Proxy Statement (Form DEF 14A)
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14AINFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant☒
Filed by a Party other than the Registrant☐
Check the appropriate box:
| ☐ | Preliminary proxy statement |
| ☐ | Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant to §240.14a-12 |
(
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Payment of Filing Fee (Check all boxes that apply):
| ☒ | No fee required |
| ☐ | Fee paid previously with preliminary materials |
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
|
Attending the Annual Meeting The 2025 Annual Meeting of Stockholders (the "Annual Meeting") of To attend, vote, and submit questions during the Annual Meeting, please visit http://www.virtualshareholdermeeting.com/SIGI2025 and enter the 16-digit control number on your Notice of Internet Availability or proxy card. If you requested printed copies of the proxy materials, we encourage you to vote your shares by phone, by mail, or online in advance to ensure your vote will be represented at the Annual Meeting. Even if you plan to attend the Annual Meeting virtually, we encourage you to vote your shares in advance. |
At the Annual Meeting, we will ask stockholders to:
| 1. | Elect 12 directors named in the accompanying Proxy Statement for a one-year term expiring in 2026; |
| 2. | Approve, on an advisory basis, the 2024 compensation of Selective's named executive officers; and |
| 3. | Ratify the appointment of |
In addition, we will attend to any other business properly brought before the Annual Meeting and its adjournments, postponements, or continuations, if any. After the Annual Meeting, we will offer time for your questions. In connection with the Annual Meeting, we are also making available Selective's 2024 Annual Report to Stockholders ("2024 Annual Report").
The Board of Directors recommends that you vote "FOR" each of the director nominees in Proposal 1 and "FOR" each of Proposals 2 and 3. These proposals are further described in the Proxy Statement.
Selective stockholders of record as of the close of business on
YOUR VOTE IS IMPORTANT. VOTE YOUR SHARES BY (I) CALLING THE TOLL-FREE TELEPHONE NUMBER LISTED ON THE PROXY CARD, (II) ACCESSING THE INTERNET WEBSITE LISTED ON THE PROXY CARD, OR (III) COMPLETING, DATING, AND SIGNING THE PROXY CARD AND RETURNING IT IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE ANNUAL MEETING THROUGH THE PROCESSES DESCRIBED IN THE PROXY STATEMENT. IF YOU HOLD SHARES THROUGH A BROKER OR OTHER CUSTODIAN, PLEASE SEE THE VOTING INSTRUCTIONS PROVIDED TO YOU BY THAT BROKER OR CUSTODIAN.
Very truly yours,
Chairman of the Board, President and Chief Executive Officer
TABLE OF CONTENTS
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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This Proxy Statement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). Forward-looking statements may be identified by words like "anticipate," "expect," "project," "believe," "plan," "may," "estimate," "intend," and other similar words. We base these forward-looking statements on our beliefs, assumptions, and estimates using information available to us at the time. They are not intended to be guarantees of future events or performance. Factors that may cause actual results to differ materially from forward-looking statements in this Proxy Statement can be found in our most recent Annual Report on Form 10-K filed with the
We caution you not to unduly rely on any of our forward-looking statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements, except as required by law. This cautionary statement applies to all forward-looking statements in this document.
WEBSITES
Website addresses referenced in this Proxy Statement are provided for convenience only, and the content on the referenced websites does not constitute a part of, and is specifically not incorporated by reference into, this Proxy Statement.
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PROXY STATEMENT
FOR THE 2025 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
GENERAL INFORMATION ABOUT SELECTIVE'S ANNUAL MEETING
WHEN AND WHERE IS THE ANNUAL MEETING?
The 2025 Annual Meeting of Stockholders (the "Annual Meeting") of
WHEN IS THIS PROXY STATEMENT BEING MAILED OR RELEASED TO STOCKHOLDERS?
This Proxy Statement and proxy card are first being mailed or given to Selective stockholders on or about
WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
Anyone who owned Selective common stock as of the close of business on
WHO IS SOLICITING MY PROXY TO VOTE MY SHARES AND WHEN?
Selective's Board of Directors (the "Board") is soliciting your proxy, meaning your authorization for our named proxies,
WHAT IS THE COST OF SOLICITING PROXIES AND WHO IS PAYING FOR THE COST?
Selective is bearing the entire cost of soliciting proxies. Proxies will be solicited principally by mail and email. They also may be solicited in person, in writing, by telephone, text message, email, or otherwise by directors or employees, including officers of Selective or a Selective subsidiary, who will receive no additional compensation for these efforts. Selective has engaged
WHAT ARE THE REQUIREMENTS FOR BUSINESS TO BE CONDUCTED AT THE ANNUAL MEETING?
For business to be conducted at the Annual Meeting, owners of 30,384,159 shares of Selective common stock (a majority of the issued and outstanding shares entitled to vote), constituting a quorum, must be in attendance by virtual participation or represented by proxy. Our common stock is our only class of voting securities.
HOW DO STOCKHOLDERS ATTEND THE VIRTUAL ANNUAL MEETING?
The Annual Meeting will be held exclusively via live audiocast, allowing meeting attendance from anywhere in the world. We are pleased to use virtual stockholder meeting technology to provide ready access and cost savings for Selective and its stockholders.
To be admitted to the Annual Meeting at http://www.virtualshareholdermeeting.com/SIGI2025, you must enter the 16-digit control number on the proxy card you received. You can vote online, submit your questions, and examine Selective's stockholder list by following the instructions provided on the meeting website during the Annual Meeting.
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The meeting will begin promptly at
The virtual meeting platform is fully supported across internet browsers (Microsoft Edge, Mozilla Firefox,
HOW DO STOCKHOLDERS ASK QUESTIONS AT THE ANNUAL MEETING?
The Annual Meeting will include a question-and-answer session. We will answer questions relevant to Selective and meeting matters submitted following the meeting rules posted on the meeting website (http://www.virtualshareholdermeeting.com/SIGI2025). Stockholders can submit written questions via the Internet at any time during the Annual Meeting by following the instructions that will be available on the meeting website. Stockholders must have their control number to ask a question. To answer questions from as many stockholders as possible, each stockholder is limited to two questions. Substantially similar questions will be grouped and answered once to avoid repetition and allow more time for other questions. To ensure the meeting is conducted fairly for all stockholders, the Chairperson of the Annual Meeting may exercise discretion in recognizing stockholders wishing to participate, the order questions are addressed, and the amount of time devoted to any one question. By attending the Annual Meeting virtually, stockholders agree to abide by the agenda and procedures for the Annual Meeting.
PROPOSALS FOR STOCKHOLDER VOTE AND APPROVAL REQUIREMENTS
Management is presenting three proposals for a stockholder vote.
| PROPOSAL 1. | ELECTION OF DIRECTORS |
DIRECTORS ARE SUBJECT TO ANNUAL ELECTION BY THE STOCKHOLDERS. THE BOARD RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE FOLLOWING 12 DIRECTOR NOMINEES FOR A TERM OF ONE YEAR:
You can find information about the director nominees, the Board, its committees, and other related matters in the section entitled, "Information about Proposal 1" of this Proxy Statement.
| ▪ | Vote "FOR" all of the director nominees; | |
| ▪ | Vote "AGAINST" all of the director nominees; | |
| ▪ | Vote "FOR" or "AGAINST" specific director nominees; or | |
| ▪ | Abstain from voting for all or specific director nominees. |
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Under our By-Laws and assuming a quorum is present, a director nominee in an uncontested election must be elected by a majority of votes cast at the Annual Meeting. A majority exists when the number of votes cast "For" a director nominee exceeds the number of votes cast "Against" the director nominee. A director nominee who fails to receive a majority of votes cast in an uncontested election is required to tender their resignation from the Board within five days following the certification of the election results. In that event, (i) the
Stockholders may not cumulate their votes. Abstentions and broker non-votes will not be taken into account in determining the outcome of the vote.
| PROPOSAL 2. | APPROVAL, ON AN ADVISORY BASIS, OF THE 2024 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS |
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL, ON AN ADVISORY BASIS, OF THE 2024 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS DISCLOSED IN THIS PROXY STATEMENT.
You can find information about the compensation of our named executive officers in the section entitled, "Executive Compensation" and about Proposal 2 in the section entitled, "Information about Proposal 2" of this Proxy Statement.
| ▪ | Vote "FOR" Proposal 2; | |
| ▪ | Vote "AGAINST" Proposal 2; or | |
| ▪ | Abstain from voting on Proposal 2. |
Assuming a quorum is present, Proposal 2 will pass if approved by an affirmative vote of a majority of the votes cast at the Annual Meeting. Abstentions and broker non-votes will not be taken into account in determining the outcome of the vote.
| PROPOSAL 3. | RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING
You can find information about Selective's relationship with
| ▪ | Vote "FOR" Proposal 3; | |
| ▪ | Vote "AGAINST" Proposal 3; or | |
| ▪ | Abstain from voting on Proposal 3. |
Assuming a quorum is present, Proposal 3 will pass if it receives an affirmative vote of a majority of the votes cast at the Annual Meeting. Abstentions will not be taken into account in determining the outcome of the vote. Proposal 3 is considered a "routine" matter on which brokers may cast a vote.
OTHER MATTERS TO COME BEFORE THE ANNUAL MEETING
The Board is unaware of any other business to be presented for a vote at the Annual Meeting. If any other matters are properly presented for a vote, the individuals named as proxies will have discretionary authority to vote on such matters using their best judgment to the extent permitted by applicable laws, rules, and regulations.
The Chairperson of the Annual Meeting may refuse to allow the presentation of a proposal or nominee for the Board if the proposal or nominee is not properly submitted. The requirements for submitting proposals and director nominations for the Annual Meeting are detailed in Selective's By-Laws.
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VOTING AND PROXY PROCEDURE
HOW DO I VOTE?
If you are the record holder of your shares, you can vote in four ways:
| 1. | BY MAIL(PROXY CARD MUST BE RECEIVED BEFORE THE ANNUAL MEETING): |
| ▪ | Mark your voting instructions on your proxy card; | |
| ▪ | Sign your name exactly as it appears on your proxy card; | |
| ▪ | Date your proxy card; and | |
| ▪ | Mail your proxy card to us in the provided postage-paid envelope. |
Timing is important, so please mail your proxy card promptly. We must receive it before the commencement of the Annual Meeting. If you do not give voting instructions on your signed and mailed proxy card, the named proxies will vote your shares "FOR" each of the director nominees in Proposal 1 and "FOR" each of Proposals 2 and 3.
| 2. | BY TELEPHONE(MAY BE DONE AT ANY TIME UNTIL |
| ▪ | Call the toll-free number on your proxy card; and | |
| ▪ | Follow the instructions on your proxy card and the voice prompts. |
IF YOU VOTE BY TELEPHONE, YOU DO NOT NEED TO RETURN YOUR PROXY CARD.
| 3. | BY INTERNET(MAY BE DONE AT ANY TIME UNTIL |
| ▪ | Go to the website listed on your proxy card; and | |
| ▪ | Follow the instructions on your proxy card and the website. |
IF YOU VOTE BY INTERNET, YOU DO NOT NEED TO RETURN YOUR PROXY CARD.
| 4. | BY VIRTUAL PARTICIPATION(MAY ONLY BE DONE ON |
| ▪ | Virtually attend the Annual Meeting and vote online during the audiocast. |
If your shares are held in our 401(k) plan or employee stock purchase plan, you can vote in any of the above four ways; provided, however, if you choose to vote by telephone (option 2) or by internet (option 3), you must do so before
HOW DO I REVOKE MY PROXY OR CHANGE MY VOTING INSTRUCTIONS?
You may revoke your proxy at any time before the proxy is exercised at the Annual Meeting by:
| ▪ | Submitting a new vote by telephone, via the Internet, or by returning a properly executed new proxy card bearing a later date. Any subsequent timely and valid vote by any method will change your prior vote. For example, if you voted by telephone, a subsequent Internet vote will change your vote. The vote counted will be the last vote received before |
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| ▪ | Writing to Selective's Corporate Secretary, |
| ▪ | Virtually attending the Annual Meeting and voting online during the audiocast. |
HOW WILL PROXIES BE VOTED IF I GIVE MY AUTHORIZATION?
If you (i) properly execute your proxy card and retuit to Selective, or (ii) submit your proxy by telephone or via the Internet and do not subsequently revoke your proxy, your shares of common stock will be voted at the Annual Meeting according to your instructions. In the absence of voting instructions, the named proxies will vote your shares "FOR" each of the director nominees in Proposal 1 and "FOR" each of Proposals 2 and 3. If other matters properly come before the Annual Meeting, the named proxies will vote on such matters using their best judgment to the extent permitted by applicable laws, rules, and regulations.
WHAT IF MY SHARES ARE NOT REGISTERED IN MY NAME?
