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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): January 5, 2023
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 United Fire Group Inc.
(Exact name of registrant as specified in its charter)
 
Iowa001-3425745-2302834
(State of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)
118 Second Avenue SE
Cedar RapidsIowa52401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (319) 399-5700
_______________________N/A________________________
(Former name or former address, if changed since last report)
  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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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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 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities Registered Pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.001 par valueUFCSThe NASDAQ Global Select Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

UFG Insurance Appoints Julie Stephenson as New Chief Operating Officer

On January 5, 2023, the Company announced the appointment of Julie Stephenson, age 55, as Executive Vice President and Chief Operating Officer. Ms. Stephenson has over 25 years of experience in the insurance industry, most recently serving as global head of casualty reinsurance at Swiss Re. Prior to joining Swiss Re in 2021, she held the positions of chief operating officer-middle market (2019-2021) and commercial chief underwriting officer (2015-2019) at CNA Insurance and global liability manager for Chubb Insurance. She earned a bachelor’s degree in mechanical engineering from Texas A&M University. She will begin her duties as Executive Vice President and Chief Operating Officer on Monday, January 30, 2023 (the "Effective Date").

In accordance with the terms of Ms. Stephenson’s Executive Employment Offer Letter (the “Offer Letter”), Ms. Stephenson’s initial base salary will be $575,000 per year, subject to regular annual review, payable in accordance with the standard payroll practices of the Company, and subject to all withholdings and deductions, as required by law.

Pursuant to the Offer Letter and payable in March 2023, Ms. Stephenson will receive a guaranteed cash bonus in the amount of $537,000, regardless of attainment of performance measures applicable to other senior executives, to compensate her for compensation she forfeited upon separating from her prior employer. For 2023, the Offer Letter provides that Ms. Stephenson will be eligible for a cash bonus at target of 110% of base salary, pro-rated for her partial year of employment, with an opportunity to achieve up to 200% of the target cash bonus opportunity upon attainment of the maximum level in all performance metric categories established by the Company’s Board of Directors, and set forth in the Company’s anticipated 2023 annual incentive plan for its most senior management team members. The Offer Letter also provides that Ms. Stephenson is eligible for a retention bonus in the gross amount of $60,400 if she remains Chief Operating Officer of the Company through March 31, 2025, and an additional retention bonus in the gross amount of $240,000 if she remains Chief Operating Officer of the Company through March 31, 2026.

Ms. Stephenson is eligible to receive an annual equity award determined by the Board. In 2023, the Chief Executive Officer will recommend to the Company’s Board of Directors that Ms. Stephenson’s total award opportunity shall be 110% of her base salary (up to $632,500), comprising of: (i) $158,125 stock options (25%); (ii) $158,125 RSUs (25%); and (iii) $316,250 PSUs valued at target with a maximum payout opportunity of $474,375 (150% of target), prorated based on her start date with the Company. Additionally, the Company will grant Ms. Stephenson, in replacement of lost equity compensation from her prior employer, an award of restricted stock units (“RSUs”) under the United Fire Group, Inc. 2021 Stock and Incentive Plan as follows: 6,730 RSUs to vest on March 1, 2023; 3,831 RSUs to vest on March 1, 2024; the number of RSUs equivalent to CHF 125,000 (based on the actual conversion of Swiss francs to U.S. dollars as of November 25, 2022) to vest on March 31, 2024; and the number of RSUs equivalent to CHF 500,000 (based on the actual conversion of Swiss francs to U.S. dollars as of November 25, 2022) to vest on March 31, 2025.

Ms. Stephenson has also entered into the Company's standard form of Change in Control Severance Agreement for its named executive officers. The agreement, among other things, provides for: 1) an 18-month non-competition agreement and 2) in the event of both a change in control and termination of employment by the Company without cause: a) a severance benefit
payable to the named executive officer in an amount equal to 1.5 times her highest annual base salary plus target annual incentive compensation, b) the continuation of certain insurance benefits for a period of 18 months, c) the full vesting of each long-term incentive award held by the named executive officer, with any performance measures deemed satisfied at the target level, and d) certain outplacement benefits.

The above description of the Offer Letter does not purport to be complete and is qualified in its entirety by reference to the full text of the Offer Letter filed herewith as Exhibit 10.1.

