SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Universal Insurance Holdings, Inc.
--------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11:
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing is calculated and state how it was
determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement Number:
3) Filing Party:
4) Date Filed:
April 20, 2007
Dear Shareholder:
On behalf of the Board of Directors, I invite you to attend the 2007 Annual
Meeting of Shareholders ("Annual Meeting") of Universal Insurance Holdings, Inc.
("Company"). The Annual Meeting will be held at 9:00 a.m., Eastern Standard
Time, on Friday, May 18, 2007 at the Westin Fort Lauderdale, 400 Corporate
Drive, Fort Lauderdale, Florida 33334.
The shareholders will be asked (i) to elect six directors, each to hold
office until the 2008 annual meeting or until their successors have been elected
and qualified; (ii) to approve an amendment to the Company's Certificate of
Incorporation, as amended and restated, to increase the number of authorized
shares of common stock of the Company from 50,000,000 shares to 55,000,000
shares; (iii) to approve the formulas used to calculate performance bonuses in
each of the amended employment agreements of the Chief Executive Officer and
Chief Operating Officer of the Company; and (iv) to ratify the appointment of
Blackman Kallick Bartelstein LLP as the independent registered public accounting
firm of the Company for the year ending December 31, 2007. The Board of
Directors has unanimously approved these proposals and we urge you to vote in
favor of these proposals and in accordance with the Board's recommendation on
such other matters as may be submitted to you for a vote at the meeting.
Your vote is very important, regardless of the number of shares you own.
Please sign and return each proxy card that you receive in the enclosed
postage-paid envelope, which is provided for your convenience. The return of
your proxy card will not prevent you from voting in person but will assure that
your vote is counted if you are unable to attend the Annual Meeting. We look
forward to seeing you on May 18, 2007.
Sincerely,
/s/ Bradley I. Meier
-----------------------------------
Bradley I. Meier, President
1110 West Commercial Boulevard, Suite 100, Fort Lauderdale, Florida 33309,
(954) 958-1200
UNIVERSAL INSURANCE HOLDINGS, INC.
1110 WEST COMMERCIAL BOULEVARD, SUITE 100
FORT LAUDERDALE, FLORIDA 33309
NOTICE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 2007
NOTICE IS HEREBY GIVEN that the 2007 Annual Meeting of Shareholders
("Annual Meeting") of Universal Insurance Holdings, Inc., a Delaware corporation
("Company"), will be held at 9:00 a.m., Eastern Standard Time, on Friday, May
18, 2007, at the Westin Fort Lauderdale, 400 Corporate Drive, Fort Lauderdale,
Florida 33334, for the following purposes:
1. To elect six directors, each to hold office until the 2008 annual
meeting or until their successors have been elected and qualified;
2. To approve an amendment to the Company's Certificate of Incorporation,
as amended and restated, to increase the number of authorized shares
of common stock of the Company from 50,000,000 shares to 55,000,000
shares;
3. To approve the formulas used to calculate performance bonuses in each
of the amended employment agreements of the Chief Executive Officer
and the Chief Operating Officer of the Company;
4. To ratify the appointment of Blackman Kallick Bartelstein LLP as the
independent registered public accounting firm of the Company for the
year ending December 31, 2007; and
5. To transact any other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 16, 2007 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Annual Meeting and at any adjournment thereof. A complete list
of shareholders of record of the Company on the record date will be available
for examination by any shareholder, for any purpose germane to the Annual
Meeting, during ordinary business hours, for the ten-day period prior to the
Annual Meeting, at the executive offices of the Company, 1110 West Commercial
Boulevard, Suite 100, Fort Lauderdale, Florida 33309.
It is important that your shares be represented at the Annual Meeting.
Whether or not you expect to be present, please fill in, date, sign and return
the enclosed proxy form in the accompanying addressed, postage-prepaid envelope.
If you attend the meeting, you may revoke your proxy and vote in person.
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In the event that there are not sufficient votes to approve any one of the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned to permit further solicitation of proxies by the Company.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Norman M. Meier
----------------------------------------
Norman M. Meier, Secretary
Fort Lauderdale, Florida
April 20, 2007
WHETHER OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT AS PROMPTLY AS
POSSIBLE IN THE ACCOMPANYING POSTAGE-PREPAID ENVELOPE. SHAREHOLDERS WHO ATTEND
THE MEETING MAY REVOKE THEIR PROXIES AT THE MEETING AND VOTE IN PERSON.
3
UNIVERSAL INSURANCE HOLDINGS, INC.
1110 WEST COMMERCIAL BOULEVARD, SUITE 100
FORT LAUDERDALE, FLORIDA 33309
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors ("Board") of Universal Insurance Holdings, Inc., a
Delaware corporation ("Company"), of proxies to be voted at the Annual Meeting
of Shareholders of the Company ("Annual Meeting"), to be held at the Westin Fort
Lauderdale, 400 Corporate Drive, Fort Lauderdale, Florida 33334, on Friday, May
18, 2007 at 9:00 a.m., Eastern Standard Time, and at any and all postponements
or adjournments thereof, for the purposes set forth in the accompanying Notice
of Annual Meeting.
A copy of the Annual Report of the Company for its fiscal year ended
December 31, 2006 is included. This Proxy Statement, Notice of Annual Meeting,
accompanying proxy card, and Annual Report are first expected to be mailed to
shareholders on or about April 20, 2007.
INFORMATION RELATING TO VOTING AT THE ANNUAL MEETING
The close of business on April 16, 2007 has been fixed by the Board as the
record date ("Record Date") for determination of shareholders entitled to notice
of, and to vote at, the Annual Meeting. Therefore, only shareholders of record
as of the close of business on April 16, 2007 are entitled to notice of, and to
vote at, the Annual Meeting or any postponements or adjournments thereof. The
securities to be voted at the Annual Meeting consist of (i) shares of Common
Stock of the Company, $0.01 par value per share ("Common Stock"), with each
share entitling its record owner to one vote, (ii) shares of Series M Preferred
Stock of the Company, $0.01 par value per share ("Series M Preferred Stock"),
with each share entitling its record owner to one vote and (iii) shares of
Series A Preferred Stock of the Company, $0.01 par value per share ("Series A
Preferred Stock"), with each share entitling its record owner to one vote. The
holders of Series M Preferred Stock, voting separately as a series, are entitled
to elect two directors. The holders of Common Stock, Series M Preferred Stock
and Series A Preferred Stock, voting together as one class, are entitled to
elect the remaining directors.
If the accompanying proxy card is properly signed, returned to the Company
in time to be voted at the Annual Meeting, and not revoked, the shares
represented by such card will be voted in accordance with the instructions
contained on such card. Unless contrary instructions are given, the persons
designated as proxy holders in the proxy card will vote FOR Proposals 1, 2, 3
and 4. If any other matters properly come before the Annual Meeting, the persons
named as proxy holders will vote upon such matters as determined by a majority
of the Board.
Each shareholder may revoke a previously granted proxy at any time before
it is exercised by filing with the Secretary of the Company a revoking
instrument or a duly executed proxy bearing a later date. The powers of the
proxy holders will be suspended if the person executing the proxy attends the
Annual Meeting in person and so requests. Attendance at the Annual Meeting will
not, in itself, constitute revocation of a previously granted proxy.
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The table below sets forth the number and classes of Company stock entitled
to vote at the Annual Meeting.
Number of Record Number of Shares Amount of Votes
---------------- ---------------- ---------------
Holders Outstanding Entitled to be Cast
------- ----------- -------------------
Class of Voting Stock as of the Record Date as of the Record Date as of the Record Date
--------------------- --------------------- --------------------- ---------------------
Common Stock 45 38,057,103 38,057,103
Series M Preferred Stock 4 88,690 88,690
Series A Preferred Stock 3 44,950 44,950
The Company had no other class of voting securities outstanding on the
Record Date.
The presence, in person or by proxy, of at least a majority of the total
number of outstanding shares of the Series M Preferred Stock entitled to vote at
the Annual Meeting for those matters where a separate vote of the Series M
Preferred Stock is required, and of at least a majority of the total number of
outstanding shares of the Common Stock, Series M Preferred Stock and Series A
Preferred Stock entitled to vote at the Annual Meeting for those matters where
the Common Stock, Series M Preferred Stock and Series A Preferred Stock, voting
together as a class, is required, is necessary to constitute a quorum at the
Annual Meeting. If a quorum is not present at the Annual Meeting, a majority of
the shares so represented may vote to adjourn the Annual Meeting from time to
time without further notice. If a quorum is present, the affirmative vote of a
majority of the votes actually cast at the meeting, whether in person or by
proxy, is necessary to elect the nominees for directors. With respect to the
amendment of the Company's Certificate of Incorporation, the vote required for
approval shall be the affirmative vote of the holders of at least a majority of
the issued and outstanding shares of capital stock entitled to vote at the
Annual Meeting. There is no cumulative voting in the election of directors. With
respect to the approval of the formulas used to calculate performance bonuses,
or any other matter properly brought before the Annual Meeting or any
adjournment of the Annual Meeting, the vote required for approval shall be the
affirmative vote of a majority of the total number of votes that those present
at the Annual Meeting, in person or by proxy, are entitled to cast.
