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Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers |
(b) As further described below in Item 5.02(c), effective July 24, 2022, Michael H. Braun (“Braun”) resigned as Chief Executive Officer and as a member of the board of directors (the “Board”) of FedNat Holding Company (the “Company”).
(c) Effective July 24, 2022, David K. Patterson was named the Company’s interim Chief Executive Officer. Mr. Patterson first joined the Board in August 2019 as a Board observer pending completion of regulatory reviews and was elected to the Board at the 2019 Annual Meeting. Mr. Patterson brings to the Board his more than 40 years of operational and executive leadership experience in the property and casualty insurance industry. Most recently he was Chairman and President of ESIS, Inc. (“ESIS”), the risk management services subsidiary of Ace Limited (now Chubb Limited), which he joined in 2004 and for which he served as President and Chairman from 2005 to 2015. Prior to joining ESIS, Mr. Patterson was the President and Chief Executive Officer of Kemper National Services, Inc., a claims service organization serving the property and casualty insurance operations of Kemper National, from 1994 to 2003. While at Kemper, Mr. Patterson served in a variety of regional and home office senior leadership roles in claims, systems and operations. For his service as interim Chief Executive Officer, Mr. Patterson will receive a fee of $50,000 per month. Mr. Patterson’s appointment as Chief Executive Officer and director of the Company’s wholly owned insurance subsidiaries, FedNat Insurance Company and Maison Insurance Company, is subject to compliance with applicable regulatory requirements.
On July 24, 2022, Braun and the Company entered into a Consulting Agreement (the “Consulting Agreement”) that is filed as Exhibit 99.1 to this Current Report on Form 8-K. The Consulting Agreement (and accompanying release) provides for:
•Confirmation of Braun’s resignation as an officer and director of the Company and each of its subsidiaries and affiliates;
•A general release by Braun of all claims that he might have had as a result of his employment with the Company or the termination of his employment with the Company;
•Braun to provide, at the request of the Board, limited consultation through December 31, 2022;
•In lieu of the $2,000,000 lump sum payment to which Braun would have been entitled in the event of a termination of his employment other than for “cause,” consulting payments totaling $1,200,000, consisting of one lump sum payment of $800,000, payable within ten business days and, thereafter, six monthly payments of $66,666.67, commencing August 1, 2022;
•Vesting of all currently unvested restricted stock awards, which Braun is entitled to under the terms of his employment agreement;
•Immediate payment of paid-time-off and accrued vacation pay of 10 weeks;
•A release of the non-competition agreement currently set forth in Braun’s employment agreement; and
•Standard confidentiality; non-solicitation and mutual non-disparagement provisions.
The foregoing description of the material terms and conditions of the Consulting Agreement is qualified in its entirety by reference to the Consulting Agreement, which is filed as Exhibit 99.1 to this Current Report on Form 8-K.
(e) The compensation arrangements entered into in connection with the matters disclosed in Items 5.02(b) and 5.02(c) are described above.