DEF 14A of Employers Holdings, Inc.
Filed Apr 11, 2024 · FY20230001379041-24-000094
Proposal 1 - Election of Directors (page 4)
Proposal 1 - Election of Directors (page 4) After careful consideration, our Board of Directors (the "Board"), with each nominee abstaining on the vote for herself or himself, nominated the nine director candidates identified below for election at the annual meeting, to hold office until the next succeeding annual meeting of stockholders or until their successors have been duly elected or appointed and qualified. All nominees are current members of the Board. Each nominee has consented to being named in this proxy statement and to serve as a director, if elected. Should any of the nominees become unable or unwilling to serve, the proxies will be voted for the election of such person(s) as shall be recommended by the Board. The Board has no reason to believe that any nominee will be unable to serve.
Board Nominees
Board Nominees
Board Nominees
| | | | Committees | | | | | | | Nominee | Age | Director Since | Audit | Board Governance and Nominating | Human Capital Management and Compensation | Finance | Risk Management Technology and Innovation | Executive | | Katherine H. Antonello | 59 | 2021 | | | | Member | Member | Member | | John M. de Figueiredo | 58 | 2019 | | Member | | | Chair | Member | | Barbara A. Higgins | 57 | 2018 | | Member | Chair | | | Member | | James R. Kroner | 62 | 2013 | Member | Chair | | | | Member | | Michael J. McColgan | 68 | 2017 | Chair | | | | Member | Member | | Michael J. McSally | 66 | 2013 | | | Member | | | | | Jeanne L. Mockard | 60 | 2018 | Member | | | Chair | | Chair | | Alex Perez-Tenessa | 49 | 2022 | | | | Member | Member | | | Steven P. Sorenson | 59 | 2024 | | | Member | | Member | |
Board Nominees
| 9 ongoing directors | 6 years average tenure of independent directors | | 33% female directors | 89% independent directors |
Board Nominees
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2023 Compensation Decision Highlights
| Name and Principal Position | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | | Katherine H. Antonello President and Chief Executive Officer | 702,304 | — | 1,699,904 | — | 1,193,500 | — | 131,398 | 3,727,106 | | Michael S. Paquette Executive Vice President, Chief Financial Officer | 527,842 | — | 566,909 | — | 564,200 | — | 136,672 | 1,795,623 | | Lori A. Brown Executive Vice President, Chief Legal Officer | 386,384 | — | 401,527 | — | 316,500 | — | 89,154 | 1,193,565 | | John M. Mutschink Executive Vice President, Chief Administrative Officer | 361,849 | — | 307,727 | — | 306,900 | — | 57,947 | 1,034,423 | | Jeffrey C. Shaw Former Executive Vice President, Chief Information Officer | 264,776 | — | 401,527 | — | 58,000 | — | 415,763 | 1,140,066 |
Proposal 1 - Election of Directors
Proposal 1 - Election of Directors
Nominees for Election as Directors
Nominees for Election as Directors The Company's full Board currently consists of 10 directors. On February 13, 2024, Prasanna G. Dhoré, a current director, notified the Board that he would not seek re-election, and that his service as a director would end immediately following the 2024 Annual Meeting. Mr. Dhoré has served on the Board of Directors of Employers Holdings since 2015, and his resignation was not due to any disagreement with the Company on any matter relating to its operations, policies or practices. The Company and the Board thank Mr. Dhoré for his distinguished service to the Company and its stockholders. Following the 2024 Annual Meeting, the Company’s continuing Board will consist of nine directors. Effective as of March 1, 2024, Steven P. Sorenson was appointed as a member of the Board. Mr. Sorenson was identified as a nominee by a third-party search firm. The Board, with each nominee abstaining on the vote for herself or himself, nominated the nine director candidates identified below for election at the 2024 Annual Meeting of Stockholders, to hold office until the next succeeding annual meeting of stockholders or until their successors have been duly elected or appointed and qualified. All nominees are current members of the Board. The Board Governance and Nominating Committee considered each nominee’s experiences, qualifications, attributes, and skills when determining the current performance of the Board. The Board Governance and Nominating Committee also reviewed the Board and committee evaluations, including individual peer-to-peer reviews, and considered the significant experience our directors have had working together on the Board. The Board evaluated the same criteria when it approved the nominees recommended by the Board Governance and Nominating Committee. In considering the nominees, the Board Governance and Nominating Committee and the Board focused on the background and experiences of the nominees, as described in the biographies appearing below. The Board Governance and Nominating Committee and the Board concluded that the nominees for election provide the Company with an appropriate mix of experience, perspectives, knowledge, education, and abilities to allow the Board to fulfill its responsibilities to the Company and its stockholders. Each nominee has consented to being named in this proxy statement and to serve as a director, if elected. Should any of the nominees become unable or unwilling to serve, the proxies will be voted for the election of such person(s) as shall be recommended by the Board. The Board has no reason to believe that the nominees will be unable to serve. Except as otherwise indicated, the principal occupation of each nominee has not changed during the past five years. The information provided is as of April 1, 2024, unless otherwise indicated.
Nominees for Election as Directors
| Katherine H. Antonello |
Nominees for Election as Directors
| Principal Occupation: | Director Since: 2021 | | President and Chief Executive Officer of Employers Holdings, Inc. | Committee Memberships: | | Age: 59 | Executive | | Other current public company directorships: None | Finance | | Previous public company directorships in last five years: None | Risk Management, Technology and Innovation |
Nominees for Election as Directors
| Experience | | Ms. Antonello has served as a Director and the President and Chief Executive Officer of the Company since April 2021. She also serves as a Director and Chief Executive Officer of each of the Company’s wholly-owned subsidiaries. Ms. Antonello joined the Company in August 2019 as its Executive Vice President, Chief Actuary. Prior to joining the Company, Ms. Antonello served as the Chief Actuary for the National Council on Compensation Insurance (NCCI) from June 2013 to July 2019. Ms. Antonello earned her Bachelor of Science degree in Mathematics from Birmingham-Southern College. She is a Fellow of the Casualty Actuarial Society, a Fellow of the Society of Actuaries, and a Member of the American Academy of Actuaries. In addition, she currently serves as the Chair of the Nominating Committee of the Board of the Casualty Actuarial Society and as an advisory board member of Kids Chance of America. | | Skills and Qualifications | | Ms. Antonello’s qualifications to serve on the Board include, among other factors, her unique blend of over 37 years of insurance experience in the areas of both life and annuity insurance and property and casualty insurance. She has over 25 years of deep workers’ compensation insurance experience, having held leadership roles over actuarial, policy services, claims, government affairs, regulatory reporting, research, and internal audit functions. Additionally, during her career, she has broadened her industry perspective by working at carriers, insurance bureaus, and consulting firms. |
Nominees for Election as Directors
| João (John) M. de Figueiredo |
Nominees for Election as Directors
| Principal Occupation: | Director Since: 2019 | | Professor | Independent | | Age: 58 | Committee Memberships: | | Other current public company directorships: None | Board Governance and Nominating | | Previous public company directorships in last five years: None | Executive | | | Risk Management, Technology and Innovation (Chair) |
Nominees for Election as Directors
| Experience | | Dr. de Figueiredo has been a professor at Duke University since 2010 and is currently the Russell M. Robinson II Distinguished Professor of Law, Strategy, and Economics at the Duke University Law School and Fuqua School of Business. Prior to joining Duke, Dr. de Figueiredo held faculty positions at the UCLA Anderson School of Management, UCLA Law School, and the MIT Sloan School of Management. He has also served as a strategic management consultant at Monitor Company. His research specializes in business and innovation strategies in regulated industries. His scholarly articles, papers, and reviews on strategy, innovation, economics, and business-government interactions have appeared in numerous scholarly and management journals in a variety of disciplines. Dr. de Figueiredo received a Ph.D. in Business and Public Policy from the University of California, Berkeley, an M.Sc. degree in Economics from the London School of Economics, and an A.B. degree from Harvard University, and he has been a Research Associate with the National Bureau of Economic Research since 2007. | | Skills and Qualifications | | Dr. de Figueiredo’s qualifications to serve on the Board include, among other factors, his knowledge, research, and expertise in areas of competitive strategy, disruptive and incremental innovation, strategy implementation and organizational change, data analytics, and corporate regulatory and political strategy. |
Nominees for Election as Directors
| Barbara A. Higgins |
Nominees for Election as Directors
| Principal Occupation: | Director Since: 2018 | | Advisor | Independent | | Age: 57 | Committee Memberships: | | Other current public company directorships: None | Board Governance and Nominating | | Previous public company directorships in last five years: None | Executive | | | Human Capital Management and Compensation (Chair) |
Nominees for Election as Directors
| Experience | | Ms. Higgins retired from Duke Energy Corporation ("Duke Energy") in December 2021 and currently serves as an advisor on customer experience management as well as on the board of multiple non-profit institutions. From August 2017 through December 2021, Ms. Higgins served as the Chief Customer Officer for Duke Energy, with focus on designing end-to-end strategies for measurement, valuation and improvement of the residential and commercial customer experience and had also served as its Customer Experience Advisor. Previously, from May 2015 to August 2017, she was a consultant. Ms. Higgins served as Chief Customer Officer for Allstate Insurance Company from May 2011 to April 2015. Prior to that, she led Customer Experience at United Airlines, Inc., following a nearly 19-year career at The Walt Disney Company ("Disney") where she served in every Disney-owned and operated theme park location worldwide. From 2013 to the end of 2018, she served as a Director at DeVry University and was an advisory board member from November 2011-2013. Ms. Higgins received a Bachelor of Science degree from Cornell University, School of Hotel Administration and a Master of Business Administration from the University of Florida, Warrington College of Business Administration. | | Skills and Qualifications | | Ms. Higgins's qualifications to serve on the Board include, among other factors, her 35 years of experience in multi-channel operations, market research, brand management and leadership, managing operations across diverse cultures in the Americas, Asia, and Europe. An expert in customer experience management, she has worked for public multi-national companies in industries spanning energy, insurance, airlines, and hospitality, providing frequent updates to these boards. In her previous board experience, she served on the governance committee and oversaw transition from public company to private-owned board structure, developing committee charters and a new compensation structure. |
Nominees for Election as Directors
| James R. Kroner |
Nominees for Election as Directors
| Principal Occupation: | Director Since: 2013 | | Consultant | Independent | | Age: 62 | Committee Memberships: | | Other current public company directorships: None | Audit | | | Board Governance and Nominating (Chair) | | Previous public company directorships in last five years: None | | | | Executive |
Nominees for Election as Directors