Item 7.01 Regulation FD Disclosure.
On January 5, 2023, the Company issued a press release announcing the appointment of Julie Stephenson as Executive Vice President and Chief Operating Officer effective January 30, 2023. A copy of the press release is being furnished with this Current Report on Form 8-K as Exhibit 99.1.


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Item 9.01. Financial Statements and Exhibits.
(d)     Exhibits.
Exhibit 10.1
Exhibit 99.1
Exhibit 104


SIGNATURES
          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 United Fire Group, Inc.
 (Registrant)
  
Dated:January 5, 2023/s/ Kevin J. Leidwinger
 Kevin J. Leidwinger, Chief Executive Officer

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January 3, 2023 Julie Stephenson Re: Executive Employment Offer Letter Dear Ms. Stephenson, I am pleased to offer you (“Executive”) the position of Executive Vice President and Chief Operating Officer of United Fire Group, Inc. (the “Company”). The proposed terms of your employment are as follows: 1. Duties: Executive will be employed by the Company as its Executive Vice President and Chief Operating Officer. The employment of Executive will commence January 30, 2023. The Employment Agreement shall be for an indefinite term, but the employment of Executive will be “at will.” Executive will report directly to Kevin Leidwinger, CEO. Executive agrees to devote her full business time, attention, and best efforts to the performance of Executive’s duties and to the furtherance of the Company's interests. Notwithstanding the foregoing, nothing in this letter shall preclude Executive from devoting reasonable periods of time to charitable and community activities, managing personal investment assets, and serving on boards of other companies (public or private) not in competition with the Company, provided that none of these activities interferes with the performance of Executive’s duties hereunder, or creates a conflict of interest. 2. Location: Executive shall be a full-time remote employee in the State of Texas, subject to business travel as needed to properly fulfill Executive’s employment duties and responsibilities. Should Executive elect to change her principal place of residence, she agrees to provide at least one (1) month advance written notice to the Company. 3. Base Earnings: In consideration of Executive’s services, Executive will be paid an initial base salary of $575,000 per year, subject to review annually, payable semi-monthly in accordance with the standard payroll practices of the Company, and subject to all withholdings and deductions, as required by law. 4. Retention Bonus: Executive will be eligible for the following retention bonus: • If Executive remains as Chief Operating Officer through March 31, 2025, the Company shall pay Executive a retention bonus in the gross amount of $60,400 on May 1, 2025. • If Executive remains as Chief Operating Officer through March 31, 2026, the Company shall pay Executive a retention bonus in the gross amount of $240,000 on May 1, 2026. 5. Annual Bonus: During Executive’s employment, Executive will be eligible to participate in the Company's annual bonus plan on the same terms and conditions as other similarly situated executives, which are subject to the Board’s review and approval. For 2022, the CEO will recommend a $537,000 cash bonus. The CEO will also recommend to the Board that Executive's annual target bonus opportunity for subsequent years be set as $632,500 (110% of base salary), with a maximum payout opportunity of DocuSign Envelope ID: 038A6818-247C-4F0A-B9E1-F00D7E3709E9

