SCHEDULE 14A

(Rule 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

(Amendment No. )

Filed by the Registrant ☑

Filed by a Party other than the Registrant ☐

Check the appropriate box:

HCI GROUP, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

April 30, 2019            

TO OUR SHAREHOLDERS:

On behalf of the HCI Board of Directors, you are cordially invited to attend the 2019 Annual Meeting of Shareholders, which will be held on Thursday, May 30, 2019 at 3 p.m., Eastern time, at our headquarters: Cypress Commons, 5300 West Cypress Street, Suite 105, Tampa, Florida 33607. Shareholders will be admitted beginning at 2:30 p.m.

We are proud of the relationships we have built with our shareholders and the frequent dialogue we have with them. In 2018, we continued our practice of engaging with shareholders to understand their perspectives and solicit their input on a variety of issues. Since the 2018 annual shareholders’ meeting, we have held conversations with shareholders representing nearly half of our outstanding shares. During these conversations, we discussed HCI’s business strategy, its board composition, its corporate governance policies and its executive compensation practices, as well as its policies on corporate social and environmental responsibility. Through these conversations, we gained a valuable understanding of shareholder perspectives. We appreciate the thoughtful and meaningful feedback we received.

As a result of shareholder input, we have refreshed portions of our Proxy Statement to make it easier to read and understand. We have included, for example, a table of contents, a Proxy Statement Summary, and enhanced visuals and charts. We have provided also additional information on our executive compensation process and the peer group of companies we use for benchmarking executive pay. We also added a section describing our environmental, social and governance policies.

Most important, we recently added two new individuals to our Board of Directors: Loreen M. Spencer, a retired Audit Partner with Deloitte & Touche, LLP, and Sue Watts, Chief Operating Officer and Executive Vice President for Application Services, Infrastructure and Digital Services at Capgemini SE, a global technology consulting firm. Both are accomplished business leaders who bring diversity of thought, experience and skills that will contribute to our long-term strategy.

On behalf of the Board of Directors, I thank you for your continued investment and support. Your vote at the shareholder meeting is very important. Please sign and return the accompanying proxy card or follow the instructions on the card for voting by telephone or internet so your shares can be voted as you direct.

Yours truly,

Paresh Patel

Chairman of the Board

Chief Executive Officer

5300 West Cypress Street, Suite 100

Tampa, Florida 33607

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Thursday, May 30, 2019

3 p.m. Eastern time

Cypress Commons

5300 West Cypress Street, Suite 105

Tampa, Florida 33607

The Annual Meeting of Shareholders of HCI Group, Inc. will be held at 3 p.m. Eastern time on Thursday, May 30, 2019 at Cypress Commons located at 5300 West Cypress Street, Suite 105, Tampa, Florida 33607. Shareholders will be admitted beginning at 2:30 p.m. The principal purposes of the Annual Meeting will be to cover the following items of business:

You may vote if you were a shareholder of record as of April 11, 2019.

Our 2018 Annual Report to Shareholders, which is not a part of this Proxy Statement, is enclosed.

It is important that your shares be represented at the Annual Meeting and voted in accordance with your instructions. Please indicate your instructions by promptly signing and dating the enclosed proxy card and mailing it in the enclosed postage-paid, pre-addressed envelope, or by following the instructions on the proxy card for telephone or internet voting.

By Order of the Board of Directors,

Andrew L. Graham

Secretary and General Counsel

TABLE OF CONTENTS

PROXY STATEMENT SUMMARY

This summary highlights information that can be found elsewhere in this Proxy Statement. It does not contain all the information that you should consider. You should read the entire Proxy Statement before voting.

Information About the Annual Meeting

Items of Business

We do not anticipate that any other business matters will be brought before the meeting for a vote. However, if any other matters are presented, it is the intention of the persons named in the proxy to vote the proxy as recommended by the Board of Directors or, if no recommendation is given, in their own discretion using their best judgment.

How to Vote

By Internet		By Phone		By Mail		In Person
www.proxyvote.com		Call the phone number listed on your proxy card		Follow the instructions on your proxy card		Vote by ballot at our Annual Meeting

PROXY STATEMENT SUMMARY

Upon your written request, we will provide you with a copy of our 2018 Annual Report on Form 10-K, including exhibits, free of charge. Send your request to HCI Group, Inc., c/o Kevin Mitchell, Senior Vice President of Investor Relations, 5300 West Cypress Street, Suite 100, Tampa, Florida 33607.

PROXY STATEMENT SUMMARY

Financial Highlights

PROXY STATEMENT SUMMARY

Forward-Looking Statements

This Proxy Statement may contain forward-looking statements made pursuant to the Private Securities Litigation Reform Act of 1995. Words such as “project” and other similar words and expressions are intended to signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various risks and uncertainties. For example, the declaration and payment of dividends is at the discretion of our Board of Directors. Our ability to pay dividends depends upon many factors, including the Company’s operating results; financial condition and capital requirements; the availability of cash from our subsidiaries; legal and regulatory constraints and requirements on the payment of dividends and such other factors as our Board of Directors may deem relevant. HCI Group, Inc. disclaims all obligations to update any forward-looking statements.

SHAREHOLDER ENGAGEMENT

Since the 2018 annual shareholders’ meeting, we have reached out to many of our largest shareholders. We focused on our 20 largest shareholders, representing approximately 77.4% of our outstanding common stock. During the past 12 months, the Chairman of the Compensation Committee and our Senior Vice President of Investor Relations spoke with 11 shareholders representing nearly 50% of the Company’s outstanding common stock. During these conversations, we heard from shareholders regarding our Board composition, corporate governance policies and executive compensation practices, as well as policies on corporate, social and environmental responsibility.

SHAREHOLDER ENGAGEMENT

What we heardHow we respondedGovernanceExecutive CompensationEnvironmental, Social & GovernanceShareholders provided feedback and wanted to hear our plans regarding board composition, including ethnic and gender diversity and the structure of our classified board." Our Proxy Statement highlights the ethnic and gender diversity of our current Board of Directors and discloses our ongoing efforts to increase diversity on our Board." In 2018, we established a Board Observer Program to train selected individuals in public company board operations, governance and law, among other things, and prepare them to serve on public company boards as well as provide for us a means to identify future, exceptionally well qualified Board candidates. In selecting program participants, we plan to emphasize segments of our population that are underrepresented on public company boards. The initial participants were Loreen Spencer and Sue Watts, both of whom were recently appointed to our Board of Directors.We believe staggered, three-year terms and the resulting continuity enable directors, in particular independent directors, to focus as a group on the company's long-term performance for the benefit of the shareholders.Shareholders wanted to hear from us regarding our methodology and calculation of executive compensation, particularly for our Chief Executive Officer." In 2016, we retained a nationally-recognized compensation consulting firm to review our Chief Executive Officer's annual compensation program, which at the time was made up of salary and a formula-based annual cash bonus. Based on feedback from our shareholders and the consulting firm, we shifted much of the focus of the plan away from short-term cash-based compensation to long term compensation in the form of equity grants. We believe the current plan balances short-term incentives with long-term incentives in the compensation plan of our Chief Executive Officer and better aligns the Chief Executive Officer's interests with that of the shareholders." Based upon advice from our compensation consulting firm, we provide our chief executive officer with annual grants of restricted shares, which vest over a period of time, and out-of-the-money stock purchase options." Benchmarking to competitors is one of the factors we use in making compensation decisions. The core peer group of Florida-based insurance companies we use for benchmarking our chief executive officer's compensation appears within the Compensation Discussion and Analysis section of this Proxy Statement. We believe this group best represents our direct competitors.Shareholders wanted us to describe how we contribute to our community, promote diversity in our Board and our workforce, and manage the environmental risks to the Company." We have added a section to our Proxy Statement describing our Environmental, Social and Governance policies and practices (See page 14)." Climate change is a long-term risk to our business. We mitigate the risks posed by climate change by issuing policies of one-year duration and by securing reinsurance that substantially covers our risks from catastrophic storms and floods." We offer competitive benefits to our employees including options for health coverage and short-term and long-term disability insurance at no cost to the employee. We award restricted stock to employees to align their interests with shareholder interests and ensure our employees share in our success. We have committed to paying a living wage to all of our full-time employees." Our Board of Directors oversees our cybersecurity efforts and receives ongoing reports on those efforts from management. We maintain policies designed to safeguard our data and the data of our customers. We have adopted a Cyber Incident Response Plan and engage in penetration testing, internal and external audits of our cybersecurity controls and simulated cyber attacks scenarios to gauge our preparedness for these situations.

