Stephen J. Donaghy
UNIVERSAL INSURANCE HOLDINGSAbout Stephen J. Donaghy
Stephen J. Donaghy is CEO of Universal Insurance Holdings, Inc. (UVE) and a director since 2020; age 60 as of the 2025 proxy . He became CEO in 2019 after serving as COO (2016–2019) and earlier roles including CIO, CAO, CMO, Secretary, and EVP dating back to 2006, bringing deep operational experience across underwriting, technology, and administration . 2024 performance under his leadership: total revenue +9.3% to $1.5B, diluted EPS $2.01, ROAE 16.5%, net operating ratio 94.0%, and gross premiums written +7.7% . Over the 2019–2024 measurement window, UVE’s cumulative TSR implies a $100 investment ended at $96.21 vs peer index at $178.32, while net income was $58.9M in 2024 (vs $66.8M in 2023; $(22.3)M in 2022) .
Board service and governance: Donaghy serves on UVE’s board with no committee memberships and is not independent (management director) . UVE separates Chair/CEO roles (Executive Chairman: Sean P. Downes) and maintains a Lead Independent Director; board held four meetings in 2024 with all directors attending ≥75%, and independent directors met in two executive sessions . Management directors (including the CEO) receive no extra board fees .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Universal Insurance Holdings (UVE) | Chief Executive Officer | 2019–present | Provides substantial operational insight to the board and leads consolidated entity . |
| Universal Insurance Holdings (UVE) | Chief Operating Officer | 2016–2019 | Drove operations across underwriting and claims in a complex, vertically integrated structure . |
| Universal Insurance Holdings (UVE) | Chief Marketing Officer | 2015–2016 | Led marketing strategy during multi-state footprint expansion . |
| Universal Insurance Holdings (UVE) | Chief Administrative Officer | 2013–2015 | Built administrative capabilities and efficiencies . |
| Universal Insurance Holdings (UVE) | Chief Information Officer | 2009–2015 | Led technology modernization and IT governance . |
| Universal Insurance Holdings (UVE) | Secretary | 2013–2019 | Corporate governance and disclosure responsibilities . |
| Universal Insurance Holdings (UVE) | Executive Vice President | 2006–present | Senior leadership across subsidiaries and corporate functions . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| JM Family Enterprises (private) | VP Strategic Initiatives; VP Sales & Marketing; Senior Information Officer | Not disclosed (prior to joining UVE) | Senior executive roles in strategy, sales, and IT; relevant large-enterprise experience . |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base salary | $1,000,000 | $1,000,000 | $1,000,000 |
| All other compensation (insurance, 401k, auto allowance) | $770,564 | $70,534 | $69,526 |
| Notes | Salary fixed per amended agreement (no increase/decrease during term) | — | All other breakdown: Medical/Dental $18,957; Life/Disability/Other $25,819; 401(k) match $17,250; Auto allowance $7,500 |
Performance Compensation
Annual Cash Incentive (CEO) – 2024
| Metric | Weighting | Target | Actual | Payout detail | Overall CEO payout |
|---|---|---|---|---|---|
| Net operating ratio | 50% | 95% | 94.0% | Paid modestly above target based on achievement | 112.7% of target; $1,689,910 |
| GPW growth | 30% | 7% | 7.7% | Slightly above target | — |
| Qualitative | 20% | Qualitative | Achieved at target (CEO) | Committee assessment at target for CEO | — |
| Plan cap (alignment feature) | — | Cap at target unless stock ranks top-third of Russell 3000 | UVE ranked top third in 2024 | Allowed > target payout due to stock performance screen | — |
CEO target bonus opportunity is 150% of salary; threshold 75%; maximum 300% per employment agreement, with annual program design showing threshold 50%, target 100%, maximum 200% for payout mechanics .
