LARGE SHAREHOLDER ADDRESSES JAMES RIVER GROUP BOARD FOLLOWING DISCRETIONARY MANAGEMENT PERFORMANCE BONUSES

Rhea-AI Summary

James River Group Holdings (NASDAQ: JRVR) faces shareholder criticism over the Board's recent decision to award approximately $2.115 million in discretionary management bonuses for the 2024 performance period. Gregory and Scott Fortunoff, who hold nearly 2% of JRVR's outstanding shares, expressed shock at this decision given the company's significant underperformance.

The shareholders highlighted that JRVR's stock price has declined approximately 59% over the past year, while book value dropped about 30%. In 2024, the company reduced its annual cash dividend from $0.20 to $0.05 per share due to deteriorating financial results. The letter criticizes the Board, noting that except for Matthew Botein, they collectively own less than 0.5% of outstanding shares, while receiving approximately $1.331 million in group compensation.

The Fortunoffs propose that any bonuses should be awarded in stock options rather than cash, and unused portions should be distributed to shareholders as a special dividend. They threaten further action if the Board fails to prioritize capital preservation and shareholder interests.

Positive

• None.

Negative

• Stock price declined approximately 59% over the past year
• Book value dropped approximately 30%
• Annual cash dividend reduced from $0.20 to $0.05 per share
• $2.115 million in discretionary bonuses awarded despite poor performance
• Board members collectively own less than 0.5% of shares (excluding one member)
• High Board compensation of $1.331 million despite company underperformance

News Market Reaction

-0.25%

1 alert

-0.25% News Effect

On the day this news was published, JRVR declined 0.25%, reflecting a mild negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

Gregory and Scott Fortunoff, who together with their affiliates, hold a substantial equity interest in James River Group Holdings, Ltd. (NASDAQ: JRVR) (the "Company"), sent the following letter to the Company's Board of Directors (the "Board") regarding the Board's recent decision to significantly increase the cash incentive awards for Company management for the 2024 performance period despite the Company's ongoing underperformance.

NEW YORK, March 14, 2025 /PRNewswire/ --

March 10, 2025

The Board of Directors
James River Group Holdings, Ltd.
Clarendon House
Wellesley House, 2nd Floor
90 Pitts Bay Road
Pembroke HM08, Bermuda

Members of the Board,

            We are writing to you as a group of shareholders of James River Group Holdings, Ltd. (the "Company") that own almost 2% of the outstanding shares of the Company's common stock at the time of this letter.  As we write this letter, the share price of the Company is down approximately 59% over the last year, and the book value of the Company has also dropped approximately 30% during this time. Therefore, we were shocked by the Company's announcement on Friday of discretionary bonuses awarded by the Board of Directors of the Company (the "Board") and are writing due to the urgent nature of this matter.  

Last Friday, we were very shocked to learn from the Company's Form 8-K filing that the Board had decided to use its discretion "to increase the cash incentive award amounts for the 2024 performance period."  This "discretionary" bonus totaled approximately $2,115,000.  While we are hopeful that the Company's long and costly restricting will bear fruit, we believe this discretionary bonus rewards Company personnel for efforts to rectify problems which they created. We believe a bonus should only be granted when outperformance and excellence is achieved. The precipitous decline of the Company's stock price and book value not only reflect the absence of excellence but call into question the fundamental competence of Company management.

            We note that, in 2024, the Company decided to significantly decrease its annual cash dividend from $0.20 per share to $0.05 per share in order to shore up the finances of the Company as its financial results continued to significantly deteriorate.  We find it shocking that the current Board would reward management with the equivalent of almost $0.05 per share in performance bonuses instead of offering shareholders an increase in their dividend. Public company management is mandated to maximize shareholder value, not enrich themselves as shareholders' expense. It is not for management to be rewarded for subpar results. We believe that performance-based awards are warranted when the Company is performing well, but nothing whatsoever about the Company's performance in 2024 warranted this type of bonus.

            This Board of Directors as a group, except for Mr. Matthew Botein, owns less than half of 1% of the outstanding shares of the Company.  The majority of the shares owned by the Board were given as compensation, rather than outright purchases using their own money. Currently, Board members earn $128,000 as base compensation for serving as directors, with most making 50% to 70% more than that.  Presently, the Board is making approximately $1,331,000 as a group.  That amount significantly outpaces the returns shareholders have had on the Company's stock in the last 12 months.  This Board has no skin in the game or incentive to improve the Company's performance, yet, it is comfortable rewarding management with shareholder money while the Company's performance across all metrics has been subpar, with the stock price remaining near all-time lows. 

We would like the Board to explain to shareholders their decision to use their "discretion" to offer bonuses to management based on the Company's current performance. We would also like to know what led the Board to determine that it was better to reward management for the Company's continued underperformance rather than use these available funds to increase the annual cash dividend to the Company's shareholders or to grow the Company's business. While we believe that no bonus is warranted for the Company's performance in 2024, if the Board insists on providing management with some type of bonus, we strongly suggest that, at a minimum, the Board only award bonuses in the form of incentive stock options and divide the "discretionary" amounts awarded to management in order to align such performance bonuses with the performance of the Company's stock price and book value in 2024.  Further, we believe that the unused portion of these "discretionary" awards should be given to the shareholders in the form of a special dividend.

We expect your prompt response and a clear public commitment from the Board to prioritize the preservation of capital. We are prepared to take further steps to ensure the Board remains accountable and acts in the best interests of shareholders.

Sincerely,

Gregory Fortunoff

CONTACT:

Gregory Fortunoff
greg@jaftex.com 

View original content:https://www.prnewswire.com/news-releases/large-shareholder-addresses-james-river-group-board-following-discretionary-management-performance-bonuses-302401686.html

SOURCE Gregory Fortunoff

FAQ

How much did JRVR's stock price and book value decline in 2024?

JRVR's stock price declined approximately 59% over the year, while the book value dropped approximately 30%.

What is the size of the discretionary bonus awarded by JRVR's Board for 2024?

The Board awarded approximately $2,115,000 in discretionary cash incentive bonuses for the 2024 performance period.

How much did JRVR reduce its annual dividend in 2024?

JRVR decreased its annual cash dividend from $0.20 per share to $0.05 per share in 2024.

What percentage of JRVR shares do the Fortunoff shareholders own?

Gregory and Scott Fortunoff, along with their affiliates, own almost 2% of JRVR's outstanding shares.

What alternative bonus structure do the shareholders propose for JRVR management?

They suggest awarding bonuses in the form of incentive stock options instead of cash, and distributing unused portions as a special dividend to shareholders.