 
$1,265,000 (200% of target bonus). Actual payments will be determined based on Company results against the applicable performance goals established by the Board. Any annual bonus with respect to a particular calendar year will be paid within 3.5 months following the end of the year. Executive must remain continuously employed through the bonus payment date to be eligible to receive an annual bonus payment for a particular calendar year. 6. Equity Grants: For each full calendar year of employment, Executive will be eligible to receive an annual equity award determined by the Board, at its discretion under the United Fire Group, Inc. Stock Plan, which shall vest as follows: (a) PSUs and RSUs—three-year cliff vest; and (b) non-qualified stock options— three-year graduated/pro rata vest. PSUs are performance stock units subject to performance goals. Actual payments of PSUs will be determined based on Company results against the applicable performance goals established by the Board. In February 2023, the CEO will recommend your eligibility to the Board to participate in the Long Term Incentive Plan (LTIP), with a total award opportunity of 110% of your base salary (up to $632,500), comprising of: (i) $158,125 stock options (25%); (ii) $158,125 RSUs (25%); and (iii) $316,250 PSUs valued at target with a maximum payout opportunity of $474,375 (150% of target), prorated based on Executive’s start date with the Company. The Board has discretion on the terms and conditions of equity grants. Executive must remain continuously employed through the vesting date for all equity awards. 7. Initial RSU Grant/Foregone Equity Compensation: The CEO will recommend that the United Fire Group, Inc. Board of Directors grant Executive 6,730 RSUs to vest on March 1, 2023; 3,831 RSUs to vest on March 1, 2024; the number of RSUs equivalent to chf 125,000 (based on the actual conversion of chf to USD as of the Executive’s resignation date from her most recent employer) to vest on March 31, 2024, and the number of RSUs equivalent to chf 500,000 (based on the actual conversion of chf to USD as of the Executive’s resignation date from her most recent employer) to vest on March 31, 2025. The intention of this grant is to provide Executive with stock awards equivalent to her foregone equity compensation from Swiss Re and CNA. Executive must remain continuously employed through the anniversary vesting date to receive shares. This equity compensation is subject to the terms and conditions of the Stock Award Agreement and the discretion of the United Fire Group, Inc. Board of Directors. 8. Stock Options: At the discretion of our Board of Directors, Executive may be awarded additional United Fire & Casualty company stock options. Any stock options awarded vest at 20% per year for five years and are valid for ten years from the date of issue. They are valued at the trading price on the date of awarding. In addition, restricted stock units may be awarded annually, based on the performance of the Company. 9. Paid Time Off (PTO): Executive will be provided with a bank of 80 hours of PTO upon the commencement of her employment, and will subsequently accrue paid time off at 10.34 hours semi-monthly in accordance with Company’s practices as determined by the Company in its discretion. This is equivalent to 31 days of PTO after a full year of service. This PTO accrual is at the maximum rate of accrual at the Company. 10. Benefits & Perquisites: Executive will be eligible to participate in the employee benefit plans and programs generally available to the Company's executives, including group medical, dental, vision and life insurance, disability benefits, 401(k), cash balance pension, and non-qualified deferred compensation plan, subject to the terms and conditions of such plans and programs. Executive will be entitled to paid vacation in accordance with the Company's policies in effect from time to time. Executive will also be entitled to the fringe benefits and perquisites that are made available to other similarly situated executives of the Company, including but not limited to a membership to a Cedar Rapids country club. DocuSign Envelope ID: 038A6818-247C-4F0A-B9E1-F00D7E3709E9

 
The Company reserves the right to amend, modify or terminate any of its benefit plans or programs at any time and for any reason. 11. Withholding: All forms of compensation paid to Executive as an employee of the Company shall be less all applicable withholdings. 12. Stock Ownership Requirements: As Chief Operating Officer of the Company, Executive will be required to comply with the Company's Stock Ownership Requirements applicable to executive officers. The targeted value for the Executive is one and a half times (1.5x) annual base salary within a time frame of five years from the employment start date, subject to increase or decrease by the Board. 13. At-Will Employment: Executive’s employment with the Company will be for no specific period. Rather, Executive’s employment will be at-will, meaning that Executive or the Company may terminate the employment relationship at any time, with or without cause, and with or without notice and for any reason or no particular reason. Although Executive’s compensation and benefits may change from time to time, the at-will nature of Executive’s employment may only be changed by an express written agreement signed by an authorized officer of the Company. 14. Change in Control: The Company will enter into a Change in Control Severance Agreement (the “CIC Agreement”) with Executive on the same terms on which it has entered into such agreements with certain other senior executives. The Company will also enter into a separate Severance Benefit Agreement providing for agreed upon severance payments to Executive if the employment of Executive is terminated without “Cause” (as defined in the CIC Agreement) prior to January 30, 2025. 15. Non-Compete, Non-Solicitation, Non-Disclosure, and Assignment of Work Product: The Employment Agreement will include normal and customary provisions relating to (i) competition with the Company and solicitation of the Company’s agents, customers and employees during the term of employment and for a period of one year thereafter, (ii) disclosure of confidential information, and (iii) assignment of work product. 16. 409A: Notwithstanding anything herein the contrary, in the event that the Company determines that any amounts payable hereunder may be subject to Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and other interpretive guidance issued with respect thereto (“Section 409A”), the Company may take such actions that the Company determines are necessary or appropriate to: (i) exempt such payments from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to such payments or (ii) comply with the requirements of Section 409A and thereby avoid the application of penalty taxes under Section 409A. 17. Company Policies: During Executive’s employment, Executive shall comply with all of the Company’s rules, regulations, policies, and practices may be designated by the Company from time to time in its discretion. 18. Execution and Delivery. This Term Sheet may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes DocuSign Envelope ID: 038A6818-247C-4F0A-B9E1-F00D7E3709E9

