DEF 14A of Rli Corp, Mar 21, 2024

DEF 14A of Rli Corp

Filed Mar 21, 2024 · FY20230001558370-24-003707

Open on EDGAR

  1. DIRECTORS AND OFFICERS

    DIRECTORS AND OFFICERS The following is information regarding beneficial ownership of the Company’s Common Stock by each Director and Named Executive Officer (“NEO”) (whose compensation is disclosed in this Proxy Statement), and the Directors and executive officers of the Company as a group, as of March 4, 2024:

  2. DIRECTORS AND OFFICERS

    | Name of Individual or | Number of Shares | Percent of Outstanding | | Number of Persons in Group | Beneficially Owned (1) | Common Stock | | Kaj Ahlmann (2) (3) | 14,357 | * | | Michael E. Angelina (2) (3) | 17,487 | * | | Todd W. Bryant (4) (6) | 95,568 | * | | Aaron P. Diefenthaler (4) (5) (6) | 76,396 | * | | David B. Duclos (2) (3) | 8,997 | * | | Jeffrey D. Fick (4) (6) | 112,334 | * | | Susan S. Fleming (2) (3) | 10,013 | * | | Jordan W. Graham (2) (3) | 60,599 | * | | Clark C. Kellogg | 0 | * | | Craig W. Kliethermes (4) (5) (6) | 133,442 | * | | Jennifer L. Klobnak (4) (6) | 119,420 | * | | Paul B. Medini (2) (3) | 1,356 | * | | Jonathan E. Michael (4) (5) (6) (7) | 1,316,247 | 2.9% | | Robert P. Restrepo, Jr. (3) | 13,087 | * | | Debbie S. Roberts (2) (3) | 10,073 | * | | Michael J. Stone (3) (8) | 215,145 | * | | Directors and executive officers as a group (17 persons) (4) (5) (6) | 2,260,744 | 4.91% |

  3. DIRECTORS AND OFFICERS

    * Less than 1 percent of Class.

  4. DIRECTORS AND OFFICERS

    | (1) Unless otherwise noted, each person has sole voting power and sole dispositive power with respect to the shares reported. |

  5. DIRECTORS AND OFFICERS

    | (2) Includes shares held by a bank trustee under an irrevocable trust established by the Company with respect to the RLI Corp. Nonemployee Director Deferred Compensation Plan (“Director Deferred Plan”) for the benefit of the following: Mr. Ahlmann 10,260 shares; Mr. Angelina 6,831 shares; Mr. Duclos 5,661 shares; Dr. Fleming 7,350 shares; Mr. Graham 53,423 shares; Mr. Medini 608 shares; and Ms. Roberts 9,325 shares. Each participating Director has no voting or investment power with respect to such shares. |

  6. DIRECTORS AND OFFICERS

    | (3) The above number of shares beneficially owned includes 748 Restricted Stock Units (“RSUs”) (732 RSU’s granted plus dividend equivalents through March 4, 2024) granted to nonemployee Directors on May 4, 2023. Directors can elect to either receive the RSUs as shares of Company stock upon vesting or defer receipt of those shares under the Director Deferred Plan. RSUs have dividend rights that accrue as additional RSUs payable upon vesting or distribution from the Director Deferred Plan. The RSUs will vest, under the terms of the Award, on the date of the Company’s 2024 Annual Meeting. |

  7. DIRECTORS AND OFFICERS

    | (4) Includes shares allocated to the NEOs and one other executive officer under the ESOP as of March 4, 2024 with respect to which such persons have sole voting power (pursuant to their ability to direct the Trustee to vote their shares) and no investment power. As of March 4, 2024, the following shares were allocated under the ESOP for the NEOs: Mr. Bryant 30,717 shares; Mr. Diefenthaler 4,224 shares; Mr. Fick 12,319 shares; Mr. Kliethermes 7,439 shares; Ms. Klobnak 19,983 shares; and Mr. Michael 268,453 shares. |

  8. DIRECTORS AND OFFICERS

    | (5) Includes shares allocated to the NEO’s and one other executive officer in which shares are held by a bank trustee under an irrevocable trust established by the Company with respect to the RLI Corp. Executive Deferred Compensation Plan (“Deferred Plan”) for the benefit of the following NEOs: Mr. Diefenthaler 1,476 shares; Mr. Kliethermes 11,249 shares; and Mr. Michael 62,961 shares. Each participant has no voting or investment power with respect to such shares. |

  9. DIRECTORS AND OFFICERS

    | (6) Includes shares that may be acquired by Chairman Michael, the NEOs, and one other executive officer within 60 days after March 4, 2024. Under the 2015 and 2023 LTIP (as described herein), upon the exercise of outstanding stock options as follows for Chairman Michael and the NEOs: Mr. Bryant 37,350 shares; Mr. Diefenthaler 42,000 shares; Mr. Fick 37,699 shares; Mr. Kliethermes 54,100 shares; Ms. Klobnak 66,200 shares; and Mr. Michael 77,698 shares. |

  10. DIRECTORS AND OFFICERS

    | (7) Includes 156,009 shares allocated under the Key Employee Excess Benefit Plan (“Key Plan”), over which Mr. Michael has no voting or investment power; and 7,864 shares owned by the Jonathan E. Michael Family Trust, over which Mr. Michael, as Trustee, has sole voting and sole investment power. |

  11. DIRECTORS AND OFFICERS

    | (8) Includes 135 shares held by Mr. Stone’s wife. |

  12. DIRECTORS AND OFFICERS

    The information with respect to beneficial ownership of Common Stock of the Company is based on information furnished to the Company by each individual included in the table.

  13. PROPOSAL ONE: ELECTION OF DIRECTORS

    PROPOSAL ONE: ELECTION OF DIRECTORS

  14. GENERAL

    GENERAL At this year’s Annual Meeting, 10 Directors are to be elected, each to hold office for a one-year term expiring at the 2025 Annual Meeting and until such Director’s successor is elected and qualified or until such Director’s earlier death, resignation, or removal. Unless otherwise instructed, the shares represented by a signed proxy card will be voted for the election of each of the 10 nominees named below. The affirmative vote of a majority of the votes cast is required for the election of each Director. Votes will be tabulated by an Inspector of Election appointed at the Annual Meeting. Shares may be voted for, against or abstained from, each nominee. Cumulative voting for the Directors is not permitted under the Company’s Amended and Restated Certificate of Incorporation.

  15. NOMINEES

    NOMINEES Dr. Susan S. Fleming, Ms. Debbie S. Roberts and Messrs. Michael E. Angelina, David B. Duclos, Jordan W. Graham, Clark C. Kellogg, Craig W. Kliethermes, Paul B. Medini, Robert P. Restrepo, Jr., and Michael J. Stone, each a current Director, are standing for election. Each is nominated to serve for a one-year term expiring at the 2025 Annual Meeting. The Board of Directors has no reason to believe that any nominee will be unable to serve if elected. In the event that any nominee shall become unavailable for election, the shares represented by a proxy will be voted for the election of a substitute nominee selected by the persons appointed as proxies and recommended by the Board, unless the Board should determine to reduce the number of Directors pursuant to the Company’s Bylaws or allow the vacancy to stay open until a replacement is designated by the Board. The Board of Directors recommends that the shareholders vote “FOR” the election of all 10 nominees listed below.

  16. NOMINEES

    | David B. Duclos | | | Age: 66 Director since: 2017 Lead Independent Director Chairman Elect, effective May 2, 2024 Committees: ● Chair, Human Capital & Compensation ● Strategy & Risk | BACKGROUND Mr. Duclos retired as CEO of QBE, North America in July 2016, which he was appointed to in April 2013. He retired December 2012 from XL Group, having served as Chief Executive of XL Insurance from January 2008 through December 2011. Mr. Duclos joined XL in October 2003 and served in several senior level underwriting and field operations roles, including running XL’s global specialty business. From September 1999 through July 2003, Mr. Duclos was the President, Small Business Group of Kemper Insurance Company. Mr. Duclos was employed at Cigna Corporation from July 1979 through July 1999 in various underwriting and managerial positions. The positions included Branch Underwriting, Marketing Manager, Branch Executive, AVP-Field Operations, Region President and Specialty Business Leader. He previously served as a Director of RLI Corp. from August 16, 2012 until February 26, 2013. | | | QUALIFICATIONS Mr. Duclos brings 45 years of experience with various companies related to the insurance and reinsurance industries. Mr. Duclos has broad global reinsurance and insurance expertise, and executive management experience. Mr. Duclos has a Bachelor’s degree in Business Administration from Eastern Illinois University and is a graduate of the Advanced Insurance Executive Education Program at the Wharton School of the University of Pennsylvania. | | | OTHER COMPANY BOARD SERVICE Mr. Duclos serves as Non-Executive Chair of Westfield International Specialty; Chair of QBE Groups subsidiary board for the Blue Ocean and Equator Re companies, a Director of Maguire Academy of Insurance and Risk Management at Saint Joseph’s University; a member of the board of the American Association of Insurance Services; and Non-Executive Chair of Brightway Insurance Agency. He is a former Director of QBE Latin American Insurance Holdings Limited, formerly known as QBE Emerging Markets Holdings Limited and former non-executive Chairman of Lloyd’s Global Network, an advisory Board of Lloyd’s of London. |

  17. NOMINEES

    | Michael E. Angelina | | | Age: 57 Director since: 2013 Independent Director Committees: ● Chair, Audit ● Strategy & Risk | BACKGROUND Mr. Angelina is an Executive in Residence of the Maguire Academy of Insurance and Risk Management at Saint Joseph’s University since January 2021. Prior to this position he was the Executive Director of the Maguire Academy where he led the Risk Management and Insurance program within the Haub School of Business and coordinated the Maguire Academy activities. From June 2005 to April 2012, Mr. Angelina was the Chief Risk Officer and Chief Actuary for Endurance Specialty Holdings, Ltd., where he was a functional leader of pricing, reserving and risk management and the leader of the Enterprise Risk Management Initiative. From January 2000 to June 2005, Mr. Angelina was the Managing Principal of Tillinghast-Towers Perrin where he led the Philadelphia office and co-led the Tillinghast Asbestos practice. | | | QUALIFICATIONS Mr. Angelina has significant insurance industry experience including his extensive risk management background. Mr. Angelina has a Bachelor’s degree in Mathematics from Drexel University. | | | OTHER COMPANY BOARD SERVICE Mr. Angelina serves on the board of directors of Hagerty Reinsurance, CoAction Specialty, and QBE Equator Reinsurances Limited; and as former Chairman of the Board for Hagerty, Inc (NYSE: HGTY), former member of American Academy of Actuaries Committee on Property & Liability Financial Reporting, and former Chair of AAA Casualty Practice Council. |

  18. NOMINEES

    | Susan S. Fleming | | | Age: 53 Director since: 2018 Independent Director Committees: ● Chair, Finance & Investment ● Audit | BACKGROUND Dr. Fleming is an entrepreneur in residence, executive educator, and angel investor. From 2009 through 2018, she served as a Senior Lecturer of management and entrepreneurship at the School of Hotel Administration and the Johnson Graduate School of Management of Cornell University. From 2004 through 2009, she pursued a Masters and PhD from Cornell University. From 1998 until December 2003, she was Partner and Principal of Capital Z Financial Services Partners, a private equity fund focused on the financial services industry. From 1994 until December 2003, she served as Vice President, Insurance Partners Advisors, L.P., a private equity fund focused on the insurance and healthcare industries. From 1992 until 1994 she was an analyst with Morgan Stanley & Co. | | | QUALIFICATIONS With her years of experience in private equity, investment banking, and education, Dr. Fleming brings expertise in financial services, corporate finance, mergers and acquisitions, and organizational leadership to our Board. Dr. Fleming holds a Bachelor’s Degree in Economics and Asian Studies from the University of Virginia and a Master’s Degree and PhD in Management and Organizations from Cornell University. | | | OTHER COMPANY BOARD SERVICE Dr. Fleming currently serves on the board of directors for Virtus Investment Partners, Inc. (NYSE: VRTS) and Fleming Reinsurance Ltd. She was formerly a Director of Endurance Specialty Holdings, Ltd.; Quanta Capital Holdings, Ltd.; Ceres Group, Inc.; PXRE Group, Ltd.; and Universal American Financial Group, Inc. |