Under Delaware law, shares represented at the Annual Meeting (either by
properly executed proxies or in person) that reflect abstentions or "broker
non-votes" (i.e., shares held by a broker or nominee that are represented at the
Annual Meeting, but with respect to which such broker or nominee is not
empowered to vote on a particular proposal) will be counted as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. Abstentions as to any proposal will have the same effect as votes
against the proposal. With respect to Proposals 1 and 4, broker non-votes will
be treated as unvoted for purposes of determining approval of such proposals
(and therefore will reduce the absolute number - although not the percentage -
of votes needed for approval) and will not be counted as votes for or against
the proposals. With respect to Proposals 2 and 3, however, broker non-votes will
have the same effect as votes against the proposal.
A shareholder may revoke his or her proxy at any time prior to its exercise
by (i) filing with Norman M. Meier, Secretary, Universal Insurance Holdings,
Inc., 1110 West Commercial Boulevard, Suite 100, Fort Lauderdale, Florida 33309,
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written notice thereof, (ii) submitting a duly executed proxy bearing a later
date, or (iii) appearing at the Annual Meeting and giving the Secretary notice
of his or her intention to vote in person. Unless previously revoked or
otherwise instructed thereon, proxies will be voted at the Annual Meeting on the
proposals as described above.
The Company will bear the cost of soliciting proxies in the enclosed form.
Officers and regular employees of the Company may solicit proxies by a further
mailing or personal conversations or via telephone or facsimile, provided that
they do not receive compensation for doing so. The Company will, upon request,
reimburse brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of stock.
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ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board has the ultimate authority for the management of the Company's
business, objectives and operations. It selects the Company's executive
officers, delegates responsibilities for the conduct of the Company's day-to-day
operations to those officers, and monitors the performance of the officers.
Meetings of the Board are held regularly each quarter and as required. The
Board held five meetings during 2006. During 2006, each director attended 75
percent or more of the aggregate number of Board meetings and meetings of the
Board committees on which he served.
The Company encourages its Board members to attend the Company's Annual
Meeting of Shareholders.
The following table sets forth the total compensation paid to non-employee
directors during the fiscal year ended December 31, 2006.
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DIRECTOR COMPENSATION
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Fees
Earned or
Paid In Stock
Name Cash Awards Total
----------------------------------------------------------------------
----------------------------------------------------------------------
Joel Wilentz $45,000 $38,000 $83,000
----------------------------------------------------------------------
Norman Meier $45,000 $38,000 $83,000
----------------------------------------------------------------------
Reed Slogoff $45,000 $38,000 $83,000
----------------------------------------------------------------------
For 2007, non-employee directors will receive annual compensation of
$80,000, paid quarterly, for serving on the Board and the reimbursement of
reasonable expenses incurred in attending meetings. Officers are elected
annually by the Board and serve at the discretion of the Board. The Company has
entered into indemnification agreements with its executive officers and
directors pursuant to which the Company has agreed to indemnify such
individuals, to the fullest extent permitted by law, for claims made against
them in connection with their positions as officers, directors or agents of the
Company.
The Board has nominated Bradley I. Meier, Norman M. Meier, Sean P. Downes,
Ozzie A. Schindler, Reed J. Slogoff and Joel M. Wilentz for reelection to the
Board to serve as directors until the 2008 annual meeting or until their
successors are duly elected and qualified. The nominees have consented to be
named and have indicated their intent to serve if elected. The Board has no
reason to believe that the nominees will be unavailable or that any other
vacancy on the Board will occur. If any nominee becomes unavailable for any
reason, or if any other vacancy in the class of directors to be elected at the
Annual Meeting should occur before the election, the shares represented by the
proxy will be voted for the person, if any, who is designated by the Board to
replace the nominee or to fill such other vacancy on the Board.
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The holders of Series M Preferred Stock, voting separately as a series, are
entitled to elect directors to fill the seats currently held by Bradley I. Meier
and Norman M. Meier, both of whom the Board recommends for reelection; such
directors shall be elected by a majority of votes in the affirmative of the
Series M Preferred Stock shares cast at the Annual Meeting. The holders of
Common Stock, the holders of Series M Preferred Stock and the holders of Series
A Preferred Stock, voting together as one class, are entitled to elect directors
to fill the seats currently held by Sean P. Downes, Ozzie A. Schindler, Reed J.
Slogoff and Joel M. Wilentz, all of whom the Board recommends for reelection;
such directors shall be elected by a majority of votes in the affirmative of the
Common Stock shares, Series M Preferred Stock shares and Series A Preferred
Stock shares, voting together as a class, cast at the Annual Meeting. If
elected, all nominees are expected to serve until the 2008 annual meeting or
until their successors are duly elected and qualified.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE NOMINEES DESCRIBED ABOVE BE
ELECTED AS DIRECTORS TO SERVE UNTIL THE 2008 ANNUAL MEETING OR UNTIL THEIR
SUCCESSORS ARE DULY ELECTED AND QUALIFIED.
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INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of the Company are as follows:
Name Age Position First Year as
---- --- -------- -------------
Director
--------
(Term Expires)
Bradley I. Meier 39 President, Chief Executive Officer 1990
(Director Nominee) and Director (2007)
Norman M. Meier 68 Director, Secretary 1992
(Director Nominee) (2007)
Ozzie A. Schindler 38 Director 2007
(Director Nominee) (2007)
Reed J. Slogoff 38 Director 1997
(Director Nominee) (2007)
Joel M. Wilentz, M.D. 73 Director 1997
(Director Nominee) (2007)
Sean P. Downes 37 Chief Operating Officer, Senior 2005
(Director Nominee) Vice President and Director (2007)
James M. Lynch 52 Executive Vice President and
Chief Financial Officer
BIOGRAPHICAL INFORMATION
Biographical information regarding the directors and executive officers of
the Company is as follows:
Bradley I. Meier has been President, Chief Executive Officer and a Director
of the Company since its inception in November 1990. He has served as President
of Universal Property and Casualty Insurance Company ("UPCIC"), a wholly owned
subsidiary of the Company, since its formation in April 1997. In 1990, Mr. Meier
graduated from the Wharton School of Business with a B.S. in Economics.
Norman M. Meier has been a Director of the Company since July 1992.
From December 1986 until November 1999, Mr. Meier was President, Chief Executive
Officer and a Director of Columbia Laboratories, Inc., a publicly traded
corporation in the pharmaceuticals business. From 1971 to 1977, Mr. Meier was
Vice President of Sales and Marketing for Key Pharmaceuticals. From 1977 until
1986, Mr. Meier served as a consultant to Key Pharmaceuticals.
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Ozzie A. Schindler has been a Director of the Company since January 2007.
Mr. Schindler is a partner with the law firm of Greenberg Traurig and
specializes in international tax, trusts and succession and planning. He has an
LL.M. in Taxation from New York University School of Law and graduated with
honors from the University of Florida School of Law. Mr. Schindler also
graduated with high honors from the University of Florida Fisher School of
Accounting. He is admitted to both the Florida and New York bars.
Reed J. Slogoff has been a Director of the Company since March 1997. Mr.
Slogoff is currently a principal with Pearl Properties Commercial Management,
LLC, a commercial real estate investment and management firm based in
Philadelphia, Pennsylvania. Mr. Slogoff was formerly with Entercom
Communications Corp., a publicly traded radio broadcasting company and was
previously a member of the corporate and real estate group of the law firm of
Dilworth, Paxson, LLP. Mr. Slogoff received a B.A. with Honors from the
University of Pennsylvania in 1990, and a J.D. from the University of Miami
School of Law in 1993.
Joel M. Wilentz, M.D. has been a Director of the Company since March 1997.
Dr. Wilentz is one of the founding members of Dermatology Associates in Florida,
founded in 1970. He is a member of the boards of the Neurological Injury
Compensation Association for Florida, the Broward County Florida Medical
Association, and the American Arm of the Israeli Emergency Medical Service for
the southeastern United States, of which he is also President. Dr. Wilentz is a
past member of the Board of Overseers of the Nova Southeastern University School
of Pharmacy.
Sean P. Downes has been Senior Vice President, Chief Operating Officer and
a Director of the Company since January 2005. He also has been Chief Operating
Officer and a Director of UPCIC since July 2003. Mr. Downes was Chief Operating
Officer of Universal Adjusting Corporation from July 1999 to July 2003. During
that time, Mr. Downes created the Company's claims operation. Before joining the
Company in July 1999, Mr. Downes was Vice President of Downes and Associates, a
multi-line insurance adjustment corporation.
James M. Lynch has been Executive Vice President and Chief Financial
Officer of the Company since August 1998. Before joining the Company in August
1998, Mr. Lynch was Chief Financial Officer of Florida Administrators, Inc., an
organization specializing in property and casualty insurance. Prior to working
at Florida Administrators, Inc., Mr. Lynch held the position of Senior Vice
President of Finance and Comptroller of Trust Group, Inc., which also
specialized in property and casualty insurance. Before his position at Trust
Group, Mr. Lynch was a Manager with the accounting and auditing firm of Coopers
& Lybrand, which later became PricewaterhouseCoopers LLC.
Norman M. Meier and Bradley I. Meier are father and son, respectively.
There are no other family relationships among the Company's executive officers
and directors.
