UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by
the Registrant ý
Filed by
a Party other than the Registrant o
Check the
appropriate box:
|
o
|
Preliminary
Proxy Statement
|
||||
|
o
|
Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|
||||
|
ý
|
Definitive
Proxy Statement
|
||||
|
o
|
Definitive
Additional Materials
|
||||
|
o
|
Soliciting
Material Pursuant to Section 240.14a-12
|
||||
GREENLIGHT
CAPITAL RE, LTD.
(Name of
Registrant As Specified in its Charter)
N/A
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
|
ý
|
No
fee required.
|
|
|
o
|
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 fee is
calculated and state how it was determined):
|
|||||
| (4) |
Proposed
maximum aggregate value of transaction:
|
|||||
| (5) |
Total
fee paid:
|
|||||
|
o
|
Fee
paid previously with preliminary materials:
|
|||||
|
o
|
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 No.:
|
|||||
|
(3)
|
Filing
Party:
|
|||||
|
(4)
|
Date
Filed:
|
|||||
GREENLIGHT
CAPITAL RE, LTD.
The
Grand Pavilion, 802 West Bay Road
P.O.
Box 31110
Grand
Cayman, KY1-1205
Cayman
Islands
NOTICE
OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL
28, 2009
Notice is
hereby given that the Annual General Meeting of Shareholders, or the Meeting, of
Greenlight Capital Re, Ltd., or the Company, will be held at the Company’s
offices at The Grand Pavilion, 802 West Bay Road, Grand Cayman, Cayman Islands
on April 28, 2009, at 9:00 a.m., (local time), for the following
purposes:
|
|
1.
|
To
consider and vote upon a proposal to elect seven directors of the Company
to serve on the Board of Directors until the Annual General Meeting of
Shareholders in 2010;
|
|
|
2.
|
To
consider and vote upon a proposal to elect seven directors of Greenlight
Reinsurance, Ltd., a wholly-owned subsidiary of the Company, or Greenlight
Re, to serve on the Board of Directors of Greenlight Re until the Annual
General Meeting of Shareholders in 2010, which pursuant to the Company’s
Third Amended and Restated Memorandum and Articles of Association, is
required to be considered by the shareholders of the
Company;
|
|
|
3.
|
To
consider and vote upon a proposal to ratify the appointment of BDO
Seidman, LLP, or BDO, as the independent auditors of the Company for the
fiscal year ending December 31, 2009;
and
|
|
|
4.
|
To
consider and vote upon a proposal to ratify the appointment of BDO as the
independent auditors of Greenlight Re for the fiscal year ending December
31, 2009, which pursuant to the Company’s Third Amended and Restated
Memorandum and Articles of Association, is required to be considered by
the shareholders of the Company.
|
Information
concerning the matters to be acted upon at the Meeting is set forth in the
accompanying Proxy Statement.
Only
shareholders of record, as shown by the transfer books of the Company, at the
close of business on March 6, 2009, will be entitled to notice of, and to vote
at, the Meeting or any adjournments thereof.
In
accordance with rules adopted by the Securities and Exchange Commission, we are
pleased to furnish these proxy materials to shareholders for the first time
primarily over the Internet rather than in paper form. We believe these rules
allow us to provide our shareholders with expedited and convenient access to the
information they need, while helping to conserve natural resources and lower the
costs of printing and delivering proxy materials.
Whether
or not you plan to attend the Meeting, we hope you will vote as soon as
possible. Voting your proxy will ensure your representation at the Meeting. We
urge you to carefully review the proxy materials and to vote FOR Proposals 1
through 4.
By Order
of the Board of Directors,
 |
Leonard Goldberg
Chief
Executive Officer
March 3,
2009
Grand
Cayman, Cayman Islands
| TABLE OF CONTENTS | |||
|
Page
|
|||
|
|
|
||
|
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|
||
|
|
|
||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
|
|
|||
GREENLIGHT
CAPITAL RE, LTD.
The Grand
Pavilion, 802 West Bay Road
P.O. Box
31110
Grand
Cayman, KY1-1205
Cayman
Islands
PROXY
STATEMENT
ANNUAL
GENERAL MEETING OF SHAREHOLDERS
TO
BE HELD ON APRIL 28, 2009
This
Proxy Statement is furnished in connection with the solicitation by the Board of
Directors of Greenlight Capital Re, Ltd., or the Company, of proxies for use at
the Annual General Meeting of Shareholders of the Company, or the Meeting, to be
held at The Grand Pavilion, 802 West Bay Road, Grand Cayman, Cayman Islands
on April 28, 2009 at 9:00 a.m., (local time), and at any and all adjournments or
postponements thereof, for the purposes set forth in the accompanying Notice of
Annual General Meeting of Shareholders. The Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2008, including financial statements, is
included with this Proxy Statement for informational purposes and not as a means
of soliciting your proxy. Additional copies of
the Annual Report on Form 10-K may be obtained, without charge, by writing to us
at the address above.
This
Proxy Statement and the accompanying proxy card and Notice of Annual General
Meeting of Shareholders are first being provided to shareholders on or about
March 3, 2009.
Unless
otherwise indicated or unless the context otherwise requires, all references in
this Proxy Statement to “the Company,” "GLRE," “we,” “us,” “our” and similar
expressions are references to Greenlight Capital Re, Ltd. All references to
Greenlight Re are references to Greenlight Reinsurance, Ltd. the wholly-owned
subsidiary of Greenlight Capital Re, Ltd.
As a
shareholder of GLRE, you have a right to vote on certain business matters
affecting GLRE. The proposals that will be presented at the Meeting
and upon which you are being asked to vote are discussed below under the
“Proposals” section. Each Class A ordinary share of GLRE you owned as
of the record date entitles you to one vote on each proposal presented at the
Meeting, subject to certain provisions of our Third Amended and Restated
Memorandum and Articles of Association, or our Articles, as described below
under “Voting Securities and Vote Required.”
You may
vote by mail, by telephone, over the internet, or in person at the
Meeting.
Voting
by Mail. If you have requested a
paper copy of the proxy documents you may vote by signing the proxy card and
returning it in the prepaid and addressed envelope enclosed with the proxy
materials. If you vote by mail we encourage you to sign and return the
proxy card even if you plan to attend the Meeting so that your shares will be
voted if you are unable to attend the Meeting.
Voting
by Telephone. To vote by
telephone, please follow either the instructions included on your proxy card or
the voting instructions you received by mail or that are being provided via the
Internet. If you vote by telephone, you do not need to complete and
mail a proxy card. Telephone voting is available through 9:00 a.m., (local time),
the day prior to the Meeting day.
Voting over the Internet. To
vote over the Internet, please follow either the instructions included on your
proxy card or the voting instructions you receive by mail or the
instructions that are being provided via the Internet. If you
vote over the Internet, you do not need to complete and mail a proxy card.
Internet voting is available through 9:00 a.m. (local time) the day
prior to the Meeting day.
Voting in Person at the
Meeting. If you attend the Meeting and plan to vote in person, we
will provide you with a ballot at the Meeting. If your shares are
registered directly in your name, you are considered the shareholder of record
and you have the right to vote in person at the Meeting. If your
shares are held in the name of your broker or other nominee, you are considered
the beneficial owner of shares held in street name. As a beneficial
owner, if you wish to vote at the Meeting, you will need to bring to the Meeting
a legal proxy from your broker or other nominee authorizing you to vote those
shares.
Under
rules adopted by the SEC, we are furnishing proxy materials to our shareholders
primarily via the Internet, instead of mailing printed copies of those materials
to each shareholder. On or about March 10, 2009, we will mail to our
shareholders (other than those who previously requested electronic or paper
delivery) a Notice of Internet Availability containing instructions on how to
access our proxy materials, including our proxy statement and our annual report.
The Notice of Internet Availability also instructs you on how to access your
proxy card to vote over the Internet, by mail or telephone.
This new
process is designed to expedite shareholders’ receipt of proxy materials, help
conserve natural resources and lower the cost of the Meeting. However, if you
would prefer to receive printed proxy materials, please follow the instructions
included in the Notice of Internet Availability. If you have previously elected
to receive our proxy materials electronically, you will continue to receive
these materials via e-mail unless you elect otherwise.
Any
registered shareholder receiving a Notice of Internet Availability who
would like to request a separate paper copy of these materials, should:
(1) go to www.bnymellon.mobular.net/bnymellon/GLRE
and follow the instructions provided; (2) send an e-mail message to shrrelations@bnymellon.com
with “Request for Proxy Materials” in the subject line and provide your name,
address and the control number that appears in the box on the Notice of Internet
Availability; or (3) call our Investor Relations department, at 1(888)
313-0164 (Toll Free) or 1(201) 680-6688 (Outside of the U.S. or
Canada).
As of
March 6, 2009, the record date for the determination of persons entitled to
receive notice of, and to vote at, the Meeting, the following ordinary shares
are estimated to be issued and outstanding:
|
|
•
|
29,781,736
Class A ordinary shares, par value $0.10 per
share
|
|
|
•
|
6,254,949
Class B ordinary shares, par value $0.10 per
share
|
The above
ordinary shares are our only classes of equity shares outstanding and entitled
to vote at the Meeting.
Class
A Ordinary Shares
Each
Class A ordinary share is entitled to one vote per share. However, except upon
unanimous consent of the Board of Directors, no holder shall be permitted to
acquire an amount of shares which would cause any person to own (directly,
indirectly or constructively under applicable United States tax attribution and
constructive ownership rules) 9.9% or more of the total voting power of the
total issued and outstanding ordinary shares. Due to the voting limitations on
our Class B ordinary shares described below, each Class A ordinary share will be
effectively entitled to more than one vote per share subject to the 9.9%
restriction described in this paragraph.
Class
B Ordinary Shares
Each
Class B ordinary share is entitled to ten votes per share. However, the total
voting power of all Class B ordinary shares, as a class, shall not exceed 9.5%
of the total voting power of the total issued and outstanding ordinary shares.
The voting power of any Class A ordinary shares held by any holder of Class B
ordinary shares (whether directly, or indirectly or constructively under
applicable United States tax attribution and constructive ownership rules) shall
be included for purposes of measuring the total voting power of the Class B
ordinary shares.
Because
the applicability of the voting power reduction provisions to any particular
shareholder depends on facts and circumstances that may be known only to the
shareholder or related persons, we request that any holder of ordinary shares
with reason to believe that it is a shareholder whose ordinary shares constitute
9.9% or more of the voting power of the Company, or a 9.9% Shareholder, contact
us promptly so that we may determine whether the voting power of such holder’s
ordinary shares should be reduced. By submitting a proxy, a holder of ordinary
shares will be deemed to have confirmed that, to its knowledge, it is not, and
is not acting on behalf of, a 9.9% Shareholder. The directors of the Company are
empowered to require any shareholder to provide information as to that
shareholder’s beneficial ownership of ordinary shares, the names of persons
having beneficial ownership of the shareholder’s ordinary shares, relationships
with other shareholders or any other facts the directors may consider relevant
to the determination of the number of ordinary shares attributable to any
person. The directors may disregard the votes attached to ordinary shares of any
holder who fails to respond to such a request or who, in their judgment, submits
incomplete or inaccurate information. The directors retain certain discretion to
make such final adjustments that they consider fair and reasonable in all the
circumstances as to the aggregate number of votes attaching to the ordinary
shares of any shareholder to ensure that no person shall be a 9.9% Shareholder
at any time.
The
attendance of two or more persons representing, in person or by proxy, more than
50% of the issued and outstanding ordinary shares as of March 6, 2009, the
record date of the Meeting, is necessary to constitute a quorum at the Meeting.
Assuming that a quorum is present, the affirmative vote of the holders of a
simple majority of the ordinary shares voted will be required to approve each of
the proposals 1, 2, 3 and 4.
With
regard to any proposal, votes may be cast in favor of or against such proposal
or a shareholder may abstain from voting on such proposal. Abstentions will be
excluded entirely from the vote and will have no effect except that abstentions
and “broker non-votes” will be counted toward determining the presence of a
quorum for the transaction of business. Generally, broker non-votes occur when
ordinary shares held for a beneficial owner are not voted on a particular
proposal because the broker has not received voting instructions from the
beneficial owner, and the broker does not have discretionary authority to vote
on a particular proposal.
The Board
of Directors recommends that the shareholders take the following actions at the
Meeting:
|
|
1.
|
Proposal One: to vote
FOR the election of the seven director nominees named herein to the
Company’s Board of Directors for terms expiring at the Annual General
Meeting of Shareholders in 2010.
|
|
|
2.
|
Proposal Two: to vote
FOR the election of the seven director nominees named herein to serve on
the Board of Directors of Greenlight Re until the Annual General Meeting
of Shareholders in 2010, which pursuant to the Company’s Third Amended and
Restated Memorandum and Articles of Association, is required to be
considered by the shareholders of the
Company.
|
|
|
3.
|
Proposal Three: to vote
FOR the ratification of BDO Seidman, LLP, or BDO, an independent
registered public accounting firm, as the Company’s independent auditor
for fiscal year ending December
31, 2009.
|
|
|
4.
|
Proposal Four: to vote
FOR the ratification of BDO an independent registered public accounting
firm, as Greenlight Re’s independent auditor for fiscal year ending
December 31, 2009, which pursuant to the Company’s Third Amended and
Restated Memorandum and Articles of Association, is required to be
considered by the shareholders of the
Company.
|
A
representative of BDO will attend the Meeting, and will be available to respond
to questions and may make a statement if he or she so desires.
Proxies
must be received by us by 9 a.m. (local
time) on April 27,
2009. A shareholder may revoke his or her proxy at any time up to one
hour prior to the
commencement of the Meeting.