  19. NOMINEES

    | Jordan W. Graham | | | Age: 63 Director since: 2004 Independent Director Committees: ● Nominating & Corporate Governance ● Audit | BACKGROUND Mr. Graham has been Managing Director with Quotient Partners since May 2011, providing business strategy and merger/acquisition advisory services to financial services, digital media, internet, and information services companies. From 2010 to 2011, he served as President of FICO Consumer Services and Executive Vice President of Credit Scoring and Predictive Analytics at Fair Isaac, Inc., the leading provider of credit, analytics, and decision management technologies. From 2007 to 2010, Mr. Graham was Managing Director and Head of North America Business Development for the Global Transaction Services (GTS) Division of Citigroup responsible for strategic planning, global partnerships, and acquisitions. For the preceding two years, he was retained as a full-time consultant to the CEO of Citigroup GTS and provided strategy and acquisition advisory services. From 1998 to 2004, he was an executive with Cisco Systems, serving as Vice President of the Internet Business Solutions Group, Services Industries Strategy Consulting, leading internet business strategy consulting practices for the financial services, healthcare, energy, and media/entertainment industries globally. Previously, he was Managing Director and Global Head of Cisco’s Financial Services Industry Consulting Practice providing internet business strategy services to CXO level executives in Global 500 insurance, banking, and securities firms. He has also been the CEO of two successful venture capital-backed businesses, a financial services technology company and an internet cloud-based solutions provider, and an advisor to the Board of Directors of Hagerty, Inc. | | | QUALIFICATIONS Mr. Graham has strong financial services, strategy, merger/acquisition, and advisory experience as well as deep information technology and digital/internet background. He has over 30 years of experience working both in and providing information technology-based products and services to the financial services industry globally. Mr. Graham has a Bachelor’s degree in Business Entrepreneurship from the University of Southern California. | | | OTHER COMPANY BOARD SERVICE Mr. Graham currently serves on the board of directors of Yiftee, Inc. Mr. Graham previously served as a Director and member of the Investment Committee for Securitas Capital, a SwissRe and Credit Suisse backed private equity fund investing in insurance and risk related ventures. |

  20. NOMINEES

    | Clark C. Kellogg | | | Age: 62 Director since: 2024 Independent Director Committees: ● Human Capital & Compensation ● Finance & Investment | BACKGROUND Mr. Kellogg is a basketball commentator at CBS Sports. At CBS, he has been a lead studio and game analyst since 1997. Mr. Kellogg spent a total of thirty-two years with the Indiana Pacers; most recently as Vice Present of Player Relations, and also has a broadcaster and player. | | | QUALIFICATIONS Mr. Kellogg brings over 30 years of experience, expertise, and background in customer experience matters as well as executive management experience. He has a Bachelor’s degree in Marketing from Ohio State University. | | | OTHER COMPANY BOARD SERVICE Mr. Kellogg currently serves on the Board of Directors of First Merchants Bank (Nasdaq: FRME) where he serves on the Audit and Compensation and Human Resources Committee; and Chairperson, Columbus Foundation Governing Committee. He previously served on The Ohio State Alumni Association Board and The Ohio State Board of Trustees. |

  21. NOMINEES

    | Craig W. Kliethermes | | | Age: 59 Director since: 2021 Management Director Committees: ● Finance & Investment ● Strategy & Risk | BACKGROUND Mr. Kliethermes has been the President and Chief Executive Officer of the Company since January 1, 2022 and was President and Chief Operating Officer of the Company in 2021. From 2016 until 2020, Mr. Kliethermes was the President and Chief Operating Officer of the Company’s insurance subsidiaries and from 2013 until 2016 he was Executive Vice President, Operations of the Company’s insurance subsidiaries. Mr. Kliethermes joined the Company in 2006. Prior to joining RLI, he served in leadership roles with Lockton Companies, GE Insurance/Employers Reinsurance and John Deere Insurance Company. | | | QUALIFICATIONS Mr. Kliethermes has over 38 years of industry experience including nearly 18 years at the Company where, in his current role, he is responsible to ensure the effective and profitable operations of the Company’s business. He has a Bachelor’s degree in Mathematics from Maryville University, a fellow of the Casualty Actuarial Society; a member of the American Academy of Actuaries; and a member of the Chartered Property & Casualty Underwriters Society. | | | OTHER COMPANY BOARD SERVICE Mr. Kliethermes serves as a member of the American Property and Casualty Insurance Association Executive Advisory Board; a Director of Maguire Academy of Insurance and Risk Management at Saint Joseph’s University; and a Director of the Heart of Illinois Big Brothers Big Sisters. Mr. Kliethermes previously served as a Director of Maui Jim, Inc. |

  22. NOMINEES

    | Paul B. Medini | | | Age: 66 Director since: 2022 Independent Director Committees: ● Audit ● Human Capital & Compensation | BACKGROUND Mr. Medini retired in August 2020 as Sr. Vice President and Chief Accounting Officer of Chubb Ltd. Mr. Medini joined ACE Limited in June 2003 as Chief Accounting Officer. In 2016, ACE Limited completed the acquisition of Chubb Corporation and Mr. Medini continued in his prior role and was named Sr. Vice President and Chief Accounting Officer of Chubb Ltd. in January 2016. He was previously a partner in the property/casualty insurance practice at PricewaterhouseCoopers. | | | QUALIFICATIONS Mr. Medini has extensive knowledge in accounting and auditing in the insurance and reinsurance industries and brings to the Board in-depth experience of insurance accounting and insurance auditing. He has a Bachelor’s and Master’s degree in Business Administration from Pace University. | | | OTHER COMPANY BOARD SERVICE Mr. Medini serves on the board of directors of ABR Reinsurance Capital Holdings Ltd. |

  23. NOMINEES

    | Robert P. Restrepo, Jr. | | | Age: 73 Director since: 2016 Independent Director Committees: ● Chair, Nominating & Corporate Governance ● Finance & Investment | BACKGROUND Mr. Restrepo retired in May 2015 as CEO and President of State Auto Insurance Companies and as Chairman in December 2015. Mr. Restrepo joined and was appointed Chairman, CEO and President of State Auto in 2006. From 2005 to 2006, Mr. Restrepo served as Senior Vice President, Insurance Operations of Main Street America Group and was responsible for personal lines, commercial lines, bonds, claims, marketing, information technology and customer service. From 1998 to 2003, Mr. Restrepo was the President and CEO, Property & Casualty of Allmerica Financial. From 1996 to 1998, Mr. Restrepo was the President and CEO, Personal Lines at Travelers Property & Casualty and was responsible for the newly combined personal property and casualty operations of Travelers and Aetna. In 1972, Mr. Restrepo joined Aetna Life & Casualty and held various managerial positions through 1996, including positions in marketing, technology, and field management, and ended as Senior Vice President, Personal Lines. | | | QUALIFICATIONS Mr. Restrepo brings over 40 years of experience with various companies related to the insurance industries. He has extensive insurance expertise, executive management, finance, regulatory, and risk management experience. He has a Bachelor’s degree in English from Yale University. | | | OTHER COMPANY BOARD SERVICE Mr. Restrepo serves on the board of directors of Enact Holdings, Inc. (Nasdaq: ACT), Genworth Financial (NYSE: GNW), and the Larry H. Miller Group. Mr. Restrepo is a former Director of Majesco; Nuclear Electric Insurance Limited; Big I Reinsurance Company; Property Casualty Insurers Association of America (now known as American Property Casualty Insurance Association); Insurance Information Institute; and The Institutes. |

  24. NOMINEES

    | Debbie S. Roberts | | | Age: 59 Director since: 2018 Independent Director Committees: ● Human Capital & Compensation ● Nominating & Corporate Governance | BACKGROUND Ms. Roberts has been the Executive Vice President and Chief Operations Officer of Panera Bread Co. since September 2020. From 2016 until her retirement in 2018, Ms. Roberts was the President East Zone at McDonald’s Corporation. From 2014 to 2016, Ms. Roberts served as President Northeast Zone at McDonald’s Corporation. In her 28-year career at McDonald’s Corporation, she gained increasingly progressive responsibilities in the areas of accounting, marketing and operations including roles as Sr. Vice President, Restaurant Support Officer-East, President Northeast Zone and President East Zone being responsible for $18.7 billion in sales and 7,000 restaurants. | | | QUALIFICATIONS Mr. Restrepo brings over 40 years of experience with various companies related to the insurance industries. He has extensive insurance expertise, executive management, finance, regulatory, and risk management experience. Ms. Roberts holds a Bachelor’s degree in Accounting from the University of Illinois. | | | OTHER COMPANY BOARD SERVICE Ms. Roberts currently serves on the board of directors of Krispy Kreme, Inc. and the Women’s Foodservice Forum. She is a former member of The American Red Cross, University of Illinois Champaign Alumni, and Catalyst Board of Directors. |

  25. NOMINEES

    | Michael J. Stone | | | Age: 75 Director since: 2012 Independent Director Committees: ● Chair, Strategy & Risk ● Human Capital & Compensation | BACKGROUND Mr. Stone is the former President and Chief Operating Officer of the Company’s principal insurance subsidiaries from January 2002 until his retirement in December 2015. Mr. Stone joined the Company in May 1996 and held various executive officer positions. From 1977 to May 1996, Mr. Stone held various managerial and executive officer positions with Travelers Insurance Group. | | | QUALIFICATIONS Mr. Stone has nearly 40 years of insurance industry expertise and 19 years at the Company where he was responsible for the overall direction of the Company’s principal insurance subsidiaries. He has a Bachelor’s degree in Political Science from Bellarmine College, and received his Law degree, magna cum laude, from the University of Louisville. | | | OTHER COMPANY BOARD SERVICE Mr. Stone serves on the board of directors of SILAC, Inc. He is also a former member of Board of Directors of Kairos Acquisition Corp., former Chairperson of UnityPoint Health Board of Directors, and former member of the Bellarmine University Board of Trustees. |

  26. BOARD INDEPENDENCE STATUS

    BOARD INDEPENDENCE STATUS The following table identifies the independence status of our Director nominees and Directors who served on the Board during 2023:

  27. BOARD INDEPENDENCE STATUS

    | Director | Independent | Management | | Kaj Ahlmann | ● | | | Michael E. Angelina | ● | | | John T. Baily (1) | ● | | | Calvin G. Butler, Jr. (2) | ● | | | David B. Duclos | ● | | | Susan S. Fleming | ● | | | Jordan W. Graham | ● | | | Craig W. Kliethermes | | ● | | Paul B. Medini | ● | | | Jonathan E. Michael | | ● | | Robert P. Restrepo, Jr. | ● | | | Debbie S. Roberts | ● | | | Michael J. Stone | ● | |

  28. BOARD INDEPENDENCE STATUS

    | (1) Mr. Baily retired from the Board upon conclusion of his term on May 2, 2023, and therefore his independence was not assessed after that date. |

  29. BOARD INDEPENDENCE STATUS

    | (2) Mr. Butler resigned from the Board of Directors in light of the demands of his new role as President and Chief Executive Officer of Exelon Corporation effective January 31, 2023, and therefore his independence was not assessed after that date. |

  30. BOARD INDEPENDENCE STATUS

    The following relationships were reviewed in connection with determining Director independence but were determined to not be material relationships and to not affect such person’s independence under the Board independence standards:

  31. BOARD INDEPENDENCE STATUS

    | ● | Mr. Angelina is a Director of QBE Equator Reinsurances Limited, a subsidiary of QBE Re. Mr. Duclos is a non-executive Chairman of QBE Groups subsidiary board for Equator Reinsurances Limited and Blue Ocean Limited and a former Director of QBE Emerging Markets and Latin American Insurance Holdings Limited. From time to time, the Company’s principal insurance subsidiaries enter into reinsurance arrangements with QBE Re, none of which exceeded 2% of QBE Re’s consolidated gross revenues. |