All directors hold office until the next annual meeting of shareholders or
the election and qualification of their successors. Currently, the Company does
not have a procedure by which shareholders may recommend nominees to the
Company's Board of Directors. Officers are elected annually by the Board of
Directors and serve at the discretion of the Board.
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COMMITTEES AND CORPORATE GOVERNANCE
AUDIT COMMITTEE
The Company has a separately designated Audit Committee, whose members are
Ozzie A. Schindler, Reed J. Slogoff and Joel M. Wilentz, each of whom was
determined by the Board to be independent under the applicable rules of the
Securities and Exchange Commission ("SEC") and the National Association of
Securities Dealers ("NASD"). The Company's Board of Directors has determined
that Ozzie A. Schindler is an "audit committee financial expert" as defined by
Item 407(d)(5) of Regulation S-K promulgated by the SEC.
The Audit Committee recommends the firm to be appointed as the independent
registered public accounting firm of the Company to audit the Company's
financial statements and to perform services related to the audit, review the
scope and results of the audit with the independent registered public accounting
firm, review with management and the independent registered public accounting
firm the Company's year-end operating results and consider the adequacy of the
internal accounting procedures.
The Audit Committee met separately once during 2006, and the full Board,
including the members of the Audit Committee, met several times during the year
to discuss the financial position of the Company, provide recommendations and
guidance to management and evaluate strategies and financial opportunities and
initiatives.
The Audit Committee operates under a written charter that was adopted by
the Board of Directors on January 9, 2007. A copy of the Audit Committee Charter
is attached to this Proxy Statement as Appendix A. The Audit Committee Charter
will be reviewed annually for changes, as appropriate.
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
Company's audited financial statements for the fiscal year ended December 31,
2006, which include the balance sheet of the Company as of December 31, 2006,
and the related statements of operations, changes in shareholders' equity and
cash flows for the years in the period ended December 31, 2006 and 2005 and the
notes thereto. The information contained in this report shall not be deemed to
be "soliciting material" or to be "filed" with the SEC, nor shall such
information be incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended ("Exchange Act"), except to the extent that the Company specifically
incorporates it by reference in such filing.
COMPOSITION
The Audit Committee of the Board of Directors is composed of the three
directors named below. Each member of the Audit Committee meets the independence
and financial experience requirements under the applicable rules of the SEC and
the NASD.
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REVIEW WITH MANAGEMENT
The Audit Committee has reviewed and discussed the Company's audited
financial statements with management.
REVIEW AND DISCUSSIONS WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has discussed with Blackman Kallick Bartelstein LLP,
the Company's independent registered public accounting firm for 2006, the
matters required to be discussed in accordance with the standards of the Public
Company Accounting Oversight Board which include, among other items, matters
related to the conduct of the audit of the Company's financial statements.
The Audit Committee has received written disclosures and the letter from
Blackman Kallick Bartelstein LLP required by Independence Standards Board
Standard No. 1 (which relates to the accountant's independence from the Company
and its related entities) and has discussed with Blackman Kallick Bartelstein
LLP its independence from the Company.
CONCLUSION
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board that the Company's audited financial statements be
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2006.
SUBMITTED BY THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS
Ozzie A. Schindler
Reed J. Slogoff
Joel M. Wilentz
COMPENSATION COMMITTEE
The Compensation Committee consists of Reed J. Slogoff and Joel M. Wilentz,
each of whom was determined by the Board to be independent under the applicable
rules of the SEC and the NASD. Among its duties, the Compensation Committee
assists the Board in discharging its responsibilities relating to corporate
goals and objectives relevant to the compensation of the Company's executive
officers, evaluating the performance of executive officers in light of those
goals and objectives and determining compensation based on such evaluation. The
Compensation Committee operates under a written charter that was adopted by the
Board on March 13, 2007. The Compensation Committee Charter will be reviewed
annually for changes, as appropriate.
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DIRECTOR NOMINATIONS
A director can be nominated by a member of the Board. The Company has not
established a Nominating Committee. Given the size of the Company, the Board
believes that this is appropriate.
CODE OF BUSINESS CONDUCT AND ETHICS
The Company adopted a Code of Business Conduct and Ethics on January 9,
2007 that is applicable to all directors, officers and employees of the Company.
The code is publicly available at the Company's headquarters in Fort Lauderdale,
Florida. Upon completion of the build-out of the Company's website, the code
will be posted there. A copy of the Company's Code of Business Conduct and
Ethics may be obtained free of charge by written request to James M. Lynch,
Universal Insurance Holdings, Inc., 1110 West Commercial Boulevard, Suite 100,
Fort Lauderdale, Florida 33309.
SHAREHOLDER COMMUNICATIONS
The Company has not established a set process for shareholders to send
communications to the Board. Given the size of the Company, the Board believes
that this is appropriate.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Downes and Associates, a multi-line insurance adjustment corporation based
in Deerfield Beach, Florida, performs certain claims, adjusting work for UPCIC.
Downes and Associates is owned by Dennis Downes, who is the father of Sean P.
Downes, COO and Senior Vice President of the Company. During 2006 and 2005, the
Company expensed claims, adjusting fees of $829,208 and $1,075,188,
respectively, to Downes and Associates.
In September 2006, the Company acquired Sterling Premium Finance Company,
Inc. ("Sterling") for the purchase price of $50,000 from the Company's Chief
Executive Officer and Chief Financial Officer, who owned Sterling. The purchase
price was equal to Sterling's book value at the time of acquisition.
Transactions between the Company and its affiliates are on terms no less
favorable to the Company than can be obtained from third parties on an arm's
length basis. Transactions between the Company and any of its executive officers
or directors require the approval of a majority of disinterested directors.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to or earned by the
Company's President and Chief Executive Officer and the Company's two other most
highly compensated executive officers (collectively, the "Named Executive
Officers") during each of the Company's last two fiscal years.
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SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------------------------------
Non-Equity
Name and Stock Incentive Plan
Principal Position Year Salary Bonus Awards Compensation Total
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Bradley I Meier,
President & CEO 2006 $830,324 $ - $ - $1,075,310 (1) $1,905,634
---------------------------------------------------------------------------------------------------------------------------------
2005 $527,365 $ - $21,500 $191,556 $740,421
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
James M. Lynch,
EVP & CFO 2006 $251,250 $90,000 $42,582 $383,832
---------------------------------------------------------------------------------------------------------------------------------
2005 $279,525 $3,846 $3,000 $286,371
---------------------------------------------------------------------------------------------------------------------------------
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Sean P. Downes,
SVP & COO 2006 $537,678 $ - $418,462 $843,982 (2) $1,800,122
---------------------------------------------------------------------------------------------------------------------------------
2005 $366,923 $ - $35,000 $181,167 $583,090
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(1) As of March 30, 2007, $591,811 of which had not been paid and is subject to shareholder approval under Proposal 3.
(2) As of March 30, 2007, $443,859 of which had not yet been paid and is subject to shareholder approval under Proposal 3.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with two of its
executive officers, Bradley I. Meier and Sean P. Downes.
The Company's employment agreement with Mr. Meier is dated as of August 11,
1999. The Company and Mr. Meier have amended the employment agreement, with the
most recent amendment dated March 21, 2007 (the employment agreement and the
amendments are collectively referred to as the "Meier Agreement"). Under the
terms of the Meier Agreement, Mr. Meier will serve as the Company's President
and Chief Executive Officer. Mr. Meier received a base salary of $830,324 in
2006, and he is entitled to a twenty percent (20%) increase in base salary each
year. Additionally, pursuant to the Meier Agreement, Mr. Meier is entitled to an
annual bonus equal to three percent (3%) of the pre-tax income of the Company up
to $5 million, and four percent (4%) of the pre-tax income of the Company in
excess of $5 million; provided, however, that any such bonus is contingent upon
the Company's shareholders approving such bonus formula, which is the subject of
Proposal 3 at the Annual Meeting. Should the Company's shareholders fail to
approve the formula, Mr. Meier forfeits his right to the bonus. Mr. Meier is
also eligible for other benefits customarily provided by the Company to its
executive employees, and the Meier Agreement contains noncompete and
nondisclosure provisions. In addition, in the event of a Change in Control of
the Company (as defined in the Meier Agreement), the Company shall pay Mr. Meier
an amount equal to 48 months base salary, plus two times any bonus paid for the
11
preceding fiscal year. Further, in the event of a Change in Control, all options
held by Mr. Meier vest and become immediately exercisable. Also, in the event
that the Company terminates the Meier Agreement, the Company shall pay Mr. Meier
48 months total compensation. The Meier Agreement expires on December 31, 2008;
however, the agreement is automatically extended each year thereafter unless the
Company or Mr. Meier provides written notice that the agreement is being
terminated 60 days in advance of the anniversary date of the Meier Agreement.
The Company's employment agreement with Mr. Downes is dated as of January
1, 2005 and provides that Mr. Downes will serve as Chief Operating Officer and
Senior Vice President of the Company. The Company and Mr. Downes have amended
the employment agreement, with the most recent amendment dated March 21, 2007
(the employment agreement and the amendments are collectively referred to as the
"Downes Agreement"). Mr. Downes received a base salary of $537,678 in 2006, and
he is entitled to a twenty percent (20%) increase in base salary each year.