CORPORATE GOVERNANCE

Board of Directors

HCI Group, Inc. (the “Company,” “HCI,” “we” or “us” or when possessive “our”) conducts business through its officers and other employees, under the direction of the Chief Executive Officer and with the oversight of the Board of Directors, to enhance the long-term value of the Company for its shareholders. The members of Board of Directors are periodically elected by the shareholders to oversee management and to ensure that the long-term interests of the Company and the shareholders are being served. Each director is expected to perform as a director in good faith with the care an ordinarily prudent person in a like position would exercise under similar circumstances and in a manner the director reasonably believes to be in the best interests of the Company.

Board of Directors Leadership Structure

In our current Board leadership structure, Paresh Patel serves as Chairman of the Board and Chief Executive Officer. Mr. Patel’s role includes providing ongoing feedback on the direction and performance of the Company, serving as Chairman of regular meetings of the Board of Directors, setting the agenda of Board meetings and leading the Board of Directors in anticipating and responding to changes in our business. Mr. Patel also plays a significant role in formulating and executing the Company’s strategic plans, technology efforts and investment decisions. We believe Board oversight and planning is a collaborative effort among the directors, each of whom has unique skills, experience and education, and this structure facilitates collaboration and communication among the directors and management and makes best use of their respective skills.

The Board of Directors has established a Lead Independent Director position and adopted a Lead Independent Director Charter. The Lead Independent Director serves pursuant to that charter. Under the Lead Independent Director Charter, the Lead Independent Director is elected annually by the independent directors. Our current Lead Independent Director is Gregory Politis. He was elected to that position in 2017 and re-elected to the position in April 2018 and again in April 2019. A current copy of the Lead Independent Director Charter is available on our website: www.hcigroup.com. Select “Investor Information” and then “Corporate Governance.” The Board of Directors believes having a Lead Independent Director enhances management accountability to the Board of Directors.

Under the Lead Independent Director Charter, the Lead Independent Director has the following responsibilities:

The Lead Independent Director also functions as a channel of communication between the Board and the Company’s shareholders and may be reached as described under Communicating with the Board of Directors on page 11. The Board of Directors continually reviews the effectiveness of our Board leadership structure to evaluate whether the structure remains appropriate for the Company and may determine to alter this leadership structure any time based on existing circumstances at that time.

CORPORATE GOVERNANCE

Board Meetings

The Board of Directors typically meets monthly, except in August, with additional meetings, as necessary, to review and discuss the performance of the Company, the Company’s plans and prospects, and any immediate issues facing the Company. In 2018, 11 Board meetings were held. Each director attended at least 75% of the Board and applicable committee meetings. Directors are expected to attend all Board meetings with only occasional absences and to prepare for the meetings by reading any materials presented to them in advance of the meetings. Directors are expected to participate fully in the activities of any Board committee to which they may be elected and likewise to attend and prepare for all committee meetings. In addition to its general oversight of management, the Board of Directors performs a number of specific functions, including:

Independent Director Meetings

Independent directors and other non-management directors meet and communicate regularly without management participation. Non-management directors include directors who are not executive officers of the Company or otherwise employed by the Company, but are not considered to be independent by virtue of a material relationship, former status, family membership or any other reason. The Lead Independent Director presides at meetings of independent directors.

Committees of the Board of Directors

The Board of Directors has established three committees to assist the Board in performing its functions: the Audit Committee, the Compensation Committee, and the Governance and Nominating Committee. The current charters of these committees are published on the Company’s website, www.hcigroup.com, and are mailed to shareholders on written request. The members and the chairmen of the Board committees are elected annually by the Board of Directors.

Audit Committee

The Company has a separately designated standing Audit Committee established in accordance with the Securities and Exchange Act of 1934. The Audit Committee’s responsibilities include the following:

CORPORATE GOVERNANCE

The Audit Committee is composed of three members: Wayne Burks, Chairman, George Apostolou and Harish M. Patel. Since our common shares are listed on the New York Stock Exchange, we are governed by its listing standards. Accordingly, each member of the Audit Committee meets the independence tests set forth in Section 303A.02 of the New York Stock Exchange Listing Manual and the criteria for independence set forth in Rule 10A-3(b)(1) of the Securities and Exchange Commission. The Board of Directors has determined that Mr. Burks is an Audit Committee financial expert. The Audit Committee met formally four times during 2018 and otherwise acted by unanimous written consent. The Board of Directors has adopted a written Audit Committee Charter. A current copy of the charter is available on our website www.hcigroup.com. Click “Investor Information” and then “Corporate Governance.”

Compensation Committee

The Compensation Committee’s responsibilities include the following:

The Compensation Committee has the authority to determine the compensation of the named executive officers and the non-employee directors and to make equity awards under the Company’s 2012 Omnibus Incentive Plan. At least annually the Compensation Committee considers the results of the Company’s operations and its financial position and makes compensation determinations. The Compensation Committee is currently composed of the following three directors: James Macchiarola, Chairman, Wayne Burks and Harish Patel, each of whom meets the independence tests set forth in Section 303A.02 of the New York Stock Exchange Listing Manual. The Compensation Committee met formally three times during 2018 and otherwise acted by unanimous written consent. The Board of Directors has adopted a formal Compensation Committee Charter. A current copy of the charter is available on our website, www.hcigroup.com. Click “Investor Information” and then “Corporate Governance.” The Compensation Committee is committed to a pay-for-performance focus and open communications with shareholders.

Governance and Nominating Committee

The functions of the Governance and Nominating Committee include the following:

CORPORATE GOVERNANCE

The Governance and Nominating Committee is composed of three members: Harish Patel, Chairman, James Macchiarola and George Apostolou, each of whom meets the independence tests set forth in Section 303A.02 of the New York Stock Exchange Listing Manual. The Governance and Nominating Committee held two meetings in 2018. The Board of Directors has adopted a written Governance and Nominating Committee Charter. A current copy of the charter is available on our website at www.hcigroup.com. Click “Investor Information” and then “Corporate Governance.”

Each of the proposed director nominees was recommended by the Governance and Nominating Committee to the Board of Directors.

The Governance and Nominating Committee identifies director candidates in numerous ways. Generally, the candidates are known to and recommended by members of the Board of Directors or management. In evaluating director candidates, the Governance and Nominating Committee considers a variety of attributes, criteria and factors, including experience, skills, expertise, diversity, personal and professional integrity, character, temperament, business judgment, time availability, dedication and conflicts of interest. At a minimum, director candidates must be at least 18 years of age and have such business, financial, technological or legal experience or education to enable them to make informed decisions on behalf of the Company. The Governance and Nominating Committee has not adopted a specific policy on diversity. However, in practice it has identified and recommended individuals of diverse ethnic, cultural and business backgrounds.