  32. BOARD INDEPENDENCE STATUS

    | ● | Mr. Angelina is Chairman of the Board of Hagerty Reinsurance Ltd. (“Hagerty Re”) and former Lead Independent Director and Chairman of the Board of Hagerty, Inc. (“Hagerty”). Hagerty Re has reinsurance arrangements with the Company’s principal insurance subsidiaries. Hagerty Insurance Agency, a subsidiary of Hagerty, also produces insurance business for the Company’s principal insurance subsidiaries. Neither arrangement exceeds 2% of Hagerty’s consolidated gross revenues. |

  33. BOARD INDEPENDENCE STATUS

    | ● | Mr. Stone is the brother of the Chairman and CEO of SS&C Technologies Holdings, Inc. (“SS&C”). The Company’s Chairman of the Board and former Chief Executive Officer (Mr. Michael) serves on the Audit and Nominating & Governance Committees and as the Lead Independent Director on the Board of Directors of SS&C. Mr. Michael does not serve on the Compensation Committee of SS&C, nor have the Company’s payments to SS&C exceeded 2% of SS&C’s consolidated gross revenues. |

  34. 2023 DIRECTOR COMPENSATION

    2023 DIRECTOR COMPENSATION During 2023, the Company’s Independent Directors were compensated as set forth in the following table and as described below:

  35. 2023 DIRECTOR COMPENSATION

    | Annual Board Retainer: | $80,000 | | Restricted Stock Units: | $100,000 | | Annual Committee Retainer: | | | Audit | $15,000 | | All Other Committees | $10,000 | | Lead Independent Director Retainer: | $20,000 | | Additional Annual Committee Chair Retainer: | | | Audit | $20,000 | | Human Capital & Compensation | $20,000 | | All Other Committees | $10,000 |

  36. 2023 DIRECTOR COMPENSATION

    Each Independent Director then in office was granted a whole number of Restricted Stock Units (“RSUs”) corresponding with $100,000 in value on May 4, 2023, which will vest on the earlier of one year after grant or the date of the 2024 Annual Shareholders Meeting. Directors may elect to either receive the RSUs as shares of Company stock upon vesting or defer receipt of those shares under the Nonemployee Director Deferred Compensation Plan (the “Director Deferred Plan”). In addition, the RSUs have dividend rights, which accrue as additional RSUs payable upon vesting or distribution from the Director Deferred Plan. Directors are reimbursed for actual travel and related expenses incurred and are provided a travel accident policy funded by the Company. Directors are also eligible to participate in the Company’s charitable foundation matching gift program pursuant to which the Company will match qualifying charitable contributions of up to $3,000 per calendar year. The following table provides the compensation of the Company’s nonemployee* Directors earned for the fiscal year ended December 31, 2023. *Mr. Michael is a Company employee and Chairman of the Board and did not receive Director fees in 2023 and therefore is not listed in the following table. In 2023, Mr. Michael received an annualized base salary of $350,000 and an MVP bonus bank payout for prior years of $1,680,788. As of December 31, 2023, Mr. Michael holds 77,698 outstanding stock options. Also, during 2023, Mr. Michael was permitted to use the Company’s fractionally-owned aircraft for up to 35 hours annually at an hourly rate set by the Independent Directors of the Board. Mr. Michael, as an employee of the Company, is eligible to participate in employee benefit programs under the terms of those programs, but is not eligible to participate in the Company’s annual or long-term incentive programs. *Mr. Kliethermes is a Company employee and a management Director and did not receive Director fees for 2023 and therefore is not listed in the following table. His compensation as President & CEO for 2023 is disclosed under the Executive Compensation 2023 Summary Compensation Table on page 43.

  37. 2023 DIRECTOR COMPENSATION

    | | | | | | Change in | | | | | | | | | Pension | | | | | | | | | Value and | | | | | | | | Non-Equity | Nonqualified | | | | | Fees Earned | | | Incentive Plan | Deferred | All Other | | | | or Paid in | Stock | Option | Compensation | Compensation | Compensation | | | Name | Cash ($) (1) | Awards ($) (2) | Awards ($) | ($) | Earnings | ($) | Total ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | Kaj Ahlmann | 101,708 | 99,984 | | | | | 201,692 | | Michael E. Angelina | 125,000 | 99,984 | | | | | 224,984 | | John T. Baily (3) | 46,325 | — | | | | | 46,325 | | Calvin G. Butler, Jr. (4) | 9,042 | — | | | | | 9,042 | | David B. Duclos | 133,123 | 99,984 | | | | | 233,107 | | Susan S. Fleming | 104,333 | 99,984 | | | | | 204,317 | | Jordan W. Graham | 106,708 | 99,984 | | | | | 206,692 | | Paul B. Medini | 105,000 | 99,984 | | | | | 204,984 | | Robert P. Restrepo, Jr. | 106,583 | 99,984 | | | | | 206,567 | | Debbie S. Roberts | 100,000 | 99,984 | | | | | 199,984 | | Michael J. Stone | 110,000 | 99,984 | | | | | 209,984 |

  38. 2023 DIRECTOR COMPENSATION

    | (1) Nonemployee Directors elect the form of their Annual Board Retainer, Annual Committee Retainer, Lead Independent Director Retainer and Annual Committee Chair Retainer, if applicable, which may be received either in cash or deferred, in accordance with the Director Deferred Plan, defined below. Amounts shown in column (b) shows total fees earned, whether or not deferred. |

  39. 2023 DIRECTOR COMPENSATION

    | (2) For nonemployee Directors, 643 RSUs were granted upon election at the 2023 Annual Shareholders’ Meeting. Directors can elect to either receive the RSUs as shares of Company stock upon vesting or defer receipt of those shares under the Director Deferred Plan. In addition, the RSUs have dividend rights that accrue as additional RSUs payable upon vesting or distribution from the Director Deferred Plan. The amounts reported in this column were calculated in accordance with FASB ASC Topic 718 based on the Company’s stock price as of the grant date. Please refer to footnote 2 to the beneficial ownership table on page 13 for the number of shares held for each Director in the rabbi trust established with respect to the Director Deferred Plan. |

  40. 2023 DIRECTOR COMPENSATION

    | (3) Mr. Baily did not stand for election at the 2023 Annual Shareholders’ Meeting and therefore was compensated through that date and was not granted an RSU award in May 2023. |

  41. 2023 DIRECTOR COMPENSATION

    | (4) Mr. Butler resigned from the Board of Directors in light of the demands of his new role as President and Chief Executive Officer of Exelon Corporation effective January 31, 2023 and therefore was compensated through that date and was not granted an RSU award in May 2023. |

  42. 2023 DIRECTOR COMPENSATION

    In December 2023, the Board approved annual compensation for Mr. Duclos, in connection with his role as Independent Chairman of the Board, effective, May 2, 2024, in the amount of $100,000, half of which will be paid in cash and half of which will be paid in shares of RLI, to be pro-rated for the partial 2024 year.

  43. KEY ATTRIBUTES OF RLI EXECUTIVE COMPENSATION

    | ● | At risk compensation: A significant portion of annual incentive compensation for our President & CEO, COO, CFO, and each executive with oversight responsibility for product group underwriting is paid over time through a bonus bank concept to provide an incentive for sustained shareholder value creation. Amounts credited to the bonus bank are reduced dollar-for-dollar should negative results occur in a future period. As a result, net losses in a future period reduce the amount available in the bonus bank and could result in a negative balance. |

  44. KEY ATTRIBUTES OF RLI EXECUTIVE COMPENSATION

    | ● | Compensation based on relative company performance: Each year we conduct a review of executive compensation within an insurance peer group to evaluate whether the Company’s executive compensation remains fair, competitive, and consistent with the Company’s absolute and relative performance. The MVP Program for the President & CEO, COO, and CFO includes an adjustment factor (positive and negative) for relative Company performance compared to selected Peer Companies. |

  45. INPUT FROM MANAGEMENT

    | ● | annual incentive targets and financial and personal goals; and |

  46. INPUT FROM MANAGEMENT

    | ● | the form and amount of long-term incentives. |

  47. COMPENSATION CONSULTANT

    COMPENSATION CONSULTANT The HCCC Charter specifically provides that if a compensation consultant is to assist in the evaluation of CEO or senior executive compensation, the HCCC has sole authority to retain and terminate the consulting firm including sole authority to approve the firm’s fees and retention terms. Management also has authority to retain a compensation consultant, but may not retain the same compensation consulting firm retained by the HCCC without approval in advance by the HCCC. The HCCC retained Meridian Compensation Partners as a compensation consultant in 2023 to provide input on: 1) aspects of the Company’s 2023 Long-Term Incentive Plan design; 2) the Company’s Policy on Recoupment of Incentive Compensation (Clawback); and 3) the peer companies that were used to evaluate executive compensation (“Peer Companies”). Management retained Lockton Financial Advisors, LLC in 2023 to provide advice regarding various elements of executive compensation. The Company has assessed the independence of Meridian Compensation Partners and Lockton Financial Advisors, LLC pursuant to the NYSE rules and the Company concluded that the retention of Meridian Compensation Partners and Lockton Financial Advisors, LLC’s did not raise any conflicts of interest.

  48. MARKET DATA

    MARKET DATA For 2023, the HCCC considered its normal pay practices when setting executive compensation, using market data to assess the overall competitiveness and reasonableness of the Company’s executive compensation program. The table below outlines Peer Companies that were used to evaluate 2023 executive compensation. In 2022, Alleghany Corp. was acquired by Berkshire Hathaway and therefore, removed from the 2023 peer group. No other changes were made to the Peer Companies compared to 2022.

  49. MARKET DATA

    | Peer Companies for Assessing 2023 Compensation | | | Argo Group Intl Holdings, Ltd. Axis Capital Holdings Limited Global Indemnity Limited The Hanover Insurance Group, Inc. James River Group Holdings, Ltd. Kemper Corporation | Kinsale Capital Group, Inc. Old Republic International Corporation ProAssurance Corporation Selective Insurance Group, Inc. United Fire Group, Inc. W.R. Berkley Corporation |

  50. MARKET DATA

    The HCCC selected these Peer Companies based on its judgment and input from Meridian Compensation Partners. Each of the Peer Companies competes within the property and casualty insurance industry and sells a variety of specialty insurance products that serve both commercial entities and individuals that can generally be defined as specialty in nature, or targeted toward niche markets. The Peer Companies have established records of financial performance, and all have been publicly traded for at least five years, facilitating the comparison of the Company’s financial performance to that of the Peer Companies. The HCCC also reviews the market capitalization of the Company compared to the Peer Companies to ensure that the Company is at or near the median market capitalization among those companies at the time of the Company’s review of the Peer Companies. For the Peer Company comparison performed in 2023, the Company’s market capitalization was fourth among thirteen companies within the Peer Companies, which includes the Company. Each year, the HCCC compares the relative ranking among the Company and Peer Companies based on the most recently available public data (2022 data reviewed in early 2023) for base salaries and total compensation for the President & CEO, COO and CFO positions to the relative performance ranking for the following publicly available performance metrics for the prior year: price-to-book ratio; return on equity; combined ratio; and total shareholder return ("TSR") for one, three and five-year time frames to determine the overall competitiveness of the Company’s executive compensation. The Company’s rank among the Peer Companies for 2023, based on 2022 results, is shown in the table below:

  51. MARKET DATA

    | Performance Metric | Price/Book | Return on Equity | Combined Ratio | One-Year TSR | Three-Year TSR | Five-Year TSR | | RLI Rank | 2 | 1 | 2 | 2 | 3 | 2 |

  52. MARKET DATA

    Base salaries and total compensation for other NEOs and executive positions are established by reference to publicly available survey data, including median base salary levels, for comparable executives in the insurance industry. The compensation information was primarily gathered from a survey of companies with assets greater than $1.5 billion with a median of $4.5 billion; and a survey with data regressed to the Company’s revenue size.

