Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of 1934
(Amendment
No.______)
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Filed
by the Registrant:
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x
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Filed
by a Party other than the Registrant:
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o
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Check the
appropriate box:
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x
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Preliminary
Proxy Statement
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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o
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Definitive
Proxy Statement
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o
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to §240.14a-12
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MAIDEN
HOLDINGS, LTD.
(Name of
Registrant as Specified in Its Charter
Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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o
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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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):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee paid:
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o
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Fee
paid previously with preliminary
materials.
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o
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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.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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April
[3], 2009
Dear
Shareholder:
You are
cordially invited to attend the 2009 Annual General Meeting of Shareholders of
Maiden Holdings, Ltd. (the “Company”), which will be held on April 30, 2009,
commencing at 2:00 p.m. (local time), at the Fairmont Hamilton Princess Hotel in
Hamilton, Bermuda.
The
enclosed notice and proxy statement contain details concerning the
meeting. The Board of Directors recommends a vote “FOR” all the
following items of business:
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(1)
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Election
of the five directors named in the accompanying proxy statement to serve
until the 2010 Annual General Meeting of
Shareholders;
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(2)
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Authorization
of the election of the three directors of Maiden Insurance Company, Ltd.,
a wholly owned subsidiary of the Company (“Maiden Insurance”), named in
the accompanying proxy statement to serve until the next annual general
meeting of the shareholders of Maiden
Insurance;
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(3)
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(4)
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Appointment
of BDO Seidman, LLP as the Company’s independent registered public
accounting firm for the 2009 fiscal year, and Arthur Morris and Company as
Maiden Insurance’s independent registered public accounting firm for the
2009 fiscal year.
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Please
sign and return your proxy card in the enclosed envelope at your earliest
convenience to assure that your shares will be represented and voted at the
meeting even if you cannot attend.
On behalf
of the officers, directors and employees of the Company, I would like to express
our appreciation for your continued support. I look forward to seeing you at the
Annual General Meeting.
Sincerely,
Barry D.
Zyskind
Chairman
of the Board of Directors
MAIDEN
HOLDINGS, LTD.
48
Par-la-Ville Road, Suite 1141
NOTICE
OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO
BE HELD ON APRIL 30, 2009
Date
and Time:
Thursday,
April 30, 2009, at 2:00 p.m., local time
Place:
Fairmont
Hamilton Princess Hotel, 76 Pitts Bay Road, Pembroke HM 11, Hamilton,
Bermuda
Items
of Business:
At the
Annual General Meeting, you will be asked to consider and vote
upon:
1. The
election of the five directors named in the accompanying proxy statement to
serve until the 2009 Annual General Meeting of Shareholders;
2. The
authorization of the election of the three directors of Maiden Insurance
Company, Ltd., a wholly owned subsidiary of the Company (“Maiden Insurance”),
named in the accompanying proxy statement to serve until the next annual general
meeting of the shareholders of Maiden Insurance;
3. To
increase the authorized share capital of the Company from US$1,000,000 divided
into 100,000,000 shares of par value US$0.01 each, to US$1,500,000 divided into
150,000,000 shares of par value US$0.01 each; and
4. The
appointment of BDO Seidman, LLP as the Company’s independent registered public
accounting firm for the 2009 fiscal year, and Arthur Morris and Company as
Maiden Insurance’s independent registered public accounting firm for the 2009
fiscal year.
We also
will transact such other business as may properly come before the meeting and
any adjournments or postponements thereof. Each of these proposals is more fully
described in the attached Proxy Statement.
Holders
of record of common shares of record at the close of business on March 31, 2009,
the date fixed by our Board of Directors as the record date for the meeting, are
entitled to notice of and to vote on any matters that properly come before the
Annual General Meeting and on any adjournment or postponement
thereof.
By Order
of the Board of Directors
Arturo M.
Raschbaum
President
and Chief Executive Officer
Hamilton,
Bermuda
[April
3], 2009
YOU
ARE URGED TO VOTE BY PROMPTLY SIGNING AND RETURNING THE ENCLOSED PROXY IN THE
RETURN ENVELOPE PROVIDED TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED. IF YOU
ATTEND THE MEETING, YOU MAY, IF YOU DESIRE, REVOKE THE PROXY AND VOTE YOUR
SHARES IN PERSON REGARDLESS OF THE METHOD BY WHICH YOU VOTED. YOUR PROXY IS
REVOCABLE IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN THIS PROXY
STATEMENT.
Important
Notice Regarding the Availability of Proxy Materials
for
the Annual General Meeting to Be Held on April 30, 2009:
The
proxy statement and annual report to security holders are available
at www.vfnotice.com/maidenholdings.
This
Proxy Statement and the accompanying form of proxy are furnished to you and
other shareholders of Maiden Holdings, Ltd. (“Maiden Holdings,” “Company,”
“our,” “us,” or “we”) on behalf of our board of directors (the “Board of
Directors”) for use at the 2009 Annual General Meeting of Shareholders (the
“Annual General Meeting”) to be held at the Fairmont Hamilton Princess Hotel, 76
Pitts Bay Road, Pembroke HM 11, Hamilton, Bermuda, on April 30, 2009, at 2:00
p.m. (local time) and any adjournment or postponement thereof. All shareholders
are entitled and encouraged to attend the Annual General Meeting in
person.
All
expenses in connection with this solicitation of proxies will be paid by us.
Proxies will be solicited principally by mail, but directors, officers and
certain other individuals authorized by us may personally solicit proxies. We
will reimburse custodians, nominees or other persons for their out-of-pocket
expenses in sending proxy material to beneficial owners.
This
Proxy Statement together with the accompanying proxy card was first mailed to
shareholders entitled to vote at the Annual General Meeting on or about April
[3], 2009.
As of
April [3], 2009, the only business we expect to be presented at the Annual
General Meeting is:
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(1)
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Election
of the five directors named in this proxy statement to serve until the
2010 Annual General Meeting of
shareholders;
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(2)
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Authorization
of the election of the three directors of Maiden Insurance Company, Ltd.,
a wholly owned subsidiary of the Company (“Maiden Insurance”), named in
this proxy statement to serve until the next annual general meeting of the
shareholders of Maiden Insurance;
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(3)
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To
increase the authorized share capital of the Company from US$1,000,000
divided into 100,000,000 shares of par value US$0.01 each, to US$1,500,000
divided into 150,000,000 shares of par value US$0.01 each;
and
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(4)
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The
appointment of BDO Seidman, LLP as the Company’s independent registered
public accounting firm for the 2009 fiscal year, and Arthur Morris and
Company as Maiden Insurance’s independent registered public accounting
firm for the 2009 fiscal year.
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Record Date
The Board
has fixed the close of business on March 31, 2009 as the record date for
determining the holders of common shares entitled to notice of and to vote at
the Annual General Meeting.
As of the
record date, there were 70,287,664 outstanding common shares entitled to one
vote per share.
Only
holders of record of common shares at the close of business on March 31, 2009
are entitled to vote at the Annual General Meeting or at any adjournment or
postponement of the meeting.
How
do I vote?
Shareholders
of record may vote either by proxy or by attending the meeting and voting in
person. If you choose to vote by proxy, please complete, sign, date and return
the enclosed proxy card in a timely manner to ensure that it is received prior
to the meeting. Even if you plan to attend the meeting, please complete and mail
your proxy card to ensure that your shares are represented at the
meeting. If you attend the meeting, you can still revoke your proxy
by voting in person. If your shares are held in a brokerage or bank
account, you must make arrangements with your broker or bank to vote your shares
in person.
May
I change my vote?
All
proxies delivered pursuant to this solicitation are revocable at any time before
they are exercised at the option of the persons submitting them by giving
written notice to the Secretary of the Company at the mailing address set forth
below, by submitting a later-dated proxy by mail or by voting in person at the
Annual General Meeting. The mailing address of our principal executive offices
is 48 Par-la-Ville Road, Hamilton HM 11, Bermuda. If your shares are held in a
brokerage account, you must make arrangements with your broker or bank to revoke
your proxy.
What
constitutes a quorum?
Two or
more persons present in person or representing in person or by proxy in excess
of 50% of the total issued voting shares of the Company will constitute a quorum
for the transaction of business at the Annual General Meeting. Shareholder
abstentions and broker non-votes will be included in the number of shareholders
present at the Annual General Meeting for the purpose of determining the
presence of a quorum. Brokers who do not receive shareholder instructions are
entitled to vote on all four of the proposals listed above. Broker non-votes and
shareholder abstentions will have no effect on the outcome of the
proposals.
What
if a quorum is not represented at the Annual General Meeting?
If within
half an hour from the time appointed for the meeting a quorum is not present,
the meeting shall stand adjourned to the same day one week later, at the same
time and place or to such other day, time or place as the Secretary may
determine. Unless the meeting is adjourned to a specific date, place and time
announced at the meeting being adjourned, fresh notice of the date, place and
time for the resumption of the adjourned meeting shall be given to each
shareholder entitled to attend and vote thereat.
How
many votes are required to approve a proposal?
Under our
bye-laws, any question proposed for the consideration of the shareholders at any
general meeting shall be decided by the affirmative votes of a majority of the
votes cast “For” and “Against” the proposal by the holders of the common shares
of the Company. Broker non-votes and shareholder abstentions will have no effect
on the outcome of the proposals.
How
will my shares be voted?
All
common shares represented by properly executed proxies received pursuant to this
solicitation will be voted in accordance with the shareholder’s directions
specified on the proxy. In voting by proxy with regard to the election of
directors, shareholders may vote in favor of each nominee or withhold their
votes as to each nominee. Should any nominee become unable to accept nomination
or election, the proxy holders named in the proxy card will vote for the
election of such other person as a director as the present directors may
recommend in the place of such nominee. With regard to the increase in the
authorized share capital of the Company and the ratification of the appointment
of our independent auditors, shareholders may vote in favor of the proposal, may
vote against the proposal or may abstain from voting. Shareholders should
specify their choices on the enclosed proxy card. If no directions have been
specified by marking the appropriate squares on the accompanying proxy card, the
shares represented by a properly submitted proxy will be voted:
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1.
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“FOR”
the election of all the nominees named in this proxy statement as
director;
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2.
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“FOR”
the authorization of the election of the three directors of Maiden
Insurance to serve until the next annual general meeting of the
shareholders of Maiden Insurance;
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3.
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“FOR”
the increase in the authorized share capital of the Company from one
hundred million (100,000,000) to one hundred fifty million (150,000,000)
common shares; and
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4.
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“FOR”
the appointment of BDO Seidman, LLP as the Company’s independent
registered public accounting firm for the 2009 fiscal year, and “FOR” the
appointment of Arthur Morris and Company as Maiden Insurance’s independent
registered public accounting firm for the 2009 fiscal
year.
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In
connection with any other business that may properly come before the Annual
General Meeting, all properly executed proxies delivered pursuant to this
solicitation and not revoked will be voted for you in the discretion of the
proxy holders named in the proxy card.
A
shareholder signing and returning the accompanying proxy has the power to revoke
it at any time prior to its exercise by giving written notice of revocation to
our Secretary, by submitting a proxy bearing a later date, or by attending the
Annual General Meeting and voting in person. Attendance at the Annual General
Meeting will not constitute, in itself, revocation of a proxy. If your shares
are held in a brokerage account, you must make arrangements with your broker or
bank to revoke your proxy.
