Verisk Analytics Inc
For the period ended May 15, 2024. Filed Apr 5, 2024.
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What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
May 15, 2024 · Filed Apr 5, 2024
Contents
Pay Versus Performance
In accordance with the SEC’s disclosure requirements regarding pay versus performance (“PVP”), this section presents the
SEC-defined
“Compensation Actually Paid” (“CAP”). Also as required by the SEC, this section compares CAP to relevant performance metrics for the Company.
Most Important Metrics Used for Linking Pay and Performance
The list below shows, in compliance with PVP regulations, the most important metrics the Company and the Talent Management and Compensation Committee used in the most recent fiscal year to link CAP to Company performance. These measures, along with others, significantly impact compensation outcomes for the NEOs.
Metrics
Adjusted EBITDA
Revenue
Relative TSR
Incremental ROIC
We consider Adjusted EBITDA to be the most important financial measure used to link CAP with performance in 2023 because it (1) measures our ability to balance revenue achievement with cost management and investing for future growth, (2) is used to determine 40% of the annual STI award payout for our NEOs, and (3) is strongly correlated to our stock price performance. Accordingly, Adjusted EBITDA is our Company Selected Measure reported in the table below. See Appendix A for a reconciliation of the
non-GAAP
measures discussed herein to the most directly comparable GAAP measure.
Pay versus Performance Table
In accordance with the SEC’s PVP rules, the following table sets forth the compensation for the PEO and the average compensation for the other NEOs, both as reported in the 2023 Summary Compensation Table (“SCT”) above in this Proxy Statement and with certain adjustments to reflect the CAP to such individuals, for each of 2023, 2022, 2021, and 2020. The table also provides information on the Company cumulative TSR, the cumulative TSR of the Company’s peer group, GAAP Net Income and Adjusted EBITDA.
| Year(1) · Summary CompensationTable Total for PEO · Compensation Actually Paidto PEO(2)(3)(4) · AverageSummaryCompensationTable Totalfor Non-PEONEOs · AverageCompensationActuallyPaid toNon-PEONEOs(2)(3)(4) · Value of InitialFixed $100InvestmentBased on: · GAAPNetIncome($M)(6) · AdjustedEBITDA(7) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Stephenson · Shavel · Stephenson · Shavel · VeriskTSR(f) · PeerGroupTSR (5)(g) | |||||||||||
| (a) · (b) · (b) · (c) · (c) · (d) · (e) · (h) · (i) | |||||||||||
| 2023 | N/A | $10,366,566 | N/A | $21,717,026 | $3,090,834 | $5,238,100 | $164.08 | $151.16 | $614 | $1,433 | |
| 2022 | $11,539,051 | $9,497,341 | ($ | 6,332,838) | $6,732,273 | $4,134,272 | $2,547,625 | $120.44 | $117.78 | $954 | $1,285 |
| 2021 | $12,796,321 | N/A | $16,416,053 | N/A | $3,207,448 | $3,917,525 | $155.07 | $153.33 | $666 | $1,248 | |
| 2020 | $10,013,372 | N/A | $27,909,134 | N/A | $3,262,117 | $7,939,143 | $139.89 | $128.58 | $713 | $1,376 | |
| (1) | Scott G. Stephenson was the PEO in 2020, 2021 and from January 1, 2022 through his retirement on May 25, 2022. Beginning on May 25, 2022, Lee M. Shavel was the PEO. For 2023, the non-PEO NEOs included Elizabeth D. Mann, Nick Daffan, Kathy Card Beckles and Sunita Holzer. For 2022, the non-PEO NEOs included Elizabeth D. Mann, Nick Daffan, Kathy Card Beckles and Mark V. Anquillare. For 2021, the non-PEO NEOs included Lee M. Shavel, Nick Daffan, Kathy Card Beckles and Mark V. Anquillare. For 2020, the non-PEO NEOs included Lee M. Shavel, Nick Daffan, Mark V. Anquillare and Kenneth E. Thompson. |
50 | Verisk 2024 Proxy Statement
| (2) | SEC rules require certain adjustments be made to the amounts reported in the Summary Compensation Table to determine CAP, as reported in the PVP table above. The following tables detail the applicable adjustments that were made to determine CAP by deducting and adding the following amounts from the “Total” column of the Summary Compensation Table and does not reflect the actual amounts of compensation earned by or paid to such NEOs during the applicable year. |