To do
this, you must:
enter a
new vote by telephone, over the Internet, or by signing and returning another
proxy card at a later date;
|
·
|
file
a written revocation with the Secretary of the Company at our address set
forth above,
|
|
·
|
file
a duly executed proxy bearing a later date;
or
|
|
·
|
appear
in person at the Meeting and vote in
person.
|
Such
persons designated as proxies are officers of the Company.
All
ordinary shares represented by properly executed proxies that are returned and
not revoked will be voted in accordance with the instructions, if any, given
thereon. If no instructions are provided in an executed proxy, it will be voted
FOR each of the proposals described herein and set forth on the accompanying
form of proxy, and in accordance with the proxy holder’s best judgment as to any
other business as may properly come before the Meeting. If a shareholder
appoints a person other than the persons named in the enclosed form of proxy to
represent him or her, such person should vote the shares in respect of which he
or she is appointed proxy holder in accordance with the directions of the
shareholder appointing him or her.
ELECTION
OF DIRECTORS OF THE COMPANY
Our Articles,
provide that the Board of Directors shall be appointed annually for a term of
appointment that shall end at the conclusion of the Annual General Meeting of
Shareholders following the one at which they were appointed. Currently, we have
seven directors serving on our Board of Directors. The Board of Directors has
nominated Alan Brooks, David Einhorn, Leonard Goldberg,
Ian Isaacs, Frank Lackner, Bryan Murphy and Joseph Platt to
serve as the directors of the Company, to be voted on by all holders of record
of ordinary shares as of the Record Date. The Board of Directors has no reason
to believe any nominee will not continue to be a candidate or will not be able
to serve as a director of the Company if elected. In the event that any nominee
is unable to serve as a director, the proxy
holders
named in the accompanying proxy have advised that they will vote for the
election of such substitute or additional nominee(s) as the Board of Directors
may propose. The Board of Directors unanimously recommends that you vote FOR the
election of each of the nominees.
Each of
the director nominees is currently serving as a director of the Company and is
standing for re-election. Unless otherwise directed, the persons
named in the proxy intend to vote all proxies FOR the election of the following
director nominees.
Director Nominees
|
Name
|
Age
|
Position
|
Director
Since
|
|||
|
Alan
Brooks(1)(3)
|
62
|
Director
|
2004
|
|||
|
David
Einhorn(3)
|
40
|
Chairman
|
2004
|
|||
|
Leonard
Goldberg(3)
|
46
|
Director,
Chief Executive Officer
|
2005
|
|||
|
Ian
Isaacs(2)(4)
|
53
|
Director
|
2008
|
|||
|
Frank
Lackner(1)(3)(4)
|
40
|
Director
|
2004
|
|||
|
Bryan
Murphy(1)(2)(3)
|
63
|
Director
|
2008
|
|||
|
Joseph
Platt(2)(4)
|
61
|
Director
|
2004
|
| (1) | Member of Audit Committee |
|
|
(2)
|
Member
of Compensation Committee
|
|
(3)
|
Member
of Underwriting Committee
|
|
(4)
|
Member
of Nominating and Governance
Committee
|
There is
no family relationship among any of the nominees, directors and/or any of the
Company’s executive officers.
The
nominees have consented to serve as directors of the Company and Greenlight Re,
if elected.
Set forth
below is biographical information concerning each nominee for election as a
director of the Company.
Alan Brooks has been a director
since July 2004. Mr. Brooks was the non-life insurance practice partner at
KPMG in the Cayman Islands from 1984 to 1999 and was then engaged as a
consultant by KPMG from February 2001 until his retirement in July 2003. During
those years, Mr. Brooks specialized in providing audit and
liquidation services to the offshore insurance industry. Mr. Brooks has been the
audit partner to over 150 licensed insurance companies in the Cayman Islands,
ranging from companies writing property and casualty, life and credit as well as
special purpose vehicles formed to insure catastrophe risks. Mr. Brooks has
significant experience in the preparation of financial statements in accordance
with United States, United Kingdom, Canadian and International GAAP.
Mr. Brooks is also a shareholder and director of Genesis Trust and
Corporate Services Ltd., a Cayman Islands-based trust and management company.
Prior to qualifying as a Chartered Accountant, Mr. Brooks received a
Diploma of Education from the North Buckinghamshire College of Education in
1968. Mr. Brooks has been a Fellow of the Institute of Chartered
Accountants of England & Wales since 1979.
David Einhorn has been a director
since July 2004 and Chairman of the Board of Directors since August 6, 2004.
Mr. Einhorn is president of Greenlight Capital, Inc., which he co-founded
in January 1996, and senior managing member of DME Advisors, LP, or DME
Advisors, our investment advisor. Greenlight Capital, Inc. and DME Advisors are
affiliates of Greenlight Capital Re, Ltd. Mr. Einhorn graduated summa cum
laude with distinction from Cornell University in 1991 where he earned a
B.A. from the College of Arts and Sciences. Mr. Einhorn also serves as a
director of BioFuel Energy Corp. (Nasdaq: BIOF).
Leonard Goldberg has served as our
Chief Executive Officer and a director since August 2005. Mr. Goldberg has
more than 20 years of insurance and reinsurance experience. He worked with the
Alea Group, a reinsurance company, from August 2000 to August 2004, including
serving as chief executive officer of Alea North America Insurance Company and
Alea North America Specialty Insurance Company from March 2002 to August 2004.
Prior to working with the Alea Group, Mr. Goldberg served as chief actuary
and senior vice president – Financial Products of Custom Risk Solutions, a
managing general agency company, from April 1999 to August 2000. From May 1995
to December 1998, Mr. Goldberg provided various actuarial services to
Zurich Group, a reinsurance company, including acting as chief actuary of Zurich
Re London. Mr. Goldberg received his B.A. in Mathematics from
Rutgers University in 1984 and MBA, Finance Concentration, from Rutgers
Executive MBA program in 1993 and is a Fellow of the Casualty Actuarial Society
and a member of the American Academy of Actuaries.
Ian Isaacs has been a director
since May 2008 and was a director of the Company from July 2004 until February
2007. Mr. Isaacs previously resigned from the Board of Directors in
February 2007 because his then current employer had a policy which prohibits
employees from serving on boards of publicly-traded companies. Mr. Isaacs
currently serves as a senior partner of Merlin Securities, a San Francisco-based
broker dealer. Mr. Isaacs served as a senior vice president, Investments,
with UBS Financial Services, a subsidiary of UBS AG, a Zurich-based investment
bank from November 2000 to March 2008. At UBS Financial Services,
Mr. Isaacs conducted market research for institutional investors, including
those of our affiliates. Mr. Isaacs was employed by PaineWebber in the
private client group from May 1990, becoming senior vice president of
Investments in 1995, until its acquisition by UBS AG in November 2000. Prior to
Paine Webber, Mr. Isaacs was employed by Hambrecht and Quist, an investment
bank based in San Francisco, where he worked in the private client division from
1985 to 1990. Mr. Isaacs received his Bachelor of Arts from
Carleton College in 1977.
Frank Lackner has been a director
since July 2004. Mr. Lackner currently acts as a consultant with Lackner
Capital Advisors LLC. Mr. Lackner served as managing director of Fox-Pitt
Kelton Cochran Caronia Waller, a global specialist investment bank, from May
2007 to September 2007. Mr. Lackner served as a managing director of
Torsiello Securities Inc., an investment banking and financial advisory services
company to the global insurance and financial services industry, and its
predecessor firm from October 2001 until October 2006. From January 1998 to
October 2001, Mr. Lackner was a founder and chief executive officer of
RiskContinuum, Inc., an online reinsurance trading exchange. During such time,
Mr. Lackner also provided consulting services to First International
Capital LLC and to other clients in the insurance industry. From September 1993
to December 1997, Mr. Lackner was a vice president of Insurance Partner
Advisors, L.P., a private equity investment partnership formed by the Centre
Reinsurance Companies, Chase Manhattan Bank and the Robert Bass Group, which
made equity investments in insurance, reinsurance and healthcare companies
worldwide. From 1992 to 1993, Mr. Lackner was a finite risk reinsurance
underwriter at the Centre Reinsurance Companies, where he worked on both
corporate development projects and structuring and pricing finite risk insurance
and reinsurance products. From 1990 to 1992, Mr. Lackner was an investment
banker at Donaldson, Lufkin & Jenrette Securities Corp., where he advised
both property/casualty and life insurance companies on strategic acquisitions,
divestitures and capital markets-related activities, including initial public
offerings, debt offerings and restructurings. Mr. Lackner received his BBA
in Banking and Finance from Hofstra University in 1989. Mr. Lackner
also serves as a director of American Safety Insurance Holdings, Ltd. (NYSE:
ASI).
Bryan Murphy has been a director
since May 2008. Mr. Murphy currently serves as a director and vice chairman
of Island Heritage Holdings Ltd., a Cayman Islands-based property, liability and
automobile insurer. From 1996 to until his retirement in December 2007,
Mr. Murphy served Island Heritage as a founding director and chief
executive officer. Prior to Island Heritage, Mr. Murphy acted as a
consultant to Trident Partnership from 1994 to 1996 and was employed by
International Risk Management Group from 1978 to 1994. Mr. Murphy has over
30 years experience in the insurance business and has held senior positions in
several countries, including Cayman Islands, Ireland, Ethiopia and Saudi Arabia.
Mr. Murphy holds a degree in economics and mathematics from
University College, Dublin, Ireland.
Joseph Platt has been a director
since July 2004. Currently, Mr. Platt is the general partner at Thorn
Partners, LP a family limited partnership. Mr. Platt’s career at Johnson
and Higgins (J&H), a global insurance broker and employee benefits
consultant, spanned 27 years until the sale of J&H to Marsh & McLennan
Companies in March of 1997. At the sale of J&H, Mr. Platt was an owner,
director and executive vice president
responsible
for North America and marketing and sales worldwide. He was head of the
operating committee and a member of the executive committee. Mr. Platt
received his B.A. from Manhattan College in 1968 and his J.D. from
Fordham University Law School in 1971. Mr. Platt also
attended Harvard Business School’s Advanced Management Program in
1983. Since 1997, Mr. Platt has been an active private investor.
Mr. Platt is on the board of directors of Jones Brown, a private Canadian
insurance broker, and serves as an independent director of the BlackRock Open
End & Liquidity Funds. He is also a Director of the West Penn Allegheny
Health System (WPAHS). He is a member of the New York State Bar
Association.
Alternate
Director
Daniel Roitman. Section 14 of the
Articles provide that any director (other than an alternate director) may, by
writing, appoint any other director, or any other person willing to act, to be
an alternate director and, by writing, may remove from office an alternate
director so appointed by him. We anticipate that, if re-elected,
Mr. Einhorn will continue to appoint Daniel Roitman as his alternate
director. Mr. Roitman is not a director nominee. Mr. Roitman has
served as chief operating officer and partner of Greenlight Capital, Inc. since
January 2003. From 1996 through 2002, Mr. Roitman worked at
Goldman Sachs. Before joining Goldman Sachs, Mr. Roitman was
employed as a member of the New York technology practice at Andersen Consulting,
now Accenture. Mr. Roitman earned a B.S. with distinction in electrical
engineering from Cornell University in 1991 and a M.Eng. in 1992.
Mr. Roitman graduated with distinction from the New York University Stern
School of Business in 2002, earning an MBA in Finance.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
ELECTION OF EACH OF THE NOMINEES ABOVE.
ELECTION
OF DIRECTORS OF GREENLIGHT RE
Pursuant
to the Articles, with respect to any matter required to be submitted to a vote
of the shareholders of Greenlight Re, the Company is required to submit a
proposal relating to such matters to its own shareholders and vote all the
shares of Greenlight Re owned by the Company in accordance with and proportional
to such vote of the Company’s shareholders. Accordingly, the shareholders of the
Company are being asked to consider this proposal.
Currently,
we have seven directors serving on Greenlight Re’s Board of Directors, which is
a full Board of Directors. Greenlight Re’s Board of Directors has nominated
Alan Brooks, David Einhorn, Leonard Goldberg, Ian Isaacs,
Frank Lackner, Bryan Murphy and Joseph Platt to serve as the
directors of Greenlight Re, to be voted on by all holders of record of ordinary
shares as of the Record Date. The Board of Directors has no reason to believe
any nominee will not continue to be a candidate or will not be able to serve as
a director of Greenlight Re if elected. In the event that any nominee is unable
to serve as a director, the proxy holders named in the accompanying proxy have
advised that they will vote for the election of such substitute or additional
nominee(s) as the Board of Directors may propose. The Board of Directors
unanimously recommends that you vote FOR the election of each of the
nominees.
Each of
the director nominees is currently serving as a director of Greenlight Re.
Unless otherwise directed, the persons named in the proxy intend to vote all
proxies FOR the election of the following director nominees.
Director Nominees
|
Name
|
Age
|
Position
|
Director
Since
|
|||
|
Alan
Brooks
|
62
|
Director
|
2004
|
|||
|
David
Einhorn
|
40
|
Chairman
|
2004
|
|||
|
Leonard
Goldberg
|
46
|
Director,
Chief Executive Officer
|
2005
|
|||
|
Ian
Isaacs
|
53
|
Director
|
2008
|
|||
|
Frank
Lackner
|
40
|
Director
|
2004
|
|||
|
Bryan
Murphy
|
63
|
Director
|
2008
|
|||
|
Joseph
Platt
|
61
|
Director
|
2004
|
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR”
AUTHORIZATION OF THE ELECTION OF GREENLIGHT RE’S NOMINEES ABOVE.