The Governance and Nominating Committee will consider director candidates recommended by shareholders. Any shareholder wishing to recommend one or more director candidates should send the recommendations before November 1 of the year preceding the next Annual Meeting of Shareholders to the Secretary of the Corporation, Andrew L. Graham, 5300 West Cypress Street, Suite 100, Tampa, Florida 33607. Each recommendation should set forth the candidate’s name, age, business address, business telephone number, residence address, and principal occupation or employment and any other attributes or factors the shareholder wishes the Committee to consider, as well as the shareholder’s name, address and telephone number and the class and number of shares held. The Committee may require the recommended candidate to furnish additional information. The secretary will forward recommendations of qualified candidates to the Governance and Nominating Committee, and those candidates will be given the same consideration as all other candidates.

A shareholder wishing to nominate an individual for election to the Board of Directors at the Annual Meeting of the Shareholders rather than recommend a candidate to the Governance and Nominating Committee, must comply with the advance notice requirements set forth in our bylaws. See Shareholder Proposals for Presentation at the 2020 Annual Meeting in Appendix C for further information.

CORPORATE GOVERNANCE

Access to Independent Advisors

The Board and its committees have the authority at any time to retain outside accounting, financial, compensation, recruiting, legal or other advisors. The Company will provide appropriate funding, as determined by the Board or any committee, to compensate such independent outside advisors, as well as to cover the ordinary administrative expenses incurred by the Board and its committees in carrying out their duties.

Director Attendance at Annual Meeting of Shareholders

Board members are encouraged, but not required, to attend the Annual Meeting of the Shareholders. All eight of our directors sitting for re-election or continuing in office attended the 2018 Annual Meeting of the Shareholders.

Board of Directors Role in Risk Oversight

The Board of Directors plays a significant role in monitoring risks to the Company and directly reviews matters involving major risks. For example, the Board annually reviews the level and design of our reinsurance programs. Reinsurance is insurance we buy from other insurance companies to cover hurricanes and other catastrophes. The Board of Directors also oversees our cybersecurity plans and efforts and typically approves strategic initiatives and large or unusual investments or expenditures of the Company’s resources.

The Audit Committee, the Compensation Committee, and the Governance and Nominating Committee were established by the Board to assist in ensuring that material risks are identified and managed appropriately. The Board and its committees regularly review material operational, financial, compensation and compliance risks with executive management. The Audit Committee is responsible for assisting the Board of Directors in its oversight of the quality and integrity of our accounting, auditing and reporting practices, and discussing with management our processes to manage business and financial risk. The Compensation Committee considers risk in connection with its design of our compensation programs for our executives. The Governance and Nominating Committee regularly reviews the Company’s corporate governance structure and Board committee assignments. Each committee regularly reports to the full Board of Directors.

Communicating with the Board of Directors

We have established procedures by which shareholders may communicate with members of the Board of Directors, individually or as a group. Shareholders wishing to communicate with the Board of Directors or a specific member of the Board may send written communications addressed to: Board of Directors, HCI Group, Inc., c/o Andrew L. Graham, Secretary of the Corporation, 5300 West Cypress Street, Suite 100, Tampa, Florida 33607. The mailing envelope should clearly specify the intended recipient or recipients, which may be the Board of Directors as a group or an individual member of the Board. The communication should include the shareholder’s name and the number of shares owned. Communications that are not racially, ethically or religiously offensive, commercial, pornographic, obscene, vulgar, profane, defamatory, abusive, harassing, threatening, malicious, false or frivolous in nature will be promptly forwarded to the specified members of the Board of Directors. We have also established procedures by which all interested parties (not just shareholders) may communicate directly with our non-management or independent directors as a group. Any interested party wishing to communicate with our non-management or independent directors as a group may send written communications addressed to: Board of Directors, HCI Group, Inc., c/o Andrew L. Graham, Secretary of the Corporation, 5300 West Cypress Street, Suite 100, Tampa, Florida 33607. The mailing envelope should clearly specify the intended recipients, which may be the non-management directors or the independent directors as a group. The Secretary will promptly forward the envelope for distribution to the intended recipients.

Board Observer Program

In 2018, we established a Board Observer Program to train selected individuals in public company board operations, governance and law, among other things, and prepare them to serve on public company boards and provide for us a

CORPORATE GOVERNANCE

means to identify future, exceptionally well qualified Board candidates. With limited exceptions, participants received all board materials and are invited to attend and participate in all Board meetings. They do not have voting privileges. In selecting program participants, we plan to emphasize segments of our population that may be underrepresented on public company boards. The initial participants were Loreen Spencer and Sue Watts, both of whom were recently appointed to our Board of Directors. (See their biographies on page 26.)

Director Education

We engage in ongoing efforts to educate our directors on matters important to their service as directors. Our General Counsel advises each new director on fiduciary duties and securities-reporting requirements. When a director is appointed to a new committee of the Board, the General Counsel advises the committee on the role of that particular committee under law, rules and the committee’s charter.

Annual Evaluations

The Board of Directors conducts an annual evaluation to determine if the Board and its committees are functioning effectively. Likewise, each Board committee conducts an annual self-evaluation to determine if it is functioning effectively.

Director Compensation

Directors who are employees of the Company do not receive any additional compensation for their service as directors. The Compensation Committee determines the compensation of our non-employee directors, each of whom receives a cash payment of $25,000 for every calendar quarter they serve as a director.

The following table sets forth information with respect to compensation earned by each of our directors (other than employee directors) during the year ended December 31, 2018.

CORPORATE GOVERNANCE

There were no stock awards granted to non-employee directors in 2018. The aggregate number of stock awards outstanding for each non-employee director as of December 31, 2018 was as follows:

Director Share Ownership Policy

We have a director share ownership policy that generally requires new directors to acquire $200,000 of the Company’s shares within five years of their initial election to the Board of Directors and then hold those shares until retirement from the Board.

Transactions with Related Persons

Oxbridge Reinsurance Limited

Claddaugh Casualty Insurance Company, Ltd., HCI’s Bermuda-domiciled reinsurance subsidiary, had a reinsurance agreement with Oxbridge Reinsurance Limited whereby Claddaugh ceded to Oxbridge a portion of the business it assumed from HCI’s insurance subsidiary, Homeowners Choice Property & Casualty Insurance Company. From June 1, 2017 through May 31, 2018, Oxbridge assumed $7,400,000 of the total covered exposure for approximately $3,400,000 in premiums. The premiums Oxbridge charged were at rates management believed to be competitive with market rates available to Claddaugh at the time. Because of claims it paid resulting from Hurricane Irma in September 2017, Oxbridge realized no financial benefit from the agreement. On May 28, 2018, Claddaugh terminated its multi-year reinsurance contract with Oxbridge effective June 1, 2018 and agreed to pay a settlement fee of $600,000. During the term of the agreement, Oxbridge had deposited funds into trust accounts to satisfy certain collateral requirements under its reinsurance contract with Claddaugh. Trust assets could be withdrawn by Claddaugh, the trust beneficiary, in the event amounts were due under the Oxbridge reinsurance agreement. Among the Oxbridge shareholders are Paresh Patel, the Company’s Chief Executive Officer, members of his immediate family and three of the Company’s non-employee directors including Jay Madhu who serves as Oxbridge’s Chairman and Chief Executive Officer. Claddaugh and Oxbridge are not currently engaged in any business relationship.

CORPORATE GOVERNANCE

First Home Bank

During the first quarter of 2018, the Company purchased six-month certificates of deposit totaling approximately $15 million from First Home Bank in Seminole, Florida. Our directors, Anthony Saravanos and George Apostolou, are also directors of First Home Bank and its holding company. The deposits earned interest at the bank’s customary rates, which were competitive with other banks in the region. At March 31, 2019, the Company’s deposits consisted of approximately $6.4 million in a money market account.

