unit or department quantitative goals and individual
goals included planned premium goals, nationwide inforce loss
ratios, corporate succession planning, management of an
officers budget and the acquisition and implementation of
new skills. Although actual performance measured against
pre-determined goals is the key component in determining
individual performance, the Committee may exercise discretion
when determining whether an NEOs individual goals have
been attained.
On February 21, 2007, the Committee approved the target
bonus opportunities, as a percentage of base salary, for the
NEOs for 2007, and a companywide performance target of
$35.9 million in GAAP net income (adjusted to exclude
capital gains and losses) for 2007, at which 100% of the target
bonus pool would be achieved, and a companywide maximum of
$40.3 million in GAAP net income (adjusted to exclude
capital gains and losses) for 2007, at which 200% of the target
bonus pool would be achieved. The target bonus opportunities
provided to each NEO under our 2007 Bonus Plan were set as a
fixed percentage of that persons base salary for 2007,
with the percentages for the NEOs ranging from 40% to 65% of
base salary as set forth under Grants of
Plan-Based Awards below. These bonus opportunities are
generally consistent with the bonus opportunities we have
provided historically and the bonus opportunities our
predecessor provided prior to our acquisition and equity
investment by our former equity sponsor, certain co-investors
and certain members of management in 2003. Although the bonus
opportunities are based on our historical practice, in 2004, we
increased the Chief Executive Officers bonus opportunity
from 60% to 65% of base salary, to account for his individual
performance in recent years, his increased responsibilities that
resulted from the growth of our business and to maintain his
overall compensation at a level that would be competitive with
the market for executive talent in our industry.
On March 10, 2008, the Committee approved the payment of
annual bonus awards under the 2007 Bonus Plan to the NEOs as
follows:
|
|
|
|
|
|
|
|
|
|
|
2007 Actual
|
|
|
|
|
Name
|
|
Bonus Award
|
|
|
|
|
|
John G. Pasqualetto
|
|
$
|
586,625
|
|
|
|
|
|
Richard J. Gergasko
|
|
|
300,675
|
|
|
|
|
|
Joseph S. De Vita
|
|
|
261,000
|
|
|
|
|
|
Richard W. Seelinger
|
|
|
177,413
|
|
|
|
|
|
Jeffrey C. Wanamaker
|
|
|
166,782
|
|
|
|
|
|
For 2007, we achieved GAAP net income, excluding capital gains
and losses, of $40.0 million. The Chief Executive Officer
prepared for the Committees consideration a recommendation
of the bonus award for each NEO other than the Chief Executive
officer. These recommendations were based on data from our
performance appraisal system that evaluated department and
individual achievement as well as certain subjective factors.
Our Chief Executive Officer participated in the Committees
review of the other NEOs, and the Committees review of the
Chief Executive Officer was conducted in executive session.
On March 27, 2008, the Committee approved the target bonus
opportunities, as a percentage of base salary, for the NEOs for
2008, and a companywide performance target for GAAP net income
(adjusted to exclude capital gains and losses) for 2008, at
which 100% of a target bonus pool would be achieved. The target
bonus opportunities provided to each NEO under our 2008 Bonus
Plan were set as a fixed percentage of that persons base
salary for 2008, with the percentages for the NEOs ranging from
45% to 65% of base salary. The Committee made increases to bonus
opportunities for Messrs. Gergasko, Seelinger and Wanamaker
from their historical levels to account for their individual
performance in 2007, their long-term potential as executives and
the increased responsibilities of these NEOs as a result of the
growth of our business.
Restricted Stock Grants and Stock Option Grants under our
2005 Equity Plan
. Grants of restricted stock
and stock options under the 2005 Equity Plan reward NEOs for
long-term increases in stockholder value. As described
16
above, the Committee believes that a meaningful portion of each
NEOs compensation should be in the form of equity awards.
In 2007, such equity awards, delivered in the form of
time-vesting restricted stock and stock options, represented a
significant and meaningful percentage of NEO compensation.
Equity awards to our NEOs are made pursuant to the 2005 Equity
Plan. Shares of restricted stock granted to NEOs vest on the
third anniversary of the grant date. We began to grant shares of
restricted stock in 2006 for a number of reasons, including the
retention effect of longer-term cliff vesting, lower levels of
dilution for our stockholders in certain scenarios, and because
Statement of Financial Accounting Standards No. 123R made
the accounting treatment of stock options less attractive. The
Board awarded stock options to NEOs with an exercise price equal
to the fair market value of our common stock on the date of
grant. These stock options will vest in equal annual
installments over four years. Most of the stock options granted
have been incentive stock options under Section 422 of the
Internal Revenue Code. However, in 2007, approximately 48.3% of
the stock options granted to our NEOs were nonqualified stock
options.
The Committee based the level of equity awards granted to our
NEOs primarily upon our financial performance as measured by our
calendar year GAAP net income, return on equity, and on our
growth in earned premium and book value. Based on
recommendations from our CEO for the other NEOs, the Committee
further considers several additional quantitative and
qualitative factors in determining equity awards, including the
level of equity awards for executives in the comparable company
group, performance of our operating subsidiaries and the
performance of the departments supervised by each of our NEOs.
The Committee then selects, in its judgment, the best balance
between restricted stock awards and stock option awards. Because
one of the goals of the compensation package is to retain
executive talent, we grant equity awards that vest over a period
of several years. We believe that this feature of our equity
awards creates an incentive for an NEO to remain with our
company by deferring a significant amount of compensation over
the vesting period.
The Committee believes that its current compensation program for
NEOs is appropriately balanced between short-term cash and
long-term equity awards. The Committees determinations of
applicable ranges have been assisted by research and guidance
provided by PM&P. The Committee may engage other qualified
external compensation experts in its discretion.
The relative amounts of cash and equity compensation are
determined based upon market-level ranges and are also
influenced by the results accomplished in a given calendar year.
The Committee believes that a combination of cash and equity
compensation serves to align the incentives of our NEOs with
those of our stockholders, while also permitting the Committee
to provide incentives to the NEOs to pursue specific short- and
long-term performance goals. The Committee believes that the
performance measures established for cash awards are
significantly challenging but fully achievable.
On March 28, 2007, the Committee approved grants of
restricted stock and stock options to the NEOs as set forth
under Grants of
Plan-Based
Awards below. In 2007, the Committee considered the fact
that our net income
exceeded-both
our 2006 budget and our results in 2005, and made awards that
represented an increase over 2006 awards, in part to reward the
NEOs for this performance. The individual awards for NEOs are
also based on a subjective review of performance of the
department for which they have responsibility, as an indicator
of that individuals contribution to our results.
On March 27, 2008, pursuant to the 2005 Equity Plan, and as
set forth below, the Committee approved grants of restricted
stock and stock options to the NEOs, other than our Chief
Executive Officer, and recommended to the Board grants of
restricted stock and option awards for our Chief Executive
Officer, which the Board approved in a meeting of independent
directors on March 27, 2008.
|
|
|
|
|
|
|
|
|
|
|
Restricted
|
|
|
Stock Option
|
|
Name
|
|
Stock Grants (#)
|
|
|
Grants (#)
|
|
|
John G. Pasqualetto
|
|
|
70,000
|
|
|
|
30,000
|
|
Richard J. Gergasko
|
|
|
36,000
|
|
|
|
12,000
|
|
Joseph S. De Vita
|
|
|
32,400
|
|
|
|
10,800
|
|
Richard W. Seelinger
|
|
|
25,500
|
|
|
|
8,500
|
|
Jeffrey C. Wanamaker
|
|
|
25,500
|
|
|
|
8,500
|
|
17
Practices
Regarding the Grant of Options
The Committee has generally followed a practice of making annual
option grants to its NEOs at its regularly-scheduled meeting in
March. The March meeting date historically occurred within
approximately four weeks following the issuance of a press
release announcing our results for the previous quarter and
fiscal year. The Committee believes that it is appropriate that
annual awards be made at a time when all material information
regarding our financial results has been disclosed. We do not
otherwise have any program, plan or practice to time annual
option grants to our executives in coordination with the release
of material non-public information.
While the majority of our option awards to NEOs have
historically been made pursuant to our annual grant program, the
Committee retains the discretion to make additional awards to
NEOs at other times in connection with the initial hiring of a
new officer, for promotions, for retention purposes or
otherwise. We have not made any such awards to date.
All option awards made to our NEOs, or any of our other
employees or directors, are made pursuant to our 2005 Equity
Plan. All options under the 2005 Equity Plan are granted with an
exercise price that is greater than or equal to the fair market
value of our common stock on the date of grant. Fair market
value is defined under the 2005 Equity Plan to be, on the date
of grant, the officially-quoted closing selling price of a share
of our common stock (or if no selling price is quoted, the bid
price) on the principal securities exchange on which our common
stock is then listed for trading for the applicable trading day.
We do not have any program, plan or practice of awarding options
and setting the exercise price based on the stocks price
on a date other than the grant date or by using average prices
(or lowest prices) of our common stock in a period preceding,
surrounding or following the grant date. While the charter of
the Committee permits delegation of the Committees
authority to subcommittees, all grants to NEOs have been made by
the Committee and/or the Board in a meeting of independent
directors.
Perquisites
and Personal Benefits
Our Chief Executive Officer receives a $750 car allowance each
month. No other NEOs currently receive car allowances, but it is
the Committees judgment that perquisites represent viable
forms of compensation both to retain and attract executive
talent. Personal benefits also include the cost of executive
life insurance premiums, 401(k) matching contributions and
profit sharing contributions.
Post-Termination
Compensation Severance Arrangements
We have entered into employment agreements containing severance
provisions with certain members of our senior management team,
including the NEOs, as described under
Potential Payments Upon Termination or Change
in Control. The agreement with our Chief Executive Officer
provides for payments and other benefits if his employment
terminates for a qualifying event or circumstance, such as being
terminated without Cause or leaving employment for
Good Reason, as these terms are defined in his
employment agreement. The employment agreements with other
members of our senior management provide for payments and other
benefits if their employment terminates for a qualifying event
or circumstance, such as being terminated without
Cause, but do not provide for severance for
Good Reason. The Committee believes that these
severance compensation arrangements are an important part of
overall compensation for our NEOs and help to secure the
continued employment and dedication of our NEOs, notwithstanding
any concern that they might have at such time regarding their
own continued employment prior to or following a change in
control. The Committee also believes that these agreements are
important as a recruitment and retention device, as all or
nearly all of the companies with which we compete for executive
talent have similar agreements in place for their senior
management.
Compensation
Committee Report
The Compensation Committee of the Board of Directors of
SeaBright Insurance Holdings, Inc. oversees SeaBright Insurance
Holdings, Inc.s compensation program on behalf of the
Board. In fulfilling its oversight responsibilities, the
Compensation Committee reviewed and discussed with management
the Compensation Discussion and Analysis set forth in this Proxy
Statement.
18
In reliance on the review and discussions referred to above, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007 and this Proxy
Statement.