 
SIGNATURE PAGE FOR OFFER LETTER Executed as of the date first set forth above. UNITED FIRE GROUP, INC. By: ______________________________ Kevin Leidwinger, CEO Acknowledged and accepted effective the date first set forth above: ________________________________ Julie Stephenson DocuSign Envelope ID: 038A6818-247C-4F0A-B9E1-F00D7E3709E9

 
Contact: Casey Prince Assistant Vice President & Marketing Communications Manager UFG Corporate Communications 319-399-5622 (w), 319-360-5578 (c) cprince@unitedfiregroup.com FOR IMMEDIATE RELEASE UFG INSURANCE APPOINTS JULIE STEPHENSON AS NEW CHIEF OPERATING OFFICER CEDAR RAPIDS, Iowa - January 5, 2023 United Fire Group Inc. (Nasdaq: UFCS) (“UFG”) is pleased to announce the appointment of Julie Stephenson as its new executive vice president and chief operating officer (“COO”), effective January 30, 2023. She succeeds the company's longtime COO Michael Wilkins, who retired from UFG at the end of September. Stephenson has over 25 years of experience in the insurance industry, most recently serving as global head of casualty reinsurance at Swiss Re. Prior to joining Swiss Re in 2021, she held the positions of chief operating officer-middle market and commercial chief underwriting officer at CNA Insurance and global liability manager for Chubb Insurance. She earned a bachelor's degree in mechanical engineering from Texas A&M University. "Julie is an accomplished, people-centered leader who brings a wealth of operational, underwriting and portfolio management experience to our company," said UFG President and CEO Kevin Leidwinger. "I'm confident that she will be a strong addition to our leadership team, as well as a great cultural fit for our company. We are thrilled to have her onboard as we continue to execute our strategic plan and position UFG for long-term success." In her new role, Ms. Stephenson will be responsible for the overall operational performance of UFG, overseeing strategic efforts to drive profitable growth across the company's various business segments. "I am incredibly excited to be joining UFG, a company known for its strong core values, trusted agency partnerships and talented employees dedicated to delivering on its promises," said Stephenson. "As COO, I look forward to working alongside my new colleagues on the leadership team to pursue our strategic objectives and drive profitable growth at UFG." ###

 
About UFG Founded in 1946 as United Fire & Casualty Company, United Fire Group, Inc. (UFG, Nasdaq: UFCS), through its insurance company subsidiaries, is engaged in the business of writing property and casualty insurance. Through our subsidiaries, we are licensed as a property and casualty insurer in 50 states, plus the District of Columbia, and we are represented by approximately 1,000 independent agencies. A.M. Best Company assigns a rating of "A" (Excellent) for members of the United Fire & Casualty Group. For more information about UFG, visit ufginsurance.com. Disclosure of Forward-Looking Statements This release may contain forward-looking statements about our operations, anticipated performance and other similar matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor under the Securities Act of 1933 and the Securities Exchange Act of 1934 for forward-looking statements. The forward-looking statements are not historical facts and involve risks and uncertainties that could cause actual results to differ from those expected and/or projected. Such forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company, the industry in which we operate, and beliefs and assumptions made by management. Words such as "expect(s)," "anticipate(s)," "intend(s)," "plan(s)," "believe(s)," "continue(s)," "seek(s)," "estimate(s)," "goal(s)," "remain(s) optimistic," "target(s)," "forecast(s)," "project(s)," "predict(s)," "should," "could," "may," "will," "might," "hope," "can" and other words and terms of similar meaning or expression in connection with a discussion of future operations, financial performance or financial condition, are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Information concerning factors that could cause actual outcomes and results to differ materially from those expressed in the forward-looking statements is contained in Part I, Item 1A "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission ("SEC") on February 25, 2022. The risks identified in our Annual Report on Form 10-K and in our other SEC filings are representative of the risks, uncertainties, and assumptions that could cause actual outcomes and results to differ materially from what is expressed in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release or as of the date they are made. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.