Form DEF 14A AMERICAN FINANCIAL GROUP For: May 19
3 min readincludes provisions for adjustments to performance thresholds in the event of a modification of the methodology of Company reporting for any measure. Any modification would result in an adjustment, as determined by the Compensation Committee, in a manner that provides for an identical award for the affected component based on identical adjusted results.
Annual Bonus Plan—2020 Targets
The target award for each component of the Annual Bonus Plan and the overall target and maximum awards for each participant are set forth in the table below. For each Company performance component, participants would receive no award for results below a threshold. Where results for any metric fell within performance ranges, the award earned for the component was to be determined by straight-line interpolation.
| |
Carl H. Lindner III |
| |
1,000,000 |
| |
780,000 |
| |
520,000 |
| |
— |
| |
2,300,000 |
| |
3,245,000 |
|
| |
S. Craig Lindner |
| |
1,000,000 |
| |
780,000 |
| |
520,000 |
| |
— |
| |
2,300,000 |
| |
3,245,000 |
|
| |
John B. Berding |
| |
600,000 |
| |
540,000 |
| |
360,000 |
| |
— |
| |
1,500,000 |
| |
1,935,000 |
|
| |
Michelle A. Gillis |
| |
142,500 |
| |
— |
| |
— |
| |
142,500 |
| |
285,000 |
| |
356,250 |
|
| |
Brian S. Hertzman |
| |
86,667 |
| |
— |
| |
— |
| |
130,000 |
| |
216,667(1) |
| |
270,833(1) |
|
| |
Vito C. Peraino |
| |
320,000 |
| |
— |
| |
— |
| |
320,000 |
| |
640,000 |
| |
800,000 |
|
|
(1) |
Mr. Hertzman’s total target and maximum were prorated reflecting an increase for the second half of 2020 during which time he served as principal financial officer. |
Overview of 2020 Compensation Paid
In reviewing and evaluating the total compensation paid to the named executive officers for 2020, the Compensation Committee considered the challenges of management during the year.
As a result of long-term investment and planning, development and testing business continuity plans, the Company seamlessly activated these plans during the COVID-19 pandemic. At the onset of the pandemic, a designated COVID-19 response team quickly enacted work-from-home capabilities, alternate work locations and additional remote work options so that our employees continued to work in an uninterrupted manner and our operations remained fully functional.
In addition to COVID-19, the property and casualty insurance industry navigated a year that included the highest number of named storms on record and the second-highest number of hurricanes on record as well as U.S. wildfires which burned the most acres since accurate records began in 1983.
Company senior officers, including and guided by the named executive officers, successfully managed these and other challenges in 2020, including a mid-year transition of chief financial officers.
When reviewing total 2020 compensation for the named executive officers, the Compensation Committee noted the Company’s strong results despite 2020 difficulties, namely the Company’s Operating EPS and P&C Earnings and the return on equity. The Compensation Committee credited the named executive officers for their leadership and believed that total 2020 compensation, principally incentive compensation earned based on Company results, was appropriate.
Annual Bonus Plan—2020 Components
The Company’s Operating EPS calculation is its diluted core earnings per share as reported to shareholders in quarterly earnings releases and excludes certain items that may not be indicative of its ongoing core operations such as realized gains and losses and special charges resulting from the recurring periodic review of the Company’s asbestos and environmental exposures.
In setting 2020 targets and maximums, the Compensation Committee considered 2019 results and determined that achieving the 2020 Operating EPS target and maximum, particularly given that the target and maximum represented a 4.2{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3} and 11.0{14cc2b5881a050199a960a1a3483042b446231310e72f0dc471a7a1eddd6b0c3}, respectively, increase over actual 2019 Operating EPS, would require substantial efforts on behalf of the entire organization. The Compensation Committee considered factors which might impact ongoing earnings, including, but not limited to, competition, market influences, governmental regulation and the Board of Directors’ desire to devote resources to other internal corporate objectives, such as acquisitions or start-ups.