APPOINTMENT
OF THE COMPANY’S AUDITOR
Upon
recommendation of the Audit Committee, the Board of Directors proposes that the
shareholders ratify the appointment of BDO to serve as the independent auditors
of the Company for the 2009 fiscal year until the Company’s Annual General
Meeting of Shareholders in 2010. BDO served as the independent auditors of the
Company for the 2008 fiscal year. A representative of BDO will attend the
Meeting, and will be available to respond to questions and may make a statement
if he or she so desires.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
APPROVAL OF THE COMPANY'S AUDITOR PROPOSAL.
APPOINTMENT
OF GREENLIGHT RE’S AUDITOR
Upon
recommendation of the Audit Committee, the Board of Directors proposes that the
shareholders ratify the appointment of BDO to serve as the independent auditors
of Greenlight Re for the 2009 fiscal year until Greenlight Re’s Annual General
Meeting of Shareholders in 2010. BDO served as the independent auditors of
Greenlight Re for the 2008 fiscal year. A representative of BDO will attend the
Meeting, and will be available to respond to questions and may make a statement
if he or she so desires.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE
APPROVAL OF GREENLIGHT RE’S AUDITOR PROPOSAL.
Our Board
of Directors has four committees: an Audit Committee, a Compensation Committee,
a Nominating and Governance Committee and an Underwriting
Committee. Each committee has a written charter. The table below
provides current membership and fiscal year 2008 meeting information for each of
the Board committees. Committee memberships changed during the fiscal
year.
|
Name
|
Audit
Committee
|
Compensation Committee | Nominating and Governance Committee |
Underwriting
Committee
|
||||
|
Alan
Brooks
|
X*
|
X
|
||||||
|
David
Einhorn
|
X
|
|||||||
|
Leonard
Goldberg
|
X
|
|||||||
|
Ian
Isaacs
|
X*
|
X
|
||||||
|
Frank
Lackner
|
X
|
X
|
X*
|
|||||
|
Bryan
Murphy
|
X
|
X
|
X
|
|||||
|
Joseph
Platt
|
X
|
X*
|
||||||
|
Total
Meetings
|
5
|
4
|
4
|
5
|
*
Committee Chairperson
Each of
our directors attended in person, or by telephone from outside of the United
States, at least 80% of the four meetings of the Board of Directors and any
committee on which he served in 2008. It is our policy that directors are
expected to attend the Meeting in the absence of a scheduling conflict or other
valid reason.
Members
of the Audit Committee, Compensation Committee and Nominating and Governance
Committee must meet all applicable independence tests of the Nasdaq stock market
rules and the applicable rules and regulations promulgated by the Securities and
Exchange Commission, or the SEC. The Company’s Nominating and Governance
Committee and the Board of Directors have reviewed the responses of director
nominees to a questionnaire asking about their relationships (and those of
immediate family members) with the Company and other potential conflicts of
interest. Except as noted, the Board of Directors concluded that all of the
director nominees listed below are independent in accordance with the director
independence standards of the Nasdaq stock market rules and the SEC and that
none has a material relationship with the Company that would impair his
independence from management or otherwise compromise his ability to act as an
independent director. Accordingly, the majority of the Board of Directors is
currently and, if all the director nominees are elected, will be comprised of
independent directors.
|
Director
|
Independent
|
Transactions
and Material Relationships
|
||
|
Alan
Brooks
|
Yes
|
None
|
||
|
David
Einhorn
|
No
|
President
of Greenlight Capital, Inc. and senior managing member of DME Advisors,
LP
|
||
|
Leonard
Goldberg
|
No
|
Chief
Executive Officer of the Company
|
||
|
Ian
Isaacs
|
Yes
|
None
|
||
|
Frank
Lackner
|
Yes
|
None
|
||
|
Bryan
Murphy
|
Yes
|
None
|
||
|
Joseph
Platt
|
Yes
|
None
|
Below is
a description of each committee of our Board of Directors.
Audit
Committee
The Audit
Committee is currently composed entirely of non-management directors each of
whom the Board of Directors has determined is independent in accordance with the
Nasdaq stock market rules and applicable rules and regulations promulgated under
the Securities Exchange Act of 1934, as amended, the Exchange Act. The Audit
Committee has general responsibility for the oversight and surveillance of our
accounting, reporting and financial control practices. The Audit Committee is
governed by a written charter approved by our Board of
Directors,
which outlines its primary duties and responsibilities and which can be found on
our website at www.greenlightre.ky. Mr. Brooks has been designated as an
“audit committee financial expert” as defined in Section 407 of the
Sarbanes-Oxley Act of 2002.
Compensation
Committee
The
Compensation Committee is appointed by the Board of Directors. All of these
members of our Compensation Committee are independent as defined under the
Nasdaq stock market rules and applicable SEC rules and regulations. The purpose
of our Compensation Committee is to discharge the responsibilities of our Board
of Directors relating to compensation of our executive officers. The
Compensation Committee is governed by a written charter approved by our Board of
Directors, which outlines its primary duties and responsibilities and which can
be found on our website at www.greenlightre.ky. Our Compensation Committee,
among other things, assists our Board of Directors in ensuring that a proper
system of compensation is in place to provide performance-oriented incentives to
management and makes recommendations to the Board of Directors with respect to
incentive-compensation plans and equity-based plans.
Nominating
and Governance Committee
The
Nominating and Governance Committee makes recommendations to the Board of
Directors as to nominations and compensation for the Board of Directors and
committee members, as well as structural, governance and procedural matters. The
Nominating and Governance Committee also reviews the performance of the Board of
Directors and the Company’s succession planning. All of the members of our
Nominating and Governance Committee are independent as defined under the Nasdaq
stock market rules and applicable SEC rules and regulations. The Nominating and
Governance Committee is governed by a written charter approved by our Board of
Directors, which outlines its primary duties and responsibilities and which can
be found on our website at www.greenlightre.ky.
The
Nominating and Governance Committee is responsible for reviewing with the Board
of Directors, on an annual basis, the requisite skills and characteristics of
new directors as well as the composition of the Board of Directors as a whole.
When the Board of Directors determines to seek a new member, whether to fill a
vacancy or otherwise, the Nominating and Governance Committee generally does not
use third-party search firms. The Nominating and Governance Committee considers
recommendations from other directors, management and others, including
shareholders. In general, the Nominating and Governance Committee looks for
directors possessing superior business judgment and integrity who have
distinguished themselves in their chosen fields of endeavor and who have
knowledge or experience in the areas of insurance, reinsurance, financial
services or other aspects of the Company’s business, operations or
activities.
The
Nominating and Governance Committee will consider, for director nominees,
persons recommended by shareholders, who may submit recommendations to the
Nominating and Governance Committee in care of the Company’s Secretary,
Greenlight Capital Re, Ltd., The Grand Pavilion, 802 West Bay Road, P.O. Box
31110, Grand Cayman, KY1-1205, Cayman Islands. To be considered by the
Nominating and Governance Committee, such recommendations must be accompanied by
a description of the qualifications of the proposed candidate and a written
statement from the proposed candidate that he or she is willing to be nominated
and desires to serve if elected. Nominees for director who are recommended by
shareholders to the Nominating and Governance Committee will be evaluated in the
same manner as any other nominee for director. Nominations by shareholders may
also be made at an Annual General Meeting of Shareholders in the manner set
forth under “Shareholder Proposals for the Annual General Meeting of
Shareholders in 2010.”
Underwriting
Committee
The
Underwriting Committee, among other things, advises our Board of Directors and
management concerning the establishment and review of our underwriting policies
and guidelines, oversees our underwriting process and procedures, monitors our
underwriting performance and oversees our underwriting risk management exposure.
The Underwriting Committee is governed by a written charter approved by our
Board of Directors, which outlines its primary duties and responsibilities and
which can be found on our website at www.greenlightre.ky.
|
Name
|
Age
|
Position
|
Position
Since
|
|||
|
Leonard
Goldberg*
|
46
|
Director,
Chief Executive Officer
|
2005
|
|||
|
Barton
Hedges
|
43
|
President
and Chief Underwriting Officer
|
2006
|
|||
|
Tim
Courtis
|
47
|
Chief
Financial Officer
|
2006
|
|
*
|
See
biography above under
“Director Nominees.”
|
Barton Hedges has served as
President and Chief Underwriting Officer of Greenlight Re since January 2006.
Mr. Hedges has more than 20 years experience in the property and casualty
insurance and reinsurance industry and is a Fellow of the Casualty Actuarial
Society and a member of the American Academy of Actuaries. Prior to joining
Greenlight Re, Mr. Hedges served as president and chief operating officer of
Platinum Underwriters Bermuda, Ltd., a property, casualty and finite risk
reinsurer from July 2002 until December 2005, where he was responsible for the
initial start-up of the company and managed the company’s day-to-day operations.
Mr. Hedges previous experience includes serving as executive vice president
and chief operating officer of Bermuda-based Scandinavian Re, actuarial
consultant at Tillinghast – Towers Perrin, Senior Manager at Deloitte &
Touche LLP and actuarial manager at United States Fidelity and Guaranty Company,
where he began his career in 1987. Mr. Hedges has a B.A. in Mathematics
from Towson State University.
Tim Courtis has served as Chief
Financial Officer since May 2006. Mr. Courtis has 19 years experience in
the property and casualty reinsurance, captive and insurance industry.
Mr. Courtis was president and chief financial officer of European
International Reinsurance Company Ltd., a subsidiary of Swiss Re, from August
1994 until April 2006, where he was responsible for the management and financial
analysis of Swiss Re’s Barbados-based entities. Prior to joining Swiss Re in
1994, Mr. Courtis worked for Continental Insurance in Barbados and
International Risk Management Company in Bermuda where he performed duties as
senior account manager to various captive insurance companies. Mr. Courtis
is a Canadian Chartered Accountant and has a MBA from York University,
Toronto and a Bachelor of Business from Wilfrid Laurier University,
Waterloo.
We
currently have five independent directors who receive compensation from us for
their services. Under the Articles, our directors may receive compensation for
their services as may be determined by our Board of Directors. Neither
Mr. Einhorn nor Mr. Goldberg is eligible for compensation as a member
of our Board of Directors. Our Compensation Committee determined that the annual
retainer we pay to our directors, excluding Mr. Einhorn and Mr. Goldberg, is
$50,000, effective May 1, 2007, payable at the election of the directors either
quarterly (for quarters commencing May 1) in arrears, in cash or once in
restricted shares, which restricted shares will vest at the earlier of the date
of the one year anniversary of the grant date and the next Annual General
Meeting of Shareholders. Each independent director will also be annually awarded
2,000 restricted shares, which will vest at the earlier of the date of the one
year anniversary of the grant date and the next Annual General Meeting of
Shareholders. Effective May 1, 2009, the award will increase to 4,000
restricted shares. Our Compensation Committee also determined that
the Chairman of the Audit Committee (Mr. Brooks) will receive an additional
$20,000 in cash annually, payable quarterly (for quarters commencing May 1) in
arrears.
Director Compensation Table
The
following table summarizes the compensation paid to our independent directors in
2008.
|
Name
|
Fees
Earned
or
Paid
in
Cash
($)
|
Stock
Awards
($)(1)
|
Option
Awards
($)(2)
|
Total
($)
|
||||
|
Alan
Brooks
|
20,000
|
91,142
|
1,674
|
112,816
|
||||
|
Ian
Isaacs(3)
|
—
|
56,276
|
—
|
56,276
|
||||
|
Frank
Lackner
|
50,000
|
39,099
|
1,674
|
90,773
|
||||
|
Bryan
Murphy
|
—
|
56,276
|
—
|
56,276
|
||||
|
Joseph
Platt
|
—
|
91,142
|
1,674
|
92,816
|
||||
|
Jerome
Simon(4)
|
16,667
|
15,055
|
—
|
31,722
|
|
(1)
|
All
stock awards were granted under our stock incentive plan. We account for
our stock incentive plan under Statement of Financial Accounting Standards
No. 123R, “Share-Based Payments,” or SFAS No. 123R. The value reported
above in the “Stock Awards” column is the amount we expensed
during 2008 based on the grant date fair value for each director’s stock
award.
|
|
(2)
|
The
aggregate number of option awards held on December 31, 2008 by each of
Messrs. Brooks, Lackner and Platt was 2,000. All option awards were
granted under our stock incentive plan. The full grant date fair value of
the options computed in accordance with SFAS No. 123R is $12,340 per
director. We account for the stock incentive plan under SFAS No. 123R. The
value reported above in the “Option Awards” column is the amount we
expensed during 2008 for each director’s option
award.
|
|
(3)
|
Mr.
Isaacs has been a director since May 1, 2008 and was also a director of
the Company from 2004 to 2007. He previously resigned from our Board of
Directors on February 16, 2007 whereupon he forfeited 2,000 unvested
options and 1,667 stock awards.
|
|
(4)
|
Mr.
Simon resigned as a director of the Company on May 1,
2008.
|
Shareholder
Communication
The
Nominating and Governance Committee has adopted a policy for handling
shareholder communications to directors. The policy and contact information can
be found on our website at www.greenlightre.ky. Shareholders may send written
communications to the Board of Directors or any one or more of the individual
directors by mail, c/o Secretary, Greenlight Capital Re, Ltd., The Grand
Pavilion, 802 West Bay Road, P.O. Box 31110, Grand Cayman, KY1-1205, Cayman
Islands or by fax at (345) 745-4576. There is no screening process, other than
to confirm that the sender is a shareholder and to filter inappropriate
materials and unsolicited materials of a marketing or publication nature. All
shareholder communications that are received by the Secretary of the Company for
the attention of a director or directors are forwarded to the director or
directors.
