Dominic J. Frederico
ASSURED GUARANTYAbout Dominic J. Frederico
Dominic J. Frederico (age 72) is President and Chief Executive Officer of Assured Guaranty Ltd. (AGO) and a director since the 2004 IPO; he has served as President and CEO since 2003, leading AGO to become the leading provider of municipal bond insurance and consolidating the industry post‑crisis while expanding into asset management and alternative investments . Under his leadership, 2024 saw strong shareholder value creation: five‑year TSR rose to 202.43 (vs. S&P 500 196.85, S&P 500 Financials 173.35, Russell Midcap Financials 184.55), share price ended 2024 at $90.01, and capital returned totaled ~$570M (repurchases + dividends) . Operating metrics used in compensation include core operating EPS ($7.22 vs $7.00 target), core operating ROE (6.7% vs 6.6%), PVP ($402M vs $485M target), and book value measures (Core operating SE/share $114.74 vs $115.08 target; Core ABV/share $170.25 vs $171.66) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Assured Guaranty Ltd. | President & CEO | 2003–present | Led IPO (2004), post‑crisis consolidation (AGM acquisition 2009), portfolio acquisitions, and strategic expansion into asset management and alternative investments . |
| Assured Guaranty Ltd. | Director | 2004–present | Non‑independent director with comprehensive operating knowledge; member of Executive Committee . |
| ACE Limited (now Chubb) | Vice Chair | 2003–2004 | Senior leadership following tenure as COO; oversaw operations and corporate initiatives . |
| ACE Limited (now Chubb) | President & COO; Chair of ACE INA Holdings | 1999–2003 | Oversaw acquisition/integration of CIGNA P&C operations and acquisition of Capital Re Corp. (AGO predecessor) . |
| ACE Limited | Director | 2001–May 2005 | Board oversight during major integrations and strategic transactions . |
| American International Group | Senior VP & CFO, AIG Risk Management (culminating role) | ~1982–1995 (13 years) | Senior finance/operating roles across AIG subsidiaries; financial and risk management expertise . |
External Roles
| Organization | Role | Years |
|---|---|---|
| Amynta Group | Advisory Board Member | Current |
| ACE Limited (now Chubb) | Director | 2001–May 2005 |
Fixed Compensation
| Year | Base Salary ($) |
|---|---|
| 2024 | 1,250,000 |
| 2023 | 1,250,000 |
| Note | CEO salary unchanged since 2017; incentive‑heavy pay philosophy . |
Performance Compensation
2024 Annual Cash Incentive Framework and Outcome
- Formula: Payout = Base Salary × 2.0x Target Multiple × (67% weighted financial score + 33% weighted non‑financial score), each scored 0–200% with negative discretion when targets are below prior‑year actuals .
- 2024 total achievement score: 120.7%; cash incentive paid: $3,016,793 .
| Financial Performance Measure (each 13.4% weight) | 2024 Target | 2024 Result | Achievement Score | Weighted Score |
|---|---|---|---|---|
| Core operating income per diluted share | $7.00 | $7.22 | 100.0% (committee reduced via negative discretion) | 13.4% |
| Core operating ROE | 6.6% | 6.7% | 100.0% (committee reduced via negative discretion) | 13.4% |
| Core operating shareholders’ equity per share | $115.08 | $114.74 | 99.7% | 13.4% |
| Core ABV per share | $171.66 | $170.25 | 99.2% | 13.3% |
| PVP | $485M | $402M | 83.0% | 11.1% |
| Total weighted financial score | 64.6% |
| Non‑Financial Objectives (33% weight) | 2024 Achievement Score | Weighted Score |
|---|---|---|
| Strategic growth, capital management, asset management diversification, human capital & ESG | 170.0% (e.g., GWP $440M/PVP $402M; repurchased ~$502M; advanced alternative investments; opened Australia/Singapore) | 56.1% |
| 2024 Cash Incentive Outcome | Value ($) |
|---|---|
| Cash incentive paid (Feb 2025) | 3,016,793 |
Long‑Term Incentives (granted Feb 2025 for 2024 performance)
- Mix: 60% PSUs (half Relative TSR vs Russell Midcap Financials at 55th percentile target; half Core ABV/share growth), 40% RSUs; 3‑year cliff vest; Relative TSR PSUs capped at 1.0x if absolute TSR negative; earned shares remain restricted 1 year post‑vest for TSR PSUs .
