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Incentive and Deferred Compensation Plans
 12 Months Ended
Dec. 31, 2025
Compensation Related Costs [Abstract]  
Incentive and Deferred Compensation Plans Incentive and Deferred Compensation Plans
 
We have two incentive plans and two deferred compensation plans for our executives, senior vice presidents and other selected officers, and two deferred compensation plans for our outside directors. Executives, senior vice presidents and other selected officers and key employees are also eligible to receive awards under an equity compensation plan, subject to the discretion of the Executive Compensation and Development Committee of our Board of Directors ("ECDC") or the chief executive officer.

Annual incentive plan
Our annual incentive plan ("AIP") is a bonus plan that pays cash to our executives, senior vice presidents and other selected officers annually. Participants can elect to defer up to 100% of the award under either the deferred compensation plan or the incentive compensation deferral plan. If the funding qualifier is met, plan participants are eligible to receive the award based upon attainment of corporate and individual performance measures, which can include various financial measures. The measures are established at the beginning of each year by the ECDC, with ultimate approval by the full Board of Directors. The corporate performance measures included the reported growth in direct written premium and policies in force, and statutory combined ratio of the Exchange and its property and casualty subsidiaries for all periods presented.

Long-term incentive plan
Our long-term incentive plan ("LTIP") is an incentive plan designed to reward executives, senior vice presidents and other selected officers who can have a significant impact on our long-term performance, and to further align the interests of such employees with those of our shareholders. Participants can elect to defer up to 100% of the award under the incentive compensation deferral plan.

The LTIP permits grants of performance-vesting and time-vesting awards. Performance-vesting awards can take the form of performance shares or units, or phantom performance shares, based on the level of achievement of performance goals as defined by us. Time-vesting awards can take the form of restricted shares or units, or phantom shares, including payment of dividends or dividend equivalent credits on the time-vesting awards, based on continued employment for a specified restricted period. Performance measures and a peer group of property and casualty companies to be used for comparison are determined by the ECDC for performance-vesting awards. The performance measures for all periods presented were the reported growth in direct written premium, statutory combined ratio, and return on invested assets of the Exchange and its property and casualty subsidiaries over a three-year performance period as compared to the results of the peer group over the same period. Because the performance component of the award is based upon a comparison to results of a peer group over a three-year period, the award accrual is based upon estimates of probable results for the remaining performance period. This estimate is subject to variability if our results or the results of the peer group are substantially different than the results we project. The type of award and form of payment, either in shares of our Class A common stock or cash, are determined by the ECDC at the beginning of each performance period, which is generally a three-year period. For the 2023-2025 performance period, the LTIP plan provides grants of performance-vesting awards. For the 2024-2026 and 2025-2027 performance periods, the LTIP plans provide grants of both a 75% performance-vesting award and a 25% time-vesting award. The plan awards for all three performance periods will be paid in cash.

The number of shares of our common stock authorized for grant under the LTIP is 1.5 million shares. We do not issue new shares of common stock to settle stock awards. We purchase our Class A common stock on the open market to settle stock awards under the plan. LTIP awards are considered vested at the end of each applicable performance period. The fair value of LTIP awards granting shares is measured at each reporting date at the current share price of our Class A common stock, and the fair value of LTIP awards granting units is measured at each reporting date based on the number of units earned. A liability is recorded and compensation expense is recognized ratably over the performance period.
The following table presents the fully vested plan awards for the related performance periods at December 31: (1)

(dollars in thousands)
  2025 (2)
202420232022
LTIP performance period2023-20252022-20242021-20232020-2022
Fully vested plan award fair value $2,631 $4,902 $249 $3,801 
(1)    Distributions to participants are made in June of the year following the close of the performance period.
(2)    The 2025 award is estimated based upon the peer group information as of September 30, 2025. Distributions will be made in 2026 once peer group financial information becomes available.


The following table presents the total compensation cost charged to operations related to the LTIP awards, net of forfeitures, and the related tax benefits recognized in income, for the years ended December 31:

(in thousands)202520242023
Total compensation cost$663 $1,542 $7,332 
Tax benefit $139 $324 $1,540 

The Exchange and its insurance subsidiaries reimburse us for compensation costs of employees performing administrative services. Earned compensation costs are allocated to these entities and reimbursed to us in cash once the payout is made. The Exchange and its insurance subsidiaries reimbursed us for approximately 36%, 39%, and 35% of the awards paid under these plans in 2025, 2024, and 2023, respectively. At December 31, 2025, there was $7.9 million of total unrecognized compensation cost for non-vested LTIP awards related to open performance periods, which is expected to be recognized over a period of two years.

Deferred compensation plan
Our deferred compensation plan allows executives, senior vice presidents and other selected officers to elect to defer receipt of a portion of their compensation and AIP cash awards until a later date. Employer 401(k) matching contributions that are in excess of the annual contribution or compensation limits are also credited to the participant accounts for those who elected to defer receipt of some portion of their base salary. Participants select hypothetical investment funds for their deferrals, which are credited with the hypothetical returns generated.

Incentive compensation deferral plan
We have an unfunded, non-qualified incentive compensation deferral plan for participants of the AIP and LTIP. Deferred awards will be credited to a deferred stock account as credits denominated in shares of our Class A common stock until retirement or other separation from service. Participants are 100% vested at date of deferral. We do not issue new shares of common stock to participants. We purchase shares of our Class A common stock in the open market to satisfy these awards. The shares are then held in a rabbi trust, which was established to hold the shares earned under both the incentive compensation deferral plan and the deferred stock compensation plan for outside directors. Tax withholdings on rabbi trust distributions are paid from funds outside the trust. As a result, shares withheld from distributions to satisfy those withholdings reduce the number of shares that must be purchased in the future to fund the rabbi trust for both plans. The rabbi trust is classified and accounted for as equity in a manner consistent with the accounting for treasury stock. Dividends received on the shares in the rabbi trust are used to purchase additional shares. Vested share credits will be paid to participants from the rabbi trust upon separation from service in approximate equal annual installments of Class A shares for a period of three years.