The Compensation Committee
Peter Y. Chung, Chairman
William M. Feldman
Mural R. Josephson
Michael D. Rice
Summary
Compensation Table
The following table sets forth information regarding
compensation earned by NEOs in 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Incentive Plan
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)
|
|
John G. Pasqualetto
|
|
|
2007
|
|
$
|
476,608
|
|
$
|
718,138
|
|
$
|
158,789
|
|
$
|
586,625
|
|
$
|
23,670
|
|
$
|
1,963,830
|
Chairman, President and
|
|
|
2006
|
|
|
387,914
|
|
|
348,532
|
|
|
134,455
|
|
|
502,198
|
|
|
23,370
|
|
|
1,396,469
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard J. Gergasko
|
|
|
2007
|
|
|
318,108
|
|
|
359,069
|
|
|
85,284
|
|
|
300,675
|
|
|
14,639
|
|
|
1,077,775
|
Executive Vice President
|
|
|
2006
|
|
|
295,415
|
|
|
174,266
|
|
|
73,117
|
|
|
293,807
|
|
|
14,259
|
|
|
850,864
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph S. De Vita
|
|
|
2007
|
|
|
291,608
|
|
|
345,212
|
|
|
88,829
|
|
|
261,000
|
|
|
14,544
|
|
|
1,001,193
|
Senior Vice President,
|
|
|
2006
|
|
|
270,402
|
|
|
174,266
|
|
|
76,761
|
|
|
268,794
|
|
|
14,169
|
|
|
804,392
|
Chief Financial Officer and Assistant Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard W. Seelinger
|
|
|
2007
|
|
|
235,013
|
|
|
153,701
|
|
|
40,366
|
|
|
177,413
|
|
|
12,793
|
|
|
619,286
|
Senior Vice President
|
|
|
2006
|
|
|
220,263
|
|
|
55,765
|
|
|
33,499
|
|
|
175,007
|
|
|
12,610
|
|
|
497,144
|
Policyholder Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffrey C. Wanamaker
|
|
|
2007
|
|
|
220,957
|
|
|
167,559
|
|
|
39,765
|
|
|
166,782
|
|
|
11,639
|
|
|
606,702
|
Senior Vice President Underwriting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes compensation cost related to shares of restricted stock
granted to our NEOs during 2007 and 2006 under our 2005 Equity
Plan. These amounts are calculated in accordance with SFAS 123R,
except that no estimate of forfeitures is made. For the grant
date fair value of restricted stock awards made in 2007, please
see Grants of Plan-Based Awards. For a
discussion of restricted stock awards made in 2008 related to
2007 performance, please see Compensation
Discussion and Analysis The Elements of Our
Compensation Program.
|
|
|
|
No shares of restricted stock were forfeited by our NEOs during
2007. See Note 20 to the Consolidated Financial Statements
included in our Annual Report on
Form 10-K
for the year ended December 31, 2007, filed with the SEC on
March 17, 2008, for a discussion of the relevant
assumptions used in calculating compensation cost recognized
pursuant to SFAS 123R.
|
|
(2)
|
|
Includes compensation cost related to incentive stock options
granted to our NEOs during the years from 2003 to 2007. These
amounts are calculated in accordance with SFAS 123R, except
that no estimate of forfeitures is made. For the grant date fair
value of stock option awards made in 2007, please see
Grants of Plan-Based Awards. For a
discussion of stock option awards made in 2008 related to 2007
performance, please see Compensation
Discussion and Analysis The Elements of Our
Compensation Program.
|
|
|
|
No stock options were forfeited by our NEOs during 2007. See
Note 20 to the Consolidated Financial Statements included
in our Annual Report on
Form 10-K
for the year ended December 31, 2007, filed with the
|
19
|
|
|
|
|
SEC on March 17, 2008, for a discussion of the relevant
assumptions used in calculating compensation cost recognized
pursuant to SFAS 123R.
|
|
|
|
(3)
|
|
Includes payments awarded to our NEOs under our 2007 Bonus Plan.
These amounts were earned in 2007 and paid in March 2008. For
additional information on our 2007 Bonus Plan, see
Compensation Discussion and
Analysis Cash bonuses under our 2007 Bonus
Plan.
|
|
(4)
|
|
All other amounts paid to or on behalf of our NEOs in 2007
include the following perquisites (valued at actual amounts
paid). We do not gross up such amounts for the income tax effect
of perquisites paid to our NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
Life Insurance
|
|
|
401(k) Matching
|
|
|
Profit Sharing
|
|
|
|
|
Named Executive Officer
|
|
Allowance
|
|
|
Premiums
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Total
|
|
|
John G. Pasqualetto
|
|
$
|
9,000
|
|
|
$
|
1,170
|
|
|
$
|
11,250
|
|
|
$
|
2,250
|
|
|
$
|
23,670
|
|
Richard J. Gergasko
|
|
|
|
|
|
|
1,139
|
|
|
|
11,250
|
|
|
|
2,250
|
|
|
|
14,639
|
|
Joseph S. De Vita
|
|
|
|
|
|
|
1,044
|
|
|
|
11,250
|
|
|
|
2,250
|
|
|
|
14,544
|
|
Richard W. Seelinger
|
|
|
|
|
|
|
840
|
|
|
|
9,703
|
|
|
|
2,250
|
|
|
|
12,793
|
|
Jeffrey C. Wanamaker
|
|
|
|
|
|
|
790
|
|
|
|
8,654
|
|
|
|
2,195
|
|
|
|
11,639
|
|
Grants of
Plan Based Awards
The following table summarizes grants of incentive stock options
and shares of restricted common stock in 2007 and the estimated
possible payouts under the 2007 Bonus Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards:
|
|
|
Option Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price
|
|
|
Fair Value
|
|
|
|
|
|
|
Estimated Possible Payouts Under Non-Equity Incentive Plan
Awards(1)
|
|
|
Stock or
|
|
|
Underlying
|
|
|
of Option
|
|
|
of Stock
|
|
|
|
Grant
|
|
|
Threshhold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
and Option
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)(2)
|
|
|
(#)(3)
|
|
|
($/Sh)
|
|
|
Awards(4)
|
|
|
John G. Pasqualetto
|
|
|
3/9/07
|
(5)
|
|
$
|
|
|
|
$
|
308,750
|
|
|
$
|
617,500
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
1,092,600
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
18.21
|
|
|
|
134,000
|
|
Richard J. Gergasko
|
|
|
3/9/07
|
(5)
|
|
|
|
|
|
|
158,250
|
|
|
|
316,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
546,300
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
18.21
|
|
|
|
67,000
|
|
Joseph S. De Vita
|
|
|
3/9/07
|
(5)
|
|
|
|
|
|
|
145,000
|
|
|
|
290,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,000
|
|
|
|
|
|
|
|
|
|
|
|
491,670
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
18.21
|
|
|
|
60,300
|
|
Richard W. Seelinger
|
|
|
3/9/07
|
(5)
|
|
|
|
|
|
|
93,375
|
|
|
|
186,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,000
|
|
|
|
|
|
|
|
|
|
|
|
327,780
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
18.21
|
|
|
|
40,200
|
|
Jeffrey C. Wanamaker
|
|
|
3/9/07
|
(5)
|
|
|
|
|
|
|
87,780
|
|
|
|
175,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,000
|
|
|
|
|
|
|
|
|
|
|
|
382,410
|
|
|
|
|
3/28/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
18.21
|
|
|
|
46,900
|
|
|
|
|
(1)
|
|
Amounts were calculated according to the terms of our 2007 Bonus
Plan. For additional information on our 2007 Bonus Plan, see
Compensation Discussion and
Analysis Cash bonuses under our 2007 Bonus
Plan.
|
|
(2)
|
|
Consists of shares of restricted common stock awarded under our
2005 Equity Plan. The awards fully vest on March 28, 2010,
the third anniversary of the grant date. For additional
information on our 2005 Equity Plan, see
Employee Benefit Plans 2005
Long-Term Equity Incentive Plan.
|
|
(3)
|
|
Consists of incentive stock options to purchase shares of our
common stock awarded under our 2005 Equity Plan. The awards vest
25% on each of the first four anniversaries of the
March 28, 2007 grant date. For additional information on
our 2005 Equity Plan, see Employee Benefit
Plans 2005 Long-Term Equity Incentive Plan.
|
|
(4)
|
|
For shares of restricted common stock, consists of the number of
shares of stock awarded multiplied by $18.21, the closing price
of our common stock on the grant date. For incentive stock
options, consists of the number of
|
20
|
|
|
|
|
options granted multiplied by $6.70, the grant date fair value
of each option. The grant date fair value is calculated
according to the provisions of SFAS 123R, except that no
estimate of forfeitures is made.
|
|
(5)
|
|
Reflects each NEOs participation in our 2007 Bonus Plan.
Amounts shown indicate each NEOs potential bonus assuming
achievement of the threshold, target and maximum operating
results, defined as net income determined in accordance with
generally accepted accounting principles (GAAP)
excluding capital gains and losses, and successful completion of
the NEOs individual goals and objectives. Actual amounts
paid in March 2008 are included in the Summary Compensation
Table.
|
Employment
Agreements
The following information summarizes the employment agreements
for our Chief Executive Officer and each of the named executive
officers.
John G.
Pasqualetto.
Mr. Pasqualettos
employment agreement, as amended, provides for an annual base
salary of $313,793 and an annual incentive bonus in a target
amount of 65% of his base salary. Mr. Pasqualettos
salary and target bonus amount are subject to review by the
Board for market and performance adjustments at the beginning of
each calendar year and may be adjusted after such review in the
Boards sole discretion. On March 27, 2008, the
Compensation Committee approved an increase in
Mr. Pasqualettos annual base salary to $550,000.
Mr. Pasqualetto may participate in present and future
benefit plans that are generally made available to employees
from time to time. If we terminate Mr. Pasqualettos
employment without cause or if Mr. Pasqualetto terminates
his employment for good reason, each as defined in his
employment agreement, he will be entitled to receive his base
salary and bonus (prorated to the date of termination) payable
in regular installments from the date of termination for a
period of 18 months thereafter. Mr. Pasqualettos
employment agreement provides that he will be restricted from
engaging in specified competitive activities and from soliciting
SeaBrights employees, customers, suppliers or other
business relations for 18 months following the date of his
termination.
Richard J. Gergasko.
Mr. Gergaskos
employment agreement provides for an annual base salary of
$258,832 and an annual incentive bonus in a target amount of 50%
of his base salary. Mr. Gergaskos salary and target
bonus amount are subject to review by the Board for market and
performance adjustments at the beginning of each calendar year
and may be adjusted after such review in the Boards sole
discretion. On March 27, 2008, the Compensation Committee
approved an increase in Mr. Gergaskos annual
(a) base salary to $342,000 and (b) target incentive
bonus amount to 55%. Mr. Gergasko may participate in
present and future benefit plans that are generally made
available to employees from time to time. If we terminate
Mr. Gergaskos employment without cause, as defined in
his employment agreement, he will be entitled to receive his
base salary payable in regular installments from the date of
termination for a period of 12 months thereafter.
Mr. Gergaskos employment agreement provides that he
will be restricted from engaging in specified competitive
activities and from soliciting our employees, customers,
suppliers or other business relations for 12 months
following the date of his termination.
Joseph S. De Vita.
