| Stock Options | | | 25 | | | one-third of direct compensation because we believethe options vest on each of the following to be true:a fair, reasonable and competitive base salary is essential to attract and retain strong management;
annual performance-based cash awards recognize and reward both individual achievement and the named executive officer’s role in overall Company performance; and
equity-based compensation helps our named executive officers to “think like owners” and, therefore, aligns their interests with those of our shareholders.
Base Salary
We establish base salary to recruit and retain experienced executives who can help us achieve our business goals. We determine a named executive officer’s initial base salary by considering a variety of factors, including the executive’s experience level, the responsibilities of the executive’s position, our existing compensation structure, compensation levels at peer companies, the cost of living and quality of life in the geographical area in which the executive is located and the executive’s role in maintaining a culture that values our employees. In addition, to determine increases in base salary, we consider individual and Company performance, pertinent experience with us, scope of responsibility and changes in our competitive marketplace.
Randy A. Ramlo - In establishing Mr. Ramlo’s base salary for 2015, the Compensation Committee considered the following factors when assessing his performance as CEO:
| | ◦ | Mr. Ramlo’s performance compared to his goals and objectives for 2014, which included the following: attaining specified targets relating to return on equity, written premium levels, investor visits, underwriting expense ratio and life company income; the expansion of certain business products; generating additional business from newly appointed agents in geographic areas where we are underrepresented; growing certain predetermined areas identified by the Board of Directors; increasing certain business written in our service center; establishing a new unit for specific products; establishing risk and capital statements; and establishing risk tolerance levels for presentation to our Board of Directors;
|
| | ◦ | factors that could hinder the achievement of Mr. Ramlo’s goals, including: failure to take advantage of hardening market conditions within the insurance industry; failure to successfully integrate technology initiatives while maintaining adequate security within our automation platform; failure to maintain adequate investment portfolio diversity in an attempt to generate higher investment yield; large weather events striking areas where we have heavy concentrations of insured risks; and the loss of key employees. |
| | ◦ | the Company’s performance relative to the insurance industry, with an emphasis on the performance of our peer companies; and |
| | ◦ | Mr. Ramlo’s overall performance as our President and Chief Executive Officer. |
The Compensation Committee also considered the executive compensation study and our current compensation philosophy and practices. Based on its overall assessment, the Compensation Committee recommended, and the Board of Directors approved, an increase in Mr. Ramlo’s 2015 base salary to $751,000, a 5.0% increase over 2014.
The Executive Committee meets with Mr. Ramlo throughout the year to discuss his progress toward his goals and his overall performance. At year-end, the Executive Committee and the chair of the Compensation Committee meet with Mr. Ramlo to evaluate his performance for the year; following that evaluation, the Compensation Committee conducts a final evaluation of Mr. Ramlo’s performance.
Other Named Executive Officers - Mr. Ramlo evaluated the other named executive officers’ individual performance and contributions made toward achieving the Company’s business objectives. He presented his report and salary recommendations to the Compensation Committee. The Compensation Committee considered Mr. Ramlo’s assessments and recommendations along with its own evaluations to determine the compensation for these named executive officers to be recommended to the Board of Directors:
| | ◦ | Kevin W. Helbing – Mr. Ramlo and the Compensation Committee based their evaluation of Mr. Helbing’s performance as Interim Principal Financial Officer on a number of performance and experience criteria, including timeliness and accuracy of financial reporting during the interim period; his handling of any department issues arising during the interim period; his participation in the year-end conference call; and his successful handling of investor relations calls during the interim period. Mr. Helbing’s 2015 base salary was set at $131,577, a 8.7% increase over 2014.
|
| | ◦ | Dawn M. Jaffray– Ms. Jaffray began her employment in 2015 with a base salary of $365,000. Mr. Ramlo and the Compensation Committee set her initial compensation based on a number of expectations, including timeliness and accuracy of financial reporting; exemplary audit reports; employment and management of staff to perform the internal audit function in-house; continued quality and efficiency of internal controls; growth and development in her role as Chief Financial Officer; duties related to reporting under the Securities Exchange Act of 1934; her successful management of our internal actuary and investor relations staff; her duties as liaison to our institutional investors and the investment community; and her contribution toward the attainment of our corporate return on equity goal.
|
| | ◦ | Michael T. Wilkins – Mr. Ramlo and the Compensation Committee based their evaluation of Mr. Wilkins on the following performance and experience criteria: personal lines underwriting experience; the implementation and quality of our reinsurance program in general and our catastrophe coverage in particular, including pricing negotiations; overseeing the long-term profitability of our assumed reinsurance business; evaluation and analysis of our catastrophe exposure; management of our product development and rate setting functions; maintaining industry competitiveness through the use of information technology and web-based applications; the efficiency of our information technology operations; his duties as integration leader related to information technology and cyber-security; his contribution toward the attainment of our corporate return on equity goal; and growth and development in his role as Executive Vice President. Based upon Mr. Ramlo’s report, the Compensation Committee’s overall assessment of Mr. Wilkins’ performance, the executive compensation study, and our current compensation practices, the Compensation Committee recommended, and the Board of Directors approved, an increase in Mr. Wilkins’ 2015 base salary to $452,000, a 5.9% increase over 2014.
|
| | ◦ | Barrie W. Ernst – Mr. Ramlo and the Compensation Committee based their evaluation of Mr. Ernst on the following performance and experience criteria: management of our investment portfolio during challenging economic times; maintaining adequate return on investments and cash flow management to meet our ongoing financial obligations; maintaining a net yield on investments comparable to other insurance companies similar to us in size and business model; hiring and management of various outside investment firms, including those responsible for the investments of our defined benefit pension plan; and the ability to limit our exposure to below investment grade securities as identified by the National Association of Insurance Commissioners. Based upon Mr. Ramlo’s report, the Compensation Committee’s overall assessment of Mr. Ernst’s performance, the executive compensation study, Mr. Ernst’s current compensation being in line with the market data discussed above, and our current compensation practices, the Compensation Committee recommended, and the Board of Directors approved, an increase in Mr. Ernst’s 2015 base salary to $332,000, a 3.8% increase over 2014.
|
| | ◦ | Neal R. Scharmer – Mr. Ramlo and the Compensation Committee based their evaluation of Mr. Scharmer on the following performance and experience criteria: positive management and settlement of claims and other litigation, particularly as related to large or complex losses; negotiation and review of key vendor contracts; hiring and management of various outside legal counsel used by our Company; management of outside legal expenses incurred by our Company; and hiring, development and management of our in-house legal staff. Based upon Mr. Ramlo’s report, the Compensation Committee’s overall assessment of Mr. Scharmer’s performance, the executive compensation study, our current compensation practices, and the fact that certain general counsel functions are currently performed by outside counsel, the Compensation Committee recommended, and the Board of Directors approved, an increase in Mr. Scharmer’s 2015 base salary to $290,000, a 5.5% increase over 2014.
|
The following table shows the 2015 base salary for each of our named executive officers and the 2015 market consensus based on the executive compensation study:
Base Salary Compared to Market Consensus –2015 | | | | | | | | | | | | | Name and Principal Position | | 2015 Market Consensus Base Salary | (1) | 2015 Base Salary | | Randy A. Ramlo – President/Chief Executive Officer | | $ | 756,000 |
| | | $ | 751,000 |
| | | Michael T. Wilkins – Executive Vice President/Chief Operating Officer | | 471,000 |
| | | 452,000 |
| | | Dawn M. Jaffray – Senior Vice President/Chief Financial Officer | (2) | 392,000 |
| | | 365,000 |
| | | Kevin W. Helbing – Interim Principal Financial Officer/Assistant Vice President/Controller | (2) | 130,000 |
| | | 131,577 |
| | | Barrie W. Ernst – Vice President/Chief Investment Officer | | 304,000 |
| | | 332,000 |
| | | Neal R. Scharmer – Vice President/General Counsel/Corporate Secretary | | 289,000 |
| | | 290,000 |
| |
| | (1) | 50th percentile for named executive officers as determined by CRI’s Executive Compensation Study, which used both peer group data and published survey data. |
| | (2) | Mr. Helbing was appointed to serve as interim principal financial officer until Ms. Jaffray assumed the role of principal financial officer on May 20, 2015. |
Annual Performance-Based Cash Awards
The Compensation Committee’s philosophy concerning performance-based cash awards and the application of that philosophy to determine cash-based compensation did not change from 2014. We have an annual incentive plan that provides annual performance-based cash awards to all Company employees, including all of our named executive officers, who meet minimum year of service and hours of performance standards. This plan links a portion of each employee’s annual compensation directly to our financial performance. Our objective in using the annual incentive plan is to provide a strong financial incentive for all employees to achieve critical corporate and business unit goals. To determine the amount of performance-based cash awards for each named executive officer (except Mr. Ramlo), we measured three performance indicators: corporate return on equity (“ROE”), business unit loss ratio and cost center expense ratio. Because they all work for departments that serve the entire Company, rather than specific branch office locations, the business unit loss ratio applicable to each named executive officer (except Mr. Ramlo) is the corporate loss ratio. For Mr. Ramlo, we used two performance indicators: ROE and corporate premium growth, as measured by our property and casualty insurance segment’s direct premiums written. As illustrated in the table below, we weight each performance indicator and establish threshold, target and maximum levels of performance for each performance indicator, with increasingly higher awards for attaining increasingly higher performance. Each named executive officer can receive a performance-based cash award for each performance indicator. We pay no performance-based cash award for a performance indicator if the threshold level of performance for that indicator is not attained. Attaining the highest level of performance in each of all of the applicable indicators would result in a cash award of 48.0 percent of base salary for Mr. Ramlo and 30.0 percent of base salary for our other named executive officers, except for Mr. Helbing. For Mr. Helbing, it would result in a cash award of 15.0 percent of base salary.
The Compensation Committee chose ROE as an annual incentive plan performance indicator because it believes that ROE is a good overall measure for evaluating our operating performance and that the value of our Company Common Stock is closely related to ROE performance. Accordingly, the Compensation Committee believes that achieving ROE target levels should enhance our stock value and shareholder return. In determining whether we have achieved our ROE target goal, we calculate ROE based on after-tax consolidated earnings divided by average equity. We exclude the impact of net unrealized appreciation and depreciation from our ROE calculation so that our employees are not penalized or rewarded as a result of extraordinary fluctuations in the equity and fixed income markets. The Compensation Committee chose corporate premium growth rate as an annual incentive plan performance indicator for Mr. Ramlo because premium
growth is an important goal for us. The Compensation Committee believes that organizational growth is ultimately the responsibility of the CEO.
The Compensation Committee chose business unit loss ratio and cost center expense ratio as annual incentive plan performance indicators for the other named executive officers because it believes they are good measures of our underwriting performance and overall profitability. If we keep expenses in line with guidelines established for cost center expense ratio, the Compensation Committee believes that we are more likely to achieve profitability and value for our shareholders. In determining whether we have achieved our business unit targets, the loss ratio is calculated by dividing direct premiums earned by direct losses incurred plus direct allocated loss settlement expenses paid. The cost center expense ratio is determined by dividing direct expenses by corporate premiums written.
The following table shows the 2015 performance goals for each performance indicator and the actual results for each performance indicator and relative weightings. Payments to named executive officers under our annual incentive plan were made in March 2016 for performance during 2015 and are reported in the Summary Compensation Table - 2015 of this proxy statement under the “Non-Equity Incentive Plan Compensation” column.
Annual Incentive Plan –2015
| | | | | | | | | | | | | | | | | | | 2015 Plan Goals | 2015 Annual Incentive Plan Actual Results(%) | Potential Percentage of
Total Incentive
Plan Award to
Executive
(%) | | Performance Indicators | Threshold
(%) | Target
(%) | Maximum
(%) | | Chief Executive Officer: | | | | | | | | | | | | Return on Equity | 7.0 | % | | 10.0 | % | | 13.0 | % | | 12.6 | % | | 75.0 | % | | | Corporate Premium Growth Rate | 2.5 |
| | 5.0 |
| | 7.5 |
| | 10.5 |
| | 25.0 |
| | | | | | | | | | | | | | | Other Named Executive Officers: | | | | | | | | | | | | Return on Equity | 7.0 | % | | 10.0 | % | | 13.0 | % | | 12.6 | % | | 60.0 | % | | | Business Unit Loss Ratio | 56.0 |
| | 49.0 |
| | 43.0 |
| | 49.0 |
| | 20.0 |
| | | Cost Center Expense Ratio | 3.5 |
| | 3.0 |
| | 2.5 |
| | 3.0 |
| | 20.0 |
| |
Long-Term Equity Based Awards
The Compensation Committee’s approach to long-term equity based awards remained unchanged from 2014. The Company has an equity compensation program for all of our executive officers, including our named executive officers. Long-term equity based awards are granted under the United Fire Group, Inc. Stock Plan (“Stock Plan”), which permits the issuance of both restricted stock units and stock options, among other forms of equity compensation. The Compensation Committee believes that providing a balance of restricted stock units and stock options is beneficial to us and our shareholders. The Board of Directors grants stock options and restricted stock units to our named executive officers for retention purposes and to provide compensation that encourages those executives to increase shareholder value.
The size of awards granted to named executive officers under our equity compensation program is initially tied to each executive’s base salary. Under the equity compensation program, our named executive officers are assigned to one of three “tiers.” We established five levels of performance, with increasingly higher awards for attaining increasingly higher performance. Each participant within each tier receives a proportionate share of the pool of equity awards designated annually by the Board of Directors. The size of the pool is adjusted based on our prior year’s ROE (excluding unrealized gains), so that as the ROE increases, our named executive officers can receive higher annual incentive awards and more equity. In a year when prior-year results fail to reach the threshold target, the awards are eliminated, as was the case in 2012. The ROE levels for the 2015 pool of equity awards were as follows:
ROE lower than 4%, plan participants receive no awards;
ROE between 4% and 8%, plan participants receive awards equal to 35% of the equity pool;
ROE between 8% and 12%, plan participants receive awards equal to 50% of the equity pool;
ROE between 12% and 20%, plan participants receive awards equal to 65% of the equity pool; and
ROE greater than 20%, plan participants receive awards equal to 80% of the equity pool.
Our ROE (excluding unrealized gains) for 2015 was 12.6%, resulting in plan participants receiving awards equal to 65% of the equity pool in 2016 for 2015 performance.
Company-Sponsored Benefit Plans
We believe the insurance and retirement benefit plans we sponsor are an important part of fair and reasonable compensation for all of our employees, including our named executive officers. We design these benefit plans to attract and retain a strong employee base, to provide a measure of financial security for our employees and to assist our employees in providing for their own financial security in a manner that recognizes individual needs and preferences. We also provide these programs because we believe that employees who have a plan for health and financial security are better employees. We apply these programs equally to all employees. Our benefit plans consist of an insurance plan that provides health, vision, dental, disability and basic term life insurance coverage and various retirement plans.
Deferred Compensation Plans
On May 21, 2014, the Company’s Board of Directors and the Board of Directors of its subsidiary, United Fire & Casualty Company (“UFC”), each adopted an Executive Nonqualified Excess Plan (“Excess Plan”) which covers certain officers of the Company (who are all employees of UFC), including our named executive officers other than Mr. Helbing. The Excess Plan is an unfunded, nonqualified deferred compensation plan pursuant to which the Company is authorized to make discretionary, matching contributions to participants’ accounts at a three-to-one match, up to 25 percent of a participant’s salary. The Company’s discretionary, matching contributions remain unvested for a period of time and require a matching contribution from the officer. The Compensation Committee established the terms of the Excess Plan based on a review of similar plans and standards within the industry. We believe that requiring the participating officers to have a meaningful stake in the plan aligns their goals and interests with the Company’s performance.
We also maintain a nonqualified deferred compensation plan for certain officers, including our named executive officers. We use this plan to provide eligible executives the opportunity to plan and supplement their retirement income by deferring receipt of a portion of their base salary and/or annual performance-based cash award.
We offer these plans to provide our named executive officers with security and the ability to plan for their financial futures. The Compensation Committees believes that these plans benefit the Company by allowing us to attract and retain key talent while at the same time encouraging our named executive officers to focus on corporate goals and the creation of shareholder value.
Perquisites
We do not rely upon perquisites as a method of providing significant compensation to any of our employees, preferring instead to use direct compensation and incentive plans. We provide only those perquisites that are related to our business or that we believe are necessary to attract and retain key executive personnel. For 2015, we paid for temporary lodging and relocation expenses for Ms. Jaffray and country club dues for three of our named executive officers so they have a club available for business entertainment on our behalf. Perquisites and other personal benefits paid to a named executive officer are reported in the "All Other Compensation" column of the Summary Compensation Table under the Report of Compensation Committee.
For security reasons, our Board of Directors requires Mr. Ramlo to use our corporate aircraft for business travel whenever it is practical to do so. We expect our other named executive officers to use our corporate aircraft for business travel whenever it is reasonable to do so. Occasionally, a spouse or other guest may accompany executive officers on corporate aircraft when the aircraft is already scheduled for business purposes and can accommodate additional passengers. In those cases, there is no aggregate incremental cost to the Company. However, under Internal Revenue Service regulations, we are required to treat a spouse or guest's use as personal use. Accordingly, we reported the value of this travel as ordinary income to the applicable employee. We permit Mr. Ramlo to use our corporate aircraft for personal travel and under limited circumstances directors and executive officers may be permitted to use the aircraft for personal use as well.
Annual Compensation Process
Role of Management
Our Chief Executive Officer has a key role in determining compensation levels for all named executive officers other than his own. He directs the collection and compilation of data for consideration by the Compensation Committee. Guided by the principles discussed under Compensation and Benefits Philosophy, our Chief Executive Officer:identifies appropriate performance measures and recommends to the Compensation Committee performance targets that the Compensation Committee and the Board of Directors may use to determine annual and long-term incentive awards;
develops compensation guidelines for each named executive officer position other than his own;
annually recommends to the Compensation Committee the base salary for each executive position other than his own; and
briefs each named executive officer on the performance goals and stock ownership guidelines established for that executive’s position.
Role of the Compensation Committee and the Board of Directors
The Compensation Committee and the Board of Directors refer to the principles discussed under Compensation and Benefits Philosophy to guide them in determining and implementing compensation programs for our named executive officers. For named executive officers other than our Chief Executive Officer, the Compensation Committee receives and reviews Mr. Ramlo’s recommendations as described above and makes recommendations to the full Board of Directors. The full Board of Directors then acts on these recommendations to set the compensation of our named executive officers.The Compensation Committee and the Board of Directors take the following steps to approve the compensation of our Chief Executive Officer:
The Compensation Committee identifies appropriate performance measures.
| | • | The Compensation Committee considers the compensation principles discussed under the heading Compensation and Benefits Philosophy as well as each of the Company’s compensation elements, and reviews market data from the executive compensation study. Based on that consideration and review, it annually recommends to the Board of Directors the base salary, annual incentive compensation and long-term incentive awards for our Chief Executive Officer. The Board of Directors reviews and considers the proposals of the Compensation Committee and makes its final determination based on what it believes to be in the interests of the Company and our shareholders. |
Role of Independent Consultants
Under its charter, the Compensation Committee, in its sole discretion, has the authority, resources and funds necessary to retain or obtain the advice of outside advisers, including independent compensation advisers, legal counsel and other advisers and experts. Prior to retaining or obtaining advice from such outside advisers, the committee evaluates their independence by reference to the NASDAQ Listing Rules.
During 2015, the Compensation Committee engaged CRI to advise it on compensation matters for our named executive officers. CRI reported directly to the Compensation Committee and provided services related to named executive officer compensation. Management did not participate in the selection process and did not recommend CRI, nor did management participate in specific matters assigned to CRI by the Compensation Committee. Although particular assignments may vary, compensation consultant engagements by the Compensation Committee have generally included:
reviewing and advising on all principal aspects of compensation for named executive officers, including base salaries, equity awards and annual incentive plan awards for named executive officers;
reviewing and advising the Compensation Committee on compensation for non-employee directors; and
providing advice and input to the Compensation Committee on the identification and selection of appropriate peer companies.
The Compensation Committee engaged CRI during 2015 to assist in evaluating our peer groups and to advise the Compensation Committee generally on compensation matters related to the compensation programs of our named
executive officers.
Compensation Consultant Independence
The Compensation Committee carefully considers the independence of the consultants it hires prior to engagement. To maintain the independence of the compensation consultant, the Compensation Committee has the sole authority to retain or terminate CRI. In connection with its engagement of CRI, the Committee considers various factors bearing upon CRI’s independence including, but not limited to, the amount of fees received by CRI from the Company as a percentage of CRI’s total revenue, CRI’s policies and procedures designed to prevent conflicts of interest, and the existence of any business or personal relationship with a member of the Compensation Committee or management that could impact CRI’s independence. After reviewing these and other factors, the Committee determined that CRI was independent and that its engagement did not present any conflicts of interest.
Named Executive Officers as Shareholders
We believe that ownership of Company Common Stock by our executive officers, including our named executive officers, promotes the alignment of their interests with those of our Company and our shareholders. A Board of Directors policy sets forth guidelines for stock ownership by certain of our executive officers, including our named executive officers. These guidelines include target levels of stock ownership for each covered executive officer. The goal of these guidelines is to have our executive officers, including our named executive officers, hold a meaningful stake in our Company.