| Experience | | Mr. Kroner was formerly the Chief Financial Officer and Chief Investment Officer of Endurance Specialty Holdings Ltd., which he co-founded in 2001 and from which he retired in December 2005. In addition, he served on its Executive Committee and its Board of Directors. Since his retirement, Mr. Kroner has served as a consultant to various insurance companies and as a private investor. Mr. Kroner served on the Boards of Terra Industries Inc. and Global Indemnity plc and its U.S. insurance subsidiaries. Prior to founding Endurance, Mr. Kroner was Managing Director at Fox Paine & Company LLC and served as a Managing Director and co-head of insurance industry investment banking in the Americas for JP Morgan & Co. Mr. Kroner received a bachelor’s degree in International Relations from Northwestern University and a master’s degree in Management from Northwestern University’s Kellogg School of Management. |
Nominees for Election as Directors
| Skills and Qualifications | | Mr. Kroner’s qualifications to serve on the Board include, among other factors, his experience as Chief Financial Officer, Chief Investment Officer and board member of a publicly traded insurance company that he co-founded, his consulting experience to various insurance companies, as well as his service as a director to other insurance companies, and his experience and expertise in the areas of insurance, management, finance, investments, and investment banking. |
Nominees for Election as Directors
| Michael J. McColgan |
Nominees for Election as Directors
| Principal Occupation: | Director Since: 2017 | | Director and Private Investor | Independent | | Age: 68 | Committee Memberships: | | Other current public company directorships: None | Audit (Chair) | | | Executive | | Previous public company directorships in last five years: None | Risk Management, Technology and Innovation |
Nominees for Election as Directors
| Experience | | Until July 2017, Mr. McColgan was a Partner with PricewaterhouseCoopers LLP ("PwC") providing assurance, risk management, business advisory, and other services to clients primarily in the financial services industry. During his 38-year career with PwC, including 27 years as a Partner, Mr. McColgan held various leadership positions, such as East Region Assurance Leader, the firm’s largest Assurance Practice, Managing Partner of the New York Metro Insurance Practice and Managing Partner of the Northeast Financial Services and Insurance Practices. He was also a member of the PwC Extended Leadership Team and served as the Global Engagement Partner for several of PwC’s largest insurance company clients. Mr. McColgan also serves as a Director of Point32Health, Inc. formed in 2021 through the merger of Tufts Health Plan, Inc. and Harvard Pilgrim Health Care, Inc. Mr. McColgan received a bachelor’s degree in Accounting from Villanova University, is a Certified Public Accountant, and is a member of the American and Pennsylvania Institutes of Certified Public Accountants. | | Skills and Qualifications | | Mr. McColgan’s qualifications to serve on the Board include, among other factors, the significant experience he has gained in various leadership positions as a Partner at PwC, including his expertise in the areas of assurance, risk management, and advising businesses, primarily in the financial services industry. |
Nominees for Election as Directors
| Michael J. McSally |
Nominees for Election as Directors
| Principal Occupation: | Director Since: 2013 | | Director and Private Investor | Independent | | Age: 66 | Committee Memberships: | | Other current public company directorships: None | Human Capital Management and Compensation | | Previous public company directorships in last five years: None | |
Nominees for Election as Directors
| Experience | | Mr. McSally was the Chair of our Board of Directors from May 2020 to March 2024. Mr. McSally retired in 2010 and is currently a private investor with a focus on insurance and related businesses. In May 2016, Mr. McSally became a director of IAT Insurance Group. From December 2013 to October 2018, Mr. McSally was the majority owner and non-executive Chairman of Provider Insurance Group, LLC. Mr. McSally has served in various executive positions for OneBeacon Insurance Group, John Hancock Financial Services, Commercial Union Insurance Company, and York Insurance Group. He has also served on several boards of directors of privately held insurance companies and was an Executive Partner of Charter Oak Capital Partners, LP. Mr. McSally received a bachelor’s degree from Providence College, is a Fellow of the Casualty Actuarial Society and is a member of the American Academy of Actuaries. |
Nominees for Election as Directors
| Skills and Qualifications | | Mr. McSally’s qualifications to serve on the Board include, among other factors, his experience as Chief Executive Officer, Chief Operating Officer, and in Senior Vice President positions to various insurance companies leading commercial and personal lines, distribution and agency management, as well as his service on several boards of privately held insurance companies and his significant experience and expertise in the areas of insurance, management and actuarial science. |
Nominees for Election as Directors
| Jeanne L. Mockard |
Nominees for Election as Directors
| Principal Occupation: | Director Since: 2018 | | Private Investment Manager and Director | Independent | | Age: 60 | Committee Memberships: | | Other current public company directorships: None | Audit | | | Executive (Chair) | | Previous public company directorships in last five years: None | Finance (Chair) |
Nominees for Election as Directors
| Experience | | Ms. Mockard has been the Chair of our Board of Directors since March 2024. Since 2009, Ms. Mockard has been the Principle at JLM Capital and Consulting, performing services as a consultant to financial and technology companies and as an investor in startup businesses. Prior to that, she was a Managing Director and Portfolio Manager with Putnam Investments for over 20 years. Ms. Mockard is a CFA and currently serves as a Director, member of the Audit Committee and chair of the Finance Committee of Nuclear Electric Insurance Limited, as a Director of Silent Spring Institute, a member of the Endowment Committee for The Bryn Mawr School, and as the Chair of the Investment Committee and Treasurer of the Lutheran Deaconess Association. Ms. Mockard received a Bachelor of Science degree from Tufts University and a Master of Business Administration from the University of Virginia, Darden School of Business. | | Skills and Qualifications | | Ms. Mockard’s qualifications to serve on the Board include, among other factors, her experience with financial and technology companies and as an investor in startup businesses, as well as more than 20 years of experience managing large investment portfolios, and her extensive service on various boards and committees. |
Nominees for Election as Directors
| Alejandro (Alex) Perez-Tenessa |
Nominees for Election as Directors
| Principal Occupation: | Director Since: 2022 | | CEO | Independent | | Age: 49 | Committee Memberships: | | Other current public company directorships: None | Finance | | | Risk Management, Technology and Innovation | | Previous public company directorships in last five years: None | |
Nominees for Election as Directors
| Experience | | Mr. Perez-Tenessa is the founder and CEO of Trendio Live Inc., which was formed in July 2021. Prior to that, he served as Vice President, U.S. Prime Video at Amazon.com, Inc. from August 2019 to April 2021. He served as Vice President, Kindle Content at Amazon from 2017 to 2019. Prior to joining Amazon, he served as Vice President of Beauty and Personal Care of CVS Health from 2013 to 2017. He also served as a Partner at McKinsey & Company from 2003 to 2013. Mr. Perez-Tenessa received a Master in Business Administration from Harvard University (Baker Scholar), as well as a bachelor’s degree and a master’s degree from ESSEC Business School in Paris, France. | | Skills and Qualifications | | Mr. Perez-Tenessa’s qualifications to serve on the Board include, among other factors, his unique expertise and experience in areas including transformational leadership, digital marketing, and optimization of customer experience through machine learning. . |
Nominees for Election as Directors
| Steven P. Sorenson |
Nominees for Election as Directors
| Principal Occupation: | Director Since: 2024 | | Director | Independent | | Age: 59 | Committee Memberships: | | Other current public company directorships: None | Human Capital Management and Compensation | | Previous public company directorships in last five years: None | Risk Management, Technology and Innovation |
Nominees for Election as Directors
| Experience | | Mr. Sorenson retired from the Allstate Corporation in April 2023 after serving in various senior leadership roles, most recently as Executive Vice President of Corporate Business Transformation from 2020 to April 2023 and as Executive Vice President of Operations from 2017 to 2020. He joined Allstate in 2000. Prior to joining Allstate, Mr. Sorenson was a general manager at Progressive Insurance Company from 1997 to 2000 and an engagement manager at McKinsey & Company from 1992 to 1997. Mr. Sorenson currently serves on the boards of YMCA of Metropolitan Chicago, where he serves as Chair, and One Hope United, a multistate nonprofit that helps children and families build the skills to live life without limits. Mr. Sorenson earned a master’s degree in business administration (finance and strategy) from the University of Chicago in 1992 and a bachelor’s degree in economics from Harvard University in 1987. | | Skills and Qualifications | | Mr. Sorenson’s qualifications to serve on the Board include, among other factors, his significant knowledge and expertise in areas including transformational leadership, insurance operations, and insurance product development and distribution. |
Nominees for Election as Directors
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Director Compensation
Director Compensation For purposes of determining 2023 director compensation, the Compensation Committee, with the advice, guidance and recommendations of Pay Governance, discussed, analyzed, and reviewed the 2022 director compensation program during several Compensation Committee meetings to evaluate whether the directors' compensation: (1) remained reasonable and competitive, both generally and specifically when analyzed against the director compensation for the same peer companies used to analyze named executive officer compensation; (2) was consistent with best corporate practices; (3) met the goals and objectives of the Company; and (4) aligned directors' interests with those of our stockholders. Finding that director compensation remained competitive, Pay Governance did not recommend an increase to director compensation in 2023. The Compensation Committee, after considering Pay Governance's recommendation, maintained the value of the directors' equity grant and the value and structure of the directors' cash compensation for the 2023-2024 director term. In 2023, the components of non-employee director compensation remained an annual cash retainer and an award of restricted stock units ("RSUs"). The chair of the Board and the chair of each of the Board's committees are paid additional cash fees for their service. Each non-employee committee member is paid an annual cash fee for committee membership and an additional committee meeting fee if the committee member attends more than eight committee meetings in any calendar year. No additional payments are made for attendance at Board meetings. Annual cash retainers, Board, committee chair and committee membership fees, and committee meeting attendance fees (if any) are paid in quarterly installments, in arrears at the end of each quarter. Non-employee director compensation in 2023 consisted of:
Director Compensation
| | Board of Directors | Audit | Compensation | Other Committees | | Board Member - annual cash retainer | $65,000 | $— | $— | $— | | Board Member - annual RSU award(1) | 85,000 | — | — | — | | Chair of the Board | 75,000 | — | — | — | | Committee Chair | — | 20,000 | 15,000 | 10,000 | | Committee membership - annual fee | | 14,000 | 12,000 | 9,000 | | Committee meeting attendance - per meeting, over eight per year | — | 1,750 | 1,500 | 1,500 |
Director Compensation
(1)See table below for additional details regarding RSUs.