Mr. De Vitas
employment agreement provides for an annual base salary of
$216,000 and an annual incentive bonus in a target amount of 50%
of his base salary. Mr. De Vitas salary and target
bonus amount are subject to review by the Board for market and
performance adjustments at the beginning of each calendar year
and may be adjusted after such review in the Boards sole
discretion. On March 27, 2008, the Compensation Committee
approved an increase in Mr. De Vitas annual base
salary to $309,000. Mr. De Vita may participate in present
and future benefit plans that are generally made available to
employees from time to time. If we terminate Mr. De
Vitas employment without cause, as defined in his
employment agreement, he will be entitled to receive his base
salary payable in regular installments from the date of
termination for a period of 12 months thereafter.
Mr. De Vitas employment agreement provides that
he will be restricted from engaging in specified competitive
activities and from soliciting our employees, customers,
suppliers or other business relations for 12 months
following the date of his termination.
Richard W.
Seelinger.
Mr. Seelingers employment
agreement provides for an annual base salary of $187,113 and an
annual incentive bonus in a target amount of 40% of his base
salary. Mr. Seelingers salary and target bonus amount
are subject to review by the Board for market and performance
adjustments at the beginning of each calendar year and may be
adjusted after such review in the Boards sole discretion.
On March 27, 2008, the Compensation Committee approved an
increase in Mr. Seelingers annual (a) base
salary to $255,000 and (b) target
21
incentive bonus amount to 45%. Mr. Seelinger may
participate in present and future benefit plans that are
generally made available to employees from time to time. If we
terminate Mr. Seelingers employment without cause, as
defined in his employment agreement, he will be entitled to
receive his base salary payable in regular installments from the
date of termination for a period of 12 months thereafter.
Mr. Seelingers employment agreement provides that he
will be restricted from engaging in specified competitive
activities and from soliciting our employees, customers,
suppliers or other business relations for 12 months
following the date of his termination.
Jeffrey C.
Wanamaker.
Mr. Wanamakers employment
agreement provides for an annual base salary of $164,966 and an
annual incentive bonus in a target amount of 40% of his base
salary. Mr. Wanamakers salary and target bonus amount
are subject to review by the Board for market and performance
adjustments at the beginning of each calendar year and may be
adjusted after such review in the Boards sole discretion.
On March 27, 2008, the Compensation Committee approved an
increase in Mr. Wanamakers annual (a) base
salary to $250,000 and (b) target incentive bonus amount to
45%. Mr. Wanamaker may participate in present and future
benefit plans that are generally made available to employees
from time to time. If we terminate Mr. Wanamakers
employment without cause, as defined in his employment
agreement, he will be entitled to receive his base salary
payable in regular installments from the date of termination for
a period of 12 months thereafter. Mr. Wanamakers
employment agreement provides that he will be restricted from
engaging in specified competitive activities and soliciting our
employees, customers, suppliers or other business relations for
12 months following the date of his termination.
Employee
Benefit Plans
2003
Stock Option Plan
In 2003, our Board of Directors adopted the SeaBright Insurance
Holdings Inc. 2003 Stock Option Plan. The 2003 Stock Option Plan
was amended and restated in February 2004, and on April 3,
2007, the Committee amended and restated the plan as the Second
Amended and Restated 2003 Stock Option Plan (the 2003
Stock Option Plan). The purpose of this plan was to create
an incentive for directors, consultants, advisors, officers and
other employees to remain in our employ and to contribute to our
success by granting to them a favorable opportunity to acquire
our common stock. The 2003 Stock Option Plan was also intended
to help us attract and retain individuals of exceptional
managerial talent upon whom, in large measure, our sustained
growth and profitability depend. As our Compensation Committee
has terminated the ability to grant future stock option awards
under the 2003 Stock Option Plan, we anticipate that all future
stock option grants will be made under our 2005 Equity Plan,
discussed below.
Types of Awards and Eligibility.
The 2003
Stock Option Plan provides for the grant of either
incentive stock options, within the meaning of
Section 422 of the Internal Revenue Code, or nonqualified
stock options to our directors, consultants, advisors, executive
officers or other key employees selected by our Board of
Directors to participate in this plan.
Share Reserve/Limitation.
The number of shares
of common stock with respect to which options may be granted
under the 2003 Stock Option Plan and which may be issued upon
exercise thereof may not exceed 776,458, subject to the
Boards authority to adjust this amount in the event of a
reorganization, recapitalization, merger, consolidation, share
exchange, stock dividend, stock split or similar transactions
affecting our common stock. We have granted options to purchase
491,508 shares of common stock under the 2003 Stock Option
Plan.
Administration.
Our Board of Directors, or
committee designated by the Board, administers the 2003 Stock
Option Plan. Under the 2003 Stock Option Plan, the Board or the
Committee has sole and complete authority to: select
participants; grant options to participants in forms and amounts
it determines; impose limitations, restrictions and conditions
upon options as it deems appropriate; interpret the plan and
adopt, amend and rescind administrative guidelines and other
rules relating to the plan; correct any defect or omission or
reconcile any inconsistency in the plan or an option granted
under the plan; and make all other determinations on and take
all other actions necessary or advisable for the implementation
and administration of the plan.
Terms of Awards.
The exercise price of an
option granted under the 2003 Stock Option Plan may not be less
than 100% of the fair market value of our common stock on the
date the option is granted. Our Board of Directors
22
determines, in connection with each option grant under the plan,
when options become exercisable and when they expire, provided
that the expiration may not exceed ten years from the date of
grant.
Change of Control.
For a description of
termination and change in control provisions applicable to
options issued under the 2003 Stock Option Plan, please see
Potential Payments Upon Termination or Change
in Control Stock Options Under the 2003 Stock Option
Plan. On April 3, 2007, the Committee amended the
2003 Stock Option Plan to extend the protection
period following a Sale of the Company to four years
following a Sale of the Company during which a
participants stock options would accelerate and become
fully vested and exercisable if the participant were subject to
an Involuntary Termination.
2005
Long-Term Equity Incentive Plan
On December 22, 2004, we adopted the SeaBright Insurance
Holdings, Inc. 2005 Long-Term Equity Incentive Plan, and we
amended and restated the plan as the SeaBright Insurance
Holdings, Inc. Amended and Restated 2005 Long-Term Equity
Incentive Plan on April 3, 2007 (the 2005 Equity
Plan). The 2005 Equity Plan provides for grants of stock
options, restricted stock, restricted stock units, deferred
stock units and other equity-based awards. Directors, officers
and other employees of SeaBright and its subsidiaries, as well
as others performing services for us, may be eligible for grants
under the plan. The purpose of the 2005 Equity Plan is to
provide these individuals with incentives to maximize
stockholder value and otherwise contribute to our success and to
enable us to attract, retain and reward the best available
persons for positions of responsibility.
A total of 1,047,755 shares of our common stock were
initially available for issuance under the 2005 Equity Plan.
This amount will automatically increase on the first day of each
fiscal year through 2015 by the lesser of: (i) 2% of the
shares of common stock outstanding on the last day of the
immediately preceding fiscal year or (ii) such lesser
number of shares as determined by the Compensation Committee.
Accordingly, on January 1, 2006, the total number of shares
of our common stock available for issuance under the 2005 Equity
Plan increased by 328,223 shares, on January 1, 2007,
the total number of shares of our common stock available for
issuance under the 2005 Equity Plan increased by
411,068 shares and on January 1, 2008, the total
number of shares of our common stock available for issuance
under the 2005 Equity Plan increased by 416,622 shares. The
number of shares available for issuance under the 2005 Equity
Plan is subject to adjustment in the event of a reorganization,
stock split, merger or similar change in the corporate structure
or the outstanding shares of common stock. In the event of any
of these occurrences, we may make any adjustments we consider
appropriate to, among other things, the number and kind of
shares, options or other property available for issuance under
the 2005 Equity Plan or covered by grants previously made under
the plan. The shares available for issuance under the 2005
Equity Plan may be, in whole or in part, authorized and unissued
or held as treasury shares.
The Compensation Committee of our Board of Directors administers
the 2005 Equity Plan. Our Board also has the authority to
administer the 2005 Equity Plan and to take all actions that the
Compensation Committee is otherwise authorized to take under the
plan.
The following is a summary of the material terms of the 2005
Equity Plan, but does not include all of the provisions of the
plan. For further information about the plan, we refer you to
the 2005 Equity Plan.
Terms of
the 2005 Equity Plan
Eligibility.
Directors, officers and employees
of SeaBright and its subsidiaries, as well as other individuals
performing services for us, or to whom we have extended an offer
of employment, are eligible to receive grants under the 2005
Equity Plan. However, only employees may receive grants of
incentive stock options. In each case, the Compensation
Committee will select the actual grantees.
Stock Options.
Under the 2005 Equity Plan, the
Compensation Committee or the Board may award grants of
incentive stock options conforming to the provisions of
Section 422 of the Internal Revenue Code, and other,
non-qualified stock options. The Compensation Committee may not,
however, award to any one person in any one calendar year
options to purchase common stock equal to more than
300,000 shares, and it may not award incentive options
first exercisable during any calendar year whose underlying
shares have a fair market value greater than $100,000,
determined at the time of grant.
23
The exercise price of an option granted under the 2005 Equity
Plan may not be less than 100% of the fair market value of a
share of common stock on the date of grant, and the exercise
price of an incentive option awarded to a person who owns stock
constituting more than 10% of SeaBrights voting power may
not be less than 110% of such fair market value on such date.
Unless the Compensation Committee determines otherwise, the
exercise price of any option may be paid in any of the following
ways:
|
|
|
|
|
in cash;
|
|
|
|
by delivery of shares of common stock with a fair market value
equal to the exercise price; and/or
|
|
|
|
by simultaneous sale through a broker of shares of common stock
acquired upon exercise.
|
If a participant elects to deliver shares of common stock in
payment of any part of an options exercise price, the
Compensation Committee may, in its discretion, grant the
participant a reload option. The reload option
entitles its holder to purchase a number of shares of common
stock equal to the number so delivered. The reload option may
also include, if the Compensation Committee chooses, the right
to purchase a number of shares of common stock equal to the
number delivered or withheld in satisfaction of any of our tax
withholding requirements in connection with the exercise of the
original option. The terms of each reload option will be the
same as those of the original exercised option, except that the
grant date will be the date of exercise of the original option,
and the exercise price will be the fair market value of the
common stock on the date of exercise.
The Compensation Committee will determine the term of each
option in its discretion. However, no term may exceed ten years
from the date of grant or, in the case of an incentive option
granted to a person who owns stock constituting more than 10% of
the voting power of SeaBright or any of its subsidiaries, five
years from the date of grant. In addition, all options under the
2005 Equity Plan, whether or not then exercisable, generally
cease vesting when a grantee ceases to be a director, officer or
employee of, or to otherwise perform services for, us or our
subsidiaries. Options generally expire 30 days after the
date of cessation of service, so long as the grantee does not
compete with us during the
30-day
period.
For a description of termination and change in control
provisions applicable to options issued under the 2005 Equity
Plan, please see Potential Payments Upon
Termination or Change in Control Stock Options and
Restricted Stock Awards Under the 2005 Equity Plan.
Restricted Stock.
Under the 2005 Equity Plan,
the Compensation Committee may award restricted stock subject to
the conditions and restrictions, and for the duration, which
will generally be at least six months, that it determines in its
discretion. For a description of termination and change in
control provisions applicable to restricted stock issued under
the 2005 Equity Plan, please see Potential
Payments Upon Termination or Change in Control Stock
Options and Restricted Stock Awards Under the 2005 Equity
Plan.
