Ernie Garateix
About Ernie Garateix
Ernie Garateix is Chief Executive Officer and a director of Heritage Insurance Holdings, Inc. (HRTG). Age 53, he has served as CEO and board member since December 2020, after roles as COO (2014–2020) and EVP (2012–2014) and previously Vice President at American Integrity Insurance Group beginning October 2007 . HRTG’s 2024 performance under his leadership included net income of $61.5M, ROE of 24.1%, book value per share up 30.3% to $9.50, and premiums-in-force of $1.43B with improved net loss ratio of 58.2% . In Q1 2025, HRTG delivered net income of $30.5M, annualized ROAE of 39%, and book value per share of $10.62, while maintaining profitability despite catastrophe losses and achieving rate adequacy across >90% of its geographies .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Heritage Insurance Holdings | Chief Executive Officer, Director | 2020–present | Led profitability initiatives (rate adequacy, underwriting discipline), book value growth, and portfolio management . |
| Heritage Insurance Holdings | Chief Operating Officer | 2014–2020 | Operational leadership through exposure management and diversification . |
| Heritage Insurance Holdings | Executive Vice President | 2012–2014 | Senior leadership during early growth and integration . |
| American Integrity Insurance Group | Vice President | Began Oct 2007 (prior to Heritage) | Property & casualty leadership experience in underwriting and operations . |
External Roles
No public company external directorships disclosed for Garateix .
Board Service & Governance
- Board tenure: Director since 2020; not independent (as CEO). Committees are composed entirely of independent directors; Garateix does not serve on board committees .
- Leadership structure: Chair and CEO roles are separate (Chair: Richard Widdicombe), mitigating dual-role concentration risk .
- Board activity: 5 meetings in 2024; executive sessions of non-management directors held 4 times, presided by a non-management director (Widdicombe) .
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | $1,000,000 | $850,000 |
| All Other Compensation ($) | $43,446 (auto allowance, benefits, 401k, life insurance) | $336,679 (PTO cash-outs and benefits) |
Notes: Company provides medical, life, hospitalization and disability insurance; limited perquisites and no tax gross-ups per governance practices .
Performance Compensation
Annual Cash Incentive – Structure and Results
| Item | 2023 | 2024 |
|---|---|---|
| Threshold ($) | $500,000 | $595,000 |
| Target ($) | $1,000,000 | $1,020,000 |
| Maximum ($) | $1,500,000 | $1,615,000 |
| Actual Payout ($) | $1,480,000 (148% of target) | $1,490,333 (146.1% of target) |
| Metric | Weighting | Threshold | Target | Maximum | Actual | Payout |
|---|---|---|---|---|---|---|
| Net Operating Ratio | 60% | 100% | 96% | 92% | 90.7% (2023) ; 87.7% (2024) | 150% (2023) ; 158% (2024) |
| ROAE | 20% | 4% | 8% | 12% | 25.8% (2023) ; 24.1% (2024) | 150% (2023) ; 158% (2024) |
| Qualitative | 20% | N/A | N/A | N/A | 140% (2023) ; 97% (2024) | 140% (2023) ; 97% (2024) |
Definition: Net operating ratio numerator includes net losses & LAE, policy acquisition costs, G&A, less net investment income and policy fee income; denominator is net premiums earned. ROAE = net income divided by average equity, excluding AOCI .
Long-Term Equity Incentives
Performance criteria (for 2024 awards): 50% 3-year adjusted book value per share growth (ex-dividends & AOCI), 50% 3-year total shareholder return (TSR), measured Jan 1, 2024–Dec 31, 2026; vest after performance period no later than Mar 30, 2027 .
| Award Type | 2023 Actually Granted (value) | Vesting | 2024 Granted (value) | Vesting |
|---|---|---|---|---|
| Time-Based Restricted Stock | $825,000 | 3 tranches: Dec 15, 2023/2024/2025 | $637,500 | 3 tranches: Dec 15, 2024/2025/2026 |
| Performance-Based Restricted Stock (Target/Max) | $825,000 / $1,650,000 | 3-year period ending Dec 31, 2025; vest by Mar 30, 2026 | $1,020,000 / $2,040,000 | 3-year period ending Dec 31, 2026; vest by Mar 30, 2027 |
Options: Company does not currently grant stock options; no repricing or backdating without shareholder approval .
Outstanding Equity Awards (as of Dec 31, 2024)
| Award | Shares Not Vested (#) | Market Value ($) | Performance Shares – Unearned (#) | Market/Payout Value ($) |
|---|---|---|---|---|
| Time-Based (2/26/2024 grant) | 60,542 | $732,558 ($12.10/sh) | 290,598 (max for 2024 award) | $3,516,236 |
| Time-Based (7/11/2023 grant) | 67,402 | $815,564 ($12.10/sh) | 404,412 (max for 2023 award) | $4,893,385 |
Notes: Performance shares reflect maximums; actual vesting contingent on outcomes vs targets .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Total Beneficial Ownership | 1,270,808 shares (4.1% of outstanding) |
| Ownership Components | 581,281 performance-based RS (max); 145,299 performance-based RS (target); 183,215 unvested time-based RS |
| Shares Outstanding | 30,993,270 (record date Apr 16, 2025) |
| Pledging/Hedging | Pledging prohibited; short sales prohibited; hedging requires CFO pre-clearance |
| Ownership Guidelines | Not disclosed; clawback policy in place (2023 adoption per SEC/NYSE rules) |
Upcoming vesting dates (time-based): Dec 15, 2025 and Dec 15, 2026 tranches from 2024 awards; 2023 tranches included Dec 15, 2025 .
Employment Terms
| Term Element | Provision |
|---|---|
| Agreement Effective | Dec 31, 2023 (amended & restated) |
| Base Salary | $850,000 |
| Annual Cash Incentive | Threshold $595,000; Target $1,020,000; Max $1,615,000 |
| Annual Time-Based Equity | $637,500; vests in three equal annual installments |
| Annual Performance-Based Equity | Threshold $510,000; Target $1,020,000; Max $2,040,000 |
| Term / Renewal | Initial term to Dec 31, 2024; auto-renews for successive 12-month periods unless 90-days’ prior notice; duties as CEO; limited outside board service permitted with approval |
| Severance (no change-of-control) | If terminated without cause or resigns for good reason: lump sum = 1.5×(base salary + target bonus); all unvested time-based awards vest; performance-based awards vest at target |
| Severance (post change-of-control) | If terminated without cause or resigns for good reason: above severance + prorated annual bonus based on actual performance; performance-based awards vest at target |
| Non-Compete/Non-Solicit | 1-year post-employment non-compete, non-solicitation, and non-interference |
| Equity Plan Change-of-Control (Plan-level) | If awards not assumed/replaced: immediate vest prior to change of control and cash-out; if assumed, and termination without cause/good reason within 12 months: vest full/prorated (max value basis) |
Clawback & Insider Trading Controls: Formal clawback policy adopted in 2023; pre-clearance required for transactions; pledging and short sales prohibited .
Pay vs Performance (Company-level)
| Year | CEO Compensation Actually Paid ($) | TSR (Value of $100) | Net Income ($000s) |
|---|---|---|---|
| 2022 | $1,230,211 | $17.77 | $(154,363) |
| 2023 | $6,496,734 | $110.88 | $45,308 |
| 2024 | $8,726,817 | $205.78 | $61,539 |
Say-on-Pay & Shareholder Feedback
- Say-on-Pay approval: 83% support in 2023; 76% support in 2024; ongoing investor outreach by Compensation Committee .
Compensation Structure Analysis
- Shift to higher at-risk pay in 2024: Lower base salary with higher performance-contingent cash and equity targets to align with shareholder outcomes .
- Performance metrics emphasize profitability and capital efficiency: Net operating ratio and ROAE drove above-target payouts in both 2023 and 2024, consistent with improved net loss ratios and ROE .
- Equity mix favors RS/PS over options: Lower risk profile; no option repricing/backdating; no tax gross-ups; no liberal change-of-control definitions .
Risk Indicators & Red Flags
- Hedging/pledging: Pledging prohibited; hedging requires CFO pre-clearance; short sales prohibited .
- Clawback: Formal policy aligned with SEC/NYSE rules .
- Related party transactions: Board member agency commissions disclosed (Berset/Comegys), not linked to Garateix .
- Governance: Separate Chair/CEO; committees fully independent; majority independent board .
Investment Implications
- Alignment: High proportion of at-risk pay tied to net operating ratio, ROAE, BVPS growth, and TSR; significant unvested performance shares (2023/2024 cycles) align multiyear incentives, reducing near-term selling pressure as vesting dates are 2026–2027 .
- Retention/Change-of-Control: Severance at 1.5× salary+target bonus and target vesting of performance equity under qualifying terminations (post-COC) balance retention with shareholder-aligned triggers; not excessively rich by small-cap P&C standards .
- Trading signals: Upcoming time-based vesting tranches (Dec 2025/2026) and potential maximum achievement for 2024 performance awards (company disclosed expectation of max achievement recognition accounting in 2025) could add incremental share supply on vest; hedging/pledging restrictions mitigate leveraged selling risks .
- Execution risk: Continued underwriting discipline and reinsurance placements have improved combined ratios and ROE; compensation levers reinforce these priorities, but exposure to cat losses and competitive dynamics remains central to payout variability .