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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 (Amendment No.          )

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Notice of 2020

Annual General Meeting

Of Members and

Proxy Statement

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LETTER FROM THE BOARD OF DIRECTORS

FROM OUR BOARD OF DIRECTORS

Dear Fellow Shareholders:

2019 was a strong year for our Company driven by good operating results in our main businesses and strong absolute investment returns.  Our share price increased 30%.  We also deployed $435 million into businesses during the year, and ended 2019 with undeployed capital at $1.0 billion.  This level of undeployed capital reflects management’s thoughtful and patient redeployment and return of capital over the past several years following sales of a number of our large businesses between 2015 and 2017 that generated $4 billion in proceeds.  Your Board believes that this patient approach to redeployment will serve owners well in the years to come.

Strong Financial Performance

We finished 2019 with book value per share of $1,024 and adjusted book value per share of $1,018, increases of 14% and 15% from the prior year.  Excluding the gain from the MediaAlpha transaction in February 2019, BVPS and ABVPS each grew 8%.  We focus management on growing ABVPS because we believe that, in the long term, growth in market value per share will follow growth in ABVPS.  In 2019, our one-year total shareholder return was 30.2%. Each of our main operating businesses performed well this year, and our total investment portfolio returned 20.4% (15.5% excluding the gain from the MediaAlpha transaction).  A very satisfying result.

Execution of Our Business Strategy

During 2019, your Company made good progress on capital deployment, putting $435 million to work.  Three significant deals emerged from our platform companies: (i) Embrace, a pet insurance MGA acquired by NSM, (ii) the acquisition of NSM’s collector car renewal rights and (iii) our buyout of Oaktree’s 50% interest in Kudu.  At the parent company, we closed the Elementum transaction and strengthened our deal pipeline considerably.

Thoughtful Approach to Board Composition with a Demonstrated Commitment to Refreshment

As part of our ongoing commitment to creating a balanced and effective Board with diverse viewpoints, skills, and deep industry expertise related to our Company strategy, Peter Carlson joined the Board in 2019. Pete brings over thirty years of accounting and audit experience in the insurance industry.  He is the former Executive Vice President and COO of Brighthouse Financial and the former Executive Vice President and CAO of MetLife. Our Board has a robust refreshment process and, since 2017, four new independent directors have joined the Board, replacing three long-serving directors. Average tenure now stands at seven years, and women comprise 25% of our members.

Ongoing Dialogue with Shareholders Through Proactive Engagement

Engaging with our shareholders remains a high priority.  Over the last year, members of the Board and management reached out to shareholders owning 72% of White Mountains’ outstanding shares and met with all shareholders who requested meetings, who represented 26% of our shares outstanding.  Over the past several years, feedback received from these discussions has helped guide changes to our executive compensation program and further enhance our disclosures about the skills and areas of expertise of our Board, the Board’s oversight of risk management, and our human capital management initiatives.  In this year’s proxy statement, we have included a Board skills matrix, enhanced our disclosure around Board oversight of ESG, and added a section on human capital management.

The global pandemic is challenging all of us in 2020, but our core principles serve us equally well in times of calm and times of uncertainty.  We wish you well as you manage through these turbulent times.  It is a privilege to serve as your Board, and we greatly value your support of White Mountains.

Sincerely,

The White Mountains Insurance Group Board of Directors

April 7, 2020

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White Mountains Insurance Group, Ltd. (the “Company”, “Registrant” or “WTM”) is an exempted Bermuda limited liability company whose principal businesses are conducted through its subsidiaries and affiliates.  Within this proxy statement, the term “White Mountains” is used to refer to one or more entities within the consolidated organization, as the context requires.

White Mountains is engaged in the business of making opportunistic and value-oriented acquisitions of businesses and assets in the insurance, financial services and related sectors, operating these businesses and assets through its subsidiaries and, if and when attractive exit valuations become available, disposing of these businesses and assets.

White Mountains conducts its business primarily in four areas:  municipal bond insurance, specialty insurance distribution, capital solutions for asset management firms, and other operations.  White Mountains’s municipal bond insurance business is conducted through its subsidiary HG Global Ltd. and its reinsurance subsidiary HG Re Ltd. (“HG Re” and, collectively, “HG Global”).  HG Global was established to fund the startup of and provide reinsurance, through HG Re, to Build America Mutual Assurance Company (“BAM”), a mutual municipal bond insurance company.  White Mountains’s specialty insurance distribution business is conducted through its subsidiary NSM Insurance HoldCo, LLC and its subsidiaries (collectively, “NSM”).  White Mountains provides capital solutions for asset management firms through its subsidiary Kudu Investment Management, LLC and its subsidiaries (collectively, “Kudu”).  White Mountains’s other operations consist of the Company and its wholly-owned subsidiary, White Mountains Capital, Inc (“WM Capital”), its other intermediate holding companies, its wholly-owned investment management subsidiary, White Mountains Advisors LLC (“WM Advisors”), investment assets managed by WM Advisors, and certain other consolidated and unconsolidated entities and certain other strategic investments.  White Mountains’s reportable segments are HG Global/BAM, NSM, Kudu and Other Operations.  For additional information on our business segments, please refer to the Form 10-K for 2019, which can be found at www.whitemountains.com.

The 2020 Annual General Meeting will be confined to a shareholder vote on the proposals set forth in this Proxy Statement and on such other matters properly brought before the meeting.

For a reconciliation of non-GAAP measures used in this Proxy Statement to their most comparable GAAP measures, see Annex A.

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PROXY SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement.  This summary does not contain all of the information that you should consider.  You should read the entire Proxy Statement carefully before voting.

This Proxy Statement and the accompanying proxy card are being distributed and made available to shareholders on or about April 23, 2020.

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Chief Executive Officer:

Other NEOs:

The Board is responsible for overseeing the Company’s management of ESG matters.  Following our core operating principle of Thinking Like Owners, we maintain robust and owner-focused corporate governance practices.  With respect to environmental matters, though our business operations do not have a large physical footprint, we strive to make meaningful contributions towards protecting the environment and contributing to our local communities.  As to sustainability, the Board oversees the Company’s corporate culture and reinforces the importance of promoting a respectful and diverse work environment that enables our employees to be productive and feel valued.  We focus on building long-term value for our owners by building enduring partnerships with the management teams and our partners in our various businesses and in the communities in which we operate.  The Board is proud of the Company’s efforts, which can generally be broken down into four main categories: (i) human capital management, (ii) diversity and inclusion, (iii) social impact, and (iv) sustainability.  For further details on our Company’s efforts on these categories, please refer to page 19 of the proxy statement.

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WHITE MOUNTAINS INSURANCE GROUP, LTD.

NOTICE OF 2020 ANNUAL GENERAL MEETING OF MEMBERS

TO BE HELD MAY 21, 2020

Notice is hereby given that the 2020 Annual General Meeting of Members of White Mountains Insurance Group, Ltd. will be held on Thursday, May 21, 2020 at 10:00 am Eastern Time at White Mountains Insurance Group, 23 South Main Street, Suite 3B, Hanover, New Hampshire.  At this meeting, you will be asked to consider and vote upon the following proposals:

1)           election of two directors to Class II with terms ending in 2023;

2)           approval of the advisory resolution on executive compensation; and

3)           approval of the appointment of PricewaterhouseCoopers LLP (“PwC”) as the Company’s Independent Registered Public Accounting Firm for 2020.

