Michael Barnes
About Michael Barnes
Michael G. Barnes, age 58, is Executive Chairman and Chairman of the Board at Tiptree Inc., serving as a director since August 2010; he founded Tiptree’s predecessor (TFP) in 2007, served as CEO until 2012, and has led structured credit businesses at UBS, PaineWebber, and Bear Stearns . Under his leadership, Tiptree’s FY2024 revenues grew 23.9% to $2,042.9 million with adjusted net income up 61.6% to $100.1 million; TSR (stock price plus dividends) was 12.6% in 2024 and 22.6% over 5 years, and long-term annualized TSR since June 2007 is 10.7% . The Board recognizes Barnes’ dual role as non-independent Chairman and Executive Chairman and mitigates with a Lead Independent Director .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Tiptree Financial Partners (TFP) | Founder, CEO (later Chairman) | Founded 2007; CEO until 2012; Chairman until merger in 2018 | Built permanent capital platform; predecessor to TIPT; foundation for diversified financial services |
| UBS Principal Finance LLC | Head of Structured Credit Arbitrage | Joined 2000; served two years (c. 2000–2002) | Led proprietary structured credit trading; integrated post UBS–PaineWebber merger |
| PaineWebber | Managing Director; Global Head Structured Credit Products | 1999–2000 | Led structured credit product group globally |
| Bear Stearns | Head, Structured Transactions Group | 12 years prior to 1999; last 5 years as group head | Built and scaled structured transactions; senior leadership in fixed income |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Philadelphia Financial Group, Inc. | Chairman of the Board | 2010–2015 | Oversight of private placement life insurance/annuity platform |
| Care Investment Trust Inc. | Chairman of the Board | 2010–2018 | Governance of senior living real estate company |
| Tiptree Advisors Holdings, L.P. (f/k/a Corvid Peak) | Founding Partner/Principal | Since 2003 (affiliates); control combination in 2019 | Investment advisory to Fortegra/Tiptree portfolios; related-party economics |
Fixed Compensation
| Year | Base Salary ($) | Actual Cash Bonus ($) | Stock Awards ($) | Other Compensation ($) | Total ($) |
|---|---|---|---|---|---|
| 2024 | 1,100,000 | 0 | 5,753,000 (550,000 PRSUs granted 1/1/2024) | 81,324 (MERP, travel, tax gross-ups) | 6,934,324 |
| 2023 | 1,000,000 | 4,382,697 | 0 | 61,998 | 5,444,695 |
| 2022 | 1,000,000 | 3,227,466 | 0 | 63,183 | 4,290,649 |
- Note: In lieu of 2024 cash bonus, the CNG Committee awarded 60,813 TIPT shares to Barnes (from a pool set by Adjusted EBITDA), and 550,000 PRSUs were granted on 1/1/2024 with a $70 share-price performance condition .
Performance Compensation
| Metric | Weighting/Design | Target | Actual (FY2024) | Payout | Vesting/Timing |
|---|---|---|---|---|---|
| Adjusted EBITDA Pool (Exec Committee) | 7.0% of Adjusted EBITDA before Exec Committee comp; Barnes allocation 3.5% | n/a | Adjusted EBITDA $153,983k | 60,813 shares (stock in lieu of cash) | Shares delivered; PRSU program separate |
| PRSUs (2021 grant) | Price hurdles: $30–$60 (adjusted for dividends); 10-year term | Price milestones | 1,200,000 PRSUs unvested as of 12/31/2024 | Vests only on achieving price hurdles; remains eligible after qualifying retirement dates | Expires 8/4/2031; performance-only vest; service conditions as noted |
| PRSUs (2024 grant) | One hurdle: $70 (adjusted for dividends); 10-year term | Price milestone | 550,000 PRSUs unvested as of 12/31/2024 | Vests only on achieving $70 target; remains eligible after 1/1/2027 retirement threshold | Expires 1/1/2034; performance-only vest; service conditions as noted |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 10,479,835 shares (9,902,095 shares + 516,927 vested options) = 27.57% of outstanding as of 3/10/2025 |
| Unvested performance RSUs | 1,750,000 PRSUs (1,200,000 from 2021; 550,000 from 2024) |
| Stock options (exercisable/unexercisable) | 46,494 @ $5.67 (1/4/2016) ; 4,649 @ $5.87 (3/10/2016) ; 112,015 @ $6.65 (2/22/2017) ; 93,332 @ $5.85 (2/26/2018) ; 90,326 @ $6.26 (2/26/2019) ; 113,408 exercisable + 56,703 unexercisable @ $7.25 (2/20/2020; 56,703 vest on 2/26/2025) |