If the Selective stock you own is held in the name of a bank, broker, or other nominee (commonly referred to as holding shares in "street name"), your bank, broker, or other nominee should have provided you access to these proxy materials by mail or e-mail with information on how to submit your voting instructions. If you do not provide voting instructions, the broker, bank, or other holder of record cannot vote your shares on "non-routine" matters but can vote your shares on "routine" matters. "Broker non-votes" occur when a beneficial owner of shares held in street name fails to provide instructions to the broker, bank, or other nominee as to how to vote on matters deemed "non-routine." We believe the election of directors (Proposal 1) and the advisory (non-binding) vote on the 2024 compensation of Selective's named executive officers (Proposal 2) are "non-routine" matters, and brokers, banks, or other nominees cannot vote your shares on such proposals if you have not given voting instructions. In these cases, the broker, bank, or other nominee can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under the
HOW WILL VOTES, ABSTENTIONS, AND BROKER NON-VOTES BE COUNTED?
The inspectors of election appointed for the Annual Meeting by the Board will separately tabulate affirmative and negative votes, abstentions, and broker non-votes. Shares represented by proxies that reflect abstentions and broker non-votes are counted to determine whether there is a quorum.
The below chart summarizes the required voting standard for each proposal and the impacts of abstentions and broker non-votes.
| Proposal | Voting Approval Standard | Effect of Abstention(1) |
Effect of Broker Non-Vote(2) |
|
| 1. | Election of Directors | A nominee for director shall be elected to the Board if the votes cast for such nominee's election exceed the votes cast against such nominee's election(3) | No effect | No effect |
| 2. | Approval, on an Advisory Basis, of the 2024 Compensation of our Named Executive Officers | Affirmative vote of a majority of votes cast | No effect | No effect |
| 3. | Ratification of the Appointment of Independent Registered Public Accounting Firm | Affirmative vote of a majority of votes cast | No effect | Not applicable |
(1)For purposes of determining the number of votes cast concerning a particular matter, only those cast "For" or "Against" are included.
(2)Under NYSE rules that apply to brokers, Proposal 3 is considered a "routine" proposal on which brokers are permitted to vote in their discretion even if the beneficial owners do not provide voting instructions. However, Proposals 1 and 2 are not considered to be routine matters and brokers will not be entitled to vote thereon unless
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beneficial owners provide voting instructions. Accordingly, broker non-votes will not be counted toward the tabulation of votes on Proposals 1 and 2.
(3)Directors shall be elected by a plurality of the votes cast at any meeting of stockholders for which the Secretary of the Company determines that the number of nominees exceeds the number of directors to be elected as of the date seven days prior to the scheduled mailing date of the proxy statement for such meeting.
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
This Proxy Statement and our 2024 Annual Report are available on Selective's Internet website at www.Selective.com.
INFORMATION ABOUT PROPOSAL 1
Election of Directors
Under our By-Laws, directors in uncontested elections must be elected by a majority of votes cast. A majority exists when the number of votes cast "for" a director nominee exceeds the number of votes cast "against" that director nominee. For more information on our majority voting policy, please see the section entitled, "Corporate Governance - Majority Voting for Directors in Uncontested Elections" of this Proxy Statement.
All directors stand for election for a one-year term. In all cases, each director will hold office until a successor has been elected and qualified, or until the director's earlier resignation or removal.
The Board currently has 13 members, 12 of whom are standing for reelection at the Annual Meeting.
Process for Review and Nomination of Director Candidates
We believe that the Board's membership should encompass a broad range of skills, expertise, industry knowledge, and opinions. Directors should possess the highest personal and professional ethics, integrity, and values, and must be committed to representing the long-term interests of Selective and its stockholders.
| ▪ | Directors and management; |
| ▪ | Third-party search firms that the |
| ▪ | Stockholders. |
Any stockholder proposing one or more director candidates must submit in writing all applicable information required under the Exchange Act and Selective's By-Laws to the Chairperson of the
| ▪ | Personal and professional ethics, integrity, character, and values; |
| ▪ | Professional and personal experience; |
| ▪ | Business judgment; |
| ▪ | Skills and expertise; |
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| ▪ | Industry knowledge; |
| ▪ | Independence and avoidance or limitation of potential or actual conflicts of interest; |
| ▪ | Dedication and commitment to representing the long-term interests of Selective and its stockholders; |
| ▪ | Willingness to dedicate and devote sufficient time to Board duties and activities; |
| ▪ | Expertise in areas expected to contribute to the Board's effectiveness, such as general operations, technology, finance, investment, marketing, financial reporting, legal and regulatory, risk management, cybersecurity, and human capital management, among others; and |
| ▪ | Other appropriate and relevant factors, including the qualifications and skills of the current members of the Board. |
The table below summarizes some of the attributes, expertise, and skills we find relevant to our business that our director nominees bring to the Board. The table does not include every attribute, expertise, or skill that each director nominee offers. The fact that a particular attribute, expertise, or skill is not listed does not mean that a director nominee does not possess it. All our director nominees exhibit high integrity, an appreciation for the benefits of varying backgrounds, experiences, and thought, innovating thinking, proven records of success, and knowledge of corporate governance requirements and best practices.
| ATTRIBUTES, EXPERTISE, and SKILLS |
AINAR D. AIJALA, JR. |
LISA ROJAS BACUS |
TERRENCE W. CAVANAUGH |
WOLE C. COAXUM |
ROBERT KELLY DOHERTY |
JOHN J. MARCHIONI |
THOMAS A. MCCARTHY |
STEPHEN C. MILLS |
CYNTHIA S. NICHOLSON |
KATE E. R. SAMPSON |
JOHN S. SCHEID |
|
| INSURANCE INDUSTRY | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ||||
| FINANCIAL STATEMENT/ AUDIT/PUBLIC DISCLOSURE |
☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | |||
| FINANCE/CAPITAL MANAGEMENT EXPERTISE/ M&A |
☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ||||
| INVESTMENT | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ||||
| PUBLIC COMPANY EXECUTIVE EXPERIENCE |
☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | |||
| ACTUARIAL | ☒ | ☒ | ☒ | ☒ | ☒ | |||||||
| ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ||
| RISK MANAGEMENT, INCLUDING SUSTAINABILITY |
☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ |
| TECHNOLOGY/ CYBERSECURITY |
☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ||||
| LEGAL OR REGULATORY |
☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ||
| MARKETING/BRANDING | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ | ||||||
| AGENCY DISTRIBUTION | ☒ | ☒ | ☒ | ☒ | ☒ | ☒ |
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Demographics
Under our Corporate Governance Guidelines, interviewee pools for director candidates include individuals of diverse gender, race, and culture. 50% of our director nominees self-identify as diverse. Four director nominees self-identify as female; three director nominees self-identify as racially or ethnically diverse; and one director nominee self-identifies as LGBTQ+.
The tenure of our director nominees is as follows: 50% have served five years or less; 42% have served six through ten years; and 8% have served eleven through fifteen years. The ages of our director nominees are as follows: 25% are age 50 through 59; 67% are age 60 through 69; and 8% are age 71 as of the date of this Proxy Statement.
Director Nominees
No family relationships exist among Selective's current directors, director nominees, and executive officers.
The Board ratified the
All 12 director nominees have consented to be named in this Proxy Statement and to serve if elected. The Board does not know of any reason a director nominee would decline or be unable to serve if elected. If a director nominee becomes unavailable or unable to serve before the Annual Meeting, the Board can reduce its size or designate a substitute director nominee. If the Board designates a substitute director nominee, proxies that would have been cast for the original director nominee will be cast for the substitute director nominee unless contrary instructions are given.
| NOMINEES OF THE BOARD OF DIRECTORS | |
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Age: 68 Director since: 2020 Independent Director Board Committees: |
Background Information ◾ Senior Advisor to the Global CEO and other senior-level positions, including Chief Global Corporate Development Officer and Global Managing Partner of Consulting and Human Capital, ◾ Senior Manager, ◾ ◾ Enrolled Actuary pursuant to the Employee Retirement Income Security Act of 1974, since 1982. ◾ Emeritus Governor, ◾ ◾ Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 61 Director since: 2020 Independent Director Board Committees: |
Background Information ◾ Executive Vice President, Global Chief Marketing Officer, ◾ Executive Vice President and Chief Marketer, ◾ Executive Director, Global Marketing Strategy and other senior positions, ◾ Board Member, Culver's ◾ Board Member, ◾ Member, ◾ Member, Prospanica. ◾ NortheArizona University (B.S.) and ◾ Diligent Institute ESG Leadership Certification. Other Public Company Board Service ◾ Board Member, ◾ Board Member and Audit Committee Member, Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 71 Director since: 2018 Independent Director Board Committees: |
Background Information ◾ Founding partner, ◾ President and Chief Executive Officer, ◾ Chief Operating Officer of Chubb Surety & ◾ Director, ◾ Board of Commissioners, ◾ Director, ◾ Trustee, The Institutes, 2010 to 2016. ◾ Director, ◾ University of Notre Dame (B.B.A.). ◾ Harvard Business School ( Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 54 Director since: 2020 Independent Director Board Committees: Finance and Investments, Risk |
Background Information ◾ Founder, Chief Executive Officer, and Director, ◾ Managing Director and other senior management positions, ◾ President and Chief Executive Officer, ◾ Vice President, ◾ Director, Tech:NYC, since 2023. ◾ Trustee, ◾ Director, ◾ Williams College (B.A.). ◾ New York University's SteSchool of Business (M.B.A.). Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 66 Director since: 2015 Independent Director Lead Independent Director since: 2022 Board Committees: Audit, Finance and Investments, Executive |
Background Information ◾ Managing Partner and Founder, ◾ Vice Chairman, ◾ Director, ◾ Director, ◾ Princeton University (B.A.). Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 55 Director since: 2019 Chairman of the Board since: 2022 Board Committees: Executive |
Background Information ◾ President and Chief Executive Officer ("CEO"), Selective, since 2020. ◾ President and Chief Operating Officer, Selective, 2013 to 2020. ◾ Executive Vice President, Insurance Operations, Selective, 2010 to 2013. ◾ Executive Vice President, Chief Underwriting and Field Operations Officer, Selective, 2008 to 2010. ◾ Executive Vice President, Chief ◾ Senior Vice President, Director of Personal Lines, Selective, 2005 to 2007. ◾ Various insurance operations and government affairs positions, Selective, 1998 to 2005. ◾ Board of Trustees, The Institutes, since 2022. ◾ Director, ◾ Director, ◾ Member of the ◾ Chartered Property Casualty Underwriter (CPCU). ◾ Princeton University (B.A.). ◾ Harvard University (Advanced Management Program). Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 68 Director since: 2018 Independent Director Board Committees: Finance and Investments, Risk, Executive |
Background Information ◾ Executive Vice President and Chief Financial Officer, Cigna, 2013 to 2017; Vice President, Finance, 2011 to 2013; Acting Chief Financial Officer, 2010 to 2011; Vice President and Treasurer, 2008 to 2010; and Vice President, Strategy and Corporate Development, 2003 to 2008. ◾ Director, ◾ Trustee, ◾ Director, ◾ Wharton School of the ◾ Carnegie Mellon University (M.B.A.). ◾ NACD Directorship Certified®. Other Public Company Board Service ◾ Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 65 Director since: 2020 Independent Director Board Committees: |
Background Information ◾ President and General Manager, ◾ Founding Partner and Chief Executive Officer, ◾ President and Chief Operating Officer, ◾ Director, Project Level, since ◾ Member, ◾ Director, Madison Square Garden Networks, 2020 to 2021. ◾ Director, ◾ Member, ◾ Director, ◾ Princeton University (B.A.). Other Public Company Board Service ◾ Director, ◾ Director, Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 63 Director since: 2018 Independent Director Board Committees: |
Background Information ◾ President, CEO and Director, ◾ President, ◾ Executive Vice President, ◾ Advisor, ◾ Director, ◾ Chairperson, ◾ Board of Overseers, ◾ Trustee, The Institutes, 2010 to 2016. ◾ Board Member, ◾ Board Member, ◾ Fellow of the ◾ Member, ◾ ◾ NACD Directorship Certified®. ◾ CERT Certificate in Cybersecurity Oversight. |
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Other Public Company Board Service ◾ Director and Audit Committee Member, ◾ Director and Audit Committee Member, Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 61 Director since: 2009 Independent Director Board Committees: |
Background Information ◾ Band of Sisters, LLC, Managing Member, since 2021. ◾ Advisor, ◾ Advisor, Tangelo (formerly known as Tangerine/Feed Each Other/Forkcast), since 2018; Chief Marketing Officer, 2017 to 2018; Chief Operating Officer, 2015 to 2017. ◾ Chief Marketing Officer, Softcard®, 2013 to 2015. ◾ Executive Vice President and Chief Marketing Officer, ◾ Advisor, ◾ Senior Vice President and Chief Marketing Officer, ◾ Member of ◾ Director, ◾ Director, ◾ University of ◾ Kelley School of Business, Discussion of individual experience, qualifications, attributes, and skills. |
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Age: 52 Director since: 2024 Independent Director Board Committees: Corporate Governance and Nominating, Finance and Investments |
Background Information ◾ Owner, ◾ Managing Director and Partner leading insurance technology venture investments, ◾ Lyft, Vice President of Risk Solutions, 2014 to 2018. ◾ Managing Director, ◾ Member of ◾ University of ◾ Stanford University Graduate School of Business (Executive Education in Finance and Accounting). ◾ NACD Directorship Certified®. Discussion of individual experience, qualifications, attributes, and skills. |
|
Age: 69 Director since: 2014 Independent Director Board Committees: |
Background Information ◾ Owner and sole member, ◾ PricewaterhouseCoopers LLP, Senior Partner, 2009 to 2013; Global Insurance Assurance Practice Leader, 2001 to 2009; Chairman, Americas Insurance Practice, 2001 to 2010; ◾ Director, ◾ Director, ◾ Director, ◾ Director, ◾ Director, ◾ Director, Messmer Catholic Schools, 2013 to 2021; Chairman, 2016 to 2021. ◾ Member, ◾ Chairman, Accounting Examining Board, ◾ Member, ◾ Director, ◾ Investment Committee Member, ◾ Certified Public Accountant ( ◾ University of Notre Dame (B.B.A.). ◾ NACD Directorship Certified®. ◾ CERT Certificate in Cybersecurity Oversight. Discussion of individual experience, qualifications, attributes, and skills. |
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Board Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" EACH OF THE DIRECTOR NOMINEES.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
Security Ownership of Management and the Board
The following table shows, as of
| ◾ | The number of shares of Selective common stock beneficially owned by each director, director nominee, and the named executive officers; and |
| ◾ | The number of shares of Selective common stock beneficially owned by our directors and executive officers as a group. |
None of the directors, director nominees, or named executive officers held any stock options exercisable or any restricted stock units that vest within 60 days of
| Total Shares of Common Stock Beneficially Owned(1) |
Percent of Class(2) |
|
| Aijala, Ainar D., Jr. | 6,640 | * |
| Bacus, |
4,485 | * |
| Brennan, Patrick S.(3) | 12,082 | * |
| Cavanaugh, Terrence W. | 20,659 | * |
| Coaxum, Wole C. | 3,933 | * |
| Doherty, |
22,673 | * |
| Eppers, Joseph O. | 11,090 | * |
| Hall, Brenda M. | 14,772 | * |
| Harnett, Anthony D.(4) | 17,298 | * |
| Lanza, Michael H. | 32,100 | * |
| Marchioni, John J. | 150,485(5) | * |
| McCarthy, Thomas A. | 17,398(6) | * |
| Mills, Stephen C. | 4,485 | * |
| Mitchell, |
12,849 | * |
| Nicholson, Cynthia S. | 17,910 | * |
| Sampson, Kate E. R.(7) | 0 | * |
| Scheid, John S. | 28,605 | * |
| Urban, Philip H.(8) | 28,428 | * |
| All directors and executive officers, as a group (21 persons) | 506,992 | 1% |
* Less than 1% of the common stock outstanding.
