Insurance company Argo Group International Holdings has agreed to pay $900,000 to settle charges that it failed to disclose more than $5.3 million in perks to its former CEO, including personal use of corporate aircraft.
Mark Watson stepped down as CEO in November 2019, shortly after Argo said it had received subpoenas from the U.S. Securities and Exchange Commission seeking documents related to its disclosures about executive compensation.
The SEC issued an administrative order last week finding Argo understated the value of perks it gave Watson from 2014 through 2018 by 400%, disclosing only about $1.2 million in its proxy statements when it had actually paid him more than $5.3 million worth of additional perks.
Even after activist investor Voce Capital Management accused Argo in a February 2019 letter to shareholders of misdirecting corporate assets “to support the lifestyle and hobbies of [Watson] at the expense of shareholders,” Argo allegedly failed to disclose more than $1 million worth of perks in its April 2019 proxy statement.
To settle the SEC’s charges, Argo agreed to pay a $900,000 civil penalty.
Watson became CEO of the underwriter of specialty insurance and reinsurance products in 2000 after investing in predecessor company Argonaut Group.
According to the SEC, Argo disclosed perks paid to Watson that consisted predominantly of 401(k) and retirement contributions, the imputed value of insurance coverage, supplemental executive retirement plan benefits, housing and home leave allowances, medical premiums and financial planning services.
Those same proxy statements, however, allegedly did not disclose Argo had paid for, among other things, Watson’s personal use of corporate aircraft and automobiles, helicopter trips, use of a car service by family members, club and concierge service memberships, and tickets and transportation to sporting, fashion or other entertainment events.
Voce Capital gave up a proxy fight in May 2019. In its letter to shareholders, it said Watson “appears to be quite the bon vivant” and that it was “deeply concerned that Mr. Watson’s hobbies, pet projects and the cult of personality he apparently wishes to create for himself have commandeered and corrupted Argo’s priorities.”