| Hedging/pledging policy | Hedging prohibited; pledging permitted up to 25% loan-to-value for directors/employees; no disclosure of Barnes’ pledged amount |
| Ownership guidelines | Not disclosed in proxy for executives; director equity retainer program disclosed separately |
Employment Terms
| Provision | Executive Chairman Agreement Detail |
|---|---|
| Agreement dates/role | Executive Employment Agreement dated Feb 1, 2018; Executive Chairman |
| Severance (without cause/good reason/death/disability) | Lump sum equal to 2x base salary plus average of prior two annual bonuses, multiplied by two; as of 12/31/2024, estimated $6,582,697 |
| Equity treatment (separation) | Time-based vesting condition fully satisfied; PRSUs remain outstanding and eligible to vest upon achieving share-price targets, subject to retirement thresholds (2021 PRSUs after 8/4/2024; 2024 PRSUs after 1/1/2027) |
| Change-of-control | RSUs accelerate; option time-vesting waived; PRSUs vest only to extent price hurdles met at transaction, otherwise forfeited unless assumed |
| Clawback | Policy effective 10/1/2023; recovery of erroneously awarded incentive comp after restatements per SEC/Dodd-Frank |
| Tax gross-ups | No 280G/409A tax gross-ups in executive agreements; perquisite tax gross-up reimbursements observed (e.g., travel-related taxes) |
Board Governance
- Role: Non-independent Chairman and Executive Chairman; Lead Independent Director (Lesley Goldwasser) presides over executive sessions and when Chairman is absent .
- Committees: Audit and CNG committees comprise four independent directors; Barnes is not a member; Audit chaired by Paul M. Friedman; CNG chaired by Dominique Mielle .
- Attendance: In FY2024, Board met 5 times; Audit 5; CNG 5; all directors attended ≥75% of meetings of Board/committees on which they served .
- Independence: Four of seven directors deemed independent under Nasdaq/SEC rules .
Director Compensation (as applicable)
- Barnes receives no additional director fees; his compensation is entirely through executive pay .
- Non-employee director program (FY2024): $112,500 cash + $112,500 stock (quarterly), optional up to $150,000 stock; Lead Director +$25,000; Audit Chair +$20,000; CNG Chair +$15,000; increased cash retainer to $137,500 effective 1/1/2025 .
Related-Party Transactions (Governance Red Flags)
- Tiptree Advisors (formerly Corvid Peak): Controlled by Barnes; Tiptree pays investment management/incentive fees; fees were ~$6.7 million in FY2024; Tiptree holds a 52% economic interest in certain profit shares of Tiptree Advisors as of 1/1/2025, with call/put rights between 2026–2030 on remaining interests; outstanding TSA receivable ~$866,000 as of 12/31/2024 . Prior disclosure: ~$5.2 million fees in FY2023 (Corvid Peak) .
- Insider Trading Policy permits limited pledging (up to 25% LTV), which can create misalignment risk if used; actual pledges by Barnes not disclosed .
Performance & Track Record
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenues ($000s) | 2,042,854 | 1,649,031 |
| Net income attributable to common ($000s) | 53,367 | 13,951 |
| Adjusted net income ($000s) | 100,060 | 61,917 |
| Return on average equity (%) | 12.2% | 3.4% |
| Adjusted ROAE (%) | 22.9% | 15.2% |
| TSR (Stock + Dividends, 1-yr) | 12.6% | 38.4% |
| TSR (5-yr) | 22.6% | 29.8% |
- Pay versus performance: Compensation “actually paid” vs TSR and Adjusted EBITDA disclosed per Item 402(v); FY2024 compensation actually paid to Barnes $10.20 million alongside company TSR 112.74 and Adjusted EBITDA $153,983k . FY2023 compensation actually paid $13.02 million; Adjusted EBITDA $112,379k .
Compensation Structure Analysis
- Shift to long-dated PRSUs with high hurdle ($70) embeds strong alignment with long-term price appreciation; 2024 PRSU grant covers multi-year LTIP, reducing near-term equity grants and emphasizing long-term value creation .