(1) No directors or executive officers hold Selective common stock in margin accounts or have Selective common stock pledged for a loan or stock purchase.
(2) Percentages based on 60,740,489 shares of common stock outstanding as of
(3)
(4)
(5) Includes 135,395 shares held in a trust.
(6) Includes 16,246 shares held in a trust.
(7)
(8)
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Security Ownership of Certain Beneficial Owners
The following table lists the only persons or groups known to Selective to be the beneficial owners of more than 5% of any class of Selective's voting securities based on Schedules 13G and amendments thereto filed by the beneficial owners with the
| Title of Class | Owner |
Amount and Nature of Beneficial Ownership |
Percent of Class(1) |
| Common Stock |
50 Hudson Yards |
7,764,200 shares of common stock(2) |
12.8% |
| Common Stock |
|
6,206,485 shares of common stock(3) |
10.2% |
| Common Stock |
|
5,468,800 shares of common stock(4) |
9.0% |
(1) Percentages based on 60,740,489 shares of common stock outstanding as of
(2)
(3)
(4)
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EXECUTIVE OFFICERS
The names of our executive officers and their ages, positions, and biographies are set forth below. Our executive officers are appointed by and serve at the discretion of our Board.
| EXECUTIVE OFFICERS | |
| President and Chief Executive Officer |
Background Information ◾ For information regarding |
|
Age: 50 Executive Vice President, Chief Financial Officer |
Background Information ◾ Present position since ◾ Treasurer, ◾ Commercial Lines Product Manager, ◾ Senior Manager of ◾ ◾ ◾ ◾ Vice Chair, ◾ Member, ◾ Member, |
|
Age: 56 Executive Vice President, Chief Investment Officer |
Background Information ◾ Present position since 2022. ◾ Senior Vice President, Chief Investment Officer, Selective, 2015 to 2022. ◾ Director, BlackRock ( ◾ Senior Vice President of Investments, ◾ ◾ ◾ Chartered Financial Analyst. |
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|
Age: 54 Executive Vice President, Chief Operating Officer, Standard Lines |
Background Information ◾ Present position since 2022. ◾ Executive Vice President, ◾ Senior Vice President, Chief Strategic Operations Officer, Selective, 2015 to 2019. ◾ Vice President, Director of Field Underwriting, Selective, 2008 to 2015. ◾ Certified Insurance Counselor. ◾ Certified Risk Manager. ◾ ◾ |
|
Age: 52 Senior Vice President, Chief Accounting Officer |
Background Information ◾ Present position since 2016. ◾ Interim Chief Financial Officer, ◾ Senior Vice President, Controller, 2010 to 2016. ◾ Vice President, Controller, 2008 to 2010. ◾ Senior Accountant and various finance positions, 1999 to 2008. ◾ Previously held financial roles at Toys"R"Us and Deloitte. ◾ Certified Public Accountant ( ◾ ◾ Member of ◾ Member of |
|
Age: 60 Executive Vice President, MUSIC |
Background Information ◾ Present position since 2020. ◾ Various roles of increasing seniority in Business Services, Commercial Lines Underwriting, Excess and Surplus Lines, and Information Technology, Selective, 1988 to 2020. ◾ ◾ ◾ Chartered Property Casualty Underwriter (CPCU). |
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|
Age: 65 Executive Vice President, Chief Claims Officer |
Background Information ◾ Present position since 2019. ◾ Chief Claims Officer, ◾ Senior Vice President, Claims, and other management roles, ◾ ◾ |
|
Age: 63 Executive Vice President, General Counsel, and Chief Compliance Officer |
Background Information ◾ Present position since 2007. ◾ Senior Vice President and General Counsel, Selective, 2004 to 2007. ◾ Director, ◾ Trustee, ◾ Member, ◾ Member, ◾ Member, National Investor Relations Institute. ◾ ◾ |
|
Age: 61 Executive Vice President, Chief Actuary |
Background Information ◾ Present position since 2017. ◾ Senior Vice President, Actuarial Reserving, Selective, 2010 to 2017. ◾ Vice President and Chief Reserving Actuary, ◾ Fellow of the ◾ Member, ◾ |
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TRANSACTIONS WITH RELATED PERSONS
Review, Approval, or Ratification of Transactions with Related Persons
Selective has a written Related Person Transactions Policy and Procedures (the "Related Person Policy"). The Related Person Policy defines "Related Person Transactions" as any transaction, arrangement, or relationship in which Selective or any of its subsidiaries was, is, or will be a participant and the amount involved exceeds
Under the Related Person Policy, the Audit Committee (or Chairperson of the Audit Committee if between meetings) must approve Related Person Transactions. In its review, the Audit Committee considers all available relevant facts and circumstances of the proposed transaction, including (i) the benefits to Selective, (ii) the impact on a director's independence, (iii) the availability of other sources for comparable products and services, (iv) the terms of the transaction, and (v) the terms available to unrelated third parties or employees generally. No Audit Committee member may participate in any review, consideration, or approval of any Related Person Transaction in which such director or any of their immediate family members is the Related Person. The Audit Committee only approves Related Person Transactions that it considers are in, or not inconsistent with, the best interests of Selective and its stockholders.
In 2005, we established a private foundation, now named
BlackRock
BlackRock, a leading publicly traded investment management firm, has purchased our common shares in the ordinary course of its investment business and has previously filed Schedules 13G/A with the
We are required to disclose related-party information for our transactions with BlackRock. BlackRock is highly regulated, serves its clients as a fiduciary, and has a diverse platform of active (alpha) and index (beta) investment strategies across asset classes that enables it to tailor investment outcomes and asset allocation solutions for clients. BlackRock also offers the BlackRock Solutions® investment and risk management technology platform, Aladdin®, risk analytics, advisory, and technology services and solutions to a broad base of institutional and wealth management investors. We incurred expenses related to BlackRock for services rendered of $2.0 million in 2024.
As part of our overall investment diversification, we invest in various BlackRock funds from time to time. These funds accounted for less than 1% of our invested assets at
Our pension plan's investment portfolio contained investments in BlackRock funds of
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Vanguard
Vanguard, one of the world's largest investment management companies, has purchased our common shares in the ordinary course of its investment business and has previously filed Schedules 13G/A with the
As part of our overall investment diversification, we may invest in various Vanguard funds from time to time. These funds accounted for less than 1% of our invested assets at
Fidelity
Fidelity, one of the world's largest investment management companies, has purchased our common shares in the ordinary course of its investment business and filed a Schedule 13G with the
As part of our overall investment diversification, we may invest in various Fidelity funds from time to time. These funds accounted for less than 0.2% of our invested assets at
Director Independence
Our securities are listed on the
1 The Board determined that each of the following current directors are independent: Mses. Bacus, Mitchell, Nicholson, and Sampson and Messrs. Aijala, Cavanaugh, Coaxum, Doherty, McCarthy, Mills, Scheid, and Urban. The Board determined that each of the following director nominees are independent: Mses. Bacus, Mitchell, Nicholson, and Sampson and Messrs. Aijala, Cavanaugh, Coaxum, Doherty, McCarthy, Mills, and Scheid.
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The Board also considered that
All members of the Audit Committee, the
CORPORATE GOVERNANCE
Corporate Governance Guidelines
Selective's Corporate Governance Guidelines are available for review on Selective's website at www.selective.com/investors/corporate-governance.
Majority Voting for Directors in Uncontested Elections
The Board has adopted a majority voting policy for uncontested elections of incumbent directors. To be reelected to the Board, an incumbent director must receive a majority vote by stockholders, unless the Corporate Secretary determines that the number of director nominees exceeds the number of directors to be elected. If any incumbent director nominee receives less than a majority of votes cast, the following process must be followed:
| ◾ | The incumbent director must tender their resignation to the Chairperson of the Board within five days following the certification of the election results. |
| ◾ | Within 45 days after the stockholders' meeting, the |
| ◾ | Within 90 days after the stockholders' meeting, the Board shall formally act on the |
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| ◾ | Any incumbent director who fails to receive a majority of votes cast and tenders a resignation may not participate or vote in the deliberations of the |
Board Refreshment
While the Board recognizes the importance of Board refreshment, it does not believe that it should limit the number of terms for which an individual may serve as a director. Directors who have served on the
Overboarding: Limits on Outside Board Memberships
The Board recognizes that a director's ability to fulfill their responsibilities as a member of the Board can be impaired if the director serves on numerous other boards or board committees. Accordingly, our Corporate Governance Guidelines limit the number of public company directorships that a director may hold. Pursuant to our Corporate Governance Guidelines, directors are not permitted to serve on the boards of more than four public companies (including the Board); provided that any director employed as a chief executive officer of a public company is not permitted to serve on the boards of more than two public companies (including the Board). A director must advise the Lead Independent Director, the Chairperson of the Board, or the Chairperson of the
Board Meetings and Committees
The Board held seven meetings in 2024, and the independent directors met four times without management present. All directors attended at least 75% of the aggregate number of Board and their respective committee meetings during 2024, with average attendance over 98%. While we do not have a formal policy on director attendance at annual meetings of stockholders, we expect all directors to attend such meetings. All then-serving directors virtually attended the 2024 Annual Meeting of Stockholders.
The Board has six standing committees:
| ◾ | Audit Committee; |
| ◾ |
| ◾ |
| ◾ | Executive Committee; |
| ◾ |
| ◾ | Risk Committee. |
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as when a director has special knowledge or experience. It is anticipated that Board committee chairpersons will serve up to an average of approximately five consecutive years to facilitate rotation of committee chairpersons, while maintaining experienced leadership.