  53. ELEMENTS OF COMPANY EXECUTIVE COMPENSATION

    | o | Annual incentive awards under the MVP Program, which incorporates annual and long-term design features, for the President & CEO, COO, and CFO; |

  54. ELEMENTS OF COMPANY EXECUTIVE COMPENSATION

    | o | Annual incentive awards under the Management Incentive Program (“MIP”) for other home office executives; and |

  55. ELEMENTS OF COMPANY EXECUTIVE COMPENSATION

    | o | Annual incentive awards under the Underwriting Profit Program (“UPP”) for executives with oversight responsibility for product group underwriting. |

  56. ELEMENTS OF COMPANY EXECUTIVE COMPENSATION

    | ● | Long-term incentive compensation grants: equity-based awards under the 2015 and 2023 LTIP to all NEOs and other management members; long-term components through at-risk payouts over time under: 1) the MVP Program for the President & CEO, COO, and CFO; and 2) the UPP Program for the Chief Investment Officer & Treasurer. |

  57. ELEMENTS OF COMPANY EXECUTIVE COMPENSATION

    | o | All outstanding annual incentive awards for the current performance period and all outstanding long-term incentive awards are forfeited if a participant’s employment is terminated for cause; |

  58. ELEMENTS OF COMPANY EXECUTIVE COMPENSATION

    | o | A bonus bank is forfeited if a participant leaves RLI’s employment for any reason other than death, disability, or retirement, as specified under the RLI Corp. Annual Incentive Plan. As explained further on page 35, some or all of an MVP Program Bonus bank is subject to forfeiture in the event of negative financial returns. Post-employment payouts from a bonus bank are also subject to forfeiture if a participant fails to comply with certain covenants, including employee and customer non-solicitation provisions, among others; and |

  59. ELEMENTS OF COMPANY EXECUTIVE COMPENSATION

    | o | Proceeds from equity awards granted in 2022 and later, received within 6 months of termination of employment, are subject to clawback in the event of misconduct in the form of pre- or post-termination of employment breach of covenants related to customer and employee non-solicitation and protection of Company confidential information. |

  60. BALANCE OF SHORT-TERM AND LONG-TERM COMPENSATION

    BALANCE OF SHORT-TERM AND LONG-TERM COMPENSATION The HCCC works to balance short-term and long-term elements of total compensation, as described in the following sections. The goal is to provide a meaningful level of long-term compensation to align with long-term value creation and mitigate the risk that members of management make decisions or take actions solely to increase short-term compensation while adding excessive risk to the Company. In that regard, the HCCC believes that a greater percentage of total compensation should be in the form of long-term compensation for more senior positions. We consider those salary and annual incentive amounts earned in 2023 and paid for 2023 to be short-term compensation. MVP Program payments made in 2023 from amounts earned in prior years, UPP payments in 2023 for prior underwriting years, and the grant date fair value of stock options awards in 2023, on the other hand, are considered long-term compensation. The following table compares the percentage of total compensation, which is short-term in nature, to the percentage, which is long-term in nature.

  61. BALANCE OF SHORT-TERM AND LONG-TERM COMPENSATION

    | | Short-Term as % of Total Compensation | Long-Term as % of Total Compensation | | | (Salary and Annual Incentive Earned | (Payment from Bonus Bank for Prior Years and | | Name | and Paid in 2023) | Grant Date Fair Value of Stock Options Awarded) | | Craig W. Kliethermes | 54% | 46% | | Todd W. Bryant | 58% | 42% | | Jennifer L. Klobnak | 60% | 40% | | Aaron P. Diefenthaler (1) (2) | 62% | 38% | | Jeffrey D. Fick (1) | 77% | 23% |

  62. BALANCE OF SHORT-TERM AND LONG-TERM COMPENSATION

    | (1) Messrs. Fick and Diefenthaler participate in the MIP, which does not have a long-term component, instead of MVP, which does have a long-term component, and consequently their long-term percentage is less than the other NEOs. |

  63. BALANCE OF SHORT-TERM AND LONG-TERM COMPENSATION

    | (2) Mr. Diefenthaler also participates in UPP, which does have a long-term payout component. |

  64. MARKET VALUE POTENTIAL EXECUTIVE INCENTIVE PROGRAM (MVP PROGRAM) — GENERAL

    MARKET VALUE POTENTIAL EXECUTIVE INCENTIVE PROGRAM (MVP PROGRAM) — GENERAL MVP Defined. As discussed in further detail below, the MVP Program provides a mechanism with which the HCCC can correlate incentive compensation to long-term shareholder value creation. The MVP Program uses an economic profit measure called “Market Value Potential” (“MVP”), which measures the after-tax returns earned by the Company above its cost of capital, as a gauge of shareholder value creation. MVP is defined as (1) the Actual Return (the increase in adjusted GAAP book value as defined immediately below), less (2) the Required Return (beginning capital multiplied by the blended cost of capital). If the Company does not earn the Required Return in a given year and MVP is negative, no incentive award is made pursuant to the MVP Program for that year. For the purposes of the MVP Program, the increase or decrease in GAAP book value is calculated as ending capital less beginning capital. Ending capital is defined as ending GAAP book value, less unrealized gains or losses net of tax on available-for-sale fixed income investments, plus outstanding long-term debt instruments at the end of the period; and adjusted for capital transactions during the year. Beginning capital is defined as beginning GAAP book value, less unrealized gains or losses net of tax on available-for-sale fixed maturity investments, plus outstanding long-term instruments at the beginning of the period. The Company’s blended cost of capital is defined as the weighted average of the cost of equity capital and the cost of debt capital. The cost of equity capital is the average ten-year U.S. Treasury Note rate, plus a market risk premium of five percent modified by the Company’s ten-year beta versus the S&P 500 index. The Company’s cost of debt capital is the forward market rate on its outstanding long-term debt. MVP Program Participation. Participation in the MVP Program, percentage incentive awards and the formula to calculate MVP are recommended by the HCCC and approved annually by the Independent Directors of the Board for Mr. Kliethermes and by the entire Board for other participants. In 2023, participation in the MVP Program was limited to Messrs. Kliethermes and Bryant and Ms. Klobnak. The Board has concluded based on the position responsibilities and ongoing assessment of individual performance against operational and financial goals that the senior executive management team is most responsible for the operating and investment decisions and actions that directly impact the creation of long-term shareholder value, and, therefore, should be rewarded with a portion of their incentive compensation being directly and exclusively tied to the creation of MVP. MVP Components. As discussed in more detail below, there are two components to the MVP Program. The first component, based on strategic objectives, represents annual compensation. The second component, based on financial objectives, is paid out over time out of amounts credited to a bonus bank, which is at risk of forfeiture based on future performance and as such represents long-term compensation. The component based on financial objectives is also adjusted based on a relative comparison of the Company's five-year growth in book value to that of the Peer Companies. The Company’s relative growth in book value, in turn, is calculated by comparing its compound annual growth rate (“CAGR”) in GAAP comprehensive earnings over the applicable five-year period to that of the Peer Companies. CAGR in comprehensive earnings is calculated based on publicly disclosed comprehensive earnings of Peer Companies for the five-year period ending at the third quarter of the fifth year. MVP Percentage Award. For 2023, each participant in the MVP Program received an MVP incentive award expressed as a percentage of MVP created by the Company in that calendar year. Each year the HCCC confirms that the percentage awards remain appropriate by reviewing historical incentive award payouts, projected future payouts, and resulting total compensation for MVP Program participants, which in turn, is compared to the performance of the Company necessary to achieve such payouts. The HCCC compares the performance of the Company and total compensation of the MVP Program participants with comparable performance metrics and compensation at the Peer Companies. The MVP percentage award, expressed as a percentage of MVP, for each participant for 2023 was as follows: 2.25 percent for Mr. Kliethermes; 1.1 percent for Mr. Bryant; and 1.5 percent for Ms. Klobnak, which were increased, compared to 2022, from 2.0 percent, 1.0 percent, and 1.15 percent respectively. The HCCC set the percentage incentive awards for 2023 based on the factors described above and the range of expected MVP to be created by the Company in 2023 and the projected incentive awards and incentive payouts that would result. Individual MVP Award payments during any fiscal year, including payments from amounts credited to a bonus bank in prior years, are capped at $7.5 million under the terms of the RLI Corp. Annual Incentive Compensation Plan. Pursuant to the Annual Incentive Compensation Plan under which the MVP Program operates, the Board of Directors may exercise discretion to alter MVP Awards based on such objective or subjective criteria it deems appropriate. MVP Program Guideline Amendment. In 2022 the Company sold its minority interest in Maui Jim, Inc. (“Maui Jim”) to Kering Eyewear for cash proceeds of $686.6 million. The Company recognized a net realized gain of $571.0 million as a result of the sale. The RLI Corp. Annual Incentive Compensation Plan, under which the MVP Program operates, provides the HCCC authority to adjust annual performance goals or performance results to exclude the effects of an extraordinary, unusual or nonrecurring event; discontinued operations; or a divestiture, among other events. In 2022 the HCCC revised the MVP Program to provide that the net gain in 2022 from the sale of Maui Jim shares – net of tax; net of transaction costs; and net of one-time transactions bonuses paid to all employees other than the NEOs, a total of $434.4 million - would be excluded from the calculation of the Actual Return (increase in adjusted GAAP book value), which in turn is used to calculate MVP as described on page 35. The HCCC also revised the calculation of MVP under the MVP Program and MIP Guidelines for 2023 and subsequent years to exclude the lesser amount of net gain from the sale of Maui Jim subsequently received by the Company in 2023 and later from certain escrow accounts established at the time of the close of the transaction in 2022. The HCCC made this determination on the basis of a number of factors including: the guiding principles of RLI executive compensation discussed on page 29; the unique one-time nature of the transaction; market precedent for the treatment of gains by other companies from a one-time sale or divestiture transaction; the longstanding nature of the Company’s investment in Maui Jim; RLI’s contractual obligation to sell its Maui Jim shares pursuant to a Shareholder’s Agreement with the majority owner of Maui Jim; and the minority interest held by RLI and resulting lack of direct control over Maui Jim’s business by RLI, among other factors. MVP is also a financial goal in the Management Incentive Program in which Messrs. Diefenthaler and Fick participate, as further explained beginning on page 37, and in Company’s Underwriter Incentive Program and Associate Incentive Program. The net gain from the sale of Maui Jim received by the Company in 2022 and 2023 was excluded from the calculation of MVP achieved in 2022 and 2023 in each of these incentive programs in the same manner and for the same reasons it was excluded from the MVP Program.