Vesting, Withholding Taxes and Transferability of All
Awards.
The terms and conditions of each award
made under the 2005 Equity Plan, including vesting requirements,
will be set forth consistent with the plan in a written
agreement with the grantee. Except in limited circumstances, no
award under the 2005 Equity Plan may vest and become exercisable
within six months of the date of grant, unless the Compensation
Committee determines otherwise.
Unless the Compensation Committee determines otherwise, a
participant may elect to deliver shares of common stock, or to
have us withhold shares of common stock otherwise issuable upon
exercise of an option or upon grant or vesting of restricted
stock or a restricted stock unit, in order to satisfy our
withholding obligations in connection with any such exercise,
grant or vesting.
Unless the Compensation Committee determines otherwise, no award
made under the 2005 Equity Plan will be transferable other than
by will or the laws of descent and distribution or to a
grantees family member by gift or a qualified domestic
relations order, and each award may be exercised only by the
grantee, his or her qualified family member transferee, or any
of their respective executors, administrators, guardians, or
legal representatives.
Amendment and Termination of the 2005 Equity
Plan.
The Board may amend or terminate the 2005
Equity Plan in its discretion, except that no amendment will
become effective without prior approval of our stockholders if
24
such approval is necessary for continued compliance with
applicable stock exchange listing requirements. Furthermore, any
termination may not materially and adversely affect any
outstanding rights or obligations under the 2005 Equity Plan
without the affected participants consent. If not
previously terminated by the Board, the 2005 Equity Plan will
terminate on the tenth anniversary of its adoption.
On April 3, 2007, the Committee amended the 2005 Equity
Plan to extend the protection period following a
Change in Control from one year to four years following a Change
in Control, during which a participants equity awards
would accelerate and become fully vested and exercisable and all
restrictions on shares of restricted stock units would
automatically lapse if the participant were subject to an
Involuntary Termination.
Outstanding
Equity Awards
The following table summarizes the outstanding equity award
holdings of our NEOs as of December 31, 2007:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units of
|
|
|
or Units
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
Stock that
|
|
|
of Stock that
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
Price ($)
|
|
|
Date
|
|
|
Vested (#)
|
|
|
Vested ($)
|
|
|
John G. Pasqualetto
|
|
|
155,292
|
|
|
|
|
|
|
$
|
6.54
|
|
|
|
9/30/13
|
|
|
|
75,000(2
|
)
|
|
$
|
1,131,000
|
|
|
|
|
38,250
|
|
|
|
38,249
|
|
|
|
10.50
|
|
|
|
1/20/15
|
|
|
|
60,000(3
|
)
|
|
|
904,800
|
|
|
|
|
6,250
|
|
|
|
18,750
|
|
|
|
17.64
|
|
|
|
3/17/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
18.21
|
|
|
|
3/28/17
|
|
|
|
|
|
|
|
|
|
Richard J. Gergasko
|
|
|
77,646
|
|
|
|
|
|
|
|
6.54
|
|
|
|
9/30/13
|
|
|
|
37,500(2
|
)
|
|
|
565,500
|
|
|
|
|
22,950
|
|
|
|
22,949
|
|
|
|
10.50
|
|
|
|
1/20/15
|
|
|
|
30,000(3
|
)
|
|
|
452,400
|
|
|
|
|
3,125
|
|
|
|
9,375
|
|
|
|
17.64
|
|
|
|
3/17/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
18.21
|
|
|
|
3/28/17
|
|
|
|
|
|
|
|
|
|
Joseph S. De Vita
|
|
|
58,235
|
|
|
|
|
|
|
|
6.54
|
|
|
|
9/30/13
|
|
|
|
37,500(2
|
)
|
|
|
565,500
|
|
|
|
|
28,687
|
|
|
|
28,687
|
|
|
|
10.50
|
|
|
|
1/20/15
|
|
|
|
27,000(3
|
)
|
|
|
407,160
|
|
|
|
|
3,125
|
|
|
|
9,375
|
|
|
|
17.64
|
|
|
|
3/17/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
|
18.21
|
|
|
|
3/28/17
|
|
|
|
|
|
|
|
|
|
Richard W. Seelinger
|
|
|
38,823
|
|
|
|
|
|
|
|
6.54
|
|
|
|
9/30/13
|
|
|
|
12,000(2
|
)
|
|
|
180,960
|
|
|
|
|
11,475
|
|
|
|
11,475
|
|
|
|
10.50
|
|
|
|
1/20/15
|
|
|
|
18,000(3
|
)
|
|
|
271,440
|
|
|
|
|
1,000
|
|
|
|
3,000
|
|
|
|
17.64
|
|
|
|
3/17/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
18.21
|
|
|
|
3/28/17
|
|
|
|
|
|
|
|
|
|
Jeffrey C. Wanamaker
|
|
|
58,235
|
|
|
|
|
|
|
|
6.54
|
|
|
|
9/30/13
|
|
|
|
12,000(2
|
)
|
|
|
180,960
|
|
|
|
|
7,650
|
|
|
|
7,650
|
|
|
|
10.50
|
|
|
|
1/20/15
|
|
|
|
21,000(3
|
)
|
|
|
316,680
|
|
|
|
|
1,000
|
|
|
|
3,000
|
|
|
|
17.64
|
|
|
|
3/17/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
18.21
|
|
|
|
3/28/17
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Stock options granted to NEOs vest 25% on each of the first four
anniversaries of the date of grant. The following table provides
information with respect to the vesting of each NEOs stock
options that were unexercisable at December 31, 2007:
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year in Which Options Vest
|
|
|
|
|
Name
|
|
Grant Date
|
|
|
2008
|
|
|
2009
|
|
|
2010
|
|
|
2011
|
|
|
Total
|
|
|
John G. Pasqualetto
|
|
|
1/20/05
|
|
|
|
19,124
|
|
|
|
19,125
|
|
|
|
|
|
|
|
|
|
|
|
38,249
|
|
|
|
|
3/17/06
|
|
|
|
6,250
|
|
|
|
6,250
|
|
|
|
6,250
|
|
|
|
|
|
|
|
18,750
|
|
|
|
|
3/28/07
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
20,000
|
|
Richard J. Gergasko
|
|
|
1/20/05
|
|
|
|
11,474
|
|
|
|
11,475
|
|
|
|
|
|
|
|
|
|
|
|
22,949
|
|
|
|
|
3/17/06
|
|
|
|
3,125
|
|
|
|
3,125
|
|
|
|
3,125
|
|
|
|
|
|
|
|
9,375
|
|
|
|
|
3/28/07
|
|
|
|
2,500
|
|
|
|
2,500
|
|
|
|
2,500
|
|
|
|
2,500
|
|
|
|
10,000
|
|
Joseph S. De Vita
|
|
|
1/20/05
|
|
|
|
14,344
|
|
|
|
14,343
|
|
|
|
|
|
|
|
|
|
|
|
28,687
|
|
|
|
|
3/17/06
|
|
|
|
3,125
|
|
|
|
3,125
|
|
|
|
3,125
|
|
|
|
|
|
|
|
9,375
|
|
|
|
|
3/28/07
|
|
|
|
2,250
|
|
|
|
2,250
|
|
|
|
2,250
|
|
|
|
2,250
|
|
|
|
9,000
|
|
Richard W. Seelinger
|
|
|
1/20/05
|
|
|
|
5,738
|
|
|
|
5,737
|
|
|
|
|
|
|
|
|
|
|
|
11,475
|
|
|
|
|
3/17/06
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
3/28/07
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
6,000
|
|
Jeffrey C. Wanamaker
|
|
|
1/20/05
|
|
|
|
3,825
|
|
|
|
3,825
|
|
|
|
|
|
|
|
|
|
|
|
7,650
|
|
|
|
|
3/17/06
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
3/28/07
|
|
|
|
1,750
|
|
|
|
1,750
|
|
|
|
1,750
|
|
|
|
1,750
|
|
|
|
7,000
|
|
|
|
|
(2)
|
|
Shares of restricted common stock granted to our NEOs on
March 17, 2006 vest on March 17, 2009, the third
anniversary of the date of grant.
|
|
(3)
|
|
Shares of restricted common stock granted to our NEOs on
March 28, 2007 that vest on March 28, 2010, the third
anniversary of the date of grant.
|
Options
Exercised and Restricted Stock Vested
None of our NEOs exercised stock options in 2007, and no shares
of restricted stock vested during 2007.
Potential
Payments Upon Termination or Change of Control
The table below reflects the amount of compensation to each of
the NEOs assuming each NEOs employment was terminated
under each of the circumstances set forth below, or a change in
control occurred, on December 31, 2007. The amounts shown
in the table are estimates, and the actual amounts to be paid
can only be determined at the time of the NEOs separation
from the SeaBright or upon a change in control.
