Argo Group, a Bermuda-based insurance company, announced it has reached an agreement with activist fund Voce Capital Management to make changes to the composition of Argo’s board of directors.

Under the agreement reached, Carol McFate will join the board, “subject to regulatory approval and completion of customary, confirmatory due diligence.” She will fill the seat of former CEO and director Mark Watson and will join the board’s nominating and corporate governance committee and an additional committee as selected by the board.

McFate brings extensive global insurance and financial expertise. As chief investment officer of Xerox from November 2006 to October 2017, she oversaw over $12 billion in retirement investment assets for North American and U.K. plans.

Prior to Xerox, McFate served as executive vice president and global treasurer for XL Global Services, a subsidiary of XL Capital, a Bermuda-based global insurance and reinsurance company. She has also held various senior executive positions with AIG and The Prudential Insurance Company of America.

Argo said McFate’s appointment is part of the company’s “ongoing process of board refreshment.” In August 2019, Argo had proposed several enhancements to its governance and compensation programs, including declassification of its board and reduction of board size.

More appointments forthcoming

Additionally, Voce—which owns a 5.4 percent stake in Argo’s shares—will work with Argo’s nominating and corporate governance committee to identify and evaluate two new independent director candidates to stand for election at the company’s 2020 Annual General Meeting of Shareholders. One of those two new director candidates will be selected from the slate of individuals nominated by Voce for election at the requisitioned special general meeting of Argo’s shareholders.

“We are pleased to have reached a constructive agreement with Voce and value their input as we continue to enhance our Board composition and governance practices,” said Thomas Bradley, chair of the nominating and corporate governance committee.

Voce’s Founder J. Daniel Plants also expressed satisfaction with the changes: “The appointment of Carol McFate to the board, the addition of two other independent directors selected with Voce’s input, and the company’s ongoing governance improvements, are substantive and positive developments that give us confidence in the new course that Argo has charted.”

Voce has also agreed to certain customary standstill provisions and to withdraw its proxy solicitation to seek board changes at a requisitioned special general meeting of shareholders. The agreement between the company and Voce will be filed on Form 8-K with the Securities and Exchange Commission.

Governance woes

In October 2019, Argo’s independent directors launched a review of governance and executive compensation matters, following a subpoena from the SEC seeking documents concerning the company’s disclosure of certain compensation-related perquisites. The company was also facing earlier accusations made by Voce Capital.

According to Voce, Argo’s CEO misused corporate assets, like company-owned aircraft and housing. “Earlier this year, Voce published a detailed case demonstrating that a culture of indulgence, entrenchment, and failed oversight has plagued Argo under the aegis of the current board,” Voce said in a press release, issued Oct. 14.

Beginning with a public letter to shareholders on Feb. 25 and supported by a number of subsequent communications, including Voce’s 131-page white paper, “Righting the Ship,” Voce said it has “chronicled Argo’s decrepit corporate governance, particularly as it relates to the board’s lack of proper oversight of management and the absence of any delineation between corporate assets and priorities and those of management. We also called for ‘a top-to-bottom investigation of Argo’s corporate governance practices.’”