Progressive 2013 Annual Report Download - page 34

We grant restricted stock awards to our non-employee directors as their sole compensation for serving as members of the
Board of Directors. We do not plan to change to restricted stock units as we have with our employees. The restricted stock
awards are issued as time-based awards. The vesting period (i.e., requisite service period) must be a minimum of six
months and one day. The time-based awards granted to date have typically included vesting periods of 11 months from the
date of each grant. To the extent a director is newly appointed during the year, or his or her committee assignments
change, the vesting period may be shorter but always greater than six months, one day per the plan’s specifications. The
restricted stock awards are expensed pro rata over their respective vesting periods based on the market value of the
awards at the time of grant.
A summary of all directors’ restricted stock activity during the years ended December 31, follows:
2013 2012 2011
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 92,957 $21.41 94,106 $21.80 109,545 $20.86
Add (deduct):
Granted 93,254 26.19 92,957 21.41 94,106 21.80
Vested (92,957) 21.41 (94,106) 21.80 (109,545) 20.86
End of year 93,254 $26.19 92,957 $21.41 94,106 $21.80
Available, end of year1476,884 570,138 663,095
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
Options Outstanding
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
Deduct:
Exercised (36,237) 12.51 (83,888) 9.41
End of year 0 $ 0 36,237 $12.51
Exercisable, end of year10 $ 0 36,237 $12.51
1The 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, 2013, 2012, and 2011, was $2.3 million, $2.5 million, and $3.3 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;
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