(BUSINESS WIRE)--The Home Builders Association of Georgia (HBAG), comprised of more than 13,000 builders statewide, issued an urgent call today to members who are policyholders/owners of Builders Insurance to “take back” the company and restore it to a fiscally conservative company that serves its policyholders/owners.
Because repeated requests for accountability and transparency have been ignored, HBAG today urged members to support action to amend the Business Insurance Charter to return power to owners/policyholders. Additionally, HBAG urged members to call a special meeting to elect a new board of directors committed to reducing exorbitant director fees, distributing profits fairly and establishing sound corporate governance measures.
HBAG reported that over the last five years Builders Insurance, which provides workers’ compensation and other insurance to builders across the state, has paid excessive salaries, fees and indirect compensation to its directors, reported at more than $1.9 million in 2006 and 2007 alone. HBAG believes that additional unreported payments in 2007 are likely. This is out of line with market compensation for similarly sized companies and as a percentage of revenue far exceeded directors' compensation at large public companies like United Parcel Service and Delta Air Lines during that time.
Moreover, since 2000, premiums have skyrocketed while dividends to policyholders/owners have plummeted from 13.6 percent of premiums to 1.5 percent.
Charlie Eison, president of HBAG, said, “At a time when our industry is fighting for survival in a tough economy, it’s outrageous that Builders Insurance’s board members have padded their pockets with exorbitant payments that rightfully belong to our members who are the policyholders and owners of this company. We need to take control and return Builders Insurance to its rightful mission of serving our members – not creating a financial jackpot for directors.”
Underscoring the need for accountability and transparency, HBAG reported that Builders Insurance has undertaken the following actions:
- stopped reporting a large portion of directors’ compensation in 2007;
- changed the bylaws to increase its control making it virtually impossible for owners/policyholders to remove a director or hold a special meeting;
- attempted to throw out HBAG and replace it with a shell association with little or no accountability to policyholders;
- Supported legislation without consent of the policyholders that would enable them to reorganize the company on terms financially favorable to the directors.
Ed Phillips, executive vice president of HBAG said, “Builders Insurance is not being properly managed and has no accountability or transparency. Feedback from our members shows strong support for taking back the company and cleaning house to protect policyholders’ interests.”
Since owners/policyholders share the liability of a captive mutual company, HBAG considers it paramount for owners/policyholders to control the company’s management.
Below is the reported compensation for Builders Insurance’s directors for 2006 and 2007. HBAG believes there might be more than has been reported.
| Name | Directors Fees from 2006 to 2007 more than DOUBLED | Total Reported Compensation | |||||||
| | | 2006 | 2007 | | 2006 | 2007(a) | |||
| Troy E. Barber | | | $35,000 | | $85,000 | | $167,748 | | UNREPORTED(a) |
| John C. Bowles | | | $35,000 | | $80,000 | | $173,156 | | UNREPORTED(a) |
| Frederick E. Fisher | | | $0 | | $0 | | $95,087 | | UNREPORTED(a) |
| Guilford E. Hill | | | $35,000 | | $75,000 | | $127,220 | | UNREPORTED(a) |
| Gerald A. Kopp | | | $35,000 | | $80,000 | | $198,130 | | UNREPORTED(a) |
| Allen M. Richardson | | | $35,000 | | $90,000 | | $190,880 | | UNREPORTED(a) |
| Michael F. Ryan | | | $35,000 | | $75,000 | | $186,655 | | UNREPORTED(a) |
| William L. Schwanebeck, Jr. | | | $35,000 | | $75,000 | | $186,655 | | UNREPORTED(a) |
| TOTAL | | | $245,000 | | $560,000 | | $1,325,531 | | UNREPORTED(a) |
(a) Other than directors’ fees and some minimal additional compensation, the total 2007 compensation is unknown because Builders Insurance has ceased to report it.
Builders Insurance was started by HBAG in the early 1990s to provide affordable workers’ compensation and other types of insurance exclusively to its builder members and local builders associations across the state. As such, Builders Insurance is owned by policyholders, similar to a co-op or credit union.
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