Summary
The Progressive Corporation filed an 8-K on February 21, 2017, detailing changes and approvals related to its incentive plans for directors and executives. The Board of Directors adopted two new plans: The Progressive Corporation 2017 Directors Equity Incentive Plan and The Progressive Corporation 2017 Executive Annual Incentive Plan. Both plans are subject to shareholder approval at the May 2017 Annual Meeting. The new Director's Plan allows for various equity-based compensation to non-employee directors, reserving 500,000 common shares. The Executive Plan replaces the 2007 bonus plan and focuses on performance-based cash incentives for executive officers, designed to comply with IRS Section 162(m) deductibility rules.
Key Highlights
- 1Progressive Corporation adopted the 2017 Directors Equity Incentive Plan, subject to shareholder approval, allowing equity compensation for non-employee directors.
- 2The 2017 Directors Plan reserves 500,000 common shares for issuance and will remain in effect until May 2022.
- 3The company also adopted the 2017 Executive Annual Incentive Plan, replacing the prior 2007 bonus plan, subject to shareholder approval.
- 4The Executive Plan aims to provide annual cash incentive awards to executives, structured to qualify for performance-based compensation deductions under IRS Section 162(m).
- 5Annual incentive awards for 2017 have been granted under the Executive Plan, with a 'Gainshare Factor' similar to prior years but now including the results of the Property business alongside auto and commercial lines.
- 6A separate ARX Holding Corp. 2017 Gainsharing Plan was approved for employees of that subsidiary, including its CEO, John Auer, with bonuses tied to business performance.
Frequently Asked Questions
Progressive Corporation has adopted two new incentive plans: the 2017 Directors Equity Incentive Plan for non-employee directors and the 2017 Executive Annual Incentive Plan for executive officers. Both plans require shareholder approval and are designed to provide equity and performance-based cash compensation, respectively.
Both the 2017 Directors Equity Incentive Plan and the 2017 Executive Annual Incentive Plan are subject to shareholder approval at the Company's Annual Meeting of Shareholders in May 2017. If approved, they will become effective thereafter.
The 2017 Executive Annual Incentive Plan replaces the 2007 Executive Bonus Plan. A key change is the inclusion of the Property business results in the calculation of executive bonuses, alongside auto and commercial lines, which is expected to be weighted by each business unit's contribution to net earned premium.
Yes, the ARX Holding Corp. 2017 Gainsharing Plan was approved. This plan allows employees of ARX and its subsidiaries, including President and CEO John Auer, to receive bonuses for 2017. The bonus structure is similar to the company's main plan but includes specific weighting for Property business (25%) and other lines (75%).