Ohio | 1-9518 | 34-0963169 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) |
6300 Wilson Mills Road, Mayfield Village, Ohio | 44143 | |
(Address of principal executive offices) | (Zip Code) |
Not Applicable |
(Former name or former address, if changed since last report) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(1) | The provisions in the award agreements related to the eligibility for qualified retirement eligibility benefits have been expanded to apply to employees who reach the age of 60 and have 10 years of service to the company. Prior award agreements provided qualified retirement eligibility benefits to employees who reach the age of 55 with 15 years of service, and these provisions continue to apply to the 2017 awards. |
(2) | The provisions in the award agreements related to the eligibility for qualified retirement eligibility benefits were also revised to provide that, for employees of acquired entities or businesses, service prior to the company’s acquisition of the entity or business will not be included when determining whether an employee has met the years of service requirement for qualified retirement eligibility. |
(3) | The performance measure in the award granted to John F. Auer, President and Chief Executive Officer of ARX Holding Corp. (“ARX”), who received a restricted stock unit award for the first time, was different than those granted to other executive officers. Mr. Auer’s award is a performance-based award that measures the number of personal auto policies in force that are combined or “bundled” with certain personal homeowners’ insurance products written by a subsidiary of the company or by an unaffiliated carrier through a bundling program offered by the company at the end of 2017 (“Bundled Auto Policies”). A target number of units (23,931 units valued at $963,000) was awarded, and the number of units that ultimately vest, if at all, can vary from 85% of target, if Bundled Auto Policies are at least 750,000, and 150% of target, if Bundled Auto Policies are at least 1.25 million. The award will vest at 100% of target if Bundled Auto Policies are exactly 1 million. If Mr. Auer’s employment is terminated prior to the end of 2017 for any reason other than death, the award will terminate. If Mr. Auer’s employment is terminated prior to the end of 2017 as a result of death, the award will remain outstanding and will vest if, and to the extent that, the performance measure is achieved. Mr. Auer did not receive a time-based award. |
Exhibit No. Under Reg. S-K Item 601 | Form 8-K Exhibit No. | Description | ||
10 | 10.1 | Form of Restricted Stock Unit Award Agreement for 2017 Time-Based Awards under The Progressive Corporation 2015 Equity Incentive Plan | ||
10 | 10.2 | Form of Restricted Stock Unit Award Agreement for 2017 Performance-Based Awards (Performance Versus Market) under The Progressive Corporation 2015 Equity Incentive Plan | ||
10 | 10.3 | Form of Restricted Stock Unit Award Agreement for 2017 Performance-Based Awards (Investment Results) under The Progressive Corporation 2015 Equity Incentive Plan | ||
10 | 10.4 | Form of Restricted Stock Unit Award Agreement for 2017 Performance-Based Awards (Robinsons) under The Progressive Corporation 2015 Equity Incentive Plan |
(a) | Subject to the terms and conditions of the Plan and this Agreement, including the provisions of Paragraph 8 below, Participant’s rights in and to the Units shall vest, if at all, according to the following schedule (with such modifications as may be necessary or appropriate, in the Company’s sole discretion, to eliminate fractional Units from the following vesting schedule): |
(b) | Notwithstanding Paragraph 4(a) above: |
i. | If Participant’s Qualified Retirement Eligibility Date (within the meaning of Paragraph 4(b)(vi) below) occurred prior to the Grant Date, then fifty percent (50%) of each Award Installment shall vest on the Specified Date (defined below) and the remaining fifty percent (50%) of each Award Installment shall remain unvested and subject to the terms of this Agreement; |
ii. | If Participant’s Qualified Retirement Eligibility Date occurs after the Grant Date but prior to the Specified Date: |
A. | If Participant’s employment terminates as a result of a Qualified Retirement (within the meaning of Section 4(b)(v) below) prior to the Specified Date, then on Participant’s Qualified Retirement Date (within the meaning of Section 4(b)(vii) below) , fifty (50%) of each Award Installment shall vest and the remaining fifty percent (50%) of each Award Installment shall terminate automatically; |
B. | If Participant’s employment terminates for any reason other than a Qualified Retirement prior to the Specified Date, the provisions of Section 8 below shall apply to such termination; or |
C. | If Participant’s employment does not terminate prior to the Specified Date, then fifty percent (50%) of each Award Installment shall vest on the Specified Date and the remaining fifty percent (50%) of each Award Installment shall remain unvested and subject to the terms of this Agreement; and |
