AXS Axis Capital Holdings Ltd

BOARD STRUCTURE

Our Board is divided into three classes, designated Class I, Class II and Class III. The term of office for each Class II director expires at this year’s Annual General Meeting to be held on May 7, 2020; the term of office for each Class I director will expire at the Company’s Annual General Meeting in 2021; and the term of office for each Class III director will expire at the Company’s Annual General Meeting in 2022. At each annual general meeting of the Company, the successors of the class of directors whose term expires at that meeting will be elected to hold office for a term expiring at the annual general meeting to be held in the third year following the year of their election.

Three Class II directors are to be elected at the meeting to hold office until the Company’s Annual General Meeting in 2023. All of the nominees are currently directors. Our Corporate Governance and Nominating Committee recommended all of the nominees to our Board for election at the meeting. All nominees have consented to serve if elected. We do not expect that any of the nominees will become unavailable for election as a director, but if any nominee should become unavailable prior to the meeting, proxy cards authorizing the proxies to vote for the nominees will instead be voted for substitute nominees recommended by our Board.

Our Board has reviewed its classified board structure and continues to believe that this structure provides greater stability and continuity in the Board’s membership and in the direction and guidance that it provides to the Company’s management. As compared with an annual election process, this approach promotes a long-term perspective to our strategic objectives and has proved beneficial to our CEO and executive management in establishing the Company’s short- and long-term priorities. We believe that a classified election process remains in the best interests of our shareholders.

SKILLS, QUALIFICATIONS AND EXPERIENCE OF DIRECTORS

In order for the Board to satisfy its oversight responsibilities effectively, the Board seeks members who combine the highest standards of integrity with significant accomplishment in their chosen field of endeavor. The Corporate Governance and Nominating Committee is responsible for recommending qualified candidates for directorships to be filled by the Board or by our shareholders. Directors are expected to bring a diversity of experiences, skills and perspectives to our Board. The Committee considers qualities of intelligence, honesty, perceptiveness, good judgment, high ethics and standards, integrity and fairness to be of paramount importance. It also examines experience, knowledge and skills in business judgment, leadership, strategic planning, general management practices and crisis response. In addition, the Committee looks for candidates with financial expertise and a willingness and ability to commit the time required to fully discharge their responsibilities to the Board. The Committee evaluates candidates on the basis of their qualifications and not on the basis of the manner in which they were submitted for consideration.

Although we do not have a formal policy with regard to the consideration of diversity in identifying director nominees, the Committee views diversity as an essential element for our Board’s composition and effectiveness. Attributes such as race, gender, age, ethnicity and national origin are considered in the identification and evaluation of our director candidates that will be additive to our overall Board’s diversity.

The below table illustrates the Board’s continued commitment to selecting highly qualified and experienced leaders with varied yet complementary functional backgrounds.

		PROPOSAL 1. ELECTION OF DIRECTORS    5

HIGHLY QUALIFIED BOARD PROVIDES EFFECTIVE OVERSIGHT

DIRECTORS

EXPERIENTIAL CRITERIA (1)

Public Company Experience

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

Digital Experience

✓

✓

Insurance Experience

✓

✓

✓

✓

✓

✓

✓

✓

✓

Reinsurance Experience

✓

✓

✓

✓

✓

Finance Experience

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

International Experience

✓

✓

✓

✓

✓

✓

✓

✓

✓

Banking Experience

✓

✓

✓

✓

✓

✓

✓

Legal/Regulatory Experience

✓

COMPOSITION

Other Current Public Boards

0

0

2

0

0

0

0

0

2

1

1

Age

62

77

71

61

75

47

76

71

60

75

61

Tenure (Years)

8

17

17

0.4

13

1.3

10

15

1.6

10

1

Gender

M

M

M

F

M

F

M

M

F

M

F

BOARD REFRESHMENT PROCESS

Our Board is committed to orderly director succession planning and having a diversity of skills and experiences on our Board aligned with our long-term strategy. Our Board benefits immensely from the industry expertise of our longer-tenured directors, yet also recognizing the importance of regular, thoughtful refreshment, our Corporate Governance and Nominating Committee has embarked on a thoughtful director succession planning process. With the assistance of a third-party search firm, our Corporate Governance and Nominating Committee identified the skills and experience which the Company would need to lead the Company into the future, in line with our evolving strategy, and has evaluated director candidates based upon these desired qualities, attributes and skills. This succession planning has been conducted over time, as part of a multi-stage process, to ensure that the Company continues to benefit from the Company-specific expertise of our longer-tenured directors, balanced with the fresh perspectives brought by our newer directors.