What
if my shares are held by a broker?
If you
are the beneficial owner of common shares held for you by a broker, your broker
must vote those shares in accordance with your instructions. Brokers
who do not receive shareholder instructions are entitled to vote your shares for
you on any discretionary items of business at the Annual General Meeting such as
all four proposals listed above. “Broker non-votes” will be included in
determining the presence of a quorum at the Annual General Meeting.
May
I see a list of shareholders entitled to vote as of the record
date?
A list of
registered shareholders as of the close of business on March 31, 2009 will be
available for examination by any shareholder for any purpose germane to the
meeting during normal business hours through April 30, 2009, at the principal
executive offices of the Company, at 58 Par-la-Ville Road, Vallis Building,
Hamilton HM 11, Bermuda.
The
following table sets forth certain information with respect to the beneficial
ownership of our common shares by each person or group known by us to own more
than 5% of our common shares. Ownership percentages are based on 70,287,664
common shares outstanding as of March 31, 2009. We refer to Barry
Zyskind, Michael Karfunkel and George Karfunkel as our “Founding Shareholders”
in this proxy statement.
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Title
of Class
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Name
and Address of Beneficial Owner
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Amount
and Nature of
Beneficial
Ownership
(1)
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Percent
of
Class
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Common
Shares
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Barry
D. Zyskind
Maiden
Holdings, Ltd.
48
Par-la-Ville Road, Suite 1141
Hamilton
HM11, Bermuda
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4,091,500
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(2)
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5.7%
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Common
Shares
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Michael
Karfunkel
Maiden
Holdings, Ltd.
48
Par-la-Ville Road, Suite 1141
Hamilton
HM11, Bermuda
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10,742,600
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(3)
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15.0%
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Common
Shares
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George
Karfunkel
Maiden
Holdings, Ltd.
48
Par-la-Ville Road, Suite 1141
Hamilton
HM11, Bermuda
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7,547,030
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(4)
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10.5%
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Common
Shares
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Park
West Asset Management LLC
900
Larkspur Landing Circle, Suite 165
Larkspur,
California 94939
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3,591,250
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(5)
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5.1%
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Common
Shares
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Wellington
Management Company, LLP
75
State Street
Boston,
MA 02109
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5,888,500
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(6)
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8.4%
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Common
Shares
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Elliott
Associates, L.P.
712
Fifth Avenue, 36th Floor
New
York, NY 10019
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3,750,000
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(7)
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5.3%
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Common
Shares
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Kensico
Capital Management Corporation
55
Railroad Avenue, 2nd Floor
Greenwich,
CT 06830
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4,159,991
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(8)
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5.9%
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(1)
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Based
on 70,287,664 common shares
outstanding.
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(2)
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Includes
1,350,000 common shares issuable upon the exercise of 10-year warrants
issued in connection with our formation and
capitalization.
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(3)
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Based
on Amendment No. 1 to Schedule 13D/A filed on January 20, 2009, Michael
Karfunkel beneficially owns 6,850,470 common shares as follows: (i)
1,350,000 common shares issuable upon exercise of 10-year warrants held
directly by Michael Karfunkel (issued in connection with our formation and
capitalization) and (ii) 5,500,470 common shares held indirectly by
Michael Karfunkel as a trustee of the Michael Karfunkel 2005
Grantor Retained Annuity Trust. Michael Karfunkel disclaims
beneficial ownership of the 3,892,130 common shares that he holds
indirectly as a trustee of the Hod Foundation, a charitable foundation
organized by Michael Karfunkel.
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(4)
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Based
on Schedule 13D filed on January 30, 2009, George Karfunkel beneficially
owns 6,805,577 common shares as follows: (i) 1,858,547 common shares held
directly by George Karfunkel, (ii) 1,350,000 common shares issuable upon
exercise of 10-year warrants held directly by George Karfunkel (issued in
connection with our formation and capitalization) and (iii) 3,597,030
common shares held in equal parts indirectly by the George
Karfunkel 2007 Grantor Retained Annuity Trust #1 and the George
Karfunkel 2007 Grantor Retained Annuity Trust #2, of which George
Karfunkel is a beneficiary. George Karfunkel disclaims
beneficial ownership of the 741,453 common shares that he holds indirectly
as a trustee of the Chesed Foundation, a charitable foundation organized
by George Karfunkel.
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(5)
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Based
on Schedule 13G filed on January 30,
2009.
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(6)
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Based
on Schedule 13G filed on February 17,
2009.
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(7)
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Based
on Amendment No. 1 to Schedule 13G filed on February 17,
2009.
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(8)
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Based
on Schedule 13G filed on February 17,
2009.
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SECURITY
OWNERSHIP OF MANAGEMENT
Set forth
below is information concerning the beneficial ownership of our common shares by
each director, by our executive officers named in the Summary Compensation Table
below and by all our directors and executive officers as a group as of March 31,
2009. For purposes of the table below, common shares subject to options which
are currently exercisable or exercisable within 60 days of March 31, 2009 are
considered outstanding and beneficially owned by the person holding the options
for the purposes of computing beneficial ownership of that person, but are not
treated as outstanding for the purpose of computing the percentage ownership of
any other person.
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Title
of Class
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Name
of Beneficial Owner
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Amount
& Nature of
Beneficial
Ownership
(1)
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Percent
of
Class
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Common
Shares
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Barry
D. Zyskind
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4,091,500
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(2)
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5.5
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%
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Common
Shares
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Arturo
M. Raschbaum
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19,000
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(3)
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*
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Common
Shares
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John
Marshaleck
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20,000
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(4)
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*
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||||||||
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Common
Shares
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Michael
J. Tait
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32,300
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(5)
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*
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||||||||
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Common
Shares
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James
A. Bolz
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18,900
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(6)
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*
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||||||||
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Common
Shares
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Simcha
Lyons
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46,935
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(7)
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*
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||||||||
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Common
Shares
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Raymond
M. Neff
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296,000
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(8)
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*
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||||||||
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Common
Shares
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Yehuda
L. Neuberger
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112,000
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(9)
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*
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||||||||
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Common
Shares
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Steven
H. Nigro
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13,000
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(10)
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*
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||||||||
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Common
Shares
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Max
Caviet
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75,000
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(11)
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*
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||||||||
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Common
Shares
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Ben
Turin
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50,000
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(12)
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Common
Shares
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All
executive officers and directors as a group (10 persons)
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4,774,635
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6.7
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%
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||||||||
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*
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Less
than one percent.
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(1)
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Based
on 70,287,664 common shares outstanding. Includes shares that the
beneficial owner has the right to acquire within 60 days of March 31, 2009
upon exercise of stock options.
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(2)
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Includes
1,350,000 common shares issuable upon the exercise of 10-year warrants we
issued to Barry Zyskind in connection with our formation and
capitalization.
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(3)
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The
amount shown above excludes options to acquire 333,334 common shares that
we granted to Mr. Raschbaum on November 12, 2008, which options will vest
25% on the first anniversary of the date of grant and 6.25% each quarter
thereafter.
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(4)
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The
amount shown above excludes options to acquire 25,000 common shares that
we granted to Mr. Marshaleck on November 12, 2008, which options will vest
25% on the first anniversary of the date of grant and 6.25% each quarter
thereafter.
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(5)
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The
amount shown above includes vested options to acquire 18,750 common
shares, and excludes unvested options to acquire 31,250 common shares that
we granted to Mr. Tait on November 6, 2007 (the options vest 25% on the
first anniversary of the date of grant and 6.25% each quarter
thereafter). The amount shown above also excludes options to
acquire 7,500 common shares that we granted to Mr. Tait on November 12,
2008, which options will vest 25% on the first anniversary of the date of
grant and 6.25% each quarter
thereafter.
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(6)
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The
amount shown above includes vested options to acquire 18,750 common
shares, and excludes unvested options to acquire 31,250 common shares that
we granted to Mr. Bolz on October 23, 2007 (the options vest 25% on the
first anniversary of the date of grant and 6.25% each quarter
thereafter).
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(7)
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The
amount shown above includes options to acquire 12,000 common shares that
we granted to Mr. Lyons at the closing of the private offering, which
options vested on July 3, 2008. The amount shown above excludes
options to acquire 6,000 common shares that we granted to Mr. Lyons on
June 26, 2008, which options vest on June 26,
2009.
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(8)
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The
amount shown above includes options to acquire 12,000 common shares that
we granted to Mr. Neff at the closing of the private offering, which
options vested on July 3, 2008. The amount shown above excludes
options to acquire 6,000 common shares that we granted to Mr. Neff on June
26, 2008, which options vest on June 26,
2009.
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(9)
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The
amount shown includes 50,000 common shares held under joint tenancy with
right of survivorship with Mr. Neuberger’s wife, Anne Neuberger. The
amount shown above includes options to acquire 12,000 common shares that
we granted Mr. Neuberger on January 8, 2008. The amount shown
above excludes options to acquire 6,000 common shares that we granted to
Mr. Neuberger on June 26, 2008, which options vest on June 26,
2009.
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(10)
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The
amount shown above includes options to acquire 12,000 common shares that
we granted to Mr. Nigro at the closing of the private offering, which
options vested on July 3, 2008. The amount shown above excludes
options to acquire 6,000 common shares that we granted to Mr. Nigro on
June 26, 2008, which options vest on June 26,
2009.
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(11)
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The
amount shown above is vested options to acquire 75,000 common
shares.
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(12)
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Based
on a Form 4 filed December 4, 2008 by Mr. Turin. Mr. Turin was
terminated from all positions with the Company in January
2009.
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PROPOSAL
1:
ELECTION
OF DIRECTORS
Our Board
of Directors currently consists of six directors. Max Caviet has not been
nominated for reelection. The other five directors will be elected at
the Annual General Meeting, each to serve for a one-year term until the 2010
Annual General Meeting of Shareholders and until the election or appointment and
qualification of his successor, or until his earlier death, resignation or
removal. Upon recommendation of the Nominating and Corporate Governance
Committee, the Board of Directors has unanimously nominated Messrs. Barry D.
Zyskind, Raymond M. Neff, Simcha Lyons, Yehuda L. Neuberger and Steven H. Nigro
for election as directors at the Annual General Meeting. Proxies cannot be voted
for more than five director nominees.
Each of
the five director nominees is standing for re-election to the Board of Directors
and has consented to serve for a new term. Unless you otherwise indicate,
proxies that we receive will be voted in favor of the election of the director
nominees. The Board of Directors does not contemplate that any of the nominees
will be unable to stand for election, but should any nominee become unable to
serve or for good cause will not serve, all proxies (except proxies marked to
the contrary) will be voted for the election of a substitute nominee as our
Board of Directors may recommend.
THE
BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF ALL NOMINEES LISTED
BELOW.
Barry D.
Zyskind, 37, has served as non-executive Chairman of our Board of
Directors since June 2007. For the last six years, Mr. Zyskind also has served
as the President, Chief Executive Officer and director of AmTrust Financial
Services, Inc. (“AmTrust”) and as a director of AmTrust’s wholly owned
subsidiaries, Technology Insurance Company, Inc. (“TIC”), Rochdale Insurance
Company (“RIC”), Wesco Insurance Company (“WIC”), AmTrust International
Insurance, Ltd. (“AII”) and AmTrust International Underwriters Limited (“AIU”)
and Associated Industries Insurance Company, Inc. (“AIIC”). Prior to joining
AmTrust, Mr. Zyskind was an investment banker at Janney Montgomery Scott, LLC in
New York. Mr. Zyskind received an M.B.A. from New York University’s Stern School
of Business in 1997. Mr. Zyskind is the son-in-law of Michael Karfunkel, who is
a major shareholder and the non-executive Chairman of the board of directors of
AmTrust.
