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Ohio
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1-9518
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34-0963169
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(State or other jurisdiction of
incorporation or organization)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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6300 Wilson Mills Road, Mayfield Village, Ohio
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44143
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(Address of principal executive offices)
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(Zip Code)
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Not Applicable
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(Former name or former address, if changed since last report)
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¨
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Exhibit No. Under Reg.
S-K Item 601
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Form 8-K Exhibit
No.
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Description
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10
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10.2 The Progressive Corporation 2017 Executive Annual Incentive
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(i)
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The number of shares of Stock to be delivered to an Eligible Director shall be determined by dividing the cash compensation that would otherwise be payable to such Eligible Director by the Fair Market Value on the date that such cash compensation would otherwise be paid; and
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(ii)
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Shares of Stock delivered to an Eligible Director pursuant to this Section 8 shall be vested immediately but may be subject to any restrictions imposed by the Committee and set forth in an Award Agreement (e.g., post-vesting holding requirements).
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a.
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"Award" means an award payable in cash to a Participant for a Fiscal Year in an amount, if any, determined under Section 4 of the Plan, subject to the terms of the Plan.
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b.
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"Award Agreement" means the written agreement and/or Committee resolutions evidencing an Award. Any Award Agreement may contain additional terms and provisions applicable to such Award(s), provided that such additional terms and conditions are not inconsistent with the terms of the Plan.
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d.
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"Business Unit" means any (i) business segment or unit, or subdivision thereof, of the Company or any of its Subsidiaries, including but not limited to, Agency Auto, Direct Auto, special lines, Personal Lines, Commercial Lines or Property, (ii) investment operation, (iii) product line, (iv) product distribution channel, (v) function, process, or other business category, (vi) geographic operation, or (vii) any combination thereof.
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e.
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"Cause" means, unless otherwise determined by the Committee and stated in the Award Agreement for any Award: a felony conviction of a Participant or the failure of a Participant to contest prosecution for a felony; a Participant’s willful misconduct or dishonesty, any of which, in the judgment of the Committee, is harmful to the business or reputation of the Company or any Subsidiary or Affiliate; or any material violation (in the judgment of the Committee) of any of the provisions of a Code of Conduct, or any confidentiality agreement, non-solicitation agreement, non-competition agreement or other agreement between the Participant and the Company.
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g.
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"Code of Conduct" means the Company’s Code of Business Conduct and Ethics, the Chief Executive Officer/Senior Financial Officers Code of Ethics (if applicable to the Participant), and/or any other Company code or standards of conduct applicable to the Participant from time to time.
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h.
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"Committee" means the committee designated pursuant to Section 3 that administers the Plan.
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j.
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"Covered Participant" shall mean each employee of the Company or a Subsidiary who receives an Award for an applicable Fiscal Year and is expected to be a "covered employee" (as defined in Section 162(m) of the Code) for the applicable Fiscal Year, and any other employee designated by the Committee, in its sole discretion.
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m.
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"Participant" means each employee of the Company or a Subsidiary who is selected by the Committee to be a participant in the Plan.
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n.
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"Performance Measures" means the performance goals selected and established by the Committee for the purposes of determining the extent to which any Award will be paid and which, in the case of any Award that is intended to qualify as a Qualified Performance-Based Award, shall be based on objective criteria relating to one or more of the following measures: revenues; premiums (written, net, earned, per policy or per vehicle); expense levels; cost control or cost savings levels; combined ratio (target, weighted, variation from target, or cohort (expected lifetime combined ratio for a group of policies commencing during a specified time period)); return on shareholder equity, assets, revenue or capital (including return on total capital or return on invested capital); policies in force; policy renewals; policy life expectancy; vehicles insured; drivers insured; households insured; earned car years; market share; physical damage earned car years; investment income; investment returns; net realized gains; net income; comprehensive income; shareholder equity; net book value per share; total shareholder return; earnings; operating income; earnings before interest, taxes and/or depreciation and amortization; customer satisfaction; customer retention; customer loyalty; strategic business criteria based on meeting specified premium or revenue goals, market penetration goals, investment performance goals, business expansion goals or loss targets; accomplishment of mergers, acquisitions, dispositions or similar extraordinary business transactions; cash; or value of a share of Stock.