Our director succession planning and refreshment process:

6    PROPOSAL 1. ELECTION OF DIRECTORS

Highlights of our directors continuing in office include the following:

Gender		Tenure		Independence

		PROPOSAL 1. ELECTION OF DIRECTORS    7

Recommendation of the Board

The Board recommends that you vote “FOR” the election of these nominees.

8    PROPOSAL 1. ELECTION OF DIRECTORS

DIRECTORS CONTINUING IN OFFICE

The table below sets forth the names, ages, classes and positions of the directors who are not standing for election at the Annual General Meeting but whose term of office will continue after the meeting. Robert L. Friedman, a Class II director, will not be standing for re-election at the meeting, and will be retiring from the Board on May 7, 2020. Maurice A. Keane, a Class III director, will also retire from the Board effective May 7, 2020.

		PROPOSAL 1. ELECTION OF DIRECTORS    9

CORPORATE GOVERNANCE HIGHLIGHTS

Corporate governance is an area of significant focus for our Board and is a critical component to our success in driving sustained shareholder value. Highlights of our corporate governance standards are provided below:

DIRECTOR INDEPENDENCE

Our Board currently consists of 13 directors, of whom eleven are independent directors, and will be reduced in size to 11 directors effective May 7, 2020. As noted above, Messrs. Friedman and Keane will retire from the Board effective May 7, 2020. The Board has affirmatively determined that each of Messrs. Davis, Friedman, Greetham, Keane, Ramey, Smith and Zeller and Mses. Dowling, Hardwick, Yastine and Zlatkus are independent as defined in the listing standards of the NYSE and in accordance with the Company’s Corporate Governance Guidelines. Mr. Benchimol serves as our Chief Executive Officer and President and therefore is not independent. Similarly, because Mr. Butt was an employee of the Company until his May 3, 2012 retirement and also is a consultant to us, he is not independent under the NYSE listing standards. Mr. Butt continues to serve as Chairman of the Board in his capacity as a non-management director. The Board has made these determinations based primarily on a review of the responses of the directors to questions regarding employment and compensation history, family relationships and affiliations and discussions with the directors.

With respect to Charles A. Davis, the Board reviewed his current relationship with Stone Point Capital LLC (“Stone Point”) and assets that we currently have under management with affiliates of Stone Point. The Board determined that neither of these relationships constitute a material relationship with us as defined in the listing standards of the NYSE. For more details about this relationship and transactions, see “Certain Relationships and Related Transactions” below.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Policies and Procedures for Transactions with Related Persons. With the assistance of the Company’s Corporate Secretary and General Counsel, our Corporate Governance and Nominating Committee is required to consider and approve all transactions in which AXIS participates where a related person may have a direct or indirect material interest which involves an amount greater than $120,000. After considering the facts and circumstances, the Committee determines the potential for a conflict of interest and also whether disclosure of the transaction is required under applicable SEC rules and regulations. Related persons include any of our directors, director nominees or executive officers, certain of our shareholders and their respective immediate family members. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, in any way with our interests. Our Code of Business Conduct requires all directors, officers and employees who may have either a potential or apparent conflict of interest to promptly disclose such conflict to our General Counsel.

 

12    CORPORATE GOVERNANCE

We seek affirmative confirmation of compliance with our Code of Business Conduct from our directors, officers and employees annually.

Additionally, each year, our directors and executive officers complete questionnaires that require the identification of any arrangements or transactions in which they or their family members have an interest. All potential related-person transactions are reviewed by our Corporate Governance and Nominating Committee, which pursuant to its charter is responsible for reviewing and approving any proposed transaction with any related person.

During 2019, our Chairman, Mr. Butt, received $350,000 in consulting fee payments pursuant to the terms of a consulting agreement by and between Mr. Butt and the Company dated May 3, 2012. The agreement was most recently amended on July 18, 2019 to extend the term of the agreement to December 31, 2020. Mr. Butt will not receive any additional fees for consulting services provided during the extended term.