2023 Director Compensation
2023 Director Compensation The table below sets forth a summary of the compensation paid to our non-employee directors in 2023. Ms. Antonello, our President and Chief Executive Officer and a director in 2023, did not receive any additional compensation for serving as a director. Please see the "2023 Summary Compensation Table" below on page 37 for the 2023 compensation received by Ms. Antonello.
2023 Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation(2) ($) | Total ($) | | João “John” M. de Figueiredo | 93,000 | 84,968 | — | — | — | 3,117 | 181,085 | | Prasanna G. Dhoré(3) | 86,000 | 84,968 | — | — | — | 3,955 | 174,923 | | Valerie R. Glenn(4) | 40,000 | — | — | — | — | — | 40,000 | | Barbara A. Higgins | 101,000 | 84,968 | — | — | — | 2,426 | 188,394 | | James R. Kroner | 94,583 | 84,968 | — | — | — | 165 | 179,716 | | Michael J. McColgan | 108,000 | 84,968 | — | — | — | 3,498 | 196,466 | | Michael J. McSally | 152,000 | 84,968 | — | — | — | 2,994 | 239,962 | | Jeanne L. Mockard | 98,000 | 84,968 | — | — | — | 4,440 | 187,408 | | Alejandro "Alex" Perez-Tenessa | 83,000 | 84,968 | — | — | — | 165 | 168,133 | | Steven P. Sorenson(5) | — | — | — | — | — | — | — |
2023 Director Compensation
(1)The amounts in the "Stock Awards" column relate to the RSUs granted in 2023 under our equity and incentive plan. Such grants of RSUs were made following the 2023 Annual Meeting of Stockholders to all non-employee directors serving as of that date and are scheduled to vest on May 25, 2024. The fair market value of each share of common stock subject to the RSUs on May 25, 2023, the date of grant, was $36.42. As of December 31, 2023, each then-serving non-employee director had 2,333 unvested RSUs, and Ms. Glenn had no outstanding equity awards with respect to the Company. Additional stock ownership information is set forth in the beneficial ownership table on page 53. The amounts shown do not reflect compensation actually received by the non-employee director but rather represent the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation ("FASB ASC Topic 718"), based on the stock price on the date of grant and excluding any assumption for future forfeitures. All other assumptions used to calculate the expense amounts shown are set forth in Note 14 to the 2023 Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, as filed February 26, 2024 (the "2023 10-K"). Dividend equivalents will be credited to those non-employee directors who elect to defer settlement of their RSUs generally until six months after termination of Board service, and will be converted into additional RSUs. (2)All Other Compensation includes the aggregate incremental costs associated with the non-employee directors' board activities. (3)Mr. Dhoré is not standing for re-election at the 2024 Annual Meeting. (4)Ms. Glenn retired from the Board effective May 25, 2023 and received pro-rated cash fees based on her service during the year. (5)Mr. Sorenson became a non-employee director effective March 1, 2024, so he did not receive any director compensation in 2023.
2023 Executive Compensation Outcomes
2023 Executive Compensation Outcomes The Compensation Committee considered, among other things, the 2023 Company performance described above, the continued successful execution of our plan to develop and implement new technologies and capabilities, and the individual performance of each NEO, in making the following compensation decisions: •We provided modest increases, if any, in 2023 base salary for NEOs based on factors such as the individual's performance, scope of responsibility and market trends; •Our financial performance in 2023 resulted in an Adjusted GAAP Calendar Year Combined Ratio of 94.7%. This was significantly better than the threshold performance (the "Bonus Hurdle") of 106.0%, and resulted in bonus awards to our NEOs of between 50% and 155% of their respective bonus targets; and •We achieved an annualized two-year change in ABVPS for calendar years 2022 and 2023 of 6.34% for our 2022 performance share ("PSU") grant, which will vest in 2025 at 59% of target, subject to the satisfaction of a one-year service-based vesting period.
Highlights of Our Executive Compensation Program
Highlights of Our Executive Compensation Program We believe our program: •Provides total target direct compensation opportunities that are within the competitive range for executives with similar roles in our compensation peer group; •Aligns pay and performance by linking incentive compensation with our combined ratio and ABVPS, which are viewed as key operational metrics and financial drivers of our stock price; •Emphasizes long-term equity compensation tied to the change in ABVPS and our stock price; and •Discourages excessive or undue risk-taking. What our Program Does: •Emphasizes Performance-Based Compensation: ◦Long Term: We continued to align a significant portion of our compensation with long-term performance by weighting PSUs at 65% of the total long-term equity compensation, which represented approximately 54% of Ms. Antonello's 2023 target direct compensation. ◦Short Term: Our short-term incentive program is entirely performance-based, with annual cash bonuses paid only if the applicable performance goals are achieved. •Has a Diversified Mix of Performance Metrics: We currently use change in ABVPS for the PSU metric, and we currently use Adjusted GAAP Calendar Year Combined Ratio as the metric for our annual cash bonus program. •Mitigates Risk, Exhibits Good Corporate Governance and Addresses Human Capital Matters: ◦Possesses Robust Clawback Policies: We have a robust policy to recapture (or "clawback") cash and equity incentive compensation paid to our NEOs and our broader executive team in the event of a restatement or misconduct. In addition, in 2023 we implemented another compensation recapture policy to comply with the new SEC rules and the Listing Standards for our current and former Section 16 officers, including our NEOs, for the recovery of erroneously awarded performance-based incentive compensation. ◦Limits the Amount of Awards Provided: Our equity and incentive plan has a maximum limit on the amount of awards provided to our NEOs. ◦Uses Regular Annual Equity Grants: We have a policy of awarding annual equity grants to our NEOs during a regularly scheduled Compensation Committee meeting, typically in February or March of each year. ◦Imposes Long-Term Vesting and Performance Requirements: Our 2023 RSUs were granted with annual vesting over a four-year period, and our 2023 PSU awards now span a three-year performance period. ◦Subjects NEOs to Stock Ownership Guidelines: We require our NEOs to attain and maintain meaningful and competitive levels of Company stock ownership. ◦Addresses Human Capital Management: Our strategy is to attract and retain responsible, talented and experienced individuals through various initiatives that help promote inclusion, diversity and fair pay. What our Program Does Not Do: •Change in Control Gross-Ups: We have no tax gross-up provisions related to change in control benefits or payments. •Hedging or Pledging: We restrict our NEOs from hedging or pledging Company equity securities, including securities granted under the Company's equity and incentive plan. •Excessive Perquisites or Benefits: We provide only limited perquisites and benefits, and do not provide items such as SERPs or defined benefit pension plans.
Independent Compensation Consultants
Independent Compensation Consultants For 2023, the Compensation Committee again engaged Pay Governance to identify competitive compensation practices for our executive and director compensation programs, and to advise the Compensation Committee regarding the design of the Company's 2023 incentive compensation components, the competitive ranges for each element of our NEOs' compensation, and compensation trends and standards for best practice. The Compensation Committee also worked with Pay Governance in determining the target compensation levels for our CEO and the other NEOs. Pay Governance did not perform any unrelated services on behalf of management and management did not retain a separate compensation consultant in 2023. Following completion of its routine, periodic review of its consultants, beginning in June 2023, the Compensation Committee retained the services of CAP to advise it regarding 2024 and future compensation decisions. CAP did not advise the Compensation Committee with respect to any 2023 compensation decisions.
Competitive Market Analysis
Competitive Market Analysis Pay Governance conducted a competitive market analysis consisting of companies within our peer group and survey data to help inform the Compensation Committee's 2023 compensation decisions. Our peer companies were selected based upon a review of organizations that have similar industry focus (insurance companies in the property and casualty segment, including companies with a workers' compensation line of business, as well as insurance companies in the life and health segments), financial size (net written and net earned premium), market capitalization, returns (return on equity and total shareholder return) and financial performance (combined ratio and net income). As a result of its review, Pay Governance recommended removing James River Group Holdings, Ltd., as its performance was no longer viewed as similar to that of the Company, and removing Protective Insurance Corporation, ProSight Global, Inc. and State Auto Financial Corporation, as each had each been acquired in recent years. Pay Governance also recommended adding HCI Group, Inc., Horace Mann Educators Corporation, National Western Life Group, Inc., NI Holdings, Inc., Palomar Holdings, Inc., and Tiptree, Inc., as they were viewed as reasonably comparable to the Company in size, industry and performance, and operated in businesses providing workers compensation insurance or other commercial specialty and casualty insurances. Pay Governance recommended the revised peer group to the Compensation Committee for 2023, for the purpose of reviewing the competitive market for the positions of Chief Executive Officer and Chief Financial Officer. The Compensation Committee approved the peer group below as recommended by Pay Governance:
Competitive Market Analysis
| Peer Group | | | | ● AMERISAFE, Inc. | ● Argo Group International Holdings, Ltd. | ● Donegal Group Inc. | | ● Global Indemnity Group, LLC | ● Hallmark Financial Services, Inc. | ● HCI Group, Inc. | | ● Horace Mann Educators Corporation | ● Kinsale Capital Group, Inc. | ● National Western Life Group, Inc. | | ● NI Holdings, Inc. | ● Palomar Holdings, Inc. | ● ProAssurance Corporation | | ● RLI Corp | ● Safety Insurance Group, Inc. | ● Selective Insurance Group, Inc. | | ● Sirius International Insurance Group, Ltd. | ● Tiptree, Inc. | ● United Fire Group, Inc. |
Competitive Market Analysis
Pay Governance reviewed proprietary survey data from the Total Compensation Solutions EPPI Compensation & Benefits Survey (2022) (the "EPPI Survey") and the APCIA Insurance Executive Compensation Survey (2022) (the "APCIA Survey") to review the competitive market for the Chief Administrative Officer position, and blended the survey data with the peer group data to review the competitive market for the Chief Legal Officer and the Chief Information Officer positions given the limited number of similar executive officer positions within the peer group. The EPPI Survey was limited to data from insurance companies with annual premiums between $500 million and $1.25 billion and assets over $1.25 billion. The APCIA Survey data was limited to insurance companies with Direct Written Premium above $750 million and assets above $1.5 billion. Pay Governance weighted each survey equally in making its recommendation.