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o.
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"Plan" means The Progressive Corporation 2017 Executive Annual Incentive Plan, as it may be amended from time to time.
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p.
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"Qualified Performance-Based Award" means any Award or portion of an Award that is intended to qualify as performance-based compensation under Section 162(m) and awarded to a Covered Participant.
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q.
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"Section 16 Officer" means any Participant who is an "officer" of the Company as that term is defined in Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended.
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r.
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"Section 162(m)" means Section 162(m) of the Code (or any successor provision) and the regulations promulgated thereunder.
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s.
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“Section 409A” means Section 409A of the Code (or any successor provision) and the regulations promulgated thereunder.
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t.
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“Section 409A-Covered Deferred Compensation Plan” means The Progressive Corporation Executive Deferred Compensation Plan, as amended from time to time, or other applicable written deferred compensation arrangement maintained by the Company and intended to be a nonqualified deferred compensation plan compliant with Section 409A.
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u.
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"Subsidiary" means any corporation, business trust, limited liability company, partnership or similar business entity in an unbroken chain beginning with the Company, if the Company or other entities in the chain own (a) more than 50% of the equity interests or partnership interests or (b) Voting Securities representing more than 50% of the aggregate Voting Power of the then-outstanding Voting Securities in such entity.
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v.
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"Voting Power" means the combined voting power of the then-outstanding Voting Securities.
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w.
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"Voting Securities" of a corporation means securities of such corporation that are entitled to vote generally in the election of directors of such corporation; and "Voting Securities" of any other entity shall mean equity interests.
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a.
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The Plan shall be administered by the Compensation Committee of the Board or such other committee as the Board shall select. The Committee shall consist of not less than two directors of the Company, all of whom shall be Outside Directors within the meaning of Section 162(m); provided, however, if at any time not all members satisfy such definitions, all actions taken by the Committee shall nonetheless be valid for all purposes other than Section 162(m). The members of the Committee shall be appointed from time to time by, and shall serve at the discretion of, the Board.
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b.
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The Committee shall have the sole discretionary authority to take all actions and make all determinations it deems necessary or advisable for the administration of the Plan, including, without limitation, (i) selection of Participants, (ii) subject to the limitations set forth herein, determination of the timing and amount of Awards made to each Participant, (iii) selection of Performance Measures and other terms applicable to Awards, (iv) certification that the Performance Measures and any other material terms of Qualified Performance-Based Awards were satisfied; and (v) interpretation of the terms of the Plan, Awards and Award Agreements. All interpretations, determinations and other decisions made by the Committee
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c.
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Qualified Performance-Based Awards are intended to be administered and interpreted in a manner that is consistent with qualification of such Awards as "performance-based compensation" within the meaning of Section 162(m).
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d.
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In the event of (a) any merger, reorganization, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, extraordinary dividend (including a spin-off), or other similar change affecting the Company’s common shares; (b) any purchase, acquisition, sale, or disposition of a significant amount of assets other than in the ordinary course of business, or of a significant business; (c) any change resulting from the accounting effects of discontinued operations, extraordinary income or loss, changes in accounting as determined under GAAP, or restatement of earnings; or (d) any charge or credit resulting from an item which is classified as "non-recurring,” "restructuring," or similar unusual item on the Company’s audited annual Statement of Comprehensive Income which, in the case of (a) – (d), results in a change in the components of the calculations of any of the Performance Measures as established by the Committee, in each case with respect to the Company or any other entity whose performance is relevant to the achievement of such Performance Measures, if any, upon which an Award is based, the Committee shall, without the consent of any affected Participant, amend or modify the terms of any outstanding Award that is based in whole or in part on the performance of the Company (or any Subsidiary or division thereof) or such other entity so as equitably to reflect such event or events, provided, however, that, with respect to any Qualified Performance-Based Award, the Committee shall not take any action pursuant to this Section which would constitute an impermissible exercise of discretion pursuant to Section 162(m) of the Code.
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a.