- 2022 PSU cohort results (vested Feb 23, 2025): Relative TSR PSU paid at 213.7% of target; ABV PSU paid at 200% of target .
| LTI Element | Mix | Performance Condition | Vesting |
|---|---|---|---|
| PSUs – Relative TSR | 30% of LTI | TSR vs Russell Midcap Financials; 55th pct = 1.0x; 25th = 0.5x; 95th = 2.5x; 1.0x cap if absolute TSR negative | 3‑year cliff; earned shares restricted 1 year |
| PSUs – Core ABV/share | 30% of LTI | 3‑year Core ABV/share growth vs target | 3‑year cliff |
| RSUs | 40% of LTI | Time‑based | 3‑year cliff; limited acceleration provisions |
Vesting and Realizations (alignment and possible liquidity events)
| 2024 Shares Vested (gross) | Shares | Value on Vesting ($) |
|---|---|---|
| Dominic J. Frederico | 331,170 | 28,126,268 |
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial ownership | 1,559,181 common shares (≈3.12% of outstanding) |
| Unvested/undelivered RSUs | 366,104 units |
| Executive ownership guideline | 7× salary; Frederico at 106.3× salary (as of 3/7/2025, $85.26/share) |
| Retention requirement | Must retain 100% of after‑tax vested shares until guideline met |
| Hedging/pledging | Hedging prohibited; pledging requires GC and N&G Committee approval; no pledges outstanding as of 3/19/2025 |
Outstanding Equity Awards (as of 12/31/2024; indicative of forward vesting cadence)
| Award Type | Grant Date | Units | Vest/Performance End |
|---|---|---|---|
| RSU | 2/23/2022 | 53,407 | 2/23/2025 (vested in 2025) |
| RSU | 2/22/2023 | 47,873 | 2/22/2026 |
| RSU | 2/21/2024 | 44,097 | 2/21/2027 |
| PSU – TSR | 2/23/2022 | 85,598 | 2/23/2025 (paid at 213.7%) |
| PSU – ABV | 2/23/2022 | 80,110 | 2/23/2025 (paid at 200%) |
| PSU – TSR | 2/22/2023 | 17,953 | 2/22/2026 |
| PSU – ABV | 2/22/2023 | 17,953 | 2/22/2026 |
| PSU – TSR | 2/21/2024 | 16,537 | 2/21/2027 |
| PSU – ABV | 2/21/2024 | 16,537 | 2/21/2027 |
Employment Terms
- No individual employment agreement; compensation set by independent Compensation Committee with FW Cook as adviser .
- Severance plan: upon involuntary termination without cause or resignation for good reason, lump‑sum of 1× base salary + average prior‑3‑year cash incentive + pro‑rata current year bonus + 1 year of medical/dental premiums; 1‑year post‑termination non‑compete and non‑solicit apply .
- Change‑in‑control: double‑trigger for equity (single‑trigger only if acquirer does not assume awards); no 280G excise tax gross‑ups .
| Potential Payments (assume event on 12/31/2024; per $90.01 stock price) | Amount ($) |
|---|---|
| Termination without Cause / Good Reason – Salary + Cash Incentive + Benefits | 4,645,033 (1,250,000 salary; 3,327,679 incentive; 67,354 benefits) |
| … Plus unvested RSUs + PSUs | 35,756,094 (13,085,384 RSUs; 22,670,710 PSUs) |
| Total – Termination without Cause / Good Reason | 40,401,127 |
| Qualifying Termination on/after Change‑in‑Control – Salary + Incentive + Benefits | 4,645,033 |
| … Plus unvested RSUs + PSUs (CIC treatment) | 38,934,576 (13,085,384 RSUs; 25,849,192 PSUs) |
| Total – Qualifying Termination post‑CIC | 43,579,609 |
| Retirement – Continued/accelerated equity (no salary/incentive/benefits) | 44,888,377 (13,085,384 RSUs; 31,802,993 PSUs) |
| Death/Disability – Equity value | 35,756,094 (13,085,384 RSUs; 22,670,710 PSUs) |
| Deferred compensation aggregate balance (12/31/2024) | 25,067,812 |
Note: Equity valuations are per plan rules and assumed at 12/31/2024 prices; actual outcomes depend on performance and share price at vesting .
Board Governance and Director Service
- Board service: Director since 2004; non‑independent; currently serves on the Board’s Executive Committee .
- Leadership structure: Independent Chair (Francisco L. Borges); CEO and Chair roles are separated; CEO focuses on operations, Chair on governance and executive sessions .
- Independence: In Feb 2025, the Board determined all directors are independent except Mr. Frederico and nominee Antonio Ursano; all Audit/Compensation/Nominating/Finance/ESG/Risk committees comprise independent directors .
- Meetings: Board met 4 times in 2024; all directors attended at least 75% of applicable meetings; executive sessions occur regularly under the Chair .
- Committees (current memberships): Frederico is a member of the Executive Committee; he does not serve on Audit/Compensation/NG/Finance/ESG/Risk committees .
Compensation Structure Analysis (alignment, design, and trends)
- Pay mix and rigor: ~90% of 2024 CEO compensation is at‑risk; 67% LTI with 60% PSUs; annual bonus linked 67% to five financial metrics and 33% to non‑financial strategic objectives; negative discretion applied when targets are below prior‑year actuals .
- YOY change: 2024 cash incentive decreased 13.7% due to underperformance vs three of five goals and negative discretion; LTI target unchanged; base salary unchanged since 2017 .