John
G. Pasqualetto, Chairman, President and Chief Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause
|
|
|
|
Without Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Following
|
|
|
|
Resignation for
|
|
|
Voluntary
|
|
|
Termination
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Good Reason
|
|
|
Resignation
|
|
|
for Cause
|
|
|
Retirement
|
|
|
Disability
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
750,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
750,000
|
|
Accrued Vacation
|
|
|
43,910
|
|
|
|
43,910
|
|
|
|
43,910
|
|
|
|
43,910
|
|
|
|
43,910
|
|
|
|
43,910
|
|
Payment under 2007 Bonus Plan
|
|
|
586,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
586,625
|
|
Health and Welfare Benefits
|
|
|
9,060
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,060
|
|
Value of Restricted Stock Awards under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,035,800
|
|
|
|
2,035,800
|
|
|
|
2,035,800
|
|
Value of Stock Options under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,180
|
|
|
|
175,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,389,595
|
|
|
$
|
43,910
|
|
|
$
|
43,910
|
|
|
$
|
2,079,710
|
|
|
$
|
2,254,890
|
|
|
$
|
3,600,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
Richard
J. Gergasko, Executive Vice President
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause
|
|
|
|
Without Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Following
|
|
|
|
Resignation for
|
|
|
Voluntary
|
|
|
Termination
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Good Reason
|
|
|
Resignation
|
|
|
for Cause
|
|
|
Retirement
|
|
|
Disability
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
322,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
322,000
|
|
Accrued Vacation
|
|
|
32,406
|
|
|
|
32,406
|
|
|
|
32,406
|
|
|
|
32,406
|
|
|
|
32,406
|
|
|
|
32,406
|
|
Payment under 2007 Bonus Plan
|
|
|
300,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,675
|
|
Value of Restricted Stock Awards under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,017,900
|
|
|
|
1,017,900
|
|
|
|
1,017,900
|
|
Value of Stock Options under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,106
|
|
|
|
105,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
655,081
|
|
|
$
|
32,406
|
|
|
$
|
32,406
|
|
|
$
|
1,050,306
|
|
|
$
|
1,155,412
|
|
|
$
|
1,778,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
S. De Vita, Senior Vice President, Chief Financial Officer and
Assistant Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause
|
|
|
|
Without Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Following
|
|
|
|
Resignation for
|
|
|
Voluntary
|
|
|
Termination
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Good Reason
|
|
|
Resignation
|
|
|
for Cause
|
|
|
Retirement
|
|
|
Disability
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
295,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
295,000
|
|
Accrued Vacation
|
|
|
27,798
|
|
|
|
27,798
|
|
|
|
27,798
|
|
|
|
27,798
|
|
|
|
27,798
|
|
|
|
27,798
|
|
Payment under 2007 Bonus Plan
|
|
|
261,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
261,000
|
|
Value of Restricted Stock Awards under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
972,660
|
|
|
|
972,660
|
|
|
|
972,660
|
|
Value of Stock Options under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,386
|
|
|
|
131,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
583,798
|
|
|
$
|
27,798
|
|
|
$
|
27,798
|
|
|
$
|
1,000,458
|
|
|
$
|
1,131,844
|
|
|
$
|
1,687,844
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
W. Seelinger, Senior Vice President Policyholder
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause
|
|
|
|
Without Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Following
|
|
|
|
Resignation for
|
|
|
Voluntary
|
|
|
Termination for
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Good Reason
|
|
|
Resignation
|
|
|
Cause
|
|
|
Retirement
|
|
|
Disability
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
236,250
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
236,250
|
|
Accrued Vacation
|
|
|
14,114
|
|
|
|
14,114
|
|
|
|
14,114
|
|
|
|
14,114
|
|
|
|
14,114
|
|
|
|
14,114
|
|
Payment under 2007 Bonus Plan
|
|
|
177,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
177,413
|
|
Value of Restricted Stock Awards under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
452,400
|
|
|
|
452,400
|
|
|
|
452,400
|
|
Value of Stock Options under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,556
|
|
|
|
52,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
427,777
|
|
|
$
|
14,114
|
|
|
$
|
14,114
|
|
|
$
|
466,514
|
|
|
$
|
519,070
|
|
|
$
|
932,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
Jeffrey
C. Wanamaker, Senior Vice President
Underwriting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cause
|
|
|
|
Without Cause or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Following
|
|
|
|
Resignation for
|
|
|
Voluntary
|
|
|
Termination for
|
|
|
|
|
|
Death or
|
|
|
Change in
|
|
Benefit
|
|
Good Reason
|
|
|
Resignation
|
|
|
Cause
|
|
|
Retirement
|
|
|
Disability
|
|
|
Control
|
|
|
Cash Severance
|
|
$
|
222,600
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
222,600
|
|
Accrued Vacation
|
|
|
21,547
|
|
|
|
21,547
|
|
|
|
21,547
|
|
|
|
21,547
|
|
|
|
21,547
|
|
|
|
21,547
|
|
Payment under 2007 Bonus Plan
|
|
|
166,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,782
|
|
Value of Restricted Stock Awards under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
497,640
|
|
|
|
497,640
|
|
|
|
497,640
|
|
Value of Stock Options under 2005 Equity Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,037
|
|
|
|
35,037
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
410,929
|
|
|
$
|
21,547
|
|
|
$
|
21,547
|
|
|
$
|
519,187
|
|
|
$
|
554,224
|
|
|
$
|
943,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Severance and Payments under 2007 Bonus Plan
The employment agreements with our NEOs provide that upon
termination, the executives are generally entitled to receive
amounts earned during their term of employment. In addition, if
an executives employment is terminated without
Cause, the executive will be entitled to receive his
or her base salary payable in regular installments from the date
of termination for a severance period set forth in the
employment agreement, or until the executive obtains other
employment, whichever occurs first. If the Chief Executive
Officers employment is terminated without
Cause, he will be entitled to receive his bonus
(prorated to the date of termination) payable in regular
installments from the date of termination for a severance period
set forth in his employment agreement, or until he obtains other
employment, whichever occurs first. However, the executive is
under no duty to seek alternative employment during the
severance period. The severance period for Mr. Pasqualetto,
our Chief Executive Officer, is 18 months from the date of
termination, and the severance period for the other NEOs is
12 months from the date of termination. The employment
agreements also provide that the executives will be restricted
from engaging in specified competitive activities and from
soliciting SeaBrights employees, customers, suppliers or
other business relations for the applicable severance period.
Under the employment agreements, termination shall be for
Cause if the executive:
(i) is continuously inattentive to his or her lawful duties
after at least one written notice has been provided and the
executive has failed to cure the same within a
30-day
period thereafter;
(ii) reports to work under the influence of alcohol or
illegal drugs, or uses illegal drugs (whether or not at the
workplace) or engages in other conduct causing us substantial
public disgrace or disrepute or economic harm;
(iii) breaches his or her duty of loyalty to us or engages
in any acts of dishonesty or fraud with respect to us or any of
our business relations;
(iv) is convicted of a felony or any crime involving
dishonesty, breach of trust, or physical or emotional harm to
any person (or enters a plea of guilty or nolo contendere with
respect thereto); or
(v) breaches any material term of his or her employment
agreement or any other agreement between the executive and us or
any of our affiliates and the breach (if capable of cure) is not
cured within thirty (30) days following written notice
thereof from us.
In addition, if Mr. Pasqualetto terminates his employment
for Good Reason, he will be entitled to receive his
base salary and bonus (prorated to the dated of termination)
payable in regular installments from the date of termination for
a period of 18 months, or until he obtains other
employment, whichever occurs first. Good Reason
means the executives voluntary resignation within
90 days after the occurrence of any of the following:
(i) without the express written consent of the executive, a
reduction in the executives annualized base salary;
(ii) without the
28
express written consent of the executive, a material diminution
in his or her supervisory responsibilities; (iii) the
relocation of the executive in connection with any relocation of
our principal place of business to a facility or a location more
than fifty (50) miles outside of the greater Seattle,
Washington metropolitan area without the executives
written consent; or (iv) our failure to obtain the
assumption of the executives employment agreement by any
successors for the remainder of its term.
If Mr. Pasqualettos employment is terminated without
Cause, or if he terminates his employment for
Good Reason, we have also agreed to pay
Mr. Pasqualettos COBRA health insurance premiums from
the date of termination through the date that is 18 months
after the date of termination.
Stock
Options and Restricted Stock Awards under the 2005 Equity
Plan
Stock Options.
Under the 2005 Equity Plan,
options that are exercisable on the date of termination of a
participants employment with SeaBright generally expire
30 days after the date of termination, so long as the
participant does not compete with us during the
30-day
period, and options that are not exercisable on the date of
termination are forfeited immediately. There are, however,
exceptions depending upon the circumstances of termination. In
the event of retirement, a participants exercisable
options will remain so for up to 90 days after the date of
retirement, so long as the participant does not compete with us
during the
90-day
period. The participants options that are not exercisable
on the date of retirement will be forfeited, unless the
Compensation Committee determines in its discretion that the
options shall become fully vested and exercisable. In the case
of a participants death or disability, all options will
become fully vested and exercisable and remain so for up to
180 days after the date of death or disability, so long as
the participant does not compete with us during the
180-day
period. In each of the foregoing circumstances, the Board or
Compensation Committee may elect to further extend the
applicable exercise period in its discretion. Upon termination
for Cause, all options will terminate immediately,
whether or not exercisable. If we undergo a Change in
Control and a participant is terminated from service
through an Involuntary Termination within four years
thereafter, all of the participants options will become
fully vested and exercisable and remain so for up to one year
after the date of termination. In addition, the Compensation
Committee has the authority to grant options that will become
fully vested and exercisable automatically upon a Change
in Control of SeaBright, whether or not the participant is
subsequently terminated. The option award agreements pursuant to
which options have been awarded to the NEOs under the 2005
Equity Plan do not provide that the options will become fully
vested and exercisable automatically upon a Change in
Control.
Restricted Stock Awards.
Under the 2005 Equity
Plan, generally, if a participants employment with us
terminates, all shares of restricted stock granted to the
participant on which the restrictions have not lapsed shall be
immediately forfeited to SeaBright. However, upon a
participants death, disability or retirement, all
restrictions on shares of restricted stock granted to the
participant shall lapse. If we undergo a Change in
Control and a participant is terminated from service
through an Involuntary Termination within four years
thereafter, all restrictions on shares of restricted stock
granted to the participant shall lapse. In addition, the
Compensation Committee has the authority to grant shares of
restricted stock with respect to which all restrictions lapse
automatically upon a Change in Control, whether or
not the participant is subsequently terminated. The restricted
stock grant agreements pursuant to which shares of restricted
stock have been awarded to the NEOs under the 2005 Equity Plan
do not provide that the restrictions on shares of restricted
stock lapse automatically upon a Change in Control.
Under the 2005 Equity Plan, Cause means the
occurrence of one or more of the following events:
(i) conviction of a felony or any crime or offense lesser
than a felony involving our property;
(ii) conduct that has caused demonstrable and serious
injury to us, monetary or otherwise;
(iii) willful refusal to perform or substantial disregard
of duties properly assigned, as determined by us; or
(iv) breach of duty of loyalty to us or other act of fraud
or dishonesty with respect to us.
29
Change in Control for purposes of the 2005 Equity
Plan means the occurrence of one of the following events:
(i) if any person or group as those
terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the Exchange
Act), other than affiliates of Summit Partners and certain
other exempt persons, acquires 50% or more of our voting
securities;
(ii) during any period of two consecutive years, a majority
of our Directors are replaced (other than any new Directors
whose election or nomination was approved by at least two-thirds
of the Directors then still in office who either were Directors
at the beginning of the two-year period or whose election was
previously so approved);
(iii) consummation of a merger or consolidation of
SeaBright with any other corporation, other than a merger or
consolidation (a) which would result in our voting
securities outstanding immediately prior to the merger or
consolidation continuing to represent more than 50% of the
combined voting power of the surviving entity or (b) by
which our corporate existence is not affected and following
which our Chief Executive Officer and Directors retain their
positions with us (and constitute at least a majority of the
Board); or
(iv) consummation of a plan of complete liquidation of
SeaBright or a sale or disposition of all or substantially all
of our assets, other than a sale to affiliates of Summit
Partners and certain other exempt persons.
Involuntary Termination means (i) the
participants involuntary dismissal or discharge by us or
one of our subsidiaries or a successor for reasons other than
Cause or (ii) such individuals voluntary resignation
following (A) a change in his or her position with
SeaBright which materially reduces his or her level of
responsibility, (B) a reduction in his or her level of
compensation (base salary or any target incentive compensation)
by more than ten percent or (C) a relocation of such
individuals place of employment by more than fifty
(50) miles, provided and only if such change, reduction or
relocation is effected by us or one of our subsidiaries or a
successor without the participants written consent.
For additional information on our 2005 Equity Plan, see
Employee Benefit Plans 2005
Long-Term Equity Incentive Plan.
Stock
Options Under the 2003 Stock Option Plan
Under the 2003 Stock Option Plan, if a participant is terminated
other than for Cause, the participants vested
and exercisable options remain so for 30 days after the
date of termination. If a participant retires, the
participants vested and exercisable options remain so for
45 days after the date of retirement. Upon death or
disability of a participant, the participants vested and
exercisable options remain so for 90 days after the date of
death or disability. All options that are not vested and
exercisable on the date of termination of the participants
employment will be forfeited as of the date of termination. In
the event of a Sale of the Company and a participant
is terminated from service through an Involuntary
Termination within four years thereafter, all of the
participants options will become fully vested and
exercisable and remain so for up to one year after the date of
termination. In addition, the Compensation Committee or the
Board may provide, in its discretion, that the options shall
become immediately exercisable by any participants who are
employed by us at the time of the Sale of the
Company
and/or
that
all options shall terminate if not exercised as of the date of
the Sale of the Company.