  65. MARKET VALUE POTENTIAL EXECUTIVE INCENTIVE PROGRAM — ANNUAL INCENTIVE COMPENSATION COMPONENT

    MARKET VALUE POTENTIAL EXECUTIVE INCENTIVE PROGRAM — ANNUAL INCENTIVE COMPENSATION COMPONENT Twenty percent of the preliminary MVP award calculated for each participant is evaluated against annual objectives and an achievement rating of 0 to 100 percent is assigned to that portion of the award. This amount represents the annual compensation component of the MVP Program award (The long-term incentive component of the MVP Program is explained under the section Long-Term Compensation on pages 39-40). For 2023, Messrs. Kliethermes and Bryant and Ms. Klobnak shared annual objectives weighted as follows: customer experience (15 percent); innovation and strategic fit (15 percent); product adjacencies (15 percent); cultural adaptability (15 percent); people (15 percent); technology alignment (15 percent) and financial and growth goals (10 percent). The annual financial performance metric, combined ratio, is non-GAAP and should not be considered a substitute for GAAP measures. The calculation of this non-GAAP metric is described on page 31. The annual growth goal relates to premium growth over one-, three-, and five-years. Under each annual objective category, there were a number of shared goals against which performance would be assessed to determine whether the annual objectives had been achieved. The evaluation of performance relative to these objectives is inherently subjective, involving a high degree of judgment by the CEO and the Board. The annual objectives are established as difficult stretch goals, requiring superior effort and execution to achieve 100 percent on all goals. The annual objectives component of an MVP award will only be paid if objectives are achieved and if positive MVP is created for shareholders. If MVP is positive and annual objectives are achieved, the annual objectives component of the award will be paid annually to provide direct linkage of annual incentive compensation for the achievement of those annual goals. However, if MVP is negative for a year, no MVP award will be made for that year with respect to the annual objective’s component. For 2023, the Committee evaluated annual objectives and a 97% percent overall achievement factor was applied. The following annual incentive compensation component was paid to each participant under the MVP Program:

  66. Calculation of MVP Program Annual Incentive Award

    Calculation of MVP Program Annual Incentive Award

  67. Calculation of MVP Program Annual Incentive Award

    | | (A) | (B) | (C = A x B) | (D = C x 20%) | (E = % Achieved) | (F = D x E) | | | 2023 MVP | Percentage | 2023 Preliminary | 20% Annual Component | Achievement | 2023 Annual | | Participant | Created (*) | Award | MVP Award | Based on Strategic Goals | Rating | Incentive Award | | C. Kliethermes | $188,408,000 | 2.25% | $4,239,180 | $847,836 | 97% | $822,401 | | T. Bryant | $188,408,000 | 1.1% | $2,072,488 | $414,498 | 97% | $402,063 | | J. Klobnak | $188,408,000 | 1.5% | $2,826,120 | $565,224 | 97% | $548,267 |

  68. MANAGEMENT INCENTIVE PROGRAM (MIP)

    MANAGEMENT INCENTIVE PROGRAM (MIP) Participants in the MIP include home office vice presidents, assistant vice presidents and other senior managers. Awards are granted annually and expressed as a percentage of year-end base pay based on targets for three financial goals and annual objectives related to strategic goals. The financial goals are: operating return on equity (“ROE”), combined ratio, and MVP. The annual objectives for 2023 were the same annual objectives for the MVP Program: customer experience (15 percent); innovation and strategic fit (15 percent); product adjacencies (15 percent); cultural adaptability (15 percent); people (15 percent); technology alignment (15 percent) and financial and growth goals (10 percent). Awards are based on actual results for the financial and growth goals, and an assessment of achievement of annual objectives as discussed above in relation to the MVP Program. ROE and combined ratio are used as financial goals to provide an incentive to increase annual profitability. ROE is a ratio calculated as our operating earnings divided by our beginning equity adjusted for capital transactions such as share repurchases and special dividends. Operating earnings, in turn, are our net earnings minus realized investment gains or losses and unrealized gains or losses on equity securities, net of tax. For 2022 and 2023, the calculation of ROE excluded the net gain from the sale of Maui Jim subsequently received by the Company. Combined ratio is a profitability measure and is calculated as the sum of our incurred losses and settlement expenses plus our policy acquisition costs and operating expenses, divided by our net premiums earned. The difference between the combined ratio and 100 reflects the per-dollar rate of underwriting income or loss. MVP is used as a financial goal as a proxy for shareholder value creation and is explained beginning on page 35. Actual awards for a year are paid in the first quarter of the following year. The HCCC approves award levels for MIP participants at the senior vice president and vice president levels, who are designated as executive officers under Section 16 of the Exchange Act. Mr. Kliethermes approves award levels for other MIP participants. For 2023, Mr. Kliethermes recommended, and the HCCC approved, an MIP maximum annual incentive opportunity for Messrs. Diefenthaler and Fick of 100 percent of their respective year-end base, 40 percent of which will be based on the achievement of financial goals of MVP, 20 percent on the ROE goal, 20 percent on the combined ratio goal, and 20 percent on the achievement of annual objectives. For 2023, targets levels and corresponding achievement levels for actual results for financial goals are measured according to the following proportionate payout ranges.

  69. 2023 MIP Maximum – Diefenthaler and Fick

    2023 MIP Maximum – Diefenthaler and Fick

  70. 2023 MIP Maximum – Diefenthaler and Fick

    | | Payout Range | | | | Management Incentive Plan Goals | 0% Payout | 100% Payout | Bonus Opportunity | | STRATEGIC GOALS | | | | | Annual Objectives | 0% achievement | 100% achievement | 20.00% | | FINANCIAL GOALS | | | | | Operating Return on Equity (ROE) | 7% | 16% | 20.00% | | Market Value Potential (MVP) | $0 | $100M | 40.00% | | Combined Ratio | 100% | 85% | 20.00% | | | | | MAXIMUM BONUS | | | | | 100.00% |

  71. 2023 MIP Maximum – Diefenthaler and Fick

    In 2023, the following MIP awards were calculated based on the corresponding actual results with respect to financial goals and an aggregate 97% achievement of annual objectives based upon an assessment by senior management of achievement of each annual objective:

  72. 2023 MIP Award

    2023 MIP Award

  73. 2023 MIP Award

    | | | | | | | | | Actual | | | | | | MIP | | | | | Actual | | Strategy | | | Total | | | Level | Actual | Bonus | Actual | | Combined | | Scorecard | | Total | MIP | | Participant | | ROE % | | MVP | Bonus % | Ratio | Bonus % | | Bonus % | MIP % | Bonus | | Aaron P. Diefenthaler | 100 | 19.4 | 20.0 | $188,408,000 | 40.000 | 86.6 | 17.87 | 97 | 19.400 | 97.267 | $345,298 | | Jeffrey D. Fick | 100 | 19.4 | 20.0 | $188,408,000 | 40.000 | 86.6 | 17.87 | 97 | 19.400 | 97.267 | $369,615 |

  74. UNDERWRITING PROFIT PROGRAM (UPP) – ANNUAL INCENTIVE COMPENSATION COMPONENT

    UNDERWRITING PROFIT PROGRAM (UPP) – ANNUAL INCENTIVE COMPENSATION COMPONENT Executives with oversight responsibility for product group underwriting participate in UPP and are eligible to earn an annual incentive based on a percentage of underwriting profit created by that product for a given underwriting year. In addition to his other duties as Chief Investment Officer & Treasurer, Mr. Diefenthaler has oversight responsibility for underwriting for two products. Under the terms of the UPP, Mr. Diefenthaler is eligible to receive a UPP bonus for each of these products based on 2% of the underwriting profit created over the respective payout periods for those products (six to ten years for one of the products and four to eight years for the other product). For UPP, underwriting profit is calculated as premiums earned net of reinsurance (“Premium”) minus expenses and actual and estimated losses (collectively “Losses”). Because Losses are determined over a multi-year payout period over which they may develop, only a partial incentive award based on underwriting profit is paid each year until all actual Losses likely to develop have occurred and a final underwriting profit figure can be determined for the applicable underwriting year. If expenses and Losses exceed the Premium, there is an underwriting loss (negative underwriting profit) for a given underwriting year in the payout period. This such negative amount will be deducted from underwriting profit from other years to determine a UPP payout. If in aggregate a negative amount results in a given year for all underwriting years the amount will be deducted from Mr. Diefenthaler’s MIP bonus for that given year. The percentage of the incentive award paid out ranges from 20% to 100%, based on product and year in the payout period, with the cumulative payout percentage increasing for later years in the payout period. Mr. Diefenthaler’s UPP award calculation also includes an adjustment for investment income over a payout period, which is calculated by multiplying the investment rate by the unpaid award balance as of the previous year-end or December 31, 2022. The investment rate, 3.96 percent, was derived by matching the duration of the product reserves to a matching bond term and is net of investment expenses of 0.15 percent. For UPP payouts, the payout for the same calendar year as the underwriting year is deemed annual incentive compensation, while payouts based on underwriting profit in prior underwriting years are deemed long-term compensation. The following table illustrates the UPP award calculation, determined on an aggregate basis for both products.

  75. UNDERWRITING PROFIT PROGRAM (UPP) – ANNUAL INCENTIVE COMPENSATION COMPONENT

    | UPP Award Calculation | | | | | | | | | | (A) | | | | (E) | | (G = E - F) | | | Underwriting Profit | (B) | (C = A x B) | (D) | Cumulative | (F) | UPP Payout | | | (Premium less | Award | Total Eligible | Payout | Eligible | Paid to | by Award | | | Losses) | Percentage | Award | Percentage | Award | Date | Year | | Award Year | ($) | (%) | ($) | (%) | ($) | ($) | ($) | | 2023 Underwriting Year | 762,513 | 2 | 15,250 | 35.2 | 5,367 | — | 5,367 | | Prior Underwriting Years | 47,395,873 | 2 | 947,917 | 94.5 | 895,725 | 693,412 | 202,313 | | Total 2023 UPP Award (sum of G) | | | | | | | 210,456(1) |

  76. UNDERWRITING PROFIT PROGRAM (UPP) – ANNUAL INCENTIVE COMPENSATION COMPONENT

    | (1) Under the terms of the UPP Program, $2,776 of investment income accrued on the unpaid profit-sharing balance as described above in included in the 2023 UPP Award. |

  77. LONG-TERM COMPENSATION

    LONG-TERM COMPENSATION

  78. MARKET VALUE POTENTIAL EXECUTIVE INCENTIVE PROGRAM — LONG-TERM INCENTIVE COMPENSATION COMPONENT AND FORFEITURE PROVISION (CLAWBACK)

    MARKET VALUE POTENTIAL EXECUTIVE INCENTIVE PROGRAM — LONG-TERM INCENTIVE COMPENSATION COMPONENT AND FORFEITURE PROVISION (CLAWBACK) The MVP Program is described beginning on page 35. Eighty percent of the preliminary MVP award calculated under that program (which will be positive if MVP is positive or negative if MVP is negative) is subject to an assessment of Company performance compared to the Peer Companies (the “financial component”). This represents the long-term component of the MVP award. The financial component of a preliminary award will be adjusted in a range from a 20 percent reduction (minimum) to a 25 percent increase (maximum) based on the Company’s long-term performance relative to the Peer Companies measured by five-year growth in book value per share. The Company’s relative growth in book value per share is calculated by comparing its CAGR in GAAP comprehensive earnings over the applicable five-year period to that of the Peer Companies. CAGR in comprehensive earnings is calculated based on publicly disclosed comprehensive earnings of Peer Companies for the five-year period ending at the third quarter of the fifth year. The adjustment to the financial component is made according to the following schedule:

  79. Adjustment of Preliminary Financial Award Based on RLI’s Relative Five-Year Book Value per Share Growth

    | 2023 MVP Program Incentive Awards and Payouts | | | Annual Objectives Achieved | 97.0% | | Peer Company Adjustment Factor | 125.00% | | | (A) | | 2023 MVP Achieved (after tax) | $188,408,000 |

  80. Adjustment of Preliminary Financial Award Based on RLI’s Relative Five-Year Book Value per Share Growth

    | Formula for 2023 | | | | | | | Payout from MVP Bank: | (H) | (G) (from above) | (I = G + H) | (J = I x 33%) | (K = I - J) | | | Beginning Bank | 2023 Award | Total Pre-payout | Payout | Remaining | | Participant | Balance ($) (1) | Credited to Bank ($) | Balance ($) | of Bank ($) | At-Risk Bank | | Craig W. Kliethermes | 4,817,204 | 4,239,180 | 9,056,384 | 2,988,607 | 6,067,777 | | Todd W. Bryant | 2,096,012 | 2,072,488 | 4,168,500 | 1,375,605 | 2,792,895 | | Jennifer L. Klobnak | 2,619,938 | 2,826,120 | 5,446,058 | 1,797,199 | 3,648,859 |

  81. Adjustment of Preliminary Financial Award Based on RLI’s Relative Five-Year Book Value per Share Growth

    | Formula for Total | | | | | 2023 MVP Payout: | | (E) (from above) | | | | (J) (from above) | Payout of 2023 | (L = J + E) | | | Payout | Annual Objectives | Total 2023 | | Participant | of Bank ($) | Component ($) | Payout ($) | | Craig W. Kliethermes | 2,988,607 | 822,401 | 3,811,008 | | Todd W. Bryant | 1,375,605 | 402,063 | 1,777,668 | | Jennifer L. Klobnak | 1,797,199 | 548,267 | 2,345,466 |

  82. Adjustment of Preliminary Financial Award Based on RLI’s Relative Five-Year Book Value per Share Growth

    | (1) Under the terms of the MVP Program, interest at the three-year U.S. Government Treasury Note rate (4.22 percent) was accrued on the unpaid bonus bank balance on December 31, 2022. The following interest was accrued to the December 31, 2023 bonus bank balance as follows: Mr. Kliethermes, $195,055; Mr. Bryant, $84,870; and Ms. Klobnak $106,085. |

  83. UNDERWRITER PROFIT-SHARING PROGRAM — LONG-TERM INCENTIVE COMPENSATION COMPONENT

    UNDERWRITER PROFIT-SHARING PROGRAM — LONG-TERM INCENTIVE COMPENSATION COMPONENT As noted on page 38, payouts based on underwriting profit for prior underwriting years are deemed long-term compensation. For Mr. Diefenthaler, UPP payouts of $202,313 in 2023 for prior underwriting years 2016-2022 are deemed long-term incentive compensation.