Policies for Approval or Ratification of Transactions with Related Persons

Our policy for approval or ratification of transactions with related persons is for those transactions to be reviewed and approved by a majority of disinterested directors. That policy is set forth in both our Code of Conduct (See Code of Ethics below) and our Corporate Governance Guidelines, which can be found at www.hcigroup.com. Select “Investor Information,” “Corporate Governance,” and then “Corporate Governance Guidelines.” The policy provides no standards for approval. Directors apply individual judgment and discretion in deciding such matters.

Adverse Interests

We are not aware of any material proceedings in which an executive officer or director is a party adverse to the Company or has a material interest adverse to the Company.

Anti-Hedging Policy

To ensure the interests of our employees, officers and directors are aligned with the long-term interests of our shareholders, the Company has an anti-hedging policy that prohibits employees, officers and directors from directly or indirectly engaging in hedging transactions related to HCI’s securities. This includes the use of financial instruments such as exchange funds, prepaid variable forwards, equity swaps, puts, calls, collars, forwards and other derivative instruments, as well as the establishment of a short position in the Company’s securities. The Board may waive this requirement when it deems appropriate.

Code of Ethics

We have adopted a Code of Ethics applicable to all employees and directors, including our Chief Executive Officer and Chief Financial Officer. The Code of Ethics is available on our website at www.hcigroup.com. Select “Investor Information” at the top, then select “Corporate Governance” and then “Code of Conduct.” We intend to disclose any change to or waiver from our Code of Ethics by posting such change or waiver to our website in the same section described above.

Corporate Governance Guidelines

To promote effective governance of the Company, we have adopted Corporate Governance Guidelines. A current copy of our Corporate Governance Guidelines is available on our website: www.hcigroup.com. Select “Investor Information” at the top, then select “Corporate Governance” and then “Corporate Governance Guidelines.”

Environmental, Social and Governance (ESG) Policies

HCI Group, Inc. is committed to operating with integrity, contributing to our community, promoting diversity in our Board and our workforce, and managing the environmental risks to the Company. In addition, we take proactive steps to secure our data and safeguard our customers’ data.

We believe ESG oversight begins at the top. Our Board of Directors is involved in ESG policymaking and works closely with management to achieve our goals in these areas. Management ensures implementation of ESG policies at all levels of the Company and regularly reports to the Board regarding the status of ESG initiatives. Our integrated approach ensures that we achieve our ESG goals.

CORPORATE GOVERNANCE

Following is a summary of our Environmental, Social and Governance policies and activities.

Environmental

The most material environmental risk to the Company is that of extreme weather. Notably, climate change may cause an increase in the number and intensity of extreme weather events that may affect our profitability. We work to mitigate this risk by offering insurance policies with only a one-year duration and securing reinsurance from other insurance companies that indemnify us against losses we might incur as the result of catastrophic events impacting our policyholders.

Social

Community Contribution

We believe in enriching our community through charitable work, including volunteer opportunities for our management and employees. The HCI Group Foundation contributes to charitable causes throughout our community, and our employees participate in dozens of local charities. Some examples include Paint Your Heart Out Tampa, Hope Children’s Home, Metropolitan Ministries of Tampa, One Blood Florida Blood Services, Be the Match Marrow Donor Program, Habitat for Humanity and the Clearwater Jazz Foundation.

Work Environment

We adhere to a harassment prevention policy which details how to report and respond to harassment issues and prohibits any form of retaliation. This includes mandatory harassment prevention training for all employees.

We are committed to paying a living wage to all of our full-time employees. We offer competitive benefits to our employees including options for health coverage and short-term and long-term disability insurance at no cost to the employee. We also award restricted stock to employees to align their interests with shareholder interests.

Diversity

We value a diverse and inclusive work environment. Our workforce is comprised of men and women of many races, religions, and national origins, and we forbid any form of discrimination based upon these factors.

Our Board is highly diverse in terms of gender, ethnicity, culture, education and business backgrounds, and our U.S.-based workforce is more than 50% female and approximately 28% non-white. The below graphics do not account for our international workforce, which consists of 98 employees located in Noida, India.

CORPORATE GOVERNANCE

Governance

HCI has adopted the following policies and programs to promote effective corporate governance.

Board-related Governance Practices

Data Security

MATTER NO. 1 ELECTION OF DIRECTORS

Three directors are to be elected at the Annual Meeting. In accordance with the Company’s articles of incorporation, the Board of Directors is divided into three classes. All directors within a class have the same three-year term of office. The class terms expire at successive annual meetings so that each year a class of directors is elected. The current terms of director classes expire in 2019 (Class B directors), 2020 (Class C directors) and 2021 (Class A directors). Each of the Class B directors elected at the 2019 Annual Meeting will be elected to serve a three-year term.

With the recommendation of the Governance and Nominating Committee, the Board of Directors has nominated the following persons to stand for re-election as Class B directors at the 2019 Annual Meeting of Shareholders, with terms expiring in 2022:

George Apostolou

Paresh Patel

Gregory Politis

Each of the nominees for election as a director has consented to serve if elected. If, as a result of circumstances not now known or foreseen, one or more of the nominees should be unavailable or unwilling to serve as a director, proxies may be voted for the election of such other persons as the Board of Directors may select. The Board of Directors has no reason to believe that any of the nominees will be unable or unwilling to serve.

The persons named in the enclosed proxy card intend, unless otherwise directed, to vote such proxy “FOR” the election of George Apostolou, Paresh Patel and Gregory Politis as Class B directors of HCI Group, Inc. The nominees receiving the three highest “FOR” vote totals will be elected as directors.

MATTER NO. 1 ELECTION OF DIRECTORS

Board of Directors

Director		Age		Primary Occupation		Director Since		Committee Memberships		Committee Chair
Nominees for Election:
George Apostolou		68		Founder, Apostolou Construction		2007
Paresh Patel		56		Chairman and Chief Executive Officer, HCI Group, Inc.		2007
Gregory Politis		67		President, Xenia Management Corporation		2007
Continuing in Office:
Wayne Burks		71		Vice President and Former Chief Financial Officer, Romark LC.		2013
James Macchiarola		70		Retired Vice President, Orange Business Services		2013
Jay Madhu		52		President and Chief Executive Officer, Oxbridge Re Holdings Ltd.		2007
Harish Patel		62		Director, Medenet, Inc.		2011
Anthony Saravanos		48		President, Greenleaf Capital		2007
Loreen Spencer		53		Retired Audit Partner, Deloitte & Touche, LLP		2019
Sue Watts		57		Chief Operations Officer and Executive Vice President, Capgemini SE		2019

Audit:         Governance & Nominating:         Compensation:

MATTER NO. 1 ELECTION OF DIRECTORS

Director Tenure

Board Selection Process

In accordance with the Company’s articles of incorporation, the Board of Directors is divided into three classes. Each class consists of three or four directors. All directors within a class have the same three-year terms of office. The class terms expire at successive annual shareholders’ meetings so that each year one class of directors is elected at the Annual Meeting of Shareholders. The Board does not believe arbitrary term limits on a director’s service are appropriate, nor does it believe that directors should expect to be re-nominated upon expiration of a three-year term. Each year the Board of Directors proposes a slate of nominees for election at the Annual Meeting of Shareholders. The Governance and Nominating Committee is tasked with identifying and selecting individuals believed to be qualified as candidates to serve on the Board and recommending to the Board candidates to stand for election as directors at the Annual Meeting of Shareholders or, if applicable, at a special meeting of the shareholders. The Governance and Nominating Committee identifies director candidates in numerous ways. Generally, the candidates are known to and recommended by members of the Board of Directors or management. The Governance and Nominating Committee also considers director candidates recommended by shareholders. Shareholders may submit

MATTER NO. 1 ELECTION OF DIRECTORS

recommendations for Board nominees directly to the Board or at the Annual Meeting of Shareholders. See page 10 for information on submitting director nominations to the Board. A shareholder wishing to nominate an individual for election to the Board of Directors at the Annual Meeting of Shareholders, rather than recommend a candidate to the Governance and Nominating Committee, must comply with the advance notice requirements set forth in the Company’s bylaws, a copy of which can be found on the Company’s website, www.hcigroup.com, by selecting the “Investor Information” tab followed by “Corporate Governance.”