Raymond M.
Neff, 67, has been a member of our Board of Directors since June 2007.
Since 1999, Mr. Neff has served as President of Neff & Associates Insurance
Consulting, Inc. and Insurance Home Office Services, LLC. He was Chairman of the
Board of the Florida Workers’ Compensation Joint Underwriting Association and a
member of the Florida Joint Underwriting Association Board until 2008. He also
previously worked at FCCI Insurance Group (a property and casualty insurance
company) as President and CEO from 1986 to 1998 and as Executive Vice President
and Chief Operating Officer from 1985 to 1986. From 1979 to 1986, Mr. Neff held
various positions at the Department of Labor and Employment Security and the
Department of Insurance for the State of Florida. From 1965 to 1979, he worked
at W.W. Stribling Associates (1978-1979) (an insurance consulting group); Kenny
Corporation (1973-1978) (a multi-line insurance agency); Foremost Life Insurance
Company (1969-1973); and the Department of Insurance for the State of Michigan
(1965-1969). Mr. Neff received his Masters of Arts, Actuarial Science, from the
University of Michigan in 1965 and received B.S. degrees in Mathematics and
Accounting from Central Michigan University in 1963.
Simcha
Lyons, 62, has been a
member of our Board of Directors since June 2007. Since 2005, Mr. Lyons has
served as a senior advisor to the Ashcroft Group, LLC of Washington, D.C., a
strategic consulting firm
founded by the former Attorney General of the United States, John Ashcroft.
Since 2003, he has also served as chairman of Lyons Global Advisors LTD, a
political consulting firm. Prior to 2002, Mr. Lyons was Vice-Chairman of Raskas
Foods of St. Louis, Missouri, a family owned business that manufactured cream
cheese, sour cream, and blue cheese products for the supermarket industry, the
food service industry and the food processing industry.
Yehuda L.
Neuberger, 32, has been a member of our board since January 2008. Mr.
Neuberger currently serves as Senior Vice President for American Stock Transfer
& Trust Company, with responsibility for Strategic Planning and oversight of
various operational divisions. Prior to joining American Stock Transfer in 2001,
Mr. Neuberger practiced as an attorney with the law firm of Weil, Gotshal &
Manges. Mr. Neuberger is a graduate of Johns Hopkins University and Harvard Law
School. Mr. Neuberger is the son-in-law of George Karfunkel, who is a major
shareholder and a director of AmTrust.
Steven H.
Nigro, 49, has been a member of our Board of Directors since July 2007.
Mr. Nigro has over 25 years of experience in financial services and specializes
in corporate and structured finance in the insurance industry. In 2005, he
co-founded Pfife Hudson Group, an investment bank specializing in corporate
finance, structured finance and asset management with a specialty in the
insurance industry. From 2002 to 2005, Mr. Nigro was a managing director at
Rhodes Financial Group, LLC and from 1998 to 2002, he was a managing director at
Hales & Company, both financial advisory firms catering exclusively to the
insurance industry. From 1994 to 1997, he was Chief Financial Officer and
Treasurer of Tower Group, Inc., an insurance holding company, where he was
responsible for financial and regulatory management, strategic planning and
corporate finance. Mr. Nigro has also served as a managing director at Cantor
Fitzgerald Securities Corp., a lending broker and dealer in equity and fixed
income securities, and OTA Limited Partnership, a derivatives trading firm and
merchant banker specializing in the financial services industry, where he was
involved in the acquisitions and financial management of the firm’s
broker-dealer, savings and loan and insurance companies. Mr. Nigro began his
career with Arthur Young and Co. and is a Certified Public Accountant in New
York.
Mr. Neff,
Mr. Lyons and Mr. Nigro are “independent” under the rules of the NASDAQ Stock
Market. NASDAQ rules require that a majority of the Board of Directors be
independent, and under special phase-in rules applicable to new public
companies, we have twelve months from May 6, 2008 (the date of our listing on
NASDAQ) to comply with the majority board independence requirement. After the
2009 Annual General Meeting of Shareholders, we will be in compliance with this
requirement.
The Board
of Directors held five meetings in 2008. Each director attended at least 75% of
his board and committee meetings.
Our
corporate governance guidelines provide that all directors are expected to
attend our Annual General Meeting of shareholders.
Board
Committees
Our Board
of Directors has established an Audit Committee, a Compensation Committee and a
Nominating and Corporate Governance Committee, each comprised entirely of
independent directors within the meaning of the rules of the NASDAQ Stock Market
except for Mr. Neuberger. However, under special phase-in rules applicable to
new public companies we have twelve months from May 6, 2008 (the date of our
listing on NASDAQ) to comply with the independent committee requirement. We will
be in compliance with this requirement before the expiration of the phase-in
period. In addition, our Board of Directors has established an Executive
Committee.
Executive
Committee
The Executive Committee assists our
Board of Directors in providing guidance on our overall strategy, business
development and corporate oversight. The Executive Committee, to the extent it
deems advisable and appropriate, will, among its other
responsibilities, recommend positions for us on significant, relevant public
policy issues. In addition, the Executive Committee exercises the power and
authority of our Board of Directors between board meetings, except that the
Executive Committee cannot authorize actions with respect to the
following:
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any
issuance of equity securities by
us;
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adoption,
amendment or repeal of our
bye-laws;
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a
merger, amalgamation or acquisition between us and another
company;
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a
sale of all or substantially all of our
assets;
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our
liquidation or dissolution;
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any
action that, pursuant to resolution of the Board of Directors, applicable
law or the rule of any securities exchange or automated inter-dealer
quotation system on which any of our securities are traded, is reserved to
any other committee of the Board of
Directors;
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any
action or matter expressly required by any provision of our bye-laws or
our memorandum of association or the laws of the Bermuda to be submitted
to shareholders for approval; or
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any
action that is in contravention of specific directions given by the full
Board of Directors.
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Mr.
Caviet was the chairman of our Executive Committee and the other member of our
Executive Committee is Mr. Zyskind. We expect Mr. Raschbaum to
replace Mr. Caviet as chairman of our Executive Committee in May
2009.
Our
Executive Committee met on a bimonthly basis in 2008.
We have a
separately-designated standing Audit Committee. The Audit Committee
assists our Board of Directors in monitoring the integrity of our financial
statements, the independent auditor’s qualifications and independence,
performance of our independent auditors and our compliance with legal and
regulatory requirements. The Audit Committee’s responsibilities also include
appointing (subject to shareholder ratification), reviewing, determining funding
for and overseeing our independent auditors and their services. Further, the
Audit Committee, to the extent it deems necessary or appropriate, among its
several other responsibilities, shall:
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review
and approve all related party transactions, including those with AmTrust
and our Founding Shareholders, as well as any subsequent modifications
thereto, for actual or potential conflict of interest situations on an
ongoing basis;
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review
and discuss with appropriate members of our management and the independent
auditors our audited financial statements, related accounting and auditing
principles, practices and
disclosures;
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review
and discuss our audited annual and unaudited quarterly financial
statements prior to the filing of such
statements;
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establish
procedures for the receipt, retention and treatment of complaints we
receive regarding accounting, internal accounting controls or auditing
matters, and the confidential, anonymous submission by employees of
concerns regarding our financial statements or accounting
policies;
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review
reports from the independent auditors on all critical accounting policies
and practices to be used for our financial statements and discuss with the
independent auditor the critical accounting policies and practices used in
the financial statements;
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obtain
reports from our management and internal auditors that we, our subsidiary
and affiliated entities are in compliance with the applicable legal
requirements and our Code of Business Conduct and Ethics, and advise our
Board of Directors about these matters;
and
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monitor
the adequacy of our operating and internal controls as reported by
management and the independent or internal
auditors.
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Mr. Neff
is the chairman of our Audit Committee and the other members of our Audit
Committee are Messrs. Lyons and Nigro. All the members of the Audit Committee
are independent both under Securities and Exchange Commission rules and as that
term is defined in the listing standards of the NASDAQ Stock Market. The Board
of Directors has determined that Messrs. Lyons and Nigro are “Audit Committee
financial experts.”
The Audit
Committee has adopted a charter. The charter is currently available on our
website at www.maiden.bm.
REPORT
OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit
Committee has reviewed and discussed the audited consolidated financial
statements of Maiden Holdings, Ltd. with management and the independent
auditors. The Audit Committee has discussed with the independent auditors the
matters required to be discussed by the Statement on Auditing Standards No. 61,
as amended (AICPA, Professional Standards, Vol.
1. AU Section 380) as adopted by the Public Company Accounting Oversight Board
in Rule 3200T.
The Audit
Committee has received the written disclosures and the letter from the
independent auditors required by applicable requirements of the Public Company
Accounting Oversight Board in Rule regarding the independent auditors’
communications with the Audit Committee concerning independence. The Audit
Committee has discussed with the independent auditors the independent auditors’
independence.
Based on
the Audit Committee’s review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the Company’s audited
consolidated financial statements be included in our Annual Report on Form 10-K
for the year ended December 31, 2008 for filing with the Securities and Exchange
Commission.
Raymond
M. Neff, Chairman
Simcha
Lyons
Steven H.
Nigro
The
Compensation Committee’s responsibilities include, among other
responsibilities:
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reviewing
and approving corporate and individual goals and objectives relevant to
the compensation of our Chief Executive Officer and other executive
officers;
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evaluating
the performance of our Chief Executive Officer and other executive
officers in light of such corporate and individual goals and objectives
and, based on that evaluation, together with the other independent
directors if directed by the Board of Directors, determining the base
salary and bonus of the Chief Executive Officer and other executive
officers and reviewing the same on an ongoing
basis;
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reviewing
all related party transactions involving compensatory matters, including
those with AmTrust and our Founding
Shareholders;
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establishing
and administering equity-based compensation under the 2007 Share Incentive
Plan and any other incentive plans and approving all grants made pursuant
to such plans; and
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making
recommendations to our Board of Directors regarding non-employee director
compensation and any equity-based compensation
plans.
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Please
refer to the Compensation
Discussion and Analysis for additional discussion of our policies and
procedures for determining and establishing executive compensation.
Mr. Nigro is the chairman of our
Compensation Committee and the other members of our Compensation Committee are
Messrs. Neff and Neuberger. Mr. Neuberger is not an “independent” director under
the rules of the NASDAQ Stock Market, and therefore our Compensation Committee
is not comprised solely of independent directors. Although NASDAQ rules require
that the Compensation Committee be comprised solely of independent directors, under special
phase-in rules applicable to new public companies we have twelve months from May
6, 2008 (the date of our listing on NASDAQ) to comply with the independent
committee requirement. We will be in compliance with this requirement before the
expiration of the phase-in period.
The
Compensation Committee has adopted a charter. The charter is currently available
on our website at www.maiden.bm.
During
2008, the Compensation Committee met four times.