Additionally, pursuant to the Downes Agreement, Mr. Downes is entitled to an
annual bonus equal to three percent (3%) of the pre-tax profits of the Company;
provided, however, that any such bonus is contingent upon the Company's
shareholders approving such bonus formula, which is the subject of Proposal 3 at
the Annual Meeting. Should the Company's shareholders fail to approve the
formula, Mr. Downes forfeits his right to the bonus. Under the Downes Agreement,
the Company may grant Mr. Downes options or warrants to purchase the Company's
Common Stock. Mr. Downes is also eligible for other benefits customarily
provided by the Company to its executive employees and the Downes Agreement
contains noncompete and nondisclosure provisions. In addition, in the event of a
Change in Control of the Company (as defined in the Downes Agreement), the
Company shall pay Mr. Downes an amount equal to 12 months base salary, plus the
annual bonus paid for the preceding fiscal year. Further, in the event of a
Change in Control, all options held by Mr. Downes vest and become immediately
exercisable. The Downes Agreement expires on December 31, 2008 unless extended
in writing by the Company.
12
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table sets forth information regarding outstanding equity
awards held by each Named Executive Officer at fiscal year ended December 31,
2006.
-----------------------------------------------------------------------------
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
-----------------------------------------------------------------------------
OPTIONS AWARDS
-----------------------------------------------------------------------------
Name Number of Securities Option Option
Underlying Exercise Expiration Date
Unexercised Options Price
Exercisable
-----------------------------------------------------------------------------
Bradley Meier 1,500,000 $1.06 01/15/2010 (1)
-----------------------------------------------------------------------------
Bradley Meier 250,000 $1.06 01/15/2010 (1)
-----------------------------------------------------------------------------
Bradley Meier 250,000 $1.63 05/07/2008
-----------------------------------------------------------------------------
Bradley Meier 150,000 $1.10 01/26/2010
-----------------------------------------------------------------------------
Bradley Meier 20,000 $0.70 12/12/2010
-----------------------------------------------------------------------------
Bradley Meier 325,000 $0.70 12/12/2010
-----------------------------------------------------------------------------
Bradley Meier 150,000 $0.60 12/21/2011
-----------------------------------------------------------------------------
Bradley Meier 1,000,000 $0.06 03/04/2014
-----------------------------------------------------------------------------
James Lynch 50,000 $1.87 08/03/2008
-----------------------------------------------------------------------------
James Lynch 25,000 $1.10 01/26/2010
-----------------------------------------------------------------------------
James Lynch 15,000 $0.70 12/12/2010
-----------------------------------------------------------------------------
James Lynch 100,000 $0.50 12/21/2011
-----------------------------------------------------------------------------
Sean Downes 15,000 $1.10 01/26/2010
-----------------------------------------------------------------------------
Sean Downes 100,000 $0.50 12/21/2011
-----------------------------------------------------------------------------
(1) Expires on earlier of January 15, 2010 or a Change in Control of the
Company, as defined in the Option Agreement.
STOCK OWNED BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The close of business on April 16, 2007 has been fixed by the Board as the
Record Date for determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting The number of shares of voting stock held as of April 16,
2007 by each holder of more than 5% of the outstanding voting stock of the
Company, each director of the Company, each nominee for reelection as a
director, each executive officer named in the Summary Compensation Table on page
11 of this Proxy Statement and all directors and executive officers of the
Company as a group is set forth below.
SERIES M PREFERRED STOCK OWNED BY MANAGEMENT
As of April 16, 2007, directors and Named Executive Officers, individually
and as a group, beneficially owned Series M Preferred Stock as follows:
13
Name and Address of Amount and Nature of
Beneficial Owner(1) Beneficial Ownership Percent of Class
---------------- -------------------- ----------------
Bradley I. Meier*(2) 48,890 48.0%
Norman M. Meier*(3) 53,000 52.0%
Officers and directors 86,890 98.0%
as a group (2 persons)(4)
* Director and Nominee
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Series M
Preferred Stock of the Company specified opposite his name. Unless
otherwise indicated, the mailing address of each shareholder is c/o
Universal Insurance Holdings, Inc., 1110 West Commercial Boulevard, Suite
100, Fort Lauderdale, Florida 33309.
(2) Consists of (i) 33,890 shares of Series M Preferred Stock and (ii) 15,000
shares of Series M Preferred Stock beneficially owned by Belmer Partners, a
Florida General Partnership ("Belmer"), of which Mr. Meier is a general
partner. Excludes all shares of Series M Preferred Stock owned by Norman M.
Meier and Phyllis R. Meier, Mr. Meier's father and mother, respectively, as
to which Mr. Meier disclaims beneficial ownership.
(3) Consists of (i) 38,000 shares of Series M Preferred Stock and (ii) 15,000
shares of Series M Preferred Stock beneficially owned by Belmer, of which
Mr. Meier is a general partner. Excludes all shares of Series M Preferred
Stock owned by Bradley I. Meier and Phyllis R. Meier, Mr. Meier's son and
former spouse, respectively, as to which Mr. Meier disclaims beneficial
ownership.
(4) See footnotes (1) - (3) above.
SERIES A PREFERRED STOCK OWNED BY MANAGEMENT
As of April 16, 2007, directors and Named Executive Officers, individually
and as a group, beneficially owned Series A Preferred Stock as follows:
Name and Address of Amount and Nature of
Beneficial Owner(1) Beneficial Ownership Percent of Class
---------------- -------------------- ----------------
Norman M. Meier*(2) 9,975 20%
Officers and directors 9,975 20%
as a group (1 person)(3)
* Director and Nominee
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Series A
Preferred Stock of the Company specified opposite his name. Unless
otherwise indicated, the mailing address of each shareholder is c/o
14
Universal Insurance Holdings, Inc., 1110 West Commercial Boulevard, Suite
100, Fort Lauderdale, Florida 33309.
(2) Consists of 9,975 shares of Series A Preferred Stock beneficially owned by
Belmer, of which Mr. Meier is a general partner. Excludes all shares of
Series A Preferred Stock owned by Phyllis R. Meier, Mr. Meier's former
spouse, as to which Mr. Meier disclaims beneficial ownership.
(3) See footnotes (1) - (2) above.
COMMON STOCK OWNED BY MANAGEMENT
As of April 16, 2007, directors and Named Executive Officers, individually
and as a group, beneficially owned Common Stock as follows:
Name and Address of Amount and Nature of
Beneficial Owner(1) Beneficial Ownership(2) Percent of Class
---------------- -------------------- ----------------
Bradley I. Meier(3) 22,497,335 59.1%
Sean P. Downes(4) 4,226,121 11.1%
Norman M. Meier(5) 504,246 1.3%
Reed J. Slogoff(6) 290,000 .8%
Joel M. Wilentz(7) 290,000 .8%
James M. Lynch(8) 290,807 .8%
Ozzie A. Schindler(9) 35,000 .1%
Officers and directors as 28,800,400 74.0%
a group (7 people)(10)
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Common Stock of
the Company specified opposite his name. Unless otherwise indicated, the
mailing address of each shareholder is c/o Universal Insurance Holdings,
Inc., 1110 West Commercial Boulevard, Suite 100, Fort Lauderdale, Florida
33309.
(2) A person is deemed to be the beneficial owner of Common Stock that can be
acquired by such person within 60 days of the date hereof upon the exercise
of warrants or stock options or conversion of Series A Preferred Stock,
Series M Preferred Stock or convertible debt. Except as otherwise
specified, each beneficial owner's percentage ownership is determined by
assuming that warrants, stock options, Series A Preferred Stock, Series M
Preferred Stock and convertible debt that are held by such person (but not
those held by any other person) and that are exercisable or convertible
within 60 days from the date hereof, have been exercised or converted.
(3) Includes (i) options to purchase an aggregate of 3,645,000 shares of Common
Stock; (ii) 169,450 shares of Common Stock issuable upon conversion of
Series M Preferred Stock; (iii) an aggregate of 331,761 shares of Common
Stock (including shares of Common Stock issuable upon exercise of warrants
and conversion of Series A and Series M Preferred Stock) beneficially owned
by Belmer, of which Mr. Meier is a general partner; and (iv) the following
shares of Common Stock which are subject to proxies granting voting power
15
to Mr. Meier: (A) 333,792 shares owned by Phyllis Meier, Mr. Meier's
mother, (B) 504,246 shares owned by Norman Meier, Mr. Meier's father, (C)
an additional 207,916 shares over which Mr. Meier has voting power, and (D)
options to purchase an aggregate of 1,115,000 shares of Common Stock owned
by Norman Meier, Mr. Meier's father, which are subject to a proxy granting
voting power to Mr. Meier. Mr. Meier no longer holds a proxy to vote an
aggregate of 666,891 shares held by Lynda Meier and Eric Meier, Mr. Meier's
sister and brother, respectively.
(4) Includes options to purchase an aggregate of 465,000 shares of Common
Stock.
(5) Includes (i) 214,938 shares of Common Stock issuable upon conversion of
Series A and Series M Preferred Stock, and (ii) an aggregate of 331,761
shares of Common Stock (including shares of Common Stock issuable upon
exercise of warrants and conversion of Series A and Series M Preferred
Stock) beneficially owned by Belmer, of which Norman Meier is a general
partner. Excludes (i) all securities owned by Bradley I. Meier or Phyllis
Meier, Norman Meier's son and former spouse, respectively, as to which
Norman Meier disclaims beneficial ownership, and (ii) all securities owned
by Norman Meier for which Norman Meier has granted voting power to his son,
Bradley Meier.