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In General
. Awards under the Plan shall consist of annual incentive awards payable in cash. All officers and other key employees of the Company and its Subsidiaries are eligible to be selected to be Participants. The Committee will select the employees who will receive Awards and establish the Performance Measures for such Awards. Only employees who are selected by the Committee to receive Awards shall be Participants in the Plan. Awards can be expressed as
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b.
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Qualified Performance-Based Awards
. With respect to Qualified Performance-Based Awards, the Committee shall establish one or more written Performance Measures, within ninety (90) days after the beginning of the Fiscal Year (or, if the service period relating to the Award is less than a full year, within the first twenty-five percent (25%) of such service period, a
s scheduled in good faith at the time the Performance Measure is established
), and while the outcome of the Performance Measure is substantially uncertain. Such Performance Measure shall state, in terms of an objective formula or standard, the method for computing the amount of the Award payable (before any discretionary reduction by the Committee) to each Participant if the Performance Measure is attained. The Award shall be based on one or more Performance Measures selected by the Committee and may be expressed in terms of an incentive pool in which one or more Covered Participants participate or as separate formulas or standards for the Covered Participants; provided, however, that in all cases the Performance Measures shall be expressed in a manner so that a third party having knowledge of the relevant performance results could calculate the amounts to be paid to the Covered Participants. As soon as practicable after the end of the Fiscal Year (but in all events prior to payment of any Covered Participant's Award), the Committee shall certify in writing prior to payment of any Award that the Performance Measures and any other material terms were satisfied. The Committee may condition payment of each Covered Participant's Award upon the satisfaction of such additional objective or subjective goals or standards as the Committee shall determine to be appropriate, in its sole discretion; provided, however, that such authority to condition payment upon the satisfaction of additional objective or subjective goals or standards shall not be deemed to give the Committee the discretion to increase the amount otherwise payable upon attainment of the pre-established Performance Measures. The Committee shall retain the discretion at any time before payment to reduce the amount of any Qualified Performance-Based Award that would otherwise be payable to a Covered Participant, including a reduction in such amount to zero, for any or no reason as the Committee may determine in its sole discretion. In no event shall the exercise of such negative discretion with respect to a Covered Participant's Award result in an increase in the amount payable to another Covered Participant. The maximum amount that may be paid to any one Covered Participant pursuant to a Qualified Performance-Based Award for any Fiscal Year shall be $8,000,000. A Qualified Performance-Based Award shall not be paid unless the Committee certifies in accordance with this section that the applicable Performance Measures have been satisfied, except that the Committee may provide in the Award
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c.
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Awards other than Qualified Performance-Based Awards
. Awards provided under the Plan that are not intended to be Qualified Performance-Based Awards shall be based on terms and conditions established by the Committee in its sole discretion. Such Awards may, but need not, be expressed as an incentive pool and may be based upon attainment of Performance Measures or such other measures or goals as the Committee may designate. The Committee may condition payment of such an Award upon the satisfaction of such objective and/or subjective standards as the Committee shall determine to be appropriate, in its sole discretion, and shall retain the discretion at any time before payment to increase or reduce the amount of any Award that would otherwise be payable to a Participant, for any or no reason as determined by the Committee in its discretion, including a reduction in such amount to zero.
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d.
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Awards for New Hires.
For a Participant who is first hired as an employee and who becomes a Participant after the first day of the Performance Period, the performance goals and other criteria for any Qualified Performance-Based Award shall be established by the Committee within the time period permitted by Section 162(m).
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e.
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Participation Not Exclusive
. A Participant may also be eligible to participate in other Progressive annual incentive or bonus plans (including, without limitation, the annual Gainsharing Plan, The Progressive Capital Management Annual Incentive Plan or any successor to either of those plans) with respect to any Fiscal Year.
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a.
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Unless the Committee or a Participant elects to defer payment of Awards, Awards under the Plan shall be paid to Participants as soon as practicable after (i) in the case of Qualified Performance-Based Awards, after the Committee certifies that the applicable Performance Measures and any other material terms were in fact satisfied, and (ii) in the case of Awards other than Qualified Performance-Based Awards, the end of the Fiscal Year to which performance relates; provided, however, that, unless deferred under this Section, neither type of Award shall be paid after March 15 of the year following the Fiscal Year to which performance relates. Participants may also be permitted to elect to defer payment of all or part of one or more Awards subject to and in accordance with the terms of a Section 409A-Covered Deferred Compensation Plan. Any such deferred Awards, instead of being paid to the Participant, shall be credited to the Participant’s account under and paid in accordance with the terms and conditions of such deferral plan or arrangement.