Compensation
Policy
In
general, we seek to pay salaries and living expenses that are commensurate with
the salaries and living expenses paid to executives at other reinsurance
companies. However, as we are the first global reinsurer in the Cayman
Islands, no direct comparisons may be made.
Our
performance-driven compensation policy consists of the following three
components:
|
|
•
|
base
salary;
|
|
|
•
|
bonuses;
and
|
|
|
•
|
equity-based
compensation.
|
We use
short-term compensation comprised of base salary and annual cash bonuses and
long-term compensation comprised of deferred bonuses, stock options and
restricted stock in an effort to align our employees’ and executive officers’
interests with those of our shareholders and increase long-term growth in book
value per share. We compensate our current executive officers,
Messrs. Goldberg, Hedges and Courtis, or the named executive officers,
according to the terms of their employment agreements. Messrs. Goldberg and
Courtis are named executive officers based on their positions with us and
Mr. Hedges is a named executive officer based on his level of
compensation.
Our
Compensation Committee reviews all recommendations made with respect to
discretionary compensation and approves all discretionary compensation decisions
for all of our employees, including our named executive officers. Each year, our
named executive officers provide information and recommendations to the
Compensation Committee with respect to individual performance to assist the
Compensation Committee with its analysis and evaluation of each employee’s
compensation. However, while the Compensation Committee considers this
information, it is not bound by the named executive officers’ recommendations.
While the Compensation Committee is generally familiar with the compensation of
similarly situated individuals and does consider this information when making
compensation decisions, given the nature of our business and compensation, the
Compensation Committee has not felt it necessary to utilize the services of a
compensation consultant or to do any formal benchmarking.
Base
Salary
We use
base salary to recognize the experience, skills, knowledge, roles and
responsibilities of our employees and executive officers. When establishing the
base salaries of our named executive officers, our Compensation Committee
considered a number of factors, including:
|
|
•
|
the
individual’s years of underwriting and actuarial
experience;
|
|
|
•
|
the
functional role of the position;
|
|
|
•
|
the
level of the individual’s
responsibility;
|
|
|
•
|
our
ability to replace the individual;
and
|
|
|
•
|
the
limited number of well-qualified candidates available in or willing to
relocate to the Cayman Islands.
|
Base
salaries, which may include a living allowance, are expected to be reviewed by
the Compensation Committee for possible increases at least once every three
years and the timing of such review depends on the nature of the individual’s
responsibilities and whether the Compensation Committee believes that changed
circumstances warrant such review.
Bonuses
We use
bonuses to reward individual and company performance. We expect our bonuses to
be highly variable from year to year primarily due to our expectation of annual
variability in our underwriting result. Our Compensation Committee
determines each named executive officer’s target bonus, expressed as a
percentage of his base salary.
Our
Compensation Committee approved a bonus program, which became effective as of
the 2007 year and in which all our employees, including our named executive
officers, participate. Under the bonus program, each employee’s target bonus
consists of two components: a quantitative component based on return on deployed
equity relating to our reinsurance operations and a discretionary component
based on a qualitative assessment of each employee’s performance. Each employee
is assigned a percentage of the portion of his or her bonus that will be
determined based upon the quantitative component of his or her bonus. An
employee’s quantitative bonus percentage may be adjusted annually by the
Compensation Committee based primarily on the roles and responsibilities of the
employee and the level of their direct involvement in underwriting
operations. The remaining portion of the target bonus is
discretionary and determined based on a qualitative assessment of the employee’s
performance in relation to certain annual performance goals and
objectives.
The
quantitative portion of an employee’s annual bonus is not calculated and paid
until two years from the end of the fiscal year in which the business was
underwritten. The employee’s receipt of the quantitative portion of his or her
bonus is therefore deferred for two years so that we can better determine the
actual performance of the reinsurance contracts for such underwriting year. An
employee must be employed by us on the last day of the applicable fiscal year in
order to receive the quantitative component of his or her bonus with respect to
such year, but need not be employed by us at the date of payment of the deferred
amounts. Notwithstanding the foregoing, with respect to the quantitative portion
of the employee’s annual bonus for 2009 and future years, employees must be
employed on January 1 following the end of the applicable fiscal year and
the payment schedule may be adjusted to comply with Section 457A of the
Internal Revenue Code of 1986, as amended, or the Code. Our Compensation
Committee has the discretion to reduce or increase any employee’s quantitative
component bonus award based on his or her individual performance or other
extraordinary factors.
We do not
provide financial guidance relative to our return on deployed equity relating to
our reinsurance operations; we believe that disclosure of the specific details
of our return on deployed equity methodology and the levels required for bonus
payments would cause us competitive harm. Moreover, 2007 was the first year in
which our Compensation Committee employed this bonus program, and we only
commenced our underwriting operations in April 2006. Therefore, we have not
reached our first two year deferral period and we cannot assess whether the
levels required for payment of quantitative bonuses, or any portion thereof,
will be attained, with any degree of certainty. However, we believe that the
levels required for quantitative bonus payments to each of our employees are
attainable.
The
discretionary portion of an employee’s annual bonus is determined by taking into
account the employee’s achievement of individual performance goals established
by the employee and management and reviewed and approved by our Chief Executive
Officer (in the case of non-management employees) or the Compensation Committee
(in the case of management employees including our named executive officers). An
employee must be employed by us or one of our subsidiaries on the last day of
the year in order to receive the discretionary component of his or her bonus for
the year.
With
respect to the 2008 discretionary bonuses for our named executive officers, the
Compensation Committee considered the individual performance of each of our
named executive officers taking into account their respective achievements in
relation to certain goals and objectives and such other criteria as our
Compensation Committee deemed appropriate. The following is a non-exclusive list
of factors considered by our Compensation Committee in making 2008 qualitative
bonus determinations, none of which were assigned any particular weight and none
of which were necessarily applicable to any particular named executive
officer:
|
|
•
|
Expanding
new lines of business;
|
|
|
•
|
Developing
and retaining relationships with brokers, agents and managing general
agents;
|
|
|
•
|
Coordinating
regulatory issues and relationships, including with rating
agencies;
|
|
|
•
|
Managing
our letters of credit facilities;
|
|
|
•
|
Ensuring
that Board of Directors and committee meetings run efficiently and
effectively;
|
|
|
•
|
Managing
the ongoing public reporting process, including any SEC or Nasdaq
issues;
|
|
|
•
|
Recruiting
and developing staff;
|
|
|
•
|
Developing
and managing relationships with outside experts, including financial
advisors, attorneys and accountants;
and
|
|
|
•
|
Producing
underwriting analyses and reports which help the Company track the
progress of its business.
|
As a
result of these analyses, the Compensation Committee approved discretionary
bonus amounts with respect to 2008 performance for each of our named executive
officers, resulting in a $250,000 qualitative bonus payment to Mr. Goldberg, a
$225,000 qualitative bonus payment to Mr. Hedges and a $225,000 qualitative
bonus payment to Mr. Courtis.
The
discretionary bonus amounts will be paid on or around March 13,
2009.
Stock
Incentive Plan Awards
In 2004,
we adopted a stock incentive plan, which was amended and restated effective as
of August 15, 2005, February 14, 2007 and May 4, 2007. We have historically
granted stock options to our employees, including our named executive officers,
at employment inception that vest ratably over three years. Pursuant to the
terms of his employment agreement, Mr. Goldberg also receives annual option
grants and on August 11, 2008, our Board of Directors granted
Mr. Goldberg options to acquire 80,000 Class A ordinary shares at an
exercise price of $29.39 per share, being 1.7 times the Company’s fully diluted
book value per share as of June 30, 2008.
Our
Compensation Committee has decided that over the long term, restricted stock
will be the preferred form of equity compensation as it better aligns management
with long-term shareholder value creation. Our Compensation Committee determines
the value of restricted stock grants that each named executive officer may
receive, which will depend upon each named executive officer’s performance. The
restricted stock will be subject to three-year cliff vesting. Unvested
restricted shares will be forfeited if a named executive officer terminates
employment for any reason (other than death or disability). Currently, we expect
long-term compensation, or the deferred portion of our bonus program and stock
incentive plan awards, to represent the majority of each named executive
officer’s compensation.
In order
to prevent the backdating of equity awards and to ensure that the timing of
awards or the release of material information will not be accelerated or delayed
to allow an award recipient to benefit from a more favorable stock price, on
February 27, 2008, our Board of Directors and Compensation Committee adopted a
policy with respect to the equity grant practices that delineates specific
procedures that must be followed when granting equity awards. We believe this
policy helps the integrity of our equity award grant practices.
With
respect to the 2007 year, our Compensation Committee approved and we
granted awards of 24,935 Class A ordinary restricted shares to each of
Messrs. Goldberg, Hedges and Courtis under our stock incentive
plan. The restricted shares were granted on March 24, 2008 and are subject
to three-year cliff vesting. These stock awards reflect our Compensation
Committee’s assessment of each individual’s successful performance during 2007
with respect to building the Company’s underwriting platform and efforts made to
prepare the Company for a successful initial public offering.
With
respect to the 2008 year, our Compensation Committee approved and we will
grant awards of $701,250, $601,250 and $626,250 of Class A ordinary restricted
shares to each of Messrs. Goldberg, Hedges and Courtis under the stock incentive
plan. The number of shares will be calculated based on the closing
price of the
shares on
March 12, 2009. The restricted shares will be granted on or
around March 13, 2009 and are subject to three-year cliff vesting. These
stock awards reflect our Compensation Committee’s assessment of each
individual’s successful performance during 2008 with respect to further
developing the Company’s underwriting platform, developing strategic
partnerships and judiciously deploying underwriting capital in a softening
reinsurance marketplace.
Other
Our named
executive officers are all currently parties to employment and Section 457A
agreements. These agreements were amended in 2008 to the extent necessary to
comply with Section 409A of the Code. In addition, we intend to continue to
maintain our current benefits and perquisites for our executive officers. Our
Compensation Committee may revise, amend or add to these benefit programs at its
discretion.
Because
we are not a U.S. taxpayer, our compensation program has not been designed to
comply with Section 162(m) of the Code.
Ordinary
Share Ownership Guidelines
We
believe that broad-based share ownership by our employees, including our named
executive officers, is the most effective method to deliver superior shareholder
returns by increasing the alignment between the interests of our employees and
our shareholders. We do not, however, have a formal requirement for share
ownership by any group of employees including our named executive
officers.
Change
in Control and Severance
Upon
termination of employment or a change in control, the named executive officers
may receive accelerated vesting of awards granted under our stock incentive plan
and severance payments under their employment agreements.
Under our
stock incentive plan, our Compensation Committee generally has the discretion to
vest unvested awards upon a change in control as described below under “The
Stock Incentive Plan.” This discretion allows the Compensation Committee to
determine at the time of the change in control whether, and the extent to which,
additional vesting is warranted. In addition, Mr. Goldberg’s option
agreements and each named executive officer’s restricted stock award agreements
provide for accelerated vesting upon termination of employment under certain
circumstances, including upon a change in control. For more details on these
termination provisions, see “Potential Payments upon Termination or Change in
Control.”
Upon
termination of employment without cause or for good reason, our named executive
officers are eligible for severance payments which, depending upon the
circumstances surrounding termination, may include:
|
|
•
|
a
cash payment equal to one year’s annual salary and
bonus;
|
|
|
•
|
a
pro-rated target bonus for the year of termination;
and
|
|
|
•
|
one
year of continued health benefits.
|
The
amount of our severance obligations to our named executive officers is designed
to be competitive with the amounts payable to executives in similar positions at
other global reinsurance companies with which we compete for talent. Severance
payments are made monthly and are contingent upon the named executive officer’s
continued compliance with the restrictive covenants in his employment agreement.
Mr. Goldberg’s agreement contains a special provision whereby he may
terminate his employment and receive severance benefits in the event of a change
in control (as defined under the description of his employment agreement). We
agreed to this provision in consideration of the risk Mr. Goldberg took by
joining us in our formation stages and our recognition of his willingness to
take the risk and his confidence in both our overall strategy and the strength
of our Board of Directors.
Compensation
Committee Report
In
February 2009, our Compensation Committee reviewed and discussed the
compensation discussion and analysis required by Regulation S-K, Item 402(b)
promulgated under the Exchange Act, with management. Based on the review and
discussions referred to in the preceding sentence, our Compensation Committee
recommended to our Board of Directors that this compensation discussion and
analysis disclosure be included in this Proxy Statement.
The
foregoing report is provided by the following directors, who constitute the
Compensation Committee:
The
Compensation Committee
Ian Isaacs
(Chairman)
Bryan
Murphy
Joseph Platt
The
foregoing Compensation Committee Report shall not be incorporated by reference
in any previous or future documents filed by the Company with the SEC under the
Securities Act of 1933, as amended, or the Exchange Act, except to the extent
that the Company specifically incorporates the Report by reference in any filed
document.
The
following Summary Compensation Table summarizes the total compensation awarded
to our named executive officers in 2008, 2007 and 2006.
