Form DEF 14A AMERICAN FINANCIAL GROUP For: May 19

contains provisions for adjustments to the performance thresholds in the event of a change in the company’s reporting methodology for an action. Any change would result in an adjustment determined by the Compensation Committee that would provide an identical award to the affected component based on identical adjusted results.

Annual Bonus Plan – Targets for 2020

The target bonus for each component of the annual bonus plan and the total target and maximum bonus for each participant are shown in the table below. For any company performance component, participants will not receive an award for results below a threshold. If the results for a metric were within performance ranges, linear interpolation should be used to determine the award earned for the component.

.

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)

Hertzman’s overall target and maximum were set proportionally, reflecting an increase for the second half of 2020. During this time he served as Chief Financial Officer.

Overview of the compensation paid for 2020

In reviewing and evaluating the total compensation paid to the named executives for 2020, the Compensation Committee considered management challenges over the course of the year.

Due to long-term investment and planning, development and test plans for business continuity, the company seamlessly activated these plans during the COVID-19 pandemic. At the beginning of the pandemic, a designated COVID-19 response team quickly deployed work-from-home features, alternative work locations and additional remote work options, so our employees continued to work uninterrupted and our operations remained fully functional.

In addition to COVID-19, the property and casualty insurance industry navigated a year that saw the most recorded storms and the second highest number of hurricanes, as well as U.S. wildfires that burned the most acres since accurate records began in 1983.

The company’s senior executives, including and led by the aforementioned executives, successfully met these and other challenges in 2020, including a mid-year change of CFO.

When reviewing the 2020 total compensation for the named executives, the Compensation Committee noted the company’s strong results despite the difficulties in 2020, namely the company’s operating EPS and P&C result and return on equity. The Compensation Committee recognized the aforementioned senior executives for their leadership and deemed total compensation for 2020, primarily incentive compensation earned based on company results, to be appropriate.

Annual Bonus Plan – Components for 2020

The companys Operational EPS calculation is the core diluted earnings per share reported to shareholders in quarterly earnings releases and excludes certain items that may not be indicative of ongoing core business such as realized gains and losses and special charges resulting from the recurring periodic asbestos and environmental reviews of the company result in exposures.

In setting the 2020 targets and maximums, the Compensation Committee took into account the 2019 results and determined that the 2020 operational EPS target and maximum should be met, especially given that the target and maximum are increasing 4.2% and 11.0%, respectively, of the actual operational EPS for 2019 would require significant efforts on behalf of the entire organization. The Compensation Committee considered factors that could affect ongoing results, including, but not limited to, competition, market influences, government regulations, and the Board of Directors’ desire to dedicate resources to other internal company goals such as acquisitions or startups.

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