| PEO SCT Total to CAP Reconciliation · 2023 · 2022 · 2021 · 2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Shavel · Stephenson · Shavel · Stephenson · Stephenson | ||||||||||
| Summary Compensation Table Total | $10,366,566 | $11,539,051 | $9,497,341 | $12,796,321 | $10,013,372 | |||||
| Deduction for SCT “Stock Awards” column value | ($ | 5,919,999) | ($ | 8,400,001) | ($ | 6,420,689) | ($ | 7,875,006) | ($ | 5,625,065) |
| Deduction for SCT “Option Awards” column value | ($ | 1,480,011) | ($ | 2,100,016) | ($ | 1,105,324) | ($ | 2,625,006) | ($ | 1,874,942) |
| Deduction for SCT “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column value | $0 | $0 | $0 | ($ | 98,355) | ($ | 73,496) | |||
| Total Deductions from SCT | ($ | 7,400,010) | ($ | 10,500,017) | ($ | 7,526,013) | ($ | 10,598,367) | ($ | 7,573,503) |
| Increase for service cost and prior service cost for pension plans | $0 | $0 | $0 | $0 | $0 | |||||
| Increase for year-end fair value of unvested equity granted during the year | $11,356,589 | $2,686,913 | $7,539,174 | $14,021,396 | $13,298,392 | |||||
| Increase /(deduction) for change in fair value of unvested equity granted in prior years | $6,371,264 | ($ | 3,245,127) | ($ | 1,743,448) | $2,539,694 | $10,128,267 | |||
| Increase for vesting date fair value of equity granted and vested during the year | $0 | $1,751,269 | $0 | $0 | $0 | |||||
| Increase /(deduction) for change in fair value of vested equity granted in prior years | $1,022,617 | ($ | 8,564,927) | ($ | 1,034,781) | ($ | 2,342,991) | $2,042,605 | ||
| Increase based on value of dividends not otherwise reflected in fair value or total compensation | $0 | $0 | $0 | $0 | $0 | |||||
| Total Adjustments | $18,750,470 | ($ | 7,371,873) | $4,760,945 | $14,218,099 | $25,469,265 | ||||
| Compensation Actually Paid(SCT minus deductions plus total adjustments) | $21,717,026 | ($ | 6,332,838) | $6,732,273 | $16,416,053 | $27,909,134 | ||||
| Average Non-PEO NEO SCT Total to CAP Reconciliation · 2023 · 2022 · 2021 · 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Summary Compensation Table Total | $3,090,834 | $4,134,272 | $3,207,448 | $3,262,117 | ||||
| Deduction for SCT “Stock Awards” column value | ($ | 1,309,988) | ($ | 2,690,771) | ($ | 1,520,386) | ($ | 1,373,430) |
| Deduction for SCT “Option Awards” column value | ($ | 327,511) | ($ | 297,717) | ($ | 425,107) | ($ | 457,820) |
| Deduction for SCT “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column value | $0 | $0 | ($ | 58,174) | ($ | 66,761) | ||
| Total Deductions from SCT | ($ | 1,637,499) | ($ | 2,988,488) | ($ | 2,003,667) | ($ | 1,898,011) |
| Increase for service cost and prior service cost for pension plans | $0 | $0 | $0 | $0 | ||||
| Increase for year-end fair value of unvested equity granted during the year | $2,513,010 | $2,821,246 | $2,587,735 | $3,247,054 | ||||
| Increase /(deduction) for change in fair value of unvested equity granted in prior years | $947,600 | ($ | 835,414) | $551,657 | $2,768,097 | |||
| Increase for vesting date fair value of equity granted and vested during the year | $0 | $0 | $0 | $0 | ||||
| Increase /(deduction) for change in fair value of vested equity granted in prior years | $324,155 | ($ | 583,991) | ($ | 425,648) | $559,886 | ||
| Increase based on value of dividends not otherwise reflected in fair value or total compensation | $0 | $0 | $0 | $0 | ||||
| Total Adjustments | $3,784,765 | $1,401,841 | $2,713,744 | $6,575,037 | ||||
| Compensation Actually Paid(SCT minus deductions plus total adjustments) | $5,238,100 | $2,547,625 | $3,917,525 | $7,939,143 | ||||
| (3) | The fair value of PSUs reporting for CAP purposes in columns (c) and (e) assumes estimated performance results as of the end of each fiscal year for internal metrics (i.e., EBITDA & ROIC) and Monte Carlo simulation valuation model for market metrics (i.e., TSR vs. performance peer group), in accordance with FASB ASC 718. PSUs will ultimately vest based on measured performance through the end of the three-year performance period for the relevant metrics. |
| (4) | The fair value of stock option awards reporting for CAP purposes in columns (c) and (e) was determined using the Black-Scholes option pricing model using materially the same assumptions as disclosed at the initial grant. |
