The U.S. Securities and Exchange Commission is seeking documents focused on Argo’s disclosures about executive compensation, the company said in response to inquiries from Bloomberg News. Its independent directors are conducting a review of its governance and compensation matters, the company said.
“The company, working with the assistance of outside counsel, is fully cooperating with the SEC and does not believe that the amounts involved are material to the company’s financial position or results of operations,” Argo said in an emailed statement.
Argo rose 1% in trading Wednesday in New York to $68 at 9:30 a.m., giving the company a market value of about $2.3 billion.
The investigation comes after an activist investor, Voce Capital Management, accused Argo of misusing corporate assets, including company-owned aircraft and housing. Argo Chief Executive Officer Mark Watson earned roughly $8.4 million in total compensation in 2018, a 180% increase over his 2017 earnings, according to a regulatory filing.
Representatives for the SEC and Voce declined to comment.
Voce, which had sought five seats on the board, gave up its fight in May, claiming two states refused to let the activist fund solicit proxies in their jurisdiction. Voce owns a 5.5% stake in Argo, making it the company’s fourth largest holder, according to data compiled by Bloomberg.
Among Voce’s allegations -- laid out in a February letter -- is that Argo failed to properly disclose the details of its corporate jet program, which Voce estimated costs millions of dollars a year to maintain and traveled dozens of times to airports near Watson’s homes and holiday destinations.
Throughout the course of the proxy fight, Voce also raised concerns about the use of corporate apartments in Miami and New York and Argo’s sponsorship of sporting events that were of personal interest to Watson.
Argo argued the complaints lodged by Voce had “little regard for the truth,” and pointed to its track record for shareholder returns as a counter to allegations of mismanagement. The insurer argued that Voce backed away from the proxy fight because it lacked the necessary support from shareholders.
Argo, based in Pembroke, Bermuda, offers reinsurance and property and casualty insurance.
In August, the company disclosed several proposed governance and compensation changes, including reducing the size of its board and ensuring that all directors stand for election each year.