Elements of Our 2023 Executive Compensation Program
Elements of Our 2023 Executive Compensation Program The below sections discuss each of the following components of our 2023 executive compensation program as approved by the Compensation Committee: •Base salary; •Annual cash bonuses; •Long-term incentives (PSUs and RSUs); •Benefits and perquisites; and •Severance plan agreements, and compensation payable upon termination of employment, or in connection with a change in control. The chart below shows Ms. Antonello's total target direct compensation mix (i.e., base salary, short-term incentive ("STI") program and long-term incentive ("LTI") program percentages).
Annual Cash Bonuses
Annual Cash Bonuses Under our 2023 annual cash bonus program (which is administered under our equity and incentive plan), each of our NEOs was eligible to receive a bonus only if a pre-established financial goal had been achieved. As in prior years, the Compensation Committee believed that the annual cash bonus was a key component of our 2023 executive compensation program as it enabled us to (1) align certain compensation opportunities with our short-term financial goals, (2) create incentives based on the Company's 2023 performance, and (3) provide competitive compensation opportunities for our NEOs. Performance Measurement For 2023, the Compensation Committee concluded that a performance goal based on an Adjusted GAAP Calendar Year Combined Ratio metric remained an effective and prevalent measure of management performance for an insurance holding company. The Compensation Committee believes that the Adjusted GAAP Calendar Year Combined Ratio promotes the importance of long-term decision making for a long-tail line of insurance like workers' compensation. This metric aligns the annual cash bonus with a key financial goal that impacts stockholder value, while excluding certain items that have limited significance in our current and ongoing operations. As in previous years, the Compensation Committee believes that the combined ratio metric: (1)utilizes a measure of the operating insurance companies' profitability; (2)balances revenue and underwriting losses, thereby guarding against the potential for increasing revenue by undertaking unnecessary risk; (3)provides a meaningful incentive for management to pursue increasing levels of operating profitability; and (4)is a common industry measure for assessing company performance. An annual bonus payment can only be made to our NEOs under the program if corporate performance is better than the pre-established Bonus Hurdle. Also, the annual bonus program design enables the Compensation Committee to use its sole discretion to reduce, but not increase, the value of the annual bonuses based on various criteria that it considers appropriate at the time the bonus payments are ultimately determined. For 2023, the performance goal was based on how the Company's Adjusted GAAP Calendar Year Combined Ratio for the 2023 calendar year compared to the pre-established Bonus Hurdle of 106.0%. The Bonus Hurdle was intended to both motivate our executives and to enable the Compensation Committee to reward our NEOs for solid performance. For purposes of the 2023 annual bonus program, Adjusted GAAP Calendar Year Combined Ratio was defined as:
Annual Cash Bonuses
| (Losses + Loss Adjustment Expenses + Commission Expense – Amortization of the Deferred Gain +/– Impact of the LPT Reserve Adjustment +/– Impact of the LPT Contingent Commission Adjustment) / Net Premiums Earned plus (Underwriting Expenses + General and Administrative Expenses) / Net Premiums Written. |
Annual Cash Bonuses
The Company's Adjusted GAAP Calendar Year Combined Ratio was calculated based on the financial information disclosed in the Company's Annual Report on Form 10-K for 2023, as filed with the SEC on February 26, 2024 (the "2023 10-K"). Bonus Target Awards In setting the bonus targets for each of the NEOs, the Compensation Committee took into account the peer group information and recommendations made by Pay Governance. After consultation with Pay Governance, the Compensation Committee increased Ms. Brown's bonus target from 55% to 60% to align her bonus target with similarly situated executives at peer companies. The Compensation Committee did not change the annual bonus targets for the other NEOs from their respective 2022 targets. The annual bonus targets for 2023 were as follows:
Annual Cash Bonuses
| Name | 2023 Annual Cash Bonus Target as a Percentage of Base Salary | | Katherine H. Antonello | 110% | | Michael S. Paquette | 70 | | Lori A. Brown | 60 | | John M. Mutschink | 55 | | Jeffrey C. Shaw | 60 |
Annual Cash Bonuses
For 2023, as in 2022, our NEOs could earn an annual cash bonus of up to 250% of the NEOs' respective targets, but only if corporate performance was better than the pre-established Bonus Hurdle; that is, less than or equal to an Adjusted GAAP Calendar Year Combined Ratio of 106.0%. Provided that the Bonus Hurdle was achieved, the Compensation Committee had the sole discretion to decrease, but not increase, the value of the NEOs' annual bonuses, based on criteria selected by the Compensation Committee for this purpose. The Compensation Committee may exercise its discretion on a case-by-case basis. 2023 Results In 2023, the Company achieved an Adjusted GAAP Calendar Year Combined Ratio of 94.7%, which was significantly better than the Bonus Hurdle of 106.0%. Highlights of the considerations that formed the basis of the Compensation Committee's annual cash bonus award determination are set forth below: •Our overall financial performance in 2023, as described above under "Summary - 2023 Company Performance Highlights"; •Our continued successful execution of our plan to develop and implement new technologies and capabilities; •Our continued internal and customer-facing business process improvements that provide greater support and ease of use to our independent agents, brokers, and other distribution partners, as well as policyholders; •Our completion of a full integration of Cerity's operations into those of Employers and our exit from our former headquarters in Reno, Nevada, which we believe will meaningfully reduce our fixed underwriting expenses going forward; and •Our further diversified risk exposure. In determining the actual annual cash bonus awards, the Compensation Committee evaluated each of our NEO's performance, responsibilities, accomplishments, and contributions to the Company during 2023, with advice from Ms. Antonello regarding the NEOs other than herself. As a result of this evaluation, and after consideration of the Company's 2023 performance, the Compensation Committee awarded each NEO an annual cash bonus equal to between 50% and 155% of the NEO's respective target. Ms. Antonello was awarded $1,193,500 (representing 155% of target) in recognition of her overall leadership of the Company, leading to the Company's strong improvement in financial and business results, as well as execution of the Company's business strategy and strategic initiatives. Mr. Paquette was awarded $564,200 (representing 155% of target) in recognition of his management of the Company's financial accounting, treasury and planning functions, including strong improvement of planning capability and forecasting capability, his effective management of the investment portfolio, and his superior business acumen. Ms. Brown was awarded $316,500 (representing 137% of target) for her effective management of the legal, risk and government & regulatory affairs functions, and her effective counsel to the Board. Mr. Mutschink was awarded $306,900 (representing 155% of target) for his versatility in managing the Company's human resource, marketing, corporate services and information security functions, leadership of multiple strategic business initiatives, and support and counsel to the Compensation Committee in transitioning the Board's Executive Compensation Consultant. Mr. Shaw was awarded $58,000 (representing 50% of target, prorated for the period during which he was employed with the Company) for his contributions to the management of the Company's information technology function prior to his separation in July 2023. The following table sets forth the 2023 annual bonus awards for each NEO:
Annual Cash Bonuses
| Name | Cash Bonus Amount | | Katherine H. Antonello | $1,193,500 | | Michael S. Paquette | 564,200 | | Lori A. Brown | 316,500 | | John M. Mutschink | 306,900 | | Jeffrey C. Shaw(1) | 58,000 |
Annual Cash Bonuses
(1) The amount awarded to Mr. Shaw reflects an annual cash bonus prorated for the period during which he was employed with the Company, as his employment ended on July 12, 2023.