  84. LONG-TERM INCENTIVE PLAN

    LONG-TERM INCENTIVE PLAN The Company has two long-term incentive plans that cover awards of equity/stock-based compensation to participants, the 2015 Long-Term Incentive Plan (“2015 LTIP”) and the 2023 Long-Term Incentive Plan (“2023 LTIP”). The 2015 LTIP is inactive, and the 2023 LTIP is currently in effect. The 2023 LTIP, described immediately below, was adopted in 2023 and replaced the 2015 LTIP. Together, these plans are referred to sometimes as “LTIPs”. Messrs. Kliethermes, Bryant, Diefenthaler, Fick and Ms. Klobnak have outstanding stock option awards under the 2015 LTIP and the 2023 LTIP. The purpose of our 2023 LTIP is to align the interests of the Company’s shareholders and recipients of awards under the 2023 LTIP by increasing the proprietary interest of such recipients in the Company’s growth and success; advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors, consultants, independent contractors and agents; and motivate such persons to act in the long-term best interests of the Company and its shareholders. The grant of equity awards, the value of which is related to the value of the Company’s Common Stock, aligns the interests of the Company’s executive officers with that of the shareholders. The HCCC believes this arrangement develops a strong incentive for Company executives to put forth maximum effort for the continued creation of shareholder value and long-term growth of the Company. Under the Company’s 2023 LTIP, certain employees, officers, and Directors of the Company are eligible to receive equity awards in a variety of forms including non-qualified stock options; incentive stock options (within the meaning of Section 422 of the Internal Revenue Code); stock appreciation rights (“SARs”); restricted stock, restricted stock units and other stock awards (collectively “Stock Awards”); and performance awards. All executives at the Company are required to own a significant level of Company stock, stated as a multiple of base salary. Equity grants provide a means for executives to meet their ownership requirement. As explained further on page 42, executives are required to hold all net shares from an equity grant until their stock ownership level is met. The HCCC believes equity awards serve as incentives to executives to maximize long-term growth and profitability of the Company, an arrangement that benefits executives, shareholders, and other stakeholders of the Company. Equity awards also provide a means to attract and retain key employees. The HCCC establishes and recommends to the Independent Directors of the Board the annual equity award for Mr. Kliethermes, which is established based on a review of long-term incentive compensation of CEO positions among the Peer Companies described above, an assessment of his performance and initiatives underway and a comparison of his equity awards compared to awards to other executives. A target range of the value of annual equity awards, expressed as a percentage of base salary based on comparisons with respect to Peer Companies and executive compensation benchmarking surveys has been established for all other Company executives. In 2023, the Company awarded long-term incentives in the form of non-qualified stock option grants to the NEOs in amounts recommended by the HCCC and approved by the Board of Directors (Independent Directors with respect to Mr. Kliethermes’ award). Grant amounts in 2023 were based upon market data, year-to-date Company performance, Company stock price performance in 2022 and through the grant date in 2023, and executive retention considerations. The HCCC believes that non-qualified stock options provide an effective form of performance-based compensation to align the interests of NEOs and shareholders. In reaching that conclusion, the HCCC considered the following: stock options provide more leverage than equity awards such as restricted stock; stock options are directly aligned with shareholder interests since they provide rewards only with share price appreciation; and, stock options are understood and supported by recipients. The Company targets long-term incentives at approximately the median of competitive market data. Mr. Kliethermes recommends to the HCCC proposed long-term incentive awards within the target range for each executive officer based on the executive officer’s position and a subjective assessment of the executive officer’s individual performance and anticipated future contributions to the Company. The HCCC considers Mr. Kliethermes’ recommendations and then approves and recommends stock option awards to the Board for approval. Options expire eight years after grant. In determining 2023 stock option awards the Committee considered peer company compensation, compensation survey benchmarking, and individual and Company performance. Stock options vest over five years at the rate of 20 percent per year, or upon termination of employment due to the death, Disability, or qualified Retirement of the recipient as defined under the LTIPs (generally age and years of service of 75). Upon termination of employment (other than due to death, Disability, or Retirement), vested options must be exercised within the earlier of 90 days of termination or expiration of the option award, except that options are forfeited in the event the employment of an option recipient is terminated for cause.

  85. 2023 SUMMARY COMPENSATION TABLE

    2023 SUMMARY COMPENSATION TABLE The aggregate compensation earned from the Company and its subsidiaries during the last fiscal year is set forth below for the Company’s President & CEO; CFO; and the other three most highly compensated executive officers, referred to herein collectively as NEOs. None of the NEOs have an employment contract with the Company. The key elements of compensation presented in the 2023 Summary Compensation Table include base salary (column c); payouts under annual incentive programs (column g); and stock option awards (column f). Amounts reflected in column (g) titled “Non-Equity Incentive Plan” for Messrs. Kliethermes, Bryant, and Ms. Klobnak reflect payouts from each of their respective MVP Program bonus bank accounts of amounts earned in prior years based on financial performance of the Company in those years. As described in detail on pages 35-37, payouts under the long-term component of the MVP Program are reflective of amounts earned in prior years, which are banked and paid out over a period of time of up to 10 years.

  86. 2023 SUMMARY COMPENSATION TABLE

    | | | | | | | | Change In Pension | | | | | | | | | | | Value and | | | | | | | | | | Non-Equity | Nonqualified | | | | | | | | Stock | Option | Incentive Plan | Deferred | All Other | | | Name and | | | Bonus | Awards | Awards | Compensation | Compensation | Compensation | | | Principal Position | Year | Salary ($) | ($) | ($) | ($) (1) | ($) (2) | Earnings ($) | ($) (3)(4) | Total ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | | Craig W. Kliethermes | 2023 | 650,000 | 0 | 0 | 626,025 | 3,811,008 | — | 98,419 | 5,185,452 | | President & Chief Executive Officer | 2022 | 648,942 | 0 | 0 | 1,603,500 | 2,513,571 | — | 80,767 | 4,846,780 | | | 2021 | 538,000 | 0 | 0 | 499,240 | 3,704,994 | — | 61,197 | 4,803,431 | | Todd W. Bryant | 2023 | 391,539 | 0 | 0 | 490,684 | 1,777,668 | — | 84,803 | 2,744,693 | | Chief Financial Officer | 2022 | 366,539 | 0 | 0 | 637,915 | 1,109,057 | — | 78,430 | 2,191,941 | | | 2021 | 344,500 | 0 | 0 | 228,130 | 1,634,125 | — | 61,197 | 2,267,952 | | Jennifer L. Klobnak | 2023 | 491,539 | 0 | 0 | 333,880 | 2,345,466 | — | 69,506 | 3,240,391 | | Chief Operating Officer | 2022 | 474,539 | 0 | 0 | 919,340 | 1,374,436 | — | 69,840 | 2,838,155 | | | 2021 | 389,039 | 0 | 0 | 249,620 | 2,025,616 | — | 61,197 | 2,725,472 | | Aaron P. Diefenthaler | 2023 | 349,923 | 0 | 0 | 200,475 | 555,754 | — | 69,506 | 1,175,658 | | Chief Investment Officer & Treasurer | 2022 | 336,616 | 0 | 0 | 406,220 | 500,790 | — | 69,840 | 1,313,466 | | | 2021 | 326,164 | 0 | 0 | 142,640 | 490,048 | — | 61,197 | 1,020,049 | | Jeffrey D. Fick | 2023 | 373,231 | 0 | 0 | 257,906 | 369,615 | — | 69,506 | 1,070,258 | | Chief Legal Officer & Corporate Secretary | 2022 | 356,616 | 0 | 0 | 293,123 | 290,063 | — | 69,840 | 1,009,642 |

  87. 2023 SUMMARY COMPENSATION TABLE

    | (1) The amounts shown in column (f) reflect the aggregate grant date fair value of stock option awards computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in footnote 8 to the Company’s audited financial statements for the fiscal year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 23, 2024. |

  88. 2023 SUMMARY COMPENSATION TABLE

    | (2) The amount shown in column (g) for Messrs. Kliethermes, Bryant, and Ms. Klobnak reflects the cash awards paid under the MVP Program, which is discussed in further detail on pages 35-37, and includes the annual award payout under the MVP Program and long-term payout reflecting 33 percent of their respective bonus bank balances. The bank balance, in turn, includes amounts credited to their bonus banks for 2023. The amount reflected in column (g) for Mr. Diefenthaler reflects the cash award paid under the MIP, which is discussed in further detail on page 37, and the cash award paid under the UPP, which is discussed in further detail on page 38. The amount reflected in column (g) for Mr. Fick reflects the cash award paid under the MIP. |

  89. 2023 SUMMARY COMPENSATION TABLE

    | (3) The amounts shown in column (i) include: |

  90. 2023 SUMMARY COMPENSATION TABLE

    | a. | A Company contribution to the ESOP of $28,460 for 2023 for each of the NEOs. |

  91. 2023 SUMMARY COMPENSATION TABLE

    | b. | A Company contribution to the 401(k) Plan of $28,268 for 2023 for each of the NEOs. |

  92. 2023 SUMMARY COMPENSATION TABLE

    | c. | The amounts reflected in this column represent the maximum amount expended on an individual annual executive physical examination for a NEO. The maximum amount is used for all NEOs to ensure that no protected health-related information is disclosed. |

  93. 2023 SUMMARY COMPENSATION TABLE

    | d. | The proportionate amounts of travel accident insurance provided for all Company management at the assistant vice president level and above. |

  94. 2023 SUMMARY COMPENSATION TABLE

    | (4) Messrs. Kliethermes, Bryant and Ms. Klobnak were authorized by the Board to use the Company’s fractionally-owned aircraft for personal use in 2023, at an hourly rate established from time to time by the Board, with personal hours flown limited such that the net hourly charges to the Company (the variable hourly rate paid by the Company less the hourly rate paid to the Company by Messrs. Kliethermes, Bryant and Ms. Klobnak) are equal to or less than 6.5 percent of their |

  95. 2023 SUMMARY COMPENSATION TABLE

    | respective base salaries, a maximum for Mr. Kliethermes of $42,250, Mr. Bryant of $26,000 and Ms. Klobnak of $32,500. The hourly rate for 2023 was $2,300 per hour. Effective January 1, 2024, the maximum personal hours authorized for each Messrs. Kliethermes, Bryant and Ms. Klobnak was modified to limit personal use based on a set number of hours reviewed and approved annually by the Board. For 2024, the Board approved personal use of: 27 hours for Mr. Kliethermes; 20 hours for Ms. Klobnak; and 16.5 hours for Mr. Bryant. Ms. Klobnak did not use this benefit in 2023. The amounts included in the All Other Compensation column for Messrs. Kliethermes and Bryant reflect the difference between the Company’s hourly variable operating costs, less the hourly rates paid by each, respectively, for all personal hours flown as reflected in column (e) in the following table: |

  96. 2023 SUMMARY COMPENSATION TABLE

    | | | (a) | (b) | (c) | (d = b - c) | (e = a x d) | | | | | | | | Total aggregate | | | | | | | Aggregate | incremental | | | | | Company | | incremental | cost to | | | | | variable | Hourly rate | cost to | Company | | | | | operating | charged for | Company | for all personal | | | | Personal | cost per | personal | per personal | hours flown | | | Year | hours flown | hour flown | hours flown | hour flown | in year | | Craig W. Kliethermes | 2023 | 17.2 | $3,981 | $2,300 | $1,681 | $28,913 | | Todd W. Bryant | 2023 | 9.1 | $3,981 | $2,300 | $1,681 | $15,297 |

  97. 2023 GRANTS OF PLAN-BASED AWARDS

    2023 GRANTS OF PLAN-BASED AWARDS The following table sets forth information about estimated possible payouts under non-equity incentive plan awards, which consist of potential payouts under the long-term component of the MVP Program for Messrs. Kliethermes, Bryant, and Ms. Klobnak, under MIP for Mr. Fick, and under the MIP and UPP for Mr. Diefenthaler. The table also shows information regarding grants of stock options made to the NEOs under the 2015 LTIP prior to May 4, 2023 and under the 2023 LTIP after May 4, 2023.