The
Nominating and Corporate Governance Committee’s responsibilities with respect to
assisting our Board of Directors include, among other
responsibilities:
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Establishing
the criteria for membership on our Board of
Directors;
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reviewing
periodically the structure, size and composition of our Board of Directors
and making recommendations to the board as to any necessary
adjustments;
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identifying
individuals qualified to become directors for recommendation to our Board
of Directors;
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identifying
and recommending for appointment to our Board of Directors, directors
qualified to fill vacancies on any committee of our Board of
Directors;
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having
sole authority to select, retain and terminate any consultant or search
firm to identify director candidates and having sole authority to approve
the consultant or search firm’s fees and other retention
terms;
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Considering
matters of corporate governance, developing and recommending to the board
a set of corporate governance principles and our code of business conduct
and ethics, as well as recommending to the board any modifications
thereto;
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Considering
questions of actual or possible conflicts of interest, including related
prior transactions, of members of our Board of Directors and of senior
executives of our Company;
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developing
and recommending to our Board of Directors for its approval an annual
board and committee self-evaluation process to determine the effectiveness
of their functioning; and
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exercising
oversight of the evaluation of the board, its committees and
management.
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Mr. Lyons
is the chairman of our Nominating and Corporate Governance Committee and the
other members are Messrs. Neuberger and Nigro. Mr. Neuberger is not an
“independent” director under the rules of the NASDAQ Stock Market, and therefore
our Nominating and Corporate Governance Committee is not comprised solely of
independent directors. Although NASDAQ rules require that the Nominating and
Corporate Governance Committee be comprised solely of independent directors,
under special phase-in rules applicable to new public companies we have twelve
months from May 6, 2008 (the date of our listing on NASDAQ) to comply with the
independent committee requirement. We will be in compliance with this
requirement before the expiration of the phase-in period.
In carrying out its function to
nominate candidates for election to our Board of Directors, the Nominating and
Corporate Governance Committee considers the mix of skills, experience,
character, commitment, and diversity of background, all in the context of the
requirements of our Board of Directors at that point in time. The Nominating and
Corporate Governance Committee believes that each candidate should be an
individual who has demonstrated integrity and ethics in such candidate’s
personal and professional life, has an understanding of elements relevant to the
success of a publicly-traded company and has established a record of
professional accomplishment in such candidate’s chosen field. Each candidate
should be prepared to participate fully in Board of Directors activities,
including attendance at, and active participation in, meetings of the Board of
Directors, and not have other personal or professional commitments that would,
in the Nominating and Corporate Governance Committee’s judgment, interfere with
or limit such candidate’s ability to do so. Each candidate should also be
prepared to represent the best interests of all of our shareholders and not just
one particular constituency. Additionally, in determining whether to recommend a
director for re-election, the Nominating and Corporate Governance
Committee also considers the director’s past attendance at Board of Directors
and committee meetings and participation in and contributions to the activities
of our Board of Directors.
The
Nominating and Corporate Governance Committee considers recommendations for
director candidates submitted by shareholders. A shareholder recommending an
individual for consideration by the Nominating and Corporate Governance
Committee must provide (i) evidence in accordance with the provisions of
Regulation 14a-8 under the Securities Exchange Act of 1934, as amended, of
compliance with the shareholder eligibility requirements and (ii) all
information regarding the candidate(s) and the security holder that would be
required to be disclosed in a proxy statement filed with the SEC if the
candidate(s) were nominated for election to the Board of Directors including,
without limitation, name, age, address, principal occupation or employment, and
stock ownership. Shareholders should send the required information to Maiden
Holdings, Ltd., c/o Secretary, 48 Par-la-Ville Road, Suite 1141, Hamilton HM11,
Bermuda.
In order
for a recommendation to be considered by the Nominating and Corporate Governance
Committee for the 2010 Annual Meeting of Shareholders pursuant to Rule 14a-8 of
the Exchange Act, the Secretary must receive the recommendation no later than
the close of business local time on December 8, 2009. Such recommendations must
be sent via registered, certified or express mail (or other means that allows
the shareholder to determine when the recommendation was received by us). The
Secretary will send any shareholder recommendations to the Nominating and
Corporate Governance Committee for consideration at a future committee meeting.
Individuals recommended by shareholders in accordance with these procedures will
receive the same consideration as other individuals evaluated by the Nominating
and Corporate Governance Committee.
The
Nominating and Corporate Governance Committee has adopted a charter. The charter
is currently available on our website at www.maiden.bm.
During
2008, the Nominating and Corporate Governance Committee met one
time.
We have
adopted corporate governance guidelines and a code of business conduct and
ethics that apply to all of our directors, officers and employees. These
documents will be made available in print, free of charge, to any shareholder
requesting a copy in writing from our company secretary at our office located at
48 Par-la-Ville Road, Suite 1141, Hamilton HM 11, Bermuda. A copy of our code of
business conduct and ethics is available on our website at
www.maiden.bm.
Shareholders
and other interested parties may communicate with members of the Board of
Directors (either individually or as a body) by addressing the correspondence to
that individual or body to The Board of Directors, c/o Chief Operating Officer,
Maiden Holdings, Ltd., 48 Par-la-Ville Road, Suite 1141, Hamilton HM 11, Bermuda
or by calling (441) 292-7090.
Section
16(a) of the Exchange Act requires officers, directors and persons who own more
than ten (10) percent of a class of equity securities registered pursuant to
Section 12 of the Exchange Act to file reports of ownership and changes in
ownership with both the SEC and the principal exchange upon which such
securities are traded or quoted. Officers, directors and persons
holding greater than ten (10) percent of the outstanding shares of a class of
Section 12-registered equity securities (“Reporting Persons”) are also required
to furnish copies of any such reports filed pursuant to Section 16(a) of the
Exchange Act with the Company. Based solely on a review of the copies
of such forms furnished to the Company and written representations that no other
reports were required, the Company believes that from January 1, 2008 to
December 31, 2008 all Section 16(a) filing requirements applicable to its
Reporting Persons were complied with in a timely manner.
EXECUTIVE
OFFICERS
The table
below sets forth the names, ages and positions of our executive
officers:
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Name
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Age
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Position(s)
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Arturo
M. Raschbaum
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53
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President
and Chief Executive Officer
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John
Marshaleck
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57
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Chief
Operating Officer and Secretary
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Michael
J. Tait
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48
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Chief
Financial Officer
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James
A. Bolz
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49
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Senior
Vice President – Underwriting of Maiden
Insurance
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Set forth
below are descriptions of the backgrounds of each of our executive
officers.
Arturo M.
Raschbaum, President and Chief Executive Officer, has served as our
President and Chief Executive Officer since November 2008. Mr. Raschbaum
previously served in several capacities with GMAC Insurance, GMAC RE LLC (now
Maiden Re LLC) and its predecessors since 1994. Mr. Raschbaum holds a BBA from
the University of Texas at El Paso and attended the Stanford University
Executive Program.
John Marshaleck, Chief
Operating Officer and Secretary, has served as our Chief Operating Officer and
Secretary since January 2009, and has served as president of Maiden Re (formerly
GMAC RE LLC) since November 2008. Mr. Marshaleck previously served in several
capacities with GMAC RE and its predecessors since 1983. Mr. Marshaleck holds a
BBA from Temple University.
Michael J. Tait, Chief
Financial Officer, joined Maiden Holdings as our Chief Financial Officer in
November 2007. Prior to joining Maiden Holdings, Mr. Tait served as the Chief
Financial Officer of Marsh’s Global Captive Solutions Group since December 2005.
Prior to being named Chief Financial Officer, he served as Director, Client
Services of Marsh Management Services (Bermuda) Limited for almost nine years.
Mr. Tait received his degree in Business Administration from the University of
Dundee, Scotland in 1981 and is a member of the Institute of Chartered
Accountants of Scotland.
The
material elements of our compensation philosophy, strategy and plans as of the
date of this Proxy Statement are discussed below.
At this
stage of our development, the objectives of our executive compensation policy
will be to retain those executives whom we believe will be essential to our
growth, to attract other talented and dedicated executives and to motivate each
of our executives to develop our overall profitability. To achieve these goals,
we intend to offer each executive an overall compensation package that is
simple, but competitive and a substantial portion of which will be tied to the
achievement of specific performance objectives. Our overall strategy is to
compensate our named executive officers with a simple mix of cash compensation,
in the form of base salary and bonus, and equity compensation, in the form of
share options and restricted share awards.
On
November 3, 2008, the Company acquired (the “GMAC Acquisition”) the reinsurance
operations of GMAC Insurance (GMACI), including its book of assumed reinsurance
business. As part of the transaction the Company’s wholly owned subsidiary
Maiden Holdings North America, Ltd. (“Maiden NA”) acquired GMAC RE LLC (“GMAC
RE”), the reinsurance managing general agent writing business on behalf of
Motors Insurance Corporation and the renewal rights for the business written by
GMAC RE for approximately $100 million, which was paid in cash. In
connection with the transaction Maiden NA also entered into an agreement to
acquire two licensed insurance companies, GMAC Direct Insurance Company (“GMAC
Direct”) and Integon Specialty Insurance Company (“Integon”). Maiden NA
completed its acquisition of GMAC Direct on December 23, 2008 for a purchase
price of approximately $13 million. Consummation of the acquisition
of Integon is subject to regulatory approval. GMAC Direct changed its
name to Maiden Reinsurance Company after its acquisition. With the acquisition
of GMAC RE, we hired Mr. Raschbaum as our President and Chief Executive Officer,
and Mr. Marshaleck as president of GMAC RE, now known as Maiden Re (and
subsequently as our Chief Operating Officer and Secretary).
We have
not to date retained a compensation consultant. Compensation decisions,
including those relating to the employment agreements to be offered to certain
of our named executive officers, will be made by our Board of Directors upon the
recommendation of the Compensation Committee. Mr. Raschbaum will be involved in
making recommendations to the Board of Directors regarding the compensation
arrangements for other executives.
We have
entered into employment agreements with Messrs. Raschbaum, Marshaleck, Tait and
Bolz.
Executive
Compensation
Our
executive compensation policy includes the following elements:
Salary. The base
salaries we provide to our named executive officers are designed to provide an
annual salary at a level consistent with individual experience, skills and
contributions to our business. The annual base salary of each of the named
executive officers is set in each of their employment agreements and will be
reviewed on an annual basis.
For a
discussion on the salaries of Mr. Raschbaum and Mr. Marshaleck, please see the
Employment Agreements section below.
With
respect to Mr. Tait’s salary for 2008, the Compensation Committee considered his
contributions as Chief Financial Officer including his assistance with the
preparation of the Company’s resale shelf registration statement and
improvements in the Company’s financial reporting capabilities. With respect to
Mr. Bolz’ salary for 2008, the Compensation Committee considered the
contributions and efforts in building the Company’s capabilities and its
positioning in the market as underwriting officers of Maiden
Insurance.
Bonus. We believe
that bonuses should be dependent on, and strictly tied to, the Company’s
performance and should only be paid in the event of superior performance. Our
bonus policy awards each named executive officer for his individual contribution
to our profits for the fiscal year. The Compensation Committee, acting without
participation by the affected executives, will approve bonus payments for the
named executive officers based on each executive’s personal contribution to the
Company’s profits during the fiscal year, which will not be less than 20% of the
respective salaries we pay them. We believe that the policy of paying a minimum
bonus of 20% of each executive officer’s salary helps us attract qualified
employees and provide an additional incentive for them to join a start-up
company with a limited track record. The definitive employment agreements for
each of our named executive officers do not specify a maximum bonus that can be
awarded. The Compensation Committee has approved bonus payments of $80,000 and
$50,000 for Mr. Tait and Mr. Bolz, respectively, with respect to
2008.
