HCI Group, Inc. (NYSE:HCI) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02 Compensatory Arrangements of Certain Officers

On March 30, 2017, our compensation committee established a cash bonus plan for our chief executive officer, Paresh Patel. The compensation committee is made up solely of “outside directors” as defined by Section 162(m) of the Internal Revenue Code and its underlying regulations. The bonus plan is a sub-plan under, and is subject to the terms and conditions of, our 2012 Omnibus Incentive Plan.

The bonus calculation under this plan is based on two performance measures. The first performance measure is earnings (on a consolidated basis) before interest and the provision for income taxes (“EBIT”). For this purpose, EBIT will not include the impact of any cash bonus under this plan or cash bonuses under any similar performance based plan. The second performance measure is return on equity (“ROE”). ROE will be the proportion (stated as a percentage) that net income (after income taxes) bears to average shareholders’ equity during the measurement period. Average shareholders’ equity during the measurement period will be the sum of the amount of shareholders’ equity at March 31, June 30, September 30 and December 31, 2017 divided by four.

The two performance measures have equal weight in calculating the bonus amount. Each will be applicable to one-half the target bonus amount, which the committee has set at $1.9 million, twice Mr. Patel’s annual salary of $950,000. The maximum cash bonus under this plan will be $3.8 million, or twice the target bonus amount. The measurement period will be the calendar year 2017.

EBIT performance will be measured on a target range from a $46.9 million threshold amount up to and including $134 million. ROE performance will be measured on a target range from a 9.8% threshold percentage up to and including 28%.

The cash bonus under this plan will be the sum of an EBIT based bonus amount and an ROE based bonus amount. If actual EBIT performance meets or exceeds the $46.9 million threshold amount, then Mr. Patel will qualify for an EBIT based bonus amount ranging proportionately from $475,000 up to and including $1.9 million.

If actual ROE meets or exceeds the 9.8% threshold percentage, then Mr. Patel will qualify for an ROE based bonus amount ranging proportionately from $475,000 up to and including $1.9 million.

The compensation committee may reduce the amount paid to Mr. Patel so long as the reduction does not cause a commensurate increase in compensation to any another executive or executives.

The foregoing bonus, if any, is subject to Mr. Patel’s agreement that in the event the company is required to restate its financial statements due to material noncompliance with any financial reporting requirement he will repay any portion of this bonus compensation that would not have been awarded under the restated financial statements.

To assist in structuring this bonus plan, the compensation committee engaged the services of Willis Towers Watson, a leading compensation advisory firm.

About HCI Group, Inc. (NYSE:HCI)

HCI Group, Inc. (HCI) is a holding company. The Company is engaged in providing property and casualty insurance to homeowners, condominium owners, and tenants in the state of Florida through its subsidiaries. The Company operates through property and casualty insurance operations segment. The Company’s operations include Insurance Operations and Other Operations. The Company’s Insurance Operations include property and casualty insurance, and reinsurance. HCI’s Other Operations include information technology (IT) and real estate. The Company, through its subsidiary, Homeowners Choice Property & Casualty Insurance Company, Inc., provides property and casualty insurance. Its real estate operations consist of properties it owns, operations located at those owned properties and investments in approximately three commercial development projects. Its IT operations are focused on developing cloud-based products or services, including Exzeo, Proplet and Atlas Viewer.

HCI Group, Inc. (NYSE:HCI) Recent Trading Information

HCI Group, Inc. (NYSE:HCI) closed its last trading session up +0.60 at 44.75 with 74,857 shares trading hands.