The following table presents amounts related to shares purchased by the rabbi trust to satisfy the liability of awards deferred under the plan, and dividend equivalent credits on rabbi trust shares, for the years ended December 31:

(dollars in thousands, except per share data)202520242023
LTIP performance period2022-20242021-20232020-2022
AIP performance period202420232022
Shares purchased001,608
Average price paid per share$0.00 $0.00 $230.71 
Cost of shares purchased$0 $0 $371 
Deferred compensation plans for outside directors
We have a deferred compensation plan for our outside directors that allows participants to defer receipt of a portion of their annual compensation until a later date. Participants select hypothetical investment funds for their deferrals, which are credited with the hypothetical returns generated.

We also have a deferred stock compensation plan for our outside directors to further align the interests of directors with those of our shareholders that provides for payment of a portion of the directors' annual compensation in shares of our Class A common stock. Each director vests in the grant 25% every three months over the course of a year. Dividends paid by us are credited to each director's account and vest immediately. We do not issue new shares of common stock to directors. We purchase shares of our Class A common stock in the open market to satisfy these awards, which are then held in the rabbi trust. The plan includes a maximum of 250,000 shares that may be issued under the plan and no shares may be credited later than ten years from the date our shareholders last approved the plan. The shares are distributed to the outside director from the rabbi trust upon ending board service.

The following table presents amounts related to shares purchased by the rabbi trust to satisfy the liability of the plan and dividend equivalent credits on rabbi trust shares, and the total compensation cost charged to operations, for the years ended December 31:

(dollars in thousands, except per share data)202520242023
Shares purchased774,0445,894
Average price paid per share$283.14 $405.60 $238.73 
Cost of shares purchased$22 $1,640 $1,407 
Total compensation cost$547 $1,052 $893 


The following table sets forth a reconciliation of beginning and ending balances of our deferred executive compensation liability as of December 31:
(in thousands)
202520242023
Deferred executive compensation, beginning of the year$34,595 $31,918 $25,760 
Annual incentive plan awards5,571 8,574 7,401 
Long-term incentive plan awards698 1,786 7,332 
Employer match and hypothetical earnings on deferred compensation2,962 4,680 2,828 
Total plan awards and earnings9,231 15,040 17,561 
Total plan awards paid(12,899)(8,105)(10,211)
Compensation deferred2,414 1,701 1,809 
Distributions from the deferred compensation plans(1,434)(2,372)(313)
Forfeitures (1)
(35)(244)— 
Funding of rabbi trust for deferred stock compensation plan for outside directors(22)(1,640)(1,407)
Funding of rabbi trust for incentive compensation deferral plan (2)
(400)(1,703)(1,281)
Deferred executive compensation, end of the year$31,450 $34,595 $31,918 

(1)    Forfeitures are the result of plan participants who separated from service and are recognized in the year they occur.
(2)    In 2025, 2024, and 2023, funding includes $0.4 million, $1.7 million and $0.9 million, respectively, representing shares held back to satisfy tax withholding on rabbi trust distributions that reduce funding requirements for performance award deferrals.
Equity compensation plan
Our equity compensation plan ("ECP") is designed to reward executives, senior vice presidents and other selected officers and key employees who can have a significant impact on our long-term performance, and to further align the interests of such employees with those of our shareholders. The ECP permits grants of restricted shares, restricted share units and other share based awards, to be satisfied with shares of our Class A common stock or cash. The ECDC determines the form of the award to be granted at the beginning of each performance period. The ECP allows for the grant of up to 250,000 shares of our Class A common stock, and no individual may receive more than 10,000 shares in any calendar year. We do not issue new shares of common stock to satisfy plan awards. Share awards are settled through the purchase of our Class A common stock on the open market. Restricted share awards may be entitled to receive dividends payable during the performance period, or, if subject to performance goals, to receive dividend equivalents payable upon vesting.  Dividend equivalents may provide for the crediting of interest or hypothetical investment experience, payable after expiration of the performance period. Vesting conditions are determined at the time the award is granted and may include continuation of employment for a specific period, satisfaction of performance goals within a defined performance period, and the satisfaction of any other terms and conditions as determined to be appropriate.

The following table presents amounts related to shares purchased to satisfy ECP plan liabilities and the total compensation cost charged to operations, for the years ended December 31:

(dollars in thousands, except per share data)2025
  2024 (1)
2023
Shares purchased5,21501,610
Average price paid per share$418.26 $0.00 $252.32 
Cost of shares purchased$2,181 $0 $406 
Total compensation cost (2)
$2,830 $6,895 $4,022 
(1)    No shares were required to be purchased in the open market. The plan liability was satisfied in cash totaling $3.2 million.
(2)    The fluctuations in all years are due to changes in number of participants and/or our stock price.

The Exchange and its insurance subsidiaries reimburse us for earned compensation costs of employees performing administrative services, which can fluctuate each year based on the plan participants. The Exchange and its insurance subsidiaries reimbursed us for approximately 32%, 35%, and 35% of the awards paid in 2025, 2024, and 2023 respectively. Unrecognized compensation cost at December 31, 2025 of $0.5 million is expected to be recognized in 2026.