Under the 2003 Stock Option Plan, Cause means if a
participant:
(i) acts in bad faith and to the detriment of SeaBright;
(ii) refuses or fails to act in accordance with any
specific direction or order of SeaBright or the Board;
(iii) exhibits in regard to his employment unfitness or
unavailability for service, unsatisfactory performance,
misconduct, dishonesty, habitual neglect, or incompetence;
(iv) is convicted of a crime involving dishonesty, breach
of trust, or physical or emotional harm to any person (or enters
a plea of guilty or nolo contendere with respect
thereto); or
30
(v) breaches any material term of the 2003 Stock Option
Plan or breaches any other agreement (including, without
limitation, any employment agreement) between or among the
participant and us.
Cause can also have any other meaning that may be
set forth in a participants option award agreement.
Sale of the Company under the 2003 Stock Option Plan
means the sale of SeaBright pursuant to which any party or
parties (other than Summit Partners, L.P.
and/or
any
of its affiliated investment funds) acquire (i) our capital
stock possessing the voting power under normal circumstances to
elect a majority of our Board of Directors (whether by merger,
consolidation or sale or transfer of our capital stock) or
(ii) all or substantially all of our assets determined on a
consolidated basis.
Involuntary Termination has the same meaning under
the 2003 Stock Option Plan as under the 2005 Stock Option Plan.
Please see Stock Options and Restricted Stock
Awards Under the 2005 Stock Option Plan.
For additional information on our 2003 Stock Option Plan, see
Employee Benefit Plans 2003 Stock
Option Plan.
Equity
Compensation Plan Information
The following table shows the total number of outstanding
options and shares available for future issuances under our
equity compensation plans as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
Number of
|
|
|
|
|
|
Remaining Available
|
|
|
|
Securities to be
|
|
|
|
|
|
for Future Issuance
|
|
|
|
Issued Upon
|
|
|
Weighted-Average
|
|
|
Under Equity
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Compensation Plan
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
(Excluding Securities
|
|
|
|
Options, Warrants
|
|
|
Options, Warrants
|
|
|
Reflected in Column
|
|
Plan Category
|
|
and Rights
|
|
|
and Rights
|
|
|
(a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
Equity compensation plans approved by stockholders
|
|
|
1,015,321
|
(1)
|
|
$
|
10.70
|
|
|
|
1,151,999
|
(2)
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,015,321
|
|
|
|
10.70
|
|
|
|
1,151,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes options granted under our 2003 Stock Option Plan and
options granted under our 2005 Equity Plan. Does not include
760,030 shares of restricted stock granted between March
2005 and March 2008 pursuant to our 2005 Equity Plan.
|
|
(2)
|
|
Includes only options eligible for grant under the 2005 Equity
Plan. In January 2006, the Compensation Committee terminated the
ability to grant future stock option awards under the 2003 Stock
Option Plan.
|
31
DIRECTOR
COMPENSATION
Summary
of Director Compensation
On March 28, 2007, the Board approved a new compensation
program for non-employee directors. The new compensation program
was structured based on a number of factors, including an
analysis by an independent compensation consultant retained by
the Compensation Committee. The consultants analysis
included a comparison of our director compensation practices to
those of our peers. Under the director compensation program, new
non-employee directors elected to the Board will receive an
initial restricted stock grant in the amount of $75,000, which
will be subject to three-year cliff vesting. In the event of a
change in control of us or upon the death, disability or
retirement of the participant, all restrictions relating to all
outstanding restricted stock grants will lapse. Following this
initial grant, no additional equity incentive compensation will
be granted to such new directors until the next annual meeting
of stockholders.
In addition, non-employee directors receive an annual retainer
of $20,000 and an additional $2,500 for each in-person Board
meeting attended and $1,000 for each telephonic Board meeting.
Certain members of committees of the Board also receive annual
retainers. Audit Committee members receive an additional annual
retainer of $4,000, except the chair of the Audit Committee who
receives an additional annual retainer of $12,000. The chairs of
the Compensation Committee, the Nominating and Corporate
Governance Committee and the Finance Committee, a committee of
the board of directors of our wholly-owned subsidiary, SeaBright
Insurance Company, each receive an additional annual retainer of
$5,000.
Our directors are also eligible to receive stock options and
other equity-based awards when, as and if determined by the
Compensation Committee pursuant to the terms of the 2005 Equity
Plan. Under our director compensation program, non-employee
directors will receive annual equity incentive grants on the
date of each annual meeting of stockholders, unless the
Compensation Committee determines otherwise. These equity
incentive grants will consist of restricted stock grants valued
at $60,000 and stock options valued at $20,000. The restricted
stock grants will be subject to three-year cliff vesting, and
the stock option grants will vest over a four-year period with
one-fourth of the options vesting on the first anniversary of
the grant date and the remaining three-fourths vesting equally
on a monthly basis over the following 36 months. The stock
options have an exercise price equal to the closing price of our
common stock on the date of grant, as reported on the Nasdaq
Global Select Market. In the event of a change in control of us
or upon the death or disability of the participant, all
restrictions relating to all outstanding restricted stock grants
will lapse and all stock option grants will become fully vested
and exercisable. Our Compensation Committee may, in its
discretion, determine to exclude one or more non-employee
directors from receiving these equity grants in any given year.
In 2007, the annual equity incentive grants to non-employee
directors were made on May 15, 2007, the date of our annual
meeting of stockholders. In accordance with our director
compensation program, the Compensation Committee approved the
grant of options with a value of $20,000, calculated using the
Black Scholes option valuation model, which would have resulted
in the grant of 2,950 stock options to each director on that
date. However, due to a clerical error, each director was
mistakenly granted only 1,092 stock options (valued at
approximately $7,400) on that date. Accordingly, to make up for
this error, on May 24, 2007 each non-employee director was
granted an additional 1,858 stock options having the same
exercise price, vesting schedule, expiration date and other
terms as the May 15 grants.
Our director compensation program also includes an ownership
guideline generally providing that non-employee directors will
own shares and options with a value equal to five times the
annual retainer for serving as a member of the Board of
Directors, excluding retainers for serving on a committee of the
Board, after five years of service as a director. The value for
this purpose is based on the greater of the price of the shares
(if the shares are in the form of restricted stock) or the fair
market value.
We also reimburse all directors for reasonable out-of-pocket
expenses they incur in connection with their service as
directors. Directors who are also our employees receive no
compensation for serving as directors.
32
Director
Compensation
The following table summarizes compensation paid to or earned by
members of our Board of Directors in 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
or Paid
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
in Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)
|
|
|
Peter Y. Chung
|
|
$
|
55,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
55,000
|
|
Joseph A. Edwards
|
|
|
47,000
|
|
|
|
33,557
|
|
|
|
3,275
|
|
|
|
83,832
|
|
William M. Feldman(3)
|
|
|
70,750
|
|
|
|
30,584
|
|
|
|
20,033
|
|
|
|
121,367
|
|
Mural R. Josephson
|
|
|
66,750
|
|
|
|
30,584
|
|
|
|
16,188
|
|
|
|
113,522
|
|
George M. Morvis
|
|
|
60,250
|
|
|
|
30,584
|
|
|
|
16,188
|
|
|
|
107,022
|
|
Michael D. Rice(4)
|
|
|
10,500
|
|
|
|
6,737
|
|
|
|
|
|
|
|
17,237
|
|
|
|
|
(1)
|
|
Includes compensation cost recognized in 2007 related to shares
of restricted stock granted to our directors under our 2005
Equity Plan. These amounts are calculated in accordance with
SFAS 123R, except that no estimate of forfeitures is made.
No shares of restricted stock were forfeited by our directors
during 2007. See Note 20 to the Consolidated Financial
Statements included in our Annual Report on
Form 10-K
for the year ended December 31, 2007, filed with the SEC on
March 17, 2008, for a discussion of the relevant
assumptions used in calculating compensation cost recognized
pursuant to SFAS 123R.
|
|
|
|
The following table reflects the number of shares outstanding at
December 31, 2007. The grant date fair value, calculated in
accordance with SFAS 123R except that no estimate of
forfeitures is made, of the restricted stock granted to each of
Messrs. Edwards, Feldman, Josephson and Morvis on
May 15, 2007 was $60,016. The grant date fair value,
calculated in accordance with SFAS 123R except that no
estimate of forfeitures is made, of the restricted stock granted
to Mr. Rice on September 24, 2007 was $75,009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
# of Shares
|
|
|
|
|
|
|
Outstanding at
|
|
|
|
|
# of Shares
|
|
December 31,
|
Name
|
|
Grant Date
|
|
Granted
|
|
2007
|
|
Joseph A. Edwards
|
|
|
11/14/06
|
|
|
|
4,000
|
|
|
|
4,000
|
|
|
|
|
5/15/07
|
|
|
|
3,276
|
|
|
|
3,276
|
|
William M. Feldman
|
|
|
3/24/05
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
|
5/25/06
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
|
5/15/07
|
|
|
|
3,276
|
|
|
|
3,276
|
|
Mural R. Josephson
|
|
|
3/24/05
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
|
5/25/06
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
|
5/15/07
|
|
|
|
3,276
|
|
|
|
3,276
|
|
George M. Morvis
|
|
|
3/24/05
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
|
5/25/06
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
|
5/15/07
|
|
|
|
3,276
|
|
|
|
3,276
|
|
Michael D. Rice
|
|
|
9/24/07
|
|
|
|
4,151
|
|
|
|
4,151
|
|
|
|
|
(2)
|
|
Includes compensation cost recognized in 2007 related to
incentive stock options granted to our directors. These amounts
are calculated in accordance with SFAS 123R, except that no
estimate of forfeitures is made. No stock options were forfeited
by our directors during 2007. See Note 20 to the
Consolidated Financial Statements included in our Annual Report
on
Form 10-K
for the year ended December 31, 2007, filed with the SEC on
March 17, 2008, for a discussion of the relevant
assumptions used in calculating compensation cost recognized
pursuant to SFAS 123R.