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b.
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Awards shall be paid in cash, less required deductions and withholding for federal, state and local taxes and other items.
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c.
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The Committee may provide, in any Award Agreement, that a Participant must be employed through a specified date in order to receive payment of an Award and may provide for exceptions to such provision, including in the event of leave of absence, disability or death; provided, however, that Awards shall in all events remain subject to the Committee's discretion to reduce or eliminate Awards in its discretion at any time before payment is made, and any such provisions with respect to Qualified Performance-Based Awards must comply with Section 4.b. herein. No Participant shall have the right to receive any payment pursuant to an Award if, prior to such payment being made, Participant’s employment is terminated by the Company or a Subsidiary for Cause, or if there occurs any action or inaction that constitutes grounds for termination for Cause or otherwise constitutes grounds for immediate termination of employment under the Company’s employment practices or policies as then in effect, as determined by the Compensation Committee in its sole discretion.
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d.
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Failure to satisfy the employment condition set forth in Section 5.c. shall result in forfeiture of any Award that otherwise would have been earned.
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(ii)
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If any recipient of an Award engaged in fraud or other misconduct (as determined by the Committee or the Board) resulting, in whole or in part, in a restatement of the financial or operating results used to determine the amount of an Award hereunder, the Company will have the right to recoup from such individual, and such individual will pay to the Company promptly upon demand the entire amount paid or deferred (as applicable) with respect to such Award, plus interest at the rate of eight percent (8%) per annum or, if lower, the highest rate permitted by law, calculated from such payment or deferral date. The Company further shall have the right to terminate and cancel any and all Awards previously made to such individual that are then outstanding, and to recover from such individual the Company’s costs and expenses incurred in connection with recovering such funds from such individual and enforcing its rights under this subsection (ii), including, without limitation, reasonable attorneys’ fees and court costs. There shall be no time limit on the Company’s right to recover such amounts under this subsection (ii), except as otherwise provided by applicable law.
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(iii)
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If the Securities and Exchange Commission adopts final rules under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that require, as a condition to the Company’s continued listing on a national securities exchange ("Exchange"), that the Company develop and implement a policy requiring the recovery of erroneously awarded compensation, and such regulations are applicable to a Participant and an Award granted pursuant to the Plan (including any award granted before such final rules are adopted), then all Awards shall be subject to recoupment pursuant to the terms of the rules of the Securities and Exchange Commission and any applicable Exchange, and any policy of the Company adopted in response to such rules.
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(iv)
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The rights contained in this subsection 5.e. shall be in addition to, and shall not limit any other rights or remedies that the Company may have under this Plan or under any applicable law or regulation.
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f.
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Nothing contained in Section 5.e. shall be deemed to (i) limit any additional legal or equitable rights or remedies the Company may have under applicable law with respect to any Participant who may have caused or contributed to the Company's need to restate its financial results. If any of the covenants contained in Section 5.e. or any part thereof, are held to be unenforceable, the court making such determination shall have the power to revise or modify such provision to make it enforceable to the maximum extent permitted by applicable law and, in its revised or modified form, said provision shall then be enforceable.
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b.
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No individual shall have any claim or right to be a Participant in the Plan at any time or, having received an Award in one Fiscal Year, to receive an Award in another Fiscal Year, and any individual's participation in the Plan may be terminated at any time with or without notice, reason, or regard to past practices.
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c.
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Neither the Plan nor any action hereunder shall confer on any person any right to remain in the employ of the Company or any of its Subsidiaries or shall affect an employee's compensation not arising under the Plan. Neither the adoption of the Plan nor its operation shall in any way affect the right and power of the Company or any Subsidiary to discipline or discharge any employee, or change the job title, duties, authority, position or compensation of any Participant, at any time or without assigning a reason therefor.
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d.
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The Plan will be unfunded and all payments due under the Plan shall be made from the Company’s general assets.
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e.