  98. 2023 GRANTS OF PLAN-BASED AWARDS

    | | | | | | All Other | Exercise | | | | | | | | Option Awards: | or Base | | | | | | | | Number of | Price of | Grant Date | | | | Estimated Possible Payouts Under | | | Securities | Option | Fair Value | | | | Non-Equity Incentive Plan Awards | | | Underlying | Awards | Option | | Name | Grant Date | Threshold ($) (1) | Target ($) (2) | Maximum ($) (3) | Options (#) (4) | ($/Sh) | Awards ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | Craig W. Kliethermes | 05/04/23 | | | | 7,500 | 136.59 | 200,475 | | | 08/01/23 | | | | 7,500 | 134.41 | 197,250 | | | 11/01/23 | | | | 7,500 | 135.22 | 228,300 | | | | 0 | 2,513,571 | 7,500,000 | | | | | Todd W. Bryant | 02/01/23 | | | | 8,500 | 131.78 | 229,840 | | | 05/04/23 | | | | 3,125 | 136.59 | 83,531 | | | 08/01/23 | | | | 3,125 | 134.41 | 82,188 | | | 11/01/23 | | | | 3,125 | 135.22 | 95,125 | | | | 0 | 1,109,057 | 7,500,000 | | | | | Jennifer L. Klobnak | 05/04/23 | | | | 4,000 | 136.59 | 106,920 | | | 08/01/23 | | | | 4,000 | 134.41 | 105,200 | | | 11/01/23 | | | | 4,000 | 135.22 | 121,760 | | | | 0 | 1,374,436 | 7,500,000 | | | | | Aaron P. Diefenthaler | 05/04/23 | | | | 7,500 | 136.59 | 200,475 | | | | 0 | 500,790 | 7,500,000 | | | | | Jeffrey D. Fick | 02/01/23 | | | | 3,750 | 131.78 | 101,400 | | | 05/04/23 | | | | 1,875 | 136.59 | 50,119 | | | 08/01/23 | | | | 1,875 | 134.41 | 49,313 | | | 11/01/23 | | | | 1,875 | 135.22 | 57,075 | | | | 0 | 290,063 | 7,500,000 | | | |

  99. 2023 GRANTS OF PLAN-BASED AWARDS

    | (1) The MVP Program applicable to Messrs. Kliethermes, Bryant and Ms. Klobnak discussed in further detail on pages 35-37, does not provide for a minimum threshold award level. Messrs. Diefenthaler and Fick participate in the MIP and the amounts shown in column (c) represent the minimum award under MIP, discussed in further detail on page 37, which is equal to zero if strategic objectives and financial goals are not met. The amount shown in column (c) for Mr. Diefenthaler also includes UPP, discussed in further detail on page 40, which does not provide a minimum threshold award level. |

  100. 2023 GRANTS OF PLAN-BASED AWARDS

    | (2) The MVP Program applicable to Messrs. Kliethermes, Bryant and Ms. Klobnak does not provide for a target award. The amounts shown in column (d) are their respective 2022 MVP Program payouts for 2022 performance, which are shown as representative amounts for a target MVP Program award for 2023. For Mr. Diefenthaler, the amount in column (d) reflects the amount he received as a payout under both MIP ($273,948) and UPP ($226,842) for 2022, which is |

  101. 2023 GRANTS OF PLAN-BASED AWARDS

    | representative of a target award for 2023. For Mr. Fick, the amount in column (d) reflects the amount he received as a payout under MIP for 2022, which is representative of a target award for 2023. |

  102. 2023 GRANTS OF PLAN-BASED AWARDS

    | (3) The amounts shown in column (e) reflect the maximum incentive award permitted under the RLI Corp. Annual Incentive Compensation Plan approved by shareholders in 2016 and amended in 2018 and 2020, which governs the MVP Program, MIP, and UPP. |

  103. 2023 GRANTS OF PLAN-BASED AWARDS

    | (4) Twenty percent of each option grant becomes exercisable one year after the date of the grant and each year thereafter in 20 percent increments. Options expire on the eighth anniversary of the grant date. Grants prior to May 4, 2023 were granted pursuant to the 2015 LTIP and grants on or after May 4, 2023 were granted pursuant to the 2023 LTIP. The stock option grants vest upon the death or the termination of employment of a stock option recipient due to Disability or Retirement. Retirement is defined generally as a termination of employment of an employee with combined age and years of service of 75 or greater. Under FASB ASC Topic 718, option awards to recipients who are current employees, but who qualify for Retirement upon departure from the Company, are expensed at the time of grant, rather than over the five-year vesting period. Because Messrs. Kliethermes’s, Bryant’s, Fick’s and Ms. Klobnak’s age and years of service exceeded 75, the HCCC decided to grant option awards to Messrs. Kliethermes, Bryant, Fick and Ms. Klobnak on a quarterly basis (one fourth of aggregate annual grant awarded in May, August and November of the current year, and February of the subsequent year) to avoid a disproportionate expense in the quarter of grant if the option award was made in a single annual grant. The HCCC also sets and approves the date upon which each quarterly grant will be awarded following the same schedule each year: 1) the initial grant occurs on the same date of all other annual option awards in May in conjunction with the meeting of the Board; and 2) each remaining quarterly grant occurs on the first trading day in the months of August, November, and February. |

  104. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END The following table sets forth information with respect to the NEOs regarding the outstanding stock option awards as of December 31, 2023. None of our NEOs hold outstanding RSUs or other equity-based awards with respect to the Company.

  105. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | | | Option Awards | | | | | | | | | | Equity | | | | | | | | Incentive | | | | | | Number of | Number of | Plan Awards | | | | | | Securities | Securities | Number of | | | | | | Underlying | Underlying | Underlying | | | | | | Unexercised | Unexercised | Unexercised | Option | Option | | | | Options (#) | Options (#) | Unearned | Exercise | Exercise | | Name | Grant Date | Exercisable (1) | Unexercisable (1) | Options (#) | Price (2) | Date | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | | Craig W. Kliethermes | 05/03/18 | 4,000 | 0 | | 56.14 | 05/03/26 | | | 05/02/19 | 14,000 | 3,500 | | 75.66 | 05/02/27 | | | 08/21/20 | 12,000 | 8,000 | | 86.24 | 08/21/28 | | | 05/06/21 | 5,600 | 8,400 | | 106.02 | 05/06/29 | | | 05/05/22 | 15,000 | 60,000 | | 109.60 | 05/05/30 | | | 05/04/23 | 0 | 7,500 | | 136.59 | 05/04/31 | | | 08/01/23 | 0 | 7,500 | | 134.41 | 08/01/31 | | | 11/01/23 | 0 | 7,500 | | 135.22 | 11/01/31 | | Todd W. Bryant | 05/03/18 | 4,000 | 0 | | 56.14 | 05/03/26 | | | 05/02/19 | 3,000 | 750 | | 75.66 | 05/02/27 | | | 08/01/19 | 3,000 | 750 | | 82.47 | 08/01/27 | | | 11/01/19 | 3,000 | 750 | | 89.32 | 11/01/27 | | | 02/03/20 | 2,250 | 1,500 | | 87.62 | 02/03/28 | | | 08/21/20 | 3,000 | 2,000 | | 86.24 | 08/21/28 | | | 11/02/20 | 3,000 | 2,000 | | 82.28 | 11/02/28 | | | 02/01/21 | 2,000 | 3,000 | | 90.64 | 02/01/29 | | | 05/06/21 | 1,200 | 1,800 | | 106.02 | 05/06/29 | | | 08/02/21 | 1,200 | 1,800 | | 101.07 | 08/02/29 | | | 11/01/21 | 1,200 | 1,800 | | 103.02 | 11/01/29 | | | 02/01/22 | 600 | 2,400 | | 97.85 | 02/01/30 | | | 05/05/22 | 1,700 | 6,800 | | 109.60 | 05/05/30 | | | 08/01/22 | 1,700 | 6,800 | | 103.56 | 08/01/30 | | | 11/01/22 | 1,700 | 6,800 | | 125.98 | 11/01/30 | | | 02/01/23 | 0 | 8,500 | | 131.78 | 02/01/31 | | | 05/04/23 | 0 | 3,125 | | 136.59 | 05/04/31 | | | 08/01/23 | 0 | 3,125 | | 134.41 | 08/01/31 | | | 11/01/23 | 0 | 3,125 | | 135.22 | 11/01/31 | | Jennifer L. Klobnak | 05/03/18 | 20,000 | 0 | | 56.14 | 05/03/26 | | | 05/02/19 | 16,000 | 4,000 | | 75.66 | 05/02/27 | | | 08/21/20 | 12,000 | 8,000 | | 86.24 | 08/21/28 | | | 05/06/21 | 5,600 | 8,400 | | 106.02 | 05/06/29 | | | 05/05/22 | 8,600 | 34,400 | | 109.60 | 05/05/30 | | | 05/04/23 | 0 | 4,000 | | 136.59 | 05/04/31 | | | 08/01/23 | 0 | 4,000 | | 134.41 | 08/01/31 | | | 11/01/23 | 0 | 4,000 | | 135.22 | 11/01/31 | | Aaron P. Diefenthaler | 05/04/17 | 11,000 | 0 | | 49.71 | 05/04/25 | | | 05/03/18 | 9,000 | 0 | | 56.14 | 05/03/26 | | | 05/02/19 | 6,000 | 1,500 | | 75.66 | 05/02/27 | | | 08/21/20 | 7,500 | 5,000 | | 86.24 | 08/21/28 | | | 05/06/21 | 3,200 | 4,800 | | 106.02 | 05/06/29 | | | 05/05/22 | 3,800 | 15,200 | | 109.60 | 05/05/30 | | | 05/04/23 | 0 | 7,500 | | 136.59 | 05/04/31 | | Jeffrey D. Fick | 05/03/18 | 9,000 | 0 | | 56.14 | 05/03/26 | | | 05/02/19 | 12,000 | 3,000 | | 75.66 | 05/02/27 | | | 08/21/20 | 2,500 | 1,667 | | 86.24 | 08/21/28 | | | 11/02/20 | 2,500 | 1,667 | | 82.28 | 11/02/28 | | | 02/01/21 | 1,666 | 2,500 | | 90.64 | 02/01/29 | | | 05/06/21 | 800 | 1,200 | | 106.02 | 05/06/29 | | | 08/02/21 | 800 | 1,200 | | 101.07 | 08/02/29 | | | 11/01/21 | 800 | 1,200 | | 103.02 | 11/01/29 | | | 02/01/22 | 400 | 1,600 | | 97.85 | 02/01/30 | | | 05/05/22 | 750 | 3,000 | | 109.60 | 05/05/30 | | | 08/01/22 | 750 | 3,000 | | 103.56 | 08/01/30 | | | 11/01/22 | 750 | 3,000 | | 125.98 | 11/01/30 | | | 02/01/23 | 0 | 3,750 | | 131.78 | 02/01/31 | | | 05/04/23 | 0 | 1,875 | | 136.59 | 05/04/31 | | | 08/01/23 | 0 | 1,875 | | 134.41 | 08/01/31 | | | 11/01/23 | 0 | 1,875 | | 135.22 | 11/01/31 |

  106. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | (1) Options vest 20 percent per year over five years and expire on the eighth anniversary of the grant date. |

  107. OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END

    | (2) Option exercise prices for grants prior to December 20, 2022 were adjusted to reflect a reduction in the exercise price equal to the $7.00 special dividend paid on that date to all our shareholders in order to prevent dilution to stock options holders. |

  108. 2023 OPTION EXERCISES AND STOCK VESTED

    2023 OPTION EXERCISES AND STOCK VESTED The following table sets forth information with respect to the NEOs regarding the exercise of options during 2023. Value realized on exercise is the excess of the fair market value of the underlying stock on the exercise date over the exercise price under the option and the value realized on the vesting of RSUs is based on the closing stock price on the date of vesting.