The following table shows the target number of shares to be owned by each named executive officer and each named executive officer’s share ownership as of March 18, 2016:
| | | | | | | | | | | Name | Tier (1) | Target Number of Shares of Common
Stock to be Held (2) | | Number of Qualifying Shares of Common Stock Held at Record Date | | Randy A. Ramlo | 3 | 49,895 |
| | | 50,699 |
| | | Michael T. Wilkins | 2 | 22,348 |
| | | 31,963 |
| | | Dawn M. Jaffray | —(4) | — |
| | | — |
| | | Kevin W. Helbing | —(3) | — |
| | | — |
| | | Barrie W. Ernst | 1 | 11,165 |
| | | 20,478 |
| | | Neal R. Scharmer | 1 | 9,595 |
| | | 14,753 |
| |
| | (1) | Equity ownership targets for Mr. Ramlo as a Tier 3 executive were calculated as the number of shares equal to two times his base salary on January 1, 2014 divided by the closing price of Company Common Stock on December 31, 2013. Equity ownership targets for Michael T. Wilkins in Tier 2 were calculated as the number of shares equal to one and one half times his base salary on January 1, 2014 divided by the closing price of Company Common Stock on December 31, 2013. Equity ownership targets for executive officers in Tier 1 were calculated as the number of shares equal to their base salary on January 1, 2014 divided by the closing price of our Company Common Stock on December 31, 2013. |
| | (2) | Shares held either directly or indirectly and any shares of restricted stock units ("RSU") (whether vested or unvested) held by the named executive officer are counted toward the target number of shares. Any unexercised stock options (whether vested or unvested) held by the named executive officer are not counted toward the target number of shares. The target number of shares are the number of shares to be held by the named executive officer by December 31, 2019, or within five years of becoming subject to United Fire's stock ownership guidelines for officers, whichever is later. |
| | (3) | Due to his interim status, Mr. Helbing was not assigned a tier group or target number of shares of Company Common Stock to hold. |
| | (4) | The Board of Directors policy for stock ownership guidelines was adopted in November 2014, prior to Ms. Jaffray's employment. Accordingly, Ms. Jaffray was not assigned a tier group or a target number of shares of Company Common Stock to hold. |
REPORT OF THE COMPENSATION COMMITTEE
March 2016
The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s annual proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
Compensation Committee
Mary K. Quass, Chair
Scott L. Carlton
Casey D. Mahon
James W. Noyce
Susan E. Voss
Summary Compensation Table – 2015
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Option Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) (3) | All Other Compensation ($) | Total ($) | | Randy A. Ramlo | 2015 |
| $ | 751,000 |
| $ | — |
| $ | 243,764 |
| $ | 243,762 |
| $ | 322,930 |
| $ | 8,449 |
| $ | 239,324 |
| (4) | $ | 1,809,229 |
| | President / Chief Executive Officer | 2014 |
| 715,000 |
| — |
| 270,961 |
| 270,971 |
| 214,500 |
| 6,184 |
| 239,734 |
| | 1,717,350 |
| | 2013 |
| 595,000 |
| — |
| 127,084 |
| 122,704 |
| 258,400 |
| 6,341 |
| 10,256 |
| | 1,119,785 |
| Kevin W. Helbing (5) | 2015 |
| 131,577 |
| 90,000 |
| — |
| 12,420 |
| 24,342 |
| 2,261 |
| 1,469 |
| (6) | 262,069 |
| | Interim Principal Financial Officer / AVP / Controller | 2014 |
| 120,994 |
| — |
| — |
| 22,868 |
| 12,656 |
| 2,025 |
| 1,399 |
| | 157,917 |
| | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | — |
| Dawn M. Jaffray (5) | 2015 |
| 241,846 |
| — |
| — |
| — |
| 94,900 |
| — |
| 22,600 |
| (7) | 359,346 |
| | Senior Vice President / Chief Financial Officer | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | — |
| | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| | — |
| | Michael T. Wilkins | 2015 |
| 452,000 |
| — |
| 119,887 |
| 119,886 |
| 117,520 |
| 6,573 |
| 101,457 |
| (8) | 917,323 |
| | Executive Vice President/ Chief Operating Officer | 2014 |
| 427,000 |
| — |
| 146,096 |
| 146,087 |
| 64,050 |
| 5,490 |
| 96,626 |
| | 885,349 |
| | 2013 |
| 388,600 |
| — |
| 68,286 |
| 65,925 |
| 104,676 |
| 6,015 |
| 7,044 |
| | 640,546 |
| | Barrie W. Ernst | 2015 |
| 332,000 |
| — |
| 70,587 |
| 70,589 |
| 86,320 |
| 5,471 |
| 39,053 |
| (9) | 604,020 |
| | Vice President / Chief Investment Officer | 2014 |
| 320,000 |
| — |
| 86,965 |
| 86,951 |
| 48,000 |
| 5,240 |
| 39,228 |
| | 586,384 |
| | 2013 |
| 305,000 |
| — |
| 46,315 |
| 44,706 |
| 79,300 |
| 5,060 |
| 11,448 |
| | 491,829 |
| | Neal R. Scharmer | 2015 |
| 290,000 |
| — |
| 60,657 |
| 60,664 |
| 75,400 |
| 10,304 |
| 2,632 |
| (10) | 499,657 |
| | Vice President / General Counsel / Secretary | 2014 |
| 275,000 |
| — |
| 73,551 |
| 73,551 |
| 33,000 |
| 9,433 |
| 2,519 |
| | 467,054 |
| | 2013 |
| 250,000 |
| — |
| 34,646 |
| 33,457 |
| 64,500 |
| 9,019 |
| 835 |
| | 392,457 |
|
| | (1) | Amounts in this column represent the aggregate grant date fair value for options and restricted stock units issued during 2015, 2014 and 2013. Amounts in this column are calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation. To calculate the option amounts we use the Black-Scholes option pricing model. This model estimates the fair value of traded options, which have different characteristics than employee stock options. Changes to the subjective assumptions used in the model can result in materially different fair value estimates. |
For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
| | (2) | All employees are eligible to participate in our annual performance-based cash award plan if they (a) have worked for us for at least twelve months, (b) have 1,000 hours of service during the calendar year and (c) are in our employ at the time the cash awards for that year are paid. The amounts shown in this column are those amounts earned by the executive for the year shown. These amounts were determined and paid in the subsequent year. For example, any non-equity incentive plan awards shown for 2015 were earned in 2015, but determined and paid in 2016.
|
| | (3) | The 2015 amount in this column for Mr. Ramlo represents $6,038 change in accrued pension benefit and $2,411 in above market deferred compensation earnings. The 2015 amount in this column for Mr. Helbing represents his change in accrued pension benefit. The 2015 amount in this column for Mr. Wilkins represents $5,875 change in accrued pension benefit and $698 in above market deferred compensation earnings. The 2015 amount in this column for Mr. Ernst represents $4,864 change in accrued pension benefit and $607 in above market deferred compensation earnings. The 2015 amount in this column for Mr. Scharmer represents $9,834 change in accrued pension benefit and $470 in above market deferred compensation earnings.
|
| | (4) | The 2015 amount in this column for Mr. Ramlo includes: (a) $6,304 in country club dues paid on Mr. Ramlo’s behalf; (b) $1,500 in premiums for a Company-sponsored life insurance policy for Mr. Ramlo’s benefit; (c) $420 in parking subsidy for our Company parking ramp; (d) $780 in allocation under our Employee Stock Ownership Plan (ESOP balances were transferred to the 401(k) Plan in 2015); (e) $229,027 in unvested Restoration Benefit Credits contributed by the Company to our Executive Nonqualified Excess Plan on Mr. Ramlo's behalf; and (f) $1,294 in additional income due to personal use of the Company’s airplane.
|
| | (5) | Mr. Helbing served as Interim Principal Financial Officer from November 14, 2014 through May 20, 2015. Mr. Helbing was not a named executive officer of the Company prior to 2014. Ms. Jaffray assumed the position of Senior Vice President and Chief Financial Officer on May 20, 2015. |
| | (6) | The 2015 amount in this column for Mr. Helbing includes: (a) $726 in premiums for a Company-sponsored life insurance policy for Mr. Helbing’s benefit; (b) $323 in allocation under our Employee Stock Ownership Plan (ESOP balances were transferred to the 401(k) Plan in 2015); and (c) $420 in parking subsidy for our Company parking ramp.
|
| | (7) | The 2015 amount in this column for Ms. Jaffray includes: (a) $1,000 in premiums for a Company-sponsored life insurance policy for Ms. Jaffray’s benefit; (b) $6,818 for relocation expenses; (c) $280 in parking subsidy for our Company parking ramp; (d) $13,251 in unvested Restoration Benefit Credits contributed by the Company to our Executive Nonqualified Excess Plan on Ms. Jaffray’s behalf; and (e) $1,251 in additional income due to personal use of the Company’s airplane.
|
| | (8) | The 2015 amount in this column for Mr. Wilkins includes: (a) $10,159 in country club dues paid on Mr. Wilkins’ behalf; (b) $1,500 in premiums for a Company-sponsored life insurance policy for Mr. Wilkins’ benefit; (c) $420 in parking subsidy for our Company parking ramp; (d) $780 in allocation under our Employee Stock Ownership Plan (ESOP balances were transferred to the 401(k) Plan in 2015); (e) $86,096 in unvested Restoration Benefit Credits contributed by the Company to our Executive Nonqualified Excess Plan on Mr. Wilkins behalf; and (f) $2,502 in additional income due to personal use of the Company’s airplane. |
| | (9) | The 2015 amount in this column for Mr. Ernst includes: (a) $9,126 in country club dues paid on Mr. Ernst’s behalf; (b) $1,500 in premiums for a Company-sponsored life insurance policy for Mr. Ernst’s benefit; (c) $420 in parking subsidy for our Company parking ramp; (d) $780 in allocation under our Employee Stock Ownership Plan (ESOP balances were transferred to the 401(k) Plan in 2015); and (e) $27,227 in unvested Restoration Benefit Credits contributed by the Company to our Executive Nonqualified Excess Plan on Mr. Ernst's behalf. |
| | (10) | The 2015 amount in this column for Mr. Scharmer includes: (a) $1,500 in premiums for a Company-sponsored life insurance policy for Mr. Scharmer’s benefit; (b) $712 in allocation under our Employee Stock Ownership Plan (ESOP balances were transferred to the 401(k) Plan in 2015); and (c) $420 in parking subsidy for our Company parking ramp.
|
GRANTS OF PLAN-BASED AWARDS
The Board of Directors has adopted a written policy regarding the issuance of options under the Stock Plan. This policy provides that all options shall be issued at regularly scheduled meetings of the Board of Directors and that the exercise price for options issued under the Stock Plan shall be the closing market price on the option grant date.
Options granted to our named executive officers by our Board of Directors under the Stock Plan have the following characteristics:
Options vest 20 percent each year on the first five anniversaries of the grant date. Options vest immediately if we enter into an agreement to dispose of all or substantially all of our assets or capital stock. The Board of Directors has the authority under the Stock Plan to accelerate vesting of stock options in other circumstances at its discretion.
Options expire on the sooner of:
ten years after the option grant date;
one year after termination of employment for reason of death or disability; or
30 days after the termination of employment for any reason other than death or disability, unless extended by the Board of Directors for up to one year after termination of employment.
The exercise price is the closing market price for Company Common Stock on the option grant date.
The following table shows the plan-based awards granted to the named executive officers during 2015.
Grants of Plan-Based Awards –2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts under Non-Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units | All Other Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards | Grant Date Fair Value of Stock and Option Award | | | | Grant Date | Threshold | Target | Maximum | | Name | Plan Name | ($) (1) | ($) (2) | ($) (3) | (#) (4) | (#) (5) | ($ / Sh) | ($) (6) | | Randy A. Ramlo | Stock Plan | 2/20/2015 | |
| |
| |
| 8,371 |
| | | $ | 243,764 |
| | | Stock Plan | 2/20/2015 | | | | | 49,067 |
| $ | 29.12 |
| 243,762 |
| | | Annual Incentive Plan | N/A (7) | $ | 180,240 |
| $ | 300,400 |
| $ | 360,480 |
| | | | | | Kevin W. Helbing | Stock Plan | 2/20/2015 | | | | — |
| | | — |
| | | Stock Plan | 2/20/2015 | | | | | 2,500 |
| 29.12 |
| 12,420 |
| | | Annual Incentive Plan | N/A (7) | 13,816 |
| 23,026 |
| 27,631 |
| | | | | | Dawn M. Jaffray | Stock Plan | 2/20/2015 | | | | — |
| | | — |
| | | Stock Plan | 2/20/2015 | | | | | — |
| — |
| — |
| | | Annual Incentive Plan | N/A (7) | 54,750 |
| 91,250 |
| 109,500 |
| | | | | | Michael T. Wilkins | Stock Plan | 2/20/2015 | | | | 4,117 |
| | | 119,887 |
| | | Stock Plan | 2/20/2015 | | | | | 24,132 |
| 29.12 |
| 119,886 |
| | | Annual Incentive Plan | N/A (7) | 67,800 |
| 113,000 |
| 135,600 |
| | | | | | Barrie W. Ernst | Stock Plan | 2/20/2015 | | | | 2,424 |
| | | 70,587 |
| | | Stock Plan | 2/20/2015 | | | | | 14,209 |
| 29.12 |
| 70,589 |
| | | Annual Incentive Plan | N/A (7) | 49,800 |
| 83,000 |
| 99,600 |
| | | | | | Neal R. Scharmer | Stock Plan | 2/20/2015 | | | | 2,083 |
| | | 60,657 |
| | | Stock Plan | 2/20/2015 | | | | | 12,211 |
| 29.12 |
| 60,664 |
| | | Annual Incentive Plan | N/A (7) | 43,500 |
| 72,500 |
| 87,000 |
| | | | |
| | (1) | We estimate the amounts shown in this column by assuming the achievement of the threshold level for the lowest weighted performance indicator used in our Annual Incentive Plan and by multiplying 2015 base salary by 24.0 percent for Mr. Ramlo; 15.0 percent for Ms. Jaffray and Messrs. Wilkins, Ernst and Scharmer, and 10.5 percent for Mr. Helbing.
date | |
| | (2) | We estimate the amounts shown in this column by assuming the achievement of target levels for all applicable performance indicators used in our Annual Incentive Plan and by multiplying 2015 base salary by 40.0 percent for Mr. Ramlo; 25.0 percent for Ms. Jaffray and Messrs. Wilkins, Ernst and Scharmer; and 17.5 percent for Mr. Helbing.
|
| | (3) | We estimate the amounts shown in this column by assuming the achievement of maximum levels for all applicable performance indicators used in our Annual Incentive Plan and by multiplying 2015 base salary by 48.0 percent for Mr. Ramlo; 30.0 percent for Messrs. Wilkins, Ernst and Scharmer; and 21.0 percent for Mr. Helbing.
|
| | (4) | The restricted stock unit ("RSU") awards represented in this column vest 100 percent on the fifth anniversary of the grant date, provided the named executive officer remains employed through the vesting date. |
| | (5) | Option awards represented in this column vest 20.0 percent each year for five years beginning with the first anniversary of the grant date, provided the named executive officer remains employed through the applicable vesting date. |
| | (6) | Amounts in this column represent the aggregate grant date fair value for option and restricted stock awards granted during 2015, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation. To calculate the option amounts, we use the Black-Scholes option pricing model. This model estimates the fair value of traded options, which have different characteristics than employee stock options. Changes to the subjective assumptions used in the model can result in materially different fair value estimates. For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company’s Annual Report on From 10-K for the year ended December 31, 2015.
|
| | (7) | There is no specific grant date for awards under our Annual Incentive Plan. We pay awards based on our 2015 performance during the first quarter of 2016. Please see Compensation Discussion and Analysis in this proxy statement for further information regarding the Annual Incentive Plan. Actual amounts paid to each named executive officer under our Annual Incentive Plan for 2015 are shown in the Summary Compensation Table – 2015 in this proxy statement and were calculated based on each individual's base salary for 2015. |
The following table details the outstanding equity awards held by each of our named executive officers as of December 31, 2015. Ms. Jaffray is not included in the table because she had no outstanding equity awards as of December 31, 2015.Grant Type Allocation PSUs — The PSUs are: •
earned over a three-year performance period, subject to continued employment; •
earned only to the extent that goals are achieved among two separate, equally weighted, performance measures tied to our 2022 Vision performance milestones relating to profit and our GAAP combined ratio; and •
settled shares of Company Common Stock with vesting between 0% and 150% of the target award based upon the results achieved. RSUs — The RSUs “cliff” vest of the third anniversary of the grant date and are settled into an equivalent number of shares of Company Common Stock, in each case, generally subject to the executive remaining employed by us through the vesting date. The purpose of the awards is to encourage shareholder alignment, long-term value creation and executive retention. Additionally, because RSUs do not vest for three years, they encourage executive retention. Stock Options — Each option has a ten-year term and, provided the executive remains employed by us through such dates, vests as to one-third of the options on each of the first three anniversaries of the grant date. Stock options directly align with our stock performance since they become valuable only if and to the extent the share price increases after the date of grant. Additionally, because stock options do not fully vest for three years, they encourage executive retention. Performance Measure Selection PSU performance measures are tied to our 2022 Vision performance milestones relating to profit and our GAAP combined ratio. These goals were selected because they are viewed as key indicators of our successful operation of our long-term operating plan. PSU performance goals are measured over a three-year performance period. •
Adjusted ROE (Three-Year Average). The Compensation Committee chose Adjusted ROE as an LTIP performance measure because ROE is viewed as a key performance indicator in our industry and is watched closely by investors. Since Adjusted ROE is a function of both income and shareholders’ equity, it encourages management to focus on objectives that are important for creating shareholder value, including the quality and profitability of our underwriting activities and capital management, and discourages excessive risk-taking. •
GAAP Combined Ratio (Three-Year Average). The Compensation Committee chose GAAP Combined Ratio as an LTIP performance measure because we believe it culminates book performance and assists with ROE for shareholder return, and also integrates expense monitoring.