The Company’s audited financial statements for the year ended December 31, 2019, as approved by the Company’s Board of Directors, will be presented at this Annual General Meeting.

Shareholders of record of common shares on the record date, Wednesday, April 1, 2020, (1) who are individuals, may attend and vote at the meeting in person or by proxy or (2) that are corporations or other entities, may have their duly authorized representative attend and vote at the meeting in person or by proxy.  A list of all Shareholders entitled to vote at the meeting will be open for public examination during regular business hours beginning on or about April 20, 2020 at the Company’s registered office located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda.

Shareholders are invited to complete and sign the accompanying proxy card to be returned to White Mountains Insurance Group, Ltd., Proxy Services, c/o Computershare Investor Services, P.O. Box 505008, Louisville, Kentucky 40233-9814, in the envelope provided, whether or not they expect to attend the meeting.  Shareholders may also vote their shares by telephone or via the internet in accordance with the instructions on your proxy card.

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WHITE MOUNTAINS INSURANCE GROUP, LTD.

PROXY STATEMENT

This Proxy Statement is being furnished in connection with the solicitation of proxies on behalf of the Company’s Board of Directors (the “Board”) for the 2020 Annual General Meeting of Members (the “2020 Annual Meeting”), to be held on Thursday, May 21, 2020 at White Mountains Insurance Group, 23 South Main Street, Suite 3B, Hanover, New Hampshire.

Holders of the Company’s common shares (“Shareholders”), par value $1.00 per share, as of the close of business on Wednesday, April 1, 2020, the record date, are entitled to vote at the meeting.  The solicitation of proxies will be made primarily by mail, and the Proxy Statement and related proxy materials will be distributed to registered Shareholders on or about April 23, 2020.

You can ensure that your common shares are properly voted at the meeting by completing, signing, dating and returning the enclosed proxy card in the envelope provided.  Shareholders may also vote their shares by telephone or via the internet in accordance with the instructions on your proxy card.  Shareholders have the right to appoint another person (who need not be a Shareholder) to represent the Shareholder at the meeting by completing an alternative form of proxy which can be obtained from the Corporate Secretary or by notifying the Inspectors of Election (see page 54).  Every Shareholder entitled to vote has the right to do so either in person or by one or more persons authorized by a written proxy executed by such Shareholder and filed with the Corporate Secretary.  Any proxy duly executed will continue in full force and effect unless revoked by the person executing it in writing or by the filing of a subsequent proxy.

Sending in a signed proxy will not affect your right to attend the meeting and vote.  If a Shareholder attends the meeting and votes in person, his or her signed proxy is considered revoked.

IMPORTANT VOTING INFORMATION

If you hold your shares through a broker, bank or other financial institution, in order for your vote to be counted on any matter other than Proposal 3 (the ratification of the selection of PwC as the Company’s auditor for 2020), you must provide specific voting instructions to your broker, bank or financial institution by completing and returning the proxy card or following the instructions provided to you to vote your shares via telephone or the internet.  Voting deadlines vary by institution.  Please check with your broker, bank or other financial institution for the voting cut-off date for WTM.

Your Participation in Voting the Shares You Own Is Important

Voting your shares is important to ensure that you have a say in the governance of your company.  Please review the proxy materials and follow the instructions on the proxy card to vote your shares.  We hope you will exercise your rights and fully participate in your company’s future.

More Information Is Available

If you have any questions about this rule or the proxy voting process in general, please contact the broker, bank or other financial institution where you hold your shares.  The U.S. Securities and Exchange Commission (“SEC”) has information available on the internet at: https://www.investor.gov/system/files/publications/documents/english/sec-guide-to-proxy-brochures.pdf with more information about your voting rights as a shareholder.

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PROPOSAL 1 - ELECTION OF THE COMPANY’S DIRECTORS

THE BOARD OF DIRECTORS

The Board is divided into three classes (each a “Class”).  Each Class serves a three-year term.

At the 2020 Annual General Meeting, G. Manning Rountree and Mary C. Choksi are nominated to be elected to Class II with a term ending in 2023.  Mr. Rountree and Ms. Choksi were previously elected by Shareholders.

The Board recommends a vote FOR Proposal 1 which calls for the election of the 2020 nominees.

The current members of the Board and terms of each Class are set forth below:

The Board is comprised of seven independent directors and the Chief Executive Officer.

Board Composition and Refreshment

The Company is committed to maintaining a Board with members from a variety of backgrounds to promote diverse, independent thinking.  Diversity considerations are an important part of the director search process, and the Company believes that continually enhancing the makeup of the Board is important.  Currently, the board has 25% gender diversity, with both women also chairing a Committee.  Out of eight directors, seven are independent, with 100% independence on key committees.  The Company actively refreshes the Board to ensure the directors collectively have the optimal mix of diverse skills and experiences to effectively oversee the business as it evolves.  Our most recent addition in 2019 was Peter Carlson.  Mr. Carlson brings over thirty years of accounting and audit experience and is the former Executive Vice President and COO of Brighthouse Financial.  In December 2019, Mr. Carlson joined MiMedx Group, an industry leader in advanced wound care and an emerging therapeutic biologics company, and became its Chief Financial Officer in March 2020.

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Director Skills and Qualifications

Our Board seeks Directors with a broad range of skills, experience and perspectives in order to ensure effective oversight of the Company’s strategies and risks.  The Board believes its members must be willing and able to devote adequate time and effort to Board responsibilities.  In evaluating director candidates, the Compensation/Nominating & Governance Committee evaluates attributes such as independence, integrity, expertise, breadth of experience, diversity, knowledge about the Company’s business and industry and ownership in the Company.  The skills matrix below highlights our Board’s key skills and qualifications that are directly relevant to our business, strategy and operations.  The Board reviews this matrix and the overall Board composition periodically in order to ensure the appropriate balance of diversity, knowledge and experience.

The lack of a checkmark for a particular item does not mean that the director does not possess that qualification, skill or experience, but rather the checkmark indicates that the item is a particularly prominent qualification, skill or experience that the director brings to the Board.

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Board of Directors

Class I – Term Ending in 2022

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Class II – To Be Elected to a Term Ending in 2023                            

Class III – To Be Elected to a Term Ending in 2023

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Class III – Term Ending in 2021

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CORPORATE GOVERNANCE

The Company’s Corporate Governance Guidelines spell out our overall approach towards corporate governance.  The Company also has a Code of Business Conduct that applies to all directors, officers and employees in carrying out their responsibilities to, and on behalf of, the Company.  No waivers of the Code of Business Conduct were requested of, or granted by, the Board for any director or executive officer during 2019.

The Company’s Corporate Governance Guidelines and Code of Business Conduct are available at our website, www.whitemountains.com.  These documents are available in print, free of charge, to any shareholder upon request.

The Board

The day-to-day management of the Company, including preparation of financial statements and short-term and long-term strategic planning, is the responsibility of management.  The primary responsibility of the Board is to oversee and review management’s performance of these functions in order to advance the long-term interests of the Company and its shareholders.

In fulfilling this responsibility, directors must exercise common sense business judgment and act in what they reasonably believe to be in the best interests of the Company.  Directors are entitled to rely on the honesty and integrity of senior management and the Company’s outside advisors and auditors.  However, it is the Board’s responsibility to establish that they have a reasonable basis for such reliance by ensuring that they have a strong foundation for trusting the integrity, honesty and undivided loyalty of the senior management team upon whom they are relying and the independence and expertise of outside advisors and auditors.

