Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(e)
Annual Cash Incentive for 2022
On February 21, 2022, the Compensation Committee of the Board of Directors (the
"Compensation Committee") of Brown & Brown, Inc. (the "Company") adopted the
annual cash incentive for 2022 for certain of the Company's executive officers,
including certain of the named executive officers, pursuant to which they are
eligible to receive a cash incentive payment based on the achievement of certain
performance objectives in 2022. The terms of the annual cash incentive are not
contained in a formal written document.
The named executive officer's annual cash incentive payment amount will consist
of three components (the calculation of which may be adjusted by the
Compensation Committee, at its discretion, to exclude the effect of items that
are unusual in nature or infrequently occurring), which are as follows:
•
The first component, which will affect 40% of the 2022 cash incentive amount, is
based on specified organic revenue growth targets, which, for named executive
officers whose responsibilities encompass the Company as a whole rather than
being tied to a particular segment, will be calculated based upon the organic
revenue growth of the Company as a whole, and for named executive officers with
segment operational responsibilities, will be calculated based upon the organic
revenue growth of the offices for which each such executive officer has
oversight responsibility.
•
The second component, which will affect 40% of the 2022 cash incentive amount,
will be determined based upon performance of the Company's EBITDAC margin
("EBITDAC Margin"), which is the Company's income before income taxes less
amortization, depreciation, interest, and the change in estimated acquisition
earn-out payables, divided by total revenues.
•
The third component, which will affect 20% of the 2022 cash incentive amount,
will be linked to the achievement of personal objectives of the named executive
officer as determined by the Compensation Committee.
Each of the components described above contemplates a minimum payout of 0% of
each named executive officer's target cash incentive amount and a maximum payout
of 200% of each named executive officer's target cash incentive amount. The
target cash incentive amounts for our named executive officers for 2022 are as
follows: J. Powell Brown - $2,000,000; R. Andrew Watts - $700,000; J. Scott
Penny - $900,000; and Chris L. Walker - $1,000,000.
Performance Stock Unit Grant
On February 21, 2022, the Compensation Committee also authorized and approved a
grant of 5,669 performance stock units (collectively, the "PSUs") under the 2019
Stock Incentive Plan to Mr. Walker. The vesting of fifty percent (50%) of the
PSUs is tied to specific organic revenue growth targets for the Company, and the
vesting of the other fifty percent (50%) of the PSUs is tied to specified
compound annual growth rate targets of the Company's cumulative earnings per
share, excluding any impact for changes in estimated acquisition earn-out
payables, in each case measured over a three-year period beginning January 1,
2022. The PSUs contemplate a minimum payout of 0% and a maximum payout of 200%
based upon the level of performance of each performance condition during the
three-year measurement period. The PSUs will vest on the fifth anniversary of
the date of grant, assuming continuous employment through such date, provided
that vesting will accelerate in the event of death, disability or termination
(including constructive termination) without cause within 12 months following a
change in control of the Company. If Mr. Walker's retirement occurs before the
third anniversary of the date of grant, the PSUs that become awarded PSUs will
be paid to Mr. Walker on the second anniversary of his retirement, subject to
Mr. Walker being in good standing with the Company as of the date of such
payment; and if Mr. Walker's retirement occurs after the third anniversary of
the date of grant, the PSUs that become awarded PSUs will be paid to Mr. Walker
on the fifth anniversary of the date of grant, subject to Mr. Walker being in
good standing with the Company as of the date of such payment. PSUs will be
settled by delivery of shares of Company common stock. Dividend equivalents will
accrue on awarded PSUs from and after the date of awarding and be paid no later
than 30 days following the applicable dividend payment date.
A copy of a form of Performance Stock Unit Agreement, pursuant to which this
grant was made, is attached as Exhibit 10.1 to this Current Report on Form 8-K.
Restricted Stock Unit Grant
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On February 21, 2022, the Compensation Committee also authorized and approved a
grant of 1,889 time-based restricted stock units (collectively, the "RSUs")
under the 2019 Stock Incentive Plan to Mr. Walker. The RSUs will vest on the
fifth anniversary of the date of grant, assuming continuous employment through
such date, provided that vesting will accelerate in the event of death,
disability or termination (including constructive termination) without cause
within 12 months following a change in control of the Company. If Mr. Walker's
retirement occurs before the third anniversary of the date of grant, the RSUs
will be paid to Mr. Walker on the second anniversary of his retirement, subject
to Mr. Walker being in good standing with the Company as of the date of such
payment; and if Mr. Walker's retirement occurs after the third anniversary of
the date of grant, the RSUs will be paid to Mr. Walker on the fifth anniversary
of the date of grant, subject to Mr. Walker being in good standing with the
Company as of the date of such payment. RSUs will be settled by delivery of
shares of Company common stock. Dividend equivalents will accrue on RSUs from
and after the date of grant and be paid no later than 30 days following the
applicable dividend payment date.
A copy of a form of Restricted Stock Unit Agreement, pursuant to which this
grant was made, is attached as Exhibit 10.2 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are filed herewith:
Exhibit No. Description
10.1 Form of Performance Stock Award Agreement under the 2019 Stock Incentive
Plan.
10.2 Form of Restricted Stock Unit Agreement under the 2019 Stock Incentive
Plan.
104 Cover Page Interactive Data File (formatted as inline XBRL).
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