Goal-Setting Process The Compensation Committee annually reviews the threshold, target and maximum goals for each performance measure of the PSUs in order to evaluate whether they remain rigorous and aligned with shareholder interests. Management presents recommendations to the Compensation Committee regarding the goals, but the Compensation Committee retains the ultimate decision-making authority to set the goals. The performance goals established for the 2022 PSU grant were designed to be challenging, but achievable, given the economic and market conditions at the time the goals were set, with vesting at the maximum goal designed to be difficult. 2022 Grant The 2022 target award opportunities and allocation to each grant type for our participating named executive officers are summarized below. The target award opportunities for Messrs. Leidwinger and Martin were determined at the time of their hiring and were based on peer company compensation for Chief Executive Officers and Chief Financial Officers, respectively, as well as internal pay equity and the level of compensation needed to recruit them to join the Company. LTIP Grant — 2022 | Named Executive Officer | | | Total Stock Award ($) | | | PSUs ($)(1) | | | RSUs ($) | | | Stock Options ($) | | | Kevin J. Leidwinger | | | | | 403,776 | | | | | | 201,880 | | | | | | 100,955 | | | | | | 100,941 | | | | Eric J. Martin | | | | | 267,195 | | | | | | 133,597 | | | | | | 66,799 | | | | | | 66,799 | | | | Robert F. Cataldo | | | | | 200,000 | | | | | | 100,000 | | | | | | 50,000 | | | | | | 50,000 | | | | Jeremy J. Bahl | | | | | 125,000 | | | | | | 62,500 | | | | | | 31,250 | | | | | | 31,250 | | | | Micah Woolstenhulme | | | | | 175,000 | | | | | | 87,500 | | | | | | 43,750 | | | | | | 43,750 | | | | Randy A. Ramlo | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | Randy L. Patten(2) | | | | | 3,010 | | | | | | — | | | | | | 3,010 | | | | | | — | | | | Michael T. Wilkins | | | | | 318,951 | | | | | | 159,384 | | | | | | 79,677 | | | | | | 79,890 | | |
(1)
The amount for PSUs is shown at target. Pursuant to the terms of his Executive Employment Offer Letter, Mr. Leidwinger’s 2022 PSU awards will have a guaranteed minimum vesting level equal to the target amount. (2)
Mr. Patten forfeited his 2022 RSU award upon his resignation in July 2022. 2020 PSU Grant The 2020 PSU grant vested based on performance from January 1, 2020 through December 31, 2022 and service through February 21, 2023. Based on performance against the pre-established performance goals, the 2020 grant vested at 51.1% of target. LTIP PSU Goals and Achievement — 2020 Grant | | | | LTIP PSU Goals | | | Achievement | | | Performance Measures | | | Threshold | | | Target | | | Maximum | | | Result | | | % of Target | | | Adjusted ROE | | | | | 3% | | | | | | 6% | | | | | | 9% | | | | | | (1.1)% | | | | | | 0.0% | | | | Premium Growth Rate | | | | | 0% | | | | | | 3% | | | | | | 6% | | | | | | (2.1)% | | | | | | 0.0% | | | OCI® Score | | | | | 1690 | | | | | | 1890 | | | | | | 2090 | | | | | | 1,917 | | | | | | 106.8% | | | | DCC Score | | | | | 890 | | | | | | 990 | | | | | | 1090 | | | | | | 985 | | | | | | 97.5% | | |
Patten RSU Grants In February 2022, upon the recommendation of Mr. Ramlo, the Compensation Committee granted special RSU awards with a target grant date fair value of $3,000 each, to certain employees based on their
2021 performance, including Mr. Patten. These RSUs were scheduled to vest in February 2025, subject to Mr. Patten’s continued employment through the vesting date. Mr. Patten forfeited his RSU grant upon his resignation. Additional Compensation Leidwinger Appointment Pursuant to Mr. Leidwinger’s Executive Employment Offer Letter (the “Leidwinger Offer Letter”) that was provided to him in connection with his commencement as our President and Chief Executive Officer, Mr. Leidwinger was granted an initial RSU award with respect to 17,500 shares, vesting as follows: (i) with respect to 5,834 shares upon the commencement of his employment with the Company; (ii) with respect to 5,833 shares on December 31, 2023; and (iii) with respect to 5,833 shares on December 31, 2024, subject to his continued employment through each such vesting date. Martin Appointment Pursuant to Mr. Martin’s Executive Employment Offer Letter (the “Martin Offer Letter”) that was provided to him in connection with his commencement as our Chief Financial Officer, Mr. Martin is eligible for a retention bonus payable in June 2023, 2024 and 2025 in the amounts of $10,000, $20,000 and $30,000, respectively, subject to his continued employment through April 1, 2023, 2024 and 2025, respectively. Pursuant to the Martin Offer Letter, the Board of Directors also granted RSUs to Mr. Martin with respect to 10,000 shares, which are scheduled to vest 60% on the one-year anniversary of Mr. Martin’s start date and 40% on the two-year anniversary of his start date, subject to his continued employment through each vesting date. Ramlo Retirement In anticipation of Mr. Ramlo’s retirement in October 2022, he and the Company entered into a Retirement Agreement in July 2022 (the “Ramlo Retirement Agreement”), pursuant to which (1) the Company agreed to continue paying Mr. Ramlo his base salary and provide regular employee benefits through his retirement on October 31, 2022 (the “Ramlo Retirement Date”), and on the Ramlo Retirement Date would pay Mr. Ramlo for his accrued paid time off, if any, consistent with the Company’s standard practices with respect to terminating employees; (2) Mr. Ramlo remained eligible for his 2022 bonus under the AIP, based on actual performance and prorated for his partial year of employment during 2022; and (3) all unvested RSUs and stock options held by Mr. Ramlo vested on the Ramlo Retirement Date and the exercise period on all stock options held by Mr. Ramlo was extended to October 31, 2024. As described above, Mr. Ramlo did not receive any equity awards in 2022 and all unvested PSUs held by Mr. Ramlo lapsed and were terminated as of the Ramlo Retirement Date. Wilkins Retirement In August 2022, Mr. Wilkins notified the Company of his intention to retire, effective September 30, 2022 (the “Wilkins Retirement Date”). In connection with Mr. Wilkins’ planned retirement, the Company and Mr. Wilkins agreed that Mr. Wilkins would continue to be paid his base salary and that all of his employee benefits would continue through the Wilkins Retirement Date. Subject to his not voluntarily terminating his employment or being terminated for cause (as defined in Mr. Wilkins’ Change in Control Severance Agreement) prior to the Wilkins Retirement Date, Mr. Wilkins (i) received a retention bonus of $50,000, which was payable within 30 days following the Wilkins Retirement Date; and (ii) was entitled to be paid his bonus for 2022 under the AIP, based on actual performance and prorated for his partial year of employment. In addition, all unvested RSUs and stock options held by Mr. Wilkins fully vested on the Wilkins Retirement Date and the exercise period on his stock options was extended to September 30, 2024. All unvested PSUs held by Mr. Wilkins lapsed and were terminated upon his retirement. Woolstenhulme Retention Awards Pursuant to the terms of his 2019 offer letter, Mr. Woolstenhulme was entitled to a $50,000 retention bonus and related tax reimbursement in 2022, subject to his continued employment through March 30,
2022. Mr. Woolstenhulme is also entitled to receive a $50,000 retention bonus in 2023 subject to his continued employment through March 30, 2023. In addition, in May 2022, the Company granted to Mr. Woolstenhulme a retention RSU award with a target grant date fair value of $150,000, which will vest in full on May 18, 2025, subject to his continued employment through such date. Patten Special Compensation As described above, prior to his resignation in July 2022, Mr. Patten did not participate in the Company’s standard executive compensation program. In February 2022, Mr. Patten received a retention bonus of $15,000. Also in February, 2022, Mr. Ramlo recommended, and the Compensation Committee approved, a supplemental cash award to Mr. Patten, pursuant to which he would be paid $20,000 on April 15, 2022 and December 31, 2022, subject to his continued service through each such date. Mr. Patten forfeited his right to the second payment upon his resignation. In addition, in May 2022, Mr. Ramlo recommended, and the Compensation Committee approved, additional supplemental compensation for Mr. Patten in the amount of $90,000, which was paid to him in a lump sum in May 2022. Company-Sponsored Benefit Plans We believe the insurance and retirement benefit plans we sponsor are an important part of fair and reasonable compensation for all of our employees, including our named executive officers. We design these benefit plans to attract and retain a strong employee base, to provide a measure of financial security for our employees and to assist our employees in providing for their own financial security in a manner that recognizes individual needs and preferences. We also provide these programs because we believe that employees who have a plan for health and financial security are better employees. We apply these programs equally to all employees. Our benefit plans consist of an insurance plan that provides health, vision, dental, disability and basic term life insurance coverage and various retirement plans, including a defined-benefit pension plan and a 401(k) plan with a Company match. The pension plan is discussed further under Pension Benefits below. Nonqualified Deferred Compensation The United Fire & Casualty Company Supplemental Executive Retirement and Deferral Plan (“SERP”) permits certain of our executive officers, including 2022 named executive officers Messrs. Cataldo, Ramlo and Wilkins, the opportunity to save a portion of their direct compensation for retirement. The SERP also allows the Company to make contributions to participants’ accounts. In 2022, the Compensation Committee exercised its discretion to make employer contributions for Messrs. Cataldo, Ramlo and Wilkins. The contributions were intended to recognize the gap between what the selected executives may receive under our tax-qualified retirement plans, which are limited due to IRS regulations, and the amount that would have been deposited in the qualified retirement plans absent such limitations. For amounts deferred after December 31, 2014, (a) any employer contribution made to a participant’s account follows a predetermined vesting schedule, and become 100% vested upon reaching age 65, death, disability, or change in control, and (b) the deferring executive officers may elect to receive their benefits as a lump sum or as annual installments over a 10-year period. As most executives who participated in the SERP have separated from the Company, including Messrs. Ramlo and Wilkins, the Board of Directors has ceased adding new executive officers as SERP participants. Rather, the Compensation Committee believes the United Fire & Casualty Company Supplemental Retirement & Deferral Plan (the “NQDC”) and other executive benefits align with market trends for executive retirement planning. The SERP and the NQDC are discussed further under Nonqualified Deferred Compensation below. Perquisites We do not rely upon perquisites as a method of providing significant compensation to any of our employees, preferring instead to use direct compensation and incentive plans. We provide only those perquisites that are related to our business or that we believe are necessary to attract and retain key executive
personnel. For 2022, we paid for country club dues for certain of our named executive officers so they have a club available for business entertainment on our behalf. Perquisites and other personal benefits paid to a named executive officer are reported in the All Other Compensation column of the Summary Compensation Table — 2022. We expect our other named executive officers to use our corporate aircraft for business travel whenever it is reasonable to do so. Occasionally, a spouse or other guest may accompany executive officers on corporate aircraft when the aircraft is already scheduled for business purposes and can accommodate additional passengers. In those cases, there is no aggregate incremental cost to the Company. We permit Mr. Leidwinger, and permitted Mr. Ramlo while he was serving as President and Chief Executive Officer, to use our corporate aircraft for personal travel, and under limited circumstances, directors and executive officers may be permitted to use the aircraft for personal use as well. Named Executive Officers as Shareholders We believe that ownership of Company Common Stock by our executive officers, including our named executive officers, promotes the alignment of their interests with those of our Company and our shareholders. A Board of Directors’ policy sets forth guidelines for stock ownership by certain of our executive officers, including certain of our named executive officers. These guidelines include target levels of stock ownership for each covered executive officer, which must be achieved with a five-year transition period. The goal of these guidelines is to have our executive officers hold a meaningful stake in our Company. The table below shows the target number of shares to be owned by each named executive officer subject to these guidelines as of the record date. As of the record date, each named executive officer subject to these guidelines either held the requisite number of shares of Company Common Stock, or was appropriately trending to goal during the five-year transition period. | Name | | | Tier(1) | | | Target Number of
Shares to be Held(2) | | | Number of Qualifying Shares of
Common Stock Held at Record Date | | | Kevin J. Leidwinger | | | | | 3 | | | | | | 101,868 | | | | | | 32,187 | | | | Eric J. Martin | | | | | 2 | | | | | | 24,095 | | | | | | 17,456 | | | | Robert F. Cataldo | | | | | 1 | | | | | | 4,508 | | | | | | 10,752 | | | | Jeremy J. Bahl | | | | | 1 | | | | | | 10,670 | | | | | | 6,329 | | | | Micah Woolstenhulme. | | | | | 1 | | | | | | 9,849 | | | | | | 30,338 | | |
(1)
Equity ownership targets for Mr. Leidwinger as a Tier 3 executive were calculated as the number of shares equal to four times his base salary on August 22, 2022 divided by the closing price of Company Common Stock on August 22, 2022. Equity ownership targets for Mr. Martin as a Tier 2 executive were calculated as the number of shares equal to one and one-half times his base salary on April 18, 2022 divided by the closing price of Company Common Stock on April 18, 2022. Equity ownership targets for Mr. Cataldo as a Tier 1 executive were calculated as the number of shares equal to his base salary on January 1, 2019 divided by the closing price of our Company Common Stock on December 31, 2018. These guidelines were revised by the Board of Directors on August 19, 2022 resulting in the inclusion of Messrs. Bahl and Woolstenhulme. Equity ownership targets for Mr. Woolstenhulme as a Tier 1 executive were calculated as the number of shares equal to his base salary on August 19, 2022 divided by the closing price of our Company Common Stock on August 19, 2022. Equity ownership targets for Mr. Bahl as a Tier 1 executive were calculated as the number of shares equal to his base salary on August 19, 2022 divided by the closing price of our Company Common Stock on August 19, 2022. (2)
Shares held either directly or indirectly and any RSUs (whether vested or unvested) held by the named executive officer are counted toward the target number of shares. Any unexercised stock options or PSUs (whether vested or unvested) held by the named executive officer are not counted toward the target number of shares. The target number of shares are the number of shares to be held by the named executive officer within five years of having a new target guideline set.
Report of the Compensation Committee The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s annual proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Susan E. Voss, Chair
Scott L. Carlton
Brenda K. Clancy
Mark A. Green
Lura E. McBride
James W. Noyce
2022 Summary Compensation Table Summary Compensation Table — 2022 | Name and Principal Position | | | Year | | | Salary ($) | | | Bonus
($)(1) | | | Stock
Awards
($)(2) | | | Option
Awards
($)(3) | | | Non-Equity
Incentive Plan
Compensation
($)(4) | | | Change in
Pension Value
and Non-
qualified
Deferred
Compensation
Earnings
($)(5) | | | All Other
Compensation
($)(6) | | | Total ($) | | Kevin J. Leidwinger
President/Chief Executive
Officer | | | | | 2022 | | | | | | 257,813 | | | | | | 336,563 | | | | | | 818,210 | | | | | | 100,942 | | | | | | — | | | | | | — | | | | | | 38,317 | | | | | | 1,551,845 | | | Eric J. Martin
SVP/Chief Financial
Officer | | | | | 2022 | | | | | | 326,563 | | | | | | 250,000 | | | | | | 496,096 | | | | | | 66,799 | | | | | | — | | | | | | — | | | | | | 15,472 | | | | | | 1,221,729 | | | Robert F. Cataldo
VP/Chief Investment
and Strategy Officer | | | | | 2022 | | | | | | 400,000 | | | | | | — | | | | | | 149,999 | | | | | | 49,995 | | | | | | 100,000 | | | | | | — | | | | | | 69,982 | | | | | | 769,976 | | | | | | | 2021 | | | | | | 375,000 | | | | | | — | | | | | | 164,006 | | | | | | 49,998 | | | | | | 140,925 | | | | | | 34,808 | | | | | | 84,954 | | | | | | 849,691 | | | | | | | 2020 | | | | | | 318,166 | | | | | | — | | | | | | 89,414 | | | | | | 43,750 | | | | | | 44,146 | | | | | | 122,289 | | | | | | 10,283 | | | | | | 628,048 | | | Jeremy J. Bahl
VP/Chief Underwriting
Officer | | | | | 2022 | | | | | | 325,000 | | | | | | — | | | | | | 93,753 | | | | | | 31,255 | | | | | | 65,000 | | | | | | — | | | | | | 28,327 | | | | | | 543,335 | | | Micah Woolstenhulme(7)
VP/Chief Risk Officer | | | | | 2022 | | | | | | 300,000 | | | | | | 50,000 | | | | | | 281,247 | | | | | | 43,749 | | | | | | 75,000 | | | | | | — | | | | | | 30,403 | | | | | | 780,399 | | | | | | | 2021 | | | | | | 230,000 | | | | | | 50,000 | | | | | | 293,514 | | | | | | 43,745 | | | | | | 86,434 | | | | | | 67,441 | | | | | | 53,427 | | | | | | 824,561 | | | Randy A. Ramlo
Former President/
Chief Executive Officer | | | | | 2022 | | | | | | 715,909 | | | | | | — | | | | | | 297,179 | | | | | | — | | | | | | 286,363 | | | | | | — | | | | | | 440,329 | | | | | | 1,739,780 | | | | | | | 2021 | | | | | | 800,000 | | | | | | — | | | | | | 656,020 | | | | | | 200,005 | | | | | | 481,040 | | | | | | 4,867 | | | | | | 245,274 | | | | | | 2,387,206 | | | | | | | 2020 | | | | | | 800,000 | | | | | | — | | | | | | 383,403 | | | | | | 187,501 | | | | | | 177,600 | | | | | | 323,233 | | | | | | 247,079 | | | | | | 2,118,816 | | | Randy L. Patten
Former AVP/Controller/
Interim Co-Chief
Financial Officer | | | | | 2022 | | | | | | 155,572 | | | | | | 125,000 | | | | | | 3,010 | | | | | | — | | | | | | — | | | | | | — | | | | | | 36,463 | | | | | | 320,045 | | | | | | | 2021 | | | | | | 189,621 | | | | | | — | | | | | | 3,002 | | | | | | 0 | | | | | | 33,715 | | | | | | 12,468 | | | | | | 1,896 | | | | | | 240,702 | | | Michael T. Wilkins
Former EVP/Chief
Operating Officer | | | | | 2022 | | | | | | 411,459 | | | | | | 50,000 | | | | | | 484,243 | | | | | | 79,890 | | | | | | 127,188 | | | | | | — | | | | | | 233,636 | | | | | | 1,386,416 | | | | | | | 2021 | | | | | | 500,000 | | | | | | — | | | | | | 348,508 | | | | | | 106,249 | | | | | | 255,500 | | | | | | 2,999 | | | | | | 107,901 | | | | | | 1,321,157 | | | | | | | 2020 | | | | | | 500,000 | | | | | | — | | | | | | 204,482 | | | | | | 100,001 | | | | | | 83,250 | | | | | | 377,217 | | | | | | 108,782 | | | | | | 1,373,732 | | |
(1)
The amount reported in this column for Messrs. Leidwinger and Martin for 2022 represents the guaranteed portion of their 2022 bonuses. The amounts reported in this column for Messrs. Woolstenhulme and Wilkins for 2022 represents retention bonuses of $50,000 each that were granted to them in 2019 and 2022, respectively, subject to their continued employment through March 30, 2022 and September 30, 2022, respectively. As described in the CD&A, the amount reported in this column for Mr. Patten for 2022 represents supplemental bonuses of $15,000, $20,000 and $90,000 paid to him in February 2022, April 2022 and May 2022, respectively. (2)
Amounts in this column represent the aggregate grant date fair value for PSUs and RSUs, as applicable, granted during 2022, 2021 and 2020. For Messrs. Ramlo and Wilkins, the amounts reported in this column for 2022 also include $297,179 and $245,182, respectively, representing the incremental fair value associated with the modification of their RSU awards in connection with their retirement. Amounts in this column are calculated in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. The grant date fair value for stock awards is measured based on the closing price of our Company Common Stock on the grant date, and the probable satisfaction of the performance conditions for the PSU awards as of the date of grant. Assuming the highest level of performance is
achieved for the 2022 PSUs, the maximum value of amounts in this column at the grant date would be as follows: Mr. Leidwinger, $302,820; Mr. Martin, $200,396; Mr. Cataldo, $150,014; Mr. Bahl, $93,753; Mr. Woolstenhulme, $131,246; and Mr. Wilkins, $239,075. The values shown have not been adjusted to reflect that these units are subject to forfeiture. For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022. (3)
Amounts in this column represent the aggregate grant date fair value for options granted during 2022, 2021 and 2020. Amounts in this column are calculated in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. To calculate the option amounts we use the Black-Scholes option pricing model. This model estimates the fair value of traded options, which have different characteristics than employee stock options. Changes to the subjective assumptions used in the model can result in materially different fair value estimates. The values shown have not been adjusted to reflect that these units are subject to forfeiture. For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022. (4)
All employees are eligible to participate in our annual performance-based cash award plan if they are in our employ at the time the cash awards for that year are paid. The amounts shown in this column are those amounts earned by the executive for the year shown. These amounts were determined and paid in the subsequent year. For example, any non-equity incentive plan awards shown for 2022 were earned in 2022, but determined and paid in 2023. (5)
The 2022 amount in this column reflects the change in pension value under the United Pension Plan that is described further in the Pension Benefits section and above market earnings under the Company’s nonqualified deferred compensation plan. There were no above market deferred compensation earnings for any named executive officers in 2022. Messrs. Cataldo, Bahl, Woolstenhulme, Ramlo, Patten and Wilkins had negative change in pension value amounts as of December 31, 2022 of $123,827, $213,682, $17,397, $476,546, $72,033 and $525,804, respectively. (6)
All Other Compensation for 2022 includes: | Name | | | Registrant
Contributions to
SERP ($) | | | Matching
Contributions to
401(k) Plan ($) | | | Perquisites and
Other Personal
Benefits ($) | | | Tax
Reimbursement
($) | | | Total ($) | | | Kevin J. Leidwinger | | | | | — | | | | | | 2,500 | | | | | | 35,817 | | | | | | — | | | | | | 38,317 | | | | Eric J. Martin | | | | | — | | | | | | 10,250 | | | | | | 5,222 | | | | | | — | | | | | | 15,472 | | | | Robert Cataldo | | | | | 46,875 | | | | | | 9,150 | | | | | | 13,957 | | | | | | — | | | | | | 69,982 | | | | Jeremy J. Bahl | | | | | — | | | | | | 10,250 | | | | | | 18,077 | | | | | | — | | | | | | 28,327 | | | | Micah Woolstenhulme | | | | | — | | | | | | 9,150 | | | | | | 0 | | | | | | 21,253 | | | | | | 30,403 | | | | Randy Ramlo | | | | | 203,004 | | | | | | 5,583 | | | | | | 231,742 | | | | | | — | | | | | | 440,329 | | | | Randy L. Patten | | | | | — | | | | | | 4,963 | | | | | | 31,500 | | | | | | — | | | | | | 36,463 | | | | Michael Wilkins | | | | | 79,170 | | | | | | 6,417 | | | | | | 146,721 | | | | | | 1,328 | | | | | | 233,636 | | |
For Mr. Leidwinger, the amount shown for perquisites and other personal benefits consists of country club dues paid on his behalf, relocation expenses, temporary housing expenses, and the incremental costs associated with his personal use of corporate aircraft. For Mr. Martin, the amounts shown for perquisites and other personal benefits consist of country club dues paid on his behalf. For Mr. Cataldo, the amount shown for perquisites and other personal benefits consists of country club dues paid on his behalf. For Mr. Bahl the amount shown is the incremental cost of an agent incentive trip for his spouse. For Mr. Ramlo, the amount shown for perquisites and other personal benefits consists of $190,123 paid to him in connection with his separation in respect of his accrued and unused paid time off, country club dues paid on his behalf, the incremental cost of agent incentive trips for his spouse, and a charitable contribution made by the Company on his behalf in connection with his retirement. For Mr. Patten, the amount for perquisites and other personal benefit consists of $31,500 paid to him in connection with his separation in respect of his accrued and unused paid time off. For Mr. Wilkins, the amount shown for perquisites and other personal benefits consists of $108,441 paid to him in connection with his separation in respect of his accrued and
