David E. Gansberg
ARCH CAPITAL GROUPAbout David E. Gansberg
David E. Gansberg (age 52) is President of Arch Capital Group Ltd. (appointed November 2024) with primary accountability for Arch’s Global Insurance Group; he joined Arch in December 2001. He previously served as CEO of Arch’s Global Mortgage Group (2019–2024), President & CEO of Arch Mortgage Insurance Company (2013–2019), and EVP/director at Arch Reinsurance Company (2007–2013). He holds a B.S. in Actuarial Mathematics (University of Michigan) and an MBA (Duke University) . Company performance context: 2024 net income of $4.3B, after-tax operating income of $3.5B, annualized ROE 22.8%, operating ROE 18.9%, and 1/3/5-year TSR of 30.8%/118.5%/126.4% .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Arch Capital Group Ltd. | President (Global Insurance Group lead) | Nov 2024–present | Oversees Global Insurance Group (North American and International) |
| Arch Capital Group Ltd. | CEO, Global Mortgage Group | Mar 2019–Nov 2024 | Delivered 2024 underwriting profit of $1.1B (+2.8% YoY) and $6.0B cumulative underwriting profit over past six years |
| Arch Mortgage Insurance Company | President & CEO | Feb 2013–Feb 2019 | Led U.S. mortgage insurance operations |
| Arch Reinsurance Company | EVP and Director | Jul 2007–Feb 2013 | Senior leadership in reinsurance |
| Arch Capital Services LLC / Arch Re Bermuda | Various underwriting/operational roles | Joined Dec 2001 | Early operating, strategic, underwriting leadership at Arch |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Coface SA | Director | Current | Serves on the board of directors |
Fixed Compensation
| Item | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 725,000 | 780,000 | 857,576 |
| “Bonus” ($) (other cash) | 266,321 | 97,219 | 63,781 |
| Non-Equity Incentive Plan (cash bonus) ($) | 1,608,079 | 2,070,481 | 2,883,900 |
| Total ($) | 4,273,283 | 5,009,494 | 27,606,339 |
- Target short-term incentive (STI) as % of salary was increased from 165% pre-promotion to 185% post-promotion (effective from November 2024 appointment as President) .
- Current base salary rate increased to $900,000 upon promotion in November 2024 .
Performance Compensation
Annual Incentive (STI) Design and 2024 Outcomes
| Metric | Weight | Target | Actual/Assessment | Payout mechanics |
|---|---|---|---|---|
| Financial metrics (ROE-based, Group and Unit) | 70% | Group ROE target 13.69% | Level of goal achievement 129.6% for 2024; group payout scale: 200% at/above max | 0–200% linear (group and segment scales) |
| Strategic goals | 30% | Defined per executive | For Mr. Gansberg, Committee determination translated to a 225% payout factor for his strategic objectives | 0–250% (capped at 200% overall; >200% only if financial goals at least target) |
Reference: Company disclosure notes a 200% STI factor for the CEO and 190.3% average for other active NEOs; Mr. Gansberg’s individual cash payout was $2,883,900 for 2024 under the STI .
Long-Term Incentives (LTI)
- Structure: 55% performance shares (PSUs), 25% stock options, 20% time-based restricted shares (annual awards); premiums for “Outperformance Awards” in Nov 2024 as part of leadership transition .
| Award | Grant date | Vehicle | Quantity/Terms | Valuation/Notes |
|---|---|---|---|---|
| Annual LTI | Feb 27, 2024 | Performance Shares | Threshold/Target/Max: 8,040 / 16,080 / 32,160 shares; 3-year ATBVPS growth metric with TSR modifier; vests Mar following period end | |
| Annual LTI | Feb 27, 2024 | Stock Options | 20,753 options @ $82.22; 10-year term; vests ratably over 3 years | |
| Annual LTI | Feb 27, 2024 | Restricted Shares | 5,847 RS; vests ratably over 3 years | |
| Outperformance Award | Nov 19, 2024 | Premium-Priced Options | 513,922 options @ $161.24 (≈70% premium to grant-date close); cliff vest on 3rd anniversary; 10-yr term; 2-year post-exercise holding; exercise/holding conditioned on compliance with 10-year non-compete and other covenants | |
| Outperformance Award | Nov 19, 2024 | Restricted Shares | 65,838 RS; vest in equal increments on 1st–3rd anniversaries; net shares must be held for 5 years from grant date |
- 2022–2024 PSU cycle outcome: TBVPS growth 23.6% annualized → 200% payout; TSR at 94.4th percentile gave a 125% modifier but capped at 200% maximum; final vesting March 4, 2025 at 200% .
