- Shareholder-Focused Revisions to Executive Bonus Plan and Director Compensation Arrangements
- New Employment Agreements
LA JOLLA, Calif., Dec. 15, 2016 (GLOBE NEWSWIRE) -- PICO Holdings, Inc. (NASDAQ:PICO) announced today that it has implemented a number of actions with respect to compensation arrangements.
On December 14, 2016, following extensive outreach to many of PICO’s shareholders following its 2016 Annual Meeting of Shareholders, PICO’s Compensation Committee recommended, and its Board of Directors approved, a series of arrangements that are designed to more closely align the Company’s compensation programs with the interests of its shareholders as the Company executes its business plan of monetizing assets and returning capital to shareholders.
The approved arrangements include:
- A revised Executive Bonus Plan, with effect from January 1, 2016, which provides various changes from PICO’s previous bonus plan, including:
- Calculations of any gains on asset dispositions will be based upon gross invested capital rather than December 31, 2015 book value;
- Reduction in participation level from 20% to 8.75%;
- 30% of amounts earned under the Executive Bonus Plan will be paid pursuant to PICO’s issuance of restricted stock units (“RSU”), for which the recipient bears the market risk for three years;
- Allocation to a discretionary pool, to allow for retention of key employees other than Messrs. Webb and Perri; and
- PICO’s ownership interest in UCP, Inc. has been “carved-out” of the Executive Bonus Plan to allow the Board of Directors of PICO to separately incentivize management to pursue PICO’s objectives with respect to its stake in UCP.
- Employment agreements, which become effective on January 1, 2017, for Mr. Webb, the Company’s Chief Executive Officer, and Mr. Perri, the Company’s Chief Financial Officer. Pursuant to the terms of the employment agreements, the base salaries and employee benefits provided to Messrs. Webb and Perri will remain at the same levels that existed prior to their promotions to Chief Executive Officer and Chief Financial Officer, respectively, in October 2016.
- A revised NonEmployee Director Compensation Policy for PICO’s nonemployee directors, which will become effective on January 1, 2017, and which provides various changes from PICO’s previous compensation policy for nonemployee directors, including:
- A reduction and reallocation of total compensation, with a greater weighting on equity awards with longer required holding periods for such awards resulting in:
- A decrease in the annual cash retainer from $80,000 to $50,000.
- An increase in the annual RSU grant from $50,000 to $75,000.
- Incentives for directors to elect to take all stock-based compensation in lieu of cash:
- Directors may elect to receive any amount of their annual retainer in the form of an RSU with a notional value equal to 125% of the stated cash retainer, a feature designed to motivate directors to take all compensation in RSU.
- Shares of common stock underlying any RSU issued to a director pursuant to the NonEmployee Director Compensation Policy will not be delivered to such director until such director ceases serving on PICO’s Board of Directors.
- Elimination of fees paid to directors for attendance at seminars.
Mr. Cates, Chairman of PICO’s Compensation Committee commented, “The board believes that these changes to PICO’s executive compensation will serve to further incentivize management to execute on PICO’s stated business plan in the most efficient and effective manner, and more closely align management’s compensation with shareholder interests. Likewise, the revised NonEmployee Director Compensation Policy is designed to incentivize PICO’s nonemployee directors to take more, or all, of their compensation in the form of stock-based awards in an effort to better align their interests with shareholder interests. Furthermore, in conjunction with requiring directors to hold all stock-based awards through their service on the board, we believe directors will be even more focused on maximizing shareholder value.” Mr. Cates continued, “As part of these changes, the board also approved changes to the Company’s self-defined peer group, which will be further described in PICO’s proxy statement for its 2017 Annual Meeting of Shareholders.”
Mr. Silvers, PICO’s Lead Independent Director, commented, “The board believes these new arrangements are fair to all parties, and are designed to provide long-term alignment with the interests of our shareholders. As with the revised Executive Bonus Plan, the NonEmployee Director Compensation Policy is designed to more closely align the board’s compensation with actual shareholder returns.”
Mr. Webb, PICO’s Chairman and Chief Executive Officer, commented, “I appreciate the board’s efforts in working to put in place a program that rewards management for realizing value while protecting the interests of shareholders. I look forward to working to create value for our shareholders as we seek to monetize assets and efficiently return capital to the owners of the business.”
Mr. Silvers concluded, “I want to thank both Mr. Webb and Mr. Perri for their commitment to our shareholders and their flexibility in allowing the board to revise the Company’s compensation programs with a focus on shareholder interests. Their hard work, dedication and attention to the interests of shareholders is greatly appreciated by the board.”
About PICO Holdings, Inc.
PICO Holdings is a diversified holding company. Currently, we believe the highest potential return to shareholders is from a return of capital to shareholders. As we monetize assets, rather than reinvest the proceeds, we intend to return the capital derived therefrom, less any working capital requirements, back to shareholders through a stock repurchase program or by other means such as special dividends taking into effect liquidity requirements, debt covenants and any other contractual and legal restrictions that may exist at the time.
As of September 30, 2016, our two major investments were:
- Vidler Water Company, Inc., a water resource development business; and
- a 56.9% interest in UCP, Inc. (NYSE: UCP), a publicly-traded homebuilder and land developer in markets located in California, Washington State, North Carolina, South Carolina and Tennessee.
At September 30, 2016, PICO Holdings, Inc. had a market capitalization of $272 million, and 23,069,381 shares outstanding.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this press release that are not historical, including statements regarding the ability of our compensation arrangements to achieve their stated objectives, our ability to execute our business objectives, and our ability to monetize assets and return capital to shareholders through stock repurchases or through other means, are forward-looking statements based on current expectations and assumptions that are subject to risks and uncertainties.
In addition, a number of other factors may cause results to differ materially from our expectations, such as: any slow down or downturn in the housing recovery or in the real estate markets in which UCP and Vidler operate; fluctuations in the prices of water and water rights; physical, governmental and legal restrictions on water and water rights; a downturn in some sectors of the stock market; general economic conditions; prolonged weakness in the overall U.S. and global economies; the performance of the businesses; the continued service and availability of key management personnel; and potential capital requirements and financing alternatives.
For further information regarding risks and uncertainties associated with our business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of our SEC filings, including our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, copies of which may be obtained by contacting us at (858) 456-6022 or at http://investors.picoholdings.com.
We undertake no obligation to (and we expressly disclaim any obligation to) update our forward-looking statements, whether as a result of new information, subsequent events, or otherwise, in order to reflect any event or circumstance which may arise after the date of this press release, except as may otherwise be required by law. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
This news release was distributed by GlobeNewswire, www.globenewswire.com.
Chairman and Chief Executive Officer
PICO Holdings, Inc.