|
|
|
|
The following table reflects the number of options outstanding
at December 31, 2007. The grant date fair value, calculated
in accordance with SFAS 123R except that no estimate of
forfeitures is made, of the options granted to each of
Messrs. Edwards, Feldman, Josephson and Morvis on
May 15, 2007 was $7,404. The grant date fair
|
33
|
|
|
|
|
value, calculated in accordance with SFAS 123R except that
no estimate of forfeitures is made, of the options granted to
each of Messrs. Edwards, Feldman, Josephson and Morvis on
May 24, 2007 was $12,244.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
# of Options
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Outstanding at
|
|
Aggregate
|
|
Option
|
|
|
|
|
# of Options
|
|
Exercise
|
|
December 31,
|
|
Grant Date
|
|
Expiration
|
Name
|
|
Grant Date
|
|
Granted
|
|
Price
|
|
2007
|
|
Fair Value
|
|
Date
|
|
Joseph A. Edwards
|
|
|
5/15/07
|
|
|
|
1,092
|
|
|
$
|
18.32
|
|
|
|
1,092
|
|
|
$
|
7,404
|
|
|
|
5/15/17
|
|
|
|
|
5/24/07
|
|
|
|
1,858
|
|
|
|
18.32
|
|
|
|
1,858
|
|
|
|
12,244
|
|
|
|
5/15/17
|
|
William M. Feldman
|
|
|
1/20/05
|
|
|
|
7,650
|
|
|
|
10.50
|
|
|
|
7,650
|
|
|
|
23,562
|
|
|
|
1/20/15
|
|
|
|
|
3/24/05
|
|
|
|
4,000
|
|
|
|
12.54
|
|
|
|
4,000
|
|
|
|
11,960
|
|
|
|
3/24/15
|
|
|
|
|
5/25/06
|
|
|
|
4,000
|
|
|
|
17.16
|
|
|
|
4,000
|
|
|
|
20,640
|
|
|
|
5/25/16
|
|
|
|
|
5/15/07
|
|
|
|
1,092
|
|
|
|
18.32
|
|
|
|
1,092
|
|
|
|
7,404
|
|
|
|
5/15/17
|
|
|
|
|
5/24/07
|
|
|
|
1,858
|
|
|
|
18.32
|
|
|
|
1,858
|
|
|
|
12,244
|
|
|
|
5/15/17
|
|
Mural R. Josephson
|
|
|
2/28/04
|
|
|
|
7,650
|
|
|
|
6.54
|
|
|
|
7,650
|
|
|
|
8,186
|
|
|
|
2/28/14
|
|
|
|
|
3/24/05
|
|
|
|
4,000
|
|
|
|
12.54
|
|
|
|
4,000
|
|
|
|
11,960
|
|
|
|
3/24/15
|
|
|
|
|
5/25/06
|
|
|
|
4,000
|
|
|
|
17.16
|
|
|
|
4,000
|
|
|
|
20,640
|
|
|
|
5/25/16
|
|
|
|
|
5/15/07
|
|
|
|
1,092
|
|
|
|
18.32
|
|
|
|
1,092
|
|
|
|
7,404
|
|
|
|
5/15/17
|
|
|
|
|
5/24/07
|
|
|
|
1,858
|
|
|
|
18.32
|
|
|
|
1,858
|
|
|
|
12,244
|
|
|
|
5/15/17
|
|
George M. Morvis
|
|
|
2/28/04
|
|
|
|
7,650
|
|
|
|
6.54
|
|
|
|
7,650
|
|
|
|
8,186
|
|
|
|
2/28/14
|
|
|
|
|
3/24/05
|
|
|
|
4,000
|
|
|
|
12.54
|
|
|
|
4,000
|
|
|
|
11,960
|
|
|
|
3/24/15
|
|
|
|
|
5/25/06
|
|
|
|
4,000
|
|
|
|
17.16
|
|
|
|
4,000
|
|
|
|
20,640
|
|
|
|
5/25/16
|
|
|
|
|
5/15/07
|
|
|
|
1,092
|
|
|
|
18.32
|
|
|
|
1,092
|
|
|
|
7,404
|
|
|
|
5/15/17
|
|
|
|
|
5/24/07
|
|
|
|
1,858
|
|
|
|
18.32
|
|
|
|
1,858
|
|
|
|
12,244
|
|
|
|
5/15/17
|
|
|
|
|
(3)
|
|
Mr. Feldmans fees earned include compensation for his
services as Chairman of the Finance Committee of our
wholly-owned subsidiary, SeaBright Insurance Company.
|
|
(4)
|
|
Mr. Rice was elected to our Board of Directors on
September 24, 2007.
|
34
BENEFICIAL
OWNERSHIP TABLE
The following table provides information concerning beneficial
ownership of our common stock as of March 26, 2008, by:
|
|
|
|
|
each of our directors and nominees;
|
|
|
|
each of our named executive officers;
|
|
|
|
each person known by us to beneficially own 5% or more of our
outstanding common stock; and
|
|
|
|
all of our directors and executive officers as a group.
|
The following table lists the number of shares and percentage of
shares beneficially owned based on 20,855,102 shares of
common stock outstanding as of March 26, 2008 and a total
of 653,991 common stock options currently exercisable or
exercisable by our directors and executive officers as a group
within 60 days of March 26, 2008.
Beneficial ownership is determined in accordance with the rules
of the SEC, and generally includes voting power
and/or
investment power with respect to the securities held. Shares of
common stock subject to options currently exercisable or
exercisable within 60 days of March 26, 2008 are
deemed outstanding and beneficially owned by the person holding
such options for purposes of computing the number of shares and
percentage beneficially owned by such person, but are not deemed
outstanding for purposes of computing the percentage
beneficially owned by any other person. Except as indicated in
the footnotes to this table, and subject to applicable community
property laws, the persons or entities named have sole voting
and investment power with respect to all shares of our common
stock shown as beneficially owned by them.
|
|
|
|
|
|
|
|
|
|
|
Shares of Common Stock Beneficially Owned
|
|
Name of Beneficial Owner
|
|
Number
|
|
|
Percentage
|
|
|
5% or more beneficial owners:
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP(1)
|
|
|
1,581,510
|
|
|
|
7.6
|
%
|
Earnest Partners, LLC(2)
|
|
|
1,246,214
|
|
|
|
6.0
|
%
|
Skyline Asset Management, LP(3)
|
|
|
1,151,981
|
|
|
|
5.5
|
%
|
T. Rowe Price Associates, Inc.(4)
|
|
|
1,078,191
|
|
|
|
5.2
|
%
|
Directors and named executive officers:
|
|
|
|
|
|
|
|
|
John G. Pasqualetto(5)
|
|
|
409,180
|
|
|
|
1.9
|
%
|
Joseph S. De Vita(6)
|
|
|
214,835
|
|
|
|
1.0
|
%
|
Richard J. Gergasko(7)
|
|
|
211,679
|
|
|
|
1.0
|
%
|
Jeffrey C. Wanamaker(8)
|
|
|
122,455
|
|
|
|
*
|
|
Richard W. Seelinger(9)
|
|
|
101,010
|
|
|
|
*
|
|
Mural R. Josephson(10)
|
|
|
25,331
|
|
|
|
*
|
|
George M. Morvis(11)
|
|
|
25,331
|
|
|
|
*
|
|
William M. Feldman(12)
|
|
|
23,419
|
|
|
|
*
|
|
Peter Y. Chung
|
|
|
14,686
|
|
|
|
*
|
|
Joseph A. Edwards(13)
|
|
|
8,014
|
|
|
|
*
|
|
Michael D. Rice(14)
|
|
|
4,151
|
|
|
|
*
|
|
All directors and executive officers as a group (14 persons)
|
|
|
1,275,408
|
|
|
|
5.9
|
%
|
|
|
|
*
|
|
Less than 1%.
|
|
(1)
|
|
Based on a Schedule 13G filed on February 6, 2008 by
Dimensional Fund Advisors LP, which is classified as an
investment advisor in accordance with
Rule 240.13d-1(b)(1)(ii)(E).
The address of Dimensional Fund Advisors LP is 1299 Ocean
Avenue, Santa Monica, CA 90401.
|
35
|
|
|
(2)
|
|
Based on a Schedule 13G filed on February 13, 2008 by
EARNEST Partners, LLC, which is classified as an investment
advisor in accordance with
Rule 240.13d-1(b)(1)(ii)(E).
The address of EARNEST Partners, LLC is 1180 Peachtree Street
NE, Suite 2300, Atlanta, GA 30309.
|
|
(3)
|
|
Based on a Schedule 13G/A filed on January 29, 2008 by
Skyline Asset Management, LP, which is classified as an
investment advisor in accordance with
Rule 240.13d-1(b)(1)(ii)(E).
The address of Skyline Asset Management, LP is 311 South Wacker
Drive, Chicago, IL 60606.
|
|
(4)
|
|
Based on a Schedule 13G filed on February 12, 2008 by
T. Rowe Price Associates, Inc., which is classified as an
investment advisor under Section 203 of the Investment
Advisors Act of 1940. The address of T. Rowe Price Associates,
Inc. is 100 E. Pratt Street, Baltimore, MD 21202.
|
|
(5)
|
|
Includes 75,000 shares of restricted stock that vest in
March 2009, 60,000 shares of restricted stock that vest in
March 2010, and options to purchase 230,166 shares of
common stock exercisable within 60 days of March 26,
2008.
|
|
(6)
|
|
Includes 37,500 shares of restricted stock that vest in
March 2009, 27,000 shares of restricted stock that vest in
March 2010, and options to purchase 109,766 shares of
common stock exercisable within 60 days of March 26,
2008.
|
|
(7)
|
|
Includes 37,500 shares of restricted stock that vest in
March 2009, 30,000 shares of restricted stock that vest in
March 2010, and options to purchase 105,820 shares of
common stock exercisable within 60 days of March 26,
2008.
|
|
(8)
|
|
Includes 12,000 shares of restricted stock that vest in
March 2009, 21,000 shares of restricted stock that vest in
March 2010, and options to purchase 73,460 shares of common
stock exercisable within 60 days of March 26, 2008.
|
|
(9)
|
|
Includes 12,000 shares of restricted stock that vest in
March 2009, 18,000 shares of restricted stock that vest in
March 2010, and options to purchase 59,536 shares of common
stock exercisable within 60 days of March 26, 2008.
|
|
(10)
|
|
Includes 2,000 shares of restricted stock that vested in
March 2008, 2,000 shares of restricted stock that vest in
May 2009, 3,276 shares of restricted stock that vest in
March 2010, and options to purchase 15,055 shares of common
stock exercisable within 60 days of March 26, 2008.
|
|
(11)
|
|
Includes 2,000 shares of restricted stock that vested in
March 2008, 2,000 shares of restricted stock that vest in
May 2009, 3,276 shares of restricted stock that vest in
March 2010, and options to purchase 15,055 shares of common
stock exercisable within 60 days of March 26, 2008.
|
|
(12)
|
|
Includes 2,000 shares of restricted stock that vested in
March 2008, 2,000 shares of restricted stock that vest in
May 2009, 3,276 shares of restricted stock that vest in
March 2010, options to purchase 13,143 shares of common
stock exercisable within 60 days of March 26, 2008,
and 3,000 shares of stock held indirectly by
Mr. Feldman as custodian for his minor children under the
UTMA/IL.
|
|
(13)
|
|
Consists of 4,000 shares of restricted stock that vest in
November 2009, 3,276 shares of restricted stock that vest
in May 2010, and options to purchase 738 shares of common
stock exercisable within 60 days of March 26, 2008.
|
|
(14)
|
|
Consists of 4,151 shares of restricted stock that vest in
September 2010.
|
36
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires our directors,
executive officers and holders of more than 10% of SeaBright
common stock to file reports with the SEC regarding their
ownership and changes in ownership of our securities. Based
solely on representations and information provided to us by the
persons required to make such filings, we believe that, during
fiscal year 2007, our directors, executive officers and 10%
stockholders complied with all Section 16(a) filing
requirements.
37
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Under the Nasdaq marketplace rules, we are required to conduct
an appropriate review of all related party transactions for
potential conflict of interest situations on an ongoing basis,
and all such transactions must be approved by our audit
committee or another independent body of the board of directors.
Our conflict of interest and code of conduct policy provides
that no director or executive officer will knowingly place
themselves in a position that would have the appearance of
being, or could be construed to be, in conflict with our
interests.
Although we have not historically had formal policies and
procedures regarding the review and approval of related party
transactions, all transactions between us and any of our
officers, directors and principal stockholders were approved by
our board of directors. We have not entered into any related
party transactions with our officers, directors or principal
stockholders since January 1, 2007.
38
AUDIT
COMMITTEE DISCLOSURE
Principal
Accounting Fees and Services
The Audit Committee appointed KPMG LLP as SeaBrights
independent registered public accounting firm for the fiscal
year ending December 31, 2007. In connection with that
appointment, we entered into an agreement with KPMG LLP that
sets forth the terms by which KPMG LLP will perform audit
services for us. That agreement provides that the alternative
dispute resolution procedures outlined in the agreement must be
followed as the sole means of resolving any difference between
the parties and prohibits the award of punitive damages.
Stockholders are being asked to ratify the appointment of KPMG
LLP at the annual meeting pursuant to Proposal No. 2.
The following table shows the fees paid or accrued by SeaBright
for audit and other services provided by KPMG LLP for fiscal
years 2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
2006
|
|
|
Audit Fees(1)
|
|
$
|
757,000
|
|
|
$
|
795,100
|
|
Audit-Related Fees(2)
|
|
|
15,850
|
|
|
|
|
|
Tax Fees(3)
|
|
|
25,285
|
|
|
|
18,720
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
$
|
798,135
|
|
|
$
|
813,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Audit fees represent fees for professional services provided in
connection with the audit of our financial statements and review
of our quarterly financial statements, including related
services such as comfort letters, consents and assistance with
and review of documents filed with the SEC.
|
|
(2)
|
|
Represents fees for professional services provided in connection
with the review of responses to comments received from the SEC.
|
|
(3)
|
|
Tax fees represent fees billed for professional services
provided in connection with tax compliance, tax advice and tax
planning.
|
The Audit Committee has adopted a policy of pre-approval of
audit and permitted non-audit services by our independent
registered public accounting firm. The Chairman of the Audit
Committee has been delegated authority to pre-approve such
services on behalf of the Audit Committee, provided that such
pre-approved services are reported to the full Audit Committee
at its next scheduled meeting.
During 2007, all services performed by SeaBrights
independent registered public accounting firm were pre-approved
by the Audit Committee in accordance with this policy.
39
Report of
the Audit Committee
The members of the Audit Committee are independent under Nasdaq
listing standards and SEC rules. The Board of Directors adopted
a written Audit Committee charter, which is available in the
Investor Relations section of our website at www.sbic.com.
The Audit Committee oversees our financial reporting process on
behalf of the Board of Directors. Management, however, has the
primary responsibility to establish and maintain a system of
internal control over financial reporting, to plan and conduct
audits and to prepare consolidated financial statements in
accordance with U.S. generally accepted accounting
principles. KPMG LLP, our independent registered public
accounting firm, is responsible for performing an independent
audit of the Companys consolidated financial statements in
conformity with the standards of the Public Company Accounting
Oversight Board (United States) and issuing a report thereon.
The Audit Committee is responsible for monitoring and reviewing
these procedures. It is not the Audit Committees duty or
responsibility to conduct auditing or accounting reviews or
procedures. The members of the Audit Committee are not employees
of SeaBright Insurance Holdings, Inc. and are not necessarily
accountants or auditors by profession or experts in the fields
of accounting or auditing. Therefore, the Audit Committee has
relied, without independent verification, on managements
representation that the Companys consolidated financial
statements have been prepared with integrity and objectivity and
in conformity with U.S. generally accepted accounting
principles and on the representations of KPMG LLP included in
its report on the Companys consolidated financial
statements.
In fulfilling its oversight responsibilities, the Audit
Committee met and held discussions, together and separately,
with management and KPMG LLP. Management represented to the
Audit Committee that the Companys audited financial
statements for the fiscal year ended December 31, 2007 were
prepared in accordance with U.S. generally accepted
accounting principles. The Audit Committee reviewed and
discussed with management and KPMG LLP the audited financial
statements for the 2007 fiscal year.
The Audit Committee also discussed with KPMG LLP the matters
required to be discussed by Statement on Auditing Standards
No. 114,
Communications with Audit Committees,
including a discussion of the quality, not just the
acceptability, of the accounting principles, the reasonableness
of significant judgments and the clarity of disclosures in the
financial statements. In addition, the Audit Committee has
received from KPMG LLP the written disclosures and the letter
required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees,
and
discussed with them their independence relating to SeaBright
Insurance Holdings, Inc. In accordance with provisions of the
Sarbanes-Oxley Act of 2002, the Audit Committee pre-approved all
audit and non-audit services performed by KPMG LLP.
Based on the Audit Committees review and discussions of
the matters referred to above, the Audit Committee recommended
to the Board of Directors (and the Board of Directors has
approved) that the audited financial statements be included in
the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007 for filing with
the Securities and Exchange Commission. The Audit Committee has
also selected and appointed KPMG LLP as the Companys
independent registered public accounting firm for the fiscal
year ending December 31, 2008, subject to stockholder
ratification.
The Audit Committee of the Board of Directors
Mural R. Josephson, Chairman
William M. Feldman
George M. Morvis
40
OTHER
MATTERS
Stockholder
Proposals and Director Nominations
Stockholder proposals for the 2009 annual meeting must be
received at our principal executive offices by December 18,
2008, and must otherwise comply with the SECs rules, to be
considered for inclusion in our proxy materials relating to our
2009 annual meeting.
If you intend to present a proposal at next years annual
meeting, or if you want to nominate one or more directors, you
must give timely notice thereof in writing to the Secretary at
the address below. The Secretary must receive this notice no
earlier than January 20, 2009 and no later than
February 19, 2009.
Notice of a proposal must include, as to each matter, (i) a
brief description of the business desired to be brought before
the annual meeting, (ii) your name and address, as they
appear on SeaBrights books, (iii) the class and
number of shares of SeaBright common stock which you
beneficially own, and (iv) any material interest you may
have in such business.
Notice of a nomination must include:
(i) as to each person whom you propose to nominate for
election as a director (A) the name, age, business address
and residence address of the person, (B) the principal
occupation or employment of the person, (C) the class or
series and number of shares of common stock of SeaBright which
are owned beneficially or of record by the person and
(D) any other information relating to the person that would
be required to be disclosed in a proxy statement or other
filings required to be made in connection with solicitations of
proxies for election of directors pursuant to
Regulation 14A under the Exchange Act; and
(ii) (A) your name and address, as they appear on
SeaBrights books, (B) the class or series and number
of shares of common stock of SeaBright which you own
beneficially or of record, (C) a description of all
arrangements or understandings between you and each proposed
nominee and any other person or persons pursuant to which your
nominations are to be made, (D) a representation that you
intend to appear in person or by proxy at the meeting to
nominate the persons named in your notice and (E) any other
information relating to you that would be required to be
disclosed in a proxy statement or other filings required to be
made in connection with solicitations or proxies for election of
directors pursuant to Regulation 14A under the Exchange Act.
Such notice must be accompanied by a written consent of each
proposed nominee to being named as a nominee and to serve as a
director if elected.
You may contact our Secretary at our principal executive offices
for a copy of the relevant By-Law provisions regarding the
requirements for making stockholder proposals and nominating
director candidates. Our By-Laws are also available on our
website at http://investor.sbic.com/governance/bylaws.cfm.
Proponents must submit notices of proposals and nominations in
writing to the following address:
Secretary
SeaBright Insurance Holdings, Inc.
1501 4th Avenue, Suite 2600
Seattle, Washington 98101
The Secretary will forward the notices of proposals and
nominations to the Nominating and Corporate Governance Committee
for consideration.
Cost of
Solicitation
SeaBright pays the cost of the annual meeting and the cost of
soliciting proxies. In addition to the use of mail, our
directors, officers and employees may solicit proxies by
personal conversations, telephone, facsimile or other electronic
means. In addition to soliciting proxies by mail, we have made
arrangements with banks, brokers and other holders of record to
send proxy materials to you, and we will reimburse them for
their expenses in doing so.
41
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C123456789
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000004
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000000000.000000 ext
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000000000.000000 ext
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000000000.000000 ext
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000000000.000000 ext
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MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
ADD 6
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000000000.000000 ext
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000000000.000000 ext
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Using a
black ink
pen, mark your votes with an
X
as shown in
this example. Please do not write outside the designated areas.
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x
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2008 Annual Meeting Proxy Card
▼
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
▼
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A
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Proposals The Board of Directors recommends a vote
FOR
Proposal 1 and
FOR
Proposal 2.
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1.
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Election of Directors:
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For
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Withhold
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For
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Withhold
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For
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Withhold
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+
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01 - John G. Pasqualetto
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o
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o
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02 - Peter Y. Chung
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o
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o
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03 - Joseph A. Edwards
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o
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o
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04 - William M. Feldman
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o
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o
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05 - Mural R. Josephson
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o
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06 - George M. Morvis
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o
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o
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07 - Michael D. Rice
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o
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o
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For
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Against
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Abstain
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2. Ratification of the Audit Committees appointment of KPMG LLP as independent registered public accounting firm for the year ending December 31, 2008.
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o
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o
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o
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If other matters are properly presented, the persons named as proxies will vote in accordance with their judgement with respect to those matters.
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B
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Non - Voting Items
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Change of Address
Please print new address below.
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Meeting Attendance
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Mark box to the right if you plan to attend the Annual Meeting.
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o
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C
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
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Please sign exactly as your name or names appear hereon. Joint owners should each sign personally. If signing in a fiduciary or representative capacity, give full title as such.
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Date (mm/dd/yyyy) Please
print date below.
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Signature 1 Please keep signature within the
box.
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Signature 2 Please keep signature within the
box.
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/ /
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n
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▼
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
▼
2008 Proxy SEABRIGHT INSURANCE HOLDINGS, INC.
1501 4th Avenue, Suite 2600, Seattle, WA 98101
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Proxy for Annual Meeting of Stockholders, Tuesday, May 20, 2008
The undersigned hereby appoints John G. Pasqualetto, Joseph S. De Vita and D. Drue Wax, and each or any of them, proxies of the undersigned with full power of substitution to represent the undersigned and to vote all of the shares of the Common Stock of SeaBright Insurance Holdings, Inc. which the undersigned is entitled to vote at the Annual Meeting of Stockholders of
SeaBright Insurance Holdings, Inc. to be held at 9:00 A.M., Pacific Time on Tuesday, May 20, 2008 in the Alki Room on the 3rd Floor of the Century Square Building located at 1501 4th Avenue, Seattle, WA 98101 and at any and all adjournments thereof, upon the matters set forth on the reverse side and described in the accompanying Proxy Statement and upon such other business as may properly come before the meeting or any adjournment thereof.
A majority of said proxies or substitutes who shall be present at the meeting may exercise all powers hereunder. All proxies will be voted as specified.
If no specification is made, the proxy will be voted
FOR
Proposals 1 and 2.
(Continued and to be voted, signed and dated on reverse side.)
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