The following tables provide information on each of the six standing committees and its current members:
| Audit Committee | |
| Written Charter is available on Selective's website at www.selective.com/investors/corporate-governance | 2024 Meetings: 6 |
|
Responsibilities: The Audit Committee monitors: (i) the integrity of the financial statements of Selective; (ii) the compliance by Selective with legal and regulatory requirements and adopted ethical standards; (iii) the independence and qualifications of Selective's independent auditors; and (iv) the performance of the internal auditors and independent auditors. Specifically, the Audit Committee: ◾ Oversees our annual audits and quarterly reviews of the financial statements. ◾ Monitors the adequacy and effectiveness of our financial reporting process and systems of internal controls. ◾ Reviews and discusses with Selective's management, Chief Audit Executive, and independent auditors Selective's financial statements, reports, and other information provided to the public and filed with the ◾ Prior to its inclusion in any audited statutory financial statements, reviews the report prepared by management, assessing the effectiveness of internal control over financial reporting and stating management's responsibility for establishing and maintaining adequate internal control over financial reporting. ◾ Monitors the activities of the ◾ Reviews and concurs in the appointment, replacement, reassignment, or dismissal of the Chief Audit Executive and the Chief Audit Executive's performance review and compensation awards. ◾ Discusses significant financial risk exposures, including Selective's loss and loss expense reserves, and the steps management has taken to monitor, control, and report such exposures. ◾ Appoints Selective's independent registered public accounting firm and supervises the relationship between Selective and its independent auditors, including reviewing their performance, making decisions about their compensation, retention, and removal, reviewing and approving in advance their audit services and permitted non-audit services, and confirming the independence of the independent auditors. ◾ Oversees Selective's Related Person Transactions Policy and Procedures and reviews and approves proposed transactions. ◾ Oversees procedures for the (a) receipt, retention, and treatment of complaints received by Selective regarding accounting, internal accounting controls, or auditing matters, and (b) confidential, anonymous submissions by employees of Selective of concerns regarding questionable accounting or auditing matters. |
|
| Director Members: | Independent |
| Yes | |
| Yes | |
| Yes | |
| Yes | |
| Yes | |
|
*The designation as the Audit Committee financial expert does not impose on such designee any duties, obligations, or liabilities that are greater than those of any other member of the Audit Committee and the Board. ** |
|
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| Written Charter is available on Selective's website at www.selective.com/investors/corporate-governance | 2024 Meetings: 6 | |
|
Responsibilities: The ◾ Reviews Selective's compensation strategy to ensure that executive officers are rewarded appropriately for their contributions, including those related to Selective's growth and profitability. ◾ Evaluates annually the performance of the CEO and the other executive officers in light of Selective's goals and objectives. ◾ Determines and approves, or recommends to the ◾ Review perquisites and other personal benefits to executive officers and directors. ◾ Reviews and approves compensation for non-employee directors. ◾ Interprets and administers any executive officer compensation plans, including determining participant eligibility, the number and type of awards available for grant, the terms of such awards, and the performance goals applicable to awards. ◾ Oversees, monitors and administers Selective's compensation recoupment policies and procedures. ◾ Assists the Board in its oversight of Selective's hedging and pledging policies applicable to Selective's executive officers and directors. ◾ Reviews and considers the results of any advisory vote on executive officer compensation ("say-on-pay" vote) and the results of any advisory vote on the frequency of say-on-pay votes ("say-on-frequency" votes). ◾ Provides recommendations to the Board on compensation-related proposals to be considered at Selective's annual meeting, including the say-on-pay vote and the say-on-frequency vote. ◾ Reviews matters related to succession planning and professional development for executive officers. ◾ Reviews periodically with the CEO the plans for succession of Selective's CEO, other executive officers, and other key employees, including plans for succession in the event of an emergency, and making recommendations to the Board with respect to the selection of appropriate individuals to succeed to these positions. ◾ Reviews periodic updates from management on initiatives and progress in the area of HCM. ◾ Reviews the independence and engagement of the independent executive compensation consultant. The |
||
| Director Members: | Independent | |
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
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| * |
||
| Written Charter is available on Selective's website at www.selective.com/investors/corporate-governance | 2024 Meetings: 4 | |
|
Responsibilities: ◾ Reviews and assesses the adequacy of Selective's Corporate Governance Guidelines and recommends changes to the Board. ◾ Recommends to the Board the directors to serve as members of the Board committees, chairpersons of the committees, and Lead Independent Director. ◾ Advises the Board regarding Board composition, succession, procedures, and committees. ◾ Reviews and updates Selective's Code of Conduct and reviews conflicts of interest or other issues that may arise under the Code of Conduct involving Selective's officers or directors. ◾ Monitors Selective's compliance with the ◾ Oversees the self-evaluations of the Board and its committees. ◾ Oversees management's activities to advance corporate sustainability and social responsibility. ◾ Makes a recommendation to the Board on whether to accept an incumbent director's tendered resignation if the director fails to receive a majority vote in an uncontested election of directors. ◾ Reviews all proposals submitted by stockholders for inclusion in Selective's proxy statement for its annual meeting of stockholders and results of stockholder advisory votes and recommends to the Board how to respond to such proposals and advisory votes. |
||
| Director Members: | Independent | |
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
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| Executive Committee | ||
| Written Charter is available on Selective's website at www.selective.com/investors/corporate-governance | 2024 Meetings: 1 | |
|
Responsibilities: The Executive Committee exercises the authority of the Board, except as otherwise limited by law, including during the intervals between regularly scheduled Board meetings when Board action is needed. The Chairperson of the Executive Committee reports to the full Board on the Executive Committee's activities. Specifically, theExecutive Committee: ◾ Takes action on matters brought before it when the Board is not in session, except with respect to the Company's investments and except as expressly prohibited by the New Jersey Business Corporation Act, as amended, or such other applicable law, rule, and regulation. ◾ Takes such other actions and does such other things as may be referred to it from time to time by the Board. |
||
| Director Members: | Independent | |
| No | ||
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
| * |
||
| Written Charter is available on Selective's website at www.selective.com/investors/corporate-governance | 2024 Meetings: 5 | |
|
Responsibilities: ◾ Reviews and approves changes to Selective's investment policies, strategies, and programs. ◾ Reviews investment transactions made on behalf of Selective and reviews the performance of Selective's investment portfolio and external investment managers. ◾ Discusses Selective's major investment risk exposures with management, including the steps management has taken to monitor and manage such exposures. ◾ Reviews Selective's capital structure and reviews and makes recommendations to the Board about Selective's financial policies and corporate finance matters, including (i) financial planning, cash flow management, fiscal and treasury policies, and financial risk assessment and management, (ii) the issuance, retirement, or repurchase of debt, equity, insurance-linked securities, and other securities, and (iii) other transactions or financial issues that management desires the ◾ Reviews matters relating to the investment portfolios of the benefit plans of Selective and its subsidiaries, including the administration and performance of such portfolios. ◾ Appoints members of Selective's Management Investment Committee. ◾ Reviews and makes recommendations to the Board regarding the payment of dividends. ◾ Oversees management's incorporation of corporate sustainability and social responsibility considerations into their due diligence and investment decision-making process, as appropriate. |
||
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| Director Members: | Independent | |
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
| Risk Committee | ||
| Written Charter is available on Selective's website at www.selective.com/investors/corporate-governance | 2024 Meetings: 4 | |
|
Responsibilities: The Risk Committee assists the Board in overseeing Selective's operational activities and identifies and reviews related risks. The Risk Committee is also responsible for oversight of the Selective's enterprise risk management framework and practices. Specifically, the Risk Committee: ◾ Oversees the implementation, execution, and performance of Selective's enterprise risk management program, including risk (i) culture and governance; (ii) identification and prioritization; (iii) appetite, tolerances, and limits; (iv) management and controls; and (v) reporting and communication, including Selective's Own Risk Solvency Assessment filed with the applicable state insurance regulators. ◾ Monitors Selective's major operational risks, including underwriting, claims, catastrophe, climate change, business continuity, reputational and other emerging risks. ◾ Oversees the reinsurance program of Selective's insurance subsidiaries, including the structure, pricing, and participating reinsurers' financial strength. ◾ Reviews material corporate insurance policies of Selective and its insurance subsidiaries. ◾ Monitors Selective's information technology security program and the controls around cybersecurity, artificial intelligence, and data privacy, including plans to enhance the program's effectiveness. The Risk Committee also monitors Selective's business continuity and disaster recovery plans. |
||
| Director Members: | Independent | |
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
| Yes | ||
Board Leadership Structure
Our two principal Board leadership positions are: (i) Board Chairperson; and (ii) Lead Independent Director.
Our Corporate Governance Guidelines do not require the separation of the offices of the Board Chairperson and the CEO. Instead, the Board regularly evaluates and decides whether the same person should hold the offices of Board Chairperson and CEO. Our Board has determined that it is appropriate and in the best interests of Selective and its stockholders for
As discussed in greater detail below, our current governance structure establishes a dynamic leadership role for the Lead Independent Director, which, together with independent committee leadership, provides a meaningful counterbalance to the CEO Chairperson and maintains independent and effective oversight of management.
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CEO and Board Chairperson Responsibilities
When the CEO serves as the Board Chairperson, as is the current structure, they are responsible for oversight and guidance of Selective's management and overall corporate performance. The CEO Chairperson leads the Board and facilitates intra-Board communication in overseeing Selective's strategy and long-term and short-term goals, and fosters ethical and responsible corporate culture and decision-making throughout Selective. Specific duties of a Board Chairperson include:
| ◾ | Consistent with the Corporate Governance Guidelines, coordinating with the other directors, the Lead Independent Director, and management in preparation of Board and Board committee agendas and meeting materials; |
| ◾ | Presiding over all Board and stockholder meetings; |
| ◾ | Recommending actions to improve the effectiveness and performance of the Board; |
| ◾ | In conjunction with the Lead Independent Director, serving as a spokesperson for the Board and meeting with stockholders as required; and |
| ◾ | Assisting the Lead Independent Director and Chairperson of the |
Lead Independent Director Responsibilities
Our Corporate Governance Guidelines provide that when the Board does not have an independent Chairperson, the Board will appoint an independent director to be the Lead Independent Director.
| ◾ | Presiding at all meetings of independent directors, as appropriate, and providing prompt feedback to the Chairperson and/or CEO; |
| ◾ | Serving as a point of contact for Board members to raise issues that they may not be able to readily address with the Chairperson and/or CEO; |
| ◾ | Ensuring that matters of importance to the directors are placed on the Board's meeting agendas; |
| ◾ | Assuring that the Chairperson and/or CEO understand the Board's views on all critical matters; |
| ◾ | Assuring that the Board understands the Chairperson's and/or CEO's views on all critical matters; and |
| ◾ | Calling executive sessions of the independent directors and serving as the chairperson of such meetings. |
It is anticipated that the Lead Independent Director will serve up to approximately five consecutive years to facilitate the rotation of the Lead Independent Director position while maintaining experienced leadership; however, the Board may extend such tenure consistent with good governance practices, including to further strategic objectives or address external factors affecting Selective.
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Board and CommitteeMulti-Step Evaluation Process
Continuing Education for Directors
Selective provides continuing education opportunities for directors, including a mix of in-house and third-party presentations and programs. We will reimburse directors for reasonable expenses incurred in connection with continuing education courses or programs related to their Board service.
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SUSTAINABILITY AND HUMAN CAPITAL
Selective's Sustainability Oversight and Management
|
The Board delegated oversight of sustainability to the Board's |
||
|
The executive management team oversees the organization's sustainability efforts. The Sustainability Committee provides detailed quarterly reports on sustainability-related initiatives to the executive management team, which provides feedback and oversight on those initiatives. |
||
|
The Sustainability Committee is a management committee, comprised of leaders and employees from the Underwriting, Claims, Legal, Finance, Risk, Internal Audit, and Human Resources Departments. A sustainability Manager coordinates its activities. The Sustainability Committee is responsible for developing plans and objectives for sustainability-related initiatives and providing reports to executive leadership and the |
Sustainability and Social Responsibility
We integrate sustainability principles into our business and partner with key stakeholders to develop human capital, environmental, and claims strategies and solutions that enhance resilience, well-being, inclusivity, risk mitigation, and customer service.
Helping Our Customers
We provide customers and distribution partners with services and educational resources to help mitigate potential risks. Our risk management initiatives include proactively providing policyholders with notifications and alerts, identifying risks, mitigating potential loss occurrences, and providing tools and technologies that improve safety and reduce losses. Our
Page 32
Developing Our Employees
A core strategic priority is to ensure we have a highly engaged and aligned team of high-caliber employees. We continue to invest significantly in employee training programs and prioritize their development to position our talent for future opportunities and leadership. See below under the "Human Capital" section for further information on these initiatives.
Supporting Our Communities
Through the Foundation, we donate to non-profit organizations that promote civic responsibility, support home, auto, and business safety, and provide health and human services. The Foundation's mission is to empower safe, sustainable, just, and inclusive communities where we - and our customers and agents - live and work.
Selective invests in indirect state and federal incentives to finance programs with social benefits or objectives. For example, Selective has invested in low-income housing tax credits, historic property credits, rural investment programs, economic redevelopment credits, renewable energy credits, and scholarship tax credit programs. We also coordinate employee volunteerism to support local charities.
Managing Climate Risk
We protect thousands of individuals and businesses against the financial impact of covered losses, including catastrophic events. Climate change increases the unpredictability of weather-related loss frequency and severity, posing a long-term risk to our customers' businesses and lives - and our profitability. We aim to mitigate climate change impact by (i) prudently overseeing and managing catastrophe risk exposure, (ii) providing our customers responsive claims handling, risk management services, and proactive weather alerts, (iii) preparing for the continuing transition to clean energy, and (iv) reducing our carbon footprint. Understanding and helping mitigate climate change perils for our business and customers is core to our operations and strategy. We believe that these efforts (i) demonstrate responsible corporate action to mitigate climate change impact and (ii) will contribute to sustained superior financial and operating performance over time that will reward our shareholders.