Long-Term Incentive Grants
Long-Term Incentive Grants We continue to believe that a properly designed long-term incentive program with competitive compensation opportunities encourages our NEOs to pursue and execute long-term strategies to increase stockholder value. Our long-term incentive program is designed to serve as an important retention and recruiting tool in securing a highly-qualified senior management team. We remain committed to linking a significant percentage of our NEOs' compensation to the performance of the Company. In March 2023, the Compensation Committee approved long-term incentive grants under our equity and incentive plan. As in recent years, approximately 65% of the aggregate value of these grants was in the form of PSUs and the remaining 35% was in the form of RSUs (each unit having the value of one share of common stock). As discussed above, the Compensation Committee continues to compensate the NEOs in a manner that is designed to provide a significant portion of our NEOs' compensation (specifically, annual cash bonuses and PSUs) as performance-based. In determining the overall long-term incentive grant levels for each NEO, the Compensation Committee, with advice from Pay Governance, reviewed the relative total compensation opportunities (cash plus long-term incentives), the NEOs' relative responsibilities, the replacement/retention risk, the executive's potential at the Company, individual performance, and tenure with the Company. The Compensation Committee also considered Company performance, peer group data and general market compensation practices. The Compensation Committee did not assign a specific weight to any of these factors. The design of the components of our long-term incentive program reflects this review and is described below. 2023 PSU Grants The metric used to measure management performance for our PSU grant changed in 2023. The PSUs granted to our NEOs in March 2023 were based on our achievement of a metric tied to an annualized three-year change in ABVPS. The Company's change in ABVPS is based on pre-determined levels over the Average Daily Closing Rate of the 10-year U.S. Treasury over a three-year performance period ("10 Yr. Treasury"). Prior-year PSU grants were based on a two-year performance period followed by a one-year service-based vesting requirement. This change was made to further align with market practices and to tie a significant portion of compensation to our longer-term performance. ABVPS was chosen for the 2023 PSU grants because we believe that (1) it encourages management to focus on multiple performance objectives that are deemed critical to creating stockholder value over a sustained period of time, principally our underwriting results and our investment income, (2) it is readily understood by management, and (3) it is simpler and more transparent than many other commonly used performance goals and will therefore more effectively motivate and retain our executives. For 2023, as in 2022, the NEOs are eligible to earn a maximum of 250% of target for the 2023 PSU grant. As in previous years, dividend equivalents will be credited to outstanding PSUs upon the achievement of the applicable performance goals and during the vesting periods, and will be paid only if these performance goals are achieved and all other requirements tied to the payment of the PSUs are satisfied. In that event, payment would be made, in cash, when the underlying PSUs are distributed. For the performance period commencing on January 1, 2023, and ending on December 31, 2025, the performance goals selected were based on how the Company's change in ABVPS over this period compares to pre-determined levels over the 10 Yr. Treasury, which were intended to be challenging, but achievable. The pre-established threshold, target and maximum levels for the Company's change in ABVPS and the corresponding payouts as a percentage of the target number of PSUs awarded are as follows:
Long-Term Incentive Grants
| | Company's Annualized Three-Year Change in Adjusted Book Value Per Share | Payout as a Percentage of Target | | Maximum | 10 Yr. Treasury + 9.0% | 250% | | Target | 10 Yr. Treasury + 4.0% | 100 | | Threshold | <10 Yr. Treasury + 0.0% | 0 |
Long-Term Incentive Grants
For purposes of the 2023 PSU grants, the Company's change in ABVPS will be calculated based on the financial information disclosed in the Company's Annual Financial Statements for years 2023, 2024, and 2025, and is defined as follows: Annualized Three-Year Change in Adjusted Book Value Per Share = ((Adjusted book value per share at the end of the three-year performance period + dividends declared per common share during the three-year performance period) / Adjusted book value per share at the beginning of the three-year performance period) ^ (1/3) -1. Adjusted book value per share = ((Stockholders' equity + deferred reinsurance gain-LPT Agreement - accumulated other comprehensive income or loss, net of income tax) / Ending common shares outstanding). Average Daily Closing Rate of the 10-Year U.S. Treasury ("10 Yr. Treasury") = the sum of the individual daily closing rates of the 10-Year U.S. Treasury for each calendar day in which the U.S. Treasury market is open during the performance period, divided by the total number of calendar days in which the U.S. Treasury market is open during such performance period. Payouts, if any, would be made by March 15, 2026. The PSU grants made to our NEOs in 2023 are set out and described in the 2023 Summary Compensation Table on page 37 and the 2023 Grants of Plan-Based Awards Table on page 40. Performance Goal Certification for the 2022 PSU Grants In 2022, the Compensation Committee granted PSUs with a two-year performance period (calendar years 2022 and 2023) followed by a one-year service-based vesting period. The structure of these grants is similar to the description above for the 2023 PSU grants, with the principle differences being that: (1) the performance goals were based on a two-year performance period followed by a one-year service-based vesting period and (2) our achievement of the ABVPS metric was compared to pre-determined levels that did not vary based on the 10-Year Treasury. The pre-established threshold, target and maximum levels for ABVPS and the corresponding payouts as a percentage of the target number of 2022 PSUs awarded are as follows:
Long-Term Incentive Grants
| | Company's Annualized Two-Year Change in Adjusted Book Value Per Share | Payout as a Percentage of Target | | Maximum | > 14.0% | 250% | | Target | 8.0% | 100 | | Threshold | 3.0% | 0 |
Long-Term Incentive Grants
The Compensation Committee has certified that the Company earned an annualized two-year change in ABVPS for the 2022-2023 performance period of 6.34%, which equates to 59% of target. These grants are included in the 2023 Outstanding Equity Awards at Fiscal Year-End table on page 41 and generally will become payable in 2025, following the one-year service-based vesting period. 2023 RSU Grants Our NEOs received grants of time-vesting RSUs in March 2023, which vest over a four-year period. As in previous years, the Compensation Committee believes that the RSU grants will positively impact retention and will effectively motivate management to focus on executing the existing long-term strategic plan designed to increase stockholder value. As in recent years, dividend equivalent units will be credited during the vesting periods but will be paid only if the vesting requirements are satisfied. In that event, payment would be made, in cash, when the underlying RSUs are distributed. All RSU grants that were made in 2023 to our NEOs are set out and described in the 2023 Summary Compensation Table on page 37 and the 2023 Grants of Plan-Based Awards Table on page 40.
Key Executive Change in Control and Severance Plan
Key Executive Change in Control and Severance Plan Each NEO was eligible to receive severance benefits under the Key Executive Change in Control and Severance Plan (the "Plan") in 2023. The Compensation Committee approved the adoption of the Plan in 2021 with the objectives of providing market-competitive severance pay and benefits for the Company's executive officers (and other highly compensated employees whom the Board or the Compensation Committee may designate), ensuring that such severance pay and benefits are consistent across groups of key employees of similar seniority, and enabling the Company to update all participants' severance pay and benefits simultaneously if and when appropriate, rather than administering individualized updates upon renewals of employment agreements with differing term expirations. (No NEO was a party to an employment agreement with the Company during 2023.) The Plan is intended to offer protection to its participants to enable them to focus their full time and attention on the success of the Company's business and mitigate distractions that may arise from the potential of an involuntary termination. The Compensation Committee also believes that severance benefits at the senior management levels are necessary to continue to attract and retain executive officers. In connection with his involuntary termination of employment in July 2023, Mr. Shaw became eligible to receive severance benefits under the Plan, with such benefits subject to his entry into a separation agreement and release of claims in favor of the Company. A description of the severance benefits under the Plan, and the actual severance benefits Mr. Shaw received pursuant to the Plan in light of his involuntary termination, are provided in "Potential Payments upon Termination or Change in Control" beginning on page 42.
Risk Assessment
Risk Assessment Management performed its annual risk assessment to evaluate whether our compensation program promotes excessive or undue risk-taking generally and specifically as applied to our NEOs, and concluded that, in all cases, the potential for promoting such risk is low. CAP reviewed management's analysis and agreed with management's conclusion. Finally, the Compensation Committee considered both management's analysis and CAP's review, and likewise concluded that this compensation program is not reasonably likely to have a material adverse effect on the Company, and then reported its results to the full Board. In making this determination, the Compensation Committee analyzed our compensation program's diverse attributes and found that the program: •Provided a balanced mix of fixed and performance-based compensation; •Included base salaries that were competitive within our industry; •Consisted of performance-based compensation awards that balanced both short- and long-term performance over varying time horizons and provided a mix of cash and equity awards based on varying performance goals among our performance-based awards; •Provided annual cash bonus awards and PSU awards that were capped at competitive levels; •Included a significant portion of total compensation linked to the Company's long-term performance, both to mitigate short-term risk that could be detrimental to the Company's long-term interests, and to encourage the creation of long-term stockholder value; •Included equity-based performance awards and equity-based time vesting awards, which were subject to multi-year vesting or performance periods and derived their value from the Company's total performance, which we believe further encourages decision-making that is in the long-term interests of the Company and its stockholders; •Included executive stock ownership guidelines (as described below), for those employees who we believe can have the greatest influence on the financial performance of the Company, which guidelines have been designed to strengthen the alignment between the interests of our senior officers and the Company's stockholders, and to discourage risk-taking that could be detrimental to the long-term interests of the Company, its performance, and long-term stockholder value; •Included clawback, grant, and retention policies (as described below), which provide additional assurance that any risks associated with our compensation plans and policies would be further mitigated; and •Included human capital initiatives that are designed to, among other things, create an inclusive work community, minimize employee turnover and employment-related litigation, improve resolution of internal complaints, and improve recruitment.