(6) Includes options to purchase an aggregate of 230,000 shares of Common
Stock, of which 50,000 are held in a custodial account for Mr. Slogoff's
minor son.
(7) Includes options to purchase an aggregate of 240,000 shares of Common
Stock.
(8) Includes options to purchase an aggregate of 215,000 shares of Common
Stock.
(9) Consists of an option to purchase 35,000 shares of Common Stock.
(10) See footnotes (1) - (9) above.
SERIES M PREFERRED STOCK HELD BY OTHERS
As of April 16, 2007, the following table sets forth information regarding
the number and percentage of Series M Preferred Stock held by all persons, other
than those persons listed immediately above, who are known by the Company to
beneficially own or exercise voting or dispositive control over 5% or more of
the Company's outstanding Series M Preferred Stock:
Amount and Nature of
Name and Address(1) Beneficial Ownership Percent of Class
---------------- -------------------- ----------------
Phyllis R. Meier(2) 16,800 18.9%
Universal Insurance Holdings, Inc.
1110 West Commercial Boulevard
Suite 100
Fort Lauderdale, Florida 33309
16
Belmer Partners(3) 15,000 16.9%
c/o Phyllis R. Meier
Managing General Partner
Universal Insurance Holdings, Inc.
1110 West Commercial Boulevard
Suite 100
Fort Lauderdale, Florida 33309
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Series M
Preferred Stock specified opposite her or its name.
(2) Consists of (i) 1,800 shares of Series M Preferred Stock and (ii) 15,000
shares of Series M Preferred Stock beneficially owned by Belmer, of which
Ms. Meier is the managing general partner. Excludes all securities owned by
Bradley I. Meier and Norman M. Meier, the son and former spouse,
respectively, as to which Ms. Meier disclaims beneficial ownership.
(3) Belmer Partners is a Florida general partnership in which Phyllis R. Meier
is managing general partner and Bradley I. Meier and Norman M. Meier are
general partners.
SERIES A PREFERRED STOCK HELD BY OTHERS
As of April 16, 2007, the following table sets forth information regarding
the number and percentage of Series A Preferred Stock held by all persons, other
than those persons listed immediately above, who are known by the Company to
beneficially own or exercise voting or dispositive control over 5% or more of
the Company's outstanding Series A Preferred Stock:
Amount and Nature of
Name and Address(1) Beneficial Ownership Percent of Class
---------------- -------------------- ----------------
Phyllis R. Meier(2) 9,975 20.0%
Universal Insurance Holdings, Inc.
1110 West Commercial Boulevard
Suite 100
Fort Lauderdale, Florida 33309
Belmer Partners(3) 30,000 60.0%
c/o Phyllis R. Meier
Managing General Partner
Universal Insurance Holdings, Inc.
1110 West Commercial Boulevard
Suite 100
Fort Lauderdale, Florida 33309
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Series A
Preferred Stock specified opposite her or its name.
17
(2) Consists of 9,975 shares of Series A Preferred Stock beneficially owned.
Excludes all shares of Series A Preferred Stock owned by Norman M. Meier,
Ms. Meier's former spouse, as to which Ms. Meier disclaims beneficial
ownership.
(3) Belmer Partners is a Florida general partnership in which Phyllis R. Meier
is managing general partner and Bradley I. Meier and Norman M. Meier are
general partners.
COMMON STOCK HELD BY OTHERS
As of April 16, 2007, the following table sets forth information regarding
the number and percentage of Common Stock held by all persons, other than those
persons listed immediately above, who are known by the Company to beneficially
own or exercise voting or dispositive control over 5% or more of the Company's
outstanding Common Stock:
Amount and Nature of
Name and Address(1) Beneficial Ownership(2) Percent of Class
---------------- -------------------- ----------------
Martin Steinberg, Esq., as the 6,518,004 17.1%
receiver for Lancer Offshore Inc.(3)
c/o David E. Wells, Esq.
Hunton & Williams LLP
1111 Brickell Avenue, Suite 2500
Miami, Florida 33131
(1) Unless otherwise indicated, the Company believes that each person has sole
voting and investment rights with respect to the shares of Common Stock of
the Company specified opposite his name.
(2) A person is deemed to be the beneficial owner of Common Stock that can be
acquired by such person within 60 days of the date hereof upon the exercise
of warrants or stock options or conversion of Series A and Series M
Preferred Stock or convertible debt. Except as otherwise specified, each
beneficial owner's percentage ownership is determined by assuming that
warrants, stock options, Series A and Series M Preferred Stock and
convertible debt that are held by such a person (but not those held by any
other person) and that are exercisable within 60 days from the date hereof,
have been exercised or converted.
(3) Consists of 6,518,004 shares of Common Stock as indicated on Schedule 13D
dated July 10, 2003 filed with the SEC on March 5, 2004.
18
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
(PROPOSAL 2)
The Company is currently authorized to issue 50,000,000 shares of Common
Stock, par value $0.01 per share, of which, as of April 16, 2007, 38,057,103
shares were issued and outstanding. Thus, as of April 16, 2007, there were
approximately 11,942,897 shares of Common Stock that were unissued. In addition,
the Company is obligated to issue shares of Common Stock upon the exercise of
stock options and warrants granted by the Company and upon the conversion of the
Company's outstanding preferred stock.
In these circumstances, the Board determined that it would be advisable and
in the best interest of the Company to amend the Company's Certificate of
Incorporation, as amended and restated ("Certificate of Incorporation"), to
increase the number of authorized shares of Common Stock in order to have
additional shares available for issuance to meet various business needs as they
may arise and to enhance the Company's flexibility in connection with possible
future actions. Those business needs and actions may include additional
financing, stock dividends, stock splits, employee benefit programs, corporate
business combinations and other corporate purposes. While the Company currently
has no arrangements, understandings or commitments with respect to the issuance
of any additional shares of Common Stock, it is considered advisable to have
sufficient authorized and unissued shares available to enable the Company, as
the need may arise, to move promptly to take advantage of market conditions and
the availability of other favorable opportunities without the delay and expense
involved in calling a special meeting of shareholders. Unless otherwise required
by applicable law or regulation, the additional shares of Common Stock will be
issuable without further authorization by vote or consent of the shareholders
and on such terms and for such consideration as may be determined by the Board.
Pursuant to that determination, on March 13, 2007, the Board of Directors
unanimously approved and recommended that the Company's shareholders consider
and approve an amendment to Article IV of the Certificate of Incorporation of
the Company to increase the number of authorized shares of Common Stock of the
Company from 50,000,000 shares to 55,000,000 shares.
The authorization of additional shares of Common Stock pursuant to this
proposal will have no dilutive effect upon proportionate voting power of the
present shareholders of the Company. However, to the extent that shares are
subsequently issued in connection with any corporate action to persons other
than the present shareholders, such issuance could have a dilutive effect on the
earnings per share and voting power of present shareholders.
In addition, although the issuance of additional shares of Common Stock in
certain instances may have the effect of forestalling a hostile takeover, the
Board does not intend nor does it view the increase in authorized shares of
Common Stock as an anti-takeover measure. The Company is not aware of any
proposed or contemplated transaction of this type, and the proposed amendment to
the Certificate of Incorporation is not being recommended in response to any
specific effort of which the Company is aware to obtain control of the Company.
At the Annual Meeting, the shareholders will be asked to consider the
proposal recommended by the Board to amend Article IV of the Certificate of
Incorporation. As proposed to be amended, paragraph (a) of Article IV would read
as follows:
19
The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 56,000,000
shares, of which:
(i) 55,000,000 shares shall be designated as Common
Stock, having a par value of $.01 per share (the "Common
Stock"); and
(ii) 1,000,000 shares shall be designated as Preferred
Stock, having a par value of $.01 per share.
If the amendment is approved by the Company's shareholders, it will become
effective upon the filing of a Certificate of Amendment in accordance with the
General Corporation Law of Delaware.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK.
APPROVAL OF FORMULAS USED TO CALCULATE PERFORMANCE BONUSES
(PROPOSAL 3)
The Company believes that linking the compensation of key employees to
corporate performance increases employee motivation to improve shareholder
value. Thus, the employee's reward is directly related to the Company's success.
The purposes of the performance-based bonuses for key employees is to motivate
the employees to improve shareholder value by linking a portion of their cash
compensation to the Company's financial performance, reward key employees for
improving the Company's financial performance and help attract and retain key
employees.
The Company is seeking shareholder approval of the material terms of the
performance goals under which annual performance-based bonuses are to be paid to
two of its key employees, Bradley I. Meier, President and Chief Executive
Officer of the Company, and Sean P. Downes, Senior Vice President and Chief
Operating Officer of the Company. The material terms of the performance goals
related to these bonus arrangements are set forth in an amendment to each of the
respective officers' employment agreements. The following summary of these bonus
arrangements is qualified in its entirety by reference to the provisions of the
arrangements contained in the amendments to the employment agreements of Mr.
Meier and Mr. Downes, which are attached to this Proxy Statement as Appendix B
and Appendix C, respectively.