Long-Term Equity Incentives
| Grant | Type | Grant date | Units/Value | Vesting | Performance criteria / result |
|---|---|---|---|---|---|
| 2024 annual grant | RSUs | 3/27/2024 | 43,794 units; $875,004 FV | Time-based; ratable on 3/27/2025, 3/27/2026, 3/27/2027 | N/A (time-based) |
| 2024 annual grant | PSUs | 3/27/2024 | Target 43,794 units; $875,004 FV | 3-year performance period through FY2026 | 3-year adjusted book value per share growth: Threshold 5%; Target 10–25%; Max 50%; payout factors 50%/100%/200% (CEO) |
| 2023 grant | RSUs | 3/30/2023 | Time-based | Ratable on 3/30/2025 and 3/30/2026 | N/A |
| 2022 PSUs | PSUs | 6/14/2022 | Target units (CEO/EC) | Certified and settled 2/21/2025 | 3-year adjusted BVPS growth achieved 15.7% → 138% of target; excess over target settled in cash |
Clawback: Incentive compensation recoupment policy compliant with SEC Rule 10D-1; restatement-triggered recovery over 3-year look-back since 10/2/2023 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership (common) | 1,600,328 shares; 5.7% of class as of 4/14/2025 |
| Options – exercisable | 286,046 @ $16.92 exp 4/7/2030; 375,294 @ $14.75 exp 3/1/2031; 166,667 @ $11.80 exp 3/2/2032 |
| Options – unexercisable | 83,333 @ $11.80 exp 3/2/2032 (vested 3/2/2025) |
| Per-share in-the-money (vs $21.06 close 12/31/2024) | $4.14 (21.06–16.92); $6.31 (21.06–14.75); $9.26 (21.06–11.80) |
| Unvested RSUs | 31,946 (3/30/2023 grant); 43,794 (3/27/2024 grant) |
| Unearned PSUs (at SEC-required max display) | 95,838 (2023 PSUs); 87,588 (2024 PSUs) |
| Ownership guidelines | CEO must hold ≥3x base salary; in compliance as of 3/31/2025 |
| Hedging/pledging | Prohibited (no hedging, shorting, options trading, margin, or pledging) |
| Director compensation for management | No additional board fees for CEO’s director service |
Option/RSU vesting dates near March 27 and March 30 may create mechanical selling pressure around settlement, though hedging/pledging is prohibited and recent RSU settlements have included cash settlement for some executives (e.g., CEO RSUs cash-settled at $19.89 on 4/1/2024) .
Employment Terms
| Provision | Key terms |
|---|---|
| Agreement date | Amended and restated effective 4/7/2022 |
| Base salary | $1,000,000; fixed during term (no increase/decrease) |
| Annual cash incentive | Threshold 75% of salary; Target 150%; Max 300% subject to annual objectives and program design |
| Annual LT equity target | $1,750,000; ≥50% performance-based PSUs; ≤50% time-based RSUs; PSUs over 3-year performance with 50%/100%/200% payout factors (CEO) |
| Termination (without cause / good reason) | Lump sum 12 months salary + 12 months COBRA; pro-rata annual cash incentive based on actual results |
| Change-in-control (double-trigger) | Lump sum 24 months salary + 2× prior year annual cash incentive; equity vests at target; 280G cutback if beneficial |
| Disability / death | Pro-rata annual incentive for year of termination; disability pay aligned to company LTD eligibility |
| Non-compete / other covenants | Non-compete 2 years; nonsolicit, nondisparagement, confidentiality |
| Equity award agreements | Unvested RSUs/PSUs vest at target upon certain terminations; stock options accelerate per terms; target-level vesting upon qualifying events; retirement eligibility at age 59½ with 15 years service (CEO eligible in 2024) |
Potential severance economics at 12/31/2024 (illustrative per proxy table): base salary $1.0M and annual incentive $1,689,910 would be payable under certain scenarios, with equity compensation value $5,593,963 vesting at target upon specified events; COBRA payments $39,385 under “without cause/good reason” .
Board Governance
- Director since 2020; not independent; no committee assignments .
- Chair/CEO split since 2019 (Executive Chairman: Sean P. Downes); Lead Independent Director in place; independent-only Audit, Compensation, Nominating committees .
- Attendance ≥75% for all directors in 2024; independent directors held two executive sessions .
- Management directors (CEO) receive no board retainers/grants; independent director cash retainer $85,000; annual equity $65,000 RSUs .
Dual-role implications: The Executive Chairman oversees claims/litigation/reinsurance subsidiaries, while the CEO manages the core insurance entities and consolidated operations—explicitly framed as a partnership to manage Florida homeowners insurance cyclicality; mitigants include split roles, a Lead Independent Director, independent committees, and anti-hedging/pledging policies .
Performance & Track Record
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net operating ratio (%) | 100.7% | 93.3% | 94.0% |
| Net income (loss) ($) | $(22,257,000) | $66,823,000 | $58,928,000 |
| Company TSR – value of $100 | $44.50 | $70.35 | $96.21 |
| Peer group TSR – value of $100 | $124.27 | $139.85 | $178.32 |
| Revenue growth (YoY) | — | — | +9.3% (to $1.5B) |
| Diluted EPS ($) | — | — | $2.01 |
| ROAE (%) | — | — | 16.5% |
Operational execution highlights under Executive Chairman/CEO partnership: 2024 hurricanes Debby/Helene/Milton response across >38,000 claims; reinsurance placement; subrogation process improvements; YoY reductions in incoming lawsuits (−27%) and active inventory (−31%) .