Stock Grant Policy and Guidelines
Stock Grant Policy and Guidelines The Company's equity grant policy specifies the Company's practices and procedures for granting equity awards, including stock options, stock appreciation rights, restricted stock, RSUs, PSUs, and any other stock-based award. This policy contains procedures to prevent stock option backdating or other timing improprieties. The equity grant policy governing the 2023 annual grants to the NEOs requires that annual equity grants to employees at the level of Vice President and above be made at a regularly scheduled Compensation Committee meeting occurring between February 15 and March 15, or at such other times as the Compensation Committee, in its judgment, deems appropriate. Equity awards to NEOs and other employees at the level of Senior Vice President and above who are new hires, who are promoted, or who are current employees, to address retention issues, will be made, if at all, on the 1st business day of March, May, August or November, which first follows the first day of employment, promotion or approval, respectively, subject to prior approval of the Compensation Committee.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table sets forth information regarding compensation awarded to, earned by or paid to each of our 2023 NEOs during 2023, 2022, and 2021 (or fewer years to the extent previous year disclosure was not required or applicable):
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation(2) ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation(3) ($) | Total ($) | | Katherine H. Antonello President and Chief Executive Officer | 2023 | 702,304 | — | 1,699,904 | — | 1,193,500 | — | 131,398 | 3,727,106 | | | 2022 | 671,994 | — | 594,057 | — | 1,145,000 | — | 107,630 | 2,518,681 | | | 2021 | 600,329 | — | 922,733 | — | 910,000 | — | 137,667 | 2,570,729 | | Michael S. Paquette Executive Vice President, Chief Financial Officer | 2023 | 527,842 | — | 566,909 | — | 564,200 | — | 136,672 | 1,795,623 | | | 2022 | 521,612 | — | 310,374 | — | 546,000 | — | 105,486 | 1,483,472 | | | 2021 | 509,954 | — | 605,145 | — | 459,550 | — | 99,582 | 1,674,231 | | Lori A. Brown Executive Vice President, Chief Legal Officer | 2023 | 386,384 | — | 401,527 | — | 316,500 | — | 89,154 | 1,193,565 | | | 2022 | 371,229 | — | 202,197 | — | 345,950 | — | 69,034 | 988,410 | | | 2021 | 362,738 | — | 374,649 | — | 227,700 | — | 52,587 | 1,017,674 | | John M. Mutschink Executive Vice President, Chief Administrative Officer | 2023 | 361,849 | — | 307,727 | — | 306,900 | — | 57,947 | 1,034,423 | | Jeffrey C. Shaw Former Executive Vice President, Chief Information Officer | 2023 | 264,776 | — | 401,527 | — | 58,000 | — | 415,763 | 1,140,066 | | | 2022 | 362,237 | — | 308,136 | — | 262,800 | — | 68,519 | 1,001,692 | | | 2021 | 346,153 | — | 474,610 | — | 227,700 | — | 48,713 | 1,097,176 |
2023 Summary Compensation Table
(1)The amounts in the "Stock Awards" column consist of PSUs and RSUs granted under our equity and incentive plan by the Compensation Committee, which followed a substantially equivalent process in each year reflected in the table. The amounts shown do not reflect compensation actually received by the NEO. Rather, the amounts shown represent the aggregate grant date fair value of the award computed in accordance with FASB ASC Topic 718, based on the closing stock price on the date of grant and excluding any assumption for future forfeitures. In addition, the grant date fair value for the PSUs is presented based on the probable satisfaction of the performance conditions as of the applicable year-end. As of year-end 2021, 2022 and 2023, the probable satisfaction of the performance conditions for the applicable years were 100%, 26% and 100% of target, respectively. All other assumptions used to calculate the grant date fair value amounts shown for 2023 are set forth in Note 14 to the 2023 Consolidated Financial Statements in the Company's 2023 10-K. The values of the 2023 PSUs as of the grant date at maximum level of achievement for Mses. Antonello and Brown and Messrs. Paquette, Mutschink and Shaw were $2,762,551, $652,069, $921,536, $499,851, and $652,069, respectively. For more information regarding these awards, see the 2023 Grants of Plan-Based Awards table on page 40. (2)The Non-Equity Incentive Plan Compensation in this column reflects the annual cash bonus, if any, earned by each of our NEOs for 2021, 2022 and 2023 and paid in the first quarter of the following year. (3)Includes the following payments that we made to or on behalf of our NEOs:
2023 Summary Compensation Table
| Name | Year | Car Allowance ($) | Perquisites ($)(a) | 401(k) Matching Contributions ($) | Cash Dividends Paid ($)(b) | Life Insurance Premiums ($) | Personal Benefits(c) ($) | Severance(d)($) | Health Savings Account Contribution ($) | Total ($) | | Katherine H. Antonello | 2023 | 14,400 | — | 13,200 | 92,928 | 2,385 | 7,285 | — | 1,200 | 131,398 | | Michael S. Paquette | 2023 | 14,400 | 10,350 | 13,200 | 94,992 | 1,260 | 1,270 | — | 1,200 | 136,672 | | Lori A. Brown | 2023 | 14,400 | — | 13,200 | 57,367 | 965 | 2,622 | — | 600 | 89,154 | | John M. Mutschink | 2023 | 14,400 | — | 13,200 | 28,238 | 908 | — | — | 1,200 | 57,947 | | Jeffrey C. Shaw | 2023 | 7,754 | — | 13,200 | 98,910 | 531 | — | 294,168 | 1,200 | 415,763 |
2023 Summary Compensation Table
a.Perquisites include club memberships. b.Cash dividends are paid for accrued dividends on eligible RSUs and PSUs upon satisfaction of the vesting and/or performance requirements when the underlying shares are distributed. c.Personal benefits include the aggregate incremental costs associated with the NEOs' professional memberships and license fees. Also included are the aggregate incremental costs associated with NEOs' guests' (i.e., spouse, family member or similar guest) attendance at company meetings and/or company activities. d.Severance includes payment and benefits provided to Mr. Shaw during 2023 in accordance with the terms of the Key Executive Change in Control and Severance Plan, which includes $259,033 in severance and a lump sum of $35,135 for COBRA continuation coverage.
2023 Grants Of Plan-Based Awards
2023 Grants Of Plan-Based Awards
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares or Stock Units(3) (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(4) ($) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Katherine H. Antonello | n/a | — | 770,000 | 1,925,000 | — | — | — | — | — | — | — | | | 3/15/2023 | — | — | — | — | 26,860 | 67,150 | — | — | — | 1,105,020 | | | 3/15/2023 | — | — | — | — | — | — | 14,460 | — | — | 594,884 | | Michael S. Paquette | n/a | — | 364,000 | 910,000 | — | — | — | — | — | — | — | | | 3/15/2023 | — | — | — | — | 8,960 | 22,400 | — | — | — | 368,614 | | | 3/15/2023 | — | — | — | — | — | — | 4,820 | — | — | 198,295 | | Lori A. Brown | n/a | — | 231,000 | 577,500 | — | — | — | — | — | — | — | | | 3/15/2023 | — | — | — | — | 6,340 | 15,850 | — | — | — | 260,828 | | | 3/15/2023 | — | — | — | — | — | — | 3,420 | — | — | 140,699 | | John M. Mutschink | n/a | — | 198,000 | 495,000 | — | — | — | — | — | — | — | | | 3/15/2023 | — | — | — | — | 4,860 | 12,150 | — | — | — | 199,940 | | | 3/15/2023 | — | — | — | — | — | — | 2,620 | — | — | 107,787 | | Jeffrey C. Shaw | n/a | — | 219,000 | 547,500 | — | — | — | — | — | — | — | | | 3/15/2023 | — | — | — | — | 6,340 | 15,850 | — | — | — | 260,828 | | | 3/15/2023 | — | — | — | — | — | — | 3,420 | — | — | 140,699 |
2023 Grants of Plan-Based Awards
(1)For the Estimated Future Payouts Under Non-Equity Incentive Plan Awards columns, Threshold reflects the bonus amount assuming the Bonus Hurdle had not been achieved, Target reflects achievement of the Bonus Hurdle and 100% achievement of the performance goals, and Maximum reflects achievement of the Bonus Hurdle and 250% achievement of the performance goals. (2)Amounts shown are the number of PSUs granted to the NEOs in March 2023. Threshold reflects that the threshold performance was not achieved, Target reflects 100% of the value of the award and Maximum reflects 250% of the value of the award at Target. The PSUs will become distributable in 2026, subject to, and to the extent of, the achievement of the applicable performance goals, as of the end of the performance period, on December 31, 2025, subject to the NEO's continued employment through December 31, 2025. (3)Amounts shown are the number of RSUs granted to each of the NEOs in March 2023. The RSUs will vest in equal 25% increments on each of March 15, 2024, 2025, 2026, and 2027, subject to the NEO's continued employment through the relevant vesting dates. (4)Amounts shown represent the aggregate fair value of the PSUs and RSUs as of the date of grant calculated in accordance with FASB ASC Topic 718, excluding any assumption for future forfeitures, and, in the case of the PSUs, based on the probable achievement of the underlying performance goals at the time of grant. Assumptions used to calculate the grant date fair value amounts are set forth in Note 14 to the 2023 Consolidated Financial Statements in the Company's 2023 10-K. However, the fair value shown above may not be indicative of the value realized due to the variability in the share price of our common stock.
2023 Outstanding Equity Awards at Fiscal Year-End
2023 Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information concerning outstanding equity awards for each of our NEOs as of December 31, 2023:
2023 Outstanding Equity Awards at Fiscal Year-End
| Name | Grant Date | Option Awards | | | | | Stock Awards | | | | | | | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(1) (#) | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) ($) | | Katherine H. Antonello | 3/15/2023 | — | — | — | | | 14,460 | 569,724 | 67,150 | 2,645,710 | | | 3/15/2022 | — | — | — | | | 25,770 | 1,015,338 | — | — | | | 3/8/2021 | — | — | — | | | 4,300 | 169,420 | — | — | | | 3/10/2020 | — | — | — | | | 980 | 38,612 | — | — | | Michael S. Paquette | 3/15/2023 | — | — | — | | | 4,820 | 189,908 | 22,400 | 882,560 | | | 3/15/2022 | — | — | — | | | 13,470 | 530,718 | — | — | | | 3/8/2021 | — | — | — | | | 2,820 | 111,108 | — | — | | | 3/10/2020 | — | — | — | | | 1,025 | 40,385 | — | — | | Lori A. Brown | 3/15/2023 | — | — | — | | | 3,420 | 134,748 | 15,850 | 624,490 | | | 3/15/2022 | — | — | — | | | 8,780 | 345,932 | — | — | | | 3/8/2021 | — | — | — | | | 1,750 | 68,950 | — | — | | | 3/10/2020 | — | — | — | | | 615 | 24,231 | — | — | | John M. Mutschink | 3/15/2023 | — | — | — | | | 2,620 | 103,228 | 12,150 | 478,710 | | | 3/15/2022 | — | — | — | | | 7,025 | 276,785 | — | — | | | 8/2/2021 | — | — | — | | | 210 | 8,274 | — | — | | | 3/8/2021 | — | — | — | | | 940 | 37,036 | — | — | | | 3/10/2020 | — | — | — | | | 305 | 12,017 | | | | Jeffrey C. Shaw | 3/15/2023 | — | — | — | | | — | — | 2,640 | 104,016 |
2023 Outstanding Equity Awards at Fiscal Year-End
(1)The column reflects RSUs granted under our equity and incentive plan in August 2021 and each of March 2023, 2022, 2021, and 2020. The RSUs vest in equal 25% increments on March 15th of the first calendar year following the date of grant and on each of the next three anniversaries of that date, provided the NEO has been continuously employed by the Company through the relevant vesting dates. The column also reflects PSUs granted in March 2022 under our equity and incentive plan, for which the two-year performance period ran from January 1, 2022 to December 31, 2023. These PSUs remain subject to a one-year service-based vesting period, which will end on December 31, 2024, and will be delivered to the applicable NEO during the first quarter of 2025, provided the NEO remains continuously employed by the Company through December 31, 2024. The Compensation Committee has certified that the Company earned a level of achievement that is 59% of target, resulting in 59% of the target number of PSUs becoming earned and eligible for vesting, which is reflected in the figures in the table. (2)The market value of shares or units of stock that have not vested reflects a stock price of $39.40, our closing price on December 29, 2023. (3)The column reflects the number of PSUs granted in March 2023 under our equity and incentive plan that would be awarded to the NEOs at the end of the three-year performance period assuming that the maximum level of the performance goal (250% of target) is achieved and the NEO remains continuously employed by the Company during the entire performance period. The performance period for the March 2023 PSU grants commenced on January 1, 2023 and ends on December 31, 2025. The 2023 PSUs granted to Mr. Shaw have been prorated in accordance with the relevant equity grant agreement in light of his separation from the Company in July 2023.