Long-Term Incentive
Program. We believe that the use of common shares and
share-based awards offers the best approach to achieving our compensation goals
as equity ownership ties a considerable portion of a named executive officer’s
compensation to the performance of our common shares. We have not adopted share
ownership guidelines for our named executive officers. We have adopted a share
incentive plan, as described below, which provides the principal method for our
named executive officers to acquire equity interests in the
Company.
2007 Share Incentive
Plan. The 2007 Share Incentive Plan (the “Plan”) is intended
to award our employees and named executive officers with proprietary interests
in the Company and to provide an additional incentive to promote our success and
to remain in our service. The Plan authorizes us to grant incentive share
options, non-qualified share options and restricted share awards to our
employees, officers, directors and consultants. Our Compensation Committee
oversees the administration of the Plan. 2,800,000 or our common shares are
reserved for issuance under the Plan, of which no more than 700,000 may be used
for restricted share awards. As of February 15, 2009, we have granted options to
purchase 1,519,834 shares in the aggregate to our senior executives,
non-employee directors, employees and other persons.
Share Options. Mr.
Raschbaum was granted 333,334 options and Mr. Marshaleck was granted 25,000
options upon joining us in November 2008.
Mr. Tait
received a grant of 7,500 options in November 2008. With respect to
Mr. Tait’s option grant in 2008, the Compensation Committee considered his
contributions to the Company as Chief Financial Officer, including his
assistance with the preparation of the Company’s resale shelf registration
statement and improvements in the Company’s financial reporting capabilities.
Mr. Bolz did not receive a grant of options in 2008.
Restricted
Shares. Our Board of Directors may in the future elect to make
grants of restricted shares to our named executive officers.
Retirement
Plan. We do not provide either a qualified or non-qualified
pension plan for our named executive officers. However, it is intended that all
of our employees will be eligible to participate in pension plans which will be
established on their behalf.
Change in Control and Severance
Arrangements. We do not maintain change in control agreements
with any of our named executive officers. We do not provide any other severance
benefits, other than as may be provided in an executive’s employment
agreement.
Perquisites and Other
Benefits. As a general matter, we limit the use of perquisites
in compensating our senior management. We maintain health and welfare programs
to provide life, health and disability benefits to our employees. Our named
executive officers participate in these plans on the same terms as other
employees. Under the terms of the employment agreements, we reimburse Messrs.
Raschbaum, Marshaleck, Tait and Bolz for reasonable travel and out-of-pocket
expenses that they incur in the performance of their functions, duties and
responsibilities.
Compensation
Committee Report
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis with management. Based on its review, the Compensation Committee
recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in this proxy statement.
Steven H.
Nigro, Chairman
Raymond
M. Neff
Yehuda L.
Neuberger
SUMMARY
COMPENSATION TABLE
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Name
and
Principal
Position
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Year
|
Salary
|
Bonus
|
Option
Awards (1)
|
Non-Equity
Incentive Plan Compensation
|
Change
in
Pension
Value and Nonqualified Deferred
Compensation
Earnings
|
All
Other
Compensation
|
Total
|
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Max
G. Caviet, former President and Chief Executive Officer (2)
|
2008
2007
|
$
|
—
—
|
$
|
—
—
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|
$
|
316,464
152,099
|
$
|
—
—
|
n/a
n/a
|
$
|
—
—
|
$
|
316,464
152,099
|
|||||||||||||||||
|
Arturo M. Raschbaum,
President and Chief Executive Officer
|
2008
|
134,615
|
—
|
9,167
|
—
|
n/a
|
1,008,450
|
(3)
|
1,152,232
|
|||||||||||||||||||||||
|
Michael
J. Tait, Chief Financial Officer
|
2008
2007
|
$
|
200,000
30,365
|
$
|
80,000
37,500
|
|
$
|
44,297
6,626
|
$
|
—
—
|
n/a
n/a
|
$
|
7,353
—
|
(4)
|
$
|
331,650
74,491
|
||||||||||||||||
|
Ben
Turin, former Chief Operating Officer, General Counsel and
Secretary
|
2008
2007
|
$
|
301,042
137,500
|
$
|
25,000
100,000
|
$
|
103,486
38,025
|
$
|
—
—
|
n/a
n/a
|
$
|
129,907
49,173
|
(5)
|
$
|
559,435
324,698
|
|||||||||||||||||
|
John
Marshaleck, Chief Operating Officer and Secretary (6)
|
2008
|
$
|
92,308
|
$
|
52,360
|
$
|
688
|
$
|
—
|
n/a
|
$
|
3,443
|
(6)
|
$
|
148,799
|
|||||||||||||||||
|
James
A. Bolz, Senior Vice President — Underwriting of Maiden
Insurance
|
2008
2007
|
$
|
250,000
43,011
|
$
|
50,000
8,602
|
$
|
44,090
8,312
|
$
|
—
—
|
n/a
n/a
|
$
|
96,646
14,449
|
(7)
|
$
|
440,736
74,374
|
|||||||||||||||||
|
(1)
|
Represents
the compensation expense incurred by Maiden Holdings relating to option
awards held by the named executive officer determined in accordance with
FAS 123(R), using the assumptions described in Note 13 to the Financial
Statements included in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission for the respective
year.
|
|
(2)
|
We
agreed to reimburse AmTrust for the proportionate amount of time that Mr.
Caviet devotes to the Company and his costs for commuting to our office in
Bermuda and associated lodging expenses. Mr. Caviet resigned in
November 2008.
|
|
(3)
|
Amounts
shown reflect payments intended to compensate Mr. Raschbaum for the loss
of certain forfeited variable compensation and benefit payments resulting
from the GMAC Acquisition, as well as medical and life insurance and car
payments. Mr. Raschbaum joined the Company in November
2008.
|
|
(4)
|
Amounts
shown reflect payments related to medical and life
insurance.
|
|
(5)
|
Amounts
shown reflect payments related to the costs of commuting to our office in
Bermuda and associated lodging expenses, as well as medical and life
insurance. Mr. Turin was terminated from all positions with the
Company in January 2009, thus all of his options have been forfeited and
returned to the reserved shares under the 2007 Incentive
Plan.
|
|
(6)
|
Amounts
shown reflect payments related to medical and life insurance and car
payments. Mr. Marshaleck joined the Company in November
2008.
|
|
(7)
|
Amounts
shown reflect payments related to the costs of commuting to our office in
Bermuda and associated lodging expenses, as well as medical and life
insurance.
|
GRANTS
OF PLAN-BASED AWARDS IN 2008
|
Name
|
Grant
Date
|
Stock
Awards: Number of Securities Underlying Options
|
Exercise
or Base Price of Option Awards
(per
Share)
|
Grant
Date Fair Value of Stock and Option Awards (1)
|
||||||||||||
|
Arturo
M. Raschbaum
|
November
12, 2008
|
333,334
|
$
|
3.28
|
$
|
176,000
|
||||||||||
|
Michael
J. Tait
|
November
12, 2008
|
7,500
|
$
|
3.28
|
$
|
6,150
|
||||||||||
|
Ben
Turin
|
March
24, 2008
November
12, 2008
|
75,000
50,000
|
$
|
10.00
3.28
|
$
|
145,500
41,000
|
||||||||||
|
John
Marshaleck
|
November
12, 2008
|
25,000
|
$
|
3.28
|
$
|
20,500
|
||||||||||
|
(1)
|
The
values of the stock options granted on March 24, 2008 and November 17.
2008 were based on a projected Black-Scholes value of $1.94 per share and
$0.82 per share, respectively.
|
Below is
a summary of the employment agreements we have entered into with certain of our
named executive officers. We do not currently maintain key man life insurance
policies with respect to any of our senior management.
We have
entered into an employment agreement with Mr. Raschbaum under which he has
agreed to serve as our President and Chief Executive Officer. The term of the
employment agreement will end on October 31, 2011 unless terminated earlier
pursuant to the terms of the employment agreement. The employment
agreement will automatically renew for successive three year periods unless the
Company or the employee provides adequate notice of its or his intention not to
renew the employment agreement. Mr. Raschbaum’s annual base salary is
$1,000,000, which is subject to annual review by the Board of
Directors.
Under his
employment agreement, we are able to terminate Mr. Raschbaum’s employment at any
time for “cause” and, upon such an event, we will have no further compensation
or benefit obligation to Mr. Raschbaum after the date of termination. Cause is
defined in the agreement as (i) a material breach of the employment agreement by
the executive, but only if such breach is not cured within 30 days following
written notice by the Company to the executive of such breach, assuming such
breach may be cured; (ii) conviction of any act or course of conduct involving
moral turpitude; or (iii) engagement in any willful act or willful course of
conduct constituting an abuse of office or authority that significantly and
adversely affects our business or reputation. No act, failure to act or course
of conduct on the executive’s part will be considered willful unless done, or
omitted to be done, by him not in good faith and without reasonable belief that
his action, omission or course of conduct was in our best
interests.
Under his
employment agreement, Mr. Raschbaum has agreed to keep confidential all
information regarding the Company that he receives during the term of his
employment and thereafter. Mr. Raschbaum also agreed that during his employment
and for a three-year period beginning upon termination of his employment he will
not solicit any of our customers with whom he had dealings or senior employees
or solicit any entity that he knows has been contacted by us regarding a
possible acquisition by us for purposes of acquiring that entity.
We
have entered into an employment agreement with Mr. Marshaleck under which he has
agreed to serve as the President of our subsidiary Maiden RE, LLC (and
subsequently as our Chief Operating Officer and Secretary). The term of the
employment agreement will end on October 31, 2011 unless terminated earlier
pursuant to the terms of the employment agreement. The employment agreement will
automatically renew for successive three year periods unless the Company or the
employee provides adequate notice of its or his intention not to renew the
employment agreement. Mr. Marshaleck’s annual base salary is
$600,000, which is subject to annual review by the Chief Executive
Officer.
Under his
employment agreement, we are able to terminate Mr. Marshaleck’s employment at
any time for “cause” and, upon such an event, we will have no further
compensation or benefit obligation to Mr. Marshaleck after the date of
termination. Cause is defined in the agreement as (i) a material breach of the
employment agreement by the executive, but only if such breach is not cured
within 30 days following written notice by the Company to the executive of such
breach, assuming such breach may be cured; (ii) conviction of any act or course
of conduct involving moral turpitude; or (iii) engagement in any willful act or
willful course of conduct constituting an abuse of office or authority that
significantly and adversely affects our business or reputation. No act, failure
to act or course of conduct on the executive’s part will be considered willful
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action, omission or course of conduct was in our best
interests.
Under his
employment agreement, Mr. Marshaleck has agreed to keep confidential all
information regarding the Company that he receives during the term of his
employment and thereafter. Mr. Marshaleck also agreed that during his employment
and for a three-year period beginning upon termination of his employment he will
not solicit any of our customers with whom he had dealings or senior employees
or solicit any entity that he knows has been contacted by us regarding a
possible acquisition by us for purposes of acquiring that entity.
