Business Context and Reporting Period
This Form 8-K Current Report was filed by Assurant, Inc. on December 8, 2005. The filing details actions taken by the Compensation Committee of the Board of Directors regarding executive compensation for fiscal year 2006 and amendments to Change in Control Severance Agreements.
Key Financial Metrics
The filing does not provide consolidated financial metrics such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation structures and severance terms.
Material Changes and Executive Compensation
The Compensation Committee established 2006 annual base salaries and target incentive awards for named executive officers. Additionally, the Committee authorized amendments and extensions to Change in Control Severance Agreements effective January 1, 2006.
2006 Executive Compensation Targets
| Name | Position | 2006 Base Salary | Target Short-Term Incentive (% of Base) | Target Long-Term Incentive (ALTIP) (% of Base) |
|---|---|---|---|---|
| J. Kerry Clayton | CEO | $890,970 | 110% | 200% |
| Robert B. Pollock | President & COO | $765,000 | 100% | 140% |
| P. Bruce Camacho | EVP & CFO | $612,000 | 100% | 110% |
| Lesley G. Silvester | EVP | $471,000 | 85% | 115% |
| Donald Hamm | EVP & CEO, Assurant Health | $459,000 | 75% | 100% |
Incentive Structure Details:
- Short-Term: Performance is measured on a five-point scale ranging from 0.0x to 2.0x the target bonus. The Committee retains discretion to adjust payouts regardless of criteria achievement.
- Long-Term (ALTIP): Awards consist of 25% restricted stock (vesting one-third annually) and 75% stock appreciation rights (vesting December 31, 2008). SARs are settled in common stock net of basic taxes.
Change in Control Severance Agreements
The Committee extended the term of existing Change in Control Severance Agreements through December 31, 2006. Key provisions include:
- Trigger: A two-year period begins following a change in control. Severance applies if employment is terminated without cause or the employee resigns for good reason during this period.
- Named Executive Officers: Entitled to a cash severance equal to 3 times the sum of annual base salary and target annual bonus.
- Benefits: Includes 18 months of continued medical and welfare benefits at active employee rates, plus outplacement services and legal fee reimbursement.
- Tax Gross-Up Amendment: The Tax Gross-Up provision was amended to reduce reimbursement by up to 5% if necessary to avoid the application of Section 4999 of the Internal Revenue Code.
Outlook and Risks
Performance criteria for fiscal year 2006 have not yet been set and will be determined by the Committee at a subsequent meeting. The filing notes that actual awards will vary based on performance against these future criteria.
Key Facts for Investor Verification
- Verify the specific performance criteria to be set by the Committee for fiscal year 2006, as these determine actual payout levels.
- Confirm the total potential cash outlay for severance for named executive officers in the event of a change in control (3x salary + bonus).
- Review the vesting schedule for the 75% stock appreciation rights component of the long-term incentive plan.
- Monitor future filings for the finalized performance metrics for the 2006 fiscal year.