Charles A. Davis is the Chief Executive Officer of Stone Point. In the ordinary course of business, we have contracted with SKY Harbor Capital Management, LLC, an affiliate of Stone Point, for asset management services for certain of our high-yield debt portfolios. In 2019, we paid $2.6 million to SKY Harbor Capital Management, LLC in management fees relating to these portfolios.

During 2019, we committed to invest $71 million in Stone Point’s Trident VIII. For the year ended December 31, 2019, we have not paid any fees to Stone Point in relation to Trident VIII.

We also have $52 million invested in the Freedom Consumer Credit Fund, LLC Series B, the manager of which is Freedom Financial Asset Management, LLC, an indirect subsidiary of Pantheon Partners, LLC. Investment funds managed by Stone Point own approximately 14.5% of Pantheon Partners, LLC. During 2019, fees paid to Freedom Financial Asset Management, LLC totaled $2.7 million.

In January 2020, we committed to invest $10 million in a co-investment with Stone Point to purchase a limited partnership interest in T-VIII Co-Invest-A LP, which is being formed by Stone Point to facilitate the investment by multiple investors in Duff & Phelps, a financial advisory firm. No management or other fees will be paid by AXIS to Stone Point in connection with Stone Point’s management of this investment.

BOARD COMMITTEES

Our Board maintains Audit, Compensation, Corporate Governance and Nominating, Finance, Risk and Executive Committees. Current copies of the charter for each of these committees, as well as our Corporate Governance Guidelines, are available on our website at www.axiscapital.com. The table below provides current membership and meeting information for each committee. In addition, the table identifies the independent directors, as determined by our Board within the meaning of the NYSE listing standards, applicable SEC regulations and our Corporate Governance Guidelines.

		CORPORATE GOVERNANCE    13

Audit Committee. The Audit Committee has general responsibility for the oversight of the integrity of our financial statements, our compliance with legal and regulatory requirements, our independent auditor’s qualifications and independence and the performance of our internal audit functions and independent auditors. The Committee appoints, retains and determines the compensation for our independent auditors, pre-approves fees and services of the independent auditors and reviews the scope and results of their audit. The Audit Committee has been established in accordance with Rule 10A-3 of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). Each member of the Audit Committee is a non-management director and is independent as defined in the listing standards of the NYSE, our Corporate Governance Guidelines and under the Exchange Act. Our Board has determined that Mr. Ramey qualifies as an audit committee financial expert pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Compensation Committee. The Compensation Committee establishes compensation for our Chief Executive Officer and certain other executives in light of our established corporate performance goals and makes recommendations to our Board with respect to overall officer, management and employee compensation policies, incentive compensation plans, equity-based plans and director compensation. Each member of this Committee is a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act and is independent as defined in the listing standards of the NYSE. For a description of our processes and procedures for the consideration and determination of executive and director compensation, see “Compensation Discussion and Analysis” and “2019 Directors Compensation” later in this proxy statement.

Corporate Governance and Nominating Committee. The Corporate Governance and Nominating Committee takes a leadership role in shaping our corporate governance by identifying and proposing qualified director nominees; overseeing the purpose, structure and composition of our Board committees; overseeing the annual evaluation of the Board and its committees; and periodically reviewing our Code of Business Conduct and Corporate Governance Guidelines. The Committee also oversees our corporate citizenship initiatives. Each member of this Committee is a non-management director and is independent as defined in the listing standards of the NYSE.

Finance Committee. The Finance Committee oversees the investment and treasury functions of the Company, including the investment of funds and financing facilities. It also is responsible for establishing our investment policies and guidelines, reviewing the selection of investment managers, evaluating the performance of investment managers, monitoring the need for additional financing and ensuring compliance with outstanding debt facility covenants.

Risk Committee. The Risk Committee assists the Board in its oversight of risks to which the Company is exposed and monitors our compliance with our aggregate risk standards and risk appetite. The Risk Committee also reviews compensation practices to determine whether our policies and plans are consistent with the Company’s risk framework and do not encourage excessive risk taking.