unused paid time off, country club dues paid on his behalf, the incremental cost of agent incentive trips for his spouse, and a charitable contribution made by the Company on his behalf in connection with his retirement. For Messrs. Woolstenhulme and Wilkins, the tax reimbursements relate to their retention bonuses. (7)
The amounts reported in the Bonus and All Other Compensation columns for Mr. Woolstenhulme have been updated from 2021 to reallocate $24,710 related to a tax reimbursement for his retention bonus that was previously reported in the Bonus column. 2022 Grants of Plan-Based Awards The following table details the grants of plan-based awards to our named executive officers in 2022 under the AIP and the United Fire Group, Inc. 2021 Stock and Incentive Plan, as applicable. | | | | | | | | | | | | | | | | Estimated Future Payouts under
Non-Equity Incentive Plan Awards | | | Estimated Future Payouts under
Equity Incentive Plan Awards | | | All Other
Stock Awards:
Number of
shares of
stock or units
(#) | | | All Other
Option
Awards:
Number of
securities
underlying
options
(#) | | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | | Grant Date
Fair Value
of Stock
and
Option
Awards
($)(5) | | | Name | | | Grant Date | | | Approval Date | | | Threshold
($)(1) | | | Target
($)(2) | | | Maximum
($)(3) | | | Threshold
(#)(4) | | | Target
(#) | | | Maximum
(#) | | Kevin J. Leidwinger(15) | | | | | 8/22/2022(6) | | | | | | 7/6/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,736 | | | | | | 29.45 | | | | | | 100,942 | | | | | | | | | 8/22/2022(7) | | | | | | 7/6/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 17,500 | | | | | | — | | | | | | — | | | | | | 515,375 | | | | | | | | | 8/22/2022(8) | | | | | | 7/6/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,428 | | | | | | — | | | | | | — | | | | | | 100,955 | | | | | | | | | 8/22/2022(9) | | | | | | 7/6/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,855 | | | | | | 6,855 | | | | | | 10,283 | | | | | | — | | | | | | — | | | | | | — | | | | | | 201,880 | | | | | | | | | —(10) | | | | | | — | | | | | | 336,563 | | | | | | 336,563 | | | | | | 504,845 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | Eric J. Martin(15) | | | | | 4/18/2022(6) | | | | | | 2/21/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,130 | | | | | | 29.57 | | | | | | 66,799 | | | | | | | | | 4/18/2022(11) | | | | | | 2/21/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 10,000 | | | | | | — | | | | | | — | | | | | | 295,700 | | | | | | | | | 4/18/2022(8) | | | | | | 2/21/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,259 | | | | | | — | | | | | | — | | | | | | 66,799 | | | | | | | | | 4/18/2022(9) | | | | | | 2/21/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,130 | | | | | | 4,518 | | | | | | 6,777 | | | | | | — | | | | | | — | | | | | | — | | | | | | 133,597 | | | | | | | | | —(10) | | | | | | — | | | | | | 250,000 | | | | | | 250,000 | | | | | | 375,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Robert F. Cataldo | | | | | 2/18/2022(6) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,779 | | | | | | 29.51 | | | | | | 49,995 | | | | | | | | | 2/18/2022(8) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,694 | | | | | | — | | | | | | — | | | | | | 49,990 | | | | | | | | | 2/18/2022(9) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 847 | | | | | | 3,389 | | | | | | 5,084 | | | | | | — | | | | | | — | | | | | | — | | | | | | 100,009 | | | | | | | | | —(10) | | | | | | — | | | | | | 50,000 | | | | | | 200,000 | | | | | | 300,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Jeremy J. Bahl | | | | | 2/18/2022(6) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,987 | | | | | | 29.51 | | | | | | 31,255 | | | | | | | | | 2/18/2022(8) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,059 | | | | | | — | | | | | | — | | | | | | 31,251 | | | | | | | | | 2/18/2022(9) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 529 | | | | | | 2,118 | | | | | | 3,177 | | | | | | — | | | | | | — | | | | | | — | | | | | | 62,502 | | | | | | | | | —(10) | | | | | | — | | | | | | 32,500 | | | | | | 130,000 | | | | | | 195,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Micah Woolstenhulme | | | | | 2/18/2022(6) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,181 | | | | | | 29.51 | | | | | | 43,749 | | | | | | | | | 2/18/2022(8) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,483 | | | | | | — | | | | | | — | | | | | | 43,763 | | | | | | | | | 2/18/2022(9) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 741 | | | | | | 2,965 | | | | | | 4,448 | | | | | | — | | | | | | — | | | | | | — | | | | | | 87,497 | | | | | | | | | 5/18/2022(12) | | | | | | 5/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,763 | | | | | | — | | | | | | — | | | | | | 149,987 | | | | | | | | | —(10) | | | | | | — | | | | | | 37,500 | | | | | | 150,000 | | | | | | 225,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | Randy A. Ramlo(14) | | | | | —(10) | | | | | | — | | | | | | 168,000 | | | | | | 672,000 | | | | | | 1,008,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 10/31/2022(13) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 297,179 | | | Randy L. Patten(14) | | | | | 2/18/2022(8) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 102 | | | | | | — | | | | | | — | | | | | | 3,010 | | | | | | | | | —(10) | | | | | | — | | | | | | 10,250 | | | | | | 41,000 | | | | | | 61,500 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | Michael T. Wilkins(14)(15) | | | | | 5/18/2022(6) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 7,635 | | | | | | 29.51 | | | | | | 79,890 | | | | | | | | | 5/18/2022(8) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,700 | | | | | | — | | | | | | — | | | | | | 79,677 | | | | | | | | | 5/18/2022(9) | | | | | | 2/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,350 | | | | | | 5,401 | | | | | | 8,102 | | | | | | — | | | | | | — | | | | | | — | | | | | | 159,384 | | | | | | | | | —(10) | | | | | | — | | | | | | 82,500 | | | | | | 330,000 | | | | | | 495,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 9/30/2022(13) | | | | | | 5/18/2022 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 245,182 | | |
(1)
We estimate the amounts shown in this column by assuming the achievement of the threshold level for the least-weighted performance measure used in our AIP and by multiplying 2022 base salary by 12.5% for Mr. Cataldo; 10% for Mr. Bahl; 12.5% for Mr. Woolstenhulme; 20% for Mr. Ramlo; 5% for Mr. Patten; and 15% for Mr. Wilkins. Pursuant to the terms of their Executive Employment Offer Letters, Messrs. Leidwinger and Martin’s payout under the AIP for 2022 was guaranteed to be no less than the target amount $336,563 and $250,000, respectively. (2)
We estimate the amounts shown in this column by assuming the achievement of target levels for all applicable performance measures used in our AIP and by multiplying 2022 base salary by 125% for Mr. Leidwinger; 52.6% for Mr. Martin; 50% for Mr. Cataldo; 40% for Mr. Bahl; 50% for Mr. Woolstenhulme; 80% for Mr. Ramlo; 20% for Mr. Patten; and 60% for Mr. Wilkins. (3)
We estimate the amounts shown in this column by assuming the achievement of maximum levels for all applicable performance measures used in our AIP and by multiplying 2022 base salary by 196% for Mr. Leidwinger; 115% for Mr. Martin; 75% for Mr. Cataldo; 60% for Ms. Bahl; 75% for Mr. Woolstenhulme; 120% for Mr. Ramlo; 30% for Mr. Patten; and 90% for Mr. Wilkins. (4)
We estimate the amounts shown in this column by assuming the achievement of the threshold level for only one of the two equal-weighted performance measures under our 2022 PSUs. Pursuant to the terms of his Executive Employment Offer Letter, the minimum achievement level for Mr. Leidwinger’s 2022 PSU award is equal to the target amount. (5)
Amounts in this column represent the aggregate grant date fair value for stock options, RSUs and PSUs granted during 2022, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation. To calculate the option amounts, we use the Black-Scholes option pricing model. This model estimates the fair value of traded options, which have different characteristics than employee stock options. Changes to the subjective assumptions used in the model can result in materially different fair value estimates. The grant date fair value for RSU and PSU awards is measured based on the closing price of our Company Common Stock on the grant date and the probable satisfaction of the performance conditions for the PSU awards as of the date of grant. For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022. (6)
Represents option awards that vest one-third each year for three years beginning with the first anniversary of the grant date, provided the named executive officer remains employed through the applicable vesting date. (7)
Represents RSUs granted to Mr. Leidwinger in connection with his commencement as our President and Chief Executive Officer, which vested with respect to 5,834 shares upon the commencement of his employment with the Company and vests (i) with respect to 5,833 shares on December 31, 2023, and (ii) with respect to 5,833 shares on December 31, 2024, subject to his continued employment through each such vesting date. (8)
Represents a grant of RSUs that vest in full on the third anniversary of the grant date, provided the named executive officer remains employed through the vesting date. (9)
Represents PSUs that vest on the third anniversary of the grant date only if and to the extent the Company achieves performance goals relating to Adjusted ROE and GAAP Combined Ratio over the 2022-2024 performance period. (10)
There is no specific grant date for awards under our AIP. We paid awards based on our 2022 performance during the first quarter of 2023. Please see Compensation Discussion and Analysis in this proxy statement for further information regarding the AIP. Actual amounts paid to each named executive officer under our AIP for 2022 are shown in the Summary Compensation Table — 2022 in this proxy statement and were calculated based on each individual’s base salary for 2021. In connection with their retirements, Messrs. Ramlo and Wilkins remained eligible for prorated payouts under the AIP, based on actual performance. Mr. Patten forfeited his 2022 award under our AIP upon his resignation in July 2022. (11)
Represents RSUs granted to Mr. Martin in connection with his commencement as our Chief Financial
Officer, which vests 60% on the one-year anniversary of Mr. Martin’s start date and 40% on the two-year anniversary of his start date, subject to his continued employment through each vesting date. (12)
Represents RSUs granted to Mr. Woolstenhulme, which vest on May 18, 2025, subject to his continued employment through the vesting date. (13)
This number represents the incremental fair value related to the modification of the RSU awards held by Messrs. Ramlo and Wilkins, the vesting of which was accelerated in connection with their retirements. (14)
Mr. Patten forfeited his 2022 equity awards upon his resignation in July 2022. Messrs. Ramlo and Wilkins forfeited their 2022 PSU awards upon their retirement in October 2022 and September 2022, respectively. (15)
The Board of Directors granted LTIP awards after approval dates for Messrs. Leidwinger, Martin, and Wilkins. Outstanding Equity Awards at 2022 Fiscal Year-End The following table details the outstanding equity awards held by each of our named executive officers as of December 31, 2022. As of December 31, 2022, Mr. Patten did not hold any outstanding equity awards. | | | | | | | | | | Option Awards | | | Stock Awards | | | Name | | | Grant Date | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#) | | | Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($) | | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) | | | Equity
Incentive
Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(1) | | | Kevin J. Leidwinger | | | | | 8/22/2022(2) | | | | | | — | | | | | | 9,736 | | | | | | 29.45 | | | | | | 8/22/2032 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 8/22/2022(3) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,855 | | | | | | 187,553 | | | | | | | | | 8/22/2022(4) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,666 | | | | | | 319,182 | | | | | | — | | | | | | — | | | | | | | | | 8/22/2022(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,428 | | | | | | 93,790 | | | | | | — | | | | | | — | | | | Eric J. Martin | | | | | 4/18/2022(2) | | | | | | — | | | | | | 6,130 | | | | | | 29.57 | | | | | | 4/18/2032 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 4/18/2022(6) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,259 | | | | | | 61,806 | | | | | | | | | 4/18/2022(7) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 10,000 | | | | | | 273,600 | | | | | | — | | | | | | — | | | | | | | | | 4/18/2022(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,259 | | | | | | 61,806 | | | | | | — | | | | | | — | | | | Robert F. Cataldo | | | | | 2/15/2013 | | | | | | 400 | | | | | | — | | | | | | 23.96 | | | | | | 2/16/2023 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2014 | | | | | | 1,500 | | | | | | — | | | | | | 29.61 | | | | | | 2/21/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/20/2015 | | | | | | 2,000 | | | | | | — | | | | | | 29.12 | | | | | | 2/20/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 5/16/2018 | | | | | | 2,681 | | | | | | — | | | | | | 52.16 | | | | | | 5/16/2028 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/15/2019 | | | | | | 2,892 | | | | | | — | | | | | | 54.26 | | | | | | 2/15/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2020(2) | | | | | | 4,157 | | | | | | 2,079 | | | | | | 44.96 | | | | | | 2/21/2030 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2020(8) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 973 | | | | | | 26,621 | | | | | | | | | 2/21/2020(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 973 | | | | | | 26,621 | | | | | | — | | | | | | — | | | | | | | | | 2/19/2021(2) | | | | | | 1,236 | | | | | | 2,474 | | | | | | 29.43 | | | | | | 2/19/2031 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/19/2021(9) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,699 | | | | | | 46,485 | | | | | | | | | 2/19/2021(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,699 | | | | | | 46,485 | | | | | | — | | | | | | — | | | | | | | | | 2/18/2022(2) | | | | | | | | | | | | 4,778 | | | | | | 29.51 | | | | | | 2/18/2032 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/18/2022(10) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,695 | | | | | | 46,375 | | | | | | | | | 2/18/2022(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,694 | | | | | | 46,348 | | | | | | | | | | | | | | | | Jeremy J. Bahl | | | | | 2/15/2013 | | | | | | 1,000 | | | | | | — | | | | | | 23.96 | | | | | | 2/16/2023 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2014 | | | | | | 1,000 | | | | | | — | | | | | | 29.61 | | | | | | 2/21/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/20/2015 | | | | | | 1,000 | | | | | | — | | | | | | 29.12 | | | | | | 2/20/2025 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 3/24/2017 | | | | | | 1,851 | | | | | | — | | | | | | 42.27 | | | | | | 3/24/2027 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | | | | Option Awards | | | Stock Awards | | | Name | | | Grant Date | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#) | | | Market
Value of
Shares
or Units
of Stock
That
Have
Not
Vested
($) | | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) | | | Equity
Incentive
Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
($)(1) | | | | | | | | 2/23/2018 | | | | | | 2,124 | | | | | | — | | | | | | 44.80 | | | | | | 2/23/2028 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/15/2019 | | | | | | 1,446 | | | | | | — | | | | | | 54.26 | | | | | | 2/15/2029 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2020(2) | | | | | | 1,782 | | | | | | 891 | | | | | | 44.96 | | | | | | 2/21/2030 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2020(8) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 417 | | | | | | 11,409 | | | | | | | | | 2/21/2020(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 417 | | | | | | 11,409 | | | | | | — | | | | | | — | | | | | | | | | 2/19/2021(2) | | | | | | 463 | | | | | | 928 | | | | | | 29.43 | | | | | | 2/19/2031 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/19/2021(9) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 637 | | | | | | 17,428 | | | | | | | | | 2/19/2021(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 637 | | | | | | 17,428 | | | | | | — | | | | | | — | | | | | | | | | 2/18/2022(2) | | | | | | — | | | | | | 2,987 | | | | | | 29.51 | | | | | | 2/18/2032 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/18/2022(10) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1059 | | | | | | 28,974 | | | | | | | | | 2/18/2022(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,059 | | | | | | 28,974 | | | | | | — | | | | | | — | | | | Micah Woolstenhulme | | | | | 5/20/2020(2) | | | | | | 3,563 | | | | | | 1,782 | | | | | | 26.68 | | | | | | 5/20/2030 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 5/20/2020(11) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 834 | | | | | | 22,818 | | | | | | | | | 5/20/2020(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,393 | | | | | | 120,192 | | | | | | — | | | | | | — | | | | | | | | | 2/19/2021(2) | | | | | | 1,082 | | | | | | 2,164 | | | | | | 29.43 | | | | | | 2/19/2031 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/19/2021(9) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,487 | | | | | | 40,684 | | | | | | | | | 2/19/2021(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,487 | | | | | | 40,684 | | | | | | — | | | | | | — | | | | | | | | | 5/19/2021(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,627 | | | | | | 126,595 | | | | | | — | | | | | | — | | | | | | | | | 2/18/2022(2) | | | | | | — | | | | | | 4,181 | | | | | | 29.51 | | | | | | 2/18/2032 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/18/2022(10) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,483 | | | | | | 40,575 | | | | | | | | | 2/18/2022(5) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,483 | | | | | | 40,575 | | | | | | — | | | | | | — | | | | | | | | | 5/18/2022(12) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,763 | | | | | | 130,316 | | | | | | — | | | | | | — | | | | Randy A. Ramlo | | | | | 2/15/2013 | | | | | | 18,609 | | | | | | — | | | | | | 23.96 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2014 | | | | | | 29,624 | | | | | | — | | | | | | 29.61 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/20/2015 | | | | | | 49,067 | | | | | | — | | | | | | 29.12 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/19/2016 | | | | | | 39,456 | | | | | | — | | | | | | 39.91 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/17/2017 | | | | | | 19,451 | | | | | | — | | | | | | 41.32 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 3/24/2017 | | | | | | 16,038 | | | | | | — | | | | | | 42.27 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/23/2018 | | | | | | 20,532 | | | | | | — | | | | | | 44.80 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/15/2019 | | | | | | 14,461 | | | | | | — | | | | | | 54.26 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2020 | | | | | | 26,726 | | | | | | — | | | | | | 44.96 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/19/2021 | | | | | | 14,841 | | | | | | — | | | | | | 29.43 | | | | | | 10/31/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Michael T. Wilkins | | | | | 2/15/2013 | | | | | | 3,000 | | | | | | — | | | | | | 23.96 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2014 | | | | | | 12,000 | | | | | | — | | | | | | 29.61 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/20/2015 | | | | | | 24,132 | | | | | | — | | | | | | 29.12 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/19/2016 | | | | | | 19,557 | | | | | | — | | | | | | 39.91 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/17/2017 | | | | | | 9,411 | | | | | | — | | | | | | 41.32 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 3/24/2017 | | | | | | 7,402 | | | | | | — | | | | | | 42.27 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/23/2018 | | | | | | 8,496 | | | | | | — | | | | | | 44.80 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/15/2019 | | | | | | 7,713 | | | | | | — | | | | | | 54.26 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/21/2020 | | | | | | 14,254 | | | | | | — | | | | | | 44.96 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/19/2021 | | | | | | 7,884 | | | | | | — | | | | | | 29.43 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | 2/18/2022 | | | | | | 7,635 | | | | | | — | | | | | | 29.51 | | | | | | 9/30/2024 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
(1)
The market value of shares or units of stock that have not vested reflects a stock price of $27.36, our closing stock price on December 30, 2022, the last trading day of 2022. (2)
These options vest in three equal installments on each of the first three anniversaries of the grant date, subject to the named executive officer’s continued employment through each such vesting date. (3)
These PSUs granted on 8/22/2022 will vest on 8/22/2025 and have a guaranteed minimum vesting level equal to target per the Leidwinger Offer Letter. (4)
These RSUs vest (i) with respect to 5,833 shares on December 31, 2023 and (ii) with respect to 5,833 shares on December 31, 2024, subject to Mr. Leidwinger’s continued employment through each such vesting date. (5)
These RSUs cliff vest on the third anniversary of the grant date, subject to the named executive officer’s continued employment through such vesting date. (6)
These PSUs granted on 4/18/2022 will vest on 4/18/2025 and are reported assuming threshold achievement. (7)
These RSUs vest 60% on the one-year anniversary of Mr. Martin’s start date and 40% on the two-year anniversary of his start date, subject to his continued employment through each vesting date. (8)
These PSUs granted 2/21/2020 vested on 2/21/2023 and are reported based on actual performance through December 31, 2022. (9)
These PSUs granted 2/19/2021 will vest on 2/19/2024 and are reported assuming target achievement. (10)
These PSUs granted 2/18/2022 will vest on 2/18/2025 and are reported assuming target achievement. (11)
These PSUs granted 5/20/2020 will vest on 5/20/2023 and are reported based on actual performance through December 31, 2022. (12)
These RSUs granted 5/18/2022 will vest on May 18, 2025, subject to Mr. Woolstenhulme’s continued employment through the vesting date. 2022 Option Exercises and Stock Award Vesting The following table represents the number and value of shares acquired by our named executive officers through the exercise of options and vesting of stock awards during fiscal year 2022. | | | | Option Awards | | | Stock Awards | | | Name | | | Number of
Shares Acquired
Upon Exercise
(#) | | | Value Realized
on Exercise
($) | | | Number of
Shares Acquired
on Vesting
(#) | | | Value Realized
on Vesting
($) | | | Kevin J. Leidwinger | | | | | — | | | | | | — | | | | | | 5,834 | | | | | | 171,811 | | | | Eric J. Martin | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Robert F. Cataldo | | | | | — | | | | | | — | | | | | | 1,727 | | | | | | 49,185 | | | | Jeremy J. Bahl | | | | | — | | | | | | — | | | | | | 864 | | | | | | 24,607 | | | | Micah Woolstenhulme | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Randy A. Ramlo | | | | | — | | | | | | — | | | | | | 24,203 | | | | | | 675,180 | | | | Randy L. Patten | | | | | 500 | | | | | | 940 | | | | | | 138 | | | | | | 3,930 | | | | Michael T. Wilkins | | | | | — | | | | | | — | | | | | | 15,366 | | | | | | 440,247 | | |
Pension Benefits All of our employees who are 21 years of age and older automatically participate in our defined- benefit pension plan after completing one year of employment and 1,000 hours of service. When eligibility criteria are met, the employee participates in the plan on the next January 1 or July 1. Employees become 100% vested in the plan after completing five years of service. Effective July 1, 2021, the Company amended the defined-benefit pension plan to convert it from a traditional pension plan with a benefits formula based on