Michael
J. Tait and James A. Bolz
We have
entered into employment agreements with Mr. Tait under which he has agreed to
serve as our Chief Financial Officer, and with Mr. Bolz under which he has
agreed to serve as Senior Vice President – Underwriting of Maiden
Insurance. The term of the employment agreement will end on October
23, 2009 (two years from the effective date) in the case of Mr. Bolz, and on
November 6, 2009 (two years from the effective date) in the case of Mr. Tait,
unless terminated earlier pursuant to the terms of the employment agreement.
Each of the employment agreements will automatically renew for successive two
year periods unless the Company or the employee provides adequate notice of its
or his intention not to renew the employment agreement.
Mr.
Tait’s annual base salary is $200,000, which is subject to annual review by the
Board of Directors. Mr. Bolz’ annual base salary is $250,000,
which is subject to annual review by the Chief Executive Officer of the
Company.
Under
their employment agreements, Mr. Tait and Mr. Bolz are each eligible to receive
a profit bonus as described above.
Under
their employment agreements, we are able to terminate Mr. Tait’s or Mr. Bolz’s
employment at any time for “cause” and, upon such an event, we will have no
further compensation or benefit obligation to Mr. Tait or Mr. Bolz after the
date of termination. Cause is defined in the agreement as (i) a material breach
of the employment agreement by the executive, but only if such breach is not
cured within 30 days following written notice by the Company to the executive of
such breach, assuming such breach may be cured; (ii) conviction of any act or
course of conduct involving moral turpitude; or (iii) engagement in any willful
act or willful course of conduct constituting an abuse of office or authority
that significantly and adversely affects our business or reputation. No act,
failure to act or course of conduct on the executive’s part will be considered
willful unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action, omission or course of conduct was in our best
interests.
Under
their employment agreements, Mr. Tait and Mr. Bolz have agreed to keep
confidential all information regarding the Company that they receive during the
term of their employment and thereafter. Messrs. Tait and Bolz also agreed that
during their employment and for a two-year period beginning upon termination of
their employment they will not solicit any of our customers with whom they had
dealings or senior employees or solicit any entity that they know has been
contacted by us regarding a possible acquisition by us for purposes of acquiring
that entity.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END 2008
|
Option
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
|
|||||||||||||||
|
Max
G. Caviet
|
75,000
|
0
|
(1)
|
0
|
$
|
3.28
|
June
26, 2017
|
|||||||||||||
|
Arturo
M. Raschbaum
|
0
|
50,000
|
(2)
|
0
|
$
|
3.28
|
November
12, 2018
|
|||||||||||||
|
Michael
J. Tait
|
0
|
45,000
|
(2)
|
0
|
$
|
3.28
|
November
12, 2018
|
|||||||||||||
|
Ben
Turin
|
0
0
|
75,000
50,000
|
(2)
(3)
|
0
0
|
$
|
10.000
3.28
|
March
24, 2008
November
12, 2018
|
|||||||||||||
|
John
Marshaleck
|
0
|
25,000
|
(2)
|
0
|
$
|
3.28
|
November
12, 2018
|
|||||||||||||
|
(1)
|
Mr.
Caviet’s options were granted in 2007 but repriced in 2008 upon his
departure from the Company. Mr. Caviet resigned as Chief
Executive Officer in November 2008.
|
|
|
(2)
|
Under
the 2007 Share Incentive Plan, 25% of the options will become exercisable
on November 12, 2009, with an additional 6.25% of the options vesting each
quarter thereafter based on the executive’s continued employment over a
four-year period.
|
|
(3)
|
Mr.
Turin was terminated from all positions with the Company in January 2009,
thus all of his options have been forfeited and returned to the reserved
shares under the 2007 Incentive
Plan.
|
None of
our named executive officers exercised any options in 2008.
We pay an
annual retainer of $55,000 to each non-employee director of the Company. In
addition, each non-employee director receives a fee of $2,000 for each meeting
of the Board of Directors attended in person. Each non-employee director who
chairs a committee also receives an annual retainer of $5,000, as well as $1,000
for each meeting of such committee of the board chaired. Each non-employee
director receives a fee of $1,000 for attendance at each meeting of a committee
of the Board of Directors on which he or she sits. We also reimburse our
directors for reasonable expenses they incur in attending meetings of the Board
of Directors or committees. Directors may also be eligible in the future for
awards under the 2007 Share Incentive Plan. A director does not receive a fee
for any Board of Directors meeting or committee meeting he or she does not
attend in person or for any committee meeting he or she attends as a
non-committee member. Employee directors receive no compensation for service on
the Board of Directors or any board committee.
At the
closing of the private offering in 2007, each non-employee director received an
initial grant of 12,000 options under the Plan described above, to purchase our
common shares with an exercise price equal to $10.00 per share, which the Board
of Directors determined to be the fair market value of our shares on the date of
grant based on the share price of our private offering, which closed on that
date. On January 8, 2008, the date Mr. Neuberger joined our Board of Directors,
Mr. Neuberger received a grant of 12,000 options under the Plan to purchase our
common shares with an exercise price equal to $10.00 per share. For determining
the expense to record on our books, we used the Black-Scholes method consistent
with FAS 123R accepted methodology, and we expect the same will apply to future
grants. Each director received a grant of 6,000 options in June 2008.
These options will vest on the first anniversary of the grant. In the future, on
the anniversary of the date he or she joined the Board of Directors, each
non-employee director will receive an annual grant of 6,000 options to purchase
our common shares with an exercise price equal to the fair market value on the
grant date, which will vest on the first anniversary of the grant.
Mr.
Zyskind has not accepted a retainer, any Board of Directors or committee fees or
any options for his service as Chairman of our Board of Directors.
DIRECTOR
COMPENSATION FOR 2008
The
following table provides the amount of compensation paid to the non-employee
directors of the Company for 2008.
|
Fees
Earned or Paid in Cash
($)(1)
|
Stock
Awards
($)
|
Option
Awards
($)(2)(3)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change
in Pension Value and
Nonqualified
Deferred
Compensation
Earnings
|
All
Other
Compensation
($)
|
Total
($)
|
||||||||||||||||||||||
|
Barry
D. Zyskind
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
—
|
$
|
—
|
|||||||||||||||
|
Raymond
M. Neff
|
96,000
|
—
|
26,350
|
—
|
—
|
—
|
122,350
|
|||||||||||||||||||||
|
Simcha
Lyons
|
80,000
|
—
|
26,350
|
—
|
—
|
—
|
106,350
|
|||||||||||||||||||||
|
Yehuda
L. Neuberger (4)
|
69,000
|
—
|
34,958
|
—
|
—
|
—
|
103,958
|
|||||||||||||||||||||
|
Steven
H. Nigro
|
94,000
|
—
|
26,350
|
—
|
—
|
—
|
120,350
|
|||||||||||||||||||||
|
(1)
|
The
amount represents annual cash retainer for board service and, as
applicable, retainers for board committee service or service as chairman
of a board committee and fees for attendance at board meetings and, as
applicable, committee meetings.
|
|
(2)
|
Represents
the compensation expense incurred by the Company relating to option awards
held by the Director during 2008 determined in accordance with FAS 123(R),
using the assumptions described in Note 13 to the Financial Statements
included in our Annual on Form Report 10-K filed with the Securities and
Exchange Commission for the respective
year.
|
|
(3)
|
The
following table represents options awarded in 2008 and outstanding at
December 31, 2008 for each
director:
|
|
Name
|
Options
Awarded
|
Options
Outstanding at December 31, 2008
|
||||||
|
Barry
D. Zyskind
|
0
|
0
|
||||||
|
Raymond
M. Neff
|
6,000
|
18,000
|
||||||
|
Simcha
Lyons
|
6,000
|
18,000
|
||||||
|
Yehuda
L. Neuberger
|
18,000
|
18,000
|
||||||
|
Steven
H. Nigro
|
6,000
|
18,000
|
||||||
Compensation
Committee Interlocks and Insider Participation
Mr. Nigro
is the chairman of our Compensation Committee and the other members of our
Compensation Committee are Messrs. Neff and Neuberger. None of the
members of our Compensation Committee has been an officer or employee of the
Company or had a relationship during 2008 requiring disclosure under Item 404 of
Regulation S-K.
During
2008:
|
|
•
|
None
of our executive officers served as a member of the compensation committee
of another entity, one of whose executive officers served on our
Compensation Committee;
|
|
|
•
|
None
of our executive officers served as a director of another entity, one of
whose executive offices served on our Compensation Committee;
and
|
|
|
•
|
None
of our executive officers served as a member of the Compensation Committee
of another entity, one of whose executive officers served as a director of
Maiden Holdings.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We were
formed in June 2007. In connection with our formation and capitalization, we
issued 7,800,000 of our common shares, then representing 100% of our outstanding
common shares, to our Founding Shareholders, Barry D. Zyskind, George Karfunkel
and Michael Karfunkel, in consideration of their collective investment of $50
million in us. In connection with our formation and
capitalization, we also issued 10-year warrants to the Founding Shareholders to
purchase up to an additional 4,050,000 common shares. In addition,
certain trusts controlled by George Karfunkel and Michael Karfunkel acquired an
aggregate of 7,155,000 common shares in the Trust Preferred Securities financing
completed on January 20, 2009. The shares held or controlled by the
Founding Shareholders, together with the shares issuable upon exercise of the
Founding Shareholders’ warrants, represent 30.1% of our outstanding common
shares assuming the exercise of all warrants. All of the Founding Shareholders’
warrants will expire 10 years from the date of issuance. To the extent the
Founding Shareholders exercise all or part of their warrants, our common shares
issued upon such exercise will be subject to “lock-up” restrictions preventing
transfer by the Founding Shareholders of any such shares for three years from
the date of issuance of such warrants. The warrants were issued to our Founding
Shareholders in recognition of the value received from them, which included the
development of our business strategy, the development of the private offering to
raise initial funds for our operations, and the recruitment of certain
executives to us. The 4,050,000 common shares issuable upon exercise of the
warrants is based on what we believed would be an acceptable percentage of
common shares to grant to our Founding Shareholders upon exercise of the
warrants to compensate them for their contributions to us.
We have
granted registration rights to the Founding Shareholders for their benefit and
the benefit of their direct and indirect transferees of shares.
As
described in this proxy statement, our Founding Shareholders, Michael Karfunkel,
George Karfunkel and Barry Zyskind, are the Chairman of the Board of Directors,
a Director and the Chief Executive Officer of AmTrust, respectively. The
Founding Shareholders own or control approximately 59% of the outstanding shares
of AmTrust.
Quota
Share Agreement and Master Agreement
In July
2007, we entered into master agreement with AmTrust (the “Master Agreement”), by
which AmTrust’s Bermuda affiliate, AmTrust International Insurance, Ltd.