Option Exercises and Stock Vested for 2023
Option Exercises and Stock Vested for 2023
Option Exercises and Stock Vested for 2023
| Name | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) | | Katherine H. Antonello | — | — | 28,131 | 1,172,856 | | Michael S. Paquette | — | — | 19,516 | 813,084 | | Lori A. Brown | — | — | 12,076 | 503,110 | | John M. Mutschink | — | — | 7,587 | 316,292 | | Jeffrey C. Shaw | — | — | 13,841 | 561,850 |
Option Exercises and Stock Vested for 2023
(1)The Number of Shares Acquired on Vesting column reflects (a) the vesting of 25% of the RSUs granted on March 6, 2019, March 10, 2020, March 8, 2021, August 2, 2021, and March 15, 2022 for each of the NEOs receiving grants in the applicable years; and (b) the number of PSUs granted on March 8, 2021 and August 2, 2021, which vested based on 141% of target level. The shares underlying the 2021 PSU grant were earned based on the achievement of pre-established corporate performance goals over a two-year performance period, followed by a one-year service-based vesting period. Additionally, for Mr. Shaw, whose employment terminated on July 12, 2023, the number of shares reflects his 2022 and 2021 PSU grants, which were prorated in accordance with the terms of the respective grant agreements. The Compensation Committee has certified that the Company earned a level of achievement for the 2022 PSUs that is 59% of target, which is also reflected in Mr. Shaw's figures in the table. (2)The Value Realized on Vesting column reflects (a) the number of shares underlying the RSU grants, which vested on March 15, 2023, multiplied by $41.14, the per share fair market value of the shares as of that date; and (b) the number of shares underlying the PSUs granted on March 8, 2021 and August 2, 2021, following the completion of the two-year performance period and one-year succeeding service-based vesting period that ended on December 31, 2023, multiplied by the per share fair market value of the shares, which was $41.83, as of January 30, 2024, the closing price on the date the PSUs were settled. For Mr. Shaw's PSUs, (i) the value realized on vesting for the 2022 PSUs granted on March 15, 2022 reflects the vested shares multiplied by the per share fair market value of the shares, which was $44.48 as of March 12, 2024, the closing price on the date the PSUs were settled; and (ii) the value realized on vesting for the 2021 PSUs granted on March 8, 2021 reflects the vested shares multiplied by the per share fair market value of the shares, which was $39.23 as of August 10, 2023, the closing price on the date the PSUs were settled.
Pension Benefits
Pension Benefits None of our NEOs participate in or has any accrued benefits under any qualified or nonqualified defined benefit plans maintained by the Company.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation None of our NEOs participate in or has an account balance in any nonqualified defined contribution plans or other nonqualified deferred compensation plans maintained by the Company.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control The following summaries and the table that follows set forth estimated potential amounts payable to our continuing NEOs upon a termination of employment or a change in control of the Company, in each case as of December 31, 2023, under the Company's compensation plans, programs, policies, agreements, and arrangements. The Compensation Committee may in its discretion revise, amend or add to the benefits if it deems it advisable. In 2023, no NEO was a party to an employment agreement with the Company.
Potential Payments to the Named Executive Officers Upon Termination or Change in Control
Potential Payments to the Named Executive Officers Upon Termination or Change in Control Assuming the employment of each of the NEOs had terminated on December 31, 2023, under each of the circumstances set forth in the table below (including the occurrence of a change in control on December 31, 2023), the payments and benefits described above would have the following estimated values under the applicable compensation plans, programs, policies, agreements, and arrangements:
Potential Payments to the Named Executive Officers Upon Termination or Change in Control
| Name | Salary(1) ($) | COBRA(2) ($) | Bonus ($) | Accrued Vacation ($) | Death Benefit ($) | Disability Benefits(4) ($) | Value of Accelerated Equity ($) | Total ($) | | Katherine H. Antonello | | | | | | | | | | Termination not in connection with a change in control either (a) by EHI for other than (i) cause, (ii) death or (iii) disability, or (b) by the executive for good reason. | 2,940,000 | 46,412 | 1,193,500(3) | 134,615 | — | — | 835,017 | 5,149,544 | | Termination in connection with a change in control (a) by EHI for other than (i) cause, (ii) death or (iii) disability, or (b) by the executive for good reason. | 4,410,000 | 69,618 | 1,925,000(6) | 134,615 | — | — | 2,554,791(5) | 9,094,024 | | Voluntary Termination | — | | — | 134,615 | — | — | — | 134,615 | | Termination for Cause | — | | — | 134,615 | — | — | — | 134,615 | | Change in Control (Equity Awards Not Assumed) | — | | 1,925,000(6) | — | — | — | 2,554,791(7) | 4,479,791 | | Death | — | | 1,193,500(3) | 134,615 | 2,250,000 | — | 2,554,791 | 6,132,906 | | Disability | — | | 1,193,500(3) | 134,615 | — | 1,350,000 | 2,554,791 | 5,232,906 | | Michael S. Paquette | | | | | | | | | | Termination not in connection with a change in control either (a) by EHI for other than (i) cause, (ii) death or (iii) disability, or (b) by the executive for good reason. | 1,105,000 | 14,943 | 564,200(3) | 100,000 | — | — | 369,835 | 2,153,978 | | Termination in connection with a change in control (a) by EHI for other than (i) cause, (ii) death or (iii) disability, or (b) by the executive for good reason. | 1,768,000 | 23,909 | 910,000(6) | 100,000 | — | — | 1,070,065(5) | 3,871,974 | | Voluntary Termination | — | | — | 100,000 | — | — | — | 100,000 | | Termination for Cause | — | | — | 100,000 | — | — | — | 100,000 | | Change in Control (Equity Awards Not Assumed) | — | | 910,000(6) | — | — | — | 1,070,065(7) | 1,980,065 | | Death | — | | 564,200(3) | 100,000 | 1,500,000 | — | 1,070,065 | 3,234,265 | | Disability | — | | 564,200(3) | 100,000 | — | 1,170,000 | 1,070,065 | 2,904,265 | | Lori A. Brown | | | | | | | | | | Termination not in connection with a change in control either (a) by EHI for other than (i) cause, (ii) death or (iii) disability, or (b) by the executive for good reason. | 770,000 | 10,573 | 316,500(3) | 74,038 | — | — | 247,694 | 1,418,805 | | Termination in connection with a change in control (a) by EHI for other than (i) cause, (ii) death or (iii) disability, or (b) by the executive for good reason. | 1,232,000 | 16,916 | 577,500(6) | 74,038 | — | — | 722,533(5) | 2,622,988 | | Voluntary Termination | — | | — | 74,038 | — | — | — | 74,038 | | Termination for Cause | — | | — | 74,038 | — | — | — | 74,038 | | Change in Control (Equity Awards Not Assumed) | — | | 577,500(6) | — | — | — | 722,533(7) | 1,300,033 | | Death | — | | 316,500(3) | 74,038 | 1,155,000 | — | 722,533 | 2,268,071 | | Disability | — | | 316,500(3) | 74,038 | — | 1,590,000 | 722,533 | 2,703,071 | | Retirement | — | | 316,500(3) | 74,038 | — | — | 629,352 | 1,019,890 |
Potential Payments to the Named Executive Officers Upon Termination or Change in Control
| Name | Salary(1) ($) | COBRA(2) ($) | Bonus ($) | Accrued Vacation ($) | Death Benefit ($) | Disability Benefits(4) ($) | Value of Accelerated Equity ($) | Total ($) | | John M. Mutschink | | | | | | | | | | Termination not in connection with a change in control either (a) by EHI for other than (i) cause, (ii) death or (iii) disability, or (b) by the executive for good reason. | 697,500 | 20,230 | 306,900(3) | 54,962 | — | — | 195,161 | 1,274,754 | | Termination in connection with a change in control (a) by EHI for other than (i) cause, (ii) death or (iii) disability, or (b) by the executive for good reason. | 1,116,000 | 32,369 | 495,000(6) | 54,962 | — | — | 548,054(5) | 2,246,385 | | Voluntary Termination | — | | — | 54,962 | — | — | — | 54,962 | | Termination for Cause | — | | — | 54,962 | — | — | — | 54,962 | | Change in Control (Equity Awards Not Assumed) | — | | 495,000(6) | — | — | — | 548,054(7) | 1,043,054 | | Death | — | | 306,900(3) | 54,962 | 1,080,000 | — | 548,054 | 1,989,916 | | Disability | — | | 306,900(3) | 54,962 | — | 2,970,000 | 548,054 | 3,879,916 | | Jeffrey C. Shaw | | | | | | | | | | Termination not in connection with a change in control either (a) by EHI for other than (i) cause, (ii) death or (iii) disability, or (b) by the executive for good reason. | 730,000 | 35,135 | 58,000(3) | — | — | — | 433,177(8) | 1,256,312 |
Potential Payments to the Named Executive Officers Upon Termination or Change in Control
(1)Amounts in this column reflect amounts that would be payable to each NEO under the Company's Key Executive Change in Control and Severance Plan had December 31, 2023 been the date of a triggering event, except with respect to Mr. Shaw whose employment terminated as of July 12, 2023. Amounts payable in connection with a change in control would be payable to the NEO in one lump sum. Amounts payable not in connection with a change in control would be payable in installments on the Company's normal payroll dates over a 24-month period for Ms. Antonello and a 15-month period for the other NEOs. (2)Amounts in this column reflect amounts that would be payable to each NEO under the Company's Key Executive Change in Control and Severance Plan had December 31, 2023 been the date of a triggering event. COBRA benefits for each NEO would consist of (i) in connection with a change in control, a lump sum payment equal to the premiums associated with continuing medical, vision and dental coverage over a 36-month period for Ms. Antonello and a 24-month period for the other NEOs, or (ii) not in connection with a change in control, a lump sum payment equal to such premiums over a 24-month period for Ms. Antonello and a 15-month period for the other NEOs. (3)The bonus amounts reflect the annual cash bonuses actually paid for 2023 under our equity and incentive plan. The 2023 annual bonuses were paid in the first quarter of 2024 at varying percentages of the eligible NEOs' respective base salary rates. Mr. Shaw's 2023 annual bonus was prorated in accordance with the terms of the 2023 annual cash bonus program. (4)Disability benefits are available to all full-time employees. In the event the NEO had been terminated due to disability, the executive would have been entitled to a benefit equal to 662/3% of their monthly salary, up to a maximum of $15,000 per month until attainment of their normal retirement age under the Social Security Act where retirement age depends on their date of birth. (5)The value of the equity acceleration that is shown for termination of a NEO's employment following a change in control is calculated based on the assumption that the equity awards would be assumed upon the occurrence of the change in control and the executive would be terminated immediately thereafter. (6)The amounts shown for bonuses upon consummation of a change in control reflect the value of the annual cash bonus to which such executive would have been entitled for 2023 if such executive remained continuously employed through such consummation, and threshold corporate performance had been achieved. (7)The value of the equity acceleration that is shown for a change in control is calculated based on the assumption that the equity awards would not be assumed in the change in control, and therefore the awards would become vested and exercisable whether or not the NEO's employment had been terminated. (8)The value of the equity acceleration displayed for Mr. Shaw has been calculated taking into account amounts actually received and the value of the outstanding grants, after considering the vesting provisions in his equity grant agreements. This value reflects: the actual value of the settlement of Mr. Shaw's 2021 PSUs of $298,697, as settled on August 10, 2023; the actual value of the settlement of Mr. Shaw's 2022 PSUs of $92,874, as settled on March 12, 2024; and the value of Mr. Shaw's 2023 PSU award of $41,606 at December 29, 2023, prorated in accordance with the applicable equity grant agreement and assuming target performance.
