Argo Group will pay $900,000 to settle a U.S. Securities and Exchange Commission investigation into executive perks paid to former CEO Mark Watson III that raised the ire of an activist shareholder.

According to the SEC, the settlement covers proxy statements for 2014 through 2018, during which the Bermuda-based specialty insurer and reinsurer failed to disclose more than $5.3 million it had paid for perks relating to Watson’s compensation. Those included “personal use of a corporate aircraft, helicopter trips and other personal travel, housing costs, transportation for family, personal services, club memberships and tickets and transportation to entertainment events,” the SEC said.

During the period in question, Argo recorded $1.2 million in compensation for Watson, including retirement and financial planning benefits, the regulator said.

“Even after being made aware of potential inaccuracies in its disclosures related to executive compensation, Argo did not accurately and adequately inform shareholders about the perks and benefits it provided its highest-ranking executive over a five-year period,” Kelly Gibson, Director of the SEC’s Philadelphia Regional Office, said in prepared remarks. “We continue to focus on whether companies are fully disclosing compensation paid to their top executives and have appropriate internal controls in place to ensure that shareholders receive information to which they are entitled.”

Accusations of excessive compensation for Watson first became public in February 2019, after activist shareholder Voce Capital management LLC alleged excessive spending for Watson’s compensation. Watson and the company denied the allegations. Argo disclosed in October 2019 that it had been subpoenaed by the SEC about executive compensation, and that its independent directors would be reviewing governance and compensation policies. Watson abruptly resigned in November 2019. Argo executive Kevin Rehnberg became interim CEO soon after, and become the company’s official leader three months later.

Since the pay scandal first surfaced, Argo has moved to address criticisms from Voce, and Rehnberg has said he is aiming for transparency and directness as he works to improve Argo’s finances and refine its culture.

Source: Securities and Exchange Commission