Charman removed as Axis chairman with $11m pay-off
Axis Capital Holdings board of directors has ousted the Bermuda re/insurers founder John Charman from his role as chairman.
Mr Charman will receive an $11 million cash pay-off as part of the termination deal, which comes after a boardroom dispute over his role.
A statement released by the company yesterday said the Axis board decided to remove Mr Charman as chairman after differences over his understanding of the role and responsibilities of the chairman position.
Mr Charman will remain on the companys board of directors and will be replaced as chairman by Michael Butt. Mr Butt had served as Axis chairman for nearly ten years before stepping down to make way for Mr Charman last month.
The close working relationship between Mr Charman and Mr Butt has proved effective for the company over the past decade, helping Axis to grow into a diversified insurer and reinsurer with shareholders equity of more than $5 billion.
Mr Charman founded Axis in the weeks after the 9/11 terrorist attacks in 2001 after raising around $1.7 billion from investors and was CEO for nearly 11 years before he retired from the role last month, to be replaced by Albert Benchimol.
Axis stated: The change in board leadership came after the board endeavoured to resolve differences with Mr Charman over his understanding of the role and responsibilities of the chairman position.
After the board and Mr Charman were unable to reach a resolution, the board concluded that the company would be best served by someone else serving as chairman and terminated Mr Charman without cause from the position of chairman under the terms of his employment agreement.
As Mr Charman was elected to the board by the companys shareholders, he will remain a member of the board of directors.
Yesterday, Mr Charman declined to comment on the matter, citing legal restrictions.
A regulatory filing by Axis yesterday revealed that Mr Charman would receive half of the money on completion of the termination, and the other half one year later.
The filing added: The change in Mr Charmans service also will result in an acceleration of the expensing of Mr Charmans outstanding share-based compensation awards and the company expects to record an additional approximately $11 million of share-based compensations costs in the second quarter of 2012.
Mr Charmans personal holding in the company, according to Yahoo Finance, is around 2.92 million shares, worth more than $92 million at yesterdays closing price. Axis shares fell 63 cents, or nearly two percent, yesterday in New York trading to close on $31.57.
Axis has been one of the biggest success stories of the 2001 Bermuda start-ups, which formed to meet the spike in demand for insurance capacity after the industry was hit by huge losses across a broad range of lines by the terrorist attacks.
In an interview with business magazine The Bottom Line last year, when he was still CEO, Mr Charman spoke about the close CEO-chairman working relationship that he had with Mr Butt, with whom he shared an office for many years.
Michael and I have a unique relationship in the industry, he told the magazine. For it to work, there has to be absolute respect for each other, for each others skills for each others characters and an understanding of transparency and openness.
Its easy to say, but very few people find the ability to exercise that on a daily basis. It may not be the right business model, but our board of directors and our staff have found it to be the best combination for Axis.
As CEO, Mr Charman was well known for having a very hands-on management style and for paying closer attention to daily activities in the company than most CEOs. He alluded to this in The Bottom Line interview.
There is not another management group in the industry that is as deeply embedded in the day-to-day activity of the company as we are, nor as close to its people, Mr Charman told the magazine.
So we really do have a sense of the reality of our activity on a daily basis, as opposed to waiting for the actuarial reports that are producing financial statements that are outdated and not necessarily relevant to the decision-making process.
The relationship through the company is a very progressive one and it gives us all a common interest. Thats the glue that binds us all together.
Apart from his business activities, Mr Charman is well known on the Island for his sponsorship of the Charman Prize, an award which recognises the Islands best artwork.
Further afield, he became the centre of media attention over his £48 million 2006 divorce settlement, thought to be the largest in UK history.
Henry Smith, the lead independent director, said: The entire board would like to thank John Charman for his contribution to Axis Capitals success over the past decade.
Johns tireless years of service and work ethic have helped to build and lay the groundwork for our companys continued success for many years to come.
Commenting on Mr Butts appointment, Mr Smith said: Michael Butts success as chairman is proven, having served the company in this capacity from September 2002 to May 2012. As chairman, he assures Axis Capital and its stakeholders with four decades of related industry experience and a thorough understanding of the company.
Michael previously served as the Chairman of the Association of Bermuda Insurers and Reinsurers from January 2008 through December 2009, and has served as a director at several publicly-traded insurance companies.
In the company statement, Mr Butt said: I look forward to returning to the role of chairman of Axis Capital and want to reiterate the boards full support for our current strategy, our CEO Albert Benchimol and the companys strong management team.
We are confident that Albert and the team will continue to build the value of the company for the long-term benefit of all stakeholders.
Rose heading to Bermuda
Spirit gaining ground
Dickinson hangs on to win thriller
Tyrone qualifies for World Championships
Ton-up Jones destroys Somerset
Haddrell wins Strokeplay Championship
Town and Force share the spoils
Take Our Poll