Executive Committee. The Executive Committee may exercise the authority of the Board when the entire Board is not available to meet, except in cases where the action of the entire Board is required by our memorandum of association, our bye-laws or applicable law.

MEETINGS OF THE BOARD AND ITS COMMITTEES

Pursuant to our Corporate Governance Guidelines, we expect our directors to attend all meetings of our Board, all meetings of all committees of the Board on which they serve and each annual general meeting, absent exigent circumstances. Our Board met five (5) times during the year ended December 31, 2019. No director attended fewer than 75% of the total number of meetings of the Board and the total number of meetings of all committees of the Board on which the director served (during the period that each director served on the Board or such committee(s)). All of our directors then in office attended our 2019 Annual General Meeting.

MEETINGS OF NON-MANAGEMENT DIRECTORS

The Board believes that one of the key elements of effective, independent oversight is that the independent directors meet in executive session on a regular basis without the presence of management. In 2019, the independent directors met in executive session with the Lead Independent Director presiding at each of our four regularly scheduled Board meetings.

14    CORPORATE GOVERNANCE

LEAD INDEPENDENT DIRECTOR

The Board believes that the role of Lead Independent Director enhances effective governance. Mr. Smith currently serves as Lead Independent Director. In addition to presiding at executive sessions of the non-management directors as well as all meetings at which the Chairman is not present, the Lead Independent Director’s duties include:

BOARD LEADERSHIP STRUCTURE

The Board believes that the decision of whether to combine or separate the positions of Chief Executive Officer and Chairman will vary company to company and depends upon a company’s particular circumstances at a given point in time. For our Company, the Board continues to believe that separating the Chief Executive Officer and Chairman positions is the appropriate leadership structure and is in the best interests of our shareholders. In addition, the Board also believes that AXIS’ leadership structure does not affect the Board’s role in risk oversight of the Company. Accordingly, Mr. Butt currently serves as our Chairman of the Board, and Mr. Smith will assume the position of Chairman upon Mr. Butt’s retirement, while Mr. Benchimol serves as our Chief Executive Officer and President. Our Board believes that this structure best encourages the free and open dialogue of alternative views and provides for strong checks and balances. Additionally, Mr. Butt’s attention to Board and committee matters allows Mr. Benchimol to focus more specifically on overseeing the Company’s day-to-day operations and underwriting activities as well as strategic opportunities and planning.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Smith, Greetham, Keane and Ramey served on our Compensation Committee during fiscal year 2019 and effective January 1, 2020, Mses. Hardwick and Zlatkus and Mr. Zeller became members. During fiscal 2019, none of our executive officers served on the Compensation Committee (or its equivalent) or on the board of directors of another entity where one of our Compensation Committee members was an executive officer.

CONSIDERATION OF DIRECTOR NOMINEES

The Corporate Governance and Nominating Committee will consider candidates recommended by shareholders to be nominated to our Board for election at the Annual General Meeting. A shareholder who wishes to submit a candidate for consideration must be a shareholder of record at the time that such shareholder submits a candidate for nomination and must be entitled to vote for the candidate at the meeting. A shareholder must give written notice of the submission to our Secretary not less than 90 days nor more than 120 days prior to the anniversary of the annual general meeting for the preceding year; provided, that, if the date of the annual general meeting is moved more than 30 days before or after the anniversary date of the annual general meeting for the preceding year, the deadline for giving written notice of the submission to our Secretary will instead be a reasonable time before we begin to print and mail our proxy materials. The notice must include:

 

•

the name, age and business and residence addresses of the candidate;

 

•

the principal occupation or employment of the candidate;

 

•

the number of common shares or other securities of the Company beneficially owned by the candidate;

 

•

all other information relating to the candidate that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act; and

 

•

the candidate’s written consent to be named in the proxy statement and to serve as a director if elected.

The notice also must include information on the shareholder submitting the nomination, including the shareholder’s name and address as it appears on our share register and the number of our common shares beneficially owned by the shareholder.

