Argo Group International Holdings has achieved détente with an activist shareholder that complained about the company’s board and executive compensation practices during much of 2019.

The Bermuda-based specialty insurer and reinsurer said it has formed a “cooperation agreement” with Voce Capital Management to change the makeup of Argo’s board of directors, partially addressing one of Voce’s major demands. To that end, the company has appointed former Xerox executive Carol McFate to its board, where she’ll take the slot once held by former CEO and board member Mark Watson.

“We are pleased to have reached a constructive agreement with Voce and value their input as we continue to enhance our board composition and governance practices,” Thomas Bradley, chair of Argo’s Nominating and Corporate Governance Committee, said in prepared remarks.

Daniel Plants, founder and chief investment officer of Voce, said that McFate’s appointment will help Argo realize its “significant untapped value.”

“We look forward to working with Argo’s board and management in the shared pursuit of creating value for all shareholders,” Plants added in prepared remarks.

McFate will join Argo’s Nominating and Corporate Governance Committee and another committee the board will choose. She’ll be tasked with identifying and evaluating two director candidates who could run during Argo’s 2020 annual shareholder meeting. That’s where the “cooperation agreement” comes in. McFate will make her choices from a slate of individuals nominated by Voce, something Plants celebrated.

“The appointment of [McFate] to the board, the addition of two other independent directors selected with Voce’s input and [Argo’s] ongoing governance improvements are substantive and positive developments that give us confidence in the new course that Argo has charted,” Plants said.

McFate brings extensive global insurance and financial expertise to the table at Argo. As chief investment officer of Xerox Corporation from November 2006 to October 2017, she oversaw over $12 billion in retirement investment assets for North American and U.K. plans. Before Xerox, McFate served as executive vice president & global treasurer for XL Global Services Inc., a subsidiary of XL Capital Ltd., a Bermuda-based global insurance and reinsurance company. She has also held various senior executive positions with AIG and The Prudential Insurance Company of America.

Argo announced in December that five directors would retire as of the company’s 2020 annual meeting as part of a “proactive refreshment process.” That action followed months of complaints from Voce over Argo’s board and its compensation policies regarding Watson, who abruptly retired in early November.

In November, Argo called for a special meeting of the company’s shareholders to elect five independent board members. Argo said that special meeting wouldn’t be needed due to the retiring board members and an earlier-than-usual annual meeting, which will be convened as early as March 2020 instead of the usual May time frame.

Voce started complaining in early 2019 about allegedly excessive corporate expenses, including a corporate jet and luxury housing. Argo has denied all accusations, but the U.S. Securities and Exchange Commission has taken notice, revealing in the fall that it would investigate the company’s disclosures about executive compensation.

Source: Argo Group