KINGSTONE COMPANIES, INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
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Filed
by the Registrant
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[X]
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Filed
by a Party other than the Registrant
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[ ]
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Check
the appropriate box:
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[ ]
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Preliminary
Proxy Statement
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[ ]
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Confidential,
For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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[X]
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Definitive
Proxy Statement
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[ ]
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Definitive
Additional Materials
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[ ]
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Soliciting
Material Pursuant to Section 240.14a-12
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KINGSTONE
COMPANIES, INC.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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[X]
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No fee
required
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction applies:
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3)
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Per
unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and state how it
was determined):
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4)
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Proposed
maximum aggregate value of transaction:
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[ ]
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offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or
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previously paid:
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2)
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Schedule or Registration Statement No.:
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3)
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Party:
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4)
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Date
Filed:
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1
KINGSTONE COMPANIES, INC.
15 Joys Lane
Kingston, New York 12401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 7, 2019
To the
Stockholders of Kingstone Companies, Inc.:
NOTICE IS HEREBY GIVEN
that the Annual
Meeting of Stockholders of Kingstone Companies, Inc., a Delaware
corporation (the “Company”), will be held on August 7,
2019 at 15 Joys Lane, Kingston, New York 12401, at 9:00 a.m., for
the following purposes:
1.
To elect seven
directors for the coming year.
2.
To ratify the
selection of Marcum LLP as the Company’s independent
registered public accounting firm for the fiscal year ending
December 31, 2019.
3.
To hold a
non-binding advisory vote to approve the Company’s executive
compensation.
4.
To hold a
non-binding advisory vote on the frequency of future advisory votes
to approve the Company’s executive compensation.
5.
To transact such
other business as may properly come before the
meeting.
Only
stockholders of record at the close of business on June 14, 2019
are entitled to notice of and to vote at the meeting or at any
adjournment thereof.
Important notice regarding the availability of
Proxy Materials:
We are sending a Notice of Internet
Availability of Proxy Materials (the “Notice”) to our
stockholders of record and beneficial owners, unless they have
directed us to provide the materials in a different manner. The
Notice provides instructions on how to access and review all of the
important information contained in this proxy statement, as well as
how to submit a proxy by telephone or over the Internet. If you
receive the Notice and would still like to receive a printed copy
of our proxy materials, instructions for requesting these materials
are included in the Notice. The Company plans to mail the Notice to
stockholders by June 28, 2019. The proxy statement and the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2018 are available electronically to the
Company’s stockholders of record as of the close of business
on June 14, 2019 at
www.proxyvote.com
.
Floyd
R. Tupper
Secretary
Kingston,
New York
June
28, 2019
2
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SUBMIT YOUR
PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE. FOR
SPECIFIC INSTRUCTIONS ON HOW TO VOTE YOUR SHARES, PLEASE REFER TO
THE INSTRUCTIONS ON THE NOTICE YOU RECEIVED IN THE MAIL OR, IF YOU
REQUESTED TO RECEIVE PRINTED PROXY MATERIALS, YOUR ENCLOSED PROXY
CARD. ANY STOCKHOLDER MAY REVOKE A SUBMITTED PROXY AT ANY TIME
BEFORE THE MEETING BY WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING
A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETING AND VOTING
IN PERSON. THOSE VOTING BY INTERNET OR BY TELEPHONE MAY
ALSO REVOKE THEIR PROXY BY VOTING IN PERSON AT THE MEETING OR BY
VOTING AND SUBMITTING THEIR PROXY AT A LATER TIME BY INTERNET OR BY
TELEPHONE.
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3
KINGSTONE COMPANIES, INC.
15 Joys Lane
Kingston, New York 12401
____________________________
PROXY STATEMENT
____________________________
SOLICITING, VOTING AND REVOCABILITY OF PROXY
This
proxy statement is being made available to all stockholders of
record at the close of business on June 14, 2019 in connection
with the solicitation by the Board of Directors of proxies to be
voted at the Annual Meeting of Stockholders to be held on August 7,
2019 at 9:00 a.m., local time, or any adjournment
thereof. Proxy materials for the Annual Meeting of
Stockholders were made available to stockholders on or about June
28, 2019.
All
shares represented by proxies duly executed and received will be
voted on the matters presented at the meeting in accordance with
the instructions specified in such proxies. Proxies so
received without specified instructions will be voted as
follows:
(i) FOR
the nominees named in the proxy to our Board of
Directors.
(ii)
FOR the ratification of the selection of Marcum LLP as our
independent registered public accounting firm for the fiscal year
ending December 31, 2019.
(iii)
FOR the approval of the compensation of our named executive
officers.
(iv)
FOR a frequency of EVERY ONE YEAR regarding how frequently we
should seek an advisory vote to approve our executive
compensation.
If you
are a beneficial owner of shares held in street name and you do not
provide specific voting instructions to the organization that holds
your shares, the organization will be prohibited under the current
rules of the New York Stock Exchange from voting your shares on
“non-routine” matters. This is commonly
referred to as a “broker non-vote.” The
election of directors, the advisory vote on the approval of
executive compensation and the advisory vote on the frequency of
votes to approve executive compensation are considered a
“non-routine” matters and therefore may not be voted on
by your bank or broker absent specific instructions from
you. The ratification of the selection of our
independent registered public accounting firm is a routine
matter. Please instruct your bank or broker so your vote
can be counted.
Our
Board of Directors does not know of any other matters that may be
brought before the meeting nor does it foresee or have reason to
believe that the proxy holder will have to vote for substitute or
alternate nominees to the Board of Directors. In the
event that any other matter should come before the meeting or any
nominee is not available for election, the person named in the
enclosed proxy will have discretionary authority to vote all
proxies not marked to the contrary with respect to such matters in
accordance with his best judgment.
4
The
total number of shares of common stock outstanding and entitled to
vote as of the close of business on June 14, 2019 was
10,773,849. Our common stock is the only class of
securities entitled to vote on matters presented to our
stockholders, each share being entitled to one vote. A
majority of the shares of common stock outstanding and entitled to
vote as of the close of business on June 14, 2019, 5,386,925 of
shares of common stock, must be present at the meeting in person or
by proxy in order to constitute a quorum for the transaction of
business.
Our
Restated Certificate of Incorporation provides for cumulative
voting of shares for the election of directors. This
means that each stockholder has the right to cumulate his votes and
give to one or more nominees as many votes as equals the number of
directors to be elected (seven) multiplied by the number of shares
he is entitled to vote. A stockholder may therefore cast
his votes for one nominee or distribute them among two or more of
the nominees; however, in order to cumulate votes, a stockholder
must request a proxy card (as Internet and telephone voting will
not be available for such purposes). Only stockholders
of record as of the close of business on June 14, 2019 will be
entitled to vote. With regard to the election of
directors, votes may be cast in favor or withheld. The
directors shall be elected by a plurality of the votes cast in
favor. Accordingly, based upon there being seven
nominees, each person who receives one or more votes will be
elected as a director. Votes withheld in connection with
the election of one or more of the nominees for director will not
be counted as votes cast for such individuals and may be voted for
the other nominees.
Stockholders may
expressly abstain from voting on Proposals 2, 3, and 4 by so
indicating on the proxy. Abstentions are counted as
present in the tabulation of votes on Proposals 2, 3, and
4. Since Proposals 2, 3, and 4 require the affirmative
approval of a majority of the shares of common stock present in
person or represented by proxy at the meeting and entitled to vote
(assuming a quorum is present at the meeting), abstentions will
have the effect of a negative vote while broker non-votes will have
no effect.
Any
person giving a proxy in the form accompanying this proxy statement
has the power to revoke it at any time before its
exercise. The proxy may be revoked by filing with us
written notice of revocation or a fully executed proxy bearing a
later date. The proxy may also be revoked by
affirmatively electing to vote in person while in attendance at the
meeting. However, a stockholder who attends the meeting
need not revoke a proxy given and vote in person unless the
stockholder wishes to do so. Written revocations or
amended proxies should be sent to us at 15 Joys Lane, Kingston, New
York 12401, Attention: Corporate Secretary. Those voting
by Internet or by telephone may also revoke their proxy by voting
in person at the meeting or by voting and submitting their proxy at
a later time by Internet or by telephone.
The
proxy is being solicited by our Board of Directors. We
will bear the cost of the solicitation of proxies, including the
charges and expenses of brokerage firms and other custodians,
nominees and fiduciaries for forwarding proxy materials to
beneficial owners of our shares. Solicitations will be
made primarily by Internet availability of proxy materials and by
mail, but certain of our directors, officers or employees may
solicit proxies in person or by telephone, telecopier or email
without special compensation.