In addition to mitigating insurance operations and investment risk, we:
| ◾ | Have robust plans to help safeguard operational continuity if we suffer unforeseen or catastrophic events. We have business continuity plans for our key data processing facility (Disaster Recovery Plan), the leadership team (Executive Crisis Management Plan), and significant operational areas. We review, update, and test these plans at least annually. Our tests include "tabletop" exercises and planned hands-on tests. |
| ◾ | Track our Scope 1 and Scope 2 greenhouse gas ("GHG") emissions. Our Scope 1 emissions include consumption of natural gas, diesel, refrigerant, and the fuel employees use for work travel in company cars. Our Scope 2 emissions comprise our electricity usage. |
| ◾ | Built ground-mount and garage-canopy solar photovoltaic facilities at our corporate headquarters. The facilities generated approximately 4.5 million kWh of electricity in 2024. We sell the related solar renewable energy credits to others, so our renewable energy production contributes to a cleaner world but does not reduce our GHG emissions. |
| ◾ | Plan to continue reducing our carbon emissions relative to our revenues over the long term. We develop initiatives with the goal of reducing our environmental impact over time. Some include: |
| ◾ | Upgrades to our corporate headquarters building management system, which should reduce heating and cooling natural gas consumption; |
| ◾ | Making efforts to transition our Company cars from gasoline to hybrid vehicles; and |
| ◾ | Migrating our information technology systems from our corporate headquarters' data center to the cloud. |
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The table below outlines strategically important sustainability categories and our related actions and areas of focus:
SUSTAINABILITY HIGHLIGHTS & AREAS OF FOCUS
| Insurance Operations |
◾ Enterprise Risk Management framework.
◾ Transition to a clean energy future.
◾ Reduction of energy and water consumption and recycling programs.
◾ Do not underwrite specific environmentally hazardous risks.
|
||
| Investment Operations |
◾ Consider sustainability risk factors in management and oversight.
◾ Incorporate sustainability considerations into investment process.
◾ Do not invest in any new direct equity or debt investments in thermal coal enterprises.
|
||
| Insurance Operations |
◾ Employment practices, such as recruiting, onboarding, and competitive compensation and benefits.
◾ Professional training and development programs.
◾ Engagement and inclusion initiatives.
◾ Employee physical, financial, and emotional well-being.
|
||
| Community |
◾ Paid time off for volunteerism.
◾ Annual donations through our Foundation, including matching charitable donations.
◾ Participating in philanthropic programs and activities to help communities where we - and our customers and agents - live and work.
|
||
| Customers & Distribution Partners |
◾ Resolving covered claims promptly.
◾ Providing customers with risk mitigation solutions.
◾ Offering coverage for many key weather and non-weather perils.
◾ Reducing environmental impact.
|
||
| Insurance Operations |
◾ Independent Board oversight.
◾ Code of Conduct.
◾ Ethics and compliance helpline.
◾ Supplier Code of Conduct.
|
||
| Customer Privacy & Data Security |
◾ Data privacy and governance.
◾ Cybersecurity programs.
◾ Technology to safeguard information and systems.
|
Human Capital
We recognize that developing and protecting our human capital and providing a beneficial employee experience complements and contributes to superior longer-term financial performance. We are committed to maintaining a safe and inclusive workplace for our approximately 2,800 employees. We discuss more fully below our approach to (i) the physical, social, and financial well-being of our employees, (ii) talent development and employee retention, and (iii) engagement and inclusion.
Physical, Social, and Financial Well-Being of our Employees
We invest significantly in our employees' physical, social, and financial well-being, which we believe is essential to attracting and retaining the best talent. We are committed to paying competitively, regularly analyzing compensation and taking appropriate action to ensure internal equity and external market alignment. We offer competitive financial benefit programs to support the fiscal well-being of our employees and their families.
Among our offerings are a 401(k) plan with non-elective and employer matching contributions, an employee stock purchase plan with discounted pricing, and tuition reimbursement and student loan repayment programs. Most employees are eligible to participate in our annual cash incentive program, which is funded and paid based on their performance and our achievement of established financial and strategic objectives. Employees of certain
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levels also are eligible to participate in our long-term stock-based incentive compensation programs. We also offer competitive and convenient health and wellness programs. To support our employees' social and emotional well-being, we encourage connections with their colleagues and communities through various programs, such as paid time off for volunteering, matching charitable donations, employee engagement events, employee resource and affinity groups, and unique programming to meet employee needs.
We invest significant time and resources in (i) training and development so our employees can fulfill their professional potential and have rewarding careers and (ii) efforts to retain our best talent and foster a positive work-life balance. We are committed to ongoing employee learning, personal growth, and continuous improvement. Our employees have access to a wide range of resources, including live instructor-led and online skills training courses. We also have leadership and talent development programs and initiatives for all levels of the organization. Examples include our (i)
Of our 2,800 employees at December 31, 2024, 1,300 were home-based; 810 were in our regional offices; and the remainder were in our corporate office. Our Flexible Work Location Policy requires most office-based non-management employees to be in their assigned office 40% of the time. Our 2024 employee turnover rate was approximately 10%, compared to approximately 11% in 2023. Employees with over 20 years of service represented approximately 14% of our workforce.
Engagement and Inclusion
Building a highly engaged team is a core strategic imperative. We employ strategies to create an inclusive workplace culture and attract and retain employees through recruiting, onboarding, training, promotion practices, professional development, engagement surveys, retention interviews, employee resource groups, and competitive compensation and benefits. We believe collaboration among employees and promoting an inclusive environment fosters innovation, improving operational performance, product development, customer experience, market opportunities, and profitability. We are committed to initiatives that promote inclusion regardless of ethnicity, race, religion, age, veteran status, sexual orientation, gender identity, disability and socio-economic background. These efforts, including engagement, inclusive leadership, and psychological safety training for officers, managers, and supervisors, seek to support employee recruiting, retention, and development and advance a valued and empowered workforce. At the Board level, the
RISK MANAGEMENT
Enterprise Risk Management
We believe a high-functioning, effective Enterprise Risk Management ("ERM") program is achieved when risk management is an organizational cultural value and the shared responsibility of every employee. We have developed processes and tools intended to support a risk management culture and create a robust organizational ERM framework. We have also designed our compensation policies and practices, governance framework, and Board leadership structure to support our overall risk appetite and strategy.
We use ERM as part of our governance and control process to take an entity-wide view of our major risks and their potential impact. We designed our ERM framework to identify, measure, report, and monitor these risks and develop appropriate responses to support the successful execution of our business strategies.
Our Board oversees our ERM process, and all Board committees oversee risks specific to their areas of supervision and report their activities and findings to the entire Board. To assist the Board in overseeing the Company's operational activities and identifying and reviewing related risk, the Board formed a Risk Committee effective
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Management maintains an Executive Risk Committee ("ERC") that is responsible for the holistic monitoring and supervision of our risk profile and determining future risk management actions supporting our overall risk profile. The ERC provides management oversight of our ERM function and is responsible for maintaining operational processes and controls designed to identify, mitigate, and manage risks that could materially impact Selective. The ERC relies on several management committees to analyze and manage specific major risks. The ERC meets quarterly, and additionally as appropriate, to review and discuss various topics and the interrelation of our significant risks, including capital modeling results, capital adequacy, risk metrics, emerging risks, and sensitivity analysis. The Chief Risk Officer provides reports to the Board or the appropriate Board committee on the ERC's activities, analyses, and findings, providing quarterly updates on specific risk metrics.
The Board also receives regular updates on the strength of our cyber risk control environment, emerging cyber threat issues, and the results of external assessments by outside security consultants. In assisting the Board in overseeing our operational activities and identifying and reviewing related risks, the Risk Committee is responsible for overseeing our cyber risks and strategy. Two directors have earned cybersecurity oversight certifications from a corporate directors' organization. For more information about cybersecurity risk management and strategy, please refer to "Item 1C. Cybersecurity." of our 2024 Annual Report.
For more information about how the Board oversees sustainability-related risks, please refer to the "
For more information about our ERM function, see the "Corporate Governance, Sustainability, and Social Responsibility" section under "Item 1. Business." of our 2024 Annual Report.
Compensation Risk Assessment
We do not believe that risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on our operations or results. Accordingly, no material adjustments were made to our compensation policies and practices because of our risk profile.
To make this determination, we assessed the risks of our compensation policies and programs. In assessing these risks, we considered that we operate in an industry based almost entirely on managing risk, and our risk management framework is robust. We considered the following:
| ◾ | The compensation policies and practices for employees of our reportable segments are similar. Our insurance operations, which sell property and casualty insurance products, are subject to, among other things, risks related to significant competition, extensive losses from catastrophic events, and emerging risks. Our investment segment, which invests premiums collected by the insurance operations and proceeds from capital transactions, is subject to, among other things, global economic risks, such as adverse impacts from governmental monetary policies, and risks inherent in the equity and debt markets; |
| ◾ | Our compensation policies are consistent with our overall risk structure, and we award a significant portion of our senior officers' compensation based on the accomplishment of financial performance goals measured over a three-year period; and |
| ◾ | In addition to designing our compensation policies and practices to motivate our employees to take appropriate levels of risk, we have developed a set of controls and governance processes to manage our risk profile. These include escalation processes based on various levels of individual authorities, a comprehensive group of management and Board committees that focus on analysis, management, and reporting of specific major risks, and robust internal audit processes. These controls and governance processes, along with our risk management process, are designed to help us understand and react to changes in our risk profile and effectively manage our risk profile consistent with our risk appetite. |
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We also considered our overall compensation program, including:
| ◾ | The features of our compensation program and whether they align with our compensation philosophy; |
| ◾ | The compensation program's multiple financial and strategic measures that balance profitability and growth. We base our financial goals on the |
| ◾ | The maximum potential payments under our compensation plans; |
| ◾ | The mix of fixed versus variable compensation; |
| ◾ | The balance between cash and equity compensation; |
| ◾ | The ratio of compensation based on long-term versus short-term performance metrics; and |
| ◾ | The timing of equity award grants and vesting. |
We also considered that we adjust our compensation programs from time-to-time as risks in our industry and reportable segments change to help ensure that compensation and risk remain appropriately aligned.
Finally, we reviewed our various risk mitigation strategies in the compensation context, including:
| ◾ | The stock ownership and retention requirements for management outlined in the section entitled, "Executive Stock Ownership and Retention Requirements" of this Proxy Statement; |
| ◾ | The independent oversight of compensation programs by the |
| ◾ | The Board's role in risk oversight, which includes receiving, analyzing, and inquiring about reports from its committees, including the |
We will continue to assess the risks of our compensation policies and programs going forward.
STOCKHOLDER COMMUNICATIONS
Stockholders and other interested partiesmay send communications to the Board, a committee of the Board, or individual directors in writing to c/o Corporate Secretary,
CODE OF CONDUCT
Selective has adopted a Code of Conductthat establishes business ethics principles that apply to all Selective personnel, including executive officers. The Code of Conduct is located on Selective's website at www.selective.com/investors/corporate-governance. Any material amendment to or waiver from the provisions of the Code of Conduct that applies to Selective's executive officers will be posted to Selective's website.
2 The combined ratio is the property and casualty insurance industry standard measure of underwriting profitability. A combined ratio under 100% indicates that an insurance company is generating an underwriting profit and a combined ratio over 100% indicates that an insurance company is generating an underwriting loss.
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INSIDER TRADING POLICY
Selective has adopted an Insider Trading Policy that applies to all employees, including officers, and directors of the Company and its subsidiaries. We believe that the Insider Trading Policy is reasonably designed to promote compliance with insider trading laws, rules and regulations with respect to the purchase, sale and/or other dispositions of Selective's securities, as well as the applicable rules and regulations of Nasdaq. A copy of the Insider Trading Policy is filed as Exhibit 19 to our Annual Report on Form 10-K.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
This Compensation Discussion and Analysis provides our stockholders information about our 2024 compensation program for the following named executive officers ("NEOs"):
| ◾ |
| ◾ |
| ◾ |
| ◾ |
| ◾ |
| ◾ |
*
**
Consideration of 2024 Say-on-Pay Advisory Vote Results
Since our initial say-on-pay proposal in 2011, our stockholders have overwhelmingly supported our compensation decisions. Our NEOs' compensation was approved at the 2024 Annual Meeting of Stockholders by over 99% of votes cast. In determining our NEOs' 2024 compensation, the
2024 Corporate Performance Results
During 2024, we generated a GAAP ROE of 7.0% and a non-GAAP operating ROE3 of 7.1%, below our 12% target. Throughout 2024, we addressed the uncertain and ongoing loss trend environment by strengthening prior year casualty loss reserves, primarily in our general liability line of business, which caused our financial results to fall short of our expectations. Our 2024 combined ratio of 103.0% included 7.1 points of adverse prior year casualty reserve development.Compared to 2023, overall NPW increased by 12% and overall new business increased 8%. We achieved a 9.5% increase in overall renewal pure price.