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)(2)
|
Option
Awards
($)(3)
|
Non-Equity
Incentive
Plan
Compensation
($)(4)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)(5)
|
Total
($)
|
|||||||||
|
Leonard
Goldberg, CEO
|
2008
|
462,500
|
250,000(1)
|
318,963
|
910,516
|
—
|
—
|
109,317(6)
|
2,051,296
|
|||||||||
|
2007
|
500,000
|
100,000
|
156,593
|
1,119,566
|
—
|
—
|
127,317(7)
|
2,003,476
|
||||||||||
|
2006
|
500,000
|
600,000
|
—
|
1,469,246
|
—
|
—
|
124,268(7)
|
2,693,514
|
||||||||||
|
Tim
Courtis, CFO
|
2008
|
300,000
|
225,000(1)
|
223,494
|
82,918
|
—
|
—
|
79,317(8)
|
910,729
|
|||||||||
|
2007
|
291,667
|
90,000
|
80,688
|
196,037
|
—
|
—
|
79,317(8)
|
737,709
|
||||||||||
|
2006
|
166,667
|
103,333
|
—
|
208,712
|
—
|
—
|
77,268(9)
|
555,980
|
||||||||||
|
Barton
Hedges, CUO
|
2008
|
450,000
|
225,000(1)
|
300,332
|
158,437
|
—
|
—
|
79,317(10)
|
1,213,086
|
|||||||||
|
2007
|
450,000
|
90,000
|
141,780
|
405,799
|
—
|
—
|
79,317(10)
|
1,166,896
|
||||||||||
|
2006
|
450,000
|
570,000
|
—
|
898,264
|
—
|
—
|
76,268(10)
|
1,994,532
|
|
(1)
|
Represents
the discretionary portion of the named executive officer’s bonus to be
paid on March 13, 2009.
|
|
(2)
|
All
stock awards were granted under our stock incentive plan. We account for
the stock incentive plan under SFAS No. 123R. The value reported above in
the "Stock Awards" column is the amount we expensed during the respective
year based on the grant date fair value for each named executive
officer’s restricted stock award.
|
|
(3)
|
All
option awards were granted under our stock incentive plan at fair value on
the date of grant. The value reported above in the "Option Awards" column
is the amount we expensed during the respective year for each named
executive officer’s option
award.
|
|
(4)
|
The
quantitative portion of each named executive officer’s bonus for 2007 and
2008 is only an estimate. As discussed in the “Compensation Discussion
& Analysis” section of this proxy statement, such quantitative
component is calculated and paid two years following the end of the fiscal
year in which the business is underwritten (for example, for the 2008
underwriting year the quantitative portion of the bonus will be paid in
2011). As of December 31, 2008, we believe that these bonus amounts
relating to 2008 would equal approximately $389,000 for Mr. Goldberg
(2007: $984,000), $350,000 for Mr. Hedges (2007: $885,000) and $59,000 for
Mr. Courtis (2007: $148,000). We note, however, that the ultimate
amount of the quantitative portion of the bonus for each named executive
officer may differ materially from the estimate provided
herein.
|
|
(5)
|
The
amounts shown in this column include a housing allowance and the amounts
we contributed to our defined contribution pension plan on behalf of each
named executive officer.
|
|
(6)
|
Includes
a $102,000 housing allowance and amounts contributed to our defined
contribution pension plan on behalf of
Mr. Goldberg.
|
|
(7)
|
Includes
a $120,000 housing allowance and amounts contributed to our defined
contribution pension plan on behalf of
Mr. Goldberg.
|
|
(8)
|
Includes
a $72,000 housing allowance and amounts contributed to our defined
contribution pension plan on behalf of
Mr. Courtis.
|
|
(9)
|
Includes
a $25,000 relocation allowance, a $48,000 housing allowance and amounts
that we contributed to our defined contribution pension plan on behalf of
Mr. Courtis.
|
|
(10)
|
Includes
a $72,000 housing allowance and amounts contributed to our defined
contribution pension plan on behalf of
Mr. Hedges.
|
Grants
of Plan Based Awards for Fiscal Year 2008
Our
Compensation Committee, or our Board of Directors acting as our Compensation
Committee, granted stock option and restricted stock awards under our stock
incentive plan and established target quantitative bonuses (which will be paid
in 2011) for our named executive officers in 2008. Set forth in the following
table is information regarding stock option and restricted stock awards granted
in 2008 as well as 2008 target quantitative bonus amounts.
GRANTS
OF PLAN BASED AWARDS IN FISCAL YEAR 2008
|
Grant
Date
|
Approval
Date
|
Estimated
Future Payouts
Under
Non-Equity Incentive
Plan
Awards(1)
|
Estimated
Future Payouts
Under
Equity Incentive Plan
Awards
|
All
other
Stock
Awards:
Number
of
Shares
of
Stock
or
Units
(#)(2)
|
All
other
Option
Awards:
Number
of
Securities
Underlying
Options
(#)
|
Exercise
or
Base
Price
of
Option
Awards
($/Sh)
|
Grant
Date
Fair
Value
of
Stock
and
Option
Awards
($)
|
|||||||||
|
Leonard
Goldberg
|
3/24/08
|
2/27/08
|
389,000
|
—
|
24,935
|
—
|
—
|
473,765
|
||||||||
|
Leonard
Goldberg
|
8/11/08
|
8/05/08
|
—
|
—
|
—
|
80,000
|
29.39(3)
|
695,200
|
||||||||
|
Tim
Courtis
|
3/24/08
|
2/27/08
|
59,000
|
—
|
24,935
|
—
|
—
|
473,765
|
||||||||
|
Barton
Hedges
|
3/24/08
|
2/27/08
|
350,000
|
—
|
24,935
|
—
|
—
|
473,765
|
|
(1)
|
The
amounts in this column reflect the named executive officer’s target
quantitative bonus for 2008 under the bonus
program.
|
|
(2)
|
The
amount in this column represents a grant of restricted shares made
pursuant to our stock incentive plan. Each restricted share award is
subject to three-year cliff
vesting.
|
|
(3)
|
The
exercise price of the Option Award is 1.7 times the fully diluted book
value on the grant date.
|
Outstanding
Equity Awards at Fiscal Year End 2008
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)(1)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)(2)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
|
|||||||||
|
Leonard
Goldberg
|
500,000(3)
|
—
|
—
|
11.10
|
8/15/15
|
61,935
|
804,536
|
—
|
—
|
|||||||||
|
73,334(4)
|
36,666(4)
|
—
|
13.48
|
10/05/16
|
—
|
—
|
—
|
—
|
||||||||||
|
16,667(5)
|
33,333(5)
|
—
|
19.60
|
8/15/17
|
—
|
—
|
—
|
—
|
||||||||||
|
20,000(6)
|
60,000(6)
|
—
|
29.39
|
8/11/18
|
—
|
—
|
—
|
—
|
||||||||||
|
Tim
Courtis
|
50,000(7)
|
25,000(7)
|
12.72
|
5/01/16
|
44,000
|
571,560
|
—
|
—
|
||||||||||
|
Barton
Hedges
|
166,667(8)
|
83,333(8)
|
—
|
11.63
|
1/02/16
|
58,435
|
759,071
|
—
|
—
|
|||||||||
|
(1)
|
This
column reflects grants of restricted shares made pursuant to our stock
incentive plan. All restricted shares are subject to three-year cliff
vesting.
|
|
(2)
|
Assumes
a stock price of $12.99, the closing price on December 31,
2008.
|
|
(3)
|
Mr.
Goldberg was granted an option to purchase 500,000 Class A ordinary shares
on August 15, 2005 in accordance with the terms of his employment. The
option became exercisable with respect to 166,666 shares on August 15,
2006 and became exercisable with respect to another 166,667 shares each on
August 15, 2007 and 2008.
|
|
(4)
|
Mr.
Goldberg was granted an option to purchase 110,000 Class A ordinary shares
on October 5, 2006, 100,000 of which were granted in accordance with the
terms of his employment agreement and another 10,000 of which were granted
at the discretion of the Compensation Committee. The option
became
|
|
|
exercisable
with respect to 36,667 shares each on October 5, 2007 and 2008, and will
become exercisable with respect to the remaining 36,666 shares on October
5, 2009.
|
|
(5)
|
Mr.
Goldberg was granted an option to purchase 50,000 Class A ordinary shares
on August 15, 2007 in accordance with the terms of his employment
agreement. The option became exercisable with respect to 16,667 shares on
August 15, 2008, and will become exercisable with respect to
16,667 shares on August 15, 2009 and the remaining 16,666 on August 15,
2010.
|
|
(6)
|
Mr.
Goldberg was granted an option to purchase 80,000 Class A ordinary shares
on August 11, 2008 in accordance with the terms of his employment
agreement. The option became exercisable with respect to
20,000 shares immediately upon grant and will become exercisable
with respect to 20,000 shares each on August 11, 2009, 2010 and
2011.
|
|
(7)
|
Mr.
Courtis was granted an option to purchase 75,000 Class A ordinary shares
on May 1, 2006 in accordance with the terms of his employment. The option
became exercisable with respect to 25,000 shares each on May 1, 2007 and
2008 and will become exercisable with respect to 25,000 shares on May 1,
2009.
|
|
(8)
|
Mr.
Hedges was granted an option to purchase 250,000 Class A ordinary shares
on January 2, 2006 in accordance with the terms of his employment. The
option became exercisable with respect to 83,334 shares on January 2, 2007
and became exercisable with respect to 83,333 shares on January 2, 2008
and will become exercisable with respect to 83,333 shares on January 2,
2009.
|
Option
Exercises and Stock Vested
No stock
options were exercised and no stock awards vested during 2008.
Equity
Compensation Plan Information
The
following table provides information as of December 31, 2008 with respect to the
Company’s Class A ordinary shares that may be issued upon the exercise of
options, warrants and restricted stock granted to employees, consultants or
members of the Board of Directors under all of our existing compensation plans,
including the 2004 Stock Incentive Plan, each as amended.
|
Plan
category
|
Number
of securities to
be
issued upon exercise
of
outstanding options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
Number
of securities
remaining
available
for
future issuance
under
equity
compensation
plans
(excluding
securities
reflected
in column
(a))
|
|||
|
(a)
|
(b)
|
(c)
|
||||
|
Equity
compensation plans approved by share holders
|
1,608,340(1)
|
$12.56
|
439,054(2)
|
|||
|
Equity
compensation plans not approved by share holders
|
—
|
—
|
—
|
|||
|
Total
|
1,608,340(1)
|
$12.56
|
439,054(2)
|
|
(1)
|
Includes
1,258,340 Class A ordinary shares issuable upon the exercise of options
that were outstanding under the Stock Incentive Plan as of
December 31, 2008. Also includes 400,000 Class A ordinary shares
issuable upon the exercise of share purchase options granted in 2004 to a
consultant, First International Capital Holdings, Ltd., or FIC, less
50,000 Class A ordinary shares relating to the re-purchase of share
purchase options from FIC in December
2007.
|
|
(2)
|
Represents
the difference between the number of securities issuable under the Stock
Incentive Plan (2,000,000) and the number of securities issued under
the Stock Incentive Plan as of December 31, 2008 being 1,560,946. The
number of securities to be issued under the Stock Incentive Plan consists
of options to acquire 1,259,000 Class A ordinary shares as well as 301,946
issued shares.
|
Pension
Benefits
None of
our named executive officers participates in a qualified or non-qualified
defined benefit pension plan sponsored by us. In accordance with the National
Pensions Law (2000 Revision) of the Cayman Islands, all Cayman Islands-based
employers are required to make a contribution to a pension plan for each person
they employ. As of June 1, 2006, we adopted a defined contribution pension plan.
The amounts contributed to this plan on behalf of the named executive officers
are set forth in the following table.
Non-qualified
Deferred Compensation in Fiscal Year 2008
|
Name
|
Executive
Contributions
in
Last
Fiscal Year
($)
|
Registrant
Contributions
in
Last
Fiscal Year
($)(1)
|
Aggregate
Earnings
in
Last
Fiscal Year
($)(2)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance
at
Last
Fiscal
Year-End
($)
|
|||||
|
Leonard
Goldberg
|
—
|
7,317
|
(5,320)
|
—
|
14,143
|
|||||
|
Barton
Hedges
|
—
|
7,317
|
(5,727)
|
—
|
13,674
|
|||||
|
Tim
Courtis
|
—
|
7,317
|
(5,221)
|
—
|
14,288
|
|
(1)
|
The
amounts provided in this column represent the amount of the contributions
we made on behalf of each named executive officer to our defined
contribution pension plan during 2008. These amounts are also reported as
compensation in the Summary Compensation Table under the “All Other
Compensation” column.
|
|
(2)
|
Earnings
are measured based on the named executive officer’s individual investment
selections. The aggregate earnings and aggregate balance data for each
named executive officer under the defined contribution pension plan is
reported net of any pension plan
expenses.
|
Employment
Agreements
The
following paragraphs summarize the material terms of the employment agreements
of our named executive officers. The severance provisions of these agreements
are summarized in the section titled “Potential Payments Upon Termination or
Change in Control” below.
Chief
Executive Officer
Leonard Goldberg. We have entered into an
employment agreement with Leonard Goldberg under which he serves as our
Chief Executive Officer for a term beginning on August 15, 2008 (amended
December 30, 2008) and ending on August 14, 2011. Under the terms of his
employment agreement, Mr. Goldberg is entitled to receive an annual salary
of not less than $400,000, subject to increase as determined by our Board of
Directors, and an annual performance-based bonus with a target equal to 125% of
base salary. Mr. Goldberg receives a Cayman Islands housing allowance of
$6,000 per month and is entitled to participate in our employee benefit plans
and insurance programs. Mr. Goldberg is also reimbursed for certain tax
preparation expenses. Under the terms of his employment agreement, on August 11,
2008, Mr. Goldberg was granted an option to acquire 80,000 Class A ordinary
shares. On each third Nasdaq trading day following the Company’s release of
earnings results for the quarterly period ended June 30, on which
Mr. Goldberg is employed by us, he will be granted an additional option to
acquire 80,000 Class A ordinary shares. All shares subject to an option must
have an exercise price equal to the greater of the fair market value per share
on the date of grant and 1.7 times the Company’s fully diluted book value per
share at June 30 preceding the grant date.