  109. 2023 OPTION EXERCISES AND STOCK VESTED

    | | Option Awards | | | | Number of Shares | Value Realized | | Name | Acquired on Exercise (#) | on Exercise ($) | | (a) | (b) | (c) | | Craig W. Kliethermes | 0 | 0 | | Todd W. Bryant | 0 | 0 | | Jennifer L. Klobnak | 0 | 0 | | Aaron P. Diefenthaler | 9,000 | 743,040 | | Jeffrey D. Fick | 0 | 0 |

  110. 2023 NON-QUALIFIED DEFERRED COMPENSATION

    2023 NON-QUALIFIED DEFERRED COMPENSATION The following table sets forth information on the non-qualified deferred compensation for the NEOs in 2023. The Company does not make contributions to the deferred compensation plan.

  111. 2023 NON-QUALIFIED DEFERRED COMPENSATION

    | | Executive Contributions | Aggregate Earnings | Aggregate Withdraws/ | Aggregate Balance | | | in Last FY | in Last FY | Distributions | at Last FYE | | Name | ($) | ($) | ($) | ($) | | (a) | (b) | (c) | (d) | (e) | | Craig W. Kliethermes (1) | 0 | 80,433 | 0 | 1,683,793 | | Todd W. Bryant (2) | 0 | 0 | 0 | 0 | | Jennifer L. Klobnak (2) | 0 | 0 | 0 | 0 | | Aaron P. Diefenthaler (3) | 36,760 | 22,912 | 0 | 306,567 | | Jeffrey D. Fick (3) | 93,212 | 50,217 | 0 | 395,574 |

  112. 2023 NON-QUALIFIED DEFERRED COMPENSATION

    | (1) The amounts shown for Mr. Kliethermes in column (c) reflect the dividends paid on, and change in the value of, the investments held in his account under the Deferred Plan, which is described in further detail on page 41. Dividends paid on Company shares held in the Deferred Plan are also deferred and are used to purchase additional shares held in the Deferred Plan. Amounts deferred in previous years were included in the Summary Compensation Table in the year of such deferrals. |

  113. 2023 NON-QUALIFIED DEFERRED COMPENSATION

    | (2) Mr. Bryant and Ms. Klobnak have not participated in the Deferred Plan in any prior years. |

  114. 2023 NON-QUALIFIED DEFERRED COMPENSATION

    | (3) The amounts shown for Messrs. Diefenthaler and Fick in column (b) reflect the amounts of deferred compensation earned in 2023. These amounts were included in the amounts shown in the 2023 Summary Compensation Table for Messrs. Diefenthaler and Fick. The amounts shown in column (c) reflect the dividends paid on, and change in the value of, the investments held in his account under the Deferred Plan, which is described in further detail on page 41. Dividends paid on Company shares held in the Deferred Plan are also deferred and are used to purchase additional shares held in the Deferred Plan. The amounts shown in column (c) were not included in amounts shown in the 2023 Summary Compensation Table for Messrs. Diefenthaler and Fick. Amounts deferred in previous years were included in the Summary Compensation Table in the year of such deferrals. |

  115. Post Termination Compensation

    Post Termination Compensation

  116. Post Termination Compensation

    | | Termination of | | | | | Name | Employment Scenarios | MVP/MIP/UPP ($) | LTIP ($) | Total ($) | | Craig W. Kliethermes (1) (2) | Departure Other Than Death, Disability, or Retirement | N/A | N/A | N/A | | | Departure From Death, Disability, or Retirement | 9,878,785 | 4,394,470 | 14,273,255 | | | For Cause | 0 | 0 | 0 | | | Change in Control | 9,878,785 | 4,394,470 | 14,273,255 | | Todd W. Bryant (1) | Departure Other Than Death, Disability, or Retirement | N/A | N/A | N/A | | | Departure From Death, Disability, or Retirement | 4,570,563 | 2,646,028 | 7,216,591 | | | For Cause | 0 | 0 | 0 | | | Change in Control | 4,570,563 | 2,646,028 | 7,216,591 | | Jennifer L. Klobnak (1) | Departure Other Than Death, Disability, or Retirement | N/A | N/A | N/A | | | Departure From Death, Disability, or Retirement | 5,994,325 | 5,017,160 | 11,011,485 | | | For Cause | 0 | 0 | 0 | | | Change in Control | 5,994,325 | 5,017,160 | 11,011,485 | | Aaron P. Diefenthaler (2) | Departure Other Than Death, Disability, or Retirement | 625,852 | 0 | 625,852 | | | Departure From Death, Disability, or Retirement | 625,852 | 3,290,960 | 3,916,812 | | | For Cause | 0 | 0 | 0 | | | Change in Control | 625,852 | 3,290,960 | 3,916,812 | | Jeffrey D. Fick (1) (2) | Departure Other Than Death, Disability, or Retirement | N/A | N/A | N/A | | | Departure From Death, Disability, or Retirement | 369,615 | 2,618,781 | 2,988,396 | | | For Cause | 0 | 0 | 0 | | | Change in Control | 369,615 | 2,618,781 | 2,988,396 |

  117. Post Termination Compensation

    | (1) Messrs. Kliethermes, Bryant, Fick, and Ms. Klobnak have met the requisite age and years of service to qualify for Retirement upon their departure from the Company, meaning any departure, other than termination for cause, would meet the definition of Retirement. |

  118. Post Termination Compensation

    | (2) Each NEO participating in a Company deferred compensation plan, upon departure for any reason, is entitled to the amounts payable to them under the Plan. For amounts due to each NEO see the table on page 47. |

  119. Post Termination Compensation

    The Company has not entered into any employment or severance agreements or arrangements with any of its executive officers that would compensate the executive officers for or after departing the Company. The following paragraphs describe the circumstances under which the Retirement or other termination of employment will result in a payment to a NEO under the Company’s annual and long-term incentive plans. MVP/MIP/UPP. Under the Company’s MVP Program, an employee must be employed on the date bonuses are paid under the MVP Program in order to receive a bonus for that year, unless the employee’s termination of employment was due to death, Disability, or Retirement. Under the Company’s MIP and UPP Programs, an employee must be employed on the last calendar day of the year in order to receive a bonus for that year, unless the employee’s termination of employment was due to death, Disability, or Retirement. Retirement requires: in order to receive a bonus payout for that year, or from a bonus bank if applicable, (1) the termination of employment of an employee who has reached age and years of service equal to or greater than 75 at the time of departure; or (2) the termination of employment of an employee who satisfies a non-competition covenant or other terms and conditions specified by the Company. Under the UPP, an employee may receive award payouts for prior underwriting years until the payout period has expired. In order to receive continued UPP payout, an employee must satisfy the certain conditions for continued UPP payout described in the UPP guidelines. The amounts in the above table show annual incentives payable upon termination of employment in the event of a death, Disability, or Retirement assuming all NEOs would have met the definition of Retirement at year-end 2023. Messrs. Kliethermes, Bryant, Fick, and Ms. Klobnak have met the definition based on age and years of service. Upon the termination of employment of a participant qualifying as Retirement, a positive MVP bonus bank calculated on the last day of the quarter during which the participant’s bonus participation ended will be paid to a participant in a lump sum on the first day of the seventh month after termination if the participant is age 65 or older, and as a quarterly annuity starting after the first day of the seventh month after termination, and continuing to age 65 using the interest rate for the five-year Treasury Note in effect at the date of Retirement if the Participant’s age is less than 65. A bonus bank balance will also be calculated at the end of the quarter prior to a participant’s bonus participation ending and the Company may, in its discretion, pay the lower of the calculated bonus banks. All such payments upon a termination of employment qualifying as Retirement are subject to ongoing restrictions on: the participant’s employment in the insurance industry; solicitation of Company employees for employment elsewhere; solicitation of business away from the Company; and disclosure of confidential information of the Company. Long-Term Incentives. Under the terms of the 2023 LTIP, stock option grants automatically vest upon the death or Disability of an optionee, but will vest upon the Retirement of an optionee only if the underlying stock option agreement so provides. The awards of stock options to the NEOs, and all other stock option recipients at the Company, provide for the immediate vesting of outstanding unvested stock options in the event of a recipient’s termination of employment qualifying as a Retirement. Retirement is defined under the 2023 LTIP as (1) the termination of employment of an employee who has reached age and years of service equal to or greater than 75 at the time of departure; or (2) the termination of employment of an employee who satisfies a non-competition covenant or other terms and conditions specified by the Company. Stock options must be exercised within the earlier of one year of the death of an optionee, or three years of the termination of employment due to the Disability or Retirement of an optionee, and the original expiration date of the stock option award. In the event of the termination of employment of an optionee for reasons other than death, Disability, or Retirement, vested options must be exercised within the earlier of 90 days of the termination of employment or the original expiration of the option award. In 2023, Messrs. Kliethermes, Bryant, Fick and Ms. Klobnak met the definition of Retirement and, accordingly, upon their termination of employment with the Company, all of their respective unvested stock option grants will immediately vest, expiring on the earlier of the original expiration date or three years after termination. For Cause. In the event of a termination for cause, all unpaid bonuses, amounts in a bonus bank, and unexercised stock options are forfeited. Change in Control. In the event of a change in control of the Company, as defined under the 2023 LTIP, the Board must take one of two actions with respect to outstanding stock option awards. Under the first alternative, the Board must make appropriate provisions for the replacement of the outstanding awards by the substitution of equity-based awards of the surviving company with substantially similar terms and conditions, with full vesting for qualifying terminations of employment, such as involuntary termination by the Company or termination by the employee with good reason, in either case, within two years following the change in control. Alternatively, the Board must permit the options to be exercised prior to the change in control, or cashed out as part of the change in control. For illustration purposes, the table shown on the previous page assumes a change in control occurred followed immediately by an involuntary termination by the Company or termination by the employee with good reason as of December 31, 2023. The 2016 RLI Corp. Annual Incentive Compensation Plan, which governs the MVP, MIP, and UPP bonus programs, includes a change in control provision, with “change in control” defined as in the 2023 LTIP. The Annual Incentive Compensation Plan provides that upon change in control, any amounts credited to a bonus bank and any amounts earned during a full or partial performance period shall not be forfeited, but will be paid out as specified under the applicable bonus program. The amounts shown in the table above show the full bonus bank balance under the MVP Program for Messrs. Kliethermes, Bryant, and Ms. Klobnak. For Mr. Diefenthaler, the amount shown is the full year bonus under the MIP and the full bonus bank balance under the UPP. For Mr. Fick, the amount shown is the full year bonus under the MIP.

  120. PAY FOR PERFORMANCE

    | (3) To calculate Compensation Actually Paid, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Messrs. Kliethermes and Michael for the period they served as PEO and for the average of the other NEOs is set forth following the footnotes to this table. |