3 Non-GAAP operating ROE is a non-GAAP financial measure and is calculated as follows:
| Non-GAAP Operating ROE: |
| Non-GAAP Operating Income from the Performance Period |
| ÷ |
| Average Common Stockholders' Equity over the Performance Period |
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GAAP COMBINED RATIO
Our after-tax net investment income was
In 2024, our annualized total shareholder retu("TSR") was -4.6%, calculated by comparing the change in value of our common stock price and reinvested dividends. The table below shows our TSR compared to
| Time Period | Selective Annualized TSR |
S&P's P&C Index Annualized TSR |
S&P's 500 Index Annualized TSR |
| One-Year Period | -4.6% | 35.2% | 24.8% |
| Three-Year Period | 5.9% | 21.3% | 8.9% |
| Five-Year Period | 9.0% | 17.9% | 14.5% |
| Ten-Year Period | 14.8% | 15.5% | 13.1% |
On
Non-GAAP operating income differs from net income available to common stockholders by the exclusion of after-tax net realized and unrealized gains and losses on investments. This non-GAAP measure is used as an important financial measure by management, analysts, and investors because the timing of realized and unrealized investment gains and losses on securities in any given period is largely discretionary and including them could distort the analysis of trends. Non-GAAP operating ROE is not intended as a substitute for ROE that is based on net income available to common stockholders prepared in accordance with GAAP. Please refer to Selective's Annual Report on Form 10-K for the year ended
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On
On
On
We received the following business honors in 2024: The ACORD Standards Advancement Award and
2024 Progress on our Strategic Business Framework
In 2024, we remained focused on our Strategic Business Framework and advanced our five strategic imperatives. We leverage these strategic imperatives to maximize growth and profitability, position the Company for long-term success, and reward our stockholders with long-term value creation. We believe that the following imperatives enhance our competitive position:
Create a Highly Engaged Team
In 2024, we continued to focus on acquiring and retaining talent. We managed daily operations in a hybrid environment, with a focus on balancing personal responsibilities and workloads. To further create a highly engaged team:
| ◾ | We focused on building greater efficiency in our talent acquisition process, expanding our talent pool, increasing leadership capabilities, and maintaining strong employee engagement and retention; |
| ◾ | Senior leaders engaged their teams to identify process and technology improvements to increase efficiency, develop action plans, and measure results; |
| ◾ | We completed success profiles for all critical roles and evaluated the readiness of successors for senior management positions; |
| ◾ | We reevaluated and redesigned our performance management process; |
| ◾ | We deployed an employee engagement survey and evaluated and communicated the results to employees; and |
| ◾ | We offered educational sessions, mentoring programs, and interviewing skills training to assist employees with their career development. |
In 2024, we were (i) designated as a
Align Resources for Profitable Growth
The year 2024 presented exceptional challenges for commercial lines and the broader industry, with social inflation and property catastrophe losses significantly impacting profitability. In response, we focused on obtaining appropriate rate adequacy and refining our underwriting and claims strategies.
A key initiative in our profitable growth strategy is geographic expansion. Since launching our expansion initiative in 2017, we have added thirteen states to our commercial lines footprint, including the following five
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states in 2024:
In personal lines, we continued to focus on writing new business in the mass affluent market and implementing pricing and underwriting actions to improve profitability.
In excess and surplus lines, we exceeded our growth and profitability goals with a focus on enhancing scalability, reducing policy issuance times, and enhancing service delivery and operational resilience.
We implemented a new digital claims payment process that reduces reliance on physical checks and should produce significant efficiencies and savings.
Deliver a Superior Omni-Channel Customer Experience
In 2024, we saw increased engagement and use of our MySelective customer portal for policy issuance, billing, and claims matters. Our technology investments and enhancements increased customer self-service and improved adjuster flows, and combined with other customer-focused initiatives, resulted in decreased call volumes.
Our Agency Paperless initiative has resulted in the electronic delivery of 98% of our commercial lines policies as of
In 2024, to help mitigate water claims, we entered strategic partnerships and piloted several value-added services that detect and help remediate water leaks. Based on the pilot's success, we have committed to increasing this program's scale and extending it to electrical system monitoring and fire prevention devices.
In 2024, we identified an opportunity to optimize our expanding value-added Commercial Auto Telematics Program. We are combining data-driven insights of telematics with our unique approach to risk management fleet coaching, aimed at improving driver safety and reducing auto claim frequency.
Leverage Data and Analytics to Create Meaningful Insights
In 2024, we developed and integrated sophisticated tools to inform risk selection, pricing, and claims decisions, including:
| ◾ | Refreshing models for claims recovery, fraud detection, and redesigning our general liability pricing model; |
| ◾ | Enhancing our loss reserving process through the development and update of models to understand and identify drivers of loss emergence and trends, and their impacts on claims development patterns to improve reserving; |
| ◾ | Migrating to a cloud-based modeling environment with integrated and enhanced tools, including automated machine learning capabilities that increase speed of model development; and |
| ◾ | Leveraging artificial intelligence to help improve our advanced analytics team's programming efficiency through automated code completion and review. |
Optimize Operational Effectiveness and Efficiency
We upgraded process automation, efficiency, security, and technology implementation, resulting in improved productivity, reduced lead times, enhanced data management, and increased operational effectiveness. In 2024, we established a Business Transformation Office, accountable for all activities associated with our ongoing adoption of a product-based operating model. We also completed a biennial security program assessment, providing robust details about our tools and processes, validating alignment with maturity plan targets, and exceeding industry averages in all categories.
In addition to our customary investment allocations, we allocated additional spending to target efficiency and scale throughout the organization, including:
| ◾ | Automation of excess and surplus lines process improvements, commercial lines underwriting documentation, and renewal underwriting; |
| ◾ |
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| ◾ | Process and workflow automation for tasks across our Flood, Finance, Claims, |
CEO Pay for Performance
The following tables present (i) CEO compensation over the past five years ("CEO Total Compensation"), (ii) the dollar and percentage change from the prior year, and (iii) Selective's cumulative TSR for the corresponding one-, three-, and five-year periods. The tables demonstrate the correlation between changes in Selective's cumulative TSR and our CEO compensation, which generally reflects and is consistent with our philosophy of aligning compensation with the interests of stockholders and long-term performance.
Note: CEO Total Compensation is based on disclosed compensation for
* The value of "Indexed Total Shareholder Retu(TSR)" at the end of each year shown above is based on the then-current value of an assumed
| 2020 | 2021 | 2022 | 2023 | 2024 | |
| CEO Total Compensation (Base Salary + Annual Cash Incentive Plan + Total Long-Term Incentive Program Compensation) | |||||
| $ Change from Prior Year | - |
||||
| % Change from Prior Year | -29.3% | +11.4% | +6.9% | +0.8% | +7.9% |
| One-Year TSR | +4.5% | +24.0% | +9.7% | +13.7% | -4.6% |
| Three-Year TSR | +18.9% | +40.2% | +42.0% | +54.5% | +18.9% |
| Five-Year TSR | +114.1% | +103.6% | +61.6% | +74.7% | +54.0% |
(1)
Role and Function of the
The CHCC oversees executive compensation and retains an independent executive compensation consultant,
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The Compensation Consultant has advised the CHCC since 2007. The Compensation Consultant advises the CHCC on executive and director compensation matters and does not provide any additional services to Selective. The CHCC determined that the Compensation Consultant has no conflicts of interest with Selective based on applicable
The CHCC has full autonomy to make compensation decisions about the NEOs, incorporating information and advice from the Compensation Consultant. In 2024,
In making its compensation decisions, the CHCC also considers (i) pre-established guidelines regarding award amounts, (ii) pay levels at companies with which we compete for business and executive talent (discussed below), (iii) Selective's performance, (iv) executive retention issues, (v) internal compensation parity, and (vi) advancement in abilities, experience, and responsibilities. As part of their usual duties and responsibilities, the Executive Vice President, Chief Human Resources Officer, and certain other human resources officers provide the CHCC with information about the overall design of the executive compensation program and its components.
DESIGN CONSIDERATIONS OF SELECTIVE'S EXECUTIVE COMPENSATION PROGRAM
Selective's Executive Compensation Program Objective and Philosophy
Our executive compensation program aims to attract, retain, and motivate executive talent to drive Selective's success by creating stockholder value through profitable growth and effective risk management.
Our compensation program is designed to (i) promote and align both the short- and long-term interests of our NEOs with those of our stockholders, (ii) reward the achievement of our business objectives through the execution of our Strategic Business Plan Framework and its five strategic imperatives, and (iii) recognize each NEO's achievements, motivating execution of duties and responsibilities in a manner not reasonably likely to have a material adverse effect on our operations or results. We aim to provide our highly talented and qualified NEOs with competitive total compensation, based on total value and a mix of short- and long-term cash and stock-based components, compared to the compensation paid by other property and casualty insurance companies and other companies with which we compete for executive talent.
When evaluating compensation for our CEO and other NEOs, the CHCC considers (i) our overall results compared to budget and projected industry results, (ii) performance relative to our ROE target, (iii) Selective's underwriting profitability as measured by our combined ratios, (iv) our ability to profitably grow NPW, (v) our investment income performance compared to both budget and benchmark targets, and (vi) retention of top talent.
Consistent with our pay-for-performance philosophy, we link our annual incentive awards to pre-determined financial and strategic business objectives and individual contributions. We align our long-term compensation to the achievement of pre-determined specific performance measures that we believe impact the generation of long-term stockholder value.
Compensation Elements
Our executive compensation program generally consists of the following key elements selected to (i) address the market-based realities of attracting and retaining quality NEOs, and (ii) align the NEOs' compensation with our stockholders' interests:
| ◾ | Base salary; |
| ◾ | Annual cash incentive plan ("ACIP") payments; and |
| ◾ | Long-term incentive program ("LTIP") awards in the form of performance-based restricted stock units and performance-based cash incentive units. |
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Compensation Best Practices
Our compensation program and practices feature the following best practices:
| WHAT WE DO | WHAT WE DO NOT DO |
| We use fixed and variable compensation components. | We do not include excise tax gross-up provisions in employment agreements. |
| We align pay with performance, with compensation weighted toward performance-based equity and performance-based cash bonus awards to NEOs. | We do not re-price stock options. |
| We have stock ownership and retention requirements for our senior executives. | We do not grant stock options at less than fair market value. |
| We have double triggers for cash and equity award payments upon a change in control under employment agreements. | We do not pay dividends on unvested stock-based awards. |
| We have a recoupment policy that provides for the clawback of certain incentive-based compensation (see section entitled, "Recoupment of Awards" of this Proxy Statement for more information). | We have not included incentive compensation in pension calculations (accrual of additional pension benefits ceased in 2016). |
| We offer very limited perquisites to executive officers. | We do not permit hedging of Selective stock by directors, officers, or employees (see section entitled, "Policy on Hedging" of this Proxy Statement for more information). |
| The CHCC engages an independent compensation consultant. | We do not guarantee annual salary increases. |
Benchmarking
When making compensation decisions, the CHCC believes it is important to have information from multiple sources about compensation practices at an array of publicly traded companies, focusing on property and casualty insurance holding companies. The CHCC believes that:
| ◾ | Benchmarking provides the CHCC with relevant context to make appropriate compensation decisions that will help attract, retain, and motivate the key talent required to drive company performance and long-term stockholder value; |
| ◾ | Measuring our compensation against practices from two benchmark sources (see below for more details) helps ensure that the CHCC has an ample and robust assessment of our competitive compensation posture; and |
| ◾ | Considering multiple market references alleviates potential volatility inherent in a single-market data point and enhances the CHCC's decisions by allowing it to rely on a more comprehensive set of market-competitive pay boundaries. |
The CHCC reviewed with the Compensation Consultant the following benchmarking information in
| ◾ | Analyses of both the individual compensation elements and total compensation that we pay our NEOs compared to a peer group that consisted of companies with which we compete in the sale of products and services and for talent (" |
| ◾ | Data from a third-party vendor survey, the 2023 |
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As part of the 2024 compensation process, in late 2023, the Compensation Consultant furnished the CHCC with the most recent NEO compensation information available from the following:
| Proxy |
Third-Party |
|
*
Information for the
In late 2024 and early 2025, to evaluate 2024 and 2025 pay decisions, including the ACIP payouts for 2024, the CHCC reviewed information (i) from the
The CHCC reviewed compensation information from these two market reference sources in setting the NEOs' total compensation (consisting of aggregate base salaries, ACIP payments, and LTIP awards) 15.9% below the combined benchmark median. The components comprising NEO total compensation for 2024 differed from market to varying degrees. Specifically, base salary was below the combined benchmark median by 4.0%. Driven by the challenging 2024 performance relative to annual financial and operational goals, ACIP awards were considerably lower for 2024 than for 2023 and were 33.6% below the combined benchmark median. The relative positioning of the combined base salary and ACIP awards resulted in annual total cash compensation that was 21.5% below the combined benchmark median. The grant date fair value of our 2024 LTIP awards was 2.6% below the combined benchmark median. The CHCC felt that each NEO's compensation, on an absolute basis and in relation to market references, was appropriate considering their individual accomplishments and contributions, performance relative to 2024 financial, operational, and strategic goals, performance compared to projected industry performance, and our expense management.