Compensation Structure Analysis
- Pay mix emphasizes at-risk compensation: ~76% of CEO’s 2024 total target pay is variable (annual cash + PSUs/RSUs) .
- Program governance: independent compensation consultant; clawbacks; stock ownership guidelines; no hedging/pledging; no option repricing; no single-trigger cash or tax gross-ups .
- Shareholder alignment features: cash incentive cap lifted only if stock performance ranks top-third of Russell 3000; ≥50% of LTIs performance-based PSUs tied to adjusted BVPS growth .
- Say-on-Pay trajectory: “disappointing” in 2023 led to outreach and design changes; 95% approval in 2024; continued annual votes .
Related Party Transactions (Red Flags)
- CEO’s son (Ryan Donaghy), Senior Software Developer at a subsidiary: base salary $165,485; total comp $248,600 in 2024; governed under related-party policy disclosures .
- Family relationships otherwise: none among current executive officers/directors; oversight via Code of Conduct and Audit Committee .
Equity Ownership & Vesting Schedules (Detail)
| Instrument | Quantity | Terms / Dates |
|---|---|---|
| Options (exercisable) | 286,046 | $16.92 strike; exp 4/7/2030; in-the-money $4.14/share vs $21.06 12/31/2024 |
| Options (exercisable) | 375,294 | $14.75 strike; exp 3/1/2031; in-the-money $6.31/share |
| Options (exercisable) | 166,667 | $11.80 strike; exp 3/2/2032; in-the-money $9.26/share |
| Options (unexercisable) | 83,333 | $11.80 strike; vested 3/2/2025 per schedule |
| RSUs (unvested) | 31,946 | 2023 grant; vest 3/30/2025 and 3/30/2026 |
| RSUs (unvested) | 43,794 | 2024 grant; ratable vest 3/27/2025, 3/27/2026, 3/27/2027 |
| PSUs (2023 – display at max per SEC) | 95,838 | 3-year performance; payout 50–200% of target based on adjusted BVPS growth |
| PSUs (2024 – display at max per SEC) | 87,588 | 3-year performance through 2026; payout 50–200% of target (CEO) |
Director Compensation (for directors; CEO as management director)
- Independent director annual cash retainer $85,000; committee chair retainers $15,000 (Comp/Invest/Nominating/Risk), $20,000 (Audit Chair, Lead Independent Director); annual equity grant ~$65,000 RSUs; vests in 1 year .
- Management directors (CEO, Executive Chairman, CAO/CIO) receive no additional board compensation .
Compensation Committee Analysis
- Committee members and independence: Chair Michael A. Pietrangelo; members Shannon A. Brown and Richard D. Peterson; independent committee, three meetings in 2024; formal report included in proxy .
- Use of independent compensation consultant and annual risk assessments; stock ownership guidelines for CEO/Executive Chairman and directors; clawback policy adopted per SEC/NYSE .
- Performance metrics emphasized: net operating ratio, GPW growth, 3-year adjusted BVPS growth .
Employment & Contracts (Retention risk)
- Agreement emphasizes retention with double-trigger CIC protections and multi-year LTI; non-compete of two years; severance 1x base + pro-rata bonus + COBRA, rising to 2x base + 2x prior-year bonus upon qualifying CIC termination (with 280G cutback if beneficial) .
- Equity awards accelerate at target under specific termination conditions; options receive favorable vesting/exercise cadence under certain scenarios .
Say-On-Pay & Shareholder Feedback
- 2024 Say-on-Pay approval ~95%; outreach and design changes after 2023 result; annual votes going forward .
Investment Implications
- Alignment signals: High at-risk mix (PSUs/RSUs) tied to adjusted BVPS growth; stock performance gate on cash incentives; strict anti-hedging/pledging; CEO is in compliance with 3x salary ownership guidelines—supportive of pay-for-performance alignment .
- Retention/trading dynamics: Upcoming RSU vest dates (March 27/30) and option schedules can produce episodic supply; however, clawback policy and no-hedging rules mitigate adverse incentives; double-trigger CIC economics (2x salary + 2x prior-year bonus) reduce involuntary departure risk .
- Execution risk: Florida homeowners exposure retains weather/regulatory cyclicality; 2024 improvement vs 2022 loss demonstrates operational discipline, but TSR has lagged peer index over five years—suggests focus on sustained underwriting profitability and capital efficiency to close the gap .
- Governance watch items: Related-party employment of CEO’s son is disclosed and policy-governed; continued monitoring warranted; 2024 Say-on-Pay recovery to 95% indicates investor acceptance of revised program .