R. Andrew Watts
BROWN & BROWNAbout R. Andrew Watts
R. Andrew Watts is Chief Financial Officer, Executive Vice President and Treasurer of Brown & Brown, Inc., appointed CFO effective March 4, 2014 after joining as EVP & Treasurer in February 2014 . He is a CPA (Illinois) and holds a B.S. from Illinois State University; prior roles include global head of customer administration at Thomson Reuters (2011–2014), CFO for segments within Thomson Reuters’ Financial & Risk division (2008–2011), CFO/co-founder of Textera (pre-2001), and nine years with PwC as senior manager . In 2024, Brown & Brown delivered total revenue of $4.805B vs. $4.257B in 2023, with Adjusted EBITDAC margin at 35.3% and company organic revenue growth of 10.4%; the company highlighted 2024 TSR of +44% as of 12/31/2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Thomson Reuters | Global Head of Customer Administration | 2011–2014 | Customer admin leadership at global scale |
| Thomson Reuters (Financial & Risk) | CFO for multiple segments | 2008–2011 | Financial leadership across segments |
| Textera | CFO & Co‑founder | Prior to 2001 | Early-stage operating and finance experience |
| PricewaterhouseCoopers | Senior Manager | Nine years, through 2001 | Audit/finance foundation; CPA credential |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Federal Reserve Bank of Atlanta, Jacksonville Branch | Director | Since Jan 2023 | Monetary/regional economic oversight exposure |
| Brown Riverfront Esplanade Foundation (Daytona Beach) | Vice President & Director | Since Sep 2022 | Community development governance |
| Florida Chamber Foundation | Board of Trustees | Since Mar 2022 | Statewide economic policy engagement |
| Museum of Arts & Sciences (Daytona Beach) | Board of Trustees | Since Jan 2020 | Nonprofit governance |
| New Planet Energy Development, LLC | Director | Since Jun 2018 | Private green energy oversight |
| Prior: Surflight Theatre; Make‑A‑Wish Foundation of New Jersey | Chair/Director | Various prior years | Community/charitable leadership |
Fixed Compensation
Multi‑year compensation (Summary Compensation Table):
| Metric ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 600,000 | 648,077 | 794,231 |
| Bonus | 60,000 | — | — |
| Stock Awards (grant‑date fair value) | 2,689,057 | 980,620 | 1,279,571 |
| Non‑Equity Incentive Plan Compensation | 981,000 | 1,559,000 | 1,903,000 |
| All Other Compensation | 78,459 | 81,161 | 86,284 |
| Total | 4,408,516 | 3,268,858 | 4,063,086 |
2024 base salary and target bonus adjustments:
- Base salary increased to $800,000 for 2024 (from $650,000 in 2023) based on market assessment .
- Target cash incentive increased to $1,000,000 for 2024 (from $850,000 in 2023); 2025 target remains $1,000,000 .
Perquisites and deferred comp detail (2024):
| Component | 2024 Amount ($) |
|---|---|
| Financial/tax planning services reimbursement | 17,214 |
| Insurance commissions reimbursement | 2,458 |
| Company 401(k) contribution | 13,800 |
| Cash dividends on vested performance/time‑based awards | 52,812 |
| Non‑qualified deferred compensation contribution | 545,650; balance $2,806,077 |
Performance Compensation
Annual cash incentive structure and 2024 outcomes (Watts weightings mirror company-level metrics):
| Component | Weighting | Target | Actual | Payout % |
|---|---|---|---|---|
| Company Organic Revenue Growth | 40% | 6.9% | 10.4% | 200% |
| Adjusted EBITDAC Margin | 40% | 34.4% | 35.3% (adjusted per committee policy) | 176% |
| Personal Objectives | 20% | Committee‑approved | Fully achieved | 200% |
2024 aggregate payout:
| Metric | Value |
|---|---|
| Aggregate Target Cash Incentive | $1,000,000 |
| Organic Revenue payout amount | $800,355 |
| Adjusted EBITDAC payout amount | $702,569 |
| Personal Objectives payout amount | $400,000 |
| Total Cash Incentive Payout | $1,903,000; 190% of target |
Long‑term equity incentives (structure and grants):
- Structure: 75% PSAs tied to three‑year performance (Organic Revenue growth; compound diluted EPS growth), plus five‑year cliff vesting; 25% RSAs with five‑year cliff vesting . No stock options or SARs under 2019 SIP .
- 2024 grants (Feb 19, 2024): PSAs target 11,791 shares (max 23,582) and RSAs 3,930 shares; grant‑date fair values $954,599 (PSA) and $324,972 (RSA) .
- 2025 grants: Total long‑term equity incentive $1,300,000 (unchanged YOY), split $975,000 PSAs and $325,000 RSAs .
- 2021 PSA outcomes certified in Feb 2024: Average Organic Revenue Growth and Adjusted EPS CAGR both above “maximum,” paying 200% of target; 2021 performance shares for Watts gained voting and dividend rights and generally fully vest on February 23, 2026 subject to continued service .