Mr. Davis, an independent director, serves as Chairman of the Board.  At meetings of the Board, Mr. Davis presides over a separate session of non-management directors without Company management present.  In addition to being led by an independent Board Chair, the Board is comprised of directors that, together, are knowledgeable and experienced in the Company’s business.  The Board is satisfied that the current structure provides strong oversight of the Company’s affairs.

Shareholder Engagement

Shareholder engagement is of great importance to our Board and management team as a means to solicit feedback and to ensure accountability and responsiveness to our shareholders.  Building on our 2018 engagement efforts, as part of our 2019 shareholder engagement, we reached out to shareholders owning 72% of outstanding shares and met with all shareholders who requested meetings, who represented 26% of outstanding shares.  Our Compensation / Nominating & Governance Committee Chair personally led discussions in meetings with shareholders representing 13% of outstanding shares, which were all meetings where her participation was requested.

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These discussions centered around our business strategy, corporate governance, executive compensation program, and board oversight of risk management.  More specifically, we discussed the changes we made to our compensation program in 2019, our continued board refreshment with the appointment in 2019 of our newest independent director, insurance industry veteran Peter Carlson, and our environmental and sustainability practices.  The 2019 changes to our compensation program were to (i) make our annual bonus program for executive officers entirely formulaic with a pre-established, rigorous and quantifiable performance target relevant for our Company and industry and (ii) adopt share ownership guidelines for our executive officers.  Our shareholders were overwhelmingly supportive of our executive compensation programs, including the performance metrics used in our 2019 annual bonus program and 2019-2021 long-term incentives, and our patient capital redeployment efforts.

Shareholder feedback is regularly communicated to our full Board, and the input we received directly informed enhancements implemented to our executive compensation program in 2019, as well as the expanded disclosure in this year’s proxy statement (e.g., Board’s Role in ESG Oversight and Director Skills and Qualifications with an individual skills matrix).

Director Independence

The Board has determined that a majority of the Company’s current directors are independent, as defined in Section 303A of the New York Stock Exchange (“NYSE”) Listed Company Manual.  Those directors determined to be independent are Messrs. Carlson, Davis, Gelston, Smith and Tanner and Mmes. Choksi and Holiday.  For a director to be independent, the Board must determine that the director has no relationship with the Company (other than being a director or shareholder of the Company or its subsidiaries) or has only immaterial relationships with the Company.  The Company does not apply categorical standards as a basis for determining director independence.  Accordingly, the Board considers all relevant facts and circumstances, on a case-by-case basis, in making an independence determination.

The Board notes no current relationships (other than being directors or shareholders) with Messrs. Carlson, Gelston, Smith and Tanner or Mmes. Choksi and Holiday.  The Board notes a relationship with Mr. Davis, as disclosed herein under “Director Compensation”, that it concluded was immaterial and did not impair his independence.  In making its independence determinations, the Board considers all such relationships in light of NYSE standards as well as the attributes it believes should be possessed by independent-minded directors.  Those attributes include the relative impact of the transactions to the director’s personal finances, the perceived degree of dependence by the director or the Company upon the relationship or transactions continuing in the future and whether the transactions were on terms that were reasonable and competitive.

Board Meetings and Committees; Annual Meeting Attendance

During 2019, the following meetings of the Board were held: four meetings of the full Board, nine meetings of the Audit Committee, five meetings of the Compensation/Nominating & Governance Committee, one meeting of the Performance Compensation Subcommittee and four meetings of the Finance Committee.  During 2019, each director attended more than 75% of the aggregate of: (1) the total number of meetings of the Board (held during the period for which he or she has been a director); and (2) the total number of meetings held by all committees of the Board on which he or she served.

It is White Mountains practice that all directors are invited to, receive materials for and generally attend all Committee meetings.  In addition, each Committee Chair provides regular updates to the full Board regarding Committee activities.

Directors are encouraged to attend annual meetings.  All of the Company’s directors were in attendance at the 2019 Annual General Meeting, which was held on May 23, 2019.

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Committees of the Board

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Interlocks and Insider Participation

No member of the Compensation/Nominating & Governance Committee was an employee of the Registrant during the last fiscal year or has served as an officer of the Registrant.

Consideration of Director Nominees

General Criteria and Process for Selection of Director Candidates.  In identifying and evaluating director candidates, the Compensation/Nominating & Governance Committee does not set specific criteria for directors.  Under its Charter, the Committee is responsible for determining desired Board skills and evaluating attributes such as independence, integrity, expertise, breadth of experience, diversity and knowledge about the Company’s business and industry and ownership interest in the Company.  In selecting director candidates, the Company seeks a diversity of skills, backgrounds and experience.  Directors must be willing to devote adequate time and effort to Board responsibilities.  As set forth in the Company’s Corporate Governance Guidelines and its Charter, the Committee is responsible for recommending director candidates to the Board.

Consideration of Director Candidates Nominated by Shareholders.  The Company has not adopted a specific policy regarding consideration of director candidates from shareholders.  Shareholders who wish to recommend candidates for consideration by the Committee may submit their nominations in writing to the Corporate Secretary at the address provided in this Proxy Statement.  The Committee may consider such shareholder recommendations when it evaluates and recommends candidates to the Board for submission to shareholders at each annual general meeting.  In addition, shareholders may nominate director candidates for election without consideration by the Committee by complying with the eligibility, advance notice and other provisions of our Bye-laws as described below.

Procedures for Nominating Director Candidates.  Under the Company’s Bye-laws, nominations for the election of directors may be made by the Board or by any shareholder entitled to vote for the election of directors (a “Qualified Shareholder”).  A Qualified Shareholder may nominate persons for election as directors only if written notice of such Qualified Shareholder’s intent to make such nomination is delivered to the Secretary not later than: (1) with respect to an election to be held at an annual general meeting, 90 days prior to the anniversary date of the immediately preceding annual general meeting or not later than 10 days after notice or public disclosure of the date of the annual general meeting is given or made available to Qualified Shareholders, whichever date is earlier, and (2) with respect to an election to be held at a special general meeting for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to Qualified Shareholders.  Each such notice shall set forth: (a) the name and address of the Qualified Shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the Qualified Shareholder is a holder of record of common shares entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the Qualified Shareholder and each such candidate and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the Qualified Shareholder; (d) such other information regarding each candidate proposed by such Qualified Shareholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each such candidate been nominated, or intended to be nominated, by the Board; and (e) the consent of each such candidate to serve as a director of the Company if so elected.

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Shareholder Communications

Shareholders, employees and others interested in communicating directly with the Board, any of the Board’s Committees or any individual member of the Board should write to the addressee, c/o the Corporate Secretary, at the address presented under “Available Information” (which appears on page 55).

Risk Oversight

The Board, directly and through its Committees, plays an active role in the oversight of the Company’s risk management.  The subject of risk management is a recurring agenda item, for which the Board regularly receives reports from management on capital, investments, and operations, including the risks associated with each and the steps management is taking to manage those risks.  The Board also discusses with management the Company’s business strategy, risk appetite and appropriate levels of risk.

The Board’s committees are assigned oversight responsibility for particular areas of risk.  For example, the Audit Committee receives a report, at least annually, on company-wide risks which considers operational, financial, legal, compliance, cyber and reputational risks, as well as climate risks and sustainability matters.  The Compensation/Nominating & Governance Committee oversees risk related to executive compensation plans and implementation.  The Finance Committee oversees the risks related to managing the Company’s investment portfolio.  Full Board meetings and individual Committee meetings are scheduled so as not to overlap and all directors are encouraged to attend all committee meetings, allowing for every director to participate and provide guidance regarding any risk concerns.