Mr.
Goldberg is subject to a six-month post-termination non-competition restriction
and a one-year post-termination non-solicitation restriction in addition to
perpetual confidentiality and non-disparagement requirements. The
non-competition restriction does not apply if Mr. Goldberg’s employment
terminates at the end of its term under circumstances that do not entitle him to
receive severance payments.
Executive
Officers
Barton Hedges. We have entered into
an employment agreement effective January 10, 2006 (amended
December 30, 2008) with Barton Hedges under which he serves as our
President and Chief Underwriting Officer of Greenlight Re. The employment
agreement does not have a fixed term. Under the terms of his employment
agreement, Mr. Hedges is entitled to receive an annual salary of not less than
$450,000, subject to increase as determined by our Board of Directors, and an
annual performance-based bonus with a target equal to 100% of base salary.
Mr. Hedges receives a Cayman Islands housing allowance of $6,000 per month
and is entitled to participate in our employee benefit plans and insurance
programs. Mr. Hedges is also reimbursed for certain tax preparation
expenses. Under the terms of his employment agreement, on January 2, 2006, Mr.
Hedges received an option to acquire 250,000 Class A ordinary shares with an
exercise price equal to the fair market value per share on the date of
grant. On February 18, 2009 we amended the employment agreement with
Mr. Hedges such that, with effect from January 1, 2009, Mr. Hedges is
entitled to receive an annual salary of $500,000.
Tim Courtis. We have entered into an
employment agreement effective May 1, 2006 (amended December 30, 2008)
with Tim Courtis under which he serves as our Chief Financial Officer. The
employment agreement does not have a fixed term. Mr. Courtis receives an annual
base salary of not less than $300,000, subject to increase as determined by our
Board of Directors, and an annual performance-based bonus with a target equal to
50% of base salary. Mr. Courtis receives a Cayman Islands housing allowance
of $6,000 per month and is entitled to participate in our employee benefit plans
and insurance programs. Under the terms of his employment agreement, on May 1,
2006, Mr. Courtis received an option to acquire 75,000 Class A ordinary shares
with an exercise price equal to the fair market value per share on the date of
grant. On February 18, 2009 we amended the employment agreement with
Mr. Courtis such that, with effect from January 1, 2009, Mr. Courtis’
target bonus is 60% of base salary.
Mr. Hedges
and Mr. Courtis are also subject to a six-month post-termination
non-competition restriction and a one-year post-termination non-solicitation
restriction in addition to perpetual confidentiality and non-disparagement
requirements.
The
Stock Incentive Plan
General
On August
11, 2004, we adopted the Greenlight Capital Re, Ltd. 2004 stock incentive plan,
or the stock incentive plan, which was amended and restated on August 15, 2005,
February 14, 2007 and May 4, 2007. The general purpose of the stock incentive
plan is to enable us and our affiliates to retain the services of eligible
employees, directors and consultants through the grant of stock options, stock
bonuses and rights to acquire restricted shares (collectively referred to as the
awards).
Subject
to adjustment in accordance with the terms of the stock incentive plan,
2,000,000 Class A ordinary shares are available for the grant of awards under
the stock incentive plan. The maximum number of Class A ordinary shares with
respect to which options may be granted to any participant during any calendar
year is 500,000 Class A ordinary shares. As of December 31, 2008, 1,259,000
options and 301,946 restricted shares have been granted under the stock
incentive plan.
Administration
Our
Compensation Committee administers the stock incentive plan and has broad
discretion, subject to the terms of the stock incentive plan, to determine which
eligible participants will be granted awards, prescribe the terms and conditions
of awards, establish rules and regulations for the interpretation and
administration of the stock incentive plan and adopt any modifications,
procedures or sub-plans that may be necessary or desirable to comply with the
laws of foreign countries in which we or our affiliates operate to assure the
viability of awards granted under the stock incentive plan.
Options
Options
are subject to such terms and conditions as our Compensation Committee deems
appropriate. Our Compensation Committee determines the per share exercise price
of options which will not be less than 100% of the fair market value of the
Class A ordinary shares on the date of grant. Options generally expire ten years
from the date of grant and vest and become exercisable as determined by our
Compensation Committee on the date of grant.
Unless
otherwise provided in an individual option agreement and subject to the stock
incentive plan’s adjustment provision, a change in control of us will not affect
any options granted under the stock incentive plan.
Restricted
Shares
Restricted
shares are subject to such terms and conditions as our Compensation Committee
deems appropriate as set forth in individual award agreements. Participants may
be entitled to vote the restricted shares while held in our custody. Our
Compensation Committee determines the purchase price, if any, of restricted
Class A ordinary shares.
Stock
Bonus Awards
Stock
bonus awards are subject to such terms and conditions as our Compensation
Committee deems appropriate. To the extent permitted so that the Class A
ordinary shares awarded will be treated as fully paid, a stock bonus may be
awarded in consideration for past services rendered.
Adjustments
Our
Compensation Committee will determine the appropriate adjustments to be made in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available with respect to an award upon the occurrence of
certain events affecting our capitalization such as a dividend or other
distribution, recapitalization, reclassification, stock split, reverse stock
split, reorganization, merger, consolidation, spin-off or sale, transfer or
disposition of all or substantially all of our assets or stock. For example, our
Compensation Committee shall adjust the number of Class A ordinary shares
subject to outstanding awards and the exercise price of outstanding
options.
Amendment/Termination
Our Board
of Directors may amend the stock incentive plan at any time. Except as provided
in the stock incentive plan, no amendment will be effective unless approved by
our shareholders to the extent shareholder approval is necessary to satisfy any
applicable law or any national securities exchange listing requirement, and no
amendment will be made that would adversely affect rights under an award
previously granted under the stock incentive plan without the consent of the
affected participants. Our Compensation Committee may suspend or terminate the
stock incentive plan at any time.
Unless
sooner terminated, the stock incentive plan will terminate on August 10,
2014.
Employment
Agreements
Leonard Goldberg
In the
event that we terminate Mr. Goldberg’s employment without cause (as defined
below), Mr. Goldberg terminates for good reason (as defined below) or his
employment terminates at the end of the term of his employment agreement without
an offer from us of continued employment on substantially similar terms, we will
pay Mr. Goldberg a lump sum payment as soon as practicable following termination
but in no event later than 2½ months following the date of termination equal to
accrued but unpaid base salary, bonus, and vacation pay; and a pro-rated portion
of the target bonus that would have been paid for the year in which his
employment terminated assuming targets had been achieved. In addition, we will
pay him as severance in twelve monthly installments the sum of his annual base
salary and target bonus provided that he does not breach the restrictive
covenants in his
employment
agreement. The commencement of these payments will be delayed for six months if
our Board of Directors determines that Mr. Goldberg is a “specified employee”
within the meaning of Section 409A of the Code with the first payment after the
delay period being equal to the amount that would have been paid had no delay
been imposed. The commencement of these payments will be delayed for
six months if our Board of Directors determines that such payments constitute
non-qualified deferred compensation and Mr. Goldberg is a “specified employee”
within the meaning of Section 409A of the Code with the first payment after
the delay period being equal to the amount that would have been paid had no
delay been imposed.
If Mr.
Goldberg’s employment terminates as a result of his death or permanent
retirement from the reinsurance industry, Mr. Goldberg and/or his beneficiaries,
legal representatives or estate will become entitled to accrued but unpaid base
salary, bonus and vacation pay; and a pro-rated portion of the target bonus that
would have been paid for the year in which his employment terminated assuming
targets had been achieved, as soon as practicable following termination but in
no event later than 2½ months following the date of termination. In addition, if
Mr. Goldberg’s employment terminates as a result of his death, his spouse
and dependents will become entitled to receive health benefits for
one year. We may terminate Mr. Goldberg’s employment agreement upon 30
days’ prior written notice if he becomes disabled. If Mr. Goldberg’s employment
terminates because of disability (as defined below), in addition to the accrued
but unpaid compensation discussed above and pro-rated bonus, Mr. Goldberg will
become entitled to receive base salary and continued health benefits for the
lesser of one year or until Mr. Goldberg is eligible to receive long-term
disability benefits under any long-term disability plan that we may establish.
Continued base salary payments will be paid in accordance with our regular
payroll schedule. The commencement of these payments will be delayed for six
months if our Board of Directors determines that such payments constitute
non-qualified deferred compensation and Mr. Goldberg is a “specified employee”
within the meaning of Section 409A of the Code with the first payment after
the delay period being equal to the amount that would have been paid had no
delay been imposed. If we are not able to provide Mr. Goldberg, his spouse,
or dependents with continued participation in our health plan, we will pay
Mr. Goldberg for the cost of such benefits which does not exceed the amount
which we would have paid if they had been entitled to participate. The cost of
such benefits will be paid in accordance with the procedures we
establish.
We may
require that Mr. Goldberg execute a release of claims against us as a
condition for compensation or benefits payable upon any termination of
employment.
Tim Courtis
and Barton Hedges
In the
event that we terminate either Mr. Courtis’ or Mr. Hedges’ employment
without cause (as defined below), or either named executive officer terminates
his employment for good reason (as defined below), we will pay him accrued but
unpaid base salary, bonus and vacation pay; and a pro-rated portion of the
target bonus that would have been paid for the year in which he was terminated
assuming targets had been achieved, as soon as practicable following termination
but in no event later than 2½ months following the date of termination. In
addition, we will pay him severance in twelve monthly installments equal to the
sum of his annual base salary and target bonus assuming targets had been
achieved, provided that he does not breach the restrictive covenants in his
employment agreement. Because he would need to relocate upon his termination
from the Company, Mr. Courtis is also entitled to receive an additional
$25,000 lump sum payment at the same time he receives his first monthly
severance payment. The commencement of the payments will be delayed for six
months if our Board of Directors determines that such payments constitute
nonqualified deferred compensation and Mr. Courtis or Mr. Hedges is a “specified
employee” within the meaning of Section 409A of the Code and the first payment
will be equal to the aggregate amount the named executive officer would have
received during the delay period had no delay been imposed.
If either
Mr. Courtis’ or Mr. Hedges’ employment terminates as a result of his death, his
beneficiary, legal representatives or estate will become entitled to accrued but
unpaid base salary, bonus and vacation pay; and a pro-rated portion of the
target bonus that would have been paid for the year in which his employment
terminated assuming targets had been achieved, as soon as practicable following
termination but in no event later than 2½ months following the date
of termination. In addition, his spouse and dependents will become entitled to
receive health benefits for one year. We may terminate either Mr. Courtis’
or Mr. Hedges’ employment agreement upon 30 days’ prior written notice if
he becomes disabled. If either Mr. Courtis’ or Mr. Hedges’ employment terminates
because of disability, he will become entitled to accrued but unpaid base
salary, bonus and vacation pay; a pro-rated
portion
of the target bonus that would have been paid for the year in which his
employment was terminated assuming targets had been achieved, as soon as
practicable following termination but in no event later than 2½ months following
the date of termination; and base salary and continued health benefits for the
lesser of one year or until he is eligible to receive long-term disability
benefits under any long-term disability plan that we may establish. Continued
base salary payments will be paid in accordance with our regular payroll
schedule. The commencement of these payments will be delayed for six months if
our Board of Directors determines that such payments constitute non-qualified
deferred compensation and Mr. Hedges or Mr. Courtis is a “specified
employee” within the meaning of Section 409A of the Code with the first
payment after the delay period being equal to the amount that would have been
paid had no delay been imposed. If we are not able to provide either
Mr. Courtis or Mr. Hedges, their spouses or dependents with continued
participation in our health plan, we will pay for the cost of such benefits
which does not exceed the amount which we would have paid if they have been
entitled to participate. The cost of such benefits will be paid in accordance
with the procedures we establish.
Mr.
Hedges’ employment agreement contained a provision that enabled him to receive
severance had his employment been terminated without cause in connection with a
dissolution of Greenlight Re that occurred prior to January 10, 2009, and he
would have become entitled to receive accrued but unpaid base salary, bonus and
vacation pay; and a pro-rated portion of the target bonus that would have been
paid for the year in which his employment terminated assuming targets had been
achieved, as soon as practicable following termination. In addition, under such
circumstances, Mr. Hedges would have received a lump sum cash payment on the
same date severance would otherwise be payable equal to the greater of the sum
of his annual base salary and target bonus for the year of termination or the
aggregate sum of base salary which Mr. Hedges would have received from the date
of termination through January 10, 2009.
We may
require that Mr. Courtis or Mr. Hedges execute a release of claims
against us as a condition for compensation or benefits payable upon any
termination of employment.
For
purposes of the employment agreements, “cause” generally means:
|
|
•
|
the
named executive officer’s drug or alcohol use which impairs his ability to
perform his duties;
|
|
|
•
|
conviction
by a court, or plea of “no contest” or guilty to a criminal
offense;
|
|
|
•
|
engaging
in fraud, embezzlement or any other illegal conduct with respect to us
and/or any of our affiliates;
|
|
|
•
|
willful
violation of the restrictive covenants set forth in his employment
agreement;
|
|
|
•
|
willful
failure or refusal to perform the duties under his employment agreement;
or
|
|
|
•
|
breach
of any material provision of his employment agreement or any of our or any
of our affiliates’ policies related to conduct which is not cured, if
curable, within ten days after written notice is
given.
|
For
purposes of the employment agreements, “good reason” generally means any of the
following events which is not cured, if curable, within 30 days after the named
executive officer has given notice thereof:
|
|
•
|
any
material and adverse change to the named executive officer’s duties or
authority which are inconsistent with his title and
position;
|
|
|
•
|
a
reduction of the named executive officer’s base salary;
or
|
|
|
•
|
a
failure by us to comply with any other material provisions of the
employment agreement.
|
In
addition to the above provisions, the definition of “good reason” in Mr.