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The Company and its Subsidiaries shall have the right to deduct from any Award, prior to payment, the amount of any taxes required to be withheld by any federal, state, local or foreign government with respect to such payments. In addition, the Company shall have the unrestricted right to set off against or recover out of any Award any amounts owed by such Participant (including without limitation pursuant to Section 5.e of the Plan) to the Company or any of its Subsidiaries.
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f.
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The Committee may rely upon any information supplied to it by any officer of the Company or any Subsidiary or by any independent accountant for the Company and may rely upon the advice of counsel in connection with the administration of the Plan and shall be fully protected in relying upon such information or advice.
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g.
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All expenses and costs in connection with the administration of the Plan shall be borne by the Company.
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h.
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The Plan and any Award Agreements entered into thereunder shall be governed by and construed in accordance with the laws of the State of Ohio applicable to contracts made and performed wholly within such state by residents thereof.
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i.
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Awards under the Plan are intended to be exempt from Section 409A because no legally binding right to any Award arises until the payment date, and, in the alternative, because any Award is a short term deferral under Section 409A; the Plan shall be administered and interpreted accordingly. Notwithstanding any provision of the Plan to the contrary, if the Committee determines that any Award may constitute deferred compensation subject to Section 409A, the Committee may take any actions necessary to preserve the intended tax treatment of the benefits provided with respect to the Award. Any Award that is subject to Section 409A because deferred pursuant to the terms of a Section 409A-Covered Deferred Compensation Plan shall be paid according to the terms of such plan.
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j.
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To the extent the Committee deems it necessary, appropriate or desirable to comply with foreign law or practice and to further the purposes of the Plan, the Committee may, without amending the Plan, (i) establish rules applicable to Awards granted to Participants who are foreign nationals, are employed outside the United States, or both, including rules that differ from those set forth in this Plan, and (ii) grant Awards to such Participants in accordance with those rules.
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k.
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Nothing contained in this Plan shall prevent the Board or the Committee from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only to specific individuals in specific cases. For purposes of this Plan, a transfer of the employment of a Participant between the Company and any of its Subsidiaries, or between any Subsidiaries, shall not be deemed a termination of employment or adversely affect or enlarge the rights of any Participant under this Plan or with respect to any Award.
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1.
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Qualified Performance-Based Award
. The Award is an Award under the Plan and subject to all of the terms and conditions of the Plan. In addition, the Award is a Qualified Performance-Based Award and is subject to all of the terms and conditions of the Plan applicable to Qualified Performance-Based Awards. The Award is performance-based, is not based on Participant performance, and is not a form of commission compensation.
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2.
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Annual Incentive Payment.
Subject to the terms of the Plan and this Agreement, the annual incentive payment, if any, payable to Participant pursuant to this Award with respect to the Fiscal Year (the “Annual Incentive Payment”) will be determined by application of the following formula:
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3.
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Definitions.
For purposes of this Agreement, the following terms will have the following meanings:
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a.
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"Paid Eligible Earnings" shall mean and include the following amounts received by Participant from the Company or one of its Subsidiaries during the Fiscal Year: regular salary, Earned Time Benefit pay (excluding the payout of unused Earned Time Benefit pay at termination), sick pay, holiday pay, funeral pay, overtime pay, military make-up pay, shift differential, and retroactive payments of any of the foregoing items, in each case received by the participant during the Fiscal Year for work or services performed as an officer or employee of Progressive. For purposes of this Agreement, and notwithstanding the foregoing, Paid Eligible Earnings shall exclude all other types of compensation, including, without limitation: any short-term or long-term disability payments made to the participant; the earnings replacement component of any workers’ compensation benefit or award; any amounts paid pursuant to a judgment in, or settlement related to, any action, suit or proceeding, whether in law or equity, to any extent arising from or relating to Participant’s employment with the Company, or work or services performed for or on behalf of the Company; any amount paid under
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b.
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“Target Percentage” shall mean <%>.
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c.
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“Performance Factor” shall be determined by the Committee in the manner described in Section 4; provided, however, that the Performance Factor will not exceed 2.0.
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4.
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The Performance Factor.
