Progressive 2013 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 2013 Progressive annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 92

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92

14. DIVIDENDS
We maintain a policy of paying an annual variable dividend that, if declared, would be payable shortly after the close of the
year. This annual variable dividend is based on a target percentage of after-tax underwriting income multiplied by a
companywide performance factor (“Gainshare factor”), subject to the limitations discussed below. The target percentage is
determined by our Board of Directors on an annual basis and announced to shareholders and the public. For 2013, the
Board determined the target percentage to be 33-1/3% of annual after-tax underwriting income, which is unchanged from
the target percentage in both 2012 and 2011.
The Gainshare factor can range from zero to two and is determined by comparing our operating performance for the year to
certain predetermined profitability and growth objectives approved by the Compensation Committee of the Board. This
Gainshare factor is also used in the annual cash bonus program currently in place for our employees (our “Gainsharing
program”). Although recalibrated every year, the structure of the Gainsharing program generally remains the same. For
2013, the Gainshare factor was 1.21, compared to 1.12 in 2012 and 1.10 in 2011.
Our annual dividend program will result in a variable payment to shareholders each year, subject to certain limitations. If the
Gainshare factor is zero or if our comprehensive income is less than after-tax underwriting income, no dividend would be
payable under our annual variable dividend policy. However, the ultimate decision on whether or not a dividend will be paid
is in the discretion of the Board of Directors. The Board could decide to alter our policy, or not to pay the annual variable
dividend for future years, at any time prior to the declaration of the dividend for the year. Such an action by the Board could
result from, among other reasons, changes in the insurance marketplace, changes in our performance or capital needs,
changes in federal income tax laws, disruptions of national or international capital markets, or other events affecting our
business, liquidity, or financial position.
In December 2013, the Board of Directors declared an annual variable dividend, which was paid in February 2014 to
shareholders of record at the close of business on January 29, 2014. The amount of the dividend was $.4929 per common
share, or $293.9 million. The 2012 annual variable dividend was declared by the Board in December 2012 and paid to
shareholders in February 2013; the total amount of dividends was $172.0 million, or $.2845 per common share. The 2011
annual variable dividend was declared by the Board in December 2011 and paid to shareholders in February 2012; the total
amount of dividends was $249.4 million, or $.4072 per common share.
In addition to the annual variable dividend, in February 2014 (declared in December 2013) and November 2012 (declared in
October 2012), we returned $596.3 million and $604.7 million, respectively, to shareholders via special cash dividends of
$1.00 per share each.
App.-A-42