(‘‘AII’’) and Maiden Insurance entered into a quota share reinsurance agreement
(the ‘‘Reinsurance Agreement’’) by which (a) AII retrocedes to Maiden Insurance
an amount equal to 40% of the premium written by AmTrust’s U.S., Irish and U.K.
insurance companies (the ‘‘AmTrust Ceding Insurers’’), net of the cost of
unaffiliated inuring reinsurance (and in the case of AmTrust’s U.K. insurance
subsidiary IGI, net of commissions) and 40% of losses and (b) AII transferred to
Maiden Insurance 40% of the AmTrust Ceding Insurer’s unearned premium reserves,
effective as of July 1, 2007, with respect to current lines of business,
excluding risks for which the AmTrust Ceding Insurers’ net retention exceeds $5
million (‘‘Covered Business’’). AmTrust also has agreed to cause AII, subject to
regulatory requirements, to reinsure any insurance company which writes Covered
Business in which AmTrust acquires a majority interest to the extent required to
enable AII to retrocede to Maiden Insurance 40% of the premiums and losses
related to such Covered Business. The Reinsurance Agreement further provides
that AII receives a ceding commission of 31% of retroceded written premiums. The
Reinsurance Agreement has an initial term of three years, and will automatically
renew for successive three year terms thereafter unless either AII or Maiden
Insurance notifies the other of its election not to renew not less than nine
months prior to the end of any such three year term. In addition, either party
is entitled to terminate on thirty day’s notice or less upon the occurrence of
certain early termination events, which include a default in payment,
insolvency, change in control of AII or Maiden Insurance, run-off, or a
reduction of 50% or more of the shareholders’ equity of Maiden Insurance or the
combined shareholders’ equity of AII and the AmTrust Ceding
Insurers.
Effective
June 1, 2008, the Master Agreement was amended such that AII agreed to retrocede
and Maiden Insurance agreed to accept and reinsure Retail Commercial Package
Business, which AmTrust, through its affiliates, commenced writing effective
June 1, 2008, in connection with its acquisition of Unitrin Business Insurance.
AII assumed 100% of the unearned premium related to in-force Retail Commercial
Package Business and losses related thereto at the effective date and 40% of
AmTrust’s net written premium and losses on Retail Commercial Package Business
written or renewed on or after the effective date. The $2 million maximum
liability for a single loss provided in the Reinsurance Agreement shall not be
applicable to Retail Commercial Package Business. AmTrust receives a ceding
commission of 34.375% for Retail Commercial Package Business. AmTrust received
approximately $114 and $59 million of ceding commissions from Maiden Insurance
during 2008 and 2007, respectively, as a result of the Master Agreement with
AmTrust.
On
February 9, 2009, AII and Maiden Insurance amended the Reinsurance Agreement to
clarify that (i) AII would offer Maiden Insurance the opportunity to reinsure
Excess Retention Business, which is defined as a policy issued by an AmTrust
insurance subsidiary with respect to which the insurance subsidiary’s retention
is greater than $5 million and (ii) the deduction for the cost of inuring
reinsurance from Affiliate Subject Premium (as defined in the Reinsurance
Agreement) retroceded to Maiden Insurance is net of ceding commission. In
addition, the Reinsurance Agreement has been amended by deleting the limitation
on Maiden Insurance’s maximum liability in respect of a single loss, which,
under certain circumstances, was $2 million. Pursuant to the Reinsurance
Agreement, as amended, AII and Maiden Insurance share, proportionally, in all
premium and losses ceded thereunder.
Loans and Other Collateral.
In order to provide AmTrust’s insurance subsidiaries with credit for
reinsurance on their statutory financial statements, AII, as the direct
reinsurer of the AmTrust Ceding Insurers, has established trust accounts (“Trust
Accounts”) for their benefit. Maiden Insurance has agreed to provide appropriate
collateral to secure its proportional share under the Quota Share Agreement of
AII’s obligations to the AmTrust Ceding Insurers to whom AII is required to
provide collateral.
This
collateral may be in the form of (a) funds (which may include cash and
investments) loaned by Maiden Insurance to AII on an unsecured basis, for
deposit into the Trust Accounts, pursuant to a loan agreement between those
parties, (b) assets transferred by Maiden Insurance, for deposit into the Trust
Accounts, (c) a letter of credit obtained by Maiden Insurance and delivered to
an AmTrust Ceding Insurer on AII’s behalf, or (d) premiums withheld by an
AmTrust Ceding Insurer at Maiden Insurance’s request in lieu of remitting such
premiums to AII.
Excess
of Loss Reinsurance
Effective January 1, 2008, we have a
45% participation in the working layer of AmTrust’s workers’ compensation excess
of loss reinsurance program. The “working layer” of AmTrust’s excess of loss
reinsurance program is the layer immediately above AmTrust’s retention. At
present, the working layer is $9 million per occurrence in excess of AmTrust’s
$1 million per occurrence retention, subject to an annual aggregate deductible
in the amount of $1.25 million. This participation was sourced through a
reinsurance intermediary via open market placement in which competitive bids
were solicited by an independent broker. The remaining 55% participation was
placed with another reinsurer. If we submit a proposal to AmTrust to provide
excess reinsurance for higher layers, AmTrust has agreed to consider such
proposal in its discretion.
Reinsurance
of AmTrust Specialty Transportation Program
As of
January 1, 2008, we have a 50% participation in a $4 million in excess of $1
million specialty transportation program written by AmTrust. This program
provides primarily commercial auto coverage and, to a lesser extent, general
liability coverage to private non-emergency para-transit and school bus service
operators. This participation was sourced through a reinsurance intermediary via
open market placement in which competitive bids were solicited by an independent
broker. Several other broker market reinsurers hold the other 50%
participation.
Asset
Management Agreement
Maiden
Insurance has entered into an asset management agreement with All Insurance
Management Limited (“AIIM”), an AmTrust subsidiary, pursuant to which AIIM has
agreed to provide investment management services to Maiden Insurance. Pursuant
to the asset management agreement, AIIM provides investment management services
for an annual fee equal to 0.35% of average invested assets plus all costs
incurred. We expect that a portion of our investment portfolio will be invested
in hedge funds operated and managed by AmTrust. We will pay AmTrust a fee in
connection with such investment. The annual fees associated with AmTrust’s
current hedge fund are 1% of assets under management and 20% of all net gains.
AmTrust receives a majority of these fees. The asset management agreement has an
initial term of one year and is automatically renewable for additional one-year
terms unless either party elects not to renew the agreement. Following the
initial one-year term, the agreement may be terminated upon 30 days written
notice by either party.
Reinsurance
Brokerage Agreement
We have
entered into a reinsurance brokerage agreement with AII Reinsurance Broker Ltd.,
a subsidiary of AmTrust. Pursuant to the brokerage agreement, AII Reinsurance
Broker Ltd. provides brokerage services relating to the Reinsurance Agreement
for a fee equal to 1.25% of the premium reinsured from AII. The brokerage fee is
payable in consideration of AII Reinsurance Broker Ltd.’s brokerage services.
AII Reinsurance Broker Ltd. is not our exclusive broker. AII Reinsurance Broker
Ltd. may, if mutually agreed, also produce reinsurance for us from other ceding
companies, and in such cases we will negotiate a mutually acceptable commission
rate.
IGI
Intermediaries Limited Brokerage Services Agreement
We have
entered into a brokerage services agreement with IGI Intermediaries Limited
(“IGI Limited”), a subsidiary of AmTrust. Pursuant to the brokerage services
agreement, IGI Limited provides marketing services to Maiden Insurance which
includes providing marketing material to potential policyholders and ceding
insurers, providing Maiden Insurance with market information on new trends and
business opportunities and referring new brokers and potential policyholders and
ceding insurers to us. A fee equal to IGI Limited’s costs in setting up to
provide and in providing such services plus 8% is payable in consideration of
IGI Limited’s marketing services. IGI Limited is not our exclusive
broker.
IGI
Intermediaries, Inc. Brokerage
Services Agreement
We have
entered into a brokerage services agreement with IGI Intermediaries, Inc. (“IGI
Inc.”), a subsidiary of AmTrust. Pursuant to the brokerage services agreement,
IGI Inc. solicits and submits proposals to Maiden Insurance for reinsurance of
specialized property and casualty programs underwritten by small insurers and
managing general agents and refers and introduces brokers and potential
insurance company cedents to us. A fee equal to IGI Inc.’s costs in setting up
to provide and in providing such services plus 8% is payable in consideration of
IGI Inc.’s marketing services. IGI Inc. is not our exclusive
broker.
Potential
Conflicts of Interest with Respect to Future Transactions
Barry D.
Zyskind, our Chairman of the Board of Directors, is the President, Chief
Executive Officer and director of AmTrust and, together with George Karfunkel
and Michael Karfunkel, owns approximately 59% of the outstanding common stock of
AmTrust. Mr. Zyskind is also the son-in-law of Michael Karfunkel, who is a major
shareholder and the non-executive Chairman of the board of directors of AmTrust.
In addition, Max G. Caviet, our former Chief Executive Officer, present director
(though he is not being nominated for reelection) and nominee for the Maiden
Insurance board of directors, is currently employed by AmTrust (and Mr. Caviet
is an executive of AmTrust). In addition, Mr. Caviet owns options and equity in
AmTrust. One of our directors, Yehuda L. Neuberger, is the son-in-law of George
Karfunkel, who is a major shareholder and director of AmTrust, and Mr. Neuberger
is employed by American Stock Transfer & Trust Company, a company formerly
controlled by George Karfunkel and Michael Karfunkel. Conflicts of interest
could arise with respect to business opportunities that could be advantageous to
AmTrust or its subsidiaries, on the one hand, and us or our subsidiaries, on the
other hand. In addition, potential conflicts of interest may arise should the
interests of AmTrust and Maiden Holdings diverge. From time to time, we and
AmTrust may both be presented with opportunities to insure, reinsure or acquire
the same book of business. Because of the overlaps between our and AmTrust’s
shareholders and management, we and AmTrust have agreed that in such cases, the
opportunities will be referred to a committee of independent directors of each
company to decide whether that company wishes to pursue the opportunity.
PROPOSAL
2:
Pursuant
to the our bye-laws, with respect to any matter required to be submitted to a
vote of the shareholders of any non-US subsidiary, which includes Maiden
Insurance, a Bermuda company, we are required to submit a proposal relating to
such matters to our shareholders and vote all the shares of Maiden Insurance in
accordance with and proportional to such vote of our shareholders. Accordingly,
our shareholders are being asked to consider this proposal.
The
Company wishes to nominate and elect Max Caviet, Arturo M. Raschbaum and John
Marshaleck to be directors of Maiden Insurance until the next annual general
meeting of the shareholders of Maiden Insurance in 2010. Ben Turin
has not been nominated for reelection.
Information
about the Nominees
Max G.
Caviet, 56, served as our President and Chief Executive Officer until
November 2008. Mr. Caviet has also served as the President and a director of AII
and AIU since 2003. From 1994 to 2003, Mr. Caviet was Engineering and Extended
Warranty Underwriter with Trenwick International Limited, a reinsurance company.
In 1990, Mr. Caviet joined Crowe Underwriting Agency Ltd. as its Engineering and
Extended Warranty Underwriter. In 1982, Mr. Caviet joined CIGNA Insurance
Company of North America (UK) Ltd. as a Senior Underwriter for Special Risks and
was promoted to Engineering and Underwriting Manager. Between 1972 and 1982, Mr.
Caviet was an underwriter and team leader, specializing in engineering risks, at
British Engine Insurance Company.
Information
about Mr. Raschbaum and Mr. Marshaleck can be found on page [__].
THE
BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” AUTHORIZATION OF THE ELECTION OF THE
NOMINEES NAMED ABOVE.