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Board’s Role in ESG Oversight

The Board is responsible for overseeing the Company’s management of ESG matters.  Following our core operating principle of Thinking Like Owners, we maintain robust and owner-focused corporate governance practices.  With respect to environmental matters, while our business operations do not have a large physical footprint, we strive to make meaningful contributions towards protecting the environment and contributing to our local communities.  As to sustainability, the Board oversees the Company’s corporate culture and reinforces the importance of promoting a respectful and diverse work environment that enables our employees to be productive and feel valued.  We focus on building long-term value for our owners by building enduring partnerships with the management teams and our partners in our various businesses and in the communities in which we operate.  The Board is proud of the Company’s efforts, which can generally be broken down into four main categories:

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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

Voting Rights of Shareholders

As of April 1, 2020, there were 3,128,644 common shares outstanding.  Shareholders of record of common shares shall be entitled to one vote per common share, provided that if, and so long as, the votes conferred by “Controlled” common shares (as defined below) of any person constitute ten percent (10%) or more of the votes conferred by the outstanding common shares of the Company, each outstanding common share comprised in such Controlled common shares shall confer only a fraction of a vote that would otherwise be applicable according to the following formula:

[(T divided by 10)-1] divided by C

Where: “T” is the aggregate number of votes conferred by all the outstanding common shares; and “C” is the number of votes conferred by the Controlled common shares of such person.

“Controlled” common shares in reference to any person means:

(1)                  all common shares directly, indirectly, or constructively owned by such person within the meaning of Section 958 of the Internal Revenue Code of 1986, as amended, of the United States; and

(2)                  all common shares directly, indirectly, or constructively owned by any person or “group” of persons within the meaning of Section 13(d)(3) of the Exchange Act and the rules and regulations promulgated thereunder; provided that this clause (ii) shall not apply to (a) any person (or any group that includes any person) that has been exempted from the provisions of this clause or (b) any person or group that the Board, by the affirmative vote of at least seventy-five percent (75%) of the entire Board, may exempt from the provisions of this clause.

The limitations set forth above do not apply to any Shareholder which is a “Byrne Entity” (as defined below) for any matter submitted to the vote of Shareholders, except with respect to the election of directors.  “Byrne Entity” means any foundation or trust established by John J. Byrne, Patrick Byrne, and any associate or affiliate of any of them (or any group of which any of them is a part), as defined under Section 13(d) of the United States Securities Exchange Act of 1934, as amended.

If, as a result of giving effect to the foregoing provisions or otherwise, the votes conferred by the Controlled common shares of any person would otherwise represent 10% or more of the votes conferred by all the outstanding common shares, the votes conferred by the Controlled common shares of such person shall be reduced in accordance with the foregoing provisions.  Such process shall be repeated until the votes conferred by the Controlled common shares of each person represent less than 10% of the votes conferred by all common shares.

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Security Ownership of Certain Beneficial Owners

To the knowledge of the Company, there was no person or entity beneficially owning more than 5% of the common shares outstanding as of April 1, 2020, except as shown below.

(a)         Information as of February 28, 2020, based on Schedule 13G/A filed with the Securities and Exchange Commission on March 6, 2020, by and on behalf of The Vanguard Group.

(b)        Information as of December 31, 2019, based on Schedule 13G/A filed with the Securities and Exchange Commission on January 27, 2020, by and on behalf of Wellington Management Group, LLP.

Security Ownership of Management

The following table sets forth, as of April 1, 2020, beneficial ownership of common shares by each director, the Named Executive Officers (as defined on page 26) and all other executive officers as a group:

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EXECUTIVE COMPENSATION

FROM OUR COMPENSATION/NOMINATING & GOVERNANCE COMMITTEE

Dear Fellow Shareholders:

One of our most important mandates as the independent Compensation/Nominating & Governance Committee (the “CNG Committee”) is to structure our executive compensation programs and governance practices to create close alignment with our shareholders’ interests, while continuing to attract and retain talented executives to execute on our Company’s strategy and create long-term value.

To that end, we regularly seek feedback from our shareholders on our compensation practices and, as appropriate, make refinements that we believe enhance our programs.  Following our 2019 Say-on-Pay vote which received nearly 94% support, we reached out to shareholders owning 72% of White Mountains’ outstanding shares and met with all shareholders who requested meetings, who represented 26% of our shares outstanding.  Ms. Edith Holiday, the CNG Committee chair, personally led discussions in meetings with shareholders representing 13% of our shares outstanding, which were all meetings in which her participation was requested.  The feedback received during these meetings was extremely valuable as we evaluate our compensation programs for potential improvements in structure or disclosure.

2019 Compensation Program Highlights:

Ø                 Base salaries were held flat for all Named Executive Officers

Ø                 Annual percent-of-salary target bonus opportunities were held flat for all Named Executive Officers

Ø                 Over 92% of total target 2019 CEO compensation was linked to Company or share performance and therefore meaningfully “at-risk”

Changes in Response to Shareholder Feedback:

Ø                 Introduced a formulaic annual incentive program for our executive officers, with pre-established, rigorous, and quantifiable performance targets that are relevant for our firm and industry – see page 32

Ø                 Established share ownership guidelines for our executive officers, set at 10x base salary for our CEO and Executive Vice Presidents, and at 3x base salary for other executive officers – see page 35

White Mountains remains in a transitional period marked by thoughtful and patient redeployment of undeployed capital generated from sales of businesses in recent years, and the CNG Committee remains committed to ensuring that our executive  compensation programs and governance practices continue to motivate long-term value creation. We believe the actions highlighted above are responsive to our shareholders’ input, and we welcome your continued feedback.

Sincerely,

The White Mountains Insurance Group Compensation/Nominating & Governance Committee

Edith E. Holiday, Chair

Morgan W. Davis

Philip A. Gelston

April 7, 2020

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Compensation Discussion and Analysis

Executive Summary

Business Overview and 2019 Performance Highlights

White Mountains is engaged in the business of making opportunistic and value-oriented acquisitions of businesses and assets in the insurance, financial services and related sectors, operating those businesses and assets through its subsidiaries and, if and when attractive exit valuations become available, divesting to realize gains on their sale. Our principal focus is to grow adjusted book value per share (“ABVPS”) because we believe that, over the long term, our share price growth will parallel our growth in ABVPS (see chart and discussion on page 30). Since our IPO, including dividends, White Mountains has delivered 13% annualized growth in ABVPS and 12% annualized growth in market value per share. Having sold off a number of significant businesses from 2015-2017, which generated $1.4 billion in transaction gains and left us with $3.1 billion of pro forma undeployed capital, we remain in a transitional period as we continue to work to thoughtfully redeploy and distribute the proceeds of those transactions.

2019 was a strong year for our Company driven by good operating results in our main businesses and strong absolute investment returns, which led to a strong one-year total shareholder return of 30.2%.  Excluding the gain from the MediaAlpha transaction in February 2019, we grew ABVPS by 8.1% and our total investment portfolio returned 15.5%.

In 2019, we redeployed $435 million into businesses, following $332 million in capital deployments in 2018, and we ended the year with undeployed capital of $1.0 billion.  We expect our returns to continue to normalize and revenues to grow as we finish redeploying and distributing this capital.