 

		CORPORATE GOVERNANCE    15

COMMUNICATIONS WITH BOARD OF DIRECTORS

Shareholders and other interested parties may send communications to our Board by sending written notice to our Secretary at our headquarters at AXIS House, 92 Pitts Bay Road, Pembroke HM 08, Bermuda. The notice may specify whether the communication is directed to the entire Board, to the non-management directors, to the Lead Independent Director or to a particular Board committee or other director. Our Secretary will handle routine inquiries and requests for information or will otherwise determine whether the communication is made for a valid purpose and is relevant to the Company and its business and, if he so determines, will forward the communication to our Chairman of the Board, to the non-management directors or to the appropriate committee chairman or director. At each meeting of our Board, our Secretary presents a summary of all communications received since the last meeting that were not forwarded and makes those communications available to the directors on request.

EMPLOYEE, OFFICER AND DIRECTOR HEDGING

Our Insider Trading Policy prohibits our officers, employees and directors from transacting certain forms of hedging or monetization transactions (including prepaid variable forward contracts, equity swaps, collars and exchange funds), or otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our securities held by them.

RISK GOVERNANCE AND RISK MANAGEMENT ORGANIZATION

The key elements of our governance framework, as it relates specifically to risk management, are described below.

Board of Directors’ Level

The Risk Committee of the Board assists the Board of Directors in overseeing the integrity and effectiveness of our enterprise risk management framework and ensuring that our risk assumption and risk mitigation activities are consistent with that framework. The Risk Committee reviews, approves and monitors our overall risk strategy, risk appetite and key risk limits and receives regular reports from the Group Risk Management function to ensure any significant risk issues are being addressed by management. The Risk Committee further reviews, with management and our internal audit function, our general policies and procedures and satisfies itself that effective systems of risk management and controls are established and maintained. Among its other responsibilities, the Risk Committee also reviews and approves our annual Own Risk and Solvency Assessment, or ORSA, report. The Risk Committee assesses the independence and objectivity of our Group Risk function, approves its terms of reference and reviews its ongoing activities.

Following a recommendation by the Chief Executive Officer, the Risk Committee also conducts a review and provides a recommendation to the Board of Directors regarding the appointment and/or removal of the Chief Risk Officer. The Risk Committee meets with the Chief Risk Officer in separate executive sessions on a regular basis.

The Finance Committee of our Board oversees our investment of funds and adequacy of financing facilities. This includes approval of our strategic asset allocation plan. The Audit Committee of our Board, which is supported by our internal audit function, is responsible for overseeing internal controls and compliance procedures. The Finance Committee also reviews with management and the Chairman of the Risk Committee, our guidelines and policies regarding risk assessment and risk management.

As part of its oversight of risks and opportunities generally, our Board oversees the risks and opportunities relating to climate change.

Group Executive Level

Our management Executive Committee formulates our business objectives and risk strategy within the overall risk appetite set by our Board. It allocates capital resources and sets limits across the AXIS operating entities, with the objective of balancing return and risk. While the management Executive Committee is responsible overall for risk management, it has delegated some authority to the executive level Risk Management Committee, or RMC, consisting of the Chief Executive Officer, Chief Financial Officer, Chief Strategy Officer, Chief Underwriting Officer, each of the Chief Executive Officers for each segment, Chief Risk Officer, Chief Actuary and General Counsel.

The RMC is responsible for overseeing the integrity and effectiveness of the Group’s enterprise risk management framework and ensuring that our risk assumption and risk mitigation activities are consistent with that framework,

16    CORPORATE GOVERNANCE

including a review of the annual business plan relative to our risk limits. In addition to the RMC, there is an established framework of separate yet complementary management committees and subcommittees, focusing on particular aspects of enterprise risk management including the following:

Management Committees

RMC Sub-Committees

Group Risk Management Organization

As a general principle, management in each of our business units is responsible in the first instance for both the risks and returns of its decisions. Management is the “owner” of risk management processes and is responsible for managing our business within defined risk limits.

Our Chief Risk Officer, who reports to the Chief Financial Officer and the Chairman of the Risk Committee, leads our independent Group Risk function and is responsible for oversight and implementation of our enterprise risk management framework as well as providing guidance and support for risk management practices. Group Risk is responsible for developing methods and processes for identifying, measuring, managing and reporting risk. This forms the basis for informing the Risk Committee and the RMC of our risk profile. Group Risk develops our risk management framework and oversees the adherence to this framework at the group and operating entity level. Our Chief Risk Officer regularly reports risk matters to the Chief Financial Officer, management Executive Committee, RMC and the Risk Committee.

