Progressive 2012 Annual Report Download - page 32

A summary of all directors’ restricted stock activity during the years ended December 31, follows:
2012 2011 2010
Restricted Stock
Number of
Shares
Weighted
Average
Grant
Date Fair
Value
Number of
Shares
Weighted
Average
Grant
Date Fair
Value
Number of
Shares
Weighted
Average
Grant
Date Fair
Value
Beginning of year 94,106 $21.80 109,545 $20.86 118,984 $15.79
Add (deduct):
Granted 92,957 21.41 94,106 21.80 112,670 20.75
Vested (94,106) 21.80 (109,545) 20.86 (122,109) 15.82
End of year 92,957 $21.41 94,106 $21.80 109,545 $20.86
Available, end of year1570,138 663,095 757,201
1Represents shares available under the 2003 Directors Equity Incentive Plan.
Prior to 2003, we granted nonqualified stock options as the equity component of the directors’ compensation. These options
became exercisable at various dates not earlier than six months, and remain exercisable for up to ten years from the date of
grant. All options granted had an exercise price equal to the market value of the common shares on the date of grant and,
under the then applicable accounting guidance, no compensation expense was recorded. All option exercises were settled
in Progressive common shares from existing treasury shares.
A summary of all stock option activity for both current and former directors during the years ended December 31, follows:
2012 2011 2010
Options Outstanding
Number of
Shares
Weighted
Average
Exercise
Price
Number
of
Shares
Weighted
Average
Exercise
Price
Number
of
Shares
Weighted
Average
Exercise
Price
Beginning of year 36,237 $12.51 120,125 $10.34 312,545 $ 8.46
Add:
Antidilution adjustment1NA NA NA NA 5,787 NA
Deduct:
Exercised (36,237) 12.51 (83,888) 9.41 (198,207) 7.07
End of year 0 $ 0 36,237 $12.51 120,125 $10.34
Exercisable, end of year20 $ 0 36,237 $12.51 120,125 $10.34
NA = Not Applicable
1During the fourth quarter 2010, we declared a $1.00 per common share special cash dividend to shareholders of record at the close of business on
December 20, 2010. Since the holders of the outstanding stock option awards were not entitled to receive the cash dividend, we were required to
increase the number of shares and reduce the exercise price of any of our then outstanding stock option awards in accordance with the antidilution
provisions of our incentive plans.
2The 1998 Directors’ Stock Option Plan has expired.
The total pretax intrinsic value of options exercised, and the fair value of the restricted stock vested, during the years ended
December 31, 2012, 2011, and 2010, was $2.5 million, $3.3 million, and $5.1 million, respectively, based on the actual
stock price at time of exercise/vesting.
Deferred Compensation We maintain The Progressive Corporation Executive Deferred Compensation Plan (“Deferral
Plan”) that permits eligible executives to defer receipt of some or all of their annual bonuses and all of their annual equity
awards. Deferred cash compensation is deemed invested in one or more investment funds, including common shares of
Progressive, offered under the Deferral Plan and elected by the participant. All Deferral Plan distributions attributable to
deferred cash compensation will be paid in cash.
For all equity awards granted in or after March 2005, and deferred pursuant to the Deferral Plan, the deferred amounts are
deemed invested in common shares and are ineligible for transfer to other investment funds in the Deferral Plan;
distributions of these deferred awards will be made in common shares. For all restricted stock awards granted prior to that
date, the deferred amounts are eligible to be transferred to any of the investment funds in the Deferral Plan; distributions of
these deferred awards will be made in cash.
App.-A-32