PROPOSAL
3:
INCREASE
THE AUTHORIZED SHARE CAPITAL
General
We are
requesting shareholder approval to grant the Board of Directors the authority to
increase the authorized share capital of the Company from US$1,000,000 divided
into 100,000,000 shares of par value US$0.01 each, to US$1,500,000 divided into
150,000,000 shares of par value US$0.01 each (the “Increase in
Authorized”). We are authorized to issue 100,000,000 shares of common shares
of which 70,287,664 common shares are currently
outstanding. Therefore, we currently have only approximately
29,712,336 authorized shares available to be issued or reserved for issuance
upon the granting of new options or upon the issuance of new warrants or other
securities convertible into common shares. The Board of Directors has
unanimously approved the Increase in Authorized and declared that it is
advisable for the shareholders to approve such amendment.
Procedure
For Effecting The Increase in Authorized
We will
file the Memorandum of Increase of the Capital with Bermuda Register of
Companies within 30 days of the Meeting.
Vote
Required and Principal Effects of the Increase in Authorized
The
approval of the Increase in Authorized requires the affirmative vote of a
majority of the shares of voting stock present in person or represented by proxy
at the Meeting.
The Board
of Directors has approved the Increase in Authorized pursuant to which the
authorized common shares of the Company from US$1,000,000 divided into
100,000,000 shares of par value US$0.01 each, to US$1,500,000 divided into
150,000,000 shares of par value US$0.01 each.
The Board
of Directors believes that the Increased in Authorized is desirable to make
available common shares for future issuance by allowing us greater flexibility
with respect to general corporate purposes and in considering potential future
actions involving the issuance of common shares, including, without limitation,
raising capital, acquisitions of companies or assets, for strategic
transactions, sales of stock or securities convertible into common shares, stock
dividends or splits, and potentially providing equity incentives to employees,
officers and directors. The Board of Directors also believes that the
Increase in Authorized would be desirable to make additional unreserved common
shares available for issuance or reservation without further shareholder
authorization, except as may be required by law or by the rules of
NASDAQ. For example, the NASDAQ Marketplace Rules requires
shareholder approval as a prerequisite to approval of applications to list
additional common shares to be issued where the present or potential issuance of
common shares (or securities convertible into common shares) could result in an
increase in outstanding common shares of 20% or more.
Authorizing
the Company to issue more common shares than currently authorized will not
affect materially any substantive rights, powers or privileges of the holders of
shares of common shares. Holders of common shares are entitled to one
vote per share on all matters submitted to the shareholders and do not have
cumulative voting rights or pre-emptive rights for the purchase of additional
shares of any class of capital stock. The additional common shares
for which authorization is sought are identical to the common shares now
authorized. However, the issuance of additional common shares may,
among other things, have a dilutive effect on the earnings per share and on
equity and voting power of existing shareholders and adversely affect the market
price for common shares. Although the Board of Directors has no
present intention of issuing any additional common shares, the proposed increase
in the number of authorized common shares could enable the Board of Directors to
render more difficult or discourage an attempt by another person or entity to
obtain control of the Company. However, we do not view the Increase
in Authorized as part of an “anti-takeover” strategy. The Increase in
Authorized is not being advanced as a result of any known effort by any party to
accumulate common shares or to obtain control of the Company. The Board of
Directors also could, although it has no present intention of so doing,
authorize the issuance of common shares to a holder who might thereby obtain
sufficient voting power to assure that any proposal to effect certain business
combinations or amendment to the Memorandum of Association or Bye-laws would not
receive the required shareholder approval.
The
Company believes that the availability of the additional common shares will
provide us with the flexibility to meet business needs as they arise, to take
advantage of favorable opportunities and to respond to a changing corporate
environment. If we issue additional shares, the ownership interests
of holders of the common shares will be diluted.
Interests
of Certain Persons in the Authorized Common Shares Increase and the
Transaction
No
director, executive officer, associate of any director or executive officer or
any other person has any substantial interest, direct or indirect, by security
holdings or otherwise, in the proposals to effectuate the Increase in Authorized
and take all related actions which are not shared by all other holders of the
common shares. See “Security Ownership of Certain Beneficial Owners
and Management.”
THE BOARD UNANIMOUSLY RECOMMENDS A
VOTE “FOR” THE INCREASE IN THE AUTHORIZED SHARE CAPITAL.
PROPOSAL
4:
Under
Bermuda law, the appointment of our auditors is a decision to be made by the
shareholders. The Audit Committee has recommended that the shareholders appoint
the firm of BDO Seidman, LLP, independent accountants, to be our independent
auditors for the fiscal year ending December 31, 2009, subject to ratification
by our shareholders.
A
representative from BDO Seidman, LLP will be present at the Annual General
Meeting and will have the opportunity to make a statement if he or she desires
to do so and to respond to appropriate questions from shareholders.
On May
12, 2008 (the “dismissal date”), we dismissed PricewaterhouseCoopers, the
independent registered public accounting firm that audited our financial
statements for the period from May 31, 2007 (the date of our incorporation)
through December 31, 2007 (the “reporting period”), as our independent
registered public accounting firm. Our Audit Committee participated in and
approved the decision to change our independent registered public accounting
firm.
PricewaterhouseCoopers’s
report on our financial statements for the reporting period did not contain an
adverse opinion or disclaimer and was not qualified or modified as to
uncertainty, audit scope, or accounting principles. During the reporting period
and up to the dismissal date, there were no disagreements with
PricewaterhouseCoopers on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of PricewaterhouseCoopers
would have caused them to make reference thereto in their report of the
financial statements for such reporting period.
In
addition, during the reporting period and up to the dismissal date, there have
been no reportable events (as defined in Item 304(a)(1)(v) of the SEC’s
Regulation S-K), except that the following deficiencies which aggregate to a
material weakness in internal control over financial reporting (the “reportable
event”) were identified:
|
|
•
|
Failure
to give appropriate consideration to U.S. GAAP accounting rules or to have
documentation of the basis for our opinion and conclusion regarding the
application of U.S. GAAP;
|
|
|
•
|
Lack
of an independent preparer and reviewer for various accounting tasks,
including the preparation of the financial statements and disclosures;
and
|
|
|
•
|
Lack
of formality regarding certain controls surrounding the control
environment.
|
Our Audit
Committee had discussed the reportable event with
PricewaterhouseCoopers.
We have
authorized PricewaterhouseCoopers to respond fully to the inquiries of the
successor accountant, BDO Seidman, LLP, concerning the subject matter of the
reportable event.
PricewaterhouseCoopers
furnished us with a letter dated June 23, 2008 addressed to the SEC stating that
it agrees with the above statements.
We
engaged BDO Seidman, LLP on May 12, 2008 as our new independent registered
public accounting firm. From the date of our incorporation and through to May
12, 2008, we have not consulted with BDO Seidman, LLP on any matters described
in Item 304(a)(2)(i) or Item 304(a)(2)(ii) of Regulation S-K.
Audit
and Non-Audit Fees
The
following table presents the aggregate fees billed for professional services
rendered to us by PricewaterhouseCoopers, for your fiscal year 2007 and BDO
Seidman for our fiscal year 2008.
|
2008
|
2007
|
||||
|
Audit
Fees (1)
|
$
|
984,280
|
757,981
|
||
|
Audit-Related
Fees (2)
|
—
|
—
|
|||
|
Tax
Fees (3)
|
—
|
—
|
|||
|
All
Other Fees (4)
|
—
|
—
|
|||
|
Total
|
$
|
984,280
|
757,981
|
|
(1)
|
Audit
fees in 2007 relate to professional services rendered for: (i) the audit
of our annual financial statements and the reviews of our quarterly
financial statements for the period from May 31, 2007 through December 31,
2007 and (ii) services performed in connection with filings of
registration statements and securities
offerings.
|
|
(2)
|
Audit-related
fees relate to services rendered to us primarily related to benefit plan
audits.
|
|
(3)
|
Tax
fees relate to services rendered to us for tax compliance, tax planning
and advice.
|
|
(4)
|
Other
services performed include certain advisory services in connection with
accounting research and do not include any fees for financial information
systems design and implementation.
|
We and
our Audit Committee are committed to ensuring the independence of the
accountants, both in fact and in appearance.
Pursuant
to its charter, the Audit Committee pre-approves all audit and permitted
non-audit services, including engagement fees and terms thereof, to be performed
for us by the independent auditors, subject to the exceptions for certain
non-audit services approved by the Audit Committee prior to the completion of
the audit in accordance with Section 10A of the Securities Exchange Act of 1934,
as amended. The Audit Committee must also pre-approve all internal
control-related services to be provided by the independent auditors. The Audit
Committee will generally pre-approve a list of specific services and categories
of services, including audit, audit-related and other services, for the upcoming
or current fiscal year, subject to a specified cost level. Any material service
not included in the approved list of services must be separately pre-approved by
the Audit Committee. In addition, all audit and permissible non-audit services
in excess of the pre-approved cost level, whether or not such services are
included on the pre-approved list of services, must be separately pre-approved
by the Audit Committee.
The Audit
Committee may form and delegate to a subcommittee consisting of one or more
members (provided that such person(s) are Independent Directors) its authority
to grant pre-approvals of audit, permitted non-audit services and internal
control-related services, provided that decisions of such subcommittee to grant
pre-approvals shall be presented to the full Audit Committee at its next
scheduled meeting.
The Audit
Committee pre-approved all fees in the period from January 1, 2008 through
December 31, 2008.
APPOINTMENT
OF INDEPENDENT AUDITORS OF MAIDEN INSURANCE
The Board
of Directors also proposes that the shareholders appoint of Arthur Morris and
Company to serve as the independent registered public accounting firm of Maiden
Insurance for the 2009 fiscal year.
For the
audit of the fiscal year ended December 31, 2007, PricewaterhouseCoopers, an
independent registered public accounting firm, served as the independent auditor
of Maiden Insurance.
A
representative from Arthur Morris and Company will be present at the Annual
General Meeting and will have the opportunity to make a statement if he or she
desires to do so and to respond to appropriate questions from
shareholders.
THE
BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPOINTMENT OF BDO SEIDMAN, LLP AS
THE INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2009 FOR THE COMPANY AND ARTHUR MORRIS AND COMPANY AS THE
INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2009 FOR MAIDEN INSURANCE.
A
proposal by a shareholder intended for inclusion in our proxy materials for the
2010 Annual General Meeting of Shareholders pursuant to Rule 14a-8 of the
Exchange Act must be received by us at 48 Par-la-Ville Road, Suite 1141,
Hamilton HM11 Bermuda, Attn: Corporate Secretary, on or before December 9, 2009,
in order to be considered for such inclusion. Shareholder proposals intended to
be submitted at the 2009 Annual General Meeting of Shareholders outside the
framework of Rule 14a-8 will be considered untimely under Rule 14a-4(c)(1) if
not received by us at the above address on or before February 21, 2010. If we do
not receive notice of the matter by the applicable date, the proxy holders will
vote on the matter, if properly presented at the meeting, in their discretion.
A copy of
our Annual Report for the fiscal year ended December 31, 2008, including audited
financial statements set forth therein, is being sent to all our shareholders
with this Notice of Annual General Meeting of Shareholders and Proxy Statement
on or about April 6, 2009.
The Board
of Directors does not intend to present, and has no knowledge that others will
present, any other business at the Annual General Meeting. However, if any other
matters are properly brought before the Annual General Meeting, it is intended
that the holders of proxies will vote thereon in their discretion.