The Performance Factor shall be determined by the performance of the Core Business during the Fiscal Year, pursuant to the procedures and calculations described below.
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a.
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Core Business Defined.
The “Core Business” shall be comprised of the following business units of the Company and its consolidated entities (each a “Business Unit” or “Unit”):
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•
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The Agency Auto Business Unit, consisting of the auto business produced by agents or brokers, including Strategic Alliances Agency Auto, but excluding all Agency special lines businesses;
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•
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the Direct Auto Business Unit, consisting of the personal auto business produced by phone, over the Internet, or via a mobile device, but excluding all Direct special lines businesses;
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•
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the special lines Business Unit, consisting of special lines business generated by agents and brokers or directly by phone, over the Internet, or via a mobile device;
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•
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The Commercial Lines Business Unit; and
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•
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The Property Business Unit.
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b.
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Matrices.
For purposes of computing a performance score for the Core Business, operating performance results for each Business Unit are evaluated using a performance matrix for the Fiscal Year. Each matrix assigns performance scores to various combinations of profitability and growth outcomes for the applicable Business Unit. Each Business Unit will be evaluated according to the performance of the Business Unit as a whole. Therefore, the Committee has established performance matrices for the Fiscal Year for each of the Business Units.
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c.
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Performance Measures
.
Each matrix will include the following Performance Measures: growth in policies in force (“PIFs”) and combined ratio, or profitability, as described below.
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i.
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Growth
. The growth measure for the Fiscal Year under all matrices will be based on policies in force ("PIFs"). For all matrices, growth will be measured by the percentage change in average PIFs for the Fiscal Year compared to the average PIFs of the immediately preceding fiscal year. Average PIFs for the Fiscal Year and for the immediately preceding fiscal year will be determined by adding the fiscal-month-end number of PIFs for each month during such year and dividing the total by twelve. Assigned risk business will not be included in determining the growth of any Business Unit.
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ii.
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Profitability.
For all Business Unit matrices, the measurement of profitability will be the combined ratio (calculated in accordance with U.S. generally accepted accounting principles) (the "GAAP Combined Ratio") for the Fiscal Year for the applicable Unit. Assigned risk business will be included in determining the GAAP Combined Ratio for the applicable Business Unit. The net operating expense of Corporate Products (e.g., self-insurance) shall be apportioned among the appropriate Business Units in accordance with the respective amount(s) of net earned premiums generated by each such Business Unit and will be reflected in the calculation of the GAAP Combined Ratio for such Business Units.
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i.
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Performance Scores.
Using the actual performance results and the performance matrix for each Business Unit, the GAAP Combined Ratio for each such Unit will be matched with the growth levels achieved by such Unit, to determine the performance score for each such Unit. The performance score for each Business Unit, which will
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ii.
|
Performance Factor.
The resulting performance scores for each of the Business Units will then be multiplied by a weighting factor, which shall be a fraction or decimal equivalent, determined by dividing the net earned premiums generated by such Business Unit during the Fiscal Year by the net earned premiums generated by all of the Business Units comprising the Core Business in the aggregate. Subject to paragraph 3(c) of this Agreement, the sum of these weighted performance scores will be the Performance Factor for the Fiscal Year.
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iii.
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Committee Discretion
. Notwithstanding anything to the contrary contained in this Agreement, at or prior to the time of payment, the Committee, in its sole discretion, may reduce the amount of any Annual Incentive Payment that otherwise would payable according to this Agreement, or eliminate the Award in full. The Committee, in its sole discretion, may treat Participant differently than other Plan participants for these purposes. Any such determination by the Committee shall be final and binding on Participant and Participant’s estate and beneficiaries. Under no circumstances shall the Committee have discretion to increase the amount of the Annual Incentive Payment above the amount that would have been paid based on this Paragraph 4 (excluding adjustments required by Section 3(d) of the Plan).
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5.
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Payment Qualification Date; Leave of Absence
. Section 5, and other applicable Sections, of the Plan will govern the payment of the Annual Incentive Payment and the limitations and exceptions thereto. The following additional terms shall apply to this Award:
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a.
|
Qualification Date.