Internal audit, an independent, objective function, reports to the Audit Committee of the Board on the effectiveness of our risk management framework. This includes assurance that key business risks have been adequately identified and managed appropriately and that our system of internal control is operating effectively. Internal audit also provides independent assurance around the validation of our internal capital model and coordinates risk-based audits, compliance reviews, and other specific initiatives to evaluate and address risk within targeted areas of our business.

		CORPORATE GOVERNANCE    17

Our risk governance structure is further complemented by our legal department which seeks to mitigate legal and regulatory compliance risks with support from other departments. This includes ensuring that significant developments in law and regulation are observed and that we react appropriately to impending legislative and regulatory changes and applicable court rulings.

CODE OF BUSINESS CONDUCT AND CORPORATE GOVERNANCE GUIDELINES

Our Corporate Governance Guidelines, along with our Code of Business Conduct and the charters of each of the committees of our Board, provide a framework for the corporate governance of the Company addressing matters such as director qualification standards, director responsibilities and duties and compensation of our directors. Our Corporate Governance Guidelines and our Code of Business Conduct apply to all of our directors, officers and employees, including our Chief Executive Officer and President, our Chief Financial Officer and our Controller and are available on our website at www.axiscapital.com. We intend to disclose on our website any required amendment to, or waiver of, a provision of the Code of Business Conduct that applies to our Chief Executive Officer and President, our Chief Financial Officer or our Controller. In addition, waivers of the Code of Business Conduct for our directors and executive officers may be made only by our Board or the Corporate Governance and Nominating Committee and will be promptly disclosed to shareholders on our website in accordance with the listing standards of the NYSE.

CORPORATE CITIZENSHIP AND SUSTAINABILITY

We define our corporate purpose as giving people and organizations the confidence to take necessary risks in the pursuit of their goals and ambitions. Our corporate citizenship program is organized around identifying, assessing and managing on an ongoing basis the environmental, social and governance factors that are relevant to our long-term financial performance. Our approach is to take into account the input of our core stakeholders, including our colleagues, our shareholders and our communities, and to consider material environmental, social and governance factors in our strategic planning and risk oversight.

The Corporate Governance and Nominating Committee of the Board has primary oversight responsibilities for our corporate citizenship program. The Committee regularly reports on citizenship and sustainability matters to, and receives the input of, the full Board. In addition, our senior management provides guidance for our citizenship and sustainability strategy and initiatives.

The Company has determined that it will focus its corporate citizenship efforts initially in four areas: environment (which includes environmental sustainability and climate-risk mitigation), diversity and inclusion, philanthropy and advocacy. Select initiatives in each of these areas are discussed below.

ENVIRONMENT

Since its inception, AXIS has been at the forefront of assessing and offering protection against weather-related risks such as hurricanes, storms, wildfires and floods, helping businesses and individuals proactively manage their exposure to such risks, and, when the need arises, recover from their aftermath. Our assessment of sustainability risks and opportunities takes into account the physical and transitional risks and opportunities of climate change. Through its NatCat Centre of Excellence, the AXIS Research Center, a newly formed climate-change working group, and local modeling teams, AXIS continues to advance research and monitoring of the newest science on climate change, as well as modeling and reviewing peril regions most likely to be affected thereby. For example:

In 2019, we significantly scaled up our environmental and climate-risk work with additional initiatives such as the following:

18    CORPORATE GOVERNANCE

As part of its oversight of risks and opportunities generally, our Board oversees the risks and opportunities relating to climate change.

OUR PEOPLE

At AXIS, investing in our people is a top priority. We strongly encourage our employees to develop critical capabilities that will aid in their professional and personal growth, propel their careers, and help them engage in the communities where they work and live. We also recognize the importance of a diverse workforce. Our goal is to elevate the level of service that we provide to our customers and partners, retain our top talent and support the communities where we do business. Some of our 2019 initiatives in furtherance of this goal are described below:

		CORPORATE GOVERNANCE    19

A key pillar of our corporate citizenship platform is diversity and inclusion. Encouraging a wide range of experiences, backgrounds and perspectives makes AXIS a more rewarding place to work, enables us to attract talented teammates, enriches our perspectives and makes us stronger as a global organization. Below are strategies and initiatives enacted to further the advancement of our diverse and inclusive culture:

