A look at time, money, and Argo Group’s filings…

Friday the 13th may be unlucky for some, but it turned out well for Mark E. Watson III, the president/CEO of Argo Group International Holdings, Ltd. (AGII). At 5:27 p.m. that day, Argo Group filed an 8-K to disclose its new employment agreement with Watson.

The juiciest term is actually not in the 8-K itself, but in the second attachment to it, a Letter Agreement dated August 10, 2010 (attached as Exhibit 10.2 to the 8-K). The letter, which accompanied Watson’s new Executive Employment Agreement, states that the company —is pleased to offer you the following benefits in recognition of your services. Basically, Argo Group promises to pay Watson a $30,000 per month housing allowance, a $3,333 per month —home leave allowance, and a $4,000 per month educational allowance. For each category, it states that he gets the payments —while [he is] a Bermuda resident. And then comes the last — but certainly not least important — subsection:

—4. Retention Bonus. Upon execution of the Agreement and this letter the Company shall pay you a lump sum amount, in cash, equal to Three Million Dollars (US $3,000,000), payable within four (4) business days following the Effective Date.

As consideration for the payments, Watson has to deliver 65,000 shares of common stock that he owns to the company ——so that the Company can cause the shares to be restricted from transfer, disposal or encumbrance until March 15, 2014….

The Executive Employment Agreement itself, attached as Exhibit 10.1 to the 8-K, is still important, but it’s less newsworthy than the letter. Also dated August 10, 2010, it states that Watson’s tenure as top executive with Argo Group will continue through March 15, 2014. It entitles Watson to a $1 million annual base salary, but that number isn’t any higher than the base salary set out in his prior employment agreement, Exhibit 10.1 to an 8-K dated August 17, 2007. (However, the 2010 proxy, filed March 15, 2010, confirms that in 2009, Watson’s total compensation added up to more than $4.37 million.)

The agreement also assures Watson that his base salary shall be reviewed each year by the Board of Director’s Human Resources Committee ——for possible increase (but not decrease). If the company meets certain objectives, the board may give him an incentive bonus. And he’s also eligible to participate in the company’s equity compensation plans and benefits plans.

By our count, Watson probably got his $3 million check earlier this week, which may have topped last week’s good fortune – if that’s possible.

Image source: Abhijeet Rane via flickr


See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at