- Annual bonus pool tied to Adjusted EBITDA emphasizes consolidated operating/allocational performance; 2024 Executive Committee bonus for Barnes paid entirely in stock (60,813 shares), limiting cash comp and reinforcing alignment .
- No option repricing; clawback in place; no 280G/409A gross-ups; however, perquisite tax gross-up reimbursements (e.g., travel-related) are present and shareholder-unfriendly .
- CNG uses independent consultant (CAP); does not benchmark formally but reviews industry practices; 2023 say-on-pay passed with 71% support; engagement with investors acknowledged .
Equity Award and Vesting Detail (Barnes)
| Award Type | Grant Date | Quantity | Condition | Status/Expiry |
|---|---|---|---|---|
| PRSUs (2021) | 8/4/2021 | 1,200,000 unvested remaining | Price hurdles $30–$60 (dividend-adjusted) | Eligible post-8/4/2024 retirement threshold; expire 8/4/2031 |
| PRSUs (2024) | 1/1/2024 | 550,000 | Price hurdle $70 (dividend-adjusted) | Eligible post-1/1/2027 retirement threshold; expire 1/1/2034 |
| Options | Multiple 2016–2020 | See counts/exercise prices above | Time-based vesting; performance met | Remaining tranche (56,703) vests 2/26/2025 |
Vesting Schedules and Insider Selling Pressure
- 2024 deliveries from vested PRSUs: 200,000 shares were issued to Barnes on 10/30/2024 (closing price $19.72), as part of PRSU vesting; equity delivery can create near-term supply and potential selling pressure absent trading restrictions/10b5-1 plans . Executive Committee 2024 bonus delivered as 60,813 shares, further increasing potential float .
- Company Insider Trading Policy restricts trading/hedging and sets blackout/control protocols; pledging allowed within strict limits, which should be monitored .
Say-on-Pay & Shareholder Feedback
- 2023 advisory vote approval: 71%; CNG noted investor feedback and considered in 2024 decisions .
Compensation Committee Analysis
- Members: Dominique Mielle (Chair), Paul M. Friedman, Lesley Goldwasser, Bradley E. Smith; all independent; CAP as consultant; negative discretion reserved; clawback policy in effect .
- Key measure linking pay to performance: Adjusted EBITDA selected as “company-selected measure” for Item 402(v) disclosure .
Risk Indicators & Red Flags
- Related-party economics with Tiptree Advisors (fees $6.7m in 2024; ownership/puts/calls with Barnes) warrant continued Audit Committee oversight and clear arm’s-length validation .
- Perquisite tax gross-ups (e.g., for travel reimbursements) are shareholder-unfriendly and could depress say-on-pay support if expanded .
- Dual role (Chairman + Executive Chairman) entails independence concerns; mitigated by Lead Director and majority-independent board, but still a governance risk to monitor .
- Pledging permitted under policy (up to 25% LTV); actual pledges not disclosed; monitor for collateralization risks .
Investment Implications
- Alignment: Large personal stake (27.6%) and PRSUs tied to ambitious $70 price hurdle support strong alignment and long-term value focus; 2024 stock-delivered bonus further reduces fixed cash cost and enhances skin-in-the-game .
- Retention: Severance economics are meaningful but standard for a founder-executive; PRSUs remain eligible post-retirement thresholds and change-of-control vests only upon price hurdle achievement—reducing windfall risk and reinforcing pay-for-performance .
- Trading signals: Significant PRSU vesting/stock deliveries in 2H24 (200,000 shares) and stock-paid bonus (60,813 shares) increase potential short-term supply; absence of disclosed hedging and blackout policy reduces manipulation risk, but monitor Form 4s and any 10b5-1 plans for selling cadence .
- Governance: Related-party advisory fees and dual-role governance are notable risks; Lead Independent Director structure, independent committees, and clawback policy provide mitigants; continued transparency and arm’s-length validation are essential .
Overall: Barnes’ compensation structure is heavily performance-oriented (Adjusted EBITDA cash pool; multi-year PRSUs with high share-price hurdles) and coupled with substantial equity ownership, suggests alignment with long-term shareholder value. Key watch items are related-party transactions, perquisite tax gross-ups, and potential insider selling pressure around vesting events, balanced by independent oversight and clawback protections .