Unless otherwise determined by the Committee, and except as expressly provided herein, in order to be entitled to receive an Annual Incentive Payment, the Participant must be an active officer or regular employee of the Company or one of its Subsidiaries on November 30 of the Fiscal Year (“Qualification Date”). If Participant’s employment terminates for any reason prior to the Qualification Date, Participant will not be entitled to an Annual Incentive Payment. Annual Incentive Payments are not earned until paid.
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b.
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Leave of Absence.
If Participant is on a leave of absence covered by the Family and Medical Leave Act of 1993, as amended (or equivalent state or local law), the Americans with Disabilities Act of 1991, as amended (or equivalent state or local law), personal leave of absence with the approval of the Company, military leave or short or long-term disability (provided that, in
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6.
|
Deferral of Annual Incentive Payment.
If then eligible to participate in The Progressive Corporation Executive Deferred Compensation Plan ("Deferral Plan"), Participant may elect to defer all or a portion of the Annual Incentive Payment otherwise payable to him/her under this Agreement, subject to and in accordance with the terms of the Deferral Plan. If Participant has made such an election under the Deferral Plan, then to the extent of such election, the Annual Incentive Payment will, instead of being paid to Participant, be credited to Participant’s account under the Deferral Plan in accordance with the terms of the Deferral Plan.
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7.
|
Shareholder Approval.
This Award is subject to the Plan being approved by the requisite vote of the Company’s shareholders at the Company’s Annual Meeting of Stockholders to be held in May 2017. If such approval is not obtained, the Award and this Agreement will be null and of no force or effect.
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8.
|
Entire Agreement
. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation or communication, whether oral or in writing, between the parties relating to the Award, provided that the Agreement shall be at all times subject to the Plan.
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9.
|
Amendment
. The Committee may amend the terms of this Award to the fullest extent permitted by Section 7 of the Plan.
|
10.
|
Acknowledgments
. Participant: (a) acknowledges receiving a copy of the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in such; (b) accepts this Agreement and the Award subject to all provisions of the Plan and this Agreement; and (c) agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee relating to the Plan, this Agreement or the Award.
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By:
/s/ Daniel P. Mascaro
|
Vice President & Secretary
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GRADE LEVEL
|
TARGET %
|
CEO and President
|
125%
|
50 to 55
|
30% to 75%
|
42 to 49
|
15% to 25%
|
30 to 41
|
0% to 12%
|
•
|
The Agency Auto business unit, consisting of the auto business produced by independent agents or brokers, including Strategic Alliances Agency auto, but excluding all Agency special lines businesses;
|
•
|
The Direct Auto business unit, consisting of the personal auto business produced by phone, over the Internet, or via a mobile device, but excluding all Direct special lines businesses;
|
•
|
The special lines business unit, consisting of special lines business generated by agents and brokers or directly by phone, over the Internet, or via a mobile device;
|
•
|
The Commercial Lines business unit; and
|
•
|
The Property business unit.
|
•
|
Agency Auto;
|
•
|
Direct Auto;
|
•
|
Special lines;
|
•
|
Commercial Lines; and
|
•
|
Property.
|
A.
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Recoupment Based on Progressive Restatement
. The Company shall have the right to recoup any Annual Gainsharing Payment (or an appropriate portion thereof, as hereinafter provided) with respect to any Plan year paid to a participant hereunder who was an executive officer of Progressive at any time during such Plan year, if: (i) the Annual Gainsharing Payment was predicated upon the achievement during such Plan year of certain financial or operating results (which includes, for purposes hereof, the Performance Factor described in Section 6); (ii) such financial or operating results were incorrect and were subsequently the subject of a restatement by The Progressive Corporation and its consolidated entities within three (3) years after the date on which such Annual Gainsharing Payment was paid to the participant; and (iii) a lower payment would have been made to the participant if the restated financial or operating results had been known at the time the payment was made. Such recoupment right shall be available to the Company whether or not the participant in question was at fault or responsible in any way in causing such restatement. In such circumstances, the Company will have the right to recover from each such participant for such Plan year, and each such participant will refund to the Company, the amount by which the Annual Gainsharing Payment paid to such participant for the Plan year in question exceeded the lower payment that would have been made based on the restated results, without interest; provided, however, that the Company will not seek to recover such amounts unless the amount due would exceed the lesser of five percent (5%) of the Annual Gainsharing Payment previously paid or twenty-thousand dollars ($20,000). Such recovery, at the Committee’s discretion, may be made by lump sum payment, installment payments, credits against future bonus payments, or other appropriate mechanism.