Under Mr. Meier's employment agreement, Mr. Meier is entitled to receive an
annual performance bonus ("Meier Performance Bonus") equal to three percent (3%)
of the Company's pre-tax income not in excess of five million dollars
($5,000,000), and four percent (4%) of the Company's pre-tax income over five
million dollars ($5,000,000), as determined in accordance with the Company's
financial statements. The bonus is computed as at December 31 for each fiscal
year and must be paid by December 31 of the year following the year in which it
is earned. The Board unanimously approved the formula used to calculate the
Meier Performance Bonus, and the Compensation Committee of the Board unanimously
confirmed its approval of the Meier Performance Bonus for the 2006 fiscal year
as recently as March 14, 2007. The Benefits Table below sets forth the amount of
20
the Meier Performance Bonus determined for the most recent completed fiscal year
of the Company, of which $483,498 has been paid and is not subject to
shareholder approval and of which $591,811 has not been paid and is contingent
on the Company obtaining shareholder approval of the performance goal applicable
under Mr. Meier's employment agreement. Similarly, the Meier Performance Bonus
for fiscal years after 2006 is contingent on shareholder approval and will not
be payable if shareholder approval is not obtained. Accordingly, the Company
hereby seeks approval of the use of the Company's pre-tax income as the
performance goal applicable to the remainder of the Meier Performance Bonus
payable for 2006, as well as the Meier Performance Bonus for fiscal years
thereafter.
Under Mr. Downes' employment agreement, Mr. Downes is entitled to receive
an annual performance bonus ("Downes Performance Bonus") equal to three percent
(3%) of the pre-tax profits of the Company, as determined in accordance with the
Company's financial statements. The bonus is computed as at December 31 for each
fiscal year and must be paid by December 31 of the year following the year in
which it is earned. The Board unanimously approved the formula used to calculate
the Downes Performance Bonus, and the Compensation Committee of the Board
unanimously confirmed its approval of the Downes Performance Bonus for the 2006
fiscal year as recently as March 14, 2007. The Benefits Table below sets forth
the amount of the Downes Performance Bonus determined for the most recent
completed fiscal year of the Company, of which $400,123 has been paid and is not
subject to shareholder approval and of which $443,859 has not been paid and is
contingent on the Company obtaining shareholder approval of the performance goal
applicable under Mr. Downes' employment agreement. Similarly, the Downes
Performance Bonus for fiscal years after 2006 is contingent on shareholder
approval and will not be payable if shareholder approval is not obtained.
Accordingly, the Company hereby seeks approval of the use of the Company's
pre-tax profits as the performance goal applicable to the remainder of the
Downes Performance Bonus payable for 2006, as well as the Downes Performance
Bonus for fiscal years thereafter.
Upon completion of each fiscal year, the Compensation Committee of the
Board will certify in writing prior to payment of the Meier and Downes
Performance Bonuses that the applicable performance objective has been attained
and the bonus is payable. With respect to Compensation Committee certification,
approved minutes of the meeting in which the certification is made will be
treated as written certification.
The Company and Mr. Meier or Mr. Downes, as the case may be, may agree to
amend or terminate the bonus arrangement at any time by entering into a written
amendment or modification of the applicable employment agreement.
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, the
federal income tax deductibility of compensation paid to Mr. Meier and Mr.
Downes may be limited to the extent that it exceeds $1.0 million in any one
year. The Company can deduct compensation in excess of that amount if it
qualifies as "performance-based compensation" under Section 162(m). For the
Meier and Downes Performance Bonuses to qualify as "performance-based
compensation," the performance-based formulas used to determine them must be
approved by the Company's shareholders. The Meier and Downes Performance Bonuses
are intended to permit the Company to pay incentive compensation which qualifies
as "performance-based compensation," thereby permitting the Company to receive a
federal income tax deduction for the payment of this incentive compensation.
21
The following table sets forth the total amounts that would be payable with
respect to the Meier and Downes Performance Bonuses for fiscal year 2006, in the
event shareholder approval of the applicable performance goals is obtained:
NEW BENEFITS
NAME AND PRINCIPAL POSITION DOLLAR VALUE ($)
Bradley I. Meier
President and Chief Executive Officer $1,075,310 (1)
Sean P. Downes
Senior Vice President and Chief Operating Officer $843,982 (2)
James M. Lynch
Executive Vice President and Chief Financial Officer $0
All executive officers as a group $1,919,291
All non-executive directors as a group $0
All non-executive officer employees as a group $0
---------------
(1) $483,498 of which has already been paid.
(2) $400,123 of which has already been paid.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
MEIER PERFORMANCE BONUS AND THE DOWNES PERFORMANCE BONUS.
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(PROPOSAL 4)
The Audit Committee recommended and the Board approved the appointment of
the accounting firm Blackman Kallick Bartelstein LLP as the Company's
independent registered public accounting firm for the fiscal year 2007, subject
to shareholder ratification. Blackman Kallick Bartelstein LLP audited the
Company's financial statements for the fiscal years ended December 31, 2004,
2005 and 2006.
AUDIT FEES
Audit fees for the fiscal years ended December 31, 2006 and December 31,
2005 were $260,000 and $176,000, respectively.
22
AUDIT RELATED FEES
Audit related fees for the fiscal years ended December 31, 2006 and
December 31, 2005 were $0.
TAX FEES
Tax fees for the fiscal years ended December 31, 2006 and December 31, 2005
were $33,500 and $31,500, respectively.
ALL OTHER FEES
All other fees for products and services provided by the Company's
principal accountant for the fiscal years ended December 31, 2006 and December
31, 2005 were $0.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT
SERVICES OF THE INDEPENDENT AUDITOR
All audit related services were pre-approved by the Audit Committee, which
concluded that the provision of such services by Blackman Kallick Bartelstein
LLP was compatible with the maintenance of that firm's independence in the
conduct of its auditing functions. The Board has appointed Blackman Kallick
Bartelstein LLP to serve as the Company's independent registered public
accounting firm for the fiscal year ending December 31, 2007. Representatives of
Blackman Kallick Bartelstein LLP will be available at the Annual Meeting where
they will have the opportunity to make a statement if they desire to do so and
where they will be available to respond to any appropriate questions.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF BLACKMAN KALLICK BARTELSTEIN LLP AS THE COMPANY'S INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2007.
OTHER INFORMATION
On January 11, 2007, the Company applied for listing of its Common Stock on
the American Stock Exchange LLC ("AMEX"). AMEX is currently reviewing the
Company's listing application, and although no assurances can be given, the
Company believes it will be able to meet the listing requirements. The Company
meets the definition of "controlled company" set forth in Section 801(a) of the
AMEX Company Guide in that greater than fifty percent (50%) of the voting power
of the Company's Common Stock is held by Bradley I. Meier.
ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, WITHOUT EXHIBITS, FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2006 ACCOMPANIES THIS PROXY STATEMENT. UPON
WRITTEN REQUEST, THE COMPANY WILL PROVIDE TO ANY SHAREHOLDER, FREE OF CHARGE, A
COPY OF ITS ANNUAL REPORT ON FORM 10-KSB, WITHOUT EXHIBITS, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. REQUESTS FOR COPIES OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB SHOULD BE DIRECTED TO JAMES M. LYNCH, UNIVERSAL INSURANCE
23
HOLDINGS, INC., 1110 WEST COMMERCIAL BOULEVARD, SUITE 100, FORT LAUDERDALE,
FLORIDA 33309.
SECTION 16 (a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, and persons who own more than 10% of the Company's Common
Stock to file initial reports of ownership and reports of changes in ownership
with the SEC. Directors, executive officers and greater than 10% shareholders
(collectively, "Reporting Persons") are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Mr. Downes failed to file a Form 4 in connection with an acquisition of the
Company's Common Stock in fiscal year 2006, but subsequently filed a Form 5 on
February 1, 2007 reflecting this transaction. Except for Mr. Downes'
transaction, and based solely on review of the copies of such forms provided to
the Company and written representations by the Reporting Persons, the Company
believes that, for the year ended December 31, 2006, all Section 16(a) filing
requirements applicable to the Reporting Persons were met.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the Company's 2008
annual meeting of shareholders must be received by the Company no later than
December 10, 2007 to be considered for inclusion in the Company's proxy
statement and form of proxy relating to such meeting. Shareholders wishing to
submit a proposal at the 2008 annual meeting of shareholders that do not intend
to include the proposal in the Company's proxy statement for that meeting must
provide appropriate notice to the Company by February 11, 2008.
OTHER MATTERS
The Company knows of no business that will be presented for action at the
Annual Meeting other than those matters referred to herein. If other matters do
come before the meeting, the persons named as proxies will act and vote
according to their best judgment on behalf of the shareholders they represent.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Norman M. Meier
-----------------------------------
Norman M. Meier, Secretary
Dated: April 20, 2007
24
APPENDIX A
UNIVERSAL INSURANCE HOLDINGS, INC.
CHARTER OF THE AUDIT COMMITTEE
------------------------------
ADOPTED AS OF JANUARY 9, 2007
I. PURPOSE
The purpose of the Audit Committee (the "COMMITTEE") is to represent and assist
the Board of Directors (the "Board") in its general oversight of the accounting
and financial reporting processes, audits of the financial statements, internal
control and audit functions, and finance, auditing, accounting, legal, financial
reporting and regulatory compliance of Universal Insurance Holdings, Inc. (the
"COMPANY"). Company management is responsible for (a) the preparation,
presentation and integrity of the Company's financial statements; (b) accounting
and financial reporting principles; and (c) the internal controls and procedures
designed to promote compliance with accounting standards and applicable laws and
regulations. The Company's independent auditing firm is responsible for
performing an independent audit of the consolidated financial statements in
accordance with generally accepted auditing standards.
