Progressive 2015 Annual Report Download - page 37

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equal installments upon the lapse of specified periods of time, typically three, four, and five years. All restricted stock units
are settled at or after vesting in Progressive common shares from existing treasury shares on a one-to-one basis.
The performance-based awards were granted to our Chief Executive Officer as his sole equity award in each of the last five
years, and to approximately 45 other Progressive executives and senior managers in 2015 in addition to their time-based
awards, to provide additional incentive to achieve pre-established profitability and growth targets or relative investment
performance.
Vesting of performance-based awards is contingent upon the achievement of predetermined performance goals within
specified time periods. The targets for the performance-based awards, as well as the number of units that ultimately may
vest, vary by grant. All performance-based awards include a specified number of shares or units that will vest if performance
meets a specified target and minimum performance goals that must be achieved for any shares or units to vest. If at least
the minimum performance goals are achieved, the range at which an award can vest is determined by the type of
measurement goals included in the award, as follows:
Performance Measurement Year of Grant
Vesting range,
expressed as a
percentage of
target
Growth of our personal and commercial auto businesses, compared to market 2013-2015 0-250%
2012 and Prior 0-200%
Investment results relative to peer group 2012-2015 0-200%
Growth in percentage of auto policies bundled with other specified types of policies
(granted to two senior executive officers) 2015 0% or 100-200%
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 expectation of the percentage of the award, if any, that will ultimately
vest. These estimates can change periodically throughout the measurement period.
A summary of all employee restricted equity award activity during the years ended December 31, follows:
2015 2014 2013
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 9,051,564 $21.27 9,918,575 $20.13 11,625,981 $17.80
Add (deduct):
Granted22,489,976 25.20 3,542,984 19.32 2,738,809 22.73
Vested (3,682,644) 19.53 (4,228,673) 16.99 (4,293,605) 15.54
Forfeited (133,669) 21.63 (181,322) 20.75 (152,610) 18.28
End of year3,4 7,725,227 $23.37 9,051,564 $21.27 9,918,575 $20.13
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.
2We reinvest dividend equivalents on restricted stock units. For 2015, 2014, and 2013, the number of units “granted” shown in the table above
includes 196,947, 538,749, and 161,077 of dividend equivalent 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, 2015, the number of shares included 2,025,871 performance-based awards at their target amounts. We expect 1,946,565 of
these performance-based awards to vest, based upon our current estimate of the likelihood of achieving these pre-determined performance goals.
4At December 31, 2015, the total unrecognized compensation cost related to unvested equity awards was $78.3 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 2.3 years.
The aggregate fair value of the restricted equity awards that vested during the years ended December 31, 2015, 2014, and
2013, was $105.4 million, $109.6 million, and $98.3 million, respectively, based on the actual stock price on the vesting
date.
App.-A-36