PHILANTHROPY

We believe in a grassroots approach to philanthropy: advancing charitable endeavors that are interwoven into the fabric of our local communities. AXIS has a long history of supporting charitable causes that align with our values. Our giving comes in many forms:

ADVOCACY

AXIS focuses its advocacy efforts on driving significant change in the (re)insurance industry by promoting issues, policies and initiatives that are supportive of the other three pillars of our corporate citizenship program, in particular pertaining to the environment and diversity and inclusion. For example, as part of our advocacy efforts, we are engaged with organizations such as the Geneva Association as well as the Insurance Development Forum, launched by the United Nations, the World Bank and the insurance industry; scaled-up our involvement in the Lloyd’s Dive In Festival, a festival for diversity and inclusion in the insurance sector; and sponsored initiatives through the UN Foundation-backed female empowerment initiative, Girl Up.

20    CORPORATE GOVERNANCE

LETTER FROM COMPENSATION COMMITTEE CHAIRMAN

Dear Shareholders,

Over the course of the past year, I have had the privilege of speaking with many of you directly, in connection with both our 2019 Annual Meeting and our fall outreach program. During these meetings, we discussed our executive compensation practices, including the changes made to our compensation structure to further align pay and performance. We also reviewed our governance practices, including our Board composition and refreshment process. In addition, we discussed environmental, social, and other sustainability topics, such as climate change as it relates to the Company’s business. The feedback provided substantially contributed to the positive enhancements made to our compensation, governance, and citizenship programs.

Changes in our compensation structure in 2019 and 2020

The Compensation Committee is committed to overseeing executive compensation programs that support our business strategy and transformation initiatives, encourage decision-making consistent with our risk framework, and align with our shareholders’ interests and the Company’s long-term goals. We also recognize that as AXIS and the (re)insurance industry continue to evolve, it is necessary to continually adapt our compensation programs to account for these shifting business dynamics and the corresponding expectations from our shareholders.

Following a thorough review of our executive compensation program over the last 18 months and incorporating feedback received from our shareholders, the Compensation Committee made changes to our compensation program in 2019 and 2020. As detailed further in this proxy statement, we have:

The Committee will continue to evaluate the Company’s compensation programs annually to ensure our compensation programs continue to attract, retain and motivate executive talent. This assessment will take into account the Company’s strategic objectives to realign portfolios to exit less profitable lines and reduce volatility, grow more promising classes of business, apply technology to support growth and efficiency, and cultivate exceptional talent.

Performance and pay outcomes in 2019

While our executive team has made significant progress in building a stronger, more profitable and future-ready company, it has taken longer than expected to deliver the desired financial results of our strategy. The Company’s 2019 financial performance was impacted by significant weather events, including an exceptionally severe Japanese typhoon season, poor crop conditions in the U.S., and loss creep from prior period catastrophes.

We have taken your feedback, both through the vote at our last Annual Meeting and our many conversations throughout the year, and incorporated it into our compensation program. The Compensation Committee is committed to reinforcing the strong link between pay and performance and therefore, took action to address your concerns. In light of below-plan financial performance, our Chief Executive Officer’s total compensation was reduced by 26% for performance year 2019 compared to 2018.

		LETTER FROM COMPENSATION COMMITTEE CHAIRMAN    25

As you review the discussion and analysis of our compensation program in the next several pages, I believe that you will find a program well-tailored to match the needs and strategic objectives of our business. Thank you for your continued investment in AXIS.

Henry Smith

Lead Independent Director

Compensation Committee Chair

26    LETTER FROM COMPENSATION COMMITTEE CHAIRMAN

EXECUTIVE SUMMARY

During 2019, the Company continued to advance its transformation program designed to reposition AXIS to become a stronger, more nimble company. Our management team has remained focused on executing against our plan, making strategic decisions and investments that we believe will create a strong and lasting foundation for profitable growth and leadership.

In 2019, we significantly advanced the following five strategic initiatives previously established by our Board:

Financial Highlights

Notwithstanding the Company’s strategic accomplishments, 2019 was a challenging financial year. It has taken longer than we had planned to demonstrate the beneficial financial impact of the actions we have taken to strengthen our portfolio.