The Committee members are not professional accountants or auditors and their
functions are not intended to duplicate or to certify the activities of
management and the independent auditor, nor can the Committee certify that the
independent auditor is "independent" under applicable rules. While certain
duties and responsibilities of the Committee are more specifically set forth
below, the general function of the Committee is oversight.
II. MEMBERSHIP AND STRUCTURE
The Committee shall consist of at least three directors determined by the Board.
If the Company's securities are quoted on the American Stock Exchange (or any
other national securities association or exchange), Committee members shall meet
the independence and financial literacy requirements of such exchange or
association and applicable federal law. Appointment to the Committee, including
the designation of the Chair of the Committee and, if required by applicable
law, the designation of any Committee members as "audit committee financial
experts," shall be made by the full Board. The Board may from time to time
remove members of the Committee and fill any vacancies on the Committee by a
majority vote of the Company's directors serving on the Board.
III. MEETINGS, REPORTS, SUBCOMMITTEES, RESOURCES AND EVALUATIONS
(a) MEETINGS AND REPORTS. The Committee shall meet as often as it determines,
but not less frequently than quarterly. The Committee may also hold special
meetings or act by unanimous written consent as the Committee may decide. The
meetings may be in person or by telephone. At each meeting of the Committee, a
majority of the members shall constitute a quorum, and a majority of the members
present at any meeting at which a quorum is present may act on behalf of the
Committee. The Committee shall maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board. The
A-1
Committee shall also make regular reports to the Board. The Committee shall meet
with management and the independent auditor in separate executive sessions as
appropriate. The Committee may periodically consult with the independent auditor
out of the presence of management regarding internal controls and the fullness
and accuracy of the Company's financial statements. The Committee may request
any officer or employee of the Company or the Company's outside counsel or the
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
In order to encourage and facilitate open communication, the Committee may meet
with management, the internal auditing group and the independent auditor in one
or more separate sessions to discuss any matters that the Committee or any of
these groups believe should be discussed. In addition, the Committee may meet
with the independent auditor and management quarterly to review the financial
statements of the Company.
(b) SUBCOMMITTEES. The Committee may form and delegate authority to
subcommittees, or to one or more members of the Committee, when appropriate.
(c) RESOURCES. The Committee is at all times authorized to have direct,
independent and confidential access to the Company's other directors, management
and personnel to carry out the Committee's purposes. The Committee shall have
the authority, to the extent it deems necessary or appropriate, to retain
independent legal, accounting or other advisors. The Company shall provide
appropriate funding, as determined by the Committee, to permit the Committee to
perform its duties under this Charter, to compensate its advisors and to
compensate any registered public accounting firm engaged for the purpose of
rendering or issuing an audit report or related work or performing other audit,
review or attest services for the Company.
(d) EVALUATIONS. The Committee shall evaluate the adequacy of its own
performance and this Charter on an annual basis and shall report to the Board
annually the results of an annual review by the Committee of its own performance
and shall recommend any proposed changes to the Board for approval.
IV. COMMITTEE AUTHORITY AND RESPONSIBILITIES
The Committee, at its discretion, has the authority to initiate special
investigations and to hire special legal, accounting or other outside advisors
or experts to assist the Committee as it deems necessary to fulfill its duties
under this Charter. The Committee may also perform such other activities
consistent with this Charter, the Company's Certificate of Incorporation and
governing law, as the Committee or the Board deems necessary or appropriate.
When appropriate, the Committee may designate one or more of its members to
perform certain of its duties on its behalf, subject to such reporting to or
ratification by the Committee as the Committee shall direct.
The Committee, to the extent it deems necessary or appropriate, shall:
Oversight of the Company's Relationship with the Independent Auditor
--------------------------------------------------------------------
o Be directly responsible for the appointment, replacement, compensation, and
oversight of the work of the independent auditor of the Company (including
resolution of disagreements between management and the independent auditor
A-2
regarding financial reporting) for the purpose of preparing or issuing an
audit report or performing other audit, review or attest services. The
independent auditor shall report directly to the Committee.
o If deemed necessary or advisable by the Committee, obtain and review
annually a report by the independent auditor describing (a) the firm's
internal quality control procedures; (b) any material issues raised by the
most recent internal quality control review or peer review or by any
inquiry or investigation by governmental or professional authorities,
within the preceding five years, respecting one or more independent audits
carried out by the firm; (c) any steps taken to deal with any such issues;
(d) any relationships or services that may affect the objectivity and
independence of the independent auditor; and (e) all relationships between
the independent auditor and the Company, including considering whether the
auditor's quality controls are adequate and the provision of permitted
non-audit services is compatible with maintaining the auditor's
independence, taking into account the opinions of management and internal
auditors. The Committee shall present its conclusions with respect to the
independent auditor to the Board.
o Establish policies for the hiring of employees and former employees of the
independent auditor.
o Review and discuss the written statement from the independent auditor
concerning all relationships between the auditor and the Company,
consistent with Independence Standards Board Standard No. 1, or any other
relationships that may adversely affect the independence of the auditor,
and, based on such review, assess the independence of the auditor.
o Review and discuss with the independent auditor (a) its audit plans, and
audit procedures, including the scope, fees and timing of the audit; (b)
the results of the annual audit examination and accompanying management
letters; and (c) the results of the independent auditor's procedures with
respect to interim periods.
o Review with the independent auditor its judgments as to the quality of the
Company's accounting principles and such matters as are required to be
discussed with the Committee under generally accepted auditing standards.
o Meet and discuss with the independent auditor (a) the issues on which it
was consulted by the Company's audit team; (b) any matters of audit quality
and consistency, and (c) any audit problems or difficulties and
management's responses to such problems or difficulties.
o Review the use of auditors other than the independent auditor in cases such
as management's request for second opinions.
Financial Statement and Disclosure Matters
------------------------------------------
o Review and discuss with management and the independent auditor quarterly
earnings press releases, if applicable, including the interim financial
information included therein and the use of "pro forma" or "adjusted"
non-GAAP information, review the year-end audited financial statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, if deemed appropriate, recommend to the Board that the
audited financial statements be included in the annual report for the year.
A-3
o Discuss with management financial information and earnings guidance
provided to analysts and rating agencies, if applicable. Such discussion
may be general and address the types of information to be disclosed and the
types of presentations to be made.
o Review and discuss reports from the independent auditor on (a) all critical
accounting policies and practices used by the Company; (b) alternative
accounting treatments within GAAP related to material items that have been
discussed with management, including the ramifications of the use of the
alternative treatments and the treatment preferred by the independent
auditor; and (c) other material written communications between the
independent auditor and management.
o Discuss with management and the independent auditor any significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements, including any
significant changes in the Company's selection or application of accounting
principles, any major issues as to the adequacy of the Company's internal
control over financial reporting and any special steps adopted or which
need to be adopted in light of any material weaknesses.
o Review and discuss with management and the independent auditor any subjects
that may have significant financial impact on the Company or that are the
subject of discussions between management and the independent auditor, such
as the effect of regulatory and accounting initiatives as well as
off-balance sheet structures.
o Discuss with management the Company's major financial risk exposures and
the steps management has taken to monitor and control such exposures,
including the Company's risk assessment and risk management policies.
o To the extent applicable, review and retain prior approval for
related-party transactions as may be required by such national securities
association or exchange on which the Company's securities are listed.
o The independent auditor shall contact the Chairman of the Committee
directly (a) to review items of a sensitive nature that can affect the
accuracy of financial reporting; or (b) to discuss significant issues
relative to the overall Board responsibility that have been communicated to
management but, in their judgment, may warrant follow-up by the Committee.
Oversight of the Company's Internal Audit Function
--------------------------------------------------
o Review and discuss with management, the independent auditor, and the
internal audit group (or other person, persons or outside firm responsible
for the Company's internal audit function) (a) the adequacy and
effectiveness of the Company's internal controls (including any material
weaknesses and significant deficiencies and significant changes in internal
controls reported to the Committee by the independent auditor or
management); (b) the Company's internal audit procedures; and (c) the
adequacy and effectiveness of the Company's disclosure controls and
procedures, and management reports thereon.
o Review annually with the internal audit group (or other person, persons or
outside firm responsible for the Company's internal audit function) the
scope of the internal audit program, and review annually the performance of
both the internal audit group and the independent auditor in executing
their plans and meeting their objectives.
A-4
o Discuss with the independent auditor and management the internal audit
group responsibilities, budget and staffing and any recommended change in
the planned scope of the internal audit.
o Review significant reports to management prepared by the internal audit
group and management's responses. In addition, at the request of the
Committee, the internal audit group (or other person, persons or outside
firm responsible for the Company's internal audit function) shall report
directly to the Committee as to its activities and any other matter
requested of it by the Committee.