Commitment to Ongoing Shareholder Engagement

As part of our ongoing commitment to better understand the views of our shareholders with respect to our business, governance, and compensation practices, we have continued our investor outreach efforts in 2019.  Over the past several years, feedback received from these discussions has helped guide refinements to our executive compensation programs and governance practices, as well as enhancements to our public disclosure.  A summary of these efforts in 2019, feedback received and responsiveness is below:

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The Right Compensation Peer Group

As described in more detail below, the CNG Committee refers to a peer group as part of its evaluation of the Company’s compensation practices.  Importantly, we do not use this peer group to benchmark compensation.   Rather, we evaluate the executive compensation programs of these peers in terms of structure and variability of payouts in good and poor performance scenarios. We seek to structure our compensation program to be more variable than most other insurance and reinsurance peers.  The CNG Committee believes that our compensation structures closely align the financial interests of management with those of our shareholders and encourage appropriate, but not excessive, risk taking.

We have made meaningful progress in redeploying and distributing the proceeds from our sale transactions in recent years.  However, as we continue to have $1 billion of undeployed capital, our returns are not comparable to peers who are fully deployed, and pay level benchmarking comparisons to any peer group, including our own, are not meaningful at this time. The CNG Committee regularly evaluates the continuing appropriateness of our peer group and will revisit our peer group as we continue to redeploy capital. See page 29 for further details on our 2019 peer group.

Compensation Program Aligned with Company Performance

In assessing the design of our executive compensation program, we value input from our shareholders and incorporate their feedback into our assessment. The current design of our compensation program consists of three primary elements: base salary, annual incentive bonus and long-term incentive compensation. Each element is structured with the primary goal of maximizing shareholder value over long periods of time. Highlights of our 2019 compensation program are as follows:

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Elements and Structure

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We believe that the goal of maximizing shareholder value over long periods of time is best pursued by utilizing a pay-for-performance program that closely aligns the financial interest of management with those of our shareholders while rewarding appropriate risk taking. We accomplish this by emphasizing variable long-term compensation, the value of which is tied to performance over a number of years rather than fixed entitlements. To illustrate, 86% of our CEO’s 2019 target total direct compensation was linked to long-term incentives, while 8% was made up of base salary, and 6% linked to annual cash bonus opportunity at target.

Chief Executive Officer:

Other NEOs:

Named Executive Officers

In this CD&A, we review the philosophy of White Mountains’s executive compensation program, the compensation process, the program’s elements, and the 2019 and 2020 compensation decisions for our named executive officers:

Unless otherwise noted, the term named executive officers (or “NEOs”) refers to the group of the five individuals listed in above table, the term “CEO” refers to Mr. Rountree, the term “CFO” refers to Mr. Campbell, and the term “CNG Committee” refers to the Compensation/Nominating & Governance Committee of the Board of Directors of White Mountains.

Business Overview, Significant Transactions in 2015-2017 and Performance Highlights

White Mountains is engaged in the business of making opportunistic and value-oriented acquisitions of businesses and assets in the insurance, financial services and related sectors, operating these businesses and assets through its subsidiaries and, if and when attractive exit valuations become available, divesting to realize gains on the sale of these businesses and assets.

From 2015-2017, White Mountains sold a number of its businesses—Sirius, Symetra, Tranzact and OneBeacon—as buyers made compelling offers that resulted in roughly $1.4 billion of transaction gains and drove strong growth in ABVPS.  As a result of these sales, the Company is in a transitional period as management works to intelligently redeploy and distribute the transaction proceeds.  As of May 2017, on a pro forma basis for the OneBeacon sale, the Company had undeployed capital of $3.1 billion on a capital base of $4.2 billion.  In addition, after the sales, the Company generated much lower revenues than before the sales, and the high level of undeployed capital implied a low single digit go-forward rate of growth in ABVPS. As undeployed capital continues to be deployed or distributed, we expect returns to normalize and revenues to grow.

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In 2019, we continued to make good progress and deployed $435 million.  Three significant deals emerged from our platform companies: (i) Embrace, a pet insurance MGA acquired by NSM, (ii) the acquisition of NSM’s collector car renewal rights and (iii) our buyout of Oaktree’s 50% interest in Kudu.  As of December 31, 2019, undeployed capital was down to $1.0 billion. In 2019, excluding the gain from the early 2019 MediaAlpha transaction, ABVPS and CVPS grew by 8.1% and 9.1%, respectively.  These results outperformed their respective targets for the year, which were set rigorously by the CNG Committee above the prior period targets.  In addition, for the 2017-2019 performance cycle, the average annual growth in ABVPS and CVPS was 8.9% and 7.9%, respectively.

The Company remains focused on creating shareholder value, while targeting redeployment in its areas of expertise: primarily insurance, broader financial services and adjacent sectors.  The Company remains value-oriented, opportunistic and highly flexible.

Shareholder Engagement and 2019 Compensation Program Changes

Engaging with our owners is central to our commitment to good governance and critical to maintaining our strong corporate governance practices.  Building on our 2018 engagement efforts, our 2019 shareholder outreach was led by the Board and senior management, often including our CNG Committee chair, Ms. Edith Holiday, leading the discussion and providing a direct line of communication between the Board and our shareholders.  Following our 2019 Say-on-Pay vote which received nearly 94% support, we reached out to shareholders representing 72% of our outstanding shares and met with all shareholders who requested meetings, who represented 26% of our shares outstanding.  Ms. Holiday personally led discussions in meetings with shareholders representing 13% of our shares outstanding, which were all meetings in which her participation was requested.  Shareholder feedback received from these meetings was shared with the entire Board and helped inform the CNG Committee’s thinking as it evaluated our compensation programs to continue to motivate and reward our executive officers for strong performance in executing our strategic transformation, while also taking into account shareholders’ views on the structure of our compensation programs.

The main topics in our engagement meetings were our current business strategy, corporate governance, executive compensation program, and board oversight of risk management.  More specifically, we discussed the changes we made to our compensation program in 2019, our continued board refreshment with the appointment in 2019 of our newest independent director, insurance industry veteran Peter Carlson, and our environmental and sustainability practices. Our shareholders were overwhelmingly supportive of our executive compensation programs, including the performance metrics used in our 2019 annual bonus program and 2019-2021 long-term incentives, and our patient capital redeployment efforts.  Shareholder feedback is regularly communicated to our full Board, and the input we received previously directly informed enhancements implemented to our executive compensation program in 2019 (summarized below), as well as the expanded disclosure in this year’s proxy statement (e.g., Board’s Role in ESG Oversight and Director Skills and Qualifications with an individual skills matrix).

2019 executive compensation program changes in response to shareholder feedback were:

Ø                 Introduced a formulaic annual incentive program for our executive officers, with pre-established, rigorous, and quantifiable performance targets that are relevant for our firm and industry – see page 32 for additional detail

Ø                 Established share ownership guidelines for our executive officers, set at 10x base salary for our CEO and Executive Vice Presidents, and at 3x base salary for other executive officers – see page 35 for additional detail

The Company’s management and Board is committed to continuing its extensive shareholder outreach program.

Compensation Philosophy

Our executive compensation policies are designed with the primary goal of maximizing shareholder value over long periods of time.  We believe that this goal is best pursued by utilizing a pay-for-performance program that closely aligns the financial interests of management with those of our shareholders while rewarding appropriate risk taking.  We accomplish this by emphasizing variable long-term compensation, the value of which is tied to performance over a number of years rather than fixed entitlements (such as base salary, pensions, and employee benefits).  To that end, the CNG Committee has established

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base salaries and target annual bonuses for our executives that tend to be lower than those paid by comparable property and casualty insurers and reinsurers, while granting the bulk of an executive’s target compensation as long-term incentive compensation.  To illustrate, 86% of our CEO’s 2019 target total direct compensation was linked to long-term incentives, while 8% was made up of base salary and 6% was target annual cash bonus opportunity.

The following principles guide and inform the CNG Committee’s efforts to deliver a highly effective executive compensation program that drives shareholder value and fosters the attraction and motivation of key talent:

Compensation Setting Process

The CNG Committee is responsible for approving our compensation programs for executive officers, and it specifically approves all compensation for our executive officers and for any employee with target annual compensation in excess of $1.5 million.  Our CEO annually presents to the CNG Committee his evaluation of our executives, their individual performance, achievements, and the contributions they made to the Company’s accomplishments over the past year, as well as over the most recent long-term incentive plan cycle.  In connection with this evaluation, the CEO recommends to the CNG Committee appropriate compensation amounts for these executives.  The CNG Committee assesses the performance, responsibilities and contributions of the CEO, considers CEO succession plans, and sets the compensation of the CEO.

With the exception of significant promotions and new hires, compensation matters are usually addressed at the first meeting of the CNG Committee each year (typically late February), following the availability of financial results for the prior year and the current year’s financial plan.  This allows us to determine the results of prior period grants and to set targets for the current year and newest long-term performance cycle.  Performance cycles for long-term compensation typically run for three years beginning on January 1st of the year of grant.

Compensation Peer Group

When making new long-term incentive grants, the CNG Committee assesses the impact of different performance scenarios on potential realizable compensation.  Further, in order to test our beliefs about the structure and variability of the awards we make, the CNG Committee annually reviews and considers a systematic analysis of the public compensation disclosures made by other property and casualty insurers and reinsurers that the CNG Committee considers to be peers.

Importantly, our compensation peer group is not used for benchmarking purposes, but rather to analyze whether our compensation programs are appropriately structured and to ensure they are more variable than most other insurance and reinsurance peers.  We remain in a thoughtful transitional period of redeploying substantial proceeds from past value-generating transactions, and as such our returns with $1.0 billion of capital undeployed as of year-end will not be comparable to peers who are fully deployed.  Therefore, pay level benchmarking comparisons to any peer group, including our own, is not meaningful at this time.

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The companies included in the analysis presented to the CNG Committee prior to it making compensation decisions in 2019 were:

The Company uses this group of companies as it reflects traditional competitors of White Mountains.  The CNG Committee regularly evaluates the continuing appropriateness of this group.  Even though sales transactions over the past five years temporarily lowered our go-forward revenues and near-term growth in ABVPS expectations, our strategy remains intact as we look to redeploy our capital.  Therefore, the CNG Committee believes this group currently remains appropriate for the Company’s competitive analysis, as a temporary reduction in revenues following significantly value-generating asset sales is not an appropriate catalyst for what would be an interim peer group change at this time.

The CNG Committee concluded that the peer analysis supported its view that the Company’s compensation programs are more variable than most other insurance and reinsurance peers, have fewer fixed elements of compensation and perquisites, and do not lead to significant rewards for poor performance.  The CNG Committee believes that the compensation structures that have been developed for the Company closely align the financial interests of management with those of our shareholders and encourage appropriate, but not excessive, risk taking.

Compensation Best Practices

We maintain a number of compensation governance best practices which support our overarching compensation philosophy and are fully aligned with our compensation principles, as discussed in the following section. Our compensation practices also align with input we have received from shareholders.

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Superior Track Record and the Alignment of Growth in ABVPS and Market Value Per Share

From our IPO in 1985 through year-end 2019, we have delivered 13% annualized growth in ABVPS and 12% annualized growth in market value per share to our shareholders.  Importantly, as seen in the chart below, ABVPS and market value per share have generally moved in tandem over the last thirty-five years, despite short-term fluctuations.  This is a core reasoning behind the CNG Committee’s selection of incentive plan performance metrics that relate to growth in book value per share.

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Compensation for 2019

The principal elements of compensation for our executives in 2019 - base salary, annual incentive bonuses and long-term incentive compensation - are discussed below.

2019 Target Annual Direct Compensation Mix

1.             Base Salary

As discussed above under “Compensation Philosophy”, the Company’s compensation program emphasizes variable long-term incentive compensation, rather than fixed entitlements.  Accordingly, we pay our executive officers salaries that we believe to be below market.  In 2008, we limited base salaries to a maximum of $500,000.  Each of our Named Executive Officers currently receives a salary of $500,000, other than Mr. Palmer who receives a salary of $400,000.

The salaries of our NEOs were not increased in 2019, and they are also kept flat for 2020:

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2.            Annual Incentive Bonuses

We provide annual bonus opportunities to our executive officers, which make up a small percentage of each NEO’s target total annual compensation – 6% for our CEO, and 11% on average for the other NEOs in 2019 – as the bulk of our executive officers’ compensation opportunity is tied to long-term incentives.  Each Named Executive Officer participates in the annual bonus pool applicable to the parent holding companies.  For 2019, the target bonus pool was $5.6 million for 42 employees.

Following the 2018 annual general meeting, the Company’s management team, along with CNG Committee chair Edith Holiday, who participated in a significant portion of the meetings, engaged with shareholders representing approximately 50% of our outstanding shares.  Based on those discussions and as a direct response to feedback, the CNG Committee has introduced a formulaic annual incentive program in effect for 2019 for our executive officers, with pre-established, rigorous, quantifiable performance targets relevant for our firm and industry.

Under our quantitative annual bonus program, the level of payout is determined by reference to the Company’s growth in CVPS, which is defined by the CNG Committee as the average of growth in ABVPS and growth in “intrinsic business value per share,” which is the ABVPS including franchise value step-ups to reflect the fair value of certain subsidiaries carried at book value.  In choosing this metric for the annual bonus program, the CNG Committee recognized that this is the same metric as used in a portion of the Company’s long-term incentives (albeit for a different time period).  The CNG Committee considered a number of other metrics but concluded that no other metric is as pertinent to our business as CVPS.  CVPS is the metric that the Board and the management team focus on because it is linked to growth in book value per share metrics, which we believe is what ultimately drives growth in our share price for our shareholders.  As previously disclosed in our 2019 proxy statement, 2019 annual bonuses were eligible to be earned ranging from 0% to 200% of target, according to the harvest scale of 2%-7%-12%.

For our executive officers, the CNG Committee maintains the discretion to decrease the individual annual bonus payouts after the quantitative formula has been applied, however it does not have discretion to increase payouts.  Our executive officers, at most, receive the quantitative result.

For 2019, the Named Executive Officers had target annual bonuses of 75% of salary, which was unchanged from the prior year and is continued into 2020.  Based on the Company’s performance of 9.1% growth in CVPS in 2019, the CNG Committee awarded the NEOs with bonuses of 141% of target.  The lone exception was Mr. Bazos, who joined the Company in May 2019, whose annual bonus for 2019 was set at target of $375,000 pursuant to his offer letter.

