XL Group CEO Michael McGavick is set to receive a 140% “performance factor” tied to his 2014 compensation resulting in over $4 million in annual incentive pay, according to the insurance and reinsurance firm’s most recent proxy statement.
In fact, all of XL’s top executive leadership have either met or exceeded their individual annual bonus benchmarks for 2014, the same year that the Bermuda-based company announced the purchase of Catlin Group for $3.9 billion, the proxy statement reveals.
XL has said it plans to raise up to $1 billion in debt to support the deal, where terms are also likely lead to existing shareholder dilution. Both XL and Catlin also plan to cut $200 million in expenses that will include significant layoffs at both firms.
According to the filing, McGavick’s 2014 compensation it tied to “a number of financial milestones, including “record” property and casualty underwriting profit of $676 million, which as an increase of 50% over 2013. The document also cited XL’s combined ratio of 88.2%, which it was described as“the best result in over 15 years.” The board document also cited the retrocession of the “majority of the life reinsurance business” through the sale of XL Life Reinsurance Ltd. to GreyCastle Holdings Ltd.
“Mr. McGavick also led the exploratory discussions with the Catlin Group and collaborated with the Board, leading to the acquisition announcement,” the filing states.
The proxy also says that XL CFO Peter Porrino will receive $1.27 million in annual incentive compensation for achieving a 110% “performance factor,” adding that “our offer to purchase Catlin would not have been achieved without Mr. Porrino’s strategic leadership.”
Porrino will also receive a one-time bonus of $900,000 for setting of the XL Life sale based on McGavick’s recommendation.
Other XL leaders to hit their respective incentive benchmarks are head of insurance operation Gregory Hendrick ($1 million), head of reinsurance operations James Veghte ($1.4 million) and chief investment officer Sarah Street ($1.69 milion).