A list
of stockholders entitled to vote at the meeting will be available
for examination by any stockholder for any purpose germane to the
meeting, during ordinary business hours, for ten days prior to the
meeting, at our offices located at 15 Joys Lane, Kingston, New York
12401, and also during the whole time of the meeting for inspection
by any stockholder who is present. To contact us,
stockholders should call (845) 802-7900.
5
EXECUTIVE
COMPENSATION
Executive Officers
The
following table sets forth the positions and offices presently held
by each of our current and former executive officers and their
ages:
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Name
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Age
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Positions and Offices Held
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Barry B. Goldstein
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66
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Former Chief Executive Officer, Executive Chairman of the Board and
Director
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Dale A. Thatcher
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57
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Chief Executive Officer, President and Director
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Victor J. Brodsky
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61
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Chief Financial Officer and Treasurer
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Benjamin Walden
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51
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Executive Vice President and Chief Actuary, Kingstone Insurance
Company
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Barry B. Goldstein
On
October 16, 2018, the Company announced that Mr. Goldstein would
step down as Chief Executive Officer, effective January 1, 2019.
Additionally, the Company announced that Mr. Goldstein, current
Chairman of the Board of Directors of the Company, had been named
Executive Chairman. Mr. Goldstein served as our President, Chief
Executive Officer, Chairman of the Board, and a director since
March 2001. He served as our Chief Financial Officer from March
2001 to November 2007 and as our Treasurer from May 2001 to August
2013. Since January 2006, Mr. Goldstein has served as
Chairman of the Board of Kingstone Insurance Company
(“KICO”) (formerly known as Commercial Mutual Insurance
Company), a New York property and casualty insurer, as well as
Chairman of its Executive Committee. Mr. Goldstein has served as
Chief Investment Officer of KICO since August 2008 and as its
President and Chief Executive Officer since January 2012. He was
Treasurer of KICO from March 2010 through September 2010. Effective
July 1, 2009, we acquired a 100% equity interest in KICO. From 1997
to 2004, Mr. Goldstein served as President of AIA Acquisition
Corp., which operated insurance agencies in Pennsylvania and which
sold substantially all of its assets to us in 2003. Mr. Goldstein
is a Certified Public Accountant (inactive). Mr. Goldstein received
his B.A. and M.B.A. from State University of New York at Buffalo.
We believe that Mr. Goldstein’s extensive experience in the
insurance industry, including his executive-level service with KICO
since 2006, give him the qualifications and skills to serve as one
of our directors.
Dale A. Thatcher
On
October 16, 2018, the Company announced that Mr. Thatcher would
succeed Mr. Goldstein as Chief Executive Officer, effective January
1, 2019. Mr. Thatcher was elected our Chief Operating Officer and
KICO’s President in March 2018. Mr. Thatcher is the founder
of Atherstone Partners, a consulting practice in insurance and
investments. Prior to starting Atherstone in September 2016, Mr.
Thatcher was Executive Vice President and Chief Financial Officer
for Selective Insurance Group, Inc. where he worked from April 2000
to September 2016 and previously Chief Accounting Officer for the
Ohio Casualty Group. He is a certified public accountant
(inactive), a chartered property and casualty underwriter and a
chartered life underwriter. Mr. Thatcher has served as one of our
directors since August 2017. He is an alumnus of the University of
Cincinnati and Harvard University. We believe that Mr.
Thatcher’s executive-level experience in the insurance
industry gives him the qualifications and skills to serve as one of
our directors.
6
Victor J. Brodsky
Mr.
Brodsky has served as our Chief Financial Officer since August 2009
and as our Treasurer since August 2013. He served as our Chief
Accounting Officer from August 2007 through July 2009, as our
Principal Financial Officer for Securities and Exchange Commission
(“SEC”) reporting purposes from November 2007 through
July 2009 and as our Secretary from December 2008 to August 2013.
In addition, Mr. Brodsky has served as a director of KICO since
February 2008, as Chief Financial Officer of KICO since September
2010 and as Executive Vice President of KICO since February 2017.
He also served as Senior Vice President of KICO from January 2012
to February 2017 and as Treasurer of KICO from September 2010
through December 2011. Mr. Brodsky served from May 2008 through
March 15, 2010 as Vice President of Financial Reporting and
Principal Financial Officer for SEC reporting purposes of Vertical
Branding Inc. Mr. Brodsky served as Chief Financial Officer of
Vertical Branding from March 1998 through May 2008 and as a
director of Vertical Branding from May 2002 through November 2005.
He served as its Secretary from November 2005 through May 2008 and
from April 2009 to March 15, 2010. A receiver was appointed for the
business of Vertical Branding in February 2010. Prior to joining
Vertical Branding, Mr. Brodsky spent 16 years at the CPA firm of
Michael & Adest in New York. Mr. Brodsky earned a Bachelor
of Business Administration degree from Hofstra University, with a
major in accounting, and is a licensed CPA in New
York.
Benjamin Walden
Mr.
Walden has served as Executive Vice President of KICO since
February 2017 and as Chief Actuary of KICO since December 2013.
From January 2015 to February 2017, he served as Senior Vice
President of KICO and from December 2013 to January 2015, he served
as Vice President of KICO. From February 2010 to November 2013, Mr.
Walden served as Chief Actuary for Interboro Insurance Company, a
personal lines carrier. From July 2008 to February 2010, Mr. Walden
was President of Assigned Risk Consulting, Inc., an independent
actuarial consulting firm. From October 2001 to April 2009, he
served as Vice President and Chief Actuary of AutoOne Insurance, an
assigned risk automobile servicing carrier. Mr. Walden was also an
actuarial consultant at Milliman, Inc., an independent provider of
actuarial and consulting services, from January 1998 to October
2001. Mr. Walden has been a Fellow of the Casualty Actuarial
Society since 1999 and holds a
Bachelor of Science Degree in Mathematics
from Villanova
University.
7
SUMMARY COMPENSATION TABLE
The
following table sets forth certain information concerning the
compensation for the fiscal years ended December 31, 2018 and 2017
for certain executive officers, including our Chief Executive
Officer through the end of 2018:
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Name and
Principal Position
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Year
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Salary
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Bonus
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Stock
Awards(1)
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Option
Awards(1)
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Non-Equity
Incentive
Plan
Compensation
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All
Other
Compensation
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Total
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Barry B.
Goldstein
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2018
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$
630,000
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$
-
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$
-
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$
-
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$
21,887
(3)
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$
43,784
(4)
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$
695,671
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Chief Executive
Officer
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2017
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$
630,000
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$
-
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$
-
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$
-
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$
1,670,111
(2)
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$
24,152
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$
2,324,263
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Dale A.
Thatcher
Chief
Operating
Officer
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2018
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$
398,630
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$
-
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$
750,000
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$
-
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$
59,795
(3)
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$
79,157
(4)
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$
1,287,582
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Victor J.
Brodsky
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2018
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$
350,000
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$
-
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$
140,009
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$
-
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$
17,573
(3)
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$
27,759
(4)
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$
535,341
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Chief
Financial
Officer
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2017
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$
320,000
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$
30,000
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$
149,500
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$
-
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$
49,832
(3)
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$
24,500
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$
573,832
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(1)
Amounts reflect the
aggregate grant date fair value of grants made in each respective
fiscal year computed in accordance with stock-based accounting
rules (FASB ASC Topic 718-Stock Compensation), excluding the effect
of estimated forfeitures. Assumptions used in the calculations of
these amounts are included in Note 12 to our Consolidated Financial
Statements included in our Annual Report on Form 10-K for the year
ended December 31, 2018, which accompanies this proxy
statement.
(2)
Represents bonus
compensation of $660,446 accrued pursuant to Mr. Goldstein’s
employment agreement for 2017 and paid in 2018, $945,000 of
long-term bonus compensation accrued pursuant to Mr.
Goldstein’s employment agreement and payable in 2020 if
incentive goals are maintained through December 31, 2019 and
$64,655 accrued pursuant to the KICO employee profit sharing plan
and paid in 2018. As of the date of the Annual Report, the above
referenced long-term bonus compensation accrued and payable in
2020, if incentive goals are maintained through December 31, 2019
has been reduced by $247,311.
(3)
Represents amounts
earned pursuant to the KICO employee profit sharing plan for 2018
and 2017.
(4)
For 2018, all other
compensation consists of the following items for each named
executive officer above.
●
For Mr. Goldstein,
the amount in the table above includes employer matching
contributions under our deferred compensation plan of $15,018,
employer matching contributions under our defined compensation plan
of $10,266, a car allowance of $12,000 and KICO director
fees.
●
For Mr. Thatcher,
the amount in the table above includes compensation paid to him for
his service as a non-employee director during 2018 comprised of a
cash retainer of $11,458 and restricted shares of our common stock
with a grant date fair value of $41,300, matching contributions
under our defined compensation plan of $10,615, a car allowance of
$9,567 and KICO director fees.