annual compensation and years of service to a “cash balance” defined-benefit plan. Participants retained all benefits previously accrued under the traditional pension benefit formula. Prior to July 1, 2021, plan benefits equaled 1.25% of an employee’s five-year average annual compensation, plus 0.5% of average annual compensation in excess of covered compensation, multiplied by the lesser of years of service or 35 years. Effective July 1, 2021, plan benefits equal 4.0%-7.0% of the participant’s annual compensation for the plan year plus 2.0%-3.5% of the participant’s compensation in excess of covered compensation, in each case, depending on the participant’s years of service. Participants are credited with interest on their balances under the plan at the greater of 2% or the discount rate on the yield of 30-year Treasury securities. Covered compensation is determined by reference to the Social Security taxable wage base. Average annual compensation means annual compensation, averaged over the period of five consecutive years of service that produces the highest average. The pension plan uses only salary to determine the average annual compensation. Under federal law, for 2022 the maximum compensation that could be considered for determining benefits was $305,000. The normal form of payment under the pension plan is a joint and 50% survivor annuity for a participant who is married on the annuity starting date and a life annuity for a participant who is unmarried on the annuity starting date. Participants may elect to receive a monthly pension over the participant’s life or a term of up to 20 years or, if the actuarial equivalent of the annuity is $10,000 or less, in the form of a lump sum cash payment. The amount of monthly pension benefits varies depending upon the form of payment elected by the participant, but the payments are in each case the actuarial equivalent of the normal form of payment. Distributions will be in the form of a lump-sum cash payment for vested participant balances of $50,000 or less. Assets of the pension plan belong to the Company and are not taxable to the employee until paid as a benefit. Such assets are subject to a substantial risk of forfeiture until vested by the employee. Normal retirement age under the pension plan is 65, which is the earliest time a participant may retire under the pension plan without any benefit reduction due to age. The earliest age a participant may retire under the plan and still receive benefits is age 55. Participants electing early retirement with at least 20 years of service receive a reduction in benefits of 6% for each year the participant retires after age 55 and before age 60, and a reduction of benefits of 4% for each year the participant retires after age 60 and before age 65. If a participant elects early retirement with less than 20 years of service to us, then the participant’s reduction in benefits is based on an actuarial calculation. None of our continuing named executive officers are currently eligible for early retirement under our pension plan. The following table reports the present value of the annual defined benefit payable for each named executive officer under our pension plan. The present value is based on the retirement benefit formula for the compensation levels and years of service of those officers. As of December 31, 2022, Messrs. Leidwinger and Martin had not yet satisfied the service requirements to participate in the pension plan. Pension Benefits — 2022 | Name | | | Plan Name | | | Number of Years of
Credited Service (#) | | | Present Value of
Accumulated
Benefits ($) | | | Payments During
Last Fiscal Year ($) | | | Kevin J. Leidwinger | | | United Pension Plan | | | | | 0 | | | | | | — | | | | | | — | | | | Eric J. Martin | | | United Pension Plan | | | | | 0 | | | | | | — | | | | | | — | | | | Robert F. Cataldo | | | United Pension Plan | | | | | 11 | | | | | | 268,187 | | | | | | — | | | | Jeremy J. Bahl | | | United Pension Plan | | | | | 22 | | | | | | 283,483 | | | | | | — | | | | Micah Woolstenhulme | | | United Pension Plan | | | | | 3 | | | | | | 50,044 | | | | | | — | | | | Randy A. Ramlo | | | United Pension Plan | | | | | 39 | | | | | | 1,651,037 | | | | | | — | | | | Randy L. Patten | | | United Pension Plan | | | | | 10 | | | | | | 107,784 | | | | | | — | | | | Michael T. Wilkins | | | United Pension Plan | | | | | 37 | | | | | | 1,490,354 | | | | | | — | | |
Nonqualified Deferred Compensation The Restoration Benefit Credit Plan, which is our supplemental executive retirement plan (“SERP”), permits certain of our executive officers, including our named executive officers, the opportunity to save a
portion of their direct compensation for retirement. Executives must make a deferral election in the year prior to the beginning of the earnings period. For performance-based cash bonuses, participants may make elections up to six months prior to the end of the performance period. Newly eligible executives have 30 days to enroll in the plan once they become eligible to participate. For amounts deferred on or prior to December 31, 2014, (a) we pay the deferred amounts to the deferring executive officer upon termination of employment for any reason after the executive reaches age 591∕2, and (b) the deferring executive officer receives the benefits in monthly installments adjusted for gains or losses over a 10-year period. For amounts deferred after December 31, 2014, (a) any employer contribution made to a participant’s account follows a predetermined vesting schedule, and become 100% vested upon reaching age 65, death, disability, or change in control, and (b) the deferring executive officers may elect to receive their benefits as a lump sum or as annual installments over a 10-year period. The SERP also allows the Company to make contributions to participants’ accounts. In 2022, employer contributions were made on behalf of Messrs. Cataldo, Ramlo and Wilkins. The contributions for Messrs. Ramlo and Wilkins were prorated for their partial year of service in 2022. As most participants in the SERP have separated from the Company, the Board of Directors has ceased adding new participants. Instead, the Board of Directors believes the NQDC, described below, paired with other executive benefits such as LTIP, competitively align with market trends for executive retirement planning. The NQDC is a non-qualified deferred compensation plan made available to management, including our named executive officers. Employees participating in the NQDC may elect to defer a portion of their salary, of which the contribution and earnings are immediately vested at 100%. Notational interest is credited to each participant’s deferred account which will be distributed in predetermined installments commencing upon his or her separation from service, or paid in a lump sum upon his or her death or a termination of employment upon a change in control of the Company. Participant deferrals are 100% vested immediately. If the executive officer dies or becomes disabled while employed by us, we will pay the plan benefits as directed by that executive officer. The SERP and NQDC allow participants to utilize in-service distributions to satisfy short-term savings goals. Participants can create these in-service payable accounts at the time of initial enrollment or at re-enrollment. The amounts deferred are subject to our creditors. The following table provides information about the participation by each of our named executive officers in the SERP. Messrs. Leidwinger, Martin, Bahl and Woolstenhulme do not participate in the SERP and Mr. Patten did not participate while he was with the Company. Messrs. Leidwinger and Martin were eligible to participate in the NQDC in 2022, but did not contribute. Nonqualified Deferred Compensation — 2022 | Name | | | Executive
Contributions in
Last FY
($)(1) | | | Registrant
Contributions in
Last FY
($)(2) | | | Aggregate
Earnings in Last FY
($)(3) | | | Aggregate
Withdrawals/
Distributions
($) | | | Aggregate Balance
at Last FYE
($)(4) | | | Kevin J. Leidwinger | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SERP | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | NQDC | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Eric J. Martin | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SERP | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | NQDC | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | Robert F. Cataldo | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SERP | | | | | — | | | | | | 46,875 | | | | | | (19,981) | | | | | | — | | | | | | 98,732 | | | | NQDC | | | | | — | | | | | | — | | | | | | (5,623) | | | | | | — | | | | | | 16,742 | | | | Jeremy J. Bahl | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SERP | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | NQDC | | | | | 91,815 | | | | | | — | | | | | | (23,862) | | | | | | — | | | | | | 155,516 | | |
| Name | | | Executive
Contributions in
Last FY
($)(1) | | | Registrant
Contributions in
Last FY
($)(2) | | | Aggregate
Earnings in Last FY
($)(3) | | | Aggregate
Withdrawals/
Distributions
($) | | | Aggregate Balance
at Last FYE
($)(4) | | | Micah Woolstenhulme | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SERP | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | NQDC | | | | | 11,739 | | | | | | — | | | | | | (784) | | | | | | — | | | | | | 13,187 | | | | Randy A. Ramlo | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SERP | | | | | — | | | | | | 203,004 | | | | | | (509,488) | | | | | | — | | | | | | 2,567,123 | | | | NQDC | | | | | 196,286 | | | | | | — | | | | | | (332,383) | | | | | | — | | | | | | 2,094,101 | | | | Randy L. Patten | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SERP | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | NQDC | | | | | 8,247 | | | | | | — | | | | | | (11,176) | | | | | | 6,205 | | | | | | 24,153 | | | | Michael T. Wilkins | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | SERP | | | | | — | | | | | | 79,170 | | | | | | (135,343) | | | | | | — | | | | | | 955,640 | | | | NQDC | | | | | 110,156 | | | | | | — | | | | | | (48,643) | | | | | | — | | | | | | 892,593 | | |
(1)
All amounts reported in this column were reported as part of either “Base Salary,” or “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table — 2022 in this proxy statement. (2)
All amounts reported in this column were reported as part of “All Other Compensation” in the Summary Compensation Table — 2022 in this proxy statement. (3)
The amounts reported in this column do not include any above-market earnings. (4)
Amounts in this column include the following amounts that were previously reported in the Summary Compensation Table as compensation for 2021 and 2020, respectively: Mr. Leidwinger — $0, $0; Mr. Martin — $0, $0; Mr. Cataldo — $65,625, $5,611; Mr. Bahl — $0, $0; Mr. Woolstenhulme — $0, $0; Mr. Ramlo — $355,093, $347,005; Mr. Patten — $0, $0; and Mr. Wilkins — $191,666, $193,828. Executive Employment Offer Letters Leidwinger Executive Employment Offer Letter The Leidwinger Offer Letter provides for an initial base salary of $750,000 per year. The Leidwinger Offer Letter provides that, for 2022, Mr. Leidwinger will be eligible for a potential cash bonus at target of 125% of base salary, pro-rated for his partial year of employment. The Leidwinger Offer Letter provides that Mr. Leidwinger’s cash bonus payout for 2022 will be no less than his pro-rated target ($336,563, based upon a start date of August 22, 2022), regardless of attainment of applicable performance measures. For 2023, Mr. Leidwinger will be eligible for a cash bonus at target of 125% of base salary, with an opportunity to achieve up to 200% of the target cash bonus opportunity. Martin Executive Employment Offer Letter The Martin Offer Letter provides for an initial base salary of $475,000 per year. The Martin Offer Letter also provides that, for 2022, the Chief Executive Officer will recommend a $250,000 cash bonus for Mr. Martin. In addition, the Martin Offer Letter provides that the Chief Executive Officer will recommend that Mr. Martin’s annual target bonus opportunity for subsequent years be set as $285,000 (i.e., 60% of base salary). The Martin Offer Letter also provides for a retention bonus payable in June 2023, 2024 and 2025 in the amounts of $10,000, $20,000 and $30,000, respectively. Potential Payments Upon Termination or Change in Control Ramlo Retirement As described above, in anticipation of Mr. Ramlo’s retirement in October 2022, Mr. Ramlo and the Company entered into the Ramlo Retirement Agreement, pursuant to which (1) the Company agreed to
continue paying Mr. Ramlo his base salary and provide regular employee benefits through the Ramlo Retirement Date, and on the Ramlo Retirement Date would pay Mr. Ramlo for his accrued paid time off, if any, consistent with the Company’s standard practices with respect to terminating employees; (2) Mr. Ramlo remained eligible for his 2022 bonus under the AIP, based on actual performance and prorated for his partial year of employment ($286,363); and (3) all unvested RSUs and stock options held by Mr. Ramlo vested on the Ramlo Retirement Date and the exercise period of all stock options held by Mr. Ramlo was extended to October 31, 2024. All unvested PSUs held by Mr. Ramlo lapsed and terminated as of the Ramlo Retirement Date. Mr. Ramlo was also paid $190,123 in respect of accrued and unused paid time off. Under the Ramlo Retirement Agreement, Mr. Ramlo is subject to a perpetual confidentiality covenant and non-compete and non-solicit covenants through April 30, 2024. The Ramlo Retirement Agreement contains a mutual non-disparagement covenant. Wilkins Retirement As described above, in connection with Mr. Wilkins’ planned retirement, the Company and Mr. Wilkins agreed that Mr. Wilkins would continue to be paid his base salary and that all of his employee benefits would continue through the Wilkins Retirement Date. Subject to his not voluntarily terminating his employment or being terminated for cause (as defined in Mr. Wilkins’ Change in Control Severance Agreement) prior to the Wilkins Retirement Date, Mr. Wilkins (i) received a retention bonus of $50,000, which was payable within 30 days following the Wilkins Retirement Date, and (ii) was entitled to be paid his bonus for 2022 under the AIP, based on actual performance and prorated for his partial year of employment ($127,188). In addition, all unvested RSUs and stock options held by Mr. Wilkins fully vested on the Wilkins Retirement Date and the exercise period on his stock options was extended to September 30, 2024. All unvested PSUs held by Mr. Wilkins lapsed and terminated upon his retirement. Mr. Wilkins was also paid $108,441 in respect of accrued and unused paid time off. Patten Resignation Mr. Patten did not receive any severance payments or benefits in connection with his resignation in July 2022, other than the pay out of his accrued and unused paid time off in the amount of $31,500, consistent with the Company’s standard practices with respect to terminating employees. Change in Control Severance Agreements The Company has entered into Change in Control Severance Agreements with each of the continuing named executive officers other than Mr. Bahl and Mr. Woolstenhulme, who are not party to any agreements or arrangements with the Company entitling him to severance payments or benefits. These agreements, among other things, provide 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 the sum of his or her highest annual base salary in effect during the 12-month period prior to his or her termination date plus his or her target annual incentive compensation (or, if higher, the average of the annual bonuses earned by the named executive officer in respect of the three fiscal years of the Company immediately preceding the fiscal year in which the change in control occurs); (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 Compensation Committee believes that these agreements help accomplish the Company’s compensation objectives of attracting and retaining superior talent through competitive compensation. The Compensation Committee also believes that it is appropriate to provide our named executive officers with the protections afforded by these agreements and that these agreements promote management independence and help retain and focus the named executive officers in the event of a change in control. Upon a termination of employment for any reason, our named executive officers will also receive compensation and benefits pursuant to our pension plan and deferred compensation plans. Such plans and arrangements do not discriminate in scope, terms or operation in favor of our named executive officers.
Our named executive officers are vested in the benefits available under these plans (specifically excluding the SERP), and therefore do not receive any enhanced benefit as a result of any termination or change in control. The information in the following tables describes the compensation that would be payable under specific circumstances if our continuing named executive officers’ employment had terminated on December 31, 2022: Potential Payments Upon Termination Or Change In Control — 2022 | Name | | | Death or
Retirement ($)(1) | | | Disability ($) | | | Change in
Control ($)(2) | | | Termination for
Cause ($) | | | Change in
Control With
Termination ($)(3)(4) | | | Kevin J. Leidwinger | | | | | 937,088 | | | | | | 600,525 | | | | | | 937,088 | | | | | | — | | | | | | 4,429,459 | | | | Eric J. Martin | | | | | 709,019 | | | | | | 459,019 | | | | | | 709,019 | | | | | | — | | | | | | 2,166,262 | | | | Robert F. Cataldo | | | | | 459,749 | | | | | | 359,749 | | | | | | 459,749 | | | | | | — | | | | | | 1,603,426 | | | Jeremy J. Bahl(5) | | | | | 241,835 | | | | | | 176,835 | | | | | | 241,835 | | | | | | — | | | | | | 1,096,983 | | | Micah Woolstenhulme(5) | | | | | 820,097 | | | | | | 670,097 | | | | | | 820,097 | | | | | | — | | | | | | 1,685,961 | | |
(1)
As of December 31, 2022, none of the continuing named executive officers have achieved normal retirement age under our benefit plans. The figures in this column assume the accelerated vesting by the Board of Directors of all unvested stock options, RSUs and PSUs, as applicable. For purposes of this table, we have assumed accelerated vesting of the PSUs at target. (2)
Under their existing Change in Control Severance Agreements, the continuing named executive officers are entitled to payment only if their employment is terminated by reason other than a Nonqualifying Termination. Nonqualifying Termination is defined to include (a) by the Company for cause, (b) by the named executive officer for reason other than a good reason, (c) the named executive officer’s death, and (d) by the Company due to the executive’s absence from the executive’s duties with the Company on a full-time basis for a period of 180 consecutive days as a result of the executive’s incapacity due to physical or mental illness. In addition to the value associated with stock options, the figures in this column assume the accelerated vesting by the Board of Directors of all RSUs and PSUs, as applicable. For purposes of this table, we have assumed accelerated vesting of the PSUs at target. (3)
Per their existing Change in Control Severance Agreements, the amounts reported in this column as separation compensation for the named executive officers equal 1.5 times the sum of the executive’s highest annual base salary and target annual incentive compensation (or, if higher, the average of the annual bonuses earned by the named executive officer in respect of the three fiscal years of the Company immediately preceding the fiscal year in which the change in control occurs). (4)
Under the terms of the existing Change in Control Severance Agreements for the named executive officers, if the payments and benefits they are entitled to receive under these agreements would result in the payment of the excise tax imposed by Section 4999 of the Internal Revenue Code, then their payments and benefits may be subject to reduction. Under their agreements, change in control payments and benefits are reduced by the minimum amount necessary to avoid federal excise tax, if the reduction would result in the named executive officers receiving a higher net after tax amount. The amounts in this column do not reflect the application of any reduction in payment or benefit according to the terms of the Change in Control Severance Agreements. (5)
While Messrs. Bahl and Woolstenhulme do not have Change in Control Severance Agreements, values are included for death, disability and change in control as if such agreement were in place. In general, we do not make a payment to a participant in our AIP for a particular year unless the participant is employed by us on the date incentive payments are made, typically in March of the following year. In the case of death or retirement, and at the discretion of our Chairman of the Board and our Chief Executive Officer, we will pay an AIP payment to a participant prorated to the date of death or retirement. Amounts shown for death and retirement assume our Chairman of the Board and our Chief Executive Officer exercised their discretion to make the payment. The Change in Control Severance Agreements in place for
continuing named executive officers state that they will be paid an amount equal to their target payment under our AIP for the year in which the change in control occurs, prorated to the date of termination. In this case, termination is presumed to occur on December 31, 2022. Upon termination of employment due to death or retirement, the Board of Directors, may at its discretion, accelerate the vesting of any unvested option awards. In addition, under the terms of the option award agreements, the vesting of unvested stock options will accelerate upon a change in control. Amounts shown are calculated using the fair market value of the stock underlying in-the-money options that would have become exercisable on December 31, 2022, assuming that the Board of Directors accelerated the vesting of all unvested options. Upon termination of employment due to death, retirement, disability or a change in control not involving termination, the Board of Directors, may at its discretion, accelerate the vesting of any unvested RSU or PSU awards. Amounts shown assumes a voluntary acceleration of vesting by the Board of Directors, with PSUs assumed to be accelerated at target. The Change in Control Severance Agreements for the named executive officers provide for the continuation of medical, accident, disability and life insurance benefits with respect to the named executive officer and his/her dependents for a period of 18 months following a change in control at substantially the same level that existed immediately prior to the change in control. The amounts shown for the named executive officers reflect the cost of these benefits as they existed at December 31, 2022. The Change in Control Severance Agreements for the named executive officers provide for outplacement services for a period of 12 months following a change in control. The cost to the Company of these outplacement services is capped for each executive at $15,000. Pay Ratio Disclosure As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following disclosure about the relationship of the annual total compensation of our employees to the annual total compensation of Kevin J. Leidwinger, our President and Chief Executive Officer as of December 31, 2022. The median of the annual total compensation of all of our employees, excluding Kevin J. Leidwinger, was $94,537 in 2022, calculated in accordance with the Summary Compensation Table rules. To identify the median employee, we compiled total cash compensation identified in our payroll records, and excluded equity awards, for all full-time, part-time, temporary and seasonal employees employed as of December 31, 2022. We selected total cash compensation as it reflects the principal form of compensation delivered to all of our employees. Further, we annualized cash compensation (other than bonus awards) for permanent full- and part-time employees who were not employed for all of 2022. The annual total compensation of Kevin J. Leidwinger for purposes of this disclosure is $3,376,364, which differs from the amount reported in the Total column of the Summary Compensation Table — 2022 due to the annualization of Mr. Leidwinger’s compensation to reflect his mid-year commencement of employment, as discussed further below. Because Mr. Leidwinger was appointed President and Chief Executive Officer effective August 22, 2022, we annualized his base salary, AIP award and, because the amount of such awards was pro-rated for his partial year of service, his annual equity awards, and added the disclosed values of the relocation and temporary housing expenses incurred in connection with his relocation, the country club dues paid on his behalf, and the incremental costs associated with his personal use of corporate aircraft. We annualized the amount of Mr. Leidwinger’s 401(k) matching contribution, certain country club expenses and the incremental costs associated with his personal use of corporate aircraft, as such amounts were impact by Mr. Leidwinger’s partial year of service. We did not annualize Mr. Leidwinger’s new hire RSU award with respect to 17,500 shares that was granted in connection with his hiring as the value of such award was not impacted by the period of service during 2022, nor did we annualize the relocation and temporary housing expenses incurred in connection with his relocation as such amounts were not prorated or reduced to reflect Mr. Leidwinger’s mid-year employment commencement date. Based on this information, for 2022 the ratio of the annual total compensation of Mr. Leidwinger, our President and Chief Executive Officer, to the median of the annual total compensation of all employees is estimated to be 36 to 1.
PAY VERSUS PERFORMANCE | Pay Versus Performance | | Year(1) | | | Summary
Compensation
Table
Total for
Leidwinger
($)(2) | | | Summary
Compensation
Table
Total for
Ramlo
($)(2) | | | Compensation
Actually
Paid to
Leidwinger
($)(3) | | | Compensation
Actually
Paid to
Ramlo
($)(3) | | | Average
Summary
Compensation
Table
Total for
Non-PEO
Named
Executive
Officers
($)(2) | | | Average
Compensation
Actually
Paid to
Non-PEO
Named
Executive
Officers
($)(3) | | | Value of Initial
Fixed $100 Investment
Based On:(4) | | | Net
Income
($) | | | Adjusted
ROE
(%)(6) | | | | Total
Shareholder
Return
($) | | | Peer Group
Total
Shareholder
Return
($)(5) | | | 2022 | | | | | 1,551,845 | | | | | | 1,739,780 | | | | | | 1,692,277 | | | | | | 1,729,603 | | | | | | 836,983 | | | | | | 765,289 | | | | | | 72.30 | | | | | | 126.34 | | | | | | 15,031,000 | | | | | | 3.0 | | | | 2021 | | | | | N/A | | | | | | 2,387,206 | | | | | | N/A | | | | | | 1,651,860 | | | | | | 865,170 | | | | | | 705,406 | | | | | | 60.00 | | | | | | 139.08 | | | | | | 80,594,000 | | | | | | 7.2 | | | | 2020 | | | | | N/A | | | | | | 2,118,816 | | | | | | N/A | | | | | | (787,543) | | | | | | 1,075,628 | | | | | | 63,988 | | | | | | 63.53 | | | | | | 118.78 | | | | | | (112,706,000) | | | | | | (13.4) | | |
(1)
The Principal Executive Officer (“PEO”) and named executive officers for the applicable years were as follows: —
2022: Kevin J. Leidwinger assumed the role of the Company’s PEO, effective August 22, 2022, and Randy A. Ramlo served as the Company’s PEO during 2022 up to August 21, 2022. The Company’s other named executive officers for 2022 were: Eric J. Martin; Robert F. Cataldo; Jeremy J. Bahl; Micah Woolstenhulme; Randy L. Patten; and Michael T. Wilkins. —
2021: Randy A. Ramlo served as the Company’s PEO for the entirety of 2021 and the Company’s other named executive officers were: Michael T. Wilkins; Randy L. Patten; Robert F. Cataldo; Micah Woolstenhulme; and Dawn M. Jaffray. —
2020: Randy A. Ramlo served as the Company’s PEO for the entirety of 2020 and the Company’s other named executive officers were: Michael T. Wilkins; Dawn M. Jaffray; Robert F. Cataldo; and Neal R. Scharmer. (2)
Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for the applicable year in the case of Messrs. Leidwinger and Ramlo and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year for the Company’s named executive officers reported for the applicable year other than the PEOs for such years. (3)
To calculate compensation actually paid, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Messrs. Leidwinger and Ramlo and for the average of the other named executive officers is set forth following the footnotes to this table. (4)
Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2019. Historic stock price performance is not necessarily indicative of future stock price performance. (5)
The TSR Peer Group consists of Standard & Poor’s 600 Property and Casualty Index. This is the same industry index used for purposes of the Company’s stock price performance graph in its Annual Report to stockholders. (6)
As noted in the CD&A, for 2022, the Compensation Committee determined that Adjusted ROE continues to be viewed as a core driver of the Company’s performance and stockholder value creation and, accordingly, was utilized as a component in both the 2022 AIP and 2022 PSUs. Adjusted ROE is our return-on-equity, calculated in accordance with GAAP, excluding the impact of market value changes on investments.
Reconciliation of Compensation Actually Paid Adjustments | Year | | | Summary
Compensation
Table
Total
($)(a) | | | (Minus)
Change in
Accumulated
Benefits
Under
Defined
Benefit and
Actuarial
Pension
Plans
($)(b) | | | Plus
Service
Costs
Under
Defined
Benefit and
Actuarial
Pension
Plans
($)(c) | | | (Minus)
Grant
Date Fair
Value of
Stock
Option
and
Stock
Awards
Granted in
Fiscal
Year
($)(d) | | | Plus
Fair
Value at
Fiscal
Year-End of
Outstanding
and Unvested
Stock
Option and
Stock
Awards Granted
in Fiscal
Year
($)(e) | | | Plus/(Minus)
Change in
Fair
Value of
Outstanding
and Unvested
Stock
Option
and
Stock
Awards
Granted
in
Prior
Fiscal
Years
($)(f) | | | Plus
Fair
Value at
Vesting of
Stock
Option and
Stock
Awards
Granted in
Fiscal
Year
that
Vested
During
Fiscal
Year
($)(g) | | | Plus/(Minus)
Change in
Fair
Value as
of Vesting
Date of
Stock
Option and
Stock
Awards
Granted in
Prior
Years for
which
Applicable
Vesting Conditions
Were
Satisfied
During
Fiscal
Year
($)(h) | | | (Minus)
Fair
Value as
of Prior
Fiscal Year-End
of Stock
Option and
Stock
Awards
Granted in
Prior
Fiscal
Years
that
Failed to
Meet
Applicable
Vesting
Conditions
During
Fiscal Year
($)(i) | | | Equals
Compensation
Actually
Paid
($) | | | Leidwinger | | | 2022 | | | | | 1,551,845 | | | | | | 0 | | | | | | N/A | | | | | | (919,152) | | | | | | 851,252 | | | | | | N/A | | | | | | 171,811 | | | | | | 36,521 | | | | | | N/A | | | | | | 1,692,277 | | | | 2021 | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | 2020 | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | Ramlo | | | 2022 | | | | | 1,739,780 | | | | | | 0 | | | | | | 24,998 | | | | | | (297,179) | | | | | | 0 | | | | | | N/A | | | | | | N/A | | | | | | 262,004 | | | | | | N/A | | | | | | 1,729,603 | | | | 2021 | | | | | 2,387,206 | | | | | | (4,867) | | | | | | 11,752 | | | | | | (856,026) | | | | | | 626,281 | | | | | | (45,121) | | | | | | N/A | | | | | | 281,303 | | | | | | (748,668) | | | | | | 1,651,860 | | | | 2020 | | | | | 2,118,816 | | | | | | (323,233) | | | | | | (20,915) | | | | | | (570,904) | | | | | | 409,574 | | | | | | (611,708) | | | | | | N/A | | | | | | (141,382) | | | | | | (1,647,791) | | | | | | (787,543) | | | | Average Other Named Executive Officers | | | 2022 | | | | | 836,983 | | | | | | 0 | | | | | | 13,594 | | | | | | (296,673) | | | | | | 235,236 | | | | | | 23,771 | | | | | | 12,929 | | | | | | 38,784 | | | | | | (99,335) | | | | | | 765,289 | | | | 2021 | | | | | 865,170 | | | | | | (33,855) | | | | | | 30,651 | | | | | | (282,058) | | | | | | 205,902 | | | | | | (8,141) | | | | | | N/A | | | | | | 61,302 | | | | | | (133,565) | | | | | | 705,406 | | | | 2020 | | | | | 1,075,628 | | | | | | (224,026) | | | | | | 43,693 | | | | | | (316,962) | | | | | | 209,886 | | | | | | (184,690) | | | | | | 400 | | | | | | (41,398) | | | | | | (498,543) | | | | | | 63,988 | | |
(a)
Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the other named executive officers, amounts shown represent averages. (b)
Represents the aggregate change in the actuarial present value of the accumulated benefits under all defined benefit and actuarial pension plans reported in the Summary Compensation Table for the indicated fiscal year. (c)
Represents the sum of the actuarial present value of the benefits under all defined benefit and actuarial pension plans attributable to services rendered during the indicated fiscal year, calculated using the same methodology as used in the Company’s financial statements under generally accepted accounting principles. (d)
Represents the grant date fair value of the stock option and stock awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. (e)
Represents the fair value as of the indicated fiscal year-end of the outstanding and unvested option awards and stock awards granted during such fiscal year, computed in accordance with the methodology used for financial reporting purposes. (f)
Represents the change in fair value during the indicated fiscal year of each option award and stock award that was granted in a prior fiscal year and that remained outstanding and unvested as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes and, for awards subject to performance-based vesting conditions, based on the probable outcome of such performance-based vesting conditions as of the last day of the fiscal year. (g)
Represents the fair value at vesting of the option awards and stock awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes.
(h)
Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each option award and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. (i)
Represents the fair value as of the last day of the prior fiscal year of the option award and stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. (j)
See footnote 1 above for the named executive officers included in the average for each year. Relationship Between Pay and Performance We believe the compensation actually paid (“CAP”) in each of the years reported above and over the three-year cumulative period are reflective of the Compensation Committee’s emphasis on “pay-for-performance” as the CAP fluctuated year-over-year, primarily due to the result of our stock performance and our varying levels of achievement against pre-established performance goals under our 2022 AIP and our 2022 PSU awards, including our Adjusted ROE performance. The following graphics reflect the relationship between the CAP to our NEOs and our TSR, the TSR of the TSR Peer Group, our net income and our Adjusted ROE during the three most recently completed fiscal years.
Performance Measures Used to Link Company Performance and Compensation Actually Paid to the Named Executive Officers The following is a list of financial performance measures, which in the Company’s assessment represent the most important financial performance measures used by the Company to link CAP to the named executive officers for 2022. Please see the CD&A for a further description of these metrics and how they are used in the Company’s executive compensation program, including the AIP and 2022 PSUs. •
Adjusted ROE •
Statutory Combined Ratio •
GAAP Combined Ratio
DIRECTOR COMPENSATION We have designed the compensation of our directors to attract and retain qualified directors and to align director compensation with the interests of our shareholders. The Compensation Committee is responsible for making recommendations to the Board of Directors regarding compensation plans and the elements of director compensation. Annual Retainer, Committee Meetings and Expenses Outstanding Equity Awards at Fiscal Year-End – 2015
| | | | | | | | | | | | | | | | | | Option Awards | Stock Awards | | Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($ / Sh) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | | Randy A. Ramlo | | | | | | 30,148 |
| (1) | $ | 1,154,970 |
| | | 10,000 |
| — |
| $ | 39.13 |
| 2/17/2016 | | | | | | | 15,000 |
| — |
| 35.23 |
| 2/16/2017 | | | | | | | 14,340 |
| — |
| 33.43 |
| 5/21/2018 | | | | | | | 3,000 |
| — |
| 22.42 |
| 5/19/2020 | | | | | | | 14,240 |
| 3,560 |
| 20.54 |
| 2/18/2021 | (3) | | | | | | 7,444 |
| 11,165 |
| 23.96 |
| 2/15/2023 | (4) | | | | | | 5,925 |
| 23,699 |
| 29.61 |
| 2/21/2024 | (5) | | | | | | — |
| 49,067 |
| 29.12 |
| 2/20/2025 | (2) | | | | | Kevin W. Helbing | | | | | | — |
| | — |
| | | — |
| 500 |
| 20.54 |
| 2/18/2021 | (3) | | | | | | — |
| 1,000 |
| 20.93 |
| 2/24/2022 | (6) | | | | | | — |
| 1,500 |
| 23.96 |
| 2/15/2023 | (4) | | | | | | — |
| 2,000 |
| 29.61 |
| 2/21/2024 | (5) | | | | | | — |
| 2,500 |
| 29.12 |
| 2/20/2025 | (2) | | | | | Michael T. Wilkins | | | | | | 15,795 |
| (7) | 605,106 |
| | | 5,000 |
| — |
| 39.13 |
| 2/17/2016 | | | | | | | 10,000 |
| — |
| 35.23 |
| 2/16/2017 | | | | | | | 8,463 |
| — |
| 33.43 |
| 5/21/2018 | | | | | | | 3,000 |
| — |
| 22.42 |
| 5/19/2020 | | | | | | | 7,574 |
| 1,893 |
| 20.54 |
| 2/18/2021 | (3) | | | | | | 3,999 |
| 5,999 |
| 23.96 |
| 2/15/2023 | (4) | | | | | | 3,194 |
| 12,777 |
| 29.61 |
| 2/21/2024 | (5) | | | | | | — |
| 24,132 |
| 29.12 |
| 2/20/2025 | (2) | | | | | Barrie W. Ernst | | | | | | 10,008 |
| (8) | 383,406 |
| | | 2,500 |
| — |
| 39.13 |
| 2/17/2016 | | | | | | | 5,000 |
| — |
| 35.23 |
| 2/16/2017 | | | | | | | 7,114 |
| — |
| 33.43 |
| 5/21/2018 | | | | | | | 3,000 |
| — |
| 22.42 |
| 5/19/2020 | | | | | | | 5,479 |
| 1,370 |
| 20.54 |
| 2/18/2021 | (3) | | | | | | 2,712 |
| 4,068 |
| 23.96 |
| 2/15/2023 | (4) | | | | | | 1,901 |
| 7,605 |
| 29.61 |
| 2/21/2024 | (5) | | | | | | — |
| 14,209 |
| 29.12 |
| 2/20/2025 | (2) | | | | | Neal R. Scharmer | | | | | | 7,987 |
| (9) | 305,982 |
| | | 4,639 |
| — |
| 33.43 |
| 5/21/2018 | | | | | | | 3,000 |
| — |
| 22.42 |
| 5/19/2020 | | | | | | | 1,010 |
| 1,010 |
| 20.54 |
| 2/18/2021 | (3) | | | | | | 2,030 |
| 3,044 |
| 23.96 |
| 2/15/2023 | (4) | | | | | | 1,608 |
| 6,433 |
| 29.61 |
| 2/21/2024 | (5) | | | | | | — |
| 12,211 |
| 29.12 |
| 2/20/2025 | (2) | | | |
| | (1) | Subject to Mr. Ramlo’s continued employment on the applicable vesting date, 7,322 restricted stock units ("RSU") vested on 2/18/2016; 5,304 RSUs vest on 2/15/2018; 9,151 RSUs vest on 2/21/2019; and 8,371 RSUs vest on 2/20/2020. |
| | (2) | The unexercisable portion of these options vests one-fifth each on 2/21/2016, 2/21/2017, 2/21/2018, 2/21/2019, and 2/21/2020. |
| | (3) | The unexercisable portion of these options vested 2/18/2016. |
| | (4) | The unexercisable portion of these options vests one-third each on 2/15/2016, 2/15/2017 and 02/15/2018. |
| | (5) | The unexercisable portion of these options vests one-fourth each on 2/21/2016, 2/21/2017, 2/21/2018 and 2/21/2019. |
| | (6) | The unexercisable portion of these options vests one-half each on 2/24/2016 and 2/24/2017. |
| | (7) | Subject to Mr. Wilkins’ continued employment on the applicable vesting date, 3,894 RSUs vested on 2/18/2016; 2,850 RSUs vest on 2/15/2018; 4,934 RSUs vest on 2/21/2019; and 4,117 RSUs vest on 2/20/2020. |
| | (8) | Subject to Mr. Ernst’s continued employment on the applicable vesting date, 2,714 RSUs vested on 02/18/2016; 1,933 RSUs vest on 2/15/2018; 2,937 RSUs vest on 2/21/2019; and 2,424 RSUs vest on 2/20/2020. |
| | (9) | Subject to Mr. Scharmer’s continued employment on the applicable vesting date, 1,974 RSUs vested on 2/18/2016; 1,446 RSUs vest on 2/15/2018; 2,484 RSUs vest on 2/21/2019; and 2,083 RSUs vest on 2/20/2020. |
OPTION EXERCISES AND STOCK AWARD VESTING
The following table represents the number and value of shares acquired by our named executive officers through the exercise of vested stock options and the vesting of stock awards under our Stock Plan during fiscal year 2015.
Option Exercises and Stock Award Vesting – 2015
| | | | | | | | | | | | | | | | | | Option Awards | Stock Awards | | Name | Number of
Shares Acquired
on Exercise
(#) | Value Realized
on Exercise
($) | Number of
Shares Acquired
on Vesting
(#) | Value Realized
on Vesting
($) | | Randy A. Ramlo | | — |
| | $ | — |
| | — |
| | $ | — |
| | Kevin W. Helbing | | 2,375 |
| | 33,353 |
| | — |
| | — |
| | Dawn M. Jaffray | | — |
| | — |
| | — |
| | — |
| | Michael T. Wilkins | | — |
| | — |
| | — |
| | — |
| | Barrie W. Ernst | | — |
| | — |
| | — |
| | — |
| | Neal R. Scharmer | | 10,529 |
| | 50,737 |
| | — |
| | — |
|
PENSION BENEFITS
All of our employees who are 21 years of age and older automatically participate in our United Pension Plan after completing one year of employment and 1,000 hours of service. When eligibility criteria are met, the employee participates in the plan on the next January 1 or July 1. Employees become 100 percent vested in the plan after completing five years of service. Plan benefits equal 1.25 percent of an employee’s five year average annual compensation, plus .5 percent of average annual compensation in excess of covered compensation, multiplied by the lesser of years of service or 35 years. Covered compensation is determined by reference to the Social Security taxable wage base. Average annual compensation means annual compensation, averaged over the period of five consecutive years of service that produces the highest average. In most cases, the five year measurement period is the last five years of full-time employment prior to retirement. The pension plan uses only salary to determine the average annual compensation. Under federal law, for 2015 the maximum salary that can be considered for determining benefits was $265,000.
The normal form of payment under the pension plan is a joint and 50 percent survivor annuity for a participant who is married on the annuity starting date and a life annuity for a participant who is unmarried on the annuity starting date. Participants may elect to receive a monthly pension over the participant’s life or a term of up to 20 years or, if the actuarial equivalent of the annuity is $10,000 or less, in the form of a lump sum cash payment. The amount of monthly pension benefits varies depending upon the form of payment elected by the participant, but the payments are in each case the actuarial equivalent of the normal form of payment. Assets of the pension plan belong to the Company and are not taxable to the employee until paid as a benefit. Such assets are subject to a substantial risk of forfeiture until vested by the employee.
Normal retirement age under the pension plan is 65, which is the earliest time a participant may retire under the pension plan without any benefit reduction due to age. The earliest age a participant may retire under the plan and still receive benefits is age 55. Participants electing early retirement with at least 20 years of service receive a reduction in benefits of 6 percent for each year the participant retires after age 55 and before age 60, and a reduction of benefits of 4 percent for each year the participant retires after age 60 and before age 65. If a participant elects early retirement with less than 20 years of service to us, then the participant’s reduction in benefits is based on an actuarial calculation. Of our named executive officers, only Messrs. Ernst and Scharmer are currently eligible for early retirement under our pension plan.
The following table reports the present value of the annual defined benefit payable for each named executive officer under our United Pension Plan. The present value is based on the retirement benefit formula for the compensation levels and years of service of those officers.
Pension Benefits – 2015
| | | | | | | | | | | | | | | Name | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefits ($) | Payments During Last Fiscal Year ($) | | Randy A. Ramlo | United Pension Plan | 32 | | $ | 1,123,557 |
| | | $ | — |
| | | Kevin W. Helbing | United Pension Plan | 8 | | 92,256 |
| | | — |
| | | Dawn M. Jaffray | United Pension Plan | — | | — |
| | | — |
| | | Michael T. Wilkins | United Pension Plan | 30 | | 968,874 |
| | | — |
| | | Barrie W. Ernst | United Pension Plan | 13 | | 583,906 |
| | | — |
| | | Neal R. Scharmer | United Pension Plan | 21 | | 817,773 |
| | | — |
| |
NONQUALIFIED DEFERRED COMPENSATION
Nonqualified Deferred Compensation Plan
We have a nonqualified deferred compensation plan (“Deferred Compensation Plan”) that permits certain of our executive officers, including named executive officers, the opportunity to save a portion of their direct compensation for retirement. Executives must make a deferral election in the year prior to the beginning of the earnings period. For Performance Based Bonuses, participants may make elections up to six months prior to the end of the earnings period. Newly eligible executives have 30 days to enroll in the plan once they become eligible to participate.
We pay the deferred amounts to the deferring executive officer upon termination of employment for any reason after the executive reaches age 59½. For amounts deferred prior to December 31, 2014, the deferring executive officer receives the benefits in monthly installments adjusted for gains or losses over a 10-year period. For amounts deferred after January 1, 2015, deferring executive officers may elect to receive their benefits within a ten-year period or less. Participant deferrals are always deemed to be 100% vested. If the executive officer dies or becomes disabled while employed by us, we will pay the plan benefits as directed by that executive officer. The amounts deferred are subject to our creditors.
As amended, the Deferred Compensation Plan also allows participants to utilize in-service distributions to satisfy short-term savings goals. Participants can create these in-service payable accounts at the time of initial enrollment or at re-enrollment.
Executive Nonqualified Excess Plan
In 2014, the Deferred Compensation Plan was supplemented with an Executive Nonqualified Excess Plan (“Excess Plan”) to allow the Company to make fully discretionary matching contributions (“Employer Contributions”) at any time. The Excess Plan is an unfunded, nonqualified deferred compensation plan pursuant to which the Company is authorized to make matching contributions to participants’ accounts at a 3 to 1 match, up to 25 percent of a participant’s salary. Any Employer Contribution made to a participant’s account follows a predetermined vesting schedule. Notational interest is credited to each participant’s deferred account which will be distributed in monthly installments commencing upon his or her separation from service, or paid in a lump sum upon his or her death or a termination of employment upon a change in control of the Company. In 2014, Employer Contributions were made for four of the named executive officers. We believe this plan and its associated vesting is an important tool to retain our executive officers.
The following table provides information about the participation by each of our named executive officers in the Deferred Compensation Plan and the Excess Plan.
Nonqualified Deferred Compensation – 2015
| | | | | | | | | | | | | | | | | | | | | | | Name | Employer Contributions
in 2015
($) | | Executive Contributions
in 2015
($) (1) | | Aggregate Earnings
in 2015
($) (2) | | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at 12/31/2015
($) | | | Randy A. Ramlo | | | | | | | | | | (3) | | Deferred Compensation Plan | $ | — |
| | $ | 200,200 |
| | $ | 8,895 |
| | $ | — |
| | $ | 380,618 |
| | | Executive Excess Plan | 229,027 |
| | — |
| | (4,768 | ) | | — |
| | 456,824 |
| | | Ramlo Total | $ | 229,027 |
| | $ | 200,200 |
| | $ | 4,126 |
| | $ | — |
| | $ | 837,442 |
| | | Kevin W. Helbing | | | | | | | | | | (4) | | Deferred Compensation Plan | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | | Executive Excess Plan | — |
| | — |
| | — |
| | — |
| | — |
| | | Helbing Total | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | | Dawn M. Jaffray | | | | | | | | | | (5) | | Deferred Compensation Plan | $ | — |
| | $ | 5,475 |
| | $ | (5 | ) | | $ | — |
| | $ | 5,470 |
| | | Executive Excess Plan | 13,251 |
| | — |
| | (231 | ) | | — |
| | 13,020 |
| | | Jaffray Total | $ | 13,251 |
| | $ | 5,475 |
| | $ | (236 | ) | | $ | — |
| | $ | 18,490 |
| | | Michael T. Wilkins | | | | | | | | | | (6) | | Deferred Compensation Plan | $ | — |
| | $ | 42,700 |
| | $ | 2,937 |
| | $ | — |
| | $ | 119,646 |
| | | Executive Excess Plan | 86,096 |
| | — |
| | (2,738 | ) | | — |
| | 170,320 |
| | | Wilkins Total | $ | 86,096 |
| | $ | 42,700 |
| | $ | 199 |
| | $ | — |
| | $ | 289,966 |
| | | Barrie W. Ernst | | | | | | | | | | (7) | | Deferred Compensation Plan | $ | — |
| | $ | 27,200 |
| | $ | 5,954 |
| | $ | — |
| | $ | 212,440 |
| | | Executive Excess Plan | 27,227 |
| | — |
| | (2,280 | ) | | — |
| | 53,025 |
| | | Ernst Total | $ | 27,227 |
| | $ | 27,200 |
| | $ | 3,674 |
| | $ | — |
| | $ | 265,465 |
| |
| | | | | | | | | | | | | | | | | | | | | | | Name | Employer Contributions
in 2015
($) | | Executive Contributions
in 2015
($) (1) | | Aggregate Earnings
in 2015
($) (2) | | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at 12/31/2015
($) | | | Neal R. Scharmer | | | | | | | | | | (8) | | Deferred Compensation Plan | $ | — |
| | $ | 14,740 |
| | $ | 2,180 |
| | $ | — |
| | $ | 67,971 |
| | | Executive Excess Plan | — |
| | — |
| | — |
| | — |
| | — |
| | | Scharmer Total | $ | — |
| | $ | 14,740 |
| | $ | 2,180 |
| | $ | — |
| | $ | 67,971 |
| |
| | (1) | All amounts reported in this column were reported as part of either “Base Salary,” “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table – 2015 in this proxy statement. |
| | (2) | All amounts reported in this column include above-market earnings reported as part of "Change in Pension Value and Nonqualified Deferred Compensation Earnings" in the Summary Compensation Table - 2015 in this proxy statement. For Mr. Ramlo, this amount was $2,411. For Mr. Wilkins, this amount was $698. For Mr. Scharmer, this amount was $470. For Mr. Ernst, this amount was $607. For Mr. Scharmer, this amount was $470. |
| | (3) | The amount in this column for Mr. Ramlo includes (i) $200,200 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $2,411 reported as above market deferred compensation earnings in our 2015 proxy statement; (ii) $20,000 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $193 reported as above-market deferred compensation earnings in our 2014 proxy statement; and (iii) $22,000 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $1,377 reported as above-market deferred compensation earnings in our 2013 proxy statement. At December 31, 2015, $456,824 of Mr. Ramlo’s account balance under the Excess Plan was unvested.
|
| | (4) | Mr. Helbing is not eligible to participate in our Deferred Compensation Plan or Excess Plan. |
| | (5) | At December 31, 2015, $13,020.24 of Ms. Jaffray's account balance under the Excess Plan was unvested. |
| | (6) | The amount in this column for Mr. Wilkins includes (i) $42,700 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $698 reported as above market deferred compensation earnings in our 2015 proxy statement; (ii) $20,000 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $69 reported as above-market deferred compensation earnings in our 2014 proxy statement; and (iii) $20,000 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $217 reported as above-market deferred compensation earnings in our 2013 proxy statement. At December 31, 2015, $170,320 of Mr. Wilkins’ account balance under the Excess Plan was unvested.
|
| | (7) | The amount in this column for Mr. Ernst includes (i) $27,200 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $607 reported as above market deferred compensation earnings in our 2015 proxy statement; (ii) $16,347 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $304 reported as above-market deferred compensation earnings in our 2014 proxy statement; and (iii) $12,369 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $2,521 reported as above-market deferred compensation earnings in our 2013 proxy statement. At December 31, 2015, $53,025 of Mr. Ernst’s account balance under the Excess Plan was unvested.
|
| | (8) | The amount in this column for Mr. Scharmer includes (i) $14,740 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $470 reported as above market deferred compensation earnings in our 2015 proxy statement; (ii) $13,802 reported as part of either “Base Salary” or “Non-Equity
|
Incentive Plan Compensation” and $36 reported as above-market deferred compensation earnings in our 2014 proxy statement; and (iii) $8,595 reported as part of either “Base Salary” or “Non-Equity Incentive Plan Compensation” and $93 reported as above-market deferred compensation earnings in our 2013 proxy statement. At December 31, 2015, Mr. Scharmer’s account balance was fully vested.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Change in Control Severance Agreements
On May 21, 2014, the Company entered into Change in Control Severance Agreements with Messrs. Ramlo, Wilkins, Ernst and Scharmer. On May 20, 2015, the Company entered into a similar agreement with Ms. Jaffray. These agreements, among other things, provide 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 his or 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 Compensation Committee believes that these agreements help accomplish the Company’s compensation objectives of attracting and retaining superior talent through competitive compensation. The Compensation Committee also believes that it is appropriate to provide our named executive officers with the protections afforded by these agreements and that these agreements promote management independence and help retain and focus the named executive officers in the event of a change in control.
Upon the termination of employment for any reason, our named executive officers will also receive compensation and benefits pursuant to our defined benefit pension plan and deferred compensation plan. Such plans and arrangements do not discriminate in scope, terms or operation in favor of our named executive officers. Our named executive officers are vested in the benefits available under these plans (specifically excluding the executive excess plan), and therefore do not receive any enhanced benefit as a result of any termination or change in control.
The information in the following tables describes the compensation that would be payable under specific circumstances if our named executive officers’ employment had terminated on December 31, 2015:
Potential Payments Upon Termination Or Change In Control – 2015
| | | | | | | | | | | | | | | | | | | | | | | Death or Retirement (1) | | Disability | | Change in Control (2) | | Termination for Cause | | Gross Amount Change in Control With Termination(3) (4) | | Randy A. Ramlo | | | | | | | | | | | Separation Compensation | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 1,577,100 |
| Annual Incentive Plan (5) | 322,930 |
| | — |
| | — |
| | — |
| | 300,400 |
| Stock Option Awards (6) | 880,586 |
| | 880,586 |
| | 880,586 |
| | — |
| | 880,586 |
| Restricted Stock Unit Awards (7) | 1,154,970 |
| | 1,154,970 |
| | 1,154,970 |
| | — |
| | 1,154,970 |
| Continued Insurance Benefits (8) | — |
| | — |
| | — |
| | — |
| | 28,116 |
| Outplacement Services (9) | — |
| | — |
| | — |
| | — |
| | 15,000 |
| | Total Amount Ramlo: | $ | 2,358,486 |
| | $ | 2,035,556 |
| | $ | 2,035,556 |
| | $ | — |
| | $ | 3,956,172 |
| | Kevin W. Helbing | | | | | | | | | | | Separation Compensation | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| Annual Incentive Plan (5) | 24,342 |
| | — |
| | — |
| | — |
| | — |
| Stock Option Awards (6) | 65,190 |
| | 65,190 |
| | 65,190 |
| | — |
| | 65,190 |
| Restricted Stock Unit Awards (7) | — |
| | — |
| | — |
| | — |
| | — |
| Continued Insurance Benefits (8) | — |
| | — |
| | — |
| | — |
| | — |
| Outplacement Services (9) | — |
| | — |
| | — |
| | — |
| | — |
| | Total Amount Helbing: | $ | 89,532 |
| | $ | 65,190 |
| | $ | 65,190 |
| | $ | — |
| | $ | 65,190 |
| | Dawn M. Jaffray | | | | | | | | | | | Separation Compensation | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 684,375 |
| Annual Incentive Plan (5) | $ | 94,900 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 91,250 |
| Stock Option Awards (6) | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| Restricted Stock Unit Awards (7) | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| Continued Insurance Benefits (8) | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 8,040 |
| Outplacement Services (9) | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 15,000 |
| | Total Amount Jaffray: | $ | 94,900 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 798,665 |
|
| | | | | | | | | | | | | | | | | | | | | | | Death or Retirement (1) | | Disability | | Change in Control (2) | | Termination for Cause | | Gross Amount Change in Control With Termination(3) (4) | | Michael T. Wilkins | | | | | | | | | | | Separation Compensation | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 847,500 |
| Annual Incentive Plan (5) | 117,520 |
| | — |
| | — |
| | — |
| | 113,000 |
| Stock Option Awards (6) | 452,657 |
| | 452,657 |
| | 452,657 |
| | — |
| | 452,657 |
| Restricted Stock Unit Awards (7) | 605,106 |
| | 605,106 |
| | 605,106 |
| | — |
| | 605,106 |
| Continued Insurance Benefits (8) | — |
| | — |
| | — |
| | — |
| | 28,296 |
| Outplacement Services (9) | — |
| | — |
| | — |
| | — |
| | 15,000 |
| | Total Amount Wilkins: | $ | 1,175,283 |
| | $ | 1,057,763 |
| | $ | 1,057,763 |
| | $ | — |
| | $ | 2,061,559 |
| | Barrie W. Ernst | | | | | | | | | | | Separation Compensation | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 622,500 |
| Annual Incentive Plan (5) | 86,320 |
| | — |
| | | | — |
| | 83,000 |
| Stock Option Awards (6) | 279,465 |
| | 279,465 |
| | 279,465 |
| | — |
| | 279,465 |
| Restricted Stock Unit Awards (7) | 383,406 |
| | 383,406 |
| | 383,406 |
| | — |
| | 383,406 |
| Continued Insurance Benefits (8) | — |
| | — |
| | — |
| | — |
| | 19,305 |
| Outplacement Services (9) | — |
| | — |
| | — |
| | — |
| | 15,000 |
| | Total Amount Ernst: | $ | 749,191 |
| | $ | 662,871 |
| | $ | 662,871 |
| | $ | — |
| | $ | 1,402,676 |
| | Neal R. Scharmer | | | | | | | | | | | Separation Compensation | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 543,750 |
| Annual Incentive Plan (5) | 75,400 |
| | — |
| | | | — |
| | 72,500 |
| Stock Option Awards (6) | 229,815 |
| | 229,815 |
| | 229,815 |
| | — |
| | 229,815 |
| Restricted Stock Unit Awards (7) | 305,982 |
| | 305,982 |
| | 305,982 |
| | — |
| | 305,982 |
| Continued Insurance Benefits (8) | — |
| | — |
| | — |
| | — |
| | 26,873 |
| Outplacement Services (9) | — |
| | — |
| | — |
| | — |
| | 15,000 |
| | Total Amount Scharmer: | $ | 611,197 |
| | $ | 535,797 |
| | $ | 535,797 |
| | $ | — |
| | $ | 1,193,920 |
|
| | (1) | At December 31, 2015, none of the named executive officers have achieved normal retirement age under our benefit plans. The figures in this column assume the accelerated vesting by the Board of Directors of all unvested stock options and restricted stock units as applicable. |
| | (2) | Under their existing Change in Control Severance Agreements, the named executive officers (excepting Mr. Helbing) are entitled to payment only if their employment is terminated by reason other than a Nonqualifying Termination. Nonqualifying Termination is defined to include (a) by the Company for cause, (b) |
by the named executive officer for reason other than a good reason, (c) the named executive officer's death, (d) by the Company due to the executive's absence from the executive's duties with the Company on a full-time basis for a period of 180 consecutive days as a result of the executive's incapacity due to physical or mental illness. In addition, under the terms of the option award agreements, the vesting of unvested stock options will accelerate upon a change in control. In addition to the value associated with stock options, the figures in this column assume the accelerated vesting by the Board of Directors of all restricted stock units. Mr. Helbing is not covered by a Change in Control Severance Agreement.
| | (3) | Per their existing Change in Control Severance Agreements, the amounts reported in this column as Separation Compensation for the named executive officers (excepting Mr. Helbing) equal 1.5 times the executive’s highest annual base salary plus target annual incentive compensation.
|
| | (4) | Under the terms of the existing Change in Control Severance Agreements for the named executive officers (excepting Mr. Helbing), if the payments and benefits they are entitled to receive under these agreements would result in the payment of the excise tax imposed by Section 4999 of the Internal Revenue Code, then their payments and benefits may be subject to reduction. Under their agreements, change in control payments and benefits are reduced by the minimum amount necessary to avoid federal excise tax, if the reduction would result in the named executive officers (excepting Mr. Helbing) receiving a higher net after tax amount. The amounts in this column do not reflect the application of any reduction in payment or benefit according to the terms of the change in control agreements.
|
| | (5) | We do not make a payment to a participant in our annual incentive plan for a particular year unless the participant is employed by us on the date incentive payments are made, typically in March of the following year. In the case of death or retirement, and at the discretion of our Chairman of the Board and our Chief Executive Officer, we will pay an annual incentive plan payment to a participant prorated to the date of death or retirement. Amounts shown for death and retirement assume our Chairman of the Board and our Chief Executive Officer exercised their discretion to make the payment. The Change in Control Severance Agreements in place for the named executive officers (excepting Mr. Helbing) state that they will be paid an amount equal to their target payment under our annual incentive plan for the year in which the change in control occurs, prorated to the date of termination. In this case, termination is presumed to occur on December 31, 2015. |
| | (6) | Upon termination of employment due to death or retirement, the Board of Directors, may at its discretion, accelerate the vesting of any unvested option awards. In addition, under the terms of the option award agreements, the vesting of unvested stock options will accelerate upon a change in control. Amounts shown are calculated using the fair market value of the stock underlying in-the-money unvested options that would have become exercisable on December 31, 2015, assuming that the Board of Directors accelerated the vesting of all unvested options. |
| | (7) | As of December 31, 2015, none of the restricted stock units held by the named executive officers were vested. Upon termination of employment due to death, retirement, disability or a change in control not involving termination, the Board of Directors, may at its discretion, accelerate the vesting of any unvested restricted stock unit awards. Amounts shown assumes a voluntary acceleration of vesting by the Board of Directors. |
| | (8) | The Change in Control Severance Agreements for the named executive officers (excepting Mr. Helbing) provide for the continuation of medical, accident, disability and life insurance benefits with respect to the named executive officer and his/her dependents for a period of 18 months following a change in control at substantially the same level that existed immediately prior to the change in control. The numbers amounts shown for the named executive officers (excepting Mr. Helbing) reflect the cost of these benefits as they existed at December 31, 2015. |
| | (9) | The Change in Control Severance Agreements for the named executive officers (excepting Mr. Helbing) provide for outplacement services for a period of 12 months following a change in control. The cost to the Company of these outplacement services is caped for each executive at $15,000. |
DIRECTOR COMPENSATION
We have designed the compensation of our directors to attract and retain qualified directors and to align director compensation with the interests of our shareholders. The Compensation Committee is responsible for making recommendations to the Board of Directors regarding compensation plans and the elements of director compensation.
ANNUAL RETAINER, COMMITTEE MEETINGS AND EXPENSES
For the 12-month period beginning with the 2022 Annual Meeting, in 2015, all non-employee directors received a retainer for service on our Board of Directors, as described further below. The Chairman of our Board of Directors, Vice Chairman of our Board of Directors, the chairpersons of the standing committees of our Board of Directors (other than the Executive Committee) and the members of each standing committee each received an additional retainer for their service in those capacities, as described further below. Retainers are paid to the directors in four equal, quarterly installments. We also reimburse business expenses, such as travel expenses, incurred by non-employee directors in relation to their service on our Board of Directors. In 2022, following a review of director compensation levels at peer companies and discussions with FW Cook, the Compensation Committee eliminated the attendance fees for regular and unscheduled meetings of the Board of Directors and approved an increase in the base annual retainer for all non-employee directors from $55,000 to $67,000, and also added an additional retainer of $5,000 for members of the Compensation Committee and Audit Committee and an additional retainer of $4,000 for members of the Executive Committee, Nominating and Governance Committee, Investment Committee and Risk Management Committee. In February 2022, the Board of Directors dissolved the ad hoc Succession Planning Committee and approved a one-time stipend in the amount of $10,000 for each member of such committee and an additional $10,000 stipend for the chair of such committee. In addition, in August 2022, the Board of Directors approved additional stipends for the chair and members of the Compensation Committee in the amounts of $10,000 and $7,500, respectively, in recognition of the substantial time and effort spent by members of the Compensation Committee in connection with the retirement of Mr. Ramlo and the appointment of Mr. Leidwinger. Non-Employee Director Fee Schedule — 2022 | Fee Type | | | Amount Paid ($) | | | Base Annual Retainer – All Directors | | | 67,000 | | | Additional Annual Retainer – Chairman of the Board | | | 50,000 | | Additional Annual Retainer – Vice Chairman of our Board of Directors, and the chairpersons of the standing committees of our Board of Directors (other than the Executive Committee) each received an additional retainer for their service in those capacities, as described further below. Retainers are paid to the directors in four equal, quarterly installments. In addition, non-employee directors receive attendance fees for their attendance at meetings of the Board of Directors and meetings of the committees on which they serve. We also reimburse business expenses, such as travel expenses, incurred by non-employee directors in relation to their service on our Board of Directors.In May 2015, the
| | | 20,000 | | | Additional Annual Retainer – Audit Committee Chair | | | 20,000 | | Additional Annual Retainer – Compensation Committee recommended, and the Board of Directors approved, the issuance to each non-employee director of 1,438 shares of restricted Company Common Stock under our Nonqualified Non-Employee Director Stock Option and Restricted Stock Plan. These shares of restricted Company Common Stock vest three years after their grant date, subject to certain vesting conditions.The following table shows the fee structure and retainers paid to our non-employee directors during 2015:
| | | Fee Type | Amount Paid | Base Annual Retainer – All Directors | $40,000Chair | | | 12,500 | | Additional Annual Retainer – Chairman of the Board | $50,000 | Additional Annual Retainer – Vice Chairman of the Board | $24,000 | Additional Annual Retainer – Audit Committee Chair | $15,000 | Additional Annual Retainer – Compensation Committee, Nominating and Governance Committee, Investment Committee, and Risk Management Committee Chairs | $10,000 | Board Meeting Attendance – Regular | $2,500 per meeting | Board Meeting Attendance – Unscheduled Major Meeting (1)
| $1,000 per meeting | Board Meeting Attendance – Unscheduled Meeting | $500 per meeting | Committee Meeting Attendance – Audit Committee | $1,000 per meeting | Committee Meeting Attendance – All Other Committees | $500 per meeting | Reimbursement for travel and other expenses related to service as a director | As incurred |
| | (1) | As jointly designated by our Chief Executive Officer and the Chair of our Compensation Committee. |
The following table shows individual non-employee director compensation during 2015:
Non-Employee Director Compensation – 2015
| | | | | | | | | | | | | | | | | | | | | | | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1)(2) | Option Awards ($) (3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | Total Compensation ($) | | John-Paul E. Besong | $ | 59,000 |
| | $ | 44,981 |
| | $ | — |
| | $ | — |
| | $ | 103,981 |
|
| | Scott L. Carlton | 59,000 |
| | 44,981 |
| | — |
| | — |
| | 103,981 |
| | | Christopher R. Drahozal | 62,500 |
| | 44,981 |
| | — |
| | — |
| | 107,481 |
|
| | Jack B. Evans | 116,000 |
| | 44,981 |
| | — |
| | — |
| | 160,981 |
|
| | Douglas M. Hultquist | 66,500 |
| (4) | 44,981 |
| | — |
| | — |
| | 111,481 |
|
| | Casey D. Mahon | 57,000 |
| | 44,981 |
| | — |
| | — |
| | 101,981 |
|
| | George D. Milligan | 72,500 |
| | 44,981 |
| | — |
| | — |
| | 117,481 |
|
| | James W. Noyce | 95,500 |
| (5) | 44,981 |
| | — |
| | — |
| | 140,481 |
|
| | Michael W. Phillips | 71,000 |
| (8) | 55,090 |
| (9) | — |
| | — |
| | 126,090 |
| | | Mary K. Quass | 70,500 |
| | 44,981 |
| | — |
| | — |
| | 115,481 |
|
| | John A. Rife | 30,500 |
| (6) | — |
| | — |
| | 1,791 |
| (7) | 32,291 |
|
| | Kyle D. Skogman | 76,000 |
| | 44,981 |
| | — |
| | — |
| | 120,981 |
|
| | Susan E. Voss | 57,000 |
| | 44,981 |
| | — |
| | — |
| | 101,981 |
| |
| | (1) | Stock awards represented in this column vest on the three year anniversary of the grant date and are subject to forfeiture until vested. At December 31, 2015, there were 2,295 shares of restricted stock outstanding for each non-employee director, with the exceptions of Michael W. Phillips whose award was accelerated and restrictions removed in connection with his resignation, and John A. Rife whose awards were accelerated and restrictions removed in connection with his retirement from the board. |
| | (2) | Amounts in this column represent the aggregate grant date fair value for restricted stock granted during 2015, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation. For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company's Annual Report on Form 10-K for the year ended December 31, 2015.
|
| | (3) | Aggregate options outstanding at December 31, 2015 for each of the following non-employee directors were: Besong – 1,755, Carlton – 3,900, Drahozal – 17,687, Evans – 8,789, Hultquist – 14,354, Mahon – 17,687, Milligan – 17,687, Noyce – 9,354, Phillips – 3,900, Quass – 17,687, Rife – 49,627, Skogman – 14,505 and Voss – 0. |
| | (4) | For Mr. Hultquist, the amount in this column includes $25,000 deferred under the Directors’ Deferred Compensation Plan. At December 31, 2015, Mr. Hultquist’s plan balance, including any accrued dividends, represented 2,191 phantom stock units. |
| | (5) | For Mr. Noyce, the amount in this column includes $0 deferred under the Directors’ Deferred Compensation Plan. At December 31, 2015, Mr. Noyce’s plan balance, including any accrued dividends, represented 3,170 phantom stock units. |
| | (6) | For Mr. Rife, the amount in this column includes $15,000 deferred under the Directors’ Deferred Compensation Plan. At December 31, 2015, Mr. Rife’s plan balance, including any accrued dividends, represented 2,618 phantom stock units. |
| | (7) | For Mr. Rife, the amount in this column represents above-market accrued interest credited to Mr. Rife under our employee deferred compensation plan. |
| | (8) | For Mr. Phillips, the amount this column includes $14,000 paid pursuant to a one-year non-compete agreement as reported on Form 8-K filed December 21, 2015. |
| | (9) | For Mr. Phillips, his award was accelerated and restrictions removed in connection with his resignation. Accordingly, the amount shown in this column includes both the incremental fair value of the modified award computed as of the modification date in accordance with FASB ASC Topic 718, as well as the grant date fair value of the original award. The modification does not represent a new grant. |
As a retired executive of United Fire & Casualty Company, Mr. Rife receives regular distributions under certain of our retirement benefit plans. Because Mr. Rife’s benefit accrual was previously reported during the year in which the benefit accrued, these amounts are not subject to disclosure in the Non-Employee Director Compensation –2015 table. During 2015, Mr. Rife received distributions of $98,888 under our defined benefit pension plan and $49,525 under our deferred compensation plan. For a discussion of the operation of these plans, see Compensation Discussion and Analysis in this proxy statement.Deferred Compensation
In November 2012, the Board of Directors approved the adoption of the 2012 Deferred Compensation Plan for United Fire Group, Inc. Non-Employee Directors (“Directors’ Deferred Compensation Plan”). The Directors’ Deferred Compensation Plan allows non-employee directors the opportunity to defer up to 100 percent of the annual retainer fee they receive for service on our Board of Directors. All non-employee directors serving on our Board of Directors were eligible to participate in the Directors’ Deferred Compensation Plan beginning with fees paid during 2013.
In order to participate in the Directors’ Deferred Compensation Plan, each non-employee director must submit an election form by December 31 prior to the plan year for which compensation will be deferred. Thereafter, the participating director can change or terminate the election for future years by making a timely new election in the prior year. Compensation amounts deferred by non-employee directors are used to acquire “credited stock units” based on the average market price of Company Common Stock during the month the amounts are deferred. Participating directors also acquire additional credited stock units based on the quarterly dividend paid to our registered shareholders. These dividend amounts are based on each participant’s account balance at the time the dividend is paid and the closing market price of Company Common Stock on the dividend payment date. A participating director’s credited stock units are then valued on an annual basis based on the closing market price of Company Common Stock on December 31st of each year. By tying a director’s deferred compensation to the performance of Company Common Stock, we believe this plan allows directors to acquire a more meaningful stake in our company.
When a participating director leaves the Board of Directors, the director may elect to receive the cash value of the credited stock units in the director’s account either in one lump sum or in equal installments paid out over five years. The participating director selects the manner of distribution when the director elects to participate in the Directors’ Deferred Compensation Plan. The amount payable to a director is the value of the credited stock units in the director’s account, valued at December 31st of the year the director ceases to serve as a director.
TRANSACTIONS WITH RELATED PERSONS
The Nominating and Governance Committee, follows a written policy relating to transactions involving United Fire Group, Inc.Investment
| | | | | Committee, and any “related person,” as that term is defined in Item 404Risk Management Committee Chairs | | | 10,000 | | Additional Annual Retainer – Members of Regulation S-K under the Exchange Act. The policy sets forth our positionCompensation Committee and procedures with respect to review and approval or ratificationAudit Committee | | | 5,000 | | Additional Annual Retainer – Members of related person transactions. A related person transaction is defined in Item 404 of Regulation S-K under the Exchange Act to mean any transaction or series of transactions with the Company in which any related person had, has or will have a direct or indirect material interest and the amount involved exceeds $120,000. The policy requires theExecutive Committee, Nominating and Governance Committee, (or the Board of Directors upon referral by the Committee)Investment Committee and Risk Management Committee | | | 4,000 | | Annual Equity Grant (Grant Date Fair Value)(1) | | | 60,000 | | Reimbursement for travel and other expenses related to disapprove, approve or ratify any related person transactions. Related person transactions are approved or ratified only if they are determined to be in, or not inconsistent with, United Fire Group, Inc.’s best interests. The following transactions are preapproved: compensation or employment relationships
required to be disclosed pursuant to Item 402 of Regulation S-K; relationships that arise only due to that person’s positionservice as a director of another entity or due to ownership of less than 10% of another entity, or both; standard insurance agency contracts, provided the agency contracts are on the same terms as are offered to agencies unrelated to us; and insurance products issued by us or a subsidiary to a related person, provided such products are issued on the same terms as such products are offered to the public.
Pursuant to the policy, the Nominating and Governance Committee gathers information from management and directors to determine what transactions it must review, coordinates with management to monitor for potential related person transactions, and reviews all transactions that could be considered to be a transaction with a related person. The Nominating and Governance Committee does not review transactions in the normal course of business unless the transaction involves an amount in excess of $120,000. Except for preapproved transactions, the Nominating and Governance Committee reviews all transactions that are not in the ordinary course of business that would be required to be reported under SEC Form 10-K, Item 13 if the amount involved exceeded $120,000. There were no such transactions since the beginning of 2015 and there are no such currently proposed transactions, except as follows:
The Board of Directors approved a relationship with Cedar Rapids Bank & Trust, a subsidiary of QCR Holdings, Inc., for which Mr. Hultquist serves as President, Chief Executive Officer and a director. Mr. Hultquist served as a director on the Board of Directors during 2015 and will continue to serve as a director until his resignation becomes effective on May 1, 2016. During 2015, Cedar Rapids Bank & Trust charged us $307,502 for management of our daily cash balances. This service was provided by Cedar Rapids Bank & Trust in the ordinary course of business on substantially the same terms and conditions as those prevailing at the time for comparable transactions with other customers. The value of the services provided to us by Cedar Rapids Bank & Trust was below the thresholds established by the applicable NASDAQ Listing Rules regarding director independence and related party transactions. We expect Cedar Rapids Bank & Trust to continue providing these services to us in the future. UFG also holds investments in QCR Holdings common stock (QCRH). At December 31, 2015, UFG held 113,181 shares with a fair value of $2,749,166.49 (less than 1% of total Market Cap of QCRH). The investment in QCR common stock is not among UFG's largest 20 holdings.
During 2015, UFG had a $100,000,000 unsecured revolving credit facility with a syndicate of financial institutions. KeyBank National Association was the administrative agent, lead arranger, sole book runner, swingline leader and letter of credit ("LOC") issuer, and Bankers Trust Company is the syndicate agent. A commitment fee on each lender's unused commitment under the credit facility was paid each quarter to KeyBank.
| | | As of December 31, 2015, UFG paid KeyBank $247,222.22. CRBT had a $10,000,000 commitment to the $100,000,000 unsecured revolving credit facility. UFG has not accessed the LOC in 2015 or 2014. On February 3, 2016, Mr. Douglas M. Hultquist tendered his resignation as a director of the Board of Directors (the "Board") of United Fire Group, Inc. ("UFG"), effective May 1, 2016. Mr. Hultquist’s resignation is not due to any disagreement with the UFG on any matter relating to UFG’s operations, policies or practices. UFG has treasury services with Cedar Rapids Bank and Trust, which is a subsidiary of QCR Holdings Inc., where Mr. Hultquist is President and CEO. Mr. Hultquist felt that as UFG continues to grow, he didn’t want to stand in the way of his bank being considered for additional business services, given the nature of his relationship as a Board Member with the company. Mr. Hultquist has served on the Board since 2007, and we are pleased that he will remain as a director of our company for a few more months. Jack Evans, Chairman of the Board is quoted "Doug provided valuable insight as a Board Member throughout the years, and UFG and our Board benefited from his experience and contributions. We wish Doug, the very best in his future endeavors." Mr. Hultquist is currently chairs our Risk Management Committee and is a member of our Investment Committee of the Board.Rockwell Collins is an aviation electronics company located in Cedar Rapids, Iowa for which UFG director John-Paul Besong previously served as an officer (he retired during 2015). UFG holds a book value investment of $5,006,092.01 in Rockwell Collins Proper fixed maturity securities. The fixed maturity security is not included amongst UFG's largest 20 holdings of fixed maturity securities.
2001 Development Corporation is a limited liability partnership investment which former UFG director John Rife serves on the Board. UFG holds 247,500 shares in the partnership which represents a 30% ownership with a book value of $225,378.15. In December 2015, UFG received a return of capital of $186,494.
Next Level Ventures Fund I, LLLP ("Next Level") is a limited liability limited partnership investment that Bob Cataldo, AVP & Senior Portfolio Manager of UFG, serves on the Investment Committee (1 of 5 members). UFG holds a 12% investment in Next Level with a book value of $2,147,215.50. In 2015, UFG received a return of capital of $215,790 in February from Next Level and made a capital contribution of $535,625 in June. Another capital contribution of $196,652 was made in December 2015 and UFG's remaining commitment is $2,636,995.
| |
(1)
In May 2022, the Compensation Committee recommended, and the Board of Directors approved, the issuance to each then-serving non-employee director of 1,905 RSUs under our Non-Employee Director Plan. These RSUs vest one year after their grant date, subject to the director’s continued service.
The following table shows individual non-employee director compensation during 2022: Non-Employee Director Compensation — 2022 | Name | | | Fees Earned or Paid
in Cash ($) | | | Stock
Awards
($)(1)(2) | | | Option
Awards
($)(3) | | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($) | | | Total
Compensation ($) | | | John-Paul E. Besong | | | | | 74,750 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 134,738 | | | | Scott L. Carlton | | | | | 110,250 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 170,238 | | | | Brenda K. Clancy | | | | | 123,250 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 183,238 | | | | Christopher R. Drahozal | | | | | 92,250 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 152,238 | | | Matthew R. Foran(4) | | | | | 75,750 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 135,738 | | | Mark A. Green(4) | | | | | 93,750 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 153,738 | | | | Lura E. McBride | | | | | 101,750 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 161,738 | | | | George D. Milligan | | | | | 117,250 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 177,238 | | | | James W. Noyce | | | | | 146,250 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 206,238 | | | Mary K. Quass(5) | | | | | 44,250 | | | | | | — | | | | | | — | | | | | | — | | | | | | 44,250 | | | | Kyle D. Skogman | | | | | 107,250 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 167,238 | | | | Susan E. Voss | | | | | 105,750 | | | | | | 59,988 | | | | | | — | | | | | | — | | | | | | 165,738 | | |
(1)
Stock awards represented in this column are scheduled to vest on May 18, 2023 and are subject to forfeiture until vested. Aggregate RSUs outstanding at December 31, 2022 for each of the following non-employee directors was: Besong — 1,905, Carlton — 1,905, Clancy — 1,905, Drahozal — 1,905, Foran — 1,905, Green — 1,905, McBride — 1,905, Milligan — 1,905, Noyce — 1,905, Skogman — 1,905, and Voss — 1,905. At December 31, 2022, Mr. Noyce’s plan balance under the Directors’ Deferred Compensation Plan, including any accrued dividends, represented 4,047 phantom stock units. (2)
Amounts in this column represent the aggregate grant date fair value for restricted stock granted during 2022 calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation. For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company’s Annual Report on Form 10-K/A for the year ended December 31, 2022. (3)
Aggregate options outstanding at December 31, 2022 for each of the following non-employee directors was: Besong — 1,755, Milligan — 1,755, Noyce — 1,755, Quass — 1,755, and Skogman — 1,755. Carlton, Clancy, Drahozal, Foran, Green, McBride, and Voss have no options outstanding. (4)
Messrs. Foran and Green were appointed to the Board of Directors effective February 18, 2022. (5)
Ms. Quass resigned from the Board of Directors effective immediately following the 2022 Annual Meeting. Deferred Compensation In November 2012, the Board of Directors approved the adoption of the 2012 Deferred Compensation Plan for United Fire Group, Inc. Non-Employee Directors (“Directors’ Deferred Compensation Plan”). The Directors’ Deferred Compensation Plan allows non-employee directors the opportunity to defer up to 100% of the annual retainer fee they receive for service on our Board of Directors. In order to participate in the Directors’ Deferred Compensation Plan, each non-employee director must submit an election form by December 31 prior to the plan year for which compensation will be deferred. Thereafter, the participating director can change or terminate the election for future years by making a timely new election in the prior year. Compensation amounts deferred by non-employee directors are used to acquire “credited stock units” based on the average market price of Company Common Stock during the month the amounts are deferred. Participating directors also acquire additional credited stock units
based on the quarterly dividend paid to our registered shareholders. These dividend amounts are based on each participant’s account balance at the time the dividend is paid and the closing market price of Company Common Stock on the dividend payment date. A participating director’s credited stock units are then valued on an annual basis based on the closing market price of Company Common Stock on the last trading day of each year. By tying a director’s deferred compensation to the performance of Company Common Stock, we believe this plan allows directors to acquire a more meaningful stake in our company. When a participating director leaves the Board of Directors, the director may elect to receive the cash value of the credited stock units in the director’s account either in one lump sum or in equal installments paid out over five years. The participating director selects the manner of distribution when the director elects to participate in the Directors’ Deferred Compensation Plan. The amount payable to a director is the value of the credited stock units in the director’s account, valued at the last trading day of the year the director ceases to serve as a director.
![[MISSING IMAGE: px_01page-bw.jpg]](/files/DEF 14A/0001104659-23-041486/px_01page-bw.jpg) Your vote matters – here’s how to vote!vote online or by phone instead of mailing this card.OnlineBefore the Meeting: Go to www.envisionreports.com/UFCSor scan the QR code — login details are located in theshaded bar below.Save paper, time and money!Sign up for electronic delivery atwww.envisionreports.com/UFCSPhoneCall toll free 1-800-652-VOTE (8683) within the USA, USterritories and CanadaVotes submitted electronically before the meeting must bereceived by 12:00 a.m. Central Time on May 17, 2023 4. Approval, on an advisory basis, of the frequency offuture shareholder votes on executive compensation.1 Year 2 Years 3 Years Abstain01 - Scott L. Carlton(Class A Director)03 - Kevin J. Leidwinger(Class A Director)04 - Susan E. Voss(Class A Director)For Against Abstain For Against Abstain For Against Abstain1 U P X02 - Brenda K. Clancy(Class A Director)Using a black ink pen, mark your votes with an X as shown in this example.Please do not write outside the designated areas.03SEBE++A Proposals — The Board of Directors recommends a vote FOR all the nominees listed, FOR Proposals 2 and 3 and 1 YEAR on Proposal 4.3. Approval, on an advisory basis, of the compensation of UnitedFire Group, Inc.’s named executive officers.1. Election of Directors:Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please givefull title.Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below.qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q2023 Annual Meeting Proxy CardFor Against Abstain2. Ratification of the appointment of Ernst & Young LLP as UnitedFire Group, Inc.’s independent registered public accounting firmfor 2023.For Against AbstainYou may vote online or by phone instead of mailing this card.OnlineBefore the Meeting: Go to www.envisionreports.com/UFCSor scan the QR code — login details are located in theshaded bar below.Save paper, time and money!Sign up for electronic delivery atwww.envisionreports.com/UFCSPhoneCall toll free 1-800-652-VOTE (8683) within the USA, USterritories and CanadaVotes submitted electronically before the meeting must bereceived by 12:00 a.m. Central Time on May 17, 2023Your vote matters – here’s how to vote!During the Meeting: Go to www.meetnow.global/M5Y2PNQlogin details are located in the shaded bar below.
![[MISSING IMAGE: px_02page-bw.jpg]](/files/DEF 14A/0001104659-23-041486/px_02page-bw.jpg) 2023 Annual Meeting Admission Ticket2023 Annual Meeting of United Fire Group, Inc. ShareholdersMay 17, 2023 10:00 a.m. CT118 Second Avenue SECedar Rapids, IA 52401Upon arrival, please present this admission ticket and photo identification at the registration desk. The Annual Meeting will be simultaneously conducted live via the Internet in which shareholders will be able to attend the Annual Meeting atwww.meetnow.global/M5Y2PNQ.To access the webcast, you must have the information that is printed in the shaded bar located on the reverse side of this form.Small steps make an impact.Help the environment by consenting to receive electronicdelivery, sign up at www.envisionreports.com/UFCSNotice of 2023 Annual Meeting of ShareholdersProxy Solicited by Board of Directors for Annual Meeting — May 17, 2023, 10 a.m. Central Time, at 118 Second Avenue SE,Cedar Rapids, IA 52401, and simultaneously conducted live via the Internet at www.meetnow.global/M5Y2PNQ.Eric J. Martin and Sarah E. Madsen, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of theundersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of United Fire Group, Inc. tobe held on May 17, 2023 at 10 a.m. Central Time or at any postponement or adjournment thereof.Shares represented by this proxy will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR the electionof each of the nominees identified in Proposal 1, FOR Proposals 2 and 3 and 1 YEAR on Proposal 4.In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.(Items to be voted appear on reverse side)United Fire Group, Inc.qIF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.qChange of Address — Please print new address below. Comments — Please print your comments below.C Non-Voting Items++Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders.The material is available at: www.envisionreports.com/ufcsThe Annual Meeting will be simultaneously conducted live via the Internet in which shareholders will be able to attend the Annual Meeting atwww.meetnow.global/M5Y2PNQ.To access the webcast, you must have the information that is printed in the shaded bar located on the reverse side of this form.2023 Annual Meeting Admission Ticket2023 Annual Meeting of United Fire Group, Inc. ShareholdersMay 17, 2023 10:00 a.m. CT118 Second Avenue SECedar Rapids, IA 52401Upon arrival, please present this admission ticket and photo identification at the registration des
0000101199 3 2022-01-01 2022-12-31
The McIntyre Foundation was established to provide charitable contributions to post high school educational institutions, community arts programs and museums, and non-profit social services in the greater Cedar Rapids, Iowa area. The McIntyre Foundation currently holds 491,863 shares of UFG stock. The McIntyre Foundation has three directors: John Rife (former UFG Vice Chairman and Director), Dee Ann McIntyre (greater than 10% beneficial owner) and Kaye Drahozal (spouse of current UFG director Christopher Drahozal). The three directors share the voting and investment power. A current UFG employee is paid an immaterial amount to complete the accounting and administrative duties for the foundation. UFG doesn't currently make any contributions to the Foundation.
OTHER MATTERS
Management knows of no other matters that will be brought before the meeting, but if other matters properly come before the meeting, the persons named in the enclosed proxy, or their substitutes, will vote in accordance with their best judgment on such matters.
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