3.            Long-Term Incentive Compensation

Long-term equity awards generally consist of an equal mix of performance shares and restricted shares, rewarding long-term value creation and aligning executives’ interests with shareholders.  Restricted shares are subject to a three-year cliff-vesting provision, instead of annual vesting, in order to promote retention that balances incentives to redeploy capital aggressively and to remain patient for good opportunities.  The number of WTM common shares earned from a grant of performance shares can range from 0%-200% of target, based on after-tax annual growth in CVPS over the three-year performance cycle.

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The CNG Committee selected performance metrics that relate to growth in book value per share because it continues to believe these metrics ultimately drive growth in our share price for our shareholders.  The market value of our shares is not included as a direct measure of performance, but it determines the ultimate value of earned performance and restricted share awards.

From year-to-year when we make new long-term incentive grants, we typically adjust the target number of shares granted to individual employees to reflect the change in CVPS during the prior year, rather than focusing on changes in market values.  This is consistent with our view that the change in book value per share and related metrics provides a better view of the change in value of the Company than metrics reflecting short-term market price fluctuations.  In addition, we generally limit total annual share grants to employees to equal to or less than 1% of the Company’s outstanding shares.  For each of the 2017-2019, 2018-2020, 2019-2021, and 2020-2022 cycles, we adhered to this guideline.

New Grants in 2019:  For the CEO and each of our other NEOs, the annual 2019 long-term incentive awards were allocated 50% as performance shares and 50% as restricted shares, consistent with prior years.  The restricted shares are subject to a three-year cliff vesting provision based on continuous service, in order to promote retention of key executive talent.  The performance shares will vest in a range of 0% - 200% of target, following a three-year performance period.

For the 2019-2021 performance period, the CNG Committee established a target of 7% annual growth in CVPS as the performance target that would result in the payout of 100% of the target performance shares.  There would be no payout for annual growth of 2% or less, and annual growth of 12% or more would be required for a payout of 200%.  Importantly, the target and maximum goals for the 2019-2021 performance cycle (2%-7%-12%) were set higher than the previous 2018-2020 cycle (2%-6%-10%), which in turn were set higher than the previous 2017-2019 cycle (1%-5%-9%).  In setting this performance scale, a primary goal of the CNG Committee was to set a performance target that would incentivize management to redeploy capital thoughtfully.  The CNG Committee took account of the level of deployed and undeployed capital (and the expected run rate returns thereon) and made assumptions regarding the timing and magnitude of future deployment and distributions of undeployed capital.  In addition, the CNG Committee considered that the one-year performance scale for the 2019 annual bonus program was the same as the three-year average performance scale being set for the 2019-2021 performance shares.  The Committee determined that this scale was appropriate due to the factors discussed above and their applicability over a longer time frame (which equates to aggregate growth of 6%-23%-40% over a three-year period).

A detailed breakdown of the fiscal 2019 grants are included in the table below:

In determining the amount of new long-term incentive compensation grants for 2019 for our named executive officers, the CNG Committee assessed each executive’s scope of authority and ability to impact the success of the Company.  Based on the CNG Committee’s general experience and the recommendation of the CEO, for NEOs other than himself, the CNG Committee established a grant level that it believed was appropriate to reflect each such executive’s expected contribution to the Company over the next performance cycle.

Payout of 2017-2019 Performance Cycle:  For the 2017-2019 performance cycle, long-term incentives were granted to the NEOs as follows: 50% as performance shares and 50% as restricted shares.  For the performance shares, which matured at the end of 2019, 5% annual growth in CVPS was the performance target for a payout of 100% of the target performance shares.  Annual growth of 1% or less would have resulted

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in no payout and annual growth of 9% or more would have resulted in a payout of 200%. At its meeting in February 2020, based on an average annual growth in CVPS of 7.9%, the Performance Compensation Subcommittee confirmed that the payout that was earned was 174% of target.

2020 Compensation Actions

Target total cash compensation opportunities remain unchanged from 2019.  At its February 2020 meeting, the CNG Committee decided to keep the NEOs’ 2020 base salaries and percent-of-salary target bonus opportunities at the same levels as in 2019.  This reflected the CNG Committee’s long-standing philosophy of linking a vast majority of executives’ compensation to long-term incentives in order to align their interests with those of our shareholders, as opposed to awarding high levels of fixed or variable annual cash compensation.

Further, the design of our executive officers’ 2020 annual bonus plan will be similar to the plan in effect for 2019, with a harvest scale of 2%-7%-12% annual CVPS growth set for threshold / target / maximum payout levels.  At the time of the CNG Committee meeting in February, the 7% target reflected a 540 basis point spread to the yield on the 10-year treasury bond, which was a 90 basis point increase in the spread from a year before.  As a result, and combined with the Company continuing to have $1.0 billion of undeployed capital, the CNG Committee determined to pause the increases in the target that had been made for the past few years and that 7% was an appropriate target for the 2020 annual bonus plan.  However, the CNG Committee expects that in future years the target will continue to increase.

2020 Long-term Incentive Grants.  In February 2020, the CNG Committee made new long-term incentive grants to the Named Executive Officers based on the same factors described above with respect to grants made in 2019 and allocated 50% as performance shares and 50% as restricted shares.  With respect to grants made to all employees of the Company, the CNG Committee granted 28,110 target shares for the 2020-2022 performance cycle, which represents a 10% decrease, year over year, in the number of shares granted.  This reflects our longstanding policy of adjusting the baseline pool size in a given year inversely proportionally to the increase or decrease in intrinsic value per share in the prior year.  In total, the WTM performance share and restricted share grants made to all employees of the Company for the 2020-2022 performance cycle totaled approximately 0.9% of the then outstanding shares, within the CNG Committee’s 1% guideline discussed above.

With approximately $1.0 billion of undeployed capital at year-end 2019, deploying capital intelligently remains the key job for the Company’s management team.  Taking account of the same factors discussed above with respect to the annual bonus plan, as well as the level of deployed and undeployed capital (and current expected run rate returns thereon over the three-year performance period) and reasonable assumptions regarding the timing and magnitude of future redeployment and distributions of undeployed capital, the CNG Committee determined that 7% annual growth in CVPS is an appropriately challenging target for a payout of 100% of the target shares for the 2020-2022 performance cycle.  Annual growth of 2% or less would result in no payout of 0%, and annual growth of 12% or more would be required for a payout of 200%.  As seen in the table below, the performance target goals associated with our performance shares have increased significantly over the past five grant cycles.

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The CNG Committee believes this target and scale properly balance the competing incentives (i) to deploy or distribute undeployed capital aggressively and (ii) to remain patient for good opportunities.

Share Ownership Guidelines for Executive Officers.  The CNG Committee has established share ownership guidelines for our executive officers.  According to the guidelines, our CEO and EVPs are required to hold Company shares with a value of 10x salary, while other executive officers are required to hold Company shares with a value of 3x salary.  Shares received upon vesting must be held until the executive is in compliance with the guideline.  Unvested restricted shares will count toward satisfaction of the guideline, while unvested performance shares will not count.  As of December 31, 2019 all named executive officers, with the exception of Mr. Bazos, are in compliance with the guidelines.  As Mr. Bazos has joined the Company during 2019, he will be required to hold shares received upon vesting of any past and future equity awards until he is in compliance with the guidelines.

Clawback Policy

The Company has adopted a clawback policy applicable to bonuses and long-term incentive awards.  If the Company restates any financial statement included in an SEC filing as a result of an employee’s misconduct, the Board may, without prejudice to any other remedies available to the Company, seek reimbursement of any bonus or long-term incentive award received by such person that relates in whole or in part to any period for which such financial statements were restated.  If the misconduct involved fraud, then in addition to other actions the Board will mandatorily seek such reimbursement.

