Argo Group International Holdings Ltd., the Bermuda-based re/insurer, announced it has agreed with activist shareholder Voce Capital Management to change the composition of Argo’s board with the addition of three new directors. The agreement ends a contentious dispute with Voce, which has been rumbling along for nearly a year.
Voce had sought to place new directors on the Argo board to counter its concern over “shockingly high” corporate expenses such as pricey real estate, an office art collection, and former CEO Mark Watson III’s personal use of company-owned aircraft and housing. Voce is a hedge fund that owns close to a 6% stake in the insurer.
As part of the cooperation agreement between Argo and Voce, Carol A. McFate will join the Argo board, subject to regulatory approval and completion of due diligence. McFate will fill the seat of former CEO and director Watson. She will join the board’s Nominating and Corporate Governance Committee and an additional committee as selected by the board.
Additionally, Voce will work with Argo’s Nominating and Corporate Governance Committee to identify and evaluate two new independent director candidates to stand for election at the company’s 2020 annual general meeting of shareholders. One of those two new director candidates will be selected from the slate of individuals nominated by Voce for election at the requisitioned special general meeting of Argo’s shareholders.
In November 2019, Argo announced the sudden and immediate retirement of Watson as chief executive officer. His departure came on the heels of an October announcement that the Securities and Exchange Commission had subpoenaed Argo over its executive compensation. In November, Voce renewed its fight with the Argo board, calling for a special meeting of Argo shareholders to elect five independent board members.
In a statement about the cooperation agreement with Voce, Argo said McFate brings extensive global insurance and financial expertise. As chief investment officer of Xerox Corp. from November 2006 to October 2017, she oversaw over $12 billion in retirement investment assets for North American and U.K. plans. Prior to Xerox, McFate served as executive vice president and global treasurer for XL Global Services, Inc., a subsidiary of XL Capital, Ltd., the Bermuda-based re/insurance company (now part of AXA Group). She has also held various senior executive positions with AIG and The Prudential Insurance Company of America.
“We are pleased to have reached a constructive agreement with Voce and value their input as we continue to enhance our Board composition and governance practices,” said Thomas A. Bradley, chair of the Nominating and Corporate Governance Committee. “We are pleased to welcome Carol to the board. Her strong leadership and executive experience in the insurance and investment management industries will help drive continued value creation for our shareholders.”
Daniel Plants, founder and chief investment officer of Voce, said:
“We made a substantial investment in Argo because we believe it has significant untapped value that can be realized. The appointment of Carol McFate to the board, the addition of two other independent directors selected with Voce’s input, and the company’s ongoing governance improvements, are substantive and positive developments that give us confidence in the new course that Argo has charted. We look forward to working with Argo’s board and management in the shared pursuit of creating value for all shareholders.”
Voce has also agreed to certain standstill provisions and to withdraw its proxy solicitation to seek board changes at a requisitioned special general meeting of shareholders. The agreement between the Company and Voce will be filed on Form 8-K with the U.S. Securities and Exchange Commission.
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