Goldberg’s employment agreement also includes a diminution of his title or
position or a change in control (change in control has the same definition as in
the stock incentive plan discussed above).
For
purposes of the employment agreements, “disability” generally means if, as a
result of incapacity due to physical or mental illness, the named executive
officer is substantially unable to perform his duties for an entire period of at
least 90 consecutive days or 180 non-consecutive days within any 365-day
period.
Stock
Incentive Plan and Awards Granted Thereunder
Under the
terms of the stock incentive plan, unless an option award provides otherwise,
upon termination other than for cause, death or disability (as defined below),
all unvested options terminate and the participant may exercise his or her
vested options within the period ending upon the earlier of three months
following termination or ten years from the grant date of the option (i.e., the
option’s expiration date). Unless an option award provides otherwise, upon
termination for cause (as defined below), all vested and unvested options will
terminate. Unless an option award provides otherwise, upon termination for death
or disability, all unvested options will terminate, and the vested portion of
the option may be exercised for the period ending upon the earlier of twelve
months following termination or the option’s expiration date.
Under the
terms of the option grants which Mr. Goldberg received in 2006, 2007 and 2008,
any unvested portion of each option award vests upon our termination of his
employment without cause, (as defined in his employment agreement, see
description above), or Mr. Goldberg’s termination of employment for good reason
(as defined in his employment agreement, see description above), or when his
employment period expires if we do not offer Mr. Goldberg continued employment
on substantially similar terms, and the option will remain exercisable until the
expiration date. Upon Mr. Goldberg’s termination due to his death or
disability (as defined in his employment agreement, see description above), any
unvested portion of the option will terminate and any vested portion of the
option will remain exercisable until the expiration date. If we terminate Mr.
Goldberg’s employment due to his permanent retirement from the reinsurance
industry, any unvested portion of the option will terminate, and the vested
portion will remain exercisable until expiration, unless Mr. Goldberg
becomes employed by an entity which competes with any aspect of our or our
affiliates’ business, in which case, the option will immediately terminate. If
we terminate Mr. Goldberg’s employment for cause, all vested and unvested
portions of the option will terminate. If Mr. Goldberg’s employment
terminates under any other circumstances, the unvested portion of the option
will terminate and the vested portion will remain exercisable for 90 days, but
no later than the expiration date.
Under the
terms of the option grants awarded to Mr. Courtis and Mr. Hedges, upon
termination of employment, the awards remain exercisable in accordance with the
terms of the stock incentive plan, except that upon termination, other than for
cause, death or disability each as defined below, all vested options remain
exercisable for the period ending upon the earlier of 90 days or the expiration
date.
Under the
terms of the restricted share awards granted to each of Messrs. Goldberg, Hedges
and Courtis in 2008, the awards will automatically vest upon the executive’s
termination of employment due to death or disability or upon the occurrence of a
change in control (as defined in the stock incentive plan, see description
above). If the executive’s employment terminates for any other reason, the
unvested shares of restricted stock will be automatically repurchased by the
Company for par value and cancelled.
Upon a
change in control (as defined in the stock incentive plan, see description
above), our Compensation Committee has the discretion to vest unvested options.
In the tables below, it is assumed that the Compensation Committee exercised its
discretion to vest unvested options.
For
purposes of the stock incentive plan, “cause” generally means: if the
participant is a party to an employment agreement or other agreement with us or
an affiliate and such agreement provides for a definition of cause, the
definition contained in the agreement, or, if no such agreement or definition
exists, cause means a participant’s:
|
|
•
|
material
breach of his employment agreement or other
agreement;
|
|
|
•
|
continued
failure to satisfactorily perform assigned job responsibilities or to
follow the reasonable instructions of his superiors, including, without
limitation, our Board of Directors;
|
|
|
•
|
commission
of a crime constituting a criminal offense or felony (or its equivalent)
or other crime involving moral turpitude;
or
|
|
|
•
|
material
violation of any material law or regulation or any policy or code of
conduct adopted by us or engaging in any other form of misconduct which,
if it were made public, could reasonably be expected to adversely affect
our or an affiliate’s business reputation or
affairs.
|
For purposes of the stock incentive plan, “disability” generally means, if the
participant is a party to an employment agreement or other agreement with us or
an affiliate and the agreement provides for a definition of disability, the
definition contained in the agreement, or, if no such agreement or definition
exists, disability will mean the failure of the participant to perform his
duties due to physical or mental incapacity as determined by our Compensation
Committee.
Assuming
Mr. Goldberg’s employment terminated under each of the circumstances
described above on December 31, 2008, such payments and benefits have an
estimated value of:
|
Event
|
Pro-Rated
Bonus
$
|
Total
Cash
Severance
$
|
Value
of
Medical
Continuation
$
|
Value
of
Accelerated
Equity(3)
$
|
Total
$
|
|||||
|
Termination
without Cause, for Good Reason, or upon expiration of Employment Agreement
without similar offer of employment
|
500,000
|
900,000(1)
|
N/A
|
N/A
|
1,400,000
|
|||||
|
Death
|
500,000
|
N/A
|
11,857
|
804,536
|
1,316,393
|
|||||
|
Permanent
Resignation from the Reinsurance Industry
|
500,000
|
N/A
|
N/A
|
N/A
|
500,000
|
|||||
|
Disability
|
500,000
|
400,000(2)
|
11,857
|
804,536
|
1,716,393
|
|||||
|
Change
in Control
|
N/A
|
N/A
|
N/A
|
804,536
|
804,536
|
|
(1)
|
Calculated
as the sum of base salary ($400,000) and target bonus
($500,000).
|
|
(2)
|
Calculated
as one times base salary.
|
|
(3)
|
Calculated
as the sum of (i) the spread value (being the difference between the
strike price and the share value on December 31, 2008) of the options
and (ii) the fair market value of unvested shares of restricted stock
subject to accelerated vesting if a termination or change in control
occurred on December 31, 2008 and using a share price of $12.99, the
December 31, 2008 closing share
price.
|
Assuming
Mr. Hedges’ employment terminated under each of the circumstances described
above on December 31, 2008, such payments and benefits have an estimated value
of:
|
Event
|
Pro-Rated
Bonus
$
|
Total
Cash
Severance
$
|
Value
of
Medical
Continuation
$
|
Value
of
Accelerated
Equity(3)
$
|
Total
$
|
|||||
|
Termination
without Cause or for Good Reason
|
450,000
|
900,000(1)
|
N/A
|
N/A
|
1,350,000
|
|||||
|
Death
|
450,000
|
N/A
|
8,762
|
759,071
|
1,217,833
|
|||||
|
Disability
|
450,000
|
450,000(2)
|
8,762
|
759,071
|
1,667,833
|
|||||
|
Change
in Control
|
N/A
|
N/A
|
N/A
|
872,404
|
872,404
|
|||||
|
Termination
without Cause in Connection with Dissolution of Greenlight
Re
|
450,000
|
900,000(1)
|
N/A
|
N/A
|
1,350,000
|
|
(1)
|
Calculated
as the sum of base salary ($450,000) and target bonus
($450,000).
|
|
(2)
|
Calculated
as one times base salary.
|
|
(3)
|
Calculated
as the sum of (i) the spread value of the options and (ii) the fair market
value of the unvested shares of restricted stock subject to accelerated
vesting if a change in control occurred on December 31, 2008 and using a
share price of $12.99, the December 31, 2008 closing share
price.
|
|
|
Assuming
Mr. Courtis’ employment terminated under each of the circumstances
described above on December 31, 2008, such payments and benefits have an
estimated value of:
|
|
Event
|
Pro-Rated
Bonus
$
|
Total
Cash
Severance
$
|
Value
of
Medical
Continuation
$
|
Value
of
Accelerated
Equity(3)
$
|
Total
$
|
|||||
|
Termination
without Cause or for Good Reason
|
$150,000
|
$475,000(1)
|
N/A
|
N/A
|
$625,000
|
|||||
|
Death
|
$150,000
|
N/A
|
$11,857
|
$571,560
|
$733,417
|
|||||
|
Disability
|
$150,000
|
$300,000(2)
|
$11,857
|
$571,560
|
$1,033,417
|
|||||
|
Change
in Control
|
N/A
|
N/A
|
N/A
|
$578,310
|
$578,310
|
|
(1)
|
Calculated
as the sum of base salary ($300,000) and target bonus ($150,000) plus an
additional $25,000 for relocation
expenses.
|
|
(2)
|
Calculated
as one times base salary.
|
|
(3)
|
Calculated
as the sum of (i) the spread value of the options and (ii) the fair market
value of the unvested shares of restricted stock subject to accelerated
vesting if a change in control occurred on December 31, 2008 and using a
share price of $12.99, the December 31, 2008 closing share
price.
|
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee currently consists of Messrs. Isaacs, Murphy and Platt,
each of whom the Board of Directors concluded was independent in accordance with
the director independence standards of the Nasdaq stock market
rules.
Management
has the primary responsibility for establishing and maintaining adequate
internal controls over financial reporting, preparing the financial statements
and the public reporting process. The Audit Committee’s primary purpose is to
assist the Board of Directors in fulfilling its responsibilities to oversee the
participation of management in the financial reporting process and the role and
responsibilities of the independent auditors.
In
performing its oversight role in connection with the audit of the Company’s
consolidated financial statements for the year ended December 31, 2008, the
Audit Committee has:
|
|
1.
|
reviewed
and discussed the audited consolidated financial statements with
management;
|
|
|
2.
|
reviewed
and discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61, as amended;
and
|
|
|
3.
|
received
from and reviewed and discussed with the independent auditors the written
disclosures required by PCAOB Rule 3526 and has discussed with the
independent auditors the independent auditor’s
independence.
|
Based on
the review and discussions referred to above, and in reliance on the
information, opinions, reports or statements presented to the Audit Committee by
management and the independent auditors, the Audit Committee recommended to the
Board of Directors that the December 31, 2008 audited consolidated financial
statements be included in the Annual Report on Form 10-K.
|
The
Audit Committee
|
|
|
Alan
Brooks (Chairman)
Frank
Lackner
Bryan
Murphy
|
Independent
Public Accountant Fees and Services
Audit
Fees
The
aggregate amount of fees billed by BDO for professional services rendered for
(1) the audit of our financial statements during the fiscal years ended
December 31, 2008 and 2007; (2) the review of the financial statements
included in our Quarterly Reports on Form 10-Q in 2008 and 2007; (3) the
2008 audit of the Company’s internal control over financial reporting with
the objective of obtaining reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects;
and (4) services that are normally provided by the auditor in connection
with statutory and regulatory filings or engagements were approximately $280,000
and $523,000, respectively.
Audit-Related
Fees
The
Company did not incur any fees billed by BDO for audit related services during
the fiscal years ended December 31, 2008 and 2007.
Tax
Fees
The
Company did not incur any fees billed by BDO for tax services during the fiscal
years ended December 31, 2008 and 2007.
All
Other Fees
The
Company did not incur any other fees billed by BDO during the fiscal years ended
December 31, 2008 and 2007.
Audit
Committee’s Pre-Approval Policies and Procedures
Our Audit
Committee charter includes our policy regarding the approval of audit and
non-audit services performed by our independent auditors. The Audit Committee is
responsible for retaining and evaluating the independent auditors’
qualifications, performance and independence. The Audit Committee pre-approves
all auditing services, internal control-related services and permitted non-audit
services (including the fees and terms thereof) to be performed for us by our
independent auditors, subject to such exceptions for non-audit services as
permitted by applicable laws and regulations. The Audit Committee may delegate
this authority to a subcommittee consisting of one or more Audit Committee
members, including the authority to grant pre-approvals of audit and permitted
non-audit services, provided that decisions of such subcommittee to grant
pre-approvals are presented to the full Audit Committee at its next meeting. The
Audit Committee approved all professional services provided to us by during
2008.
The
following table shows information known to us with respect to the beneficial
ownership of both classes of our ordinary shares as of February 20, 2009
for:
|
|
•
|
each
person or group who beneficially owns more than 5% of each class of our
ordinary shares;
|
|
|
•
|
each
of our named executive officers, Messrs. Goldberg, Hedges and
Courtis;
|
|
|
•
|
each
of our directors; and
|
|
|
•
|
all
of our directors and named executive officers as a
group.
|
Beneficial
ownership of shares is determined under the rules of the SEC and generally
includes any shares over which a person exercises sole or shared voting or
investment power. Except as indicated by footnote, and subject to applicable
community property laws, each person identified in the table possesses sole
voting and investment power with respect to all ordinary shares held by them.
Class A ordinary shares subject to options and warrants currently exercisable or
exercisable within 60 days of February 20, 2009, and not
subject
to repurchase as of that date, are deemed to be outstanding for calculating the
percentage of outstanding shares of the person holding these options, but are
not deemed to be outstanding for calculating the percentage of any other
person.
