Progressive 2012 Annual Report Download - page 30

Generally, time-based and performance-based equity awards are expensed pro rata over their respective vesting periods
based on the market value of the awards at the time of grant. Performance-based equity awards that contain variable vesting
criteria are expensed based on management’s expected vesting percentage. These estimates can change periodically
throughout the measurement period. However, the restricted stock awards granted in 2004 that were deferred pursuant to our
deferred compensation plan were accounted for as liability awards, since distributions from the deferred compensation plan
for these awards will be made in cash; accordingly, we recorded expense on a pro rata basis based on the current market
value of our common shares at the end of each reporting period. The remaining liability awards vested during 2012.
A summary of all employee restricted equity award activity during the years ended December 31, follows:
2012 2011 2010
Restricted Equity Awards
Number of
Shares1
Weighted
Average
Grant
Date Fair
Value
Number of
Shares1
Weighted
Average
Grant
Date Fair
Value
Number of
Shares1
Weighted
Average
Grant
Date Fair
Value
Beginning of year 12,296,847 $16.86 11,681,826 $16.55 10,614,016 $17.04
Add (deduct):
Granted22,680,229 19.11 2,483,461 20.03 2,841,400 17.50
Vested (3,188,111) 15.23 (1,571,237) 19.88 (1,337,647) 22.72
Forfeited (162,984) 17.93 (297,203) 15.41 (435,943) 15.58
End of year3,4 11,625,981 $17.80 12,296,847 $16.86 11,681,826 $16.55
Available, end of year515,624,677 18,141,922 20,328,180
1Includes both restricted stock units and restricted stock. Upon vesting, all units will be converted on a one-for-one basis into Progressive common
shares funded from existing treasury shares. All performance-based awards are included at their target amounts.
2In 2010, we began reinvesting dividend equivalents on restricted stock units. For 2012, 2011, and 2010, the number granted includes 440,029,
55,288, and 134,644 units, respectively, at a weighted average grant date fair value of $0, since the dividends were factored into the grant date fair
value of the original grant.
3At December 31, 2012, the number of shares included 3,393,981 performance-based awards at their target amounts. We expect 4,404,766
performance-based awards to vest, based upon our current estimate of the achievement of pre-determined performance goals.
4At December 31, 2012, the total unrecognized compensation cost related to unvested equity awards was $86.3 million, which includes
performance-based awards at their currently estimated vesting value. This compensation expense will be recognized into the income statement
over the weighted average vesting period of 2.2 years.
5Represents shares available under the 2003 Incentive Plan and the 2010 Incentive Plan; the 2003 Incentive Plan expired on January 31, 2013,
and the remaining 2,438,119 shares thereunder are no longer available for future issuance, however dividend equivalents will be issued on
outstanding awards up to the remaining authorization amount.
The aggregate fair value of the restricted equity awards that vested during the years ended December 31, 2012, 2011, and
2010, was $57.7 million, $31.3 million, and $24.3 million, respectively, based on the actual stock price on the vesting date.
In 2012, we also had 246,200 deferred liability awards vest with no intrinsic value since, as previously discussed, these
awards were expensed based on the current market value at the end of each reporting period.
App.-A-30