Option exercises and vesting:
| 2024 Activity | Shares | Value Realized ($) |
|---|---|---|
| Options exercised | — | — |
| Stock awards vested | 35,581 | 2,997,343 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership (as of Mar 3, 2025) | 194,828 shares; <1% of outstanding |
| Unvested shares with performance condition satisfied (2019 SIP) included in beneficial ownership | 43,482 shares (voting and dividend rights; no sale power; subject to forfeiture) |
| Time‑based only grants (2019 SIP) included in beneficial ownership | 46,877 shares (voting and dividend rights; no sale power; subject to forfeiture) |
| Outstanding unvested awards at FY‑end 2024 | Multiple tranches from 2020–2024 grants; detail by grant date and counts in Outstanding Equity Awards table |
| Shares pledged as collateral | None disclosed for Watts; company prohibits pledging by executives for ownership guideline shares |
| Stock ownership guidelines | Section 16 officers: 3x base salary; retain until retirement/separation |
| Hedging policy | Prohibits hedging transactions (short sales, puts/calls) by directors and executive officers |
| Clawback policy | Mandatory recovery of incentive compensation (3 fiscal years preceding a restatement) for Section 16 officers |
Employment Terms
| Provision | Detail |
|---|---|
| Employment agreement | Entered in 2014; initial term ended Feb 17, 2017; now terminable at will by either party |
| Compensation determination | From time to time by agreement with the company |
| Restrictive covenants | Two-year post-termination non‑solicit of customers and employees; confidentiality |
| Change‑in‑control (employment) | Watts does not have a standalone CIC employment provision; equity plans provide double‑trigger vesting |
| Equity plan CIC vesting | If involuntarily or constructively terminated within 12 months after CIC: 100% vesting of unvested restricted stock; performance grants vest at greater of 100% or actual to date per schedule |
| Potential CIC/termination values (equity) | 2019 SIP value for Watts: $16,557,132 upon post‑CIC termination; death/disability $11,787,986 |
| Tax gross‑ups | No excise tax gross‑ups under current plans; legacy PSP had gross‑up, but Watts shows no PSP holdings/payments |
Compensation Structure Analysis
- Mix and market adjustments: 2024 raised Watts’ base salary and target incentive to align with peer market medians (while the program does not target a specific percentile) .
- Pay for performance: 2024 cash incentive paid at 190% of target driven by above‑target organic revenue and margin outcomes, plus 200% personal objectives .
- Shift to PSAs/RSAs: Long‑term incentives emphasize PSAs with three‑year performance and five‑year cliff vesting; no options granted under 2019 SIP, reducing “option risk” and reinforcing multi‑year alignment .
- Peer group oversight: FW Cook advises; peer group updated in 2024 (add First American Financial and Hanover Insurance; remove Crawford, CBIZ, Argo) . Current peer list includes Aon, Arch, Arthur J. Gallagher, Marsh & McLennan, Selective Insurance, WTW, Erie Indemnity, RLI, Axis, Primerica, Raymond James, etc. .
Company Performance Context (Watts’ Tenure)
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| Revenues ($) | 2,606,100,000* | 3,047,500,000* | 3,563,000,000* | 4,199,000,000* | 4,705,000,000* |
| EBITDA ($) | 808,200,000* | 1,010,400,000* | 1,152,000,000* | 1,368,000,000* | 1,596,000,000* |
Values retrieved from S&P Global.*
Say‑on‑Pay & Shareholder Feedback
- Say‑on‑pay support: 94% of votes cast in favor at 2024 annual meeting; program remained substantially unchanged for 2024 given strong support .
Risk Indicators & Red Flags
- Hedging/Pledging: Prohibited for executives under policy; no pledging disclosed for Watts (contrast: a separate executive disclosed pledged shares) .
- Tax gross‑ups: Legacy PSP excise tax gross‑up exists but does not apply to Watts per holdings data .
- Related party transactions: No R. Andrew Watts related party transactions disclosed in proxy (section lists other individuals; none for Watts).
Compensation Peer Group (Benchmarking Reference)
| Peer Company | Focus |
|---|---|
| Aon plc | Insurance Intermediary |
| Arch Capital Group Ltd. | P&C Insurance Carrier |
| Arthur J. Gallagher & Co. | Insurance Intermediary |
| Marsh & McLennan Companies Inc. | Insurance Intermediary |
| Willis Towers Watson PLC | Insurance Intermediary |
| Erie Indemnity Company | P&C Insurance Carrier |
| RLI Corp. | P&C Insurance Carrier |
| AXIS Capital Holdings Limited | P&C Insurance Carrier |
| Primerica, Inc. | Life & Health Insurance |
| Raymond James Financial, Inc. | Investment Banking & Brokerage |
| Selective Insurance Group Inc. | P&C Insurance Carrier |
| (Removed in 2024: Crawford & Company; CBIZ; Argo) | Update to peer set |
| (Added in 2024: First American Financial; Hanover Insurance) | Update to peer set |
Investment Implications
- Alignment and retention: Watts’ pay mix is heavily performance‑based (PSAs and annual metrics) with five‑year cliff vesting and no options, promoting long‑term retention while tying outcomes to organic growth and margin expansion . The 2021 PSA payout at 200% and vesting date of Feb 23, 2026 signal a known vesting event that could create executive‑level liquidity near that date, though pledging and hedging are prohibited .
- Incentive levers: 2024 incentive formula drove 190% payout on company performance components; continued emphasis on organic revenue and adjusted EBITDAC margin implies sensitivity to underwriting cycle, pricing, and acquisition integration performance .
- CIC exposure: No standalone CIC cash severance disclosed for Watts; equity plans provide double‑trigger acceleration, with quantified equity value on post‑CIC termination of ~$16.6M, indicating primary CIC economics reside in unvested equity .
- Governance: Strong say‑on‑pay support (94%), independent consultant (FW Cook), and robust clawback/anti‑hedging policies reduce governance risk and support pay‑for‑performance narrative .