8-KLeadership ChangesExhibits & Filings

BROWN & BROWN, INC. 8-K Report, Executive Changes (Feb 24, 2016)

Filed February 24, 2016For Securities:BRO

Summary

Brown & Brown, Inc. (BRO) filed an 8-K on February 24, 2016, primarily detailing amendments to its 2010 Stock Incentive Plan (SIP) and the structure of its 2016 annual cash incentive program for executive officers. The SIP amendments introduce a minimum one-year vesting period for stock options and SARs, adjust performance targets for stock grants, and formalize amendment history. This change aims to align executive compensation with longer-term performance and reduce the immediacy of equity awards. The 2016 annual cash incentive program is structured into three components, totaling 100% of a named executive officer's target bonus. The first 40% is tied to organic revenue growth (company-wide or divisional, depending on the executive's role). The second 40% is linked to the company's EBITDAC margin (with a specific carve-out for Charles H. Lydecker's portion tied to the Retail Division's core operating profit margin). The final 20% is based on the achievement of personal objectives set by the Compensation Committee. This multi-faceted incentive structure encourages executives to focus on revenue generation, profitability, and individual strategic goals.

Key Highlights

  • 1Brown & Brown, Inc. amended its 2010 Stock Incentive Plan (SIP) to implement a minimum one-year vesting period for stock options and Stock Appreciation Rights (SARs).
  • 2The SIP amendments also modify performance target adjustments and related achievement levels for stock grants.
  • 3The Compensation Committee adopted the framework for the 2016 annual cash incentive compensation for executive officers.
  • 4The 2016 cash incentive is comprised of three components: 40% based on organic revenue growth, 40% based on EBITDAC margin, and 20% based on personal objectives.
  • 5Payouts for each component of the annual cash incentive can range from 0% to 200% of the target amount.
  • 6Specific target cash incentive amounts for named executive officers for 2016 are disclosed, with J. Powell Brown having the highest target at $1,400,000.

Frequently Asked Questions

The main amendments to the 2010 Stock Incentive Plan (SIP) include requiring a minimum one-year vesting period from the grant date for stock options and Stock Appreciation Rights (SARs). Additionally, the plan now includes modified provisions for adjusting performance targets and their related achievement levels for stock grants, and it memorializes the SIP's amendment history.

The 2016 annual cash incentive is divided into three components: 40% is based on organic revenue growth (company or divisional), 40% is based on the company's EBITDAC margin (with a specific retail division component for one executive), and 20% is based on the achievement of personal objectives set by the Compensation Committee. Each component allows for a payout between 0% and 200% of the target incentive.

The EBITDAC margin is defined as income before income taxes, adjusted by subtracting amortization, depreciation, interest, and changes in estimated acquisition earn-out payables, all divided by total revenues. This metric is used as a key performance indicator for 40% of the executive annual cash incentive.

The target cash incentive amounts for the named executive officers for 2016 are: J. Powell Brown - $1,400,000; R. Andrew Watts - $400,000; Charles H. Lydecker - $800,000; J. Scott Penny - $800,000; and Anthony T. Strianese - $900,000.