2024 ELEMENTS OF COMPENSATION AND ALLOCATION BETWEEN CURRENT AND LONG-TERM COMPENSATION
The table below shows the percentages of compensation for 2024 for the CEO and the other NEOs that are fixed compensation (i.e., base salary) versus variable compensation (i.e., ACIP and LTIP), and short-term incentive compensation (i.e., ACIP) versus long-term incentive compensation (i.e., LTIP).
As indicated in the table below, the 2024 compensation allocation aligns closely with our compensation philosophy, which is designed to motivate our NEOs to achieve short- and long-term corporate objectives consistent with our stockholders' economic interests. We strive to balance pay incentive elements and performance time horizons.
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| Fixed Compensation | Variable Compensation | |||
| NEOs | 2024 Base Salary | 2024 Short-Term (ACIP) |
2024 Long-Term (LTIP) |
2024 Total Variable (ACIP + LTIP) |
| 17% | 19% | 64% | 83% | |
| 8% | 37%(3) | 55%(4) | 92% | |
| 43% | 33% | 24% | 57% | |
| 29% | 32% | 39% | 71% | |
| 29% | 19% | 52% | 71% | |
| 41% | 21% | 38% | 59% | |
(1)
(2)
(3)Reflects
(4)
The chart below reflects the allocation of 2024 compensation among LTIP, ACIP, and base salary for the CEO and the average for all other NEOs:
* Average percentages include Mr.
Base Salary
Our base salary compensation is intended to provide stable, competitive compensation while considering each NEO's scope of responsibility, relevant background, training, and experience. In setting base salaries, the CHCC considers competitive market data for positions with comparable job content and overall market demand for each position. The CHCC generally believes base salaries should align with market trends for NEOs with similar responsibilities at comparable companies. When establishing the base salaries of our NEOs, the CHCC also considers:
| ◾ | The functional role of the NEO's position; |
| ◾ | The NEO's level of responsibility; |
| ◾ | The NEO's growth in the position, including skills and competencies; |
| ◾ | The NEO's contribution and performance; and |
| ◾ | Selective's ability to replace the NEO. |
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Based on these considerations and their individual accomplishments and contributions as described below in the section entitled, "2024 Compensation Actions for the CEO and other NEOs," the CHCC increased the base salary rates of the following NEOs in early 2024 during our regular salary review process:
Annual Cash Incentive Program
Our ACIP is intended to link a meaningful portion of annual cash compensation to one or more pre-established annual short-term strategic and financial organizational performance goals. For 2024, all NEOs were eligible to participate in the ACIP; however, as discussed below,
2024 Corporate ACIP Measures
Our Corporate ACIP Measures (defined below) are established to encourage our NEOs to remain focused on particular financial and strategic objectives, even in the face of challenging circumstances in the performance year. The CHCC considers the level of achievement of the Corporate ACIP Measures when determining the ACIP payments to our NEOs. The CHCC has authority to adjust payouts as it deems appropriate in its discretion.
The Corporate ACIP plan has two components, financial and strategic (together, the "Corporate ACIP Measures"). The financial component is tied to Selective's GAAP combined ratio for the performance year. The 50% target was set to a 95% combined ratio. The financial component pays 0% at a combined ratio over 100% and has a maximum 120% payout for a combined ratio of 88% or less. The strategic component opportunity ranges between 0% and 50% based on the achievement of the target of 13 specific measures tied to our strategic business framework, with a potential for an additional 5% if certain targets are exceeded.
The table below shows total potential Corporate ACIP payouts for NEOs at various combined ratio percentages, assuming all 13 strategic measures were fully met:
| GAAP Combined Ratio (%) |
Corporate ACIP Measures(1) | ||
| Financial Measure (%) | Strategic Measures (%) | Total Opportunity (%)(2) |
|
| 100.0 | 0.0 | 50 | 50.0 |
| 99.0 | 10.0 | 50 | 60.0 |
| 98.0 | 20.0 | 50 | 70.0 |
| 97.0 | 30.0 | 50 | 80.0 |
| 96.0 | 40.0 | 50 | 90.0 |
| 95.0 | 50.0 | 50 | 100.0 |
| 94.0 | 60.0 | 50 | 110.0 |
| 93.0 | 70.0 | 50 | 120.0 |
| 92.0 | 80.0 | 50 | 130.0 |
| 91.0 | 90.0 | 50 | 140.0 |
| 90.0 | 100.0 | 50 | 150.0 |
| 89.0 | 110.0 | 50 | 160.0 |
| 88.0 | 120.0 | 50 | 170.0 |
(1)Straight line interpolation applies to performance between designated goals.
(2)Reflects total opportunity based on degree of achievement of performance objectives not including the additional 5-point potential upside for exceeding commercial lines pure rate target on standard renewal business.
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2024 Corporate ACIP Measure Results
The 2024 Corporate ACIP Measure results were based on our achievement of the financial metric of overall GAAP combined ratio and the strategic measures, as described in greater detail below.
Financial Performance Results
For 2024, our overall GAAP combined ratio was 103.0%, resulting in zero funding points for the financial performance component of the Corporate ACIP Measures.
Strategic Measures Performance Results
The table below reflects that we fully achieved 12 of the 13 2024 ACIP strategic measures for corporate functions (including exceeding one of the strategic measures described below), resulting in the strategic measures performance component of the Corporate ACIP Measures being funded at 50.0 points.
| Area of Focus | Measure | Potential Value (in Points) |
Actual Results (in Points) |
| Expense Management | Achieve designated expense targets for organizational functions. | 6 | 6 |
| Create a Highly Engaged Team | Address feedback on designated employee engagement drivers. | 2 | 2 |
| Profit Improvement | Achieve designated commercial lines pure rate target on standard renewal business. | 6 (plus 5*) |
9 (6 plus 3*) |
| Achieve designated personal lines pure rate target on standard renewal business. | 3 | 0 | |
| Execute plan to file homeowners rating plans in designated states. | 3 | 3 | |
| Growth | Achieve designated target for direct new standard commercial lines premiums. | 4 | 4 |
| Achieve designated net renewal direct premium written budget for commercial lines. | 4 | 4 | |
| Execute project plan and achieve strategic milestones for excess and surplus lines business model. | 4 | 4 | |
| Achieve designated geographic expansion strategic milestones for |
6 | 6 | |
| Optimize Operational Effectiveness & Efficiency | Deploy designated commercial lines and excess and surplus lines pilot product models, establish milestones and monitor processes. | 3 | 3 |
| Create and execute plan to enroll designated agency population in digital policy delivery. | 2 | 2 | |
| Achieve designated efficiency and capacity targets through workflow optimization in claims, underwriting, and software engineering. | 3 | 3 | |
| Achieve milestones for enhancements to customer self-service site and achieve designated increase in bi-directional customer contact capability. | 4 | 4 |
* Reflects additional five-point potential for exceeding commercial lines pure rate target on standard renewal business.
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2024 Corporate ACIP Measure Results
For 2024, our combined Corporate ACIP Measures resulted in a total funding opportunity for Messrs. Marchioni, Harnett, and Lanza and
2024 Investment Department ACIP Measures
The Investment Department ACIP has three main components: corporate financial, investment financial, and investment strategic. The Investment Department ACIP corporate financial measure is the same financial measure as the Corporate ACIP, namely the GAAP combined ratio, and constitutes 25% of the calculation. The investment financial component constitutes 37.5% of the calculation and consists of after-tax net investment income and total retumeasures. The remaining 37.5% of the calculation consists of strategic initiatives significant for the success of the
Corporate Financial Performance Results
As noted above under the 2024 Corporate ACIP Measure Results, this measure was not achieved and generated zero points.
Investment Financial Measure Performance Results
The table below reflects that all 2024 Investment Department ACIP financial measures were achieved (including exceeding four of the financial measures described below), resulting in 42.8 points.
| Objective Description | Potential Value (in Points) |
Potential Upside Value (in Points) |
Actual Results (in Points) |
| Meet or exceed designated after-tax net investment income budget. | 23.9 | 16.0 | 23.9 |
| Meet or exceed limited partnership after-tax investment income budget. | 4.2 | 2.8 | 4.3 |
| Meet or exceed the designated weighted average benchmark retufor designated portfolio. | 4.7 | 3.1 | 7.8 |
| Maintain designated internal rate of retuof alternative investment portfolio. | 2.3 | 1.6 | 3.9 |
| Maintain designated public market equivalent spread of alternative investment portfolio. | 2.3 | 1.6 | 2.9 |
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Investment Strategic Measures Performance
The table below reflects that all strategic measures of the 2024 Investment Department ACIP were achieved (including exceeding three of the strategic measures described below), resulting in 44.3 points.
| Area of Focus |
Measure | Potential Value (in Points) |
Potential Upside Value (in Points) |
Actual Results (in Points) |
| Book Yield and Income Management | Achieve designated reinvestment rate on the internally managed fixed income portfolio relative to target. | 3.5 | 3.5 | |
| Achieve designated average reinvestment rate on the fixed income securities portfolio. | 3.0 | 2.0 | 5.0 | |
| Achieve designated fixed income portfolio book yield. | 3.0 | 3.0 | 5.8 | |
| Portfolio Strategy and Optimization | Conduct strategic asset allocation and update applicable benchmarks and investment policy limits. | 8.0 | 8.0 | |
| Evaluate designated asset class, including sizing and implementation considerations. | 3.0 | 3.0 | ||
| Analyze liquidity strategy and implement appropriate portfolio changes. | 2.0 | 2.0 | ||
| Risk Management | Conduct comprehensive review of portfolio risk management and analytics system. | 9.0 | 9.0 | |
| Expense Management | Maintain controllable expense budget. | 2.0 | 2.0 | |
| Optimize Operational Effectiveness & Efficiency | Enhance investment data warehouse. | 2.0 | 2.0 | |
| Identify and execute workflow automation opportunities using technology solutions. | 2.0 | 2.0 | 4.0 |
2024 Investment Department ACIP Measure Results
The 2024 Investment Department ACIP financial and strategic measures resulted in a total funding opportunity for
Page 50
2024 ACIP Payment Opportunities Awards for NEOs
The 2024 ACIP payment opportunities for the NEOs were based on competitive market levels and set as a percentage of each NEO's annual base salary. The following table lists each NEO's (i) 2024 minimum and maximum ACIP opportunities as a percentage of base salary rate, (ii) actual 2024 ACIP payment as a percentage of base salary rate, (iii) actual 2024 payment amount, and (iv) the percentage change in ACIP amount paid from 2023 to 2024:
| NEO | Minimum 2024 ACIP Opportunity (as % of Base Salary Rate) |
Maximum 2024 ACIP Opportunity(1) (as % of Base Salary Rate) |
Actual 2024 ACIP Payment (as % of Base Salary) |
Actual 2024 ACIP Payment |
Change in ACIP Payment from 2023 to 2024 |
| 0% | 350% | 115% | -40.0% | ||
| N/A | N/A | 77%(3) | N/A | ||
| 0% | 250% | 79% | 48.8% | ||
| 0% | 150% | 113% | 11.1% | ||
| 0% | 150% | 66% | -40.2% | ||
| 0% | 150% | 51% | -40.2% |
(1)Except with respect to
(2)Under the terms of his employment agreement,
(3)
ELEMENTS OF LONG-TERM COMPENSATION
Design Elements
Our long-term incentive opportunities are intended to reward our NEOs and encourage their long-term retention. By aligning financial rewards with our stockholders' economic interests, our NEOs are motivated to achieve our long-term strategic objectives and increase stockholder value. We use both cash and non-cash elements under our LTIP to deliver long-term compensation.
LTIP awards are typically granted in overlapping three-year cycles and are allocated between performance-based restricted stock units and performance-based cash incentive units. By granting performance-based restricted stock units and performance-based cash incentive units with three-year performance periods, we seek to align our NEOs' economic interests with those of our stockholders and further support retention.
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LTIP Award Grants
| Performance Period |
Restricted Stock Unit Performance Measures | Cash Incentive Unit Performance Measures |
| Generate a cumulative non-GAAP operating ROE of at least 12% (computed by excluding from the determination of average equity any unrealized gain or loss occurring after |
Cumulative TSR over the three-year performance period, and cumulative three-year statutory NPW growth and statutory operating retuon policyholder surplus(1) relative to peer index. | |
| Generate a cumulative non-GAAP operating ROE of at least 12% (computed by excluding from the determination of average equity any unrealized gain or loss occurring after |
Cumulative TSR over the three-year performance period, and cumulative three-year statutory NPW growth and statutory operating retuon policyholder surplus relative to peer index. | |
| Generate a cumulative non-GAAP operating ROE of at least 12% (computed by excluding from the determination of average equity any unrealized gain or loss occurring after |
Cumulative TSR over the three-year performance period, and cumulative three-year statutory NPW growth and statutory operating retuon policyholder surplus relative to peer index. |
(1)Statutory operating retuon policyholder surplus is a profitability measurement calculated by dividing statutory operating income by the average policyholder surplus during the performance period.