| (5) | Reflects the total shareholder return indexed to $100 per share for the fourteen-company peer group we use for executive compensation benchmarking purposes which is also the industry line peer group reported in our Annual Report on Form 10-K for the year ended December 31, 2023. Two companies in the peer group from the prior year Pay versus Performance disclosure (CoreLogic and IHS Markit) are no longer publicly-traded and were replaced in the current peer group. The comparable cumulative total shareholder return for the prior peer group for the periods starting on January 1, 2020 and ending on December 31st of the following years would be: 2020 ($127.85), 2021 ($154.89), 2022 ($119.74), and 2023 ($156.83). |
| (6) | Reflects “Net Income” for each applicable year as set forth in our Consolidated Statements of Operations included in our Annual Report on Form 10-K for each of the applicable years. |
| (7) | Reflects the Adjusted EBITDA amounts for each applicable year as set forth in our earnings release filed as an exhibit in our Current Report on Form 8-K for each of the applicable years. In 2023, our Talent Management and Compensation Committee used Adjusted EBITDA on an absolute dollar basis, and in years 2020-2022 used Adjusted EBITDA year-over-year percentage growth rates, to determine our NEOs STI outcomes. EBITDA represents GAAP Net Income from continuing operations adjusted for (i) depreciation and amortization of fixed assets; (ii) amortization of intangible assets; (iii) interest expense; and (iv) provision for income taxes. Adjusted EBITDA represents EBITDA adjusted for acquisition-related costs (earn-outs), gain/loss from dispositions (which includes businesses held for sale), and nonrecurring gain/loss. Adjusted EBITDA was subject to further normalization by our Talent Management and Compensation Committee in 2023 to eliminate the financial impact of certain items, including, among others, contributions from acquisitions not included in the Company’s budget, the timing of the divestiture of the Energy business, and the impact of foreign currency exchange rate changes. |
Pay versus Performance Description of Relationships
We align pay with Company performance to support our
pay-for-performance
culture that links funding for STI and LTI programs to Company performance measured against predetermined goals. Moreover, individual employee performance is considered in determining individual awards. The year-over-year changes in CAP are primarily due to the result of our stock performance and varying levels of achievement
against pre-established
performance goals under the STI and LTI programs as described in the CD&A above.
52 | Verisk 2024 Proxy Statement
Relationship Between Compensation Actually Paid and Company TSR, and Comparison of Peer TSR versus Company TSR
The following graph sets forth the relationship between “Compensation Actually Paid” to our PEO(s), the average of “Compensation Actually Paid” to our other NEOs, and our Company’s cumulative TSR during the four most recently completed fiscal years, as well as a comparison of the Company’s cumulative TSR over the same period to that of the fourteen-company peer group we use for executive compensation benchmarking purposes which is also the industry line peer group reported in our Annual Report on Form
10-K
for the year ended December 31, 2023.
Relationship Between Compensation Actually Paid and GAAP Net Income
The following graph sets forth the relationship between “Compensation Actually Paid” to our PEO(s), the average of “Compensation Actually Paid” to our other NEOs, and our Net Income during the four most recently completed fiscal years.
54 | Verisk 2024 Proxy Statement
Relationship Between Compensation Actually Paid and Adjusted EBITDA
The following graph sets forth the relationship between “Compensation Actually Paid” to our PEO(s), the average of “Compensation Actually Paid” to our other NEOs, and our Adjusted EBITDA during the four most recently completed fiscal years.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.