Qualifications of Board Members

In selecting individuals for Board membership, the Board of Directors considers a variety of attributes, criteria and factors, including experience, skills, expertise, diversity, personal and professional integrity, character, temperament, business judgment, time availability, dedication and conflicts of interest. At a minimum, director candidates must be at least 18 years of age, have sufficient time to devote to their Board duties and have such business, financial, technological or legal experience or education to enable them to make informed decisions on behalf of the Company. A majority of the Board members must be independent, as determined by the Board of Directors, in accordance with the listing standards of the New York Stock Exchange. In general, the Board affirmatively determines whether a director has any direct or indirect material relationship with the Company. All members of the Audit Committee, Compensation Committee, and Governance and Nominating Committee must be independent, with members of the Audit Committee and the Compensation Committee meeting higher levels of independence. Members of the Audit Committee must be financially literate as determined by the Board and at least one member must be an Audit Committee Financial Expert as described in the rules of the U.S. Securities and Exchange Commission.

Diversity of Skills and Experience of Directors

Diversity and Board Tenure

We believe that a variety of perspectives, opinions and backgrounds among the Board members is important to the Board’s ability to perform its duties. Our Board is diverse in terms of gender, ethnicity, culture, education and business backgrounds.

Board tenure diversity is equally important, as we seek to achieve the appropriate balance of years of service among Board members. Our senior directors have deep knowledge of our Company and business operations, while new directors provide fresh perspectives. Our current Board of Directors has an average tenure of 7.9 years.

MATTER NO. 1 ELECTION OF DIRECTORS

Arrangements as to Selection and Nomination of Directors

We are not aware of any arrangements as to the selection and nomination of directors.

Independent Directors

Based upon recommendations of our Governance and Nominating Committee, the Board of Directors has determined that current directors George Apostolou, Wayne Burks, James Macchiarola, Harish M. Patel, Gregory Politis, Loreen Spencer, and Sue Watts are “independent directors” meeting the independence tests set forth in Section 303A.02 of the New York Stock Exchange Listing Manual, including having no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). In the case of Mr. Apostolou, the Board considered his role as a director of First Home Bank, where the Company had during 2018 as much as approximately $15 million on deposit. In the view of the Board the amount of the deposits is not material to the Company or the bank.

Shareholder Votes at 2018 Annual Meeting of Shareholders

At our 2018 Annual Meeting of Shareholders, James Macchiarola and Harish Patel were re-elected to the Board with vote totals detailed below.

While we view these results as a significant improvement from previous years, we strive for continuous improvement and intend to continue our shareholder outreach and other efforts.

Biographies of Directors Standing for Election (Class B)

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Biographies of Directors Continuing in Office

Directors whose present terms continue until 2020 (Class C):

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Directors whose present terms continue until 2021 (Class A):

MATTER NO. 1 ELECTION OF DIRECTORS

MATTER NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Company’s Audit Committee has appointed Dixon Hughes Goodman, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019. At the Annual Meeting, shareholders will be asked to ratify the Audit Committee’s appointment of Dixon Hughes Goodman, LLP as the Company’s independent registered public accounting firm. Regardless of the outcome of this vote, the Audit Committee will retain the sole authority to appoint the Company’s independent registered public accounting firm. If the appointment is not ratified, then the Audit Committee will reconsider its appointment. Even if the appointment is ratified, the Audit Committee may appoint a different independent registered public accounting firm for the Company.

Representatives from Dixon Hughes Goodman, LLP will be present at the Annual Meeting. The representatives will have an opportunity to make a statement and will be available to respond to appropriate questions.

The persons named in the enclosed proxy card intend, unless otherwise directed, to vote such proxy “FOR” ratification of the appointment of Dixon Hughes Goodman, LLP as the Company’s independent registered public accounting firm. This proposal will be approved if the number of votes for the proposal exceeds the number of votes against the proposal.

Auditing Fees

The following table sets forth the aggregate fees for services related to the years ended December 31, 2018 and 2017 provided by Dixon Hughes Goodman, LLP, our principal accountant:

Pre-Approval Policies

All auditing services and non-auditing services are pre-approved by the Audit Committee. The Audit Committee delegates this authority to the Chairman of the Audit Committee for situations when pre-approval by the full Audit Committee is not convenient. Any decisions made by the Chairman of the Audit Committee must be disclosed at the next Audit Committee meeting.

MATTER NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

We are seeking an advisory vote to approve the compensation of our named executive officers for 2018.

This say-on-pay vote is advisory and non-binding on our Board, but our Compensation Committee will take into consideration the outcome of the vote when making future compensation decisions. At the 2016 Annual Meeting of Shareholders, 45.3% of the votes cast favored our say-on-pay proposal. As a result, in the fall of 2016 our Compensation Committee established a formal ongoing shareholder outreach program to understand our stockholders’ concerns. The overwhelming concern was addressed in 2017 when the annual compensation for our Chief Executive Officer, a major shareholder, was changed from a cash-only plan to a blend of cash and equity, which better aligned his pay with shareholder interests. This change was the result of a complete redesign of our chief executive officer compensation program that was undertaken by the Compensation Committee with the assistance of Willis Towers Watson, a leading compensation consulting firm.

Our engagement with shareholders continued over the past twelve months, when the Chairman of our Compensation Committee had discussions with 11 of our 20 largest shareholders, representing nearly 50% of our outstanding shares.

Our Board believes that our current executive compensation program appropriately links compensation realized by our executive officers to our performance and properly aligns the interests of our executive officers with those of our shareholders. A description of our executive compensation programs and a discussion of the pay decisions for 2018 for the chief executive officer and our other named executive officers are included in Compensation Discussion and Analysis below.

Our Board recommends that our shareholders vote in favor of the following resolution:

“RESOLVED” that the shareholders approve compensation paid to the Company’s named executive officers as disclosed in the Company’s Proxy Statement with respect to the Company’s 2019 Annual Meeting of Shareholders pursuant to Item 402 of Regulation S-K including the Compensation Discussion and Analysis section, the Summary Compensation Table and other compensation tables and related discussion and disclosure.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Compensation Discussion and Analysis

Introduction

The following discussion describes the principal objectives of our executive compensation programs with respect to our “named executive officers,” outlines those programs, and describes how we believe our executive compensation programs meet our objectives. Named executive officers include the Chief Executive Officer, the Chief Financial Officer and the three most highly compensated executive officers. The following individuals served as named executive officers during 2018:

Under our Compensation Committee charter, the Compensation Committee has the authority to set the compensation of the named executive officers and to grant equity awards under the Company’s 2012 Omnibus Incentive Plan.

Key Information

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Principal Objectives and Approach

In designing our executive compensation programs, the Compensation Committee’s principal objectives are to attract and retain highly skilled executives, align executive compensation with corporate performance (without encouraging excessive risk) and align the interests of our executives with the interests of our shareholders.