iii. | If Participant’s Qualified Retirement Eligibility Date occurs on or after the Specified Date but prior to any vesting date specified in Paragraph 4(a) above, then fifty percent (50%) of each unvested Award Installment shall vest on the Participant’s Qualified Retirement Eligibility Date and the remaining fifty percent (50%) of each unvested Award Installment shall remain unvested and subject to the terms of this Agreement. |
iv. | For purposes of this Paragraph 4(b), Specified Date shall mean: May 1, 2017 if the Grant Date is in March 2017; August 1, 2017 if the Grant Date is in July 2017; November 1, 2017 if the Grant Date is in October 2017; and February 1, 2018 if the Grant Date is in January 2018; and on the first day of the month that immediately follows the Grant Date if the Grant Date is at any other time; provided, however, in each case, that if no sale of Stock occurs on the New York Stock Exchange (the “NYSE”) on such date, then the next succeeding day on which the Stock is traded on the NYSE shall be the Specified Date. |
v. | For purposes of this Paragraph 4(b), “Qualified Retirement” shall mean any termination of a Participant’s employment with the Company or its Subsidiaries or Affiliates for any reason (including death, but excluding an involuntary termination for Cause) that (a) qualifies as a “separation from service” within the meaning of Section 409A, and (b) occurs on or after the first day of the calendar month in which either of the following conditions are scheduled to be satisfied: |
(A) | the Participant is 55 years of age or older and has completed at least fifteen (15) years of service as an employee of the Company or one or more of its Subsidiaries or Affiliates; or |
(B) | the Participant is 60 years of age or older and has completed at least ten (10) years of service as an employee of the Company or one or more of its Subsidiaries or Affiliates; |
vi. | For purposes of this Paragraph 4(b), “Qualified Retirement Eligibility Date” shall mean the first day of the earliest calendar month in which the Participant is scheduled to satisfy either of the age and years-of-service requirements for a Qualified Retirement as defined in Paragraph 4(b)(v) of this Agreement. |
vii. | For purposes of this Paragraph 4(b), “Qualified Retirement Date” means the date as of which Participant’s employment with the Company or its Subsidiaries or Affiliates terminates pursuant to a Qualified Retirement as defined in Paragraph 4(b)(v) of this Agreement. |
Performance vs. Market | Determination of the Number of Units Vesting |
If the Company Growth Rate exceeds the Market Growth Rate by 3.5 percentage points or more | Target Award Units x 2.50 (i.e., the Maximum Award Units) |
If the Company Growth Rate exceeds the Market Growth Rate by more than 2 but less than 3.5 percentage points | Target Award Units x (1.00 + (Company Growth Rate – Market Growth Rate – 2.00)) Example: Company Growth Rate = 2.50%; Market Growth Rate = 0.10%; Number of Units vesting will equal Target Award Units x (1.00 + (2.50 - 0.10 - 2.00)) = Target Award Units x 1.40 |
If the Company Growth Rate exceeds the Market Growth Rate by exactly 2 percentage points | Target Award Units |
If the Company Growth Rate exceeds the Market Growth Rate by less than 2 percentage points | Target Award Units x ((Company Growth Rate – Market Growth Rate) / 2.00) Example: Company Growth Rate = 2.50%; Market Growth Rate = 1.10%; Number of Units vesting will equal Target Award Units x ((2.50 – 1.10) / 2.00) = Target Award Units x 0.70 |
I. | the phrase “first opportunity to certify results” means the date which is the earlier to occur of: (i) the last day of the calendar month immediately following the month in which A.M. Best publishes the A2 Report (or, if applicable, the calendar month immediately following the month in which the successor or replacement report or data described in Subparagraph 4.d.iii.D. above is published) for the third year of the Growth Evaluation Period, or (ii) a meeting of the Compensation Committee is held at which such report or data is reviewed (whether or not a certification occurs) or a written action is executed by the Committee in lieu of such a meeting; |
II. | the term “Senior Management” means those individuals holding the following titles or positions at the time that written notice of retirement is given by such individual in accordance with Section 9(c) of this Agreement: Executive Chairman, Chief Executive Officer, and members of the Chief Executive Officer’s Direct Reporting Group; |
III. | the term “Qualified Retirement” means any termination of a Participant’s employment with the Company or its Subsidiaries or Affiliates for any reason (including death, but excluding an involuntary termination for Cause) that (a) |
(A) | the Participant is 55 years of age or older and has completed at least fifteen (15) years of service as an employee of the Company or one or more of its Subsidiaries or Affiliates; or |
(B) | the Participant is 60 years of age or older and has completed at least ten (10) years of service as an employee of the Company or one or more of its Subsidiaries or Affiliates; |
IV. | the term “Qualified Retirement Eligibility Date” means the first day of the earliest calendar month in which the Participant is scheduled to satisfy either of the age and years-of-service requirements for a Qualified Retirement as defined in Paragraph 9(d)(III) of this Agreement. |