Compliance Oversight Responsibilities
-------------------------------------
o Review matters related to the corporate compliance activities of the
Company.
o Establish procedures for the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls,
or auditing matters, and the confidential, anonymous submission by
employees of concerns regarding questionable accounting or auditing
matters.
o Discuss with management and the independent auditor any correspondence with
regulators or governmental agencies and any published reports that raise
material issues regarding the Company's financial statements or accounting
policies.
o To the extent applicable, review and publish the report of the Committee
required by the rules of the Securities and Exchange Commission to be
included in the Company's annual proxy statement.
Pre-Approval Policies
---------------------
To the extent required by applicable law, the Committee shall pre-approve all
auditing services and permitted non-audit services, including tax services, to
be performed for the Company by its independent auditor, subject to the de
minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of
the Securities Exchange Act of 1934, as amended, which are approved by the
Committee prior to the completion of the audit.
A-5
APPENDIX B
AMENDMENT TO
EMPLOYMENT AGREEMENT OF BRADLEY I. MEIER
THIS AMENDMENT is made and entered into this 21st day of March, 2007, by
and between Universal Insurance Holdings, Inc. ("Company") and Bradley I. Meier
("Executive").
WHEREAS, the Company and Executive have entered into an Employment
Agreement dated as of August 11, 1999, and the following Addendum thereto: (i)
Addendum No. 3 dated May 4, 2001, (ii) Addendum No. 4 dated January 28, 2002,
(iii) Addendum No. 5 dated June 27, 2002, and (iv) Addendum No. 6 effective as
of December 31, 2003 (collectively, the "Agreement").
WHEREAS, capitalized terms not defined herein shall have the meanings set
forth in the Agreement.
WHEREAS, the Company and Executive desire to modify certain provisions of
the Agreement.
NOW, THEREFORE, the parties hereto intending to be legally bound hereby and
upon receipt of other valuable consideration, the receipt of which is hereby
acknowledged, do hereby agree as follows:
1. Section 6(b) of the Agreement is hereby amended to read in its
entirety as follows:
"ANNUAL BONUS
------------
Employee shall receive an annual bonus of three (3%) percent of the
Company's pre-tax income up to five million dollars ($5,000,000), and
four (4%) percent of the Company's pre-tax income over five million
dollars ($5,000,000), which shall be computed as at December 31 for
each fiscal year commencing with the fiscal year ending December 31,
1999; PROVIDED, HOWEVER, that in no event shall any bonus due and
owing under this Section 6(b) be paid to Executive later than December
31 of the year following the year in which it was earned; PROVIDED,
FURTHER, that the payment of any bonus pursuant to this Section 6(b)
shall be contingent upon the Company's shareholders approving the
bonus formula described in this Section 6(b), and should the Company's
shareholders fail to approve the bonus formula described in this
Section 6(b), Executive shall forfeit his right to such bonus
compensation under this Section 6(b)."
2. Except as expressly amended herein, the terms and conditions of the
Agreement are hereby ratified and affirmed.
B-1
WITNESS the due execution hereof as of the date first above written.
UNIVERSAL INSURANCE HOLDINGS, INC.
By: /s/ James M. Lynch
--------------------------------
Title: Executive Vice President
-----------------------------
/s/ Bradley I. Meier
-----------------------------------
Bradley I. Meier
B-2
APPENDIX C
AMENDMENT TO
EMPLOYMENT AGREEMENT OF SEAN P. DOWNES
THIS AMENDMENT is made and entered into this 21st day of March, 2007, by
and between Universal Insurance Holdings, Inc. ("Company") and Sean P. Downes
("Executive").
WHEREAS, the Company and Executive have entered into an Employment
Agreement dated as of January 1, 2005, and an Addendum thereto dated May 22,
2006 (collectively, the "Agreement").
WHEREAS, capitalized terms not defined herein shall have the meanings set
forth in the Agreement.
WHEREAS, the Company and Executive desire to modify certain provisions of
the Agreement.
NOW, THEREFORE, the parties hereto intending to be legally bound hereby and
upon receipt of other valuable consideration, the receipt of which is hereby
acknowledged, do hereby agree as follows:
1. Section 6(b) of the Agreement is hereby amended to read in its
entirety as follows:
"ANNUAL BONUS
------------
Employee shall receive an annual bonus of three percent (3%) of the
pre-tax profits of the Company as determined as at the year end of
each year of the Term of this Agreement; PROVIDED, HOWEVER, that in no
event shall any bonus due and owing under this Section 6(b) be paid to
Executive later than December 31 of the year following the year in
which it was earned; PROVIDED, FURTHER, that the payment of any bonus
pursuant to this Section 6(b) shall be contingent upon the Company's
shareholders approving the bonus formula described in this Section
6(b), and should the Company's shareholders fail to approve the bonus
formula described in this Section 6(b), Executive shall forfeit his
right to such bonus compensation under this Section 6(b)."
2. Except as expressly amended herein, the terms and conditions of the
Agreement are hereby ratified and affirmed.
[SIGNATURES ON FOLLOWING PAGE]
C-1
WITNESS the due execution hereof as of the date first above written.
UNIVERSAL INSURANCE HOLDINGS, INC.
By: /s/ Bradley I. Meier
--------------------------------
Title: President
-----------------------------
/s/ Sean P. Downes
-----------------------------------
Sean P. Downes
C-2
APPENDIX D
REVOCABLE PROXY FOR HOLDERS OF SERIES M PREFERRED STOCK
UNIVERSAL INSURANCE HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS ON MAY 18, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James M. Lynch, with full power of substitution,
as the lawful proxy of the undersigned and hereby authorizes him to represent
and to vote as designated below all shares of Series M preferred stock of
Universal Insurance Holdings, Inc. ("Company") that the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders of
the Company to be held on May 18, 2007 at the Westin Fort Lauderdale, Suite 100,
Fort Lauderdale, Florida 33334, and at any adjournment thereof. Holders of
Series M preferred stock are entitled to one vote per share.
1. Proposal 1: Election of six directors for a term ending in 2008. Nominees:
Bradley I. Meier, Norman M. Meier, Sean P. Downes, Ozzie A. Schindler, Reed
J. Slogoff and Joel M. Wilentz.
FOR [ ] WITHHELD [ ]
(all nominees except as marked below)
------------------------------------------------------------------------
(Instruction: To withhold authority to vote for any individual
nominee(s), write the name(s) of the nominee(s) on the line above.)
2. Proposal 2: Approval of an amendment to the Company's Certificate of
Incorporation, as amended and restated, to increase the number of
authorized shares of common stock of the Company from 50,000,000 shares to
55,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal 3: Approval of the formulas used to calculate performance bonuses
in each of the amended employment agreements of the Chief Executive Officer
and the Chief Operating Officer of the Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Proposal 4: Ratification of the appointment of Blackman Kallick Bartelstein
LLP, independent registered public accounting firm, as the auditors of the
Company for the year ending December 31, 2007.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In the discretion of such proxy, to transact any other business as may
properly come before the annual meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE MATTERS LISTED ABOVE.
Whether or not you plan to attend the meeting, you are urged to execute and
return this proxy, which may be revoked at any time prior to its use.
Change of Address or Comments Mark Here [ ]
Please sign your name exactly as it appears
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Date ______, 2007 ------------------------------------------
Signature of Shareholder
------------------------------------------
Signature of Additional Shareholder(s)
APPENDIX E
REVOCABLE PROXY FOR HOLDERS OF SERIES A PREFERRED STOCK AND COMMON STOCK
UNIVERSAL INSURANCE HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS ON MAY 18, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James M. Lynch, with full power of
substitution, as the lawful proxy of the undersigned and hereby authorizes him
to represent and to vote as designated below all shares of Series A preferred
stock and all shares of common stock of Universal Insurance Holdings, Inc.
("Company") that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Shareholders of the Company to be held on May 18, 2007
at the Westin Fort Lauderdale, Fort Lauderdale, Florida 33334, and at any
adjournment thereof. Holders of Series A preferred stock and common stock are
entitled to one vote per share.
1. Proposal 1: Election of four directors for a term ending in 2008. Nominees:
Sean P. Downes, Ozzie A. Schindler, Reed J. Slogoff and Joel M. Wilentz.
FOR [ ] WITHHELD [ ]
(all nominees except as marked below)
------------------------------------------------------------------------
(Instruction: To withhold authority to vote for any individual
nominee(s), write the name(s) of the nominee(s) on the line above.)
2. Proposal 2: Approval of an amendment to the Company's Certificate of
Incorporation, as amended and restated, to increase the number of
authorized shares of common stock of the Company from 50,000,000 shares to
55,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal 3: Approval of the formulas used to calculate performance bonuses
in each of the amended employment agreements of the Chief Executive Officer
and the Chief Operating Officer of the Company.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Proposal 4: Ratification of the appointment of Blackman Kallick Bartelstein
LLP, independent registered public accounting firm, as the auditors of the
Company for the year ending December 31, 2007.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In the discretion of such proxy, to transact any other business as may
properly come before the annual meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED FOR THE MATTERS LISTED ABOVE.
Whether or not you plan to attend the meeting, you are urged to execute and
return this proxy, which may be revoked at any time prior to its use.
Change of Address or Comments Mark Here [ ]
Please sign your name exactly as it appears
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Date: _______, 2007 -------------------------------------------
Signature of Shareholder
-------------------------------------------
Signature of Additional Shareholder(s)