- Realized performance: 2022 PSU cohort paid 200% (ABV) and 213.7% (Relative TSR), consistent with superior multi‑year TSR and Core ABV growth .
- Clawback: Robust clawback exceeding NYSE Rule 10D‑1, covering equity and cash, including non‑restatement misconduct and restatements without fault; forfeiture for covenant breaches/termination for cause applies .
Compensation Peer Group and Say‑on‑Pay
- 2024/2025 peer group (18 companies) includes financials and asset managers with similar risk/size profiles (e.g., Everest Re, RenaissanceRe, Assurant, Enstar, Radian, Virtus, AMG, Janus Henderson); Arch Capital removed in 2024 due to fit .
- CEO pay positioning: For 2023 performance year, CEO target and actual total direct compensation above the 75th percentile of peers (reflecting experience and sustained performance) .
- Shareholder support: Say‑on‑pay approvals were >93% (2019, after program changes), 83% (2023), 82% (2024); 2018 approval was 60% prompting structural changes (lower cash multiple, more PSUs, TSR/ABV metrics) .
Performance & Track Record (under Frederico)
- 2024 highlights: GWP $440M; PVP $402M; U.S. public finance par penetration 4.8% (above 10‑yr avg 4.2%); six transactions >$500M; Brightline Florida $1.13B named “Deal of the Year”; continued non‑U.S. growth with new offices (Australia/Singapore); asset management segment adjusted operating income up ~65%; alternative investments increased ~20% to $884M market value; repurchased ~$502M of shares and returned ~$570M to shareholders; released $897M capital from insurance ops; successful LBIE litigation recovery ~$103M in Feb 2025 .
- TSR outcomes: Five‑year cumulative TSR (2019–2024) AGO 202.43 vs S&P 500 196.85, S&P Financials 173.35, Russell Midcap Financials 184.55 .
| Cumulative TSR (Dec 31 = $100 start) | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|
| Assured Guaranty | 100.00 | 66.06 | 107.25 | 135.35 | 165.83 | 202.43 |
| S&P 500 | 100.00 | 118.39 | 152.34 | 124.73 | 157.48 | 196.85 |
| S&P 500 Financials | 100.00 | 98.24 | 132.50 | 118.49 | 132.83 | 173.35 |
| Russell Midcap Financials | 100.00 | 104.94 | 142.56 | 124.74 | 141.07 | 184.55 |
Director/Officer Perquisites (2024)
| Perquisite/Benefit | Amount ($) |
|---|---|
| Employer contributions to retirement plans | 576,097 |
| Bermuda car allowance | 20,000 |
| Bermuda housing allowance | 8,554 |
| Tax return preparation | 4,600 |
| Matching gifts | 25,000 |
| Business‑related spousal travel | 6,158 |
| Miscellaneous (e.g., club fees, health insurance, gifts/awards) | 30,426 |
| Total “All Other Compensation” | 670,835 |
Policy note: Perquisites include tax prep, cybersecurity/privacy services, executive medical exams (for long‑tenured execs), and Bermuda allowances; committee reviews reasonableness versus Bermuda‑based peers .
Board Service History, Committees, and Dual‑Role Implications
- Board tenure and roles: Director since 2004; member of the Executive Committee; not on Audit/Compensation/Nominating/Finance/ESG/Risk committees .
- Dual‑role risk mitigants: Independent Chair structure; majority‑independent board; all key committees independent; regular executive sessions; annual independence determinations (only CEO and one nominee non‑independent) .
- Attendance and oversight: Board met four times in 2024; directors met attendance thresholds; established risk oversight via Risk Oversight, Audit, Finance, and ESG committees .
Investment Implications
- Alignment/skin‑in‑the‑game: High insider ownership (~3.12% of shares) and ownership multiple (106× salary) with anti‑hedging/anti‑pledging policies reduce agency risk and suggest strong alignment; frequent three‑year cliff vesting in late February can create periodic vesting‑related flows to monitor for trading liquidity around those windows .
- Pay‑for‑performance: Heavy PSU weighting tied to Core ABV and Relative TSR drives long‑term behavior; 2022 PSU over‑achievement validated program rigor, but 2024 annual cash payout reflected negative discretion and misses on PVP/book metrics, signaling committee discipline and potential shorter‑term earnings sensitivity to credit spreads and primary market volumes .
- Retention and transition: No individual contract; severance is ~1× salary plus variable components with double‑trigger CIC and robust clawbacks; retirement/CIC equity values are material, supporting retention and an orderly succession path; succession planning is an explicit board focus .
- Execution drivers/risks: Capital management (buybacks), PVP growth, asset management earnings diversification, and alternative investment performance are key levers; narrow credit spreads and competitive dynamics weighed on 2024 PVP vs target; continued international expansion and portfolio optimization (e.g., LBIE recovery) partially offset .