Reinsurance News

SEC fines Argo $900,000 over CEO benefits

5th June 2020 - Author: Matt Sheehan

Specialty re/insurer Argo has been dealt a $900,000 fine by the Securities and Exchange Commission (SEC) for failing to disclose about $5.3 million in perquisites and personal benefits it paid to former CEO and President Mark E. Watson III.

argo globalArgo was subpoenaed by the SEC back in October 2019 over compensation practices for its executives, shortly after which the then CEO announced his retirement.

The developments mark the latest chapter in what started as a messy back-and-forth between Argo and its fourth-largest shareholder Voce Capital Management.

The public exchange culminated in the re/insurer announcing plans to introduce a process of phased declassification of the Argo Board of Directors, after which the entire board will stand for election annually.

Now, the insurer has agreed to a $900,000 settlement to end the investigation, which has caused a drop in investor and rating agency confidence in the company.

According to the SE, Argo disclosed a total of approximately $1.22 million worth of perquisites and personal benefits provided to Watson, from 2014 to 2018, with an annual average of approximately $244,000.

This consisted mainly of 401k and retirement contributions, the imputed value of insurance coverage, supplemental executive retirement plan benefits, housing and home leave allowances, medical premiums and financial planning services.

However, these same definitive proxy statements failed to disclose over $5.3 million worth of additional perquisites and personal benefits provided to Watson, thereby understating the perquisites and personal benefits portion of Watson’s compensation by an annual average of over $1 million, or 400%.

Items that Argo paid for on Watson’s behalf, but did not disclose, include expenses associated with personal use of corporate aircraft, rent and other housing costs, personal use of corporate automobiles, helicopter trips, other personal travel costs.

They also include use of a car service by family members, club and concierge service memberships, tickets and transportation to sporting, fashion or other entertainment events, personal services provided by Argo employees, and watercraft-related costs.

Print Friendly, PDF & Email

Recent Reinsurance News

Getting your daily reinsurance news from Reinsurance News is a simple way to receive only the reinsurance industry news that matters, delivered directly to your email inbox.

  • Only email is mandatory, but the more you tell us about yourself the better we can serve you in future!
  • This field is for validation purposes and should be left unchanged.

By submitting the form you are giving your consent to be emailed by us.

Read previous post:
Former Everest Re exec Daryl Bradley joins Palomar’s Board of Directors

Palomar Holdings, Inc. has revealed that Daryl Bradley has been elected to its Board of Directors at the firm's 2020...