●
For Mr. Brodsky,
the amount in the table above includes employer matching
contributions under our defined contribution plan of $10,847, a car
allowance of $7,200 and KICO director fees.
8
Employment Contracts
Barry Goldstein
(1)
Agreement in effect
for the years ended December 31, 2017 and 2018.
Mr.
Goldstein is employed as our President, Chairman of the Board and
Chief Executive Officer pursuant to an employment agreement, dated
January 20, 2017 (the “Goldstein Employment
Agreement”), that expired on December 31, 2019. Pursuant to
the 2017 Goldstein Employment Agreement, Mr. Goldstein is entitled
to receive an annual base salary of $630,000 (an increase from
$575,000 per annum in effect through December 31, 2016) and an
annual bonus equal to 6% of the Company's consolidated income from
operations before taxes, exclusive of the Company's consolidated
net investment income (loss) and net realized gains (losses) on
investments (consistent with the bonus payable to Mr. Goldstein
through December 31, 2016). In addition, pursuant to the 2017
Goldstein Employment Agreement, Mr. Goldstein is entitled to a
long-term compensation payment ("LTC") of between $945,000 and
$2,835,000 in the event the Company's adjusted book value per share
(as defined in the 2017 Goldstein Employment Agreement) has
increased by at least an average of 8% per annum as of December 31,
2019 as compared to December 31, 2016 (with the maximum LTC payment
being due if the average per annum increase is at least 14%).
Accrued LTC compensation expense (credit) of $(247,311) and
$945,000 for the years ended December 31, 2018 and 2017 is included
in other operating expenses on the accompanying consolidated
statements of income and comprehensive (loss) income.
Further, pursuant
to the 2017 Goldstein Employment Agreement, in the event that Mr.
Goldstein's employment is terminated by the Company without cause
or he resigns for good reason (each as defined in the 2017
Goldstein Employment Agreement), Mr. Goldstein would be entitled to
receive his base salary, the 6% bonus and the LTC payment for the
remainder of the term. Mr. Goldstein would be entitled, under
certain circumstances, to a payment equal to one and one-half times
his then annual salary and the target LTC payment of $1,890,000 in
the event of the termination of his employment following a change
of control of the Company.
(2)
Agreement in effect
as of January 1, 2019
On
October 16, 2018, the Company entered into an amended and restated
employment agreement with Barry Goldstein, its President, Chairman
of the Board and Chief Executive Officer, effective as of January
1, 2019 and expiring on December 31, 2021 (the “Amended
Employment Agreement”). Pursuant to the Amended Employment
Agreement, Mr. Goldstein will step down as Chief Executive Officer
on January 1, 2019 and has currently been named Executive Chairman
of the Board.
Mr.
Goldstein will be entitled to receive an annual base salary of
$636,500 for the calendar year 2019 and $500,000 for each of the
calendar years 2020 and 2021. In addition, Mr. Goldstein is
eligible to receive an annual performance bonus equal to 3% of the
Company’s consolidated income from operations before taxes,
exclusive of the Company’s consolidated net investment income
(loss) and net realized gains (losses) on investments. In addition,
pursuant to the Amended Employment Agreement, Mr. Goldstein will
continue to be entitled to a long-term compensation award
(“LTC”) (which is a continuation of the previous terms
under the 2017 Goldstein Employment Agreement) of between $945,000
and $2,835,000 based on a specified minimum increase in the
Company’s adjusted book value per share (as defined in the
Amended Employment Agreement) as of December 31, 2019 as compared
to December 31, 2016 (with the maximum LTC payment being due if the
average per annum increase is at least 14%). Further, pursuant to
the Amended Employment Agreement, in the event that Mr.
Goldstein’s employment is terminated by the Company without
cause or he resigns for good reason (each as defined in the Amended
Employment Agreement), Mr. Goldstein would be entitled to receive
separation payments equal to his then applicable base salary, the
3% bonus and the LTC payment for the remainder of the term. Mr.
Goldstein would be entitled, under certain circumstances, to a
payment equal to three times his then annual salary and the target
LTC payment in the event of the termination of his employment
within eighteen months following a change of control of the
Company. Pursuant to the Amended Employment Agreement, Mr.
Goldstein will be entitled to receive a grant, under the terms of
the 2014 Plan, during the first 30 days of January 2020, with
respect to a number of shares of restricted stock determined by
dividing $436,500 by the fair market value of the Company stock on
the date of grant. The January 2020 grant will become vested with
respect to fifty percent (50%) of the award on each of December 31,
2020 and December 31, 2021 based on continued provision of services
on each vesting date. Also pursuant to the Amended Employment
Agreement, Mr. Goldstein will be entitled to receive a grant, under
the 2014 Plan, during the first 30 days of 2021, with respect to a
number of shares of restricted stock determined by dividing
$236,500 by the fair market value of the Company stock on the date
of grant. The January 2021 grant will become vested as of December
31, 2021 based on continued provision of services on the vesting
date.
9
Dale A. Thatcher
(1)
Agreement in effect
for the year ended December 31, 2018
On
March 14, 2018, the Company and Dale A. Thatcher, a director of the
Company, entered into the 2018 Thatcher Employment Agreement
pursuant to which Mr. Thatcher would serve as the Company’s
Chief Operating Officer. The 2018 Thatcher Employment Agreement
became effective as of March 15, 2018 and expired on December 31,
2018. Pursuant the 2018 Thatcher Employment Agreement, Mr. Thatcher
was entitled to receive a base salary of $500,000 per annum and a
minimum bonus equal to 15% of his base salary. Concurrently with
the execution of the 2018 Thatcher Employment Agreement, the
Company granted to Mr. Thatcher 35,715 shares of restricted common
stock under the 2014 Equity Plan. Subject to the terms of the Stock
Grant Agreement, such shares will vest in three equal installments
on each of the three annual anniversaries following the grant
date.
(2)
Agreement in effect
as of January 1, 2019
On
October 16, 2018, the Company and Mr. Thatcher entered into an
Employment Agreement effective as of January 1, 2019 and expiring
on December 31, 2021 (the “2019 Thatcher Employment
Agreement”). Pursuant to the 2019 Thatcher Employment
Agreement, Mr. Thatcher will succeed Mr. Goldstein as Chief
Executive Officer. Mr. Thatcher will continue to serve as a
director and will remain President of KICO.
Mr.
Thatcher will be entitled to receive an annual base salary of
$500,000 for 2019, $630,000 for 2020 and no increase in 2021. In
addition, Mr. Thatcher is eligible to receive an annual performance
bonus equal to 3% of the Company’s consolidated income from
operations before taxes, exclusive of the Company’s
consolidated net investment income (loss) and net realized gains
(losses) on investments. Pursuant to the 2019 Thatcher Employment
Agreement, in the event that Mr. Thatcher’s employment is
terminated by the Company without cause or he resigns for good
reason (each as defined in the 2019 Thatcher Employment Agreement),
Mr. Thatcher would be entitled to receive separation payments equal
to his then applicable base salary and the 3% bonus for the
remainder of the term. Pursuant to the 2019 Thatcher Employment
Agreement, Mr. Thatcher will be entitled to receive a grant, under
the terms of the 2014 Equity Plan, with respect to a number of
shares of restricted stock in each of 2019, 2020 and 2021
determined by dividing $750,000, $1,250,000 and $1,500,000,
respectively, by the fair market value of the Company stock on the
date of grant. Each grant vests ratably over a three-year period
from the date of grant.
10
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The
following table sets forth certain information concerning
unexercised options held by the above named executive officers as
of December 31, 2018:
|
|
Option
Awards
|
Stock
Awards
|
|||||
|
Name
|
Number of
Securities Underlying
Unexercised
Options
Exercisable
|
Number of
Securities Underlying Unexercised Options Unexercisable Option
Exercise Price
|
Option Expiration
Date
|
Number of Shares
of Stock That Have Not Vested
|
Market Value of
Shares of Stock That Have Not Vested
|
Euity Incentive
Plan Awards: Number of Unearned Shares That Have Not
Vested
|
Equity Incentive
Plan Awards: Market or Payout Value of Unearned Shares That Have
Not Vested
|
|
Dale A.
Thatcher
|
-
|
-
|
|
530
(1)
|
$
9,376
|
-
|
$
-
|
|
|
|
|
|
2,000
(2)
|
$
35,380
|
-
|
$
-
|
|
|
|
|
|
35,715
(3)
|
$
631,798
|
-
|
$
-
|
|
Victor J.
Brodsky
|
-
|
-
|
|
3,889
(4)
|
$
68,794
|
-
|
$
-
|
|
|
|
|
|
6,983
(5)
|
$
123,529
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Such shares vest to
the extent of 265 shares on each of August 9, 2019 and
2020.
(2)
Such shares vest to
the extent of 667 shares on each of January 16, 2019 and 2020, and
666 shares on January 16, 2021.