In determining the amount of LTIP awards granted to the NEOs in 2024 (except for
Performance-Based Restricted Stock Units
Approximately 75% of the total grant date fair value of each NEO's LTIP award made in 2024 (except for
| ◾ | Three-year vesting period; and |
| ◾ | Achievement at the end of the three-year period beginning on |
Dividend equivalent units ("DEUs") are credited on performance-based restricted stock units at the same time and same dividend rate paid to all Selective stockholders. Payments of DEUs, which are payable in shares of Selective common stock, remain subject to the same vesting conditions and performance measures as the underlying restricted stock units. DEUs are not paid unless and until the related restricted stock units vest. Using performance-based restricted stock units aligns this component of our NEOs' compensation with overall corporate performance and stockholder interests.
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Performance-Based Cash Incentive Units
The remaining approximate 25% of the total grant date fair value of each NEO's LTIP award granted in 2024 (except for
| ◾ | Three-year performance period; |
| ◾ | The value of each cash incentive unit, initially awarded at |
| ◾ | The number of cash incentive units ultimately earned increases or decreases based on the performance criteria in the following table: |
| Matrix of Potential Performance-Based Cash Incentive Unit Payouts (as a % of Initial Award Value) |
||||||||
| Cumulative 3-Year Statutory Net Premium Growth Relative to Peer Index |
>=80% | 100% | 108% | 117% | 125% | 133% | 142% | 150% |
| 70% | 86% | 100% | 108% | 117% | 125% | 133% | 142% | |
| 60% | 72% | 86% | 100% | 108% | 117% | 125% | 133% | |
| 50% | 58% | 72% | 86% | 100% | 108% | 117% | 125% | |
| 40% | 44% | 58% | 72% | 86% | 100% | 108% | 117% | |
| 30% | 30% | 44% | 58% | 72% | 86% | 100% | 108% | |
| <=20% | 0% | 30% | 44% | 58% | 72% | 86% | 100% | |
| <=20% | 30% | 40% | 50% | 60% | 70% | >=80% | ||
| Cumulative 3-Year Statutory Operating Retuon Policyholder Surplus Relative to Peer Index |
||||||||
In establishing the 2024 peer group to compare performance and determine the ultimate number of performance-based cash incentive units earned (the "
Timing of LTIP Awards
LTIP awards are generally granted each year after Selective releases year-end results.
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2021 LTIP Award Grant Results
The following table summarizes the achievement of the performance metrics for the 2021 LTIP award grants and the corresponding payout in 2024:
| Performance Metrics | Actual Performance Versus Performance Metrics |
Percentage Achieved |
| 2021 Grant Results | ||
|
Restricted Stock Units Generate a cumulative non-GAAP operating ROE of at least 12% (computed by excluding from the determination of average equity any unrealized gain occurring after |
Achieved at least 12% cumulative non-GAAP operating ROE and 5% cumulative growth of NPW |
100% |
|
Cash Incentive Units(1) Cumulative TSR over the three-year performance period, and cumulative three-year statutory NPW growth and statutory operating retuon policyholder surplus relative to peer index for the period of |
Achieved a TSR of 154.53%, a statutory operating retuon policyholder surplus of 41%, and NPW growth of 49%(2) | 150% of units at |
(1) Cash incentive unit awards are denominated in units and granted at a target amount, with an initial value of
(2) Selective's cumulative three-year statutory operating retuon policyholder surplus of 41% positioned us in the 100th percentile of the
2024 COMPENSATION ACTIONS FOR THE CEO AND OTHER NEOS
In making its 2024 base salary, ACIP, and LTIP compensation decisions for
| ◾ | Base salary rate increased 5.0% from 2023 to reflect |
| ◾ | ACIP payment for 2024 was 40% lower than his 2023 ACIP payment, driven primarily by the Company's financial performance in 2024 versus 2023 due to adverse prior year casualty reserve development, as described in the "2024 Corporate Performance Results" section above; |
| ◾ | Grant date value of LTIP award granted in |
| ◾ | Total compensation, including salary paid, ACIP payment, and LTIP award, was 7.9% higher in 2024 than 2023. |
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As CEO,
Based on the degree of achievement of the Corporate ACIP Measures and the factors noted above in the 2024 Corporate Performance Results, the CHCC determined that
The CHCC determined that
Our other NEOs were also critical in executing Selective's 2024 strategic goals and delivering key accomplishments. In light of these accomplishments, the CHCC made the following compensation decisions for the other NEOs:
| ◾ | Base salary rate increased 10.3% for |
| ◾ | The ACIP payments for 2024, compared to the ACIP payments for 2023, (i) increased 48.8% for |
| ◾ | The grant date values of LTIP awards granted in |
| ◾ |
| ◾ | Total compensation, including salary paid, ACIP payments, and LTIP awards, compared to 2023, increased 58.2% for |
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In making 2024 compensation decisions for Messrs. Brennan, Harnett, Eppers, and Lanza, and
| ◾ | His prior financial and insurance industry experience and expertise; |
| ◾ | The need to retain his current and future services; |
| ◾ | The compensation he would forfeit upon his departure from his prior employer; and |
| ◾ | His contributions during his three months of employment with the Company during 2024, including his successful transition of duties and responsibilities from the Interim Chief Financial Officer, participation and contributions in investor meetings, and oversight of the final preparations of the 2025 corporate budget. |
Under his employment agreement,
| ◾ | Managing the accuracy and efficiency of the statutory and GAAP closing processes and related |
| ◾ | Managing the insurance departments' financial examination process; |
| ◾ | Supporting our financial strength ratings through proactive engagement with rating agencies; |
| ◾ | Attending and participating in investor conferences and conference calls; |
| ◾ | Participating in the successful renewal of our casualty and property excess of loss reinsurance treaties and our catastrophe coverages; |
| ◾ | Enhancing our sustainability-related disclosures by issuing our third sustainability report and second |
| ◾ | Identifying and executing tax-related strategies, including tax credit investments; |
| ◾ | Monitoring, managing, and implementing enhancements to the annual expense budgeting and forecasting processes and implementing expense reduction initiatives to achieve our expense ratio target; |
| ◾ | Improving customer experience through the implementation of enhancements to billing processes, including bill redesign, new payment options, and promotion of an online payment center for distribution partners; and |
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| ◾ | Assisting in the onboarding of |
Based on the degree of achievement of the Corporate ACIP Measures and the factors noted above, the CHCC approved
| ◾ | Actively managed a diversified, high quality investment portfolio that supported Selective's capital needs and long-term objectives; |
| ◾ | Maintained a stable risk profile amidst a complex and dynamic economic and market environment, and deployed investment strategies consistent with Selective's risk tolerance; |
| ◾ | Achieved strong financial results, including: |
| ◾ | Increasing net investment income 17%, to |
| ◾ | Delivering strong total returesults that exceeded the portfolio benchmark; |
| ◾ | Increasing pre-tax book yield to 4.9%; and |
| ◾ | Generating a net investment income after-tax retuon equity of 12.8%; |
| ◾ | Updated the strategic asset allocation strategy and liquidity framework of the investment portfolio; |
| ◾ | Enhanced the operational efficiency and reporting capabilities of the |
| ◾ | Provided executive and strategic leadership as chair of the Management Investment Committee; and |
| ◾ | Supported the oversight and management of the investment strategy and plan design options of the organization's benefit plans. |
Based on the degree of achievement of the 2024 Investment Department ACIP financial and strategic measures, the CHCC approved
| ◾ | Achieving standard commercial lines NPW growth of 11% and new business growth of 4% as compared to the prior year, average renewal pure price increases of 8.3%, and strong retention of 85%; |
| ◾ | Began writing standard commercial lines business in our newly opened geographic footprint states of |
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| ◾ | Executing agency engagement efforts to position Selective as a commercial lines market of choice for our distribution partners; |
| ◾ | Launching a new product organization focusing on product development, and delivery of key technology projects and enhancements; |
| ◾ | Supporting customer experience improvements providing digital enhancements, friction reduction, and value-added services for customers and distribution partners; |
| ◾ | Achieving standard personal lines NPW growth of 4% and Flood direct premiums written growth of 17%, and implementing appropriate pricing and underwriting actions to address personal lines profitability challenges; and |
| ◾ | Supporting initiatives to improve productivity, enhance data management, and increase operational effectiveness. |
Based on the degree of achievement of the Corporate ACIP Measures and the factors noted above, the CHCC approved
| ◾ | Providing advice and support, in coordination with our |
| ◾ | Advising the Board and management on corporate governance, regulatory compliance, data, and information governance, and public disclosure matters; |
| ◾ | Providing significant counsel and leadership on government affairs and public policy matters and legislative and regulatory matters of significance to Selective and the industry, including litigation reform, risk-based pricing, artificial intelligence, flood insurance, and cybersecurity and privacy issues, and facilitating engagement with regulators, particularly in our new and projected expansion states; |
| ◾ | Providing timely and appropriate legal advice and leadership on all sustainability-related matters, including revisions and updates to internal and external disclosures and reporting, and advising management's Sustainability Committee; |
| ◾ | Providing executive leadership and legal advice for high-exposure litigation matters and continued improvement of overall quality, appropriateness, and timeliness of legal advice for claims coverage and litigation matters; and |
| ◾ | Providing legal counsel and executive leadership on strategy, decisions, and execution of communication of corporate goals and human resources initiatives. |
Based on the degree of achievement of the Corporate ACIP Measures and the factors noted above, the CHCC approved
| Page 58 |
performance philosophy, organizational performance, and goal of rewarding and retaining key performers in critical positions.
PERQUISITES
NEO perquisites in 2024 were limited to tax preparation services and executive physicals, which is consistent with prevailing industry practice. See footnote 4 to the Summary Compensation Table for perquisite details.
EXECUTIVE STOCK OWNERSHIP AND RETENTION REQUIREMENTS
Selective believes that stock ownership by management encourages the enhancement of stockholder value. Selective's stock ownership guidelines are based on prevailing corporate governance practices and detailed in the Corporate Governance Guidelines.
The following table shows the common stock ownership guidelines for certain officers. Each officer must meet (and subsequently maintain) the current stock ownership guidelines within the later of (i) five years from attainment of the respective officer status, and (ii) three years from any change to these requirements ("Requirement Date"). Base salary increases during the five-year period will require the ultimate ownership requirements to increase when shares are valued on
If, at the
| Position | Requirement |
| CEO or President | 6 x base salary |
| CFO | 4 x base salary |
| Executive Vice Presidents | 3 x base salary |
| Senior Vice Presidents or equivalent job grade | 1.5 x base salary |
In calculating ownership under the guidelines:
| ◾ | Shares of Selective common stock of which the officer is deemed to be the "beneficial owner" (as such term is defined under Section 16 of the Exchange Act), seventy-five percent (75%) of the awards of restricted stock or restricted stock units (including related dividend equivalent units) not yet vested, and shares of Selective common stock held in benefit plan investments (i.e., 401(k) plan) are counted; and |
| ◾ | Unexercised stock options are not counted. |
In addition, officers are required to retain direct ownership of at least 75% of the shares acquired under an equity award granted under any Selective equity compensation plan or other written compensatory arrangements, net of taxes and transaction costs, unless the officer has met their applicable stock ownership requirement. Taxes and transaction costs include: (i) shares retained by Selective to satisfy tax withholding requirements attributable to awards; and (ii) shares the officer tenders to pay all or any portion of the exercise price of option grants. All of our officers have met or are on track to meet the required ownership guidelines.
POLICY ON HEDGING
Selective seeks to fully align the long-term financial interests of its officers, directors, and employees with the interests of Selective's other stockholders. For this reason, Selective officers, directors, and employees are prohibited from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in transactions that hedge, offset, or are designed to hedge or offset, any decrease in the market value or the full ownership risks and rewards of their direct or indirect Selective stock holdings.
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RECOUPMENT OF AWARDS
Effective
RETIREMENT AND DEFERRED COMPENSATION PLANS
SICA also has maintained a non-contributory defined benefit pension program consisting of a tax-qualified defined benefit pension plan, the Retirement Income Plan for
SICA offers a tax-qualified defined contribution plan named the Selective Insurance Retirement Savings Plan (the "Retirement Savings Plan") for employees, including the NEOs, who meet eligibility requirements. Participants can contribute up to 50% of their eligible compensation to the Retirement Savings Plan, which was up to
In connection with the curtailment of the Retirement Income Plan, all eligible participants in the Retirement Savings Plan, including the NEOs, began receiving a non-elective contribution of 4% of base salary, after one year of service, to their accounts under the Retirement Savings Plan, subject to limitations under the Code.
Under the Deferred Compensation Plan, certain executives and employees, including the NEOs, may, subject to certain limitations, defer: (i) up to 50% of their base salary; (ii) up to 100% of their annual bonus (subject to certain limitations to provide for required tax withholding); and/or (iii) all or a percentage of such other compensation as otherwise designated by the administrator of the Deferred Compensