The non-executive chairman of the board of directors of a St. Petersburg-based insurance company received more than $900,000 in cash and stock compensation in 2018.
Gregory Branch, chairman at United Insurance Holdings Corp. (Nasdaq: UIHC), was the highest-paid board member among those at large Tampa Bay companies last year. He also is among the highest-paid directors at U.S. companies, according to a list published by the Harvard Law School Forum on Corporate Governance and Financial Regulation.
While executive compensation is widely reported on, director compensation often flies under the radar, the publication said.
Compensation is one of several issues investors watch closely at publicly traded companies, including gender diversity on boards of directors and worker pay. The St. Pete Catalyst is publishing a series of reports looking at some of those issues with a focus on companies headquartered in the Tampa-St. Pete metro area that publicly report their financial information, are traded on a major stock exchange and have a market capitalization of $100 million or more.
Directors are critical to strong corporate governance, said Luis Aguilar, a former commissioner with the U.S. Securities and Exchange Commission.
“As directors, you play a critical role in setting the appropriate tone at the top, are expected to be guardians of the company’s assets, and are relied upon by both shareholders and the capital market,” Aguilar said at the annual Boardroom Summit and Peer Exchange in 2015. “You are expected to carry out these duties and responsibilities with a keen focus and attention to detail — all on a part-time basis.”
While board members don’t have day-to-day obligations at the companies they serve, they do have a big workload, and it’s growing. There are more frequent meetings than in the past and directors have to spend more time on their own understanding issues and challenges at their companies and in their industries, according to Jan Koors, a senior managing director and president of the Western region at executive compensation consultancy Pearl Meyer.
Still, relatively few companies provide an explanation of the factors they consider when determining director pay. Institutional Shareholder Services, a proxy advisory firm, has indicated it is going to increase its scrutiny of director compensation, Koors said during a January webinar.
At United Insurance, Branch’s $903,800 in total compensation for 2018 was a “significant outlier” compared to that of other non-executive chairmen in the insurance sector, ISS said in its most recent report.
“Should the issue of outlier [non-executive director] pay at the company, without reasonable rationale disclosed, recur next year, this may result in adverse recommendations for the directors/committee responsible for setting director pay,” the ISS report said. “As such, shareholders should continue to closely monitor director pay at the company.”
It was one of two key issues ISS said it was watching at the company; the other was gender diversity. There are no women on the board of United Insurance, which does business as UPC Insurance and had $724 million in revenue in 2018.
At small companies, those with annual revenue between $500 million and $1 billion, the average director compensation was $169,226 in 2017, the most recent year for which information was available, Pearl Meyer said.
Most of Branch’s 2018 compensation came from a 40,000 restricted stock award with a market value of $788,800 that vested at the company’s annual meeting. He also received a $75,000 annual cash retainer that United paid to all its directors, and $40,000 for serving as chairman.
Branch has been chairman of the UPC Insurance board since 2008, and before that was chairman and CEO of a predecessor company. He has substantial experience in the insurance industry and broad entrepreneurial skills, the proxy said.
In 2017, his director compensation was $711,400, also primarily from restricted stock.
Among the 19 largest companies locally that had reported director compensation as of May 10, nearly all included both cash and stock as part of director pay.
Three exceptions were Heritage Insurance Holdings Inc. (NYSE: HRTG) in Clearwater and HCI Group Inc. (NYSE: HCI) in Tampa, both property and casualty insurers, as well as Publix Super Markets Inc., which reports its financial information publicly although its stock is owned only by its employees. Each of those companies provided only cash retainers for their directors.
Relatively few companies discuss how they determined directors’ pay, but most firms provide very detailed explanations of the considerations that go into executive pay. Nearly all public companies tie pay for their C-level executives to specific performance metrics.
At WellCare Health Plans Inc. (NYSE: WCG), a Tampa-based managed health care company, CEO Ken Burdick led efforts to outperform pre-established financial metrics, improve quality, launch new businesses and integrate acquisitions, a proxy filing said. That led to an 11.8 percent increase in Burdick’s pay package in 2018. Burdick received $12.7 million in cash and stock, and was the highest-paid CEO among Tampa Bay companies last year.
There was a lot of CEO turnover among local companies in the last couple of years. Among CEOs who were in their jobs for all of 2017 and 2018, Michael Benstock, CEO of Superior Group of Companies (Nasdaq: SGC) in Seminole, was the lowest-paid.
Benstock turned down more than $400,000 in cash incentive pay in 2018, according to a proxy filed by Superior, which provides uniforms and image apparel, as well as promotional products and branded merchandise, and operates call centers.