Other Elements of Compensation

Retirement Benefits

We have no active U.S. defined benefit pension plans.  Benefit accruals under all our U.S. qualified defined benefit pension plans and all our U.S. supplemental defined benefit pension plans were frozen for all employees in 2002.

Our Named Executive Officers who are not employees of Bermuda-domiciled entities may participate in our voluntary non-qualified deferred compensation plans whereby they may defer all or a portion of their compensation.  Investment options in these plans are those available in our 401(k) plans, including White Mountains common shares.  None of the investment options offered under these plans provides an above-market rate of interest.

Our employees may participate in our qualified 401(k) plans and eligible employees can participate in a qualified employee stock ownership plan.  We do not provide supplemental retirement benefits to any employees in connection with these plans.

Perquisites

We review the perquisites that our senior management receives.  The primary perquisite is limited personal use of corporate aircraft.

We allow our Named Executive Officers to use our corporate aircraft from time to time for personal reasons.  The aggregate incremental cost to the Company is included, for proxy reporting purposes, as compensation to the Named Executive Officer.  For tax purposes, we comply with IRS regulations.  We do not “gross-up” our Named Executive Officers for their taxes associated with perquisites, including with respect to personal use of our aircraft.

Our Named Executive Officers also participate in our other benefit plans on the same terms as our other employees.  These plans include medical and health insurance, company paid life insurance and charitable gift matching.

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Certain Board Fees

Our Named Executive Officers do not receive director fees for serving on the Company’s board of directors or for serving on the boards of directors of our wholly-owned or majority-owned subsidiaries.  However, those Named Executive Officers who serve on the boards of directors of other companies in which we have a minority interest may receive director fees from those companies.  We consider those board fees when evaluating the compensation of our Named Executive Officers.

Employment Agreements; Compensation Arrangement for Mr. Bazos

We have no long-term employment agreements with our Named Executive Officers although, from time to time, we have entered into short-term arrangements with newly hired executives governing their compensation and severance during up to their first three years with the Company.

Mr. Bazos joined the Company in May 2019 in the position of Executive Vice President and Head of Mergers & Acquisitions of WM Capital.  With more than 25 years of private equity experience, primarily in the financial services, healthcare and insurance sectors, Mr. Bazos joined as a senior leader of the Company as we execute on our strategy to thoughtfully redeploy capital generated from sales of significant businesses from 2015-2017.

The Compensation/Nominating & Governance Committee determined that securing the employment of an experienced executive like Mr. Bazos from the private equity industry required a competitive compensation package that would incentivize Mr. Bazos to depart a senior, highly compensated role at his previous employer to join White Mountains.  Therefore, we entered into a short-term arrangement with Mr. Bazos governing his compensation and severance during his first two years with the Company.  Following the initial two-year period, Mr. Bazos will have no long-term employment agreement, as is the case with our other Named Executive Officers.

In connection with Mr. Bazos’s hiring, the Company agreed to the following terms, which the CNG Committee believes were reasonably negotiated and aligned with market practices:

1)           a $1,500,000 sign on bonus payable in three equal tranches: upon signing, in March 2020 and in March 2021.

·                 The CNG Committee determined that this sign on bonus would provide market-competitive compensation for Mr. Bazos given his inability to earn any payouts from long-term incentive awards until 2022, consistent with our standard executive compensation program which is heavily weighted toward long-term performance-based pay.

2)           an annual bonus for 2019 set at a target of $375,000.

3)           in the event Mr. Bazos were terminated without cause prior to March 15, 2021, to receive any unpaid tranches of his signing bonus plus $875,000 and full vesting of any outstanding long-term incentives.  After March 15, 2021, a termination of Mr. Bazos’s employment would be treated the same as applicable to any other senior executive (as described below).

·                 The CNG Committee determined that these market-based arrangements appropriately reflect the risk taken by senior executives who, like Mr. Bazos, leave distinguished and established careers in adjacent industries to join a new organization.

Severance Agreements; Change in Control

Severance benefits, if any, for our Named Executive Officers are determined by the CNG Committee in its sole discretion.  Executive officers of our operating subsidiaries participate in the severance plans, if any, generally applicable at those companies.

If any of our most senior executives were to retire, in order to enable the Company to ensure a smooth transition, to receive a non-compete/non-solicit from the executive and to retain access to valuable knowledge, talents and relationships, we generally would expect to enter into arrangements that would permit the executive to earn some or all of such executive’s long-term incentive compensation then outstanding.

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We have no standalone change in control agreements with our Named Executive Officers.  However, under our long-term incentive plans, if a change in control of the Company (or a business unit, as applicable) were to occur, certain events, such as involuntary or constructive employment termination or amendments to our incentive plans which are materially adverse to its participants, may cause stock options to become fully exercisable, restricted shares to become immediately vested and performance shares and performance units to become payable in full or in part.  Our plans do not provide for tax gross-ups for excess parachute payments that may result from a change in control.

Compensation/Nominating & Governance Committee Report

The Compensation/Nominating & Governance Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation and Nominating & Governance Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Edith E. Holiday, Chair

Morgan W. Davis

Philip A. Gelston

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Summary Compensation Table

The following table presents compensation in 2019, 2018 and 2017 for the Company’s CEO, CFO and its two other most highly compensated executive officers (collectively, the “Named Executive Officers”):

(a)         For Messrs. Rountree, Campbell, Seelig and Palmer, the amounts represent annual incentive bonuses earned for the years ended December 31, 2018 and 2017.  For Mr. Bazos, the amount in 2019 represents a sign-on award of $500,000 paid to him upon joining the Company and a targeted annual incentive bonus of $375,000 for 2019. See “Compensation Discussion and Analysis.”

(b)         Represents the grant date market value of WTM performance shares granted in 2019, 2018 and 2017 and WTM restricted shares issued in 2019, 2018 and 2017.  The WTM performance share awards included in the table have a maximum payout of 200% of the shares granted and, at such level, would have a grant date fair value equal to 200% of the amounts shown in the Grants of Plan Based Awards table.  See “Grants of Plan Based Awards” and “Outstanding Equity Awards at Fiscal Year End.”

(c)          In 2019, the annual incentive bonus program for named executive officers changed to a formulaic program, with the level of payout determined by reference to the Company’s growth in CVPS.  Amounts presented in 2019 represent annual incentive awards paid in cash in March 2020 for performance in the year ended December 31, 2019.  See “Compensation Discussion and Analysis.”

(d)   See next table for details of All Other Compensation.

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All Other Compensation

The following table presents a breakout of “All Other Compensation” included in the Summary Compensation Table for 2019, 2018 and 2017:

(a)   Amounts represent director fees paid by BAM.

(b)         Amounts represent the aggregate incremental cost to the Company for the use of aircraft that were not otherwise in use for business.  For Company aircraft, the incremental cost is the direct cost per hour multiplied by the number of hours of use.

(c)          Represents parking garage rental fees paid by the Company on behalf of Mr. Bazos and Mr. Palmer.

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Grants of Plan-Based Awards

The following table presents grants of plan-based awards granted, except as otherwise noted, under the White Mountains Long-Term Incentive Plan (the “WTM Incentive Plan”) to the Named Executive Officers that received such awards during 2019: