Brian Lam
SAFETY INSURANCE GROUPAbout Brian Lam
Brian S. Lam is Vice President – Insurance Operations at Safety Insurance Group (SAFT), appointed effective March 1, 2024, after serving as Director of Insurance Operations & Customer Engagement since 2014; he joined Safety in 2002 and serves on the Deep Customer Connections Innovators Committee . He is 45 years old and has 23 years of service with Safety as of the 2025 proxy record; his role spans day-to-day insurance operations and customer engagement . Company performance context during his early tenure as VP: 2024 direct written premiums grew 20.4% with policy counts up 8.5% and average premium per policy up 10.9%, while the combined ratio was 101.1% and non‑GAAP operating EPS was $4.16; long‐term TSR from IPO through 12/31/24 was 1,428%, with 1‑yr 13%, 3‑yr 11%, and 5‑yr 11% .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Safety Insurance Group | Director, Insurance Operations & Customer Engagement | 2014–Feb 2024 | Led core insurance operations and customer engagement initiatives . |
| Safety Insurance Group | Various roles | 2002–2014 | Progressive operating roles since joining in 2002 . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Deep Customer Connections | Innovators Committee member | n/a | External forum for customer experience/innovation best practices . |
Fixed Compensation
| Element | 2024 structure for Other Executive Officers (non‑CEO) | Notes |
|---|---|---|
| Annual Performance Incentive (cash) | Threshold: 30% of salary; Target: 60%; Maximum: 90% of salary . | Executives are eligible under the amended & restated plan; Committee may select other objectives . |
| 2024 Company funding outcome | EBIT‑like metric (EBIT adjusted for equity unrealized and credit loss) Target: $62.3m; Actual: $86.4m; Funded at 139% of target . | At 139% of target, an eligible Other Executive Officer’s payout equals 0.60 × 1.39 ≈ 83.4% of base salary (derived from disclosed targets and funding) . |
| 2023 Company funding outcome | 0% of target (below threshold) . | Reflects pay‑for‑performance mechanics . |
| Plan governance updates (2024) | Removed outdated per‑person payout cap; removed legacy 162(m) references; allowed broader performance objective selection . | Effective for 2024 awards . |
Deferred compensation: Executives eligible for the performance‑based Executive Incentive Compensation Plan (EICP), which allocates 1.75% of insurance subsidiaries’ annual statutory net income to a deferred pool; company also matches supplemental deferrals at 75% up to 8% of compensation under the EICP . (Individual amounts for Mr. Lam are not disclosed.)
Performance Compensation
| Program | Metric | Weighting | Target | Actual | Payout mechanics | Vesting |
|---|---|---|---|---|---|---|
| Annual Incentive (cash) | Earnings before interest, taxes, changes in unrealized gains on equity securities and credit loss expense | 100% | $62.3m (2024) | $86.4m (2024) | 139% of target payout for 2024; 50%–150% payout range around target; 2023 funded at 0% | Paid following performance year . |
| Long‑Term Incentive – Performance Shares | 3‑year average combined ratio (vs peer target) | 60% | 96.7% = 100% payout (illustrative schedule) | 2022–2024 combined ratio 102.0% = 58% payout component | Payout curve 0%–200% based on combined ratio vs targets | Cliff vests after 3 years . |
| Long‑Term Incentive – Performance Shares | 3‑year relative TSR vs peer group | 40% | 50th percentile = 100% payout | 2022–2024 TSR 16% = 22nd percentile → 0% payout component | 0%–200% payout; capped at 100% if absolute TSR is negative | Cliff vests after 3 years . |
| 2022–2024 performance cycle (actual) | Blended payout | — | — | 34.8% of target (58% from combined ratio; 0% from TSR) | Applies to performance share cycle granted 2/23/2022 . | Vests on cycle end . |
| Time‑based RS | Time vesting | — | — | — | 30%/30%/40% over 3 years | Annual tranches; retirement provisions apply . |
Additional plan features and controls:
- Retirement provisions: time‑vested RS accelerate upon eligible retirement; performance shares prorate based on service with payout at actual performance .
- Equity plan prohibits share recycling and option repricing without shareholder approval .
- 2024 executive LTI mix guidance: 55% performance‑based, 45% time‑based (Committee approach) .
Equity Ownership & Alignment
- Trading plans: Mr. Lam adopted Rule 10b5‑1 trading plans authorizing potential sales up to 405 shares (Feb–Sep 2025 window) and up to 575 shares (Feb–Sep 2026 window), explicitly tied to expected vesting and sell‑to‑cover transactions .
- Ownership guidelines: Executives must hold stock equal to 3× base salary; includes vested shares and unvested time‑based RS; directors’ guideline is 4× cash retainer .
- Anti‑hedging/pledging policy: Hedging and pledging of company stock are prohibited; insider trading policy mandates trades via pre‑approved plans .
- Clawback: Dodd‑Frank compliant recoupment policy requires recovery of erroneously awarded incentive compensation after both “Big R” and “little r” restatements, regardless of fault .
(Individual share ownership amounts for Mr. Lam are not disclosed in the proxy’s beneficial ownership table, which covers directors and Named Executive Officers only) .
Employment Terms
- Employment agreement: “Employment Agreement by and between Safety Insurance Group, Inc. and Brian S. Lam as of March 1, 2024” is filed as an exhibit to the 2024 Form 10‑K .
- Company practice for executive agreements (as described for Named Executive Officers):
- Severance without cause/good reason: lump sum equal to remaining term salary, plus continuation of life/health benefits for the remaining term; payment of earned but unpaid salary/bonus .
- Change‑in‑control (double‑trigger): upon qualifying termination within three years of a change in control, acceleration of RS under plan terms, annual incentive at target for current period, and cash severance multiples (3× salary+most recent bonus for CEO/CFO; 2× for other NEOs), plus life/health benefits for three years (CEO/CFO) or two years (other NEOs) .
- Non‑compete and non‑solicitation covenants; confidentiality obligations .
- Equity plan treatment: Awards vest upon qualifying termination in connection with change in control (double trigger); time‑based RS granted in years prior to termination may vest on certain involuntary terminations without cause per plan terms .
Note: Specific severance/change‑in‑control multiples in Mr. Lam’s individual agreement are not itemized in the proxy; refer to the filed agreement for definitive terms .
Compensation Structure Analysis
- Increased at‑risk pay: Safety targets high “pay at risk” for executives via annual and long‑term incentives, with CEO at 72% at‑risk in 2024; the A&R Incentive Plan broadened metrics and removed outdated caps, reinforcing variable pay linkage .
- Strong performance linkage: Annual plan paid 139% of target in 2024 on EBIT‑like performance; 2023 paid 0%, demonstrating downside sensitivity .
- Long‑term calibration: 2022–2024 performance share payout at 34.8% reflects below‑target profitability/TSR, aligning realized pay with results; negative TSR cap remains shareholder‑friendly .
- Governance controls: No option repricing, robust clawback, anti‑hedging/pledging, ownership guidelines, and double‑trigger CIC treatment mitigate misalignment risk .
Performance & Track Record (context)
- 2024 operating backdrop: 20.4% direct written premium growth, but elevated PPA loss ratio drove a 101.1% combined ratio; non‑GAAP operating EPS $4.16; EBIT‑like metric of $86.4m vs $18.3m in 2023 .
- Pay‑versus‑performance: Company’s disclosed CAP tracks TSR and combined ratio dynamics, highlighting alignment of equity values with performance .
Equity Ownership & Insider Selling Pressure (signals)
| Item | Detail | Implication |
|---|---|---|
| 10b5‑1 plan (2024) | Up to 405 shares (Feb–Sep 2025) tied to expected vesting/sell‑to‑cover . | Programmatic liquidity tied to tax/withholding; minimal directional signal. |
| 10b5‑1 plan (2025) | Up to 575 shares (Feb–Sep 2026) tied to expected vesting/sell‑to‑cover . | Modest size suggests limited incremental selling pressure. |
| Hedging/pledging | Prohibited by policy . | Reduces alignment risk and forced‑sale risk. |
Compensation Peer Group (benchmarking reference)
Safety benchmarked against a 15‑company compensation peer set in 2024 (e.g., Palomar, RLI, Selective, Universal Insurance, Skyward Specialty, etc.), with adjustments removing Hallmark and Hanover for size/market cap reasons . This underpins market‑median salary targets and at‑risk incentive design .
Say‑on‑Pay & Shareholder Feedback
Say‑on‑Pay support was 97.7% in 2024, indicating broad shareholder approval of compensation design and outcomes .
Investment Implications
- Alignment and risk controls: Executive incentives are tightly linked to profitability (combined ratio) and shareholder returns (relative TSR), with clawback, anti‑hedging/pledging, and double‑trigger CIC, supporting long‑term alignment and lowering governance risk .
- Retention and continuity: Mr. Lam’s long tenure (since 2002) and elevation to VP in 2024, coupled with annual renewable employment agreements and standard severance protections, indicate moderate retention risk and operational continuity in core insurance operations .
- Performance pressure: The 2022–2024 LTI payout at 34.8% and a 101.1% 2024 combined ratio emphasize ongoing execution to normalize profitability; annual incentive cyclicality (0% in 2023 vs 139% in 2024) underscores earnings sensitivity to underwriting results .
- Trading signal: Mr. Lam’s 10b5‑1 plans are modest and tied to vesting‑related sell‑to‑cover needs, suggesting limited incremental insider‑selling overhang specific to him .