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B.
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Recoupment Based on Company Restatement
. The Company shall have the right to recoup any Annual Gainsharing Payment (or an appropriate portion thereof, as hereinafter provided) with respect to any Plan year paid to a participant hereunder who was an executive officer of the Company at any time during such Plan year, if: (i) the Annual Gainsharing Payment was predicated upon the achievement during such Plan year of certain financial or operating results (which includes, for purposes hereof, the Performance Factor described in Section 6); (ii) such financial or operating results were incorrect and were subsequently the subject of a restatement by the Company within three (3) years after the date on which such Annual Gainsharing Payment was paid to the participant; and (iii) a lower payment would have been made to the participant if the restated financial or operating results had been known at the time the payment was made. Such recoupment right shall be available to the Company whether or not the participant in question was at fault or responsible in any way in causing such restatement. In such circumstances, the Company will have the right to recover from each such participant for such Plan year, and each such participant will refund to the Company, the amount by which the Annual Gainsharing Payment paid to such participant for the Plan year in question exceeded the lower payment that would have been made based on the restated results, without interest; provided, however, that the Company will not seek to recover such amounts unless the amount due would exceed the lesser of five percent (5%) of the Annual Gainsharing Payment previously paid or twenty-thousand dollars ($20,000). Such recovery, at the Committee’s discretion, may be made by lump sum payment, installment payments, credits against future bonus payments, or other appropriate mechanism. With respect to any restatement that would provide the Company rights under both this subsection B. and subsection A. above (with respect to a participant who is both an executive officer of the Company and an executive officer of Progressive), the Company shall have the right to
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C.
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Further Rights
. Notwithstanding the foregoing subsection A., if any participant that was an executive officer of the Company and/or Progressive at any time during such Plan year engaged in fraud or other misconduct (as determined by the Committee or the Board, in their respective sole discretion) resulting, in whole or in part, in a restatement of the financial or operating results used hereunder to determine the Annual Gainsharing Payments for a specific Plan year, the Company will further have the right to recover from such participant, and the participant will refund to the Company upon demand, an amount equal to the entire Annual Gainsharing Payment paid to such participant for such Plan year plus interest at the rate of eight percent (8%) per annum or, if lower, the highest rate permitted by law, calculated from the date that such bonus was paid to the participant. The Company shall further have the right to recover from such participant the Company’s (and Progressive’s) costs and expenses incurred in connection with recovering such Annual Gainsharing Payment from the participant, including, without limitation, reasonable attorneys’ fees. There shall be no time limit on the Company’s right to recover such amounts under this subsection C., except as otherwise provided by applicable law.
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D.
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Rights Not Exclusive
. The rights contained in the foregoing subsections A., B. and C. shall be in addition to, and shall not limit, any other rights or remedies that the Company may have under any applicable law or regulation.
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E.
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Compliance with Law and Exchange Requirements
. The Annual Gainsharing Payments determined and paid pursuant to the Plan shall be subject to all applicable laws and regulations. Without limiting the foregoing, and notwithstanding anything to the contrary contained in this Plan, if the SEC adopts final rules under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that require, as a condition to the Company’s continued listing on a national securities exchange (“Exchange”), that the Company develop and implement a policy requiring the recovery of erroneously awarded compensation, and such regulations are applicable to any participant awarded Annual Gainsharing Payments pursuant to the Plan, then the Annual Gainsharing Payment paid to such participant shall be subject to recoupment by the Company pursuant to the terms of the rules of the SEC and any applicable Exchange and any policy of the Company adopted in response to such rules.
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F.
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Right to Enforce Section 12
. In addition to the Committee, the Progressive Committee shall have the right, for and on behalf of the Company, to enforce the rights of the Company under this Section 12 with respect to any executive officer of Progressive. The Committee shall consult with the Progressive Committee with respect to any matters decided under this Section 12 that involve any executive officer of Progressive.
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