(3)
Such shares vest to
the extent of 11,905 shares on each of March 14, 2019, 2020 and
2021.
(4)
Such shares vest in
14 as nearly equal as possible monthly installments through
February 23, 2020.
(5)
Such shares vest to
the extent of 2,328 shares on each of February 22, 2019 and 2020,
and 2,327 shares on February 22, 2021.
11
Termination of Employment and
Change-in-Control
Arrangements
Barry Goldstein
Pursuant to the Goldstein Employment Agreement, in the event that
Mr. Goldstein's employment is terminated by us without cause or he
resigns for good reason (each as defined in the Goldstein
Employment Agreement), Mr. Goldstein would be entitled to receive
his base salary, the 6% bonus and the LTC payment for the remainder
of the term. In addition, in such event, Mr.
Goldstein’s vested options would remain exercisable until the
first anniversary of the termination date.
Mr. Goldstein would be entitled, under
certain circumstances, to a payment equal to one and one-half times
his then annual salary and the target LTC payment of $1,890,000 in
the event of the termination of his employment within eighteen
months following a change of control of the
Company.
Under such circumstances, Mr.
Goldstein’s outstanding options would become exercisable and
would remain exercisable until the first anniversary of the
termination date.
Dale A. Thatcher
Pursuant to the 2019 Thatcher Employment Agreement, in the event
that Mr. Thatcher’s employment is terminated by the Company
without cause or he resigns for good reason (each as defined in the
2019 Thatcher Employment Agreement), Mr. Thatcher would be entitled
to receive separation payments equal to his then applicable base
salary and the 3% bonus for the remainder of the term.
In the event of the termination of Mr. Thatcher's employment within
eighteen months following a change of control of the Company, Mr.
Thatcher would be entitled, under certain circumstances, to (i) a
payment equal to one and one-half times the sum of his then annual
salary and annual performance bonus and (ii) payment of health
insurance premiums for the remainder of the term. In the event of
Mr. Thatcher's retirement from the Company, all stock grants
previously granted to Mr. Thatcher will continue to vest in
accordance with the original schedule as of Mr. Thatcher was still
employed by the Company.
Compensation of Directors
The
following table sets forth certain information concerning the
compensation of our non-employee directors for the fiscal year
ended December 31, 2018:
DIRECTOR COMPENSATION
|
Name
|
Fees Earned
or
Paid in
Cash
|
Stock
Awards(2)
|
Option
Awards
|
Total
|
|
|
|
|
|
|
|
Jay M.
Haft
|
$
61,000
|
$
41,300
|
$
-
|
$
102,300
|
|
Floyd R.
Tupper
|
$
72,500
|
$
41,300
|
$
-
|
$
113,800
|
|
William L.
Yankus
|
$
67,500
|
$
41,300
|
$
-
|
$
108,800
|
|
Carla A.
D’Andre
|
$
61,000
|
$
41,300
|
$
-
|
$
102,300
|
|
Timothy P.
McFadden(1)
|
$
18,437
|
$
12,362
|
$
-
|
$
30,799
|
(1)
Mr.
McFadden was appointed a director in August 2018.
(2)
Amounts reflect the
aggregate grant date fair value of grants made in the fiscal year
computed in accordance with stock-based accounting rules (FASB ASC
Topic 718-Stock Compensation), excluding the effect of estimated
forfeitures. Assumptions used in the calculations of these amounts
are included in Note 12 to our Consolidated Financial Statements
included in this Annual Report. The aggregate number of unvested
restricted stock awards outstanding as of fiscal year end for each
non-employee director is as follows:
12
|
Name
|
Unvested
Restricted Stock Awards (#)
|
|
|
|
|
Jay M.
Haft
|
1,999
|
|
Floyd R.
Tupper
|
3,999
|
|
William L.
Yankus
|
3,833
|
|
Carla A.
D’Andre
|
2,833
|
|
Timothy P.
McFadden
|
795
|
Our
non-employee directors are currently entitled to receive annual
compensation for their services as directors as
follows:
●
Effective January
1, 2019, $60,000
●
Effective January
1, 2019, an additional $25,000 for service as audit committee
chair, an additional $20,000 for service as compensation committee
chair, and an additional $15,000 for services as chair for other
committees
●
Effective January
1, 2019, $40,000 of our common stock determined by the closing
stock price on the first business day of the year, which vest on
December 31 of the same year.
During
2018, our non-employee directors were entitled to receive annual
compensation for their services as directors as
follows:
●
$50,000 (including
$6,000 for services as a director of KICO)
●
An additional
$11,000 for services as committee chair (and $1,500 for services as
KICO committee chair)
●
2,000 shares of our
common stock which vest in one-third increments over a three year
period (the initial grant of shares having been made in January
2016)
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Security Ownership
The
following table sets forth certain information as of June 14, 2019
regarding the beneficial ownership of our shares of common stock by
(i) each person who we believe to be the beneficial owner of more
than 5% of our outstanding shares of common stock, (ii) each
present director and nominee, (iii) each person listed in the
Summary Compensation Table under “Executive
Compensation,” and (iv) all of our present executive officers
and directors as a group:
|
Name and
Address
of Beneficial
Owner
|
Number of
Shares
Beneficially
Owned
|
Approximate
Percent of
Class
|
|
|
|
|
|
Barry B.
Goldstein
15 Joys
Lane
Kingston, New
York
|
658,194
(1)
|
6.1
%
|
|
|
|
|
|
Jay M.
Haft
69 Beaver Dam
Road
Salisbury,
Connecticut
|
92,424
|
*
|
|
|
|
|
|
Floyd R.
Tupper
220 East
57
th
Street
New York, New
York
|
61,097
(2)
|
*
|
|
|
|
|
|
Dale A.
Thatcher
212 Third
Street
Milford,
Pennsylvania
|
59,165
(3)
|
*
|
|
|
|
|
|
Victor J.
Brodsky
15 Joys
Lane
Kingston, New
York
|
30,338
(4)
|
*
|
|
|
|
|
|
Benjamin
Walden
15 Joys
Lane
Kingston, New
York
|
28,799
(5)
|
*
|
|
|
|
|
|
Carla A.
D’Andre
3561 Avocado
Avenue
Miami,
Florida
|
12,901
|
*
|
|
|
|
|
|
William L.
Yankus
10 Pheasant Hill
Road
Farmington,
Connecticut
|
9,501
|
*
|
|
Timothy P.
McFadden
310 8
th
Avenue
N.
Saint Petersburg,
Florida
|
3,265
(3)
|
*
|
|
|
|
|
|
|
|
|
|
RenaissanceRe
Ventures Ltd.
Renaissance Other
Investments
Holding
II Ltd.
RenaissanceRe
Holdings Ltd.
Renaissance
House
12 Crow
Lane
Pembrooke
HM19
Bermuda
|
595,238
(6)
|
5.5
%
|
|
|
|
|
|
All executive
officers
and directors as a
group
(9
persons)
|
955,684
(1) (2) (3) (4) (5)
|
8.9
%
|
14
*
Less than 1%.
|
(1)
|
The
information regarding Mr. Goldstein is based solely on publicly
available information filed with the Securities and Exchange
Commission (the “SEC”). Includes 73,168 shares of
common stock owned by Mr. Goldstein's wife. Mr. Goldstein has sole
voting and dispositive power over 585,026 shares of common stock
and shared voting and dispositive power over 73,168 shares of
common stock.
|
|
|
|
|
(2)
|
Includes
32,270 shares owned by Mr. Tupper’s wife. Mr. Tupper has sole
voting and dispositive power over 28,827 shares of common stock and
shared voting and dispositive power over 32,270 shares of common
stock.
|
|
|
|
|
(3)
|
Includes
265 shares issuable upon the vesting of restricted stock within 60
days.
|
|
|
|
|
(4)
|
Includes
556 shares issuable upon the vesting of restricted stock within 60
days.
|
|
|
|
|
(5)
|
Includes
7,000 shares issuable upon the exercise of options that are
exercisable currently and 334 shares issuable upon the vesting of
restricted stock within 60 days.
|
|
|
|
|
(6)
|
The
information regarding RenaissanceRe Ventures Ltd.
(“RenaissanceRe Ventures”), Renaissance Other
Investments Holding II Ltd. (“ROIHL II”) and
RenaissanceRe Holdings Ltd. (“RenaissanceRe Holdings”)
is based solely on a Schedule 13G/A filed by such reporting persons
with the SEC on February 14, 2019 (the “Renaissance
13G/A”). According to the Renaissance 13G/A, RenaissanceRe
Ventures, ROIHL II and RenaissanceRe Holdings each have shared
voting and dispositive power over the 595,238 shares of common
stock.
|
PROPOSAL 1: ELECTION OF DIRECTORS
Seven
directors are to be elected at the meeting to serve until the next
annual meeting of stockholders and until their respective
successors shall have been elected and have qualified.
Our
Restated Certificate of Incorporation provides for cumulative
voting of shares for the election of directors. This
means that each stockholder has the right to cumulate his votes and
give to one or more nominees as many votes as equals the number of
directors to be elected (seven) multiplied by the number of shares
he is entitled to vote. A stockholder may therefore cast
his votes for one nominee or distribute them among two or more of
the nominees.
Nominees for Directors
Seven
of the nominees are currently members of our Board of Directors.
The following table sets forth each nominee’s age as of June
14, 2019, the positions and offices presently held by him or her
with us, and the year in which he or she became a
director. The Board of Directors recommends a vote
FOR
all nominees. The person
named as proxy intends to vote cumulatively all shares represented
by proxies equally among all nominees for election as directors,
unless proxies are marked to the contrary.
15
|
Name
|
Age
|
Positions and Offices Held
|
Director Since
|
|
|
|
|
|
|
|
|
|
|
|
Barry
B. Goldstein
|
66
|
Executive
Chairman of the Board and Director
|
2001
|
|
Dale A.
Thatcher
|
57
|
President,
Chief Executive Officer, and Director
|
2017
|
|
Jay M.
Haft
|
84
|
Director
|
1989
|
|
Floyd
R. Tupper
|
65
|
Secretary
and Director
|
2014
|
|
William
L. Yankus
|
60
|
Director
|
2016
|
|
Carla
A. D’Andre
|
63
|
Director
|
2017
|
|
Timothy
P. McFadden
|
56
|
Director
|
2018
|
Barry B. Goldstein
On
October 16, 2018, the Company announced that Mr. Goldstein would
step down as Chief Executive Officer, effective January 1, 2019.
Additionally, the Company announced that Mr. Goldstein, current
Chairman of the Board of Directors of the Company, had been named
Executive Chairman. Mr. Goldstein served as our President, Chief
Executive Officer, Chairman of the Board, and a director since
March 2001. He served as our Chief Financial Officer from March
2001 to November 2007 and as our Treasurer from May 2001 to August
2013. Since January 2006, Mr. Goldstein has served as
Chairman of the Board of Kingstone Insurance Company
(“KICO”) (formerly known as Commercial Mutual Insurance
Company), a New York property and casualty insurer, as well as
Chairman of its Executive Committee. Mr. Goldstein has served as
Chief Investment Officer of KICO since August 2008 and as its
President and Chief Executive Officer since January 2012. He was
Treasurer of KICO from March 2010 through September 2010. Effective
July 1, 2009, we acquired a 100% equity interest in KICO. From 1997
to 2004, Mr. Goldstein served as President of AIA Acquisition
Corp., which operated insurance agencies in Pennsylvania and which
sold substantially all of its assets to us in 2003.
Mr. Goldstein is a Certified Public Accountant
(inactive).
Mr. Goldstein received his B.A. and M.B.A. from
State University of New York at Buffalo. We believe that Mr.
Goldstein’s extensive experience in the insurance industry,
including his executive-level service with KICO since 2006, give
him the qualifications and skills to serve as one of our
directors.
Dale A. Thatcher
On
October 16, 2018, the Company announced that Mr. Thatcher would
succeed Mr. Goldstein as Chief Executive Officer, effective January
1, 2019. Mr. Thatcher was elected our Chief Operating Officer and
KICO’s President in March 2018. Mr. Thatcher is the founder
of Atherstone Partners, a consulting practice in insurance and
investments. Prior to starting Atherstone in September 2016, Mr.
Thatcher was Executive Vice President and Chief Financial Officer
for Selective Insurance Group, Inc. where he worked from April 2000
to September 2016 and previously Chief Accounting Officer for the
Ohio Casualty Group. He is a certified public accountant
(inactive), a chartered property and casualty underwriter and a
chartered life underwriter. Mr. Thatcher has served as one of our
directors since August 2017. He is an alumnus of the University of
Cincinnati and Harvard University. We believe that Mr.
Thatcher’s executive-level experience in the insurance
industry gives him the qualifications and skills to serve as one of
our directors.
16
Jay M. Haft
Mr.
Haft served for more than 15 years as a personal advisor to Victor
Vekselberg, a Russian entrepreneur with considerable interests in
oil, aluminum, utilities and other industries. Mr. Haft is a
partner at Columbus Nova, the U.S.-based investment and operating
arm of Mr. Vekselberg’s Renova Group of companies. Mr. Haft
is also a strategic and financial consultant for growth stage
companies. He is active in international corporate finance and
mergers and acquisitions as well as in the representation of
emerging growth companies. Mr. Haft has extensive experience in the
Russian market, in which he has worked on growth strategies for
companies looking to internationalize their business assets and
enter international capital markets. He has been a founder,
consultant and/or director of numerous public and private
corporations, and served as Chairman of the Board of Dusa
Pharmaceuticals, Inc. Mr. Haft serves on the Board of The Link of
Times Foundation and The Mariinski Foundation and is an advisor to
Montezemolo & Partners. He has been instrumental in strategic
planning and fundraising for a variety of Internet and high-tech,
leading edge medical technology and marketing companies over the
years. Mr. Haft served as counsel to Reed Smith, an international
law firm. Mr. Haft is a past member of the Florida Commission for
Government Accountability to the People, a past national trustee
and Treasurer of the Miami City Ballet, and a past Board member of
the Concert Association of Florida. He is also a past trustee of
Florida International University Foundation and previously served
on the advisory board of the Wolfsonian Museum and Florida
International University Law School. Mr. Haft served as our Vice
Chairman of the Board from February 1999 until March 2001. From
October 1989 to February 1999, he served as our Chairman of the
Board and he has served as one of our directors since 1989 (serving
as Chairman of our Nominating and Corporate Governance Committee
since 2010). Mr. Haft received B.A. and LL.B. degrees from Yale
University. We believe that Mr. Haft’s corporate finance,
business consultation, legal and executive-level experience, as
well as his service on the Board of KICO since 2009, give him the
qualifications and skills to serve as one of our
directors.
Floyd R. Tupper
Mr.
Tupper is a certified public accountant in New York City. For over
30 years, Mr. Tupper has counseled high-net worth individuals by
creating tax planning strategies to achieve their goals as well as
those of their families. He has also helped small businesses by
developing business strategies to meet their current and future
needs. He began his career in public accounting with Ernst &
Young LLP prior to becoming self-employed. Mr. Tupper holds an
M.B.A. in Taxation from the New York University Stern School of
Business and a B.S. from New York University. Mr. Tupper has served
as a director of KICO, and Chairman of its Audit Committee, since
2006. He also serves as a member of its Investment Committee.
From 1990 until 2010, Mr. Tupper served as a Trustee of The Acorn
School in New York City. He was also a member of the school’s
Executive Committee and served as its Treasurer from 1990 to 2010.
Mr. Tupper is a member of the American Institute of Certified
Public Accountants and the New York State Society of Certified
Public Accountants. He has served as one of our directors and
Chairman of our Audit Committee since June 2014 and as our
Secretary since June 2015. We believe that Mr. Tupper’s
accounting experience, as well as his service on the Board of KICO
since 2006 (including his service as Chairman of its Audit
Committee), give him the qualifications and skills to serve as one
of our directors.
William L. Yankus
Mr. Yankus brings to the Board over 30 years’ experience
in the insurance industry. Since September 2015, Mr.
Yankus has provided insurance-related consulting services through
Pheasant Hill Advisors, LLC. From 2011 to 2015, he was
Managing Director – Investment Banking at Stern Agee where he
focused on small and mid-sized insurers. Mr. Yankus
served as Managing Director-Insurance Research at Fox-Pitt, Kelton
from 1993 to 2009 and then as Head of Insurance Research at its
successor, Macquerie, from 2009 to 2010. Mr. Yankus
served as Vice President, Insurance Research at Conning &
Company from 1985 to 1993. He completed the CFA program
in 1989 and passed the CT uniform CPA exam in 1984. Mr.
Yankus has served as one of our directors since March 2016 and
Chairman of our Compensation Committee since April
2017. He received his B.A. degree in Economics and
Accounting from The College of the Holy Cross. We believe that Mr.
Yankus’ executive level experience in the insurance industry
gives him the qualifications and skills to serve as one of our
directors.
Carla A. D’Andre
Ms.
D’Andre has more than 40 years of experience in the insurance
industry. Since 2009, Ms. D’Andre has been Chairman, CEO and
President of D’Andre Insurance Group, Inc., which she
co-founded. D’Andre Insurance Group, Inc. is the parent of
two independent insurance agencies. Prior to co-founding
D’Andre Insurance Group, Ms. D’Andre held
executive-level roles at several companies in the insurance
industry, including Executive Vice President, Head – Global
Corporate Practice and Member – Partner’s Council at
Willis Group Holdings plc, a multinational risk advisor, insurance
brokerage and reinsurance brokerage company; Managing Director and
Strategic Account Manager at AON Risk Services, a global provider
of risk management solutions; Chief Operating Officer at XL
Capital’s insurance and technology start-up firm, Inquis
Logic Inc.; Member of Senior Management and Managing Director of
Swiss Re New Markets and Director of Alternative Markets at Swiss
ReAmerica, affiliates of Swiss Reinsurance Company Ltd, a global
reinsurance company; Senior Vice President of Sedgwick North
America, an insurance brokerage firm; and Vice President of Johnson
& Higgins, an insurance brokerage firm. Ms. D’Andre
serves in senior capacities in several insurance industry groups.
In January 2019 she was elected by her peers to a three-year term
as a member of The Institutes’ CPCU Society Leadership
Council. She also serves as a member of the Executive Advisory
Council of St. John’s University School of Risk Management,
Insurance and Actuarial Science. She has served as one of our
directors since May 2017 and currently serves as Co-Chair of our
Finance Committee. Ms. D’Andre has an M.B.A. from Pace
University’s Lubin School of Business and a B.B.A. from St.
John’s University’s School of Risk Management,
Insurance and Actuarial Science. We believe that Ms.
D’Andre’s extensive experience in multiple capacities
in the insurance industry gives her the qualifications and skills
to serve as one of our directors.
17
Timothy P. McFadden
Mr.
McFadden has more than 27 years of experience in the insurance
industry. Since 2012, Mr. McFadden has served as CEO and President
of State Farm Indemnity Auto Insurance Company and Senior Vice
President of State Farm Insurance, Eastern Market Area. Since 2015,
he has also served as CEO and President of State Farm Florida Fire
Company. Mr. McFadden served as Senior Vice President of State Farm
Insurance Companies, Southern Zone from 2008 to 2011 and Senior
Vice President of State Farm Insurance Companies, Southern &
Mid Atlantic Zones from 2011 to 2013. He is a member of the Board
of State Farm Indemnity Auto Insurance Company, Local Initiatives
Support Corporation, American College Ethics Board, State Farm
Florida Fire Company, Top Layer Reinsurance and Florida Council of
100. Mr. McFadden received his B.S. degree from the United States
Military Academy at West Point and his J.D. from Stetson College of
Law. He also completed the General Management Program at Harvard
Business School and received his Chartered Life Underwriter
Designation from The American College of Financial Services. We
believe that Mr. McFadden's executive level experience in the
insurance industry gives him the qualifications and skills to serve
as one of our directors.
Family Relationships
There
are no family relationships among any of our executive officers and
directors. See related party transactions below.
Term of Office
Each
director will hold office until the next annual meeting of
stockholders and until his or her successor is elected and
qualified or until his or her earlier resignation or
removal. Each executive officer will hold office until
the initial meeting of the Board of Directors following the next
annual meeting of stockholders and until his successor is elected
and qualified or until his earlier resignation or
removal.
Committees
Audit Committee
The
Audit Committee of the Board of Directors is responsible for
overseeing our accounting and financial reporting processes and the
audits of our financial statements. The responsibilities
and duties of the Audit Committee include the
following:
●
assist the Board of
Directors in fulfilling its responsibilities by reviewing the
financial reports provided by us to the SEC, our stockholders or to
the general public, and our internal financial and accounting
controls,
●
oversee the
appointment, compensation and retention of, and the work performed
by, any independent public accountants engaged by us,
●
recommend,
establish and monitor procedures designed to improve the quality
and reliability of the disclosure of our financial condition and
results of operations, and
●
recommend,
establish and monitor procedures designed to
facilitate:
■
the receipt,
retention and treatment of complaints relating to accounting,
internal accounting controls or auditing matters, and
■
the receipt of
confidential, anonymous submissions by employees of concerns
regarding questionable accounting or auditing matters.
The
members of our Board’s Audit Committee currently are Messrs.
Tupper, McFadden and Yankus. Our Board has adopted a
written charter for the Audit Committee. A copy of the
charter is available on our website,
www.kingstonecompanies.com
.
18
Nominating and Corporate Governance Committee
The
Nominating and Corporate Governance Committee of the Board of
Directors is responsible for assisting the Board in identifying and
recruiting qualified individuals to become Board members, selecting
director nominees to be presented for Board and/or stockholder
approval, identifying members of the Board to serve on each Board
committee, identifying individuals to serve as officers and
developing corporate governance
guidelines.
The
members of the Nominating and Corporate Governance Committee
currently are Mr. McFadden, Ms. D’Andre and Mr.
Tupper. Our Board has adopted a written charter for the
Nominating and Corporate Governance Committee. A copy of
the charter is available on our website,
www.kingstonecompanies.com
.
While
the Nominating and Corporate Governance Committee does not have a
formal policy on diversity for members of the Board of Directors,
the Nominating and Corporate Governance Committee considers
diversity of background, experience and qualifications in
evaluating prospective Board members. The
Nominating and Corporate Governance Committee will consider
qualified director candidates recommended by stockholders if such
recommendations are provided in accordance with the procedures set
forth in the section entitled “Stockholder Proposals -
Stockholder Nominees” below. The Nominating and
Corporate Governance Committee evaluates all candidates based upon,
among other factors, a candidate’s financial literacy,
knowledge of our industry, other relevant background experience,
judgment, skill, integrity, the interplay of a candidate’s
experience with the experience of other Board members,
‘independence’ (for purposes of compliance with the
rules of the SEC and the Nasdaq Marketplace Rules), and
willingness, ability and availability for service. After conducting
an initial evaluation of a prospective nominee, the Nominating and
Corporate Governance Committee will interview that candidate if it
believes the candidate might be suitable to be a director. The
Nominating and Corporate Governance Committee may also ask the
candidate to meet with management. If the Nominating and Corporate
Governance Committee believes a candidate would be a valuable
addition to our Board of Directors, it may recommend to the full
Board that candidate's nomination and election. At this time, the
Nominating and Corporate Governance Committee has not adopted
minimum criteria for consideration of a proposed candidate for
nomination.
Compensation Committee
The
Compensation Committee of the Board of Directors is responsible for
the management of our business and affairs with respect to the
compensation of our employees. The responsibilities and duties of
the Compensation Committee include the following:
●
review and approve
the compensation of our Chief Executive Officer,
●
make
recommendations to our Board regarding the compensation of all
other executive officers,
●
review, and make
recommendations to our Board regarding, incentive compensation
plans and equity-based plans, and where appropriate or required,
recommend for approval by our stockholders, which includes the
ability to adopt, amend and terminate such plans,
●
administer our
incentive compensation plans and equity-based plans, including
designating the employees to whom awards are to be granted, the
amount of the award or equity to be granted and the terms and
conditions applicable to each award or grant, subject to the
provisions of each plan,
●
review, and make
recommendations to our Board regarding, employment agreements and
severance arrangements or plans, including any benefits to be
provided in connection with a change in control, for our Chief
Executive Officer and other executive officers, which includes the
ability to adopt, amend and terminate such agreements, arrangements
or plans,
●
review, and make
recommendations to our Board regarding, all employee benefit plans,
which includes the ability to adopt, administer, amend and
terminate such plans, and
●
review director
compensation for service on our Board and Board committees and
recommend any changes to our Board.
The
members of the Compensation Committee currently are Messrs. Yankus,
Haft and Tupper and Ms. D’Andre. Our Board has
adopted a written charter for the Compensation
Committee. A copy of the charter is available on our
website,
www.kingstonecompanies.com
.
The
Compensation Committee may form and delegate authority to
subcommittees and may delegate authority to one or more designated
members of the Compensation Committee. Our Chief
Executive Officer assists the Compensation Committee from time to
time by advising on a variety of compensation matters, such as
assisting the Compensation Committee in determining appropriate
salaries and bonuses for our executive officers. The
Compensation Committee has the authority to consult with management
and to engage the services of outside advisors, experts and others
to assist it in its efforts.
Finance Committee
The
Finance Committee of the Board of Directors is responsible for
financial oversight of the company including budgeting, financial
planning, financial reporting, and the creation and monitoring of
internal controls and accountability policies. The members of the
Finance Committee currently are Ms. D’Andre, and Messrs.
Haft, Yankus and McFadden.
19
Board Leadership Structure and Role in Risk Oversight
Our
Board of Directors as a whole is responsible for our risk
oversight. Our executive officers address and discuss
with our Board of Directors our risks and the manner in which we
manage or mitigate such risks. While our Board of Directors has the
ultimate responsibility for our risk oversight, our Board of
Directors works in conjunction with its committees on certain
aspects of its risk oversight responsibilities. In particular, our
Audit Committee focuses on financial reporting risks and related
controls and procedures and our Compensation Committee strives to
create compensation practices that do not encourage excessive
levels of risk taking that would be inconsistent with our
strategies and objectives. On March 19, 2019, the Company Chief
Information Security Officer presented the Company’s
Cybersecurity Program to the Board and the Board approved
same.
From
2001 to January 1, 2019, Barry B. Goldstein served as our
Chief Executive Officer and Chairman of the
Board. Effective January 1, 2019, Mr. Goldstein was
named Executive Chairman and Mr. Thatcher succeeded Mr. Goldstein
as Chief Executive Officer. At this time, our Board of Directors
believes that Mr. Goldstein’s role as Executive Chairman
of our Board and Mr. Thatcher’s role as Chief Executive
Officer enables us to benefit from their significant institutional
and industry knowledge and experience, while at the same time
promoting leadership and direction for our Board and executive
management. Given our history, position, Board
composition and the relatively small size of our company and
management team, at this time, our Board believes that we and our
stockholders are best served by our current leadership
structure.
Report of the Audit Committee
In
overseeing the preparation of the financial statements of the
Company as of December 31, 2018 and for the years ended December
31, 2018 and 2017, the Audit Committee met with management to
review and discuss all financial statements prior to their issuance
and to discuss significant accounting issues. Management
advised the Audit Committee that all financial statements were
prepared in accordance with generally accepted accounting
principles, and the Audit Committee discussed the statements with
management. The Audit Committee also discussed with
Marcum LLP, (“Marcum”) the Company’s outside
auditors, the matters required to be discussed by Public Company
Accounting Oversight Board’s Auditing Standard No. 1301,
Communications with Audit
Committees
, as currently in effect.
The
Audit Committee received the written disclosures and the letter
from Marcum required by applicable requirements of the Public
Company Accounting Oversight Board regarding Marcum’s
communications with the Audit Committee concerning independence and
the Audit Committee discussed Marcum’s independence with
Marcum.
On the
basis of these reviews and discussions, the Audit Committee
recommended to the Board of Directors that the audited financial
statements be included in the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2018, for filing with
the Securities and Exchange Commission.
20
Members
of the Audit Committee
Floyd
R. Tupper
Timothy
McFadden
William
L. Yankus
Meetings
Our
Board of Directors held four meetings during the fiscal year ended
December 31, 2018.
The
Audit Committee of the Board of Directors held four meetings during
the fiscal year ended December 31, 2018.
The
Nominating and Corporate Governance Committee of the Board of
Directors held one meeting during the fiscal year ended December
31, 2018.
The
Compensation Committee of the Board of Directors held two meetings
during the fiscal year ended December 31, 2018.
The
Finance Committee of the Board of Directors did not meet during the
fiscal year ended December 31, 2018.
During
2018, all of our then directors attended all of the meetings of the
Board and all of the meetings of the committees on which they
served with the exception of Mr. Haft who missed one Board
meeting.
We do
not have a formal policy regarding director attendance at our
annual meeting of stockholders. However, all directors
are encouraged to attend. Each of our directors was in
attendance at last year’s annual meeting of
stockholders.
Communications with Board of Directors
Any
security holder who wishes to communicate with our Board of
Directors or a particular director should send the correspondence
to the Board of Directors, Kingstone Companies, Inc., 15 Joys Lane,
Kingston, New York 12401, Attention: Corporate
Secretary. Any such communication so addressed will be
forwarded by the Corporate Secretary to the members or a particular
member of the Board.
Audit Committee Financial Expert
Our
Board of Directors has determined that Mr. Tupper is an
“audit committee financial expert,” as defined in
applicable Nasdaq listing standards and federal securities rules
and regulations, and that Mr. Tupper is independent under
applicable Nasdaq listing standards and federal securities rules
and regulations on independence of audit committee
members.
21
Section 16(a) Beneficial Ownership Reporting
Compliance
Section
16 of the Securities Exchange Act of 1934 (the “Exchange
Act”) requires that reports of beneficial ownership of common
shares and changes in such ownership be filed with the SEC by
Section 16 “reporting persons,” including directors,
certain officers, holders of more than 10% of the outstanding
common shares and certain trusts of which reporting persons are
trustees. We are required to disclose each reporting person whom we
know to have failed to file any required reports under Section 16
on a timely basis during the fiscal year ended December 31, 2018.
To our knowledge, based solely on a review of copies of Forms 3, 4
and 5 filed with the SEC and written representations that no other
reports were required, during the fiscal year ended December 31,
2018, our officers, directors and 10% stockholders complied with
all Section 16(a) filing requirements applicable to them, except
that Mr. Walden filed one Form 4 late reporting one
transaction.
Director Independence
Board of Directors
Our
Board of Directors is currently comprised of Barry B. Goldstein,
Dale A. Thatcher, Jay M. Haft, Floyd R. Tupper, William L. Yankus,
Timothy P. McFadden and Carla A. D’Andre. Our
Board of Directors has determined that each of Messrs. Haft,
Tupper, McFadden and Yankus and Ms. D’Andre is currently an
“independent director” under applicable Nasdaq listing
standards and federal securities rules and
regulations.
Audit Committee
The members
of our Board’s Audit Committee currently are Messrs. Tupper,
McFadden and Yankus, each of whom is an “independent
director” under applicable Nasdaq listing standards and
federal securities rules and regulations.
Nominating and Corporate Governance Committee
The
members of our Board’s Nominating and Corporate Governance
Committee currently are Mr. McFadden, Mr. Tupper and Ms.
D’Andre, each of whom is an “independent
director” under applicable Nasdaq listing standards and
federal securities rules and regulations.
Compensation Committee
The
members of our Board’s Compensation Committee currently are
Messrs. Yankus, Haft and Tupper and Ms. D’Andre, each of whom
is an “independent director” under applicable Nasdaq
listing standards and federal securities rules and
regulations.
Finance Committee
The
members of the Finance Committee currently are Ms. D’Andre,
and Messrs. Haft, Yankus and McFadden, each of whom is an
“independent director” under applicable Nasdaq listing
standards and federal securities rules and
regulations.
22
Related Party
Transa
ctions
Given
the low frequency of related party transactions the Company has not
formally adopted procedures for review of, or standards for
approval of such transactions however, the Board of Directors
reviews related party transactions on a case-by-case basis. The
daughter of Barry Goldstein, Amanda Goldstein, is employed as
Investor Relations Director by the Company and serves as vice
president of a subsidiary of the Company. For the fiscal year
ending December 31, 2018, she earned $142,629 in
compensation.
Recommendation
The
Board of Directors recommends a vote FOR all nominees.
PROPOSAL 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The
Audit Committee of our Board of Directors has selected Marcum LLP
as our independent registered public accounting firm to examine our
financial statements for the year ending December 31,
2019.
Although
ratification by stockholders is not required by our organizational
documents or other applicable law, our Board of Directors has
determined that requesting ratification by stockholders of the
appointment of Marcum as our independent registered public
accounting firm for the fiscal year ending December 31, 2019 is a
matter of good corporate practice. If stockholders do not
ratify the selection, the Audit Committee may reconsider whether or
not to retain Marcum, but may still determine to retain them.
Even if the selection is ratified, the Audit Committee, in its
discretion, may change the appointment at any time during the year
if it determines that such a change would be in the best interests
of us and our stockholders.
Marcum
has served as our independent registered public accountants with
respect to each fiscal year since the year ended December 31,
2013.
It is
not expected that a representative of Marcum will attend the
meeting.
The
following is a summary of the fees billed to us by Marcum for
professional services rendered for the fiscal years ended December
31, 2018 and 2017, respectively:
|
Fee
Category
|
Fiscal 2018
Fees
|
Fiscal 2017
Fees
|
|
Audit
Fees(1)
|
$
309,684
|
$
392,214
|
|
Tax
Fees(2)
|
$
-
|
$
-
|
|
Audit-Related
Fees(3)
|
$
-
|
$
-
|
|
All Other
Fees(4)
|
$
-
|
$
-
|
|
|
$
309,684
|
$
392,214
|
|
1.
Audit Fees consist
of fees billed for services rendered for the audit of our
consolidated financial statements and review of our condensed
consolidated financial statements included in our quarterly reports
on Form 10-Q, services rendered in connection with the filing of
Forms S-3 and services provided in connection with other statutory
or regulatory filings.
|
|
2.
Marcum did not
provide any tax services during the period.
|
|
3.
Marcum did not
provide any assurance or related services that are not reported
under “Audit Fees” during the period.
|
|
4.
Marcum did not
provide any “other services” during the
period.
|
The
Audit Committee is responsible for the appointment, compensation
and oversight of the work of the independent auditors and approves
in advance any services to be performed by the independent
auditors, whether audit-related or not. The Audit Committee reviews
each proposed engagement to determine whether the provision of
services is compatible with maintaining the independence of the
independent auditors. Substantially all of the fees shown above
were pre-approved by the Audit Committee.
23
Vote
Required
The
ratification of the selection of Marcum LLP as our independent
registered public accounting firm for the fiscal year ending
December 31, 2019 requires the affirmative vote of stockholders who
hold a majority of the common stock present in person or
represented by proxy at the meeting and entitled to
vote.
Recommendation
The
Board of Directors recommends a vote FOR the ratification of the
selection of Marcum LLP as our independent registered public
accounting firm for the fiscal year ending December 31,
2019.
PROPOSAL 3: ADVISORY VOTE ON THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS
In
accordance with the rules of the SEC, we are providing our
stockholders with the opportunity to cast a non-binding advisory
vote on the compensation of our named executive officers as
disclosed pursuant to Item 402(m) through (q) of Regulation S-K,
including the compensation tables and narrative discussion in this
proxy statement.
The
compensation structure established by our Compensation Committee is
designed to attract and retain motivated executives who
substantially contribute to our long-term success and the creation
of stockholder value, to reward executives when we perform
financially or operationally well, to align the financial interests
of our executives with the interests of our stockholders, and to be
competitive within our industry. We believe that our philosophy and
practices have resulted in executive compensation decisions that
are appropriate and that have benefited us over time.
We are
requesting stockholder approval of the compensation of our
executive officers as disclosed in this proxy statement. This
proposal, commonly known as a “say-on-pay” proposal,
gives our stockholders the opportunity to express their views on
our executive officers’ compensation. Because the stockholder
vote is advisory, it is not binding on us or our board of
Directors. However, our Board and the Compensation Committee, which
is responsible for designing and administering our executive
compensation program, value the opinions that our stockholders
express in their votes. The Compensation Committee will review the
results of the stockholder votes on this “say-on-pay”
proposal and consider whether to recommend any changes or
modifications to our executive compensation policies and practices
as a result of such votes.
We are
asking our stockholders to indicate their support for our named
executive officer compensation through the following
resolution:
“
RESOLVED
, that the stockholders approve
the compensation paid to our named executive officers, as disclosed
pursuant to Item 402 of Regulation S-K, including the compensation
tables and narrative discussion in this proxy
statement.”
Recommendation and Required Vote
The
affirmative vote of the holders of a majority of our common shares
present at the meeting, in person or by proxy, is required for
approval of this proposal.
The
Board of Directors recommends a vote FOR approval of the
compensation of our executive officers as disclosed in this proxy
statement.
PROPOSAL
4: ADVISORY VOTE ON THE FREQUENCY OF FUTURE
ADVISORY
VOTES ON EXECUTIVE COMPENSATION
In
accordance with the rules of the SEC, we are also providing our
stockholders with the opportunity to cast a non-binding advisory
vote on how frequently we should seek an advisory vote on the
compensation of our named executive officers. After careful
consideration of this proposal, our Board determined that an
advisory vote on executive compensation that occurs every year is
the most appropriate option for us and, therefore, recommends that
stockholders vote for future advisory votes on executive
compensation to occur every year. In reaching its recommendation,
our Board determined that an advisory vote every year would permit
our compensation programs to be evaluated annually and provide the
Board with stockholder input.
By
voting on this proposal, stockholders may indicate whether they
would prefer an advisory vote on executive officer compensation
every one, two, or three years. Stockholders may also abstain from
voting. The option that receives the most votes cast at the 2019
Annual Meeting of Stockholders will be considered by the Board in
determining the preferred frequency with which we will hold a
stockholder vote to approve the compensation of our named executive
officers.
Because
this is an advisory vote and not binding, the Board may decide that
it is in the best interest of our stockholders and us to hold an
advisory vote on the compensation of our named executive officers
more or less frequently than the frequency approved by our
stockholders. However, our Board and the Compensation Committee
value the opinions expressed by our stockholders in their vote on
this proposal and will consider the option that receives the most
votes in determining the frequency of future votes on the
compensation of our named executive officers.
24
Recommendation
The
Board recommends a vote FOR a frequency of EVERY ONE YEAR regarding
the frequency of future advisory votes to approve executive
compensation.
STOCKHOLDER PROPOSALS
Stockholder
proposals intended to be presented at our next annual meeting of
stockholders pursuant to the provisions of Rule 14a-8 of the
Securities and Exchange Commission, promulgated under the Exchange
Act, must be received at our offices in Kingston, New York by
February 29, 2020 for inclusion in our proxy statement and form of
proxy relating to such meeting.
The
following requirements with respect to stockholder proposals and
stockholder nominees to our Board of Directors are included in our
By-Laws.
Stockholder Proposals
In
order for a stockholder to make a proposal at an annual meeting of
stockholders, under our By-Laws, timely notice must be received by
us in advance of the meeting. To be timely, the proposal
must be received by our Secretary at our principal executive
offices (as provided below) no later than the close of business on
April 29, 2020, nor earlier than March 30, 2020. If
during the prior year we did not hold an annual meeting, or if the
date of the meeting for which a stockholder intends to submit a
proposal has changed by more than 30 days from the date of the
meeting in the prior year, then the notice must be received a
reasonable time before we mail the notice regarding the
availability of proxy materials for the current year. A
stockholder’s notice must set forth as to each matter the
stockholder proposes to bring before the annual meeting certain
information regarding the proposal, including the
following:
●
a brief description
of the business desired to be brought before the meeting and the
reasons for conducting such business at such meeting;
●
the name and
address of the stockholder proposing such business;
●
the class and
number of our shares which are beneficially owned by such
stockholder; and
●
any material
interest of such stockholder in such business.
Stockholder Nominees
In
order for a stockholder to nominate a candidate for director, under
our By-Laws, timely notice of the nomination must be received by us
in advance of the meeting. To be timely, the notice must
be received at our principal executive offices (as provided below)
not less than 60 days nor more than 90 days prior to the meeting;
however, if less than 70 days’ notice of the date of the
meeting is given to stockholders and public disclosure of the
meeting date, pursuant to a press release, is either not made at
all or is made less than 70 days prior to the meeting date, notice
by a stockholder to be timely made must be so received no later
than the close of business on the tenth day following the earlier
of the following:
25
●
the day on which
the notice of the date of the meeting was made available to
stockholders; or
●
the day on which
such public disclosure of the meeting date was made.
The
stockholder sending the notice of nomination must describe various
matters, including such information as:
●
the name, age,
business and residential addresses, occupation or employment and
shares held by the nominee;
●
any other
information relating to such nominee required to be disclosed in a
proxy statement; and
●
the name, address
and number of shares held by the stockholder.
These
requirements are separate from and in addition to the requirements
a stockholder must meet to have a proposal included in our proxy
statement.
Any
notice given pursuant to the foregoing requirements must be sent to
our Corporate Secretary at 15 Joys Lane, Kingston, New York
12401.
The foregoing is
only a summary of the provisions of our By-Laws that relate to
stockholder proposals and stockholder nominations for
director. Any stockholder desiring a copy of our By-Laws
will be furnished one without charge upon receipt of a written
request therefor.
HOUSEHOLDING OF PROXY MATERIALS
Certain
stockholders who share a mailing address are being delivered only
one copy of the Notice, Proxy Statement and Annual Report on Form
10-K. This delivery method, called “householding,” will
not be used if we receive contrary instructions from one or more of
the stockholders sharing a mailing address. If your household has
received only one copy, we will deliver promptly a separate copy of
the Notice, Proxy Statement and Annual Report on Form 10-K to any
stockholder who sends a written request to Kingstone Companies,
Inc., Investor Relations, 15 Joys Lane, Kingston, New York 12401
and oral requests may be made by calling us at (516)
960-1319.
You may
also notify us if you would like to receive separate copies of the
Notice, Proxy Statement and Annual Report on Form 10-K in the
future by writing to us at the address above or calling us at the
telephone number above. Stockholders who participate in
householding will continue to be able to access and receive
separate proxy cards. If you are submitting a proxy by mail, each
proxy card should be marked, signed, dated and returned in the
enclosed self-addressed envelope.
Stockholders
sharing an address who are receiving multiple copies of this
Notice, Proxy Statement and Annual Report on Form 10-K may request
delivery of a single copy of such documents by writing to us at the
address above or calling us at the telephone number
above.
26
OTHER BUSINESS
While
the accompanying Notice provides for the transaction of such other
business as may properly come before the meeting, we have no
knowledge of any matters to be presented at the meeting other than
those listed as Proposals 1, 2, 3 and 4. However, the
enclosed proxy gives discretionary authority in the event that any
other matters should be presented.
FORM 10-K
This
proxy statement is accompanied by a copy of our Annual Report on
Form 10-K for the year ended December 31, 2018 (excluding
exhibits). We may charge a fee equal to our reasonable
expenses in furnishing the exhibits.
Dale A.
Thatcher
Chief
Executive Officer
Kingston,
New York
June
28, 2019
27
TABLE OF CONTENTS