Applicable
percentage ownership in the following table is based on 29,781,736 Class A ordinary
shares outstanding as of February 20, 2009 and 6,254,949 Class B ordinary shares
outstanding as of February 20, 2009. Unless otherwise indicated, the address of
each of the named individuals is c/o Greenlight Capital Re, Ltd., The Grand
Pavilion, 802 West Bay Road, P.O. Box 31110, Grand Cayman, KY1-1205, Cayman
Islands.
|
Name
and address of beneficial owner
|
Beneficial
ownership of
principal
shareholders
|
||||||||
|
Number
of Class A Ordinary Shares
|
%
|
Number
of Class B Ordinary Shares
|
%
|
||||||
|
David
Einhorn(1)
|
—
|
—
|
6,254,949
|
100
|
|||||
|
Morgan
Stanley(2)
|
2,766,238
|
9.29
|
—
|
—
|
|||||
|
Montpellier
Investments L.P.(3)
|
2,149,997
|
7.22
|
—
|
—
|
|||||
|
Leonard
Goldberg(4)
|
757,935
|
2.54
|
—
|
—
|
|||||
|
Barton
Hedges(5)
|
343,235
|
1.15
|
—
|
—
|
|||||
|
Tim
Courtis(6)
|
147,000
|
*
|
—
|
—
|
|||||
|
Alan
Brooks(7)
|
72,313
|
*
|
—
|
—
|
|||||
|
Ian
Isaacs(8)
|
58,014
|
*
|
—
|
—
|
|||||
|
Frank
Lackner(9)
|
74,000
|
*
|
—
|
—
|
|||||
|
Bryan
Murphy(10)
|
20,000
|
*
|
—
|
—
|
|||||
|
Joseph
Platt(11)
|
91,313
|
*
|
—
|
—
|
|||||
|
All
directors and named executive officers as a group
(9
persons)
|
1,563,810
|
5.25
|
% |
6,254,949
|
100
|
% | |||
|
*
|
Represents
less than 1% of the outstanding ordinary
shares.
|
|
(1)
|
Mr.
Einhorn, together with his affiliates, is limited to voting the number of
Class B ordinary shares equal to 9.5% of the total voting power of the
total issued and outstanding ordinary shares. Mr. Einhorn owns 3,830,712
Class B ordinary shares directly. Mr. Einhorn also retains beneficial
ownership of 2,424,237 Class B ordinary shares held by the
David M. Einhorn 2007 GRAT. Mr. Einhorn has appointed
Mr. Roitman as his alternate director. Mr. Roitman has
beneficial ownership of 200,000 Class A ordinary shares. If
Mr. Roitman’s Class A ordinary shares were included in the total
shares held by the directors and named executive officers, such number
would be 8,018,759 shares.
|
|
(2)
|
Morgan
Stanley’s beneficial ownership is based on a Form 13F filed on February
17, 2009. The business address for Morgan Stanley is 1585 Broadway,
New York, New York 10036.
|
|
(3)
|
Montpellier
Investments L.P.’s beneficial ownership is based on the shareholder’s
filings with the Commission, supplemented by further information provided
to the Company by the shareholder in a February 16, 2009 telephone
conversation. According to a Schedule 13G/A filed jointly by
Montpellier Investments L.P., Montpellier Resources Ltd., Khronos LLC, Zen
Group, LLC, and Rafael Mayer; (collectively, the "Reporting Persons") on
December 9, 2008, all shares held by the Reporting Persons are held
through Montpellier Investments L.P. Montpellier Resources Ltd. holds a
majority interest in Montpellier Investments L.P. Khronos LLC is the
investment manager with respect to the shares held by Montpellier
Investments L.P. Zen Group LLC is the managing member of Khronos LLC and
Rafael Mayer is the managing member of Zen Group LLC. The business address
for Montpellier Investments L.P. is 22 Victoria Street, Hamilton HM 12,
Bermuda.
|
|
(4)
|
Includes
610,000 Class A ordinary shares subject to options and 61,935 restricted
shares subject to forfeiture held by Mr. Goldberg. Additionally, Mr.
Goldberg owns 31,250 Class A ordinary shares directly and also retains
beneficial ownership of 54,750 Class A ordinary shares held by the Leonard
R Goldberg 2007.
|
|
(5)
|
Includes
250,000 Class A ordinary shares subject to options and 58,435 restricted
shares subject to forfeiture held by Mr.
Hedges.
|
|
(6)
|
Includes
50,000 Class A ordinary shares subject to options and 44,000 restricted
shares subject to forfeiture held by Mr.
Courtis.
|
|
(7)
|
Includes
2,000 Class A ordinary shares subject to options and 4,681 restricted
shares subject to forfeiture.
|
|
(8)
|
Includes
4,681 restricted Class A ordinary shares subject to
forfeiture.
|
|
(9)
|
Includes
22,000 Class A ordinary shares subject to options held by Mr. Lackner,
including 20,000 options transferred to him from First International, and
2,000 restricted shares subject to
forfeiture.
|
|
(10)
|
Includes 4,681
restricted shares subject to
forfeiture.
|
|
(11)
|
Includes
2,000 Class A ordinary shares subject to options held by Mr. Platt, 4,681
restricted shares subject to forfeiture and 75,000 Class A ordinary shares
held by a partnership of which Mr. Platt is the general
partner.
|
Section
16(a) of the Exchange Act requires that our directors, executive officers and
the persons who beneficially own more than 10% of our ordinary shares file
reports of ownership and changes of ownership on Forms 3, 4 and 5 with the SEC.
Executive officers, directors and greater than 10% shareholders are required by
regulations promulgated by the SEC to furnish us with copies of all Forms 3, 4
and 5 they file. Based solely on the reports received by us and on the written
representations of the reporting persons, we believe that no director, executive
officer or greater than 10% shareholder failed to file on a timely basis the
reports required by Section 16(a) of the Exchange Act during, or with respect
to, fiscal 2008.
Related-Party
Transaction Policy and Audit Committee Charter
We have
established a written related-party transaction policy which provides procedures
for the review of transactions in excess of $120,000 in any year between us and
any covered person having a direct or indirect material interest, subject to
certain exceptions. Covered persons include any director, executive officer,
director nominee, 5% shareholder or any immediate family members of the
foregoing. Any such related-party transactions shall require advance approval by
a majority of our independent directors or a majority of the members of a
committee constituted solely of our independent directors. In addition, our
Audit Committee charter provides that the Audit Committee will review and
approve all related-party transactions.
Investment
Advisory Agreement
On
January 1, 2008, we entered into an agreement, or the advisory agreement,
wherein the Company and DME Advisors, a related party and an affiliate
of David Einhorn, Chairman of our Board of Directors and the
beneficial owner of all of the issued and outstanding Class B ordinary shares,
agreed to create a joint venture for the purposes of managing certain jointly
held assets. The term of the advisory agreement is January 1, 2008 through
December 31, 2010 with automatic three-year renewals unless either Greenlight Re
or DME Advisors terminates the agreement by giving 90 days notice prior to the
end of the three-year term. Concurrent with the execution of the advisory
agreement, we terminated the investment agreement with DME
Advisors.
Pursuant
to the advisory agreement, DME Advisors has the contractual right to manage
substantially all of our investable assets, subject to the investment
guidelines adopted by our Board of Directors for so long as the agreement is in
effect. DME Advisors receives two forms of compensation:
|
|
•
|
a
1.5% annual fee, regardless of the performance of our investment account,
payable monthly based on the net asset value of our investment account,
excluding assets, if any, held in trusts used to collateralize our
reinsurance obligations, or Regulation 114 Trusts;
and
|
|
|
•
|
performance
compensation based on the appreciation in the value of our investment
account equal to 20% of net profits calculated per annum, subject to a
loss carryforward provision.
|
The loss
carryforward provision allows DME Advisors to earn reduced incentive
compensation of 10% on profits in any year subsequent to the year in which our
investment account incurs a loss, until all the losses are recouped and an
additional amount equal to 150% of the loss is earned. DME Advisors is not
entitled to earn performance compensation in a year in which our investment
portfolio incurs a loss. However, DME Advisors is entitled to earn reduced
incentive compensation on subsequent years to the extent it generates profits
for our investment portfolio in such years.
DME
Advisors is required to follow our investment guidelines and act in a manner
that it considers fair and equitable in allocating investment opportunities to
us, but we do not otherwise impose any specific obligations or requirements
concerning the allocation of time, effort or investment opportunities to us or
any restrictions on the nature or timing of investments for our account and for
DME Advisors’ own account or other accounts that DME Advisors or its affiliates
may manage. In addition, DME Advisors can outsource to sub-advisors without our
consent or approval. In the event that DME Advisors and any of its affiliates
attempt to simultaneously invest in the same opportunity, the opportunity will
be allocated pro rata as reasonably determined by DME Advisors and its
affiliates. Affiliates of DME Advisors presently serve as general partner or
investment advisor of Greenlight Capital, L.P., Greenlight Capital Qualified,
L.P., Greenlight Capital Offshore, Ltd., Greenlight Capital Offshore Qualified,
Ltd., Greenlight Masters, L.P., Greenlight Masters Qualified, L.P., Greenlight
Masters Offshore, Ltd., Greenlight Masters Offshore I, Ltd., and Greenlight
Masters Partners, which we collectively refer to as the Greenlight Funds. Each
of the Greenlight Funds utilizes an investment strategy that may compete with or
diverge from our investment strategy.
We have
agreed to use commercially reasonable efforts to cause all of our current and
future subsidiaries to enter into substantially similar advisory
agreements, provided that any such agreement shall be terminable on the same
date that the advisory agreement is terminable.
We have
agreed to release DME Advisors and its affiliates from, and to indemnify and
hold them harmless against, any liability arising out of the advisory agreement,
subject to certain exceptions. Furthermore, DME Advisors and its affiliates have
agreed to indemnify us against any liability incurred in connection with certain
actions.
We may
terminate the advisory agreement prior to the expiration of its term only “for
cause,” which the advisory agreement defines as:
|
|
•
|
a
material violation of applicable law relating to DME Advisors’ advisory
business;
|
|
|
•
|
DME
Advisors gross negligence, willful misconduct or reckless disregard of its
obligations under the advisory
agreement;
|
|
|
•
|
a
material breach by DME Advisors of our investment guidelines that is not
cured within a 15-day period; or
|
|
|
•
|
a
material breach by DME Advisors of its obligations to return and deliver
assets as we may request.
|
Service
Agreement
In
February 2007, we entered into a service agreement with DME Advisors, which was
amended in August 2007 and October 2007, pursuant to which DME Advisors provides
investor relations services to us for compensation of $5,000 per month (plus
expenses). The service agreement has an initial term of one year and will
continue for sequential one-year periods until terminated by us or DME Advisors.
Either party may terminate the service agreement for any reason with 30 days
prior written notice to the other party.
For the
year ended December 31, 2008, we incurred expenses of $60,000 to DME Advisors
for investor relations services.
Shareholders’
Agreement
Pursuant
to our Shareholders’ Agreement, Greenlight Capital Investors, LLC, or GCI, had
the right to unlimited demand registration rights once we are eligible to use
Form S-3 (or similar short form registration statements). GCI assigned its
demand registration rights under the Shareholders’ Agreement, with our consent,
to David Einhorn on January 3, 2007. Mr. Einhorn has registration rights for all
of his Class B ordinary shares, including those acquired in a private placement
in May 2007, as contemplated under the Shareholders’ Agreement.
Neither
the Board of Directors nor management intends to bring before the Meeting any
business other than the matters referred to in the Notice of Annual General
Meeting of Shareholders and this Proxy Statement. If any other business should
come properly before the Meeting, or any adjournment thereof, the proxy holders
will vote on such matters at their discretion.
Other
Action at the Meeting
As of the
date of this Proxy Statement, the Company has no knowledge of any business,
other than described herein and customary procedural matters, which will be
presented for consideration at the Meeting. In the event any other business is
properly presented at the Meeting, the persons named in the accompanying proxy
may, but will not be obligated to, vote such proxy in accordance with their
judgment on such business.
Shareholder
Proposals for the Annual General Meeting of Shareholders in 2010
Shareholder
proposals must be received in writing by the Secretary of the Company no later
than 120 days prior to the Company’s Annual General Meeting of Shareholders in
2010 and must comply with the requirements of Cayman Islands corporate law and
the Articles in order to be considered for inclusion in the Company’s Proxy
Statement and form of proxy relating to such Annual General Meeting of
Shareholders, or the 2010 Proxy Statement. The Company believes that shareholder
proposals received by December 1, 2009 would be considered timely for inclusion
in the 2010 Proxy Statement. Such proposals should be directed to the attention
of the Secretary, Greenlight Capital Re, Ltd.
Shareholders
who intend to nominate persons for election as directors at the Annual General
Meeting of Shareholders of the Company must comply with the advance notice
procedures and other provisions set forth in the Articles in order for such
nominations to be properly brought before an Annual General Meeting of
Shareholders.
If a
shareholder proposal is introduced at the Annual General Meeting of Shareholders
in 2010 without any discussion of the proposal in the 2010 Proxy Statement and
the shareholder does not notify the Company, in accordance with Cayman Islands
corporate law, of the intent to raise such proposal at the Annual General
Meeting of Shareholders in 2010, then proxies received by the Company for the
Annual General Meeting of Shareholders in 2010 will be voted by the persons
named as such proxies in their discretion with respect to such
proposal.
Costs
of Solicitation
The
entire cost of this proxy solicitation will be borne by the Company, including
expenses in connection with preparing, assembly, printing and mailing proxy
solicitation materials. In addition to solicitation by mail, officers, directors
and employees of the Company may solicit proxies by telephone, facsimile,
electronic communication, in person or via the internet, although no
compensation will be paid for such solicitation.
|
By
Order of the Board of Directors
|
|||
|
|
|||
|
Leonard
Goldberg
Chief
Executive Officer
|
|||
|
Dated:
March 3, 2009
Grand
Cayman, Cayman
Islands
|
|||