Equity Ownership & Alignment
Beneficial Ownership (as of March 12, 2025)
| Category | Amount |
|---|---|
| Total beneficial ownership (Rule 13d-3) | 614,399 shares; less than 1% of outstanding |
| Directly owned (incl. 78,946 time-vested restricted) | 319,382 shares |
| Options exercisable within 60 days | 193,147 shares |
| Performance restricted shares (subject to forfeiture) | 101,870 shares |
| Options not exercisable within 60 days | 560,593 options (additional) |
Outstanding Equity (selected items, 12/31/2024 snapshot)
| Instrument | Quantity | Key terms |
|---|---|---|
| Unvested RS | 110,724 shares (MV $10,225,361) | Standard 3-year vest schedules and Outperformance Award RS holding |
| Unearned PSUs | 60,706 shares (MV $5,606,199) | Tied to 3-year ATBVPS with TSR modifier |
| Options (2024 annual) | 20,753 @ $82.22, exp. 2/27/2034 | Ratable vest over 3 years |
| Options (Outperformance) | 513,922 @ $161.24, exp. 11/19/2034 | Cliff vest on 3rd anniversary; 2-year post-exercise hold; 10-year restrictive covenants |
Ownership policies and practices:
- Executive stock ownership guideline: 4× base salary for Section 16 officers; 5 years to comply. All NEOs are in compliance .
- Holding requirement: must retain 50% of net profit shares until guidelines met .
- Hedging prohibited; pledging discouraged/limited (≤ the lesser of 30% of individual holdings or 0.5% of outstanding; requires approval); pledged shares don’t count toward guidelines .
- No pledged shares are noted for Mr. Gansberg in the ownership footnotes; pledging disclosure (if any) appears for other individuals (e.g., Pasquesi) .
Employment Terms
| Term | Details |
|---|---|
| Agreement term | Employment period ends Mar 1, 2026; auto-renews for successive 1-year periods unless 90 days’ prior notice of non-extension |
| Termination without cause or for good reason | Cash severance equal to (A) annual base salary + (B) target annual bonus + (C) pro-rated target bonus for year of termination; plus payments under Incentive Compensation Plan per plan terms |
| Equity on termination (non‑CIC) | Unvested equity awards granted after Mar 1, 2019 and prior to Mar 31, 2024, held ≥1 year, vest on termination (PSUs at lesser of target or actual-to-date); CIC or retirement timing governed by award agreements |
| Benefits | Health insurance continuation up to 12 months following qualifying termination |
| Restrictive covenants | Non-compete and non-solicit for 1 year post-termination; if resignation without good reason or non-extension by Mr. Gansberg, non-compete continues only if Company pays daily pro rata of salary plus bonus metric and provides health coverage during the period |
| Change-in-control features | Equity awards provide double-trigger vesting if assumed by acquirer (company-wide practice) ; award agreements govern if termination occurs within two years post-CIC |
| Clawback | Clawback provisions apply to all incentive-based compensation for executive officers |
| Other practices | No tax gross-ups for executives (including CIC excise) ; no hedging; pledging limited |
Performance & Track Record (Mortgage segment highlights under his leadership)
| Metric | 2024 | Multi-year |
|---|---|---|
| Net earned premiums (YoY growth) | +6.3% YoY (amid soft origination environment; aided by revised ceded reinsurance) | — |
| Underwriting profit | $1.1B (2024) | $6.0B cumulative over past six years |
Compensation Structure Analysis
- Mix shift in 2024 driven by one-time Outperformance Awards: Stock awards $8.31M and option awards $15.34M vs $1.41M and $0.45M in 2023, respectively, reflecting premium-priced options and time-vested RS targeted at retention and long-term alignment during leadership transition .
- STI remains formulaic and ROE-driven (70% weight), with strategic goals at 30%; 2024 financial attainment hit maximum, and Mr. Gansberg’s strategic assessment translated to a 225% factor for that component .
- Long-dated, premium-priced options ($161.24 strike; ~70% above grant-date price) and extended holding/non-compete features meaningfully defer realizable value, lowering near-term selling pressure while amplifying alignment with multi‑year value creation .
Say‑on‑Pay and Governance Context
- Say‑on‑Pay support of 95.3% at the 2024 annual meeting; consistent >90% since 2020 .
- Independent Compensation and Human Capital Committee; use of independent consultant; robust risk controls (no hedging, clawbacks, double‑trigger CIC equity) .
Investment Implications
- Alignment: Large, premium‑priced Outperformance options and required post‑exercise/vest holding periods create high sensitivity to sustained share price and ATBVPS growth, indicating strong alignment and reduced near‑term sell pressure from new grants .
- Retention and continuity: One‑year non‑compete (general) plus 10‑year restrictive conditions attached to Outperformance options and extended holding for RS support retention through a critical leadership transition .
- Pay-for-performance: STI and PSUs are tightly linked to ROE and ATBVPS (with relative TSR modifier); 2022–2024 PSU payout at 200% underscores outperformance in core value-creation metrics .
- Overhang risk vs. incentives: The special 2024 awards increased equity exposure materially (options and RS values of ~$21.0M for Mr. Gansberg) but at stringent performance/holding thresholds, balancing dilution with incentives to outperform .