Benchmarking

To attract and retain key executives, we carefully consider our market environment when setting pay levels for our executives, recognizing that we are in a highly competitive industry in which talented people are a significant driver of value.

In 2016, Willis Towers Watson assisted the Compensation Committee in benchmarking and in conducting pay-level and incentive-design analysis. They used two groups of peer companies representing the principal potential talent market: the insurance industry and the software industry. While the Company’s primary business is property and casualty insurance, its success relies on the development and implementation of custom software developed in house by our Exzeo software division.

The Committee benchmarks compensation annually using a core peer group of publicly held property and casualty companies based in Florida, because these companies are similar to us in terms of insurance services and market opportunity. The Committee reviews compensation and shareholder returns of these core peer companies during the process of finalizing chief executive officer compensation. The cash bonus and total compensation for our Chief Executive Officer may be higher or lower than the target reference point for chief executive officers in the core peer group because of factors such as performance and retention, as well as size and complexity of the job.

The companies within each peer group are all U.S.-based publicly held companies similar in size to our Company. The selected peer companies are listed below.

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The following table summarizes the compensation of chief executive officers in our core peer group based on the disclosures in their proxy statements.

The following table summarizes the performance of companies in our core peer group based on the disclosures in their financial statements.

2018 Company Performance

Performance on the Company’s financial and strategic goals is an important factor in our compensation decisions. The compensation awarded in 2018 to our Chief Executive Officer, Paresh Patel, and our other named executive officers reflects the Company’s accomplishments during the year and our pay-for-performance framework.

We view corporate performance not just financially, but broadly to include numerous nonfinancial, qualitative factors, including the Company’s success in creating and advancing strategic initiatives, planning for and responding to hurricanes and other catastrophic events, providing excellent customer service, and passing regulatory examinations.

As no formula or set of metrics can appropriately capture all the drivers of performance, or substitute for sound management, the Compensation Committee retains discretion in awarding cash, equity and other benefits to executives.

Our business performance in 2018 continued our long-term record of strong financial and operating results. Net income for 2018 totaled $17.7 million or $2.34 diluted earnings per common share. Investment income from 2017 to 2018 increased 45%. We also maintained a strong balance sheet, which is a key component of our business strategy. It enables us to move quickly when strategic opportunities arise. Our shareholders benefited. In 2018 our market capitalization grew 52%, our stock price increased 70%, and we paid $12.5 million in dividends.

Long term, the Company has had consistent profitability and best-in-class profit margins.

The Company’s Return on Equity (ROE) has averaged 20% over the past decade, and it has reported strong levels of Earnings Before Interest and Taxes (EBIT) as well, despite several hurricanes materially impacting our core homeowners insurance business (see the charts under Key Information above). The Company has been profitable in 43 of the last 45 quarters and paid dividends in 34 consecutive quarters. Customer retention is also a key success factor for our business, and we are pleased that our homeowners insurance policyholders have been insured by us for an average of approximately six and a half years. We believe customer retention indicates, among other things, an excellent level of customer service.

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Hurricanes, of course, are a factor that heavily affects our financial results but which our management cannot control. However, our response to those events is within management’s control. In the opinion of the Compensation Committee, the Company’s response to recent hurricanes was well planned and well executed.

The Company had notable strategic achievements in 2018. TypTap Insurance Company, our technology-driven insurance subsidiary, which began business in 2016 by addressing a critical market demand for flood insurance, expanded its product offerings to include homeowners insurance deploying new technology developed by our Exzeo technology division. As a consequence, in 2018 TypTap increased gross written premium 67% over 2017. Other strategic achievements were the expansion of our core insurance business to other states. We now offer flood insurance in five states. In addition, our real estate division completed several projects and acquisitions adding strategic balance and diversification.

Compensation Committee Engagement with Shareholders

The Compensation Committee considers the opinions of shareholders in making compensation decisions. Following the 2016 say-on-pay vote, the Chairman of the Compensation Committee and our Senior Vice President of Investor Relations established an ongoing program to speak with our shareholders twice annually – once during the “off season” and once prior to proxy voting. The purpose of the “off-season” conference calls is to understand investor perspectives regarding compensation, governance and any additional matters, and to update shareholders on our compensation and governance initiatives.

We focused the engagement program on our 20 largest shareholders, representing approximately 77.4% of our outstanding common stock. During the past 12 months, the Chairman of the Compensation Committee and our Senior Vice President of Investor Relations spoke with 11 shareholders representing nearly 50% of the Company’s outstanding common stock. To assist with our shareholder engagement program, we have hired the proxy advisory firm, Alliance Advisors.

The main areas of feedback we received from investors and the actions we took in response are summarized in the following table.

Disclosure TransparencyWhat We Heard:Compensation Committee's Response:General preferences for simplicity and clarity in the disclosure of the executive compensation plan. Redesigned the Proxy Statement to enhance readability and clarity of the executive compensation plan disclosure.Provide output of shareholders' major compensation concerns raised during the engagement calls. Disclosed in the Proxy Statement shareholders major concerns about compensation. Proposed resolution for shareholder approval to hold the advisory say-on-pay vote annually. Disclose peer groups used to benchmark compensationProvided complete list of peer group companies used for compensation benchmarking.Pay Program DesignWhat We Heard:Compensation Committee's Response:Overall, supportive of our pay program design and did not want to see any major changes to the fundamental design. The equity portion of the Chief Executive Officer's compensation is a blend of restricted shares and stock options. Some shareholder preferred a use of performance-based equity compensation. Stock options are issued at an "out-of-the-money" exercise price and by definition are performance-based. The Compensation Committee is evaluating the benefits/risks of basing restricted share awards on specific performance criteria.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Elements of Executive Compensation

The Compensation Committee uses a balanced set of pay elements to determine executive compensation levels, including base salaries, short-term cash performance bonuses and long-term equity incentives comprising restricted stock awards and, in the case of the Chief Executive Officer, stock purchase option awards. We believe these elements create appropriate incentives for driving strong corporate performance, align the interests of our executives with those of our shareholders, and enable us to retain and reward outstanding executive talent.

During 2016 and 2017 the Compensation Committee reviewed and redesigned the compensation program of our Chief Executive Officer, Paresh Patel, with the assistance of Willis Towers Watson, a leading compensation firm, and input from shareholders. The plan established in 2017 aligns Mr. Patel’s and the shareholders’ interests and provides competitive compensation while ensuring a strong link between pay and performance. It also creates a better balance relative to the core peer group with which we compete for talent. The Chief Executive’s 2018 executive compensation award includes a short-term cash bonus payment and long-term equity awards that are consistent with the redesigned plan.

Compensation Process

The Compensation Committee uses a common-sense approach to setting executive compensation. It considers objective measures of business performance as well as the judgment and knowledge of Committee members as to the talents, work habits and contributions of our executive officers.

Performance Measures

When determining executive compensation, the Compensation Committee examines Company performance on two financial metrics, EBIT (Earnings Before Interest and Taxes) and Return on Equity (ROE). We believe these measures most accurately reflect the performance of the business and the value created for shareholders.

In determining the Chief Executive Officer’s compensation, each year the Compensation Committee sets performance targets for EBIT and ROE to provide an appropriate incentive for achieving corporate goals. The Company’s actual results for EBIT and ROE are compared against the targets, and the Chief Executive Officer is eligible to receive a cash bonus based on a percentage of his base salary, provided certain minimum performance levels are achieved.

The Compensation Committee also awards equity compensation in the form of restricted stock and, in the case of the Chief Executive Officer, stock options to create a significant incentive for achieving long-term financial and strategic goals and to retain talented executives. When determining equity awards, the Committee considers competitive market dynamics, peer-group compensation levels and the Company’s overall financial performance. Equity awards vest over a four-year period.