CEO Pay Ratio
CEO Pay Ratio Pursuant to the requirements of section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, below is a description of the relationship between the annual total compensation of our median employee and the annual total compensation of our CEO for 2023. We believe that the 2023 CEO pay ratio provided below is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K. We have reviewed the changes in our employee population and employee compensatory arrangements and, based on that review, have decided to calculate the 2023 CEO pay ratio using the same median employee for 2023 as we used for 2022 because we believe that there have been no changes in either the Company's employee population or compensatory arrangements that would significantly affect our 2023 pay ratio disclosure. To determine our median employee, we examined the total cash compensation (salary or hourly wages plus bonuses and other cash incentives) for all full-time, part-time, and temporary employees who were employed by us as of December 31, 2021. We annualized salaries and wages for employees who did not work a full year. We believe the use of total cash compensation for our employees is a consistently applied compensation measure, and note, in this regard, that we do not widely distribute annual equity awards to our employees. Specifically, in 2023 only about 13% of our employees received annual equity awards. Once the median employee was identified, as described above, we then calculated this employee's annual total compensation using the same methodology we use for our NEOs for purposes of the 2023 Summary Compensation Table. As so calculated, the identified median employee's total compensation was $104,779. Ms. Antonello's total 2023 compensation was $3,727,106. Based on this information, our 2023 CEO to median employee pay ratio is approximately 36:1.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (as defined by SEC rules) and certain financial performance measures of the Company. The Compensation Committee did not consider the pay versus performance disclosure when making its incentive compensation decisions. The following tables set forth information regarding compensation for our principal executive officers (PEOs) and average compensation related to our Non-PEO NEOs versus our Company performance for 2023, 2022, 2021, and 2020.
Pay Versus Performance
| Year | Douglas D. Dirks (PEO)(1) | | Katherine H. Antonello (PEO)(1) | | Non-PEO NEOs(2) | | | | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(3) | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(3) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(2,3) | Average Compensation Actually Paid to Non-PEO NEOs ($)(2,3) | | 2023 | $— | $— | $3,727,106 | $3,498,957 | $1,290,919 | $1,012,519 | | 2022 | $— | $— | $2,518,681 | $2,649,349 | $1,078,779 | $1,139,759 | | 2021 | $2,315,871 | $2,373,415 | $2,570,729 | $2,971,888 | $1,183,048 | $1,402,493 | | 2020 | $3,662,640 | $2,091,105 | $— | $— | $1,440,715 | $974,288 |
Pay Versus Performance
| | Value of Initial Fixed $100 Investment Based on: | | | Company Selected Measure(5) | | Year | Total Shareholder Return(4) | Peer Group Total Shareholder Return(4) | Net Income ($ in millions) | Adjusted GAAP Calendar Year Combined Ratio | | 2023 | $110.83 | $168.05 | $118.1 | 94.7% | | 2022 | $118.02 | $151.65 | $48.4 | 97.0% | | 2021 | $104.79 | $127.58 | $119.3 | 97.6% | | 2020 | $79.46 | $106.96 | $119.8 | 95.4% |
Pay Versus Performance
(1)The dollar amounts reported in this column reflect the total compensation presented in the 2023 Summary Compensation Table for each fiscal year shown. Mr. Dirks served as our President and CEO (PEO) for all of 2020 and in 2021 until he retired on April 1, 2021. Effective April 1, 2021, Ms. Antonello was promoted to President and CEO. She served as our PEO for the remainder of 2021 and throughout 2022 and 2023. (2)The dollar amounts reported in this column reflect the average amounts of total compensation reported for our Non-PEO NEOs presented in the 2023 Summary Compensation Table for each fiscal year shown. During 2023, our Non-PEO NEOs consisted of Messrs. Paquette, Mutschink, and Shaw and Ms. Brown. During 2022 and 2021, our Non-PEO NEOs consisted of Mr. Paquette, Christopher Laws, Mr. Shaw and Ms. Brown. During 2020, our Non-PEO NEOs consisted of Mr. Paquette, Stephen Festa, Tracey Berg and Ms. Antonello. (3)The amounts calculated in these columns are in accordance with Item 402(v) of Regulation S-K. See the table below for detail of amounts added to and deducted from the total compensation presented in the 2023 Summary Compensation Table for each applicable fiscal year to calculate compensation actually paid. Note that there were no stock awards granted in any fiscal year that vested within such fiscal year.
Pay Versus Performance
| | 2023 | | 2022 | | | | PEO($) | Average of Non-PEO NEOs($) | PEO($) | Average of Non-PEO NEOs($) | | Total Compensation reported on Summary Compensation Table | 3,727,106 | 1,290,919 | 2,518,681 | 1,078,779 | | (Less) Fair Value of stock awards reported on Summary Compensation Table | (1,699,905) | (419,422) | (594,057) | (249,053) | | Fair Value of stock awards granted in fiscal year shown, valued at year-end, that were outstanding and unvested at end of fiscal year shown | 1,628,008 | 316,941 | 632,010 | 264,965 | | Change in fair value from end of prior fiscal year to end of fiscal year shown for awards previously granted that were outstanding and unvested at end of fiscal year shown | (115,817) | (34,446) | 70,648 | 33,126 | | Change in fair value from end of prior fiscal year to vesting date for awards previously granted in prior fiscal years that vested during fiscal year shown | (40,435) | (6,659) | 22,067 | 11,942 | | (Less) Fair Value as of prior fiscal year for any awards granted in any prior fiscal year that fail to meet applicable vesting conditions during the covered fiscal year | — | (134,814) | — | — | | Compensation Actually Paid | 3,498,957 | 1,012,519 | 2,649,349 | 1,139,759 |
Pay Versus Performance
| | 2021 | | | 2020 | | | | PEO - Dirks($) | PEO - Antonello($) | Average of Non-PEO NEOs($) | PEO($) | Average of Non-PEO NEOs($) | | Total Compensation reported on Summary Compensation Table | 2,315,871 | 2,570,729 | 1,183,048 | 3,662,640 | 1,440,715 | | (Less) Fair Value of stock awards reported on Summary Compensation Table | (1,184,664) | (922,733) | (428,545) | (1,848,909) | (615,414) | | Fair Value of stock awards granted in fiscal year shown, valued at year-end, that were outstanding and unvested at end of fiscal year shown | — | 1,017,120 | 469,622 | 1,574,091 | 508,039 | | Change in fair value from end of prior fiscal year to end of fiscal year shown for awards previously granted that were outstanding and unvested at end of fiscal year shown | — | 161,193 | 106,363 | (695,315) | (219,737) | | Change in fair value from end of prior fiscal year to vesting date for awards previously granted in prior fiscal years that vested during fiscal year shown | 1,242,208 | 145,579 | 72,005 | (601,402) | (139,315) | | Compensation Actually Paid | 2,373,415 | 2,971,888 | 1,402,493 | 2,091,105 | 974,288 |
Pay Versus Performance
(4)Total Shareholder Return assumes an initial fixed investment of $100 as of December 31, 2019, which was established by the market close on the last trading day prior to the beginning of the Company's fourth preceding fiscal year. Total shareholder return also includes reinvestment of all dividends. The Peer Group Total Shareholder Return is based on the Standard & Poor's 500 Property & Casualty Insurance Index as identified in the Stock Performance Graph included in our Annual Reports on Form 10-K for fiscal years 2023, 2022, 2021, and 2020. (5)The Company has determined that the most important financial performance measure, or Company Selected Measure, the Company used to align pay and performance by linking compensation actually paid to our NEOs for fiscal year 2023 was the Adjusted GAAP Calendar Year Combined Ratio. Adjusted GAAP Calendar Year Combined Ratio = (Losses + loss adjustment expenses + commission expense - amortization of the deferred gain +/- impact of the LPT reserve adjustment +/- impact of the loss portfolio transfer contingent commission adjustment) / net premiums earned plus (underwriting expenses + general and administrative expenses) / net premiums written. As described in the above "Compensation Discussion and Analysis," the Company's executive compensation program uses financial performance measures used in our industry and measures that are viewed as key financial drivers of our stock price to align pay and performance. The most important financial performance measures used to link executive compensation actually paid with the Company's performance include the following:
Pay Versus Performance
| Most Important Financial Performance Measures for Fiscal Year 2023 | | ◦Adjusted GAAP Calendar Year Combined Ratio | | ◦Change in Adjusted Book Value Per Share (ABVPS) |
Relationship Descriptions Between Pay Versus Performance
Relationship Descriptions Between Pay Versus Performance The following graphical comparisons illustrate the relationships between certain amounts included in the Pay Versus Performance table for fiscal years 2023, 2022, 2021, and 2020, including: (i) a comparison of Compensation Actually Paid Versus Cumulative Total Shareholder Return; (ii) a comparison of Compensation Actually Paid Versus Net Income; and (iii) a comparison of Compensation Actually Paid Versus Adjusted GAAP Calendar Year Combined Ratio.