Score = 0.00 Rank at or below | Score = 1.00 Rank equal to | Score = 2.00 Rank at or above |
25th Percentile | 50th Percentile | 75th Percentile |
i. | the term “Senior Management” means those individuals holding the following titles or positions at the time that written notice of retirement is given by such individual in accordance with Section 8(c) of this Agreement: Executive Chairman, Chief Executive Officer, and members of the Chief Executive Officer’s Direct Reporting Group; |
ii. | the term “Qualified Retirement” means any termination of a Participant’s employment with the Company or its Subsidiaries or Affiliates for any reason (including death, but excluding an involuntary termination for Cause) that (a) qualifies as a “separation from service” within the meaning of Section 409A, and (b) occurs on or after the first day of the calendar month in which either of the following conditions are scheduled to be satisfied: |
(A) | the Participant is 55 years of age or older and has completed at least fifteen (15) years of service as an employee of the Company or one or more of its Subsidiaries or Affiliates; or |
(B) | the Participant is 60 years of age or older and has completed at least ten (10) years of service as an employee of the Company or one or more of its Subsidiaries or Affiliates; |
iii. | the term “Qualified Retirement Eligibility Date” means the first day of the earliest calendar month in which the Participant is scheduled to satisfy either of the age and years-of-service requirements for a Qualified Retirement as defined in Paragraph 8(d)(ii) of this Agreement. |
1. | The firm has provided monthly data regarding its holdings and investment return, as necessary to determine or calculate such firm’s monthly total return, and to evaluate such firm’s compliance with each of the criteria set forth below, for the entire Evaluation Period; and |
2. | At all times during the Evaluation Period, the information provided by the firm shows, or Rogers Casey is able to calculate, that such firm’s investment portfolio satisfies each of the following criteria: |
3. | The Company will have no discretion to alter the Investment Benchmark list after it is finalized by Rogers Casey. |
Firm | Performance score | Total return |
Firm above PCM | .90 | 13.61 |
PCM | 13.39 | |
Firm below PCM | .89 | 13.34 |
i. | The number of personal auto policies in force included in the Company’s Agency auto and Direct auto businesses that are a part of the Company’s Personal Lines segment (“Personal Lines Auto”) and that are combined (or “bundled”) with at least one other Progressive Personal Property Insurance Product (as defined below) in force (whether issued at the same time or at different times) will be determined on the last business day of the Performance Period (the “Robinsons Bundled Policies”). For purposes of determining the Robinsons Bundled Policies: |
1. | if a policyholder has more than one personal auto policy in force, then all Progressive Personal Property Insurance Products attributable to that policyholder shall be deemed to be combined with only one of such personal auto policies in force; |
2. | all personal auto policies in force held by a policyholder and/or a policyholder’s spouse (including any policy on which any child(ren) of the policyholder and/or spouse is included) shall be treated as one policy in force; and |
3. | “Progressive Personal Property Insurance Product” shall mean any of the following personal insurance products: any personal homeowners, condominium owners or manufactured home owners insurance policy obtained by a policyholder and either underwritten by a Subsidiary or Affiliate of the Company or underwritten by an unaffiliated third party through a bundling program offered by the Company to its customers. |
ii. | If the number of Robinsons Bundled Policies is at least seven hundred fifty thousand (750,000), then the applicable calculation required by the following table will determine the number of Restricted Stock Units vesting: |
Number of Robinsons Bundled Policies | Determination of the Number of Units Vesting |
If at least 1,250,000 | Target Award Units x 1.5 (i.e., the Maximum Award Units) |
If more than 1,000,000 but less than 1,250,000 | Target Award Units x (1 + ((Number of Robinsons Bundled Policies - 1,000,000) x (0.5/250,000))) For example, if the number of Robinsons Bundled Policies is 1,100,000, then the Number of Units that will vest will be: Target Award Units x (1+((1,100,000 - 1,000,000) x (0.5/250,000))) or 1.2 Target Award Units x 1.2 |
If exactly 1,000,000 | Target Award Units |
If more than 750,000 but less than 1,000,000 | Target Award Units x (0.85 + ((Number of Robinsons Bundled Policies - 750,000) x (0.15/250,000))) For example, if the number of Robinsons Bundled Policies is 800,000, then the Number of Units that will vest will be: Target Award Units x (0.85 + ((800,000 - 750,000) x (0.15/250,000))) or Target Award Units x 0.88 |
If exactly 750,000 | Target Award Units x 0.85 |
iii. | If the number of Robinsons Bundled Policies is not at least seven hundred fifty thousand (750,000), none of the Award shall vest, and the Award shall be forfeited in its entirety. |