Role of the Board of Directors and Management in Compensation Decisions

The Compensation Committee views the determination of compensation to be a collaborative effort, and it welcomes and seeks input from executive officers, other directors and shareholders.

At least annually, before executive compensation is set for the year, the Compensation Committee discusses its compensation philosophy with the full Board of Directors and briefs the Board of Directors on the structure of the Company’s executive compensation programs. The Chairman of the Compensation Committee attempts to ensure that open communication exists between the Compensation Committee and the Company’s largest shareholders to discuss executive compensation. The Chairman reports to the Committee and the Board of Directors any material issues raised during these shareholder discussions, and the Committee and the Board of Directors, in good faith, address those issues.

In setting compensation of the named executive officers other than the Chief Executive Officer, the Compensation Committee invites the Chief Executive Officer to present his evaluation of each named executive officer’s performance

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

during the year and provide recommendations regarding each executive’s base salary, performance bonus and equity compensation. The Committee has full authority to accept, modify or reject these recommendations.

The Compensation Committee discusses Mr. Patel’s compensation and related proposals with him. Decisions regarding Mr. Patel’s compensation are made by the Committee and reviewed by the Board without Mr. Patel present.

Role of the Compensation Consultant

To assist in determining compensation of our named executive officers, the Company engages the services of Willis Towers Watson, a leading compensation advisory firm. In 2016, Willis Towers Watson assisted the Committee in understanding market compensation practices and levels, to help ensure our executive compensation programs are reasonably designed to attract and retain highly skilled executives in our competitive environment. In 2017, Willis Towers Watson helped the Compensation Committee review and redesign the Chief Executive Officer’s compensation plan to address shareholder concerns and be more consistent with market practices.

Executive Officers of the Company

The following table provides information with respect to our named executive officers as of April 11, 2019:

Biographical information for Messrs. Patel and Saravanos appears above under the heading Directors.

				MARK HARMSWORTH   Chief Financial Officer   QUALIFICATIONS   Mark Harmsworth has served as the Chief Financial Officer of our Company since May 2017. He joined HCI in December 2016 as Senior Vice President of Finance. Prior to that, Mr. Harmsworth was President of JMH Consultancy Group, where he served as consulting Chief Strategy Officer for Stewart Information Services, a New York Stock Exchange listed global real estate services company. Mr. Harmsworth has served in a range of executive leadership positions throughout his career, including Chief Financial

Officer of First American Title Insurance Company, a global specialty insurance company; Senior Executive Vice President of First Canadian Title Insurance Company; and Executive Vice President of RE/MAX Ontario-Atlantic Canada Inc., a regional sub-franchisor of RE/MAX real estate brokerage services in eastern Canada, the eastern United States and Europe. He is a Certified Public Accountant. Mr. Harmsworth holds a Bachelor of Commerce degree from the University of Toronto.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

				ANDREW L. GRAHAM   Vice President, General Counsel and Corporate Secretary   QUALIFICATIONS Andrew L. Graham has served as our General Counsel and Corporate Secretary since June 1, 2008. Mr. Graham served from 1999 to 2007 in various capacities, including General Counsel, for Trinsic, Inc. (previously named Z-Tel Technologies, Inc.), a publicly held provider of communications services headquartered in Tampa, Florida. From 2011 to 2016, Mr. Graham served on the Internal Audit Committee of Hillsborough County, Florida. From 2007 to 2011, he served on the Board of Trustees of Hillsborough

Community College, a state institution serving more than 43,000 students annually. Since 2015, he has served as a director for LM Funding America, Inc., a NASDAQ listed specialty finance company headquartered in Tampa, Florida. Mr. Graham holds a Bachelor of Science degree with a major in Accounting from Florida State University and a Juris Doctor, as well as a Master of Laws (L.L.M.) in Taxation, from the University of Florida College of Law.

				KARIN COLEMAN   Executive Vice President   QUALIFICATIONS Karin Coleman has served as the Executive Vice President of HCI since December 2017. She joined the Company in 2009 as Vice President of Corporate Services. Ms. Coleman oversees human resources, regulatory and legislative affairs, vendor management and community relations. Prior to joining HCI, Ms. Coleman served nine years as Vice President of Take Stock in Children, located in Miami, Florida, the state’s largest public-private partnership providing college access and assistance to at-risk

children, overseeing legislative and strategic partnerships. Previously, she served in various roles over 13 years at Florida Progress Corporation located in St. Petersburg, Florida. Ms. Coleman holds a Bachelor of Arts degree in International Studies from the University of South Florida and has earned her senior professional in human resources certification (SPHR).

Arrangements as to Selection and Nomination of Executive Officers

We are aware of no arrangements as to the selection or appointment of executive officers.

2018 Executive Pay Decisions

The annual base salaries, annual cash performance bonuses and equity awards of our named executive officers in 2018 were as follows.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

The annual base salary for Mr. Patel of $950,000 was unchanged from 2017, the amount provided in his 2016 employment agreement with the Company (see Employment Agreements). The base salary amount positions Mr. Patel at the lower level of the core peer group. The annual base salaries for all other named executive officers were increased in 2018 to reflect competitive market considerations. Cash bonus awards for all other named executive officers reflected the achievement of the Company’s financial goals and individual performance.

CEO Cash Bonus and Equity Compensation

In March 2018, the Compensation Committee established an incentive pay plan to outline the cash bonus available to be earned by Mr. Patel for 2018. Under the plan, the bonus was based on actual results compared against two performance measures, Earnings Before Interest and Taxes and Return on Equity, with each performance measure given equal weight. The 2018 targets were $60 million for EBIT and 16% ROE. A bonus could be paid under either or both measures, but a threshold level of performance (equal to 70% of the applicable target) had to be reached for any bonus to be payable for each respective target.

The Compensation Committee concluded, following input from the compensation consultant and shareholders, that EBIT and ROE best represented the Company’s financial performance and thus best served as metrics to link the CEO’s pay with performance and align his interests with those of shareholders. The Committee set the potential bonus payout range at 50% to 200% of base salary, based on the achievement of EBIT and ROE targets. The targets and payouts at the lower levels were designed to be reasonably achieved and to reward the Chief Executive Officer for continued consistent performance. At the higher levels, they were designed to reward the CEO for extraordinary performance. The performance measures and possible bonus payouts are summarized below.

The Company’s 2018 financial performance was adversely affected by losses sustained from Hurricane Michael. As a result, Mr. Patel did not meet the ROE target but did achieve 76% of the EBIT target. Based on these results, Mr. Patel was paid a cash bonus of $569,000. Although the Compensation Committee had the discretion to award an additional cash bonus above the amount determined by the performance calculations, it did not do so.

During 2018, Mr. Patel was awarded 40,000 shares of restricted stock and 110,000 stock purchase options having an exercise price of $40 per share. Each award is subject to a four-year vesting period intended to encourage long-term performance and executive retention. The Committee plans to award new tranches of equity compensation annually, which we believe is an appropriate practice and consistent with our industry peers.

The Compensation Committee believes Mr. Patel’s total compensation recognizes his significant contributions to the Company’s success and creates strong incentives to achieve its long-term strategic goals and increase shareholder value. His total compensation is in the middle range of compensation for chief executive officers in our core peer group.

Executive Compensation Benefit Plans and Other Practices

401(K) Plan

The Company has a 401(k) Safe Harbor Profit Sharing Plan that qualifies as a defined contribution plan under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, participating employees are eligible for Company matching and discretionary profit-sharing contributions. Plan participants may elect to defer up to one

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

hundred percent of their pre-tax gross wages, subject to annual limitations. The Company matching contribution is limited to a maximum of four percent of the employee’s annual salary or wage and is fully vested when contributed. Eligibility and vesting of the Company’s discretionary profit-sharing contribution is subject to the plan participant’s years of service. There has been no discretionary profit-sharing contribution since the 401(k) Plan’s inception.