		COMPENSATION DISCUSSION AND ANALYSIS    27

Ex-PGAAP OROACE was the financial metric used for evaluating cash bonus awards under our Annual Incentive Plan. TSR was the Company’s financial metric for the PSUs granted in 2019.

AXIS Capital’s 2019 financial results for these performance metrics are set forth below:

SHAREHOLDER ENGAGEMENT AND RESPONSIVENESS TO 2019 SAY ON PAY VOTE

At our 2019 Annual Meeting of Shareholders, 67% of the votes cast were in favor of our advisory vote on executive compensation, a decrease of over twenty percentage points from the result at our 2018 Annual Meeting. We believe one of the significant factors impacting this result was that our Chief Executive Officer received increased compensation for performance year 2018, despite Company financial results that did not meet our expectations. This increase was delivered fully in the form of equity, leaving his base salary and bonus target flat. This was intended to ensure his alignment with shareholders as he leads the Company’s multi-year transformation initiative and to recognize his additional responsibilities in light of the increased size and complexity of our business.

Both the Compensation Committee and management were disappointed with the say-on-pay outcome and sought to understand our shareholders’ perspectives. In the spring of 2019, in advance of our 2019 Annual Meeting and thereafter, in the fall of 2019, we reached out to shareholders representing over 61% of our outstanding shares and held meetings with holders of approximately 45% of our outstanding shares.

In order to establish a direct line of communication between shareholders and our Board, our Lead Independent Director and Chairman of the Compensation Committee, Mr. Smith, actively participated in the majority of these meetings. During the meetings, in addition to discussing governance and corporate citizenship matters, we discussed our executive compensation practices, including the changes made to our compensation structure in 2019 and 2020 to further align pay and performance. In particular, we discussed that our business strategy, the markets in which we operate and our peer companies have substantially changed since the inception of our long-term incentive plan. In light of these changes, the Committee sought to redesign our long-term incentive plan so that it continues to attract, retain and motivate executive talent. Our shareholders provided us their input, and their feedback was reviewed and discussed with our Compensation Committee, Corporate Governance and Nominating Committee and the full Board.

The Compensation Committee is committed to ensuring a strong link between pay and performance. Based on 2019 Company financial results, the Committee significantly reduced our Chief Executive Officer’s compensation. For performance year 2019, our Chief Executive Officer’s annual incentive and equity awards were reduced by 48% and 26%, respectively.

These reductions were a product of the Company’s below-target financial performance and several actions taken by the Committee, as follows:

Financial Performance

Committee Discretion

28    COMPENSATION DISCUSSION AND ANALYSIS

The table below is a summary of the recent changes to our compensation program and practices, incorporating feedback provided by shareholders.

Pay and Performance

The success of our transformation initiatives will depend on the talents of our executive team to embrace excellence, drive innovation and lead our workforce. We believe we have the right team for this critical juncture in the history of our Company. With our strategic, transformational journey, our Compensation Committee is focused on maintaining a pay for performance orientation, while ensuring that executives are aligned with shareholders and the Company’s long-term goals.

With that in mind, a substantial portion of our NEOs’ compensation is long-term, performance-based and “at risk.” The Committee defines “at-risk” compensation as variable pay that has both upside potential and downside risk depending on the Company’s performance.

		COMPENSATION DISCUSSION AND ANALYSIS    29

The below charts illustrate the target mix of pay for our CEO and other NEOs for the 2019 performance year:

Although our CEO demonstrated strong leadership and made excellent progress in advancing the Company’s long-term strategic plan, the Compensation Committee wanted to reinforce the strong link between pay and performance. Based on the Company’s financial results, the Compensation Committee approved the following with respect to CEO compensation for the 2019 performance year:

Total direct compensation for our CEO, which we define as 2019 salary and bonus and equity awarded for 2019 performance, was reduced by 26% from the prior year. The Committee maintained the mix of the CEO’s compensation to ensure that approximately three quarters is received in the form of equity for which the value is directly impacted by the Company’s stock price performance.

30    COMPENSATION DISCUSSION AND ANALYSIS

The following chart shows the overall decrease in our CEO’s total direct compensation between the 2018 and 2019 performance years:

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