Employment Agreements

Certain executives’ compensation and other arrangements are set forth in employment agreements. These employment agreements are described below.

Paresh Patel. On December 30, 2016, we entered into an employment agreement with Mr. Paresh Patel, our Chief Executive Officer. The agreement calls for a four-year term of employment beginning January 1, 2017 and will automatically renew for additional one-year terms unless either party delivers written notice of non-renewal to the other at least 90 days before expiration of the initial term or any renewal term. During the term of the agreement, Mr. Patel will be paid a base annual salary of $950,000 (or a higher amount as may be set from time to time by the Company’s Board of Directors). He will be entitled to any additional bonus compensation provided for by resolution of the Company’s Board of Directors or applicable committee of the Board of Directors. Mr. Patel will also be entitled to participate in our medical, dental, life, disability and retirement benefits plans, if any, upon substantially the same terms applicable to other Company executives.

In the event of termination without good cause, Mr. Patel will be entitled to accrued base salary, accrued vacation pay and other time off, each through the date of termination. He will also be entitled to severance compensation of his base salary for six months after the date of termination. If we terminate Mr. Patel’s employment for good cause, he will be entitled only to accrued base salary, accrued vacation pay and other paid time off, each through the date of termination. If Mr. Patel chooses to terminate his employment, he will be entitled to accrued base salary, accrued vacation pay and other paid time off, each through the date of termination. The agreement provides that during the time of Mr. Patel’s employment and for a period of six months after termination of employment, he will not enter into, engage in, be employed or consult with any business that competes with HCI.

Mark Harmsworth. On November 23, 2016, we entered into an employment agreement with Mr. Harmsworth, our Chief Financial Officer. Mr. Harmsworth initially served as Senior Vice President of Finance and assumed the role of Chief Financial Officer on May 16, 2017. The agreement calls for a four-year term of employment beginning on December 5, 2016 and will automatically renew for additional one-year terms unless either party delivers written notice of non-renewal at least 90 days before expiration of the initial term or any renewal term. During the term of the agreement, Mr. Harmsworth will be paid a base annual salary of $300,000 (or higher amount as may be set from time to time by the Company’s Board of Directors). Mr. Harmsworth was paid an initial signing bonus of $15,000 and an additional bonus of $25,000 after one month of employment. In 2017, Mr. Harmsworth was entitled to a bonus of not less than $100,000. He is entitled to any additional compensation provided by resolution of the Company’s Board of Directors or applicable committee of the Board of Directors. Mr. Harmsworth was awarded 40,000 shares of restricted stock subject to a four-year vesting period. He is also entitled to participate in our medical, dental, life, disability and retirement benefits plans, if any, upon substantially the same terms applicable to other Company executives.

Under his employment agreement, in the event of termination without good cause, Mr. Harmsworth is entitled to accrued base salary, accrued vacation pay and other time off, each through the date of termination. He will also be entitled to severance compensation of his base salary for 12 months after the date of termination. If we terminate Mr. Harmsworth’s employment for good cause, he will be entitled to only accrued base salary and accrued paid time off, each through the date of termination. If Mr. Harmsworth chooses to terminate his employment, he will be entitled to accrued base salary and accrued paid time off, each through the date of termination. The agreement provides that during the time of Mr. Harmsworth’s employment and for a period of 12 months after termination of employment, he will not enter into, engage in, be employed or consult with any business that competes with HCI.

Mr. Harmsworth’s agreement regarding the 40,000 restricted shares awarded to him at the beginning of his employment provides that if his employment is terminated without good cause, then up to 10,000 of his remaining unvested shares will vest.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Clawback Policy

Our Compensation Committee charter contains a clawback policy. It provides that in appropriate circumstances the Committee will require an executive officer to reimburse the Company for incentive compensation payments predicated upon financial results that were subsequently restated and filed with the Securities and Exchange Commission.

Accounting and Tax Considerations

In designing our compensation programs, we consider the potential accounting and tax effects on the Company and our employees. In allocating among different components of compensation, we consider the accounting expense and potential reward associated with each separate component of compensation.

To assist with the payment of their income taxes, when their restricted shares vest or their stock options are exercised, our executives are entitled to surrender a portion of their holdings to the Company for the payment of taxes.

Section 162(m) of the Internal Revenue Code [Section 162(m)] generally disallows a tax deduction to a public corporation for compensation over $1,000,000 paid in any fiscal year to a company’s chief executive officer or other named executive officers (excluding the company’s principal financial officer, in the case of tax years commencing before 2018). However, in the case of tax years commencing before 2018, the statute exempted qualifying performance-based compensation from the deduction limitation if certain requirements were met. Section 162(m) was amended in December 2017 by the Tax Cuts and Jobs Act to eliminate the exemption for performance-based compensation (other than with respect to certain grandfathered arrangements entered into prior to November 2, 2017) and to expand the group of named executive officers who may be covered by the deduction limit under Section 162(m). For 2018, approximately $692,000 of HCI’s executive officer compensation was determined to be nondeductible under Section 162(m). The Compensation Committee expects in the future to authorize compensation in excess of $1,000,000 to one or more named executive officers that will not be deductible under Section 162(m) when it believes that doing so is in the best interests of HCI Group, Inc. and its shareholders.

Pension or Other Retirement Plan and Deferred Compensation Plans

Except for the Company’s 401(k) Safe Harbor Profit Sharing Plan described above under Compensation Discussion and Analysis, we have not had and currently do not have a pension or other retirement plan or a nonqualified deferred compensation plan. Accordingly, the pension benefit table, the nonqualified deferred compensation table, and any related disclosures have been omitted from the discussion below. The Company’s 401(k) Plan matching contributions are described in footnote 1 to the Summary Compensation Table below.

Potential Payments Upon Termination or Change-in-Control

At December 31, 2018, Paresh Patel and Mark Harmsworth are the only named executive officers due cash compensation in the event of termination of employment. The amount of compensation payable to such named executive officers upon voluntary termination, involuntary termination without cause, termination with cause and termination in the event of permanent disability or death of the executive is set forth above under Employment Agreements. Under our 2012 Omnibus Incentive Plan, restricted shares vest immediately upon a change of control unless the surviving entity assumes the obligation or issues replacement securities. Further, restricted shares vest immediately if the holder’s employment is terminated within 12 months after a change in control.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Summary Compensation Table

The following table provides summary information concerning compensation for services rendered in all capacities awarded to, earned by or paid to our named executive officers during the years ended December 31, 2018, 2017 and 2016. Note that Securities and Exchange Commission rules require us to report stock awards at the grant-date fair value of the entire award in the year of the grant rather than reporting this expense over the service period as we do for financial reporting purposes. Fair value of stock and option awards is estimated in accordance with Accounting Standards Codification (ASC) Topic 718 Compensation—Stock Compensation. Hence, in the table below, each amount appearing under Stock Awards and Option Awards is an estimate of the award’s fair value at the grant date, regardless of whether vesting has occurred. Stock awards included in the summary compensation below were, in all cases, restricted stock awards that contain service-only provisions. Thus, the values given for these awards are based on the value of the Company’s stock on the grant date. The actual values on the vesting date will almost certainly differ from the estimated values.

MATTER NO. 3 APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

Grants of Plan-Based Awards for 2018

The following table sets forth information regarding all plan-based awards granted to our named executive officers during the year ended December 31, 2018. The stock awards identified in the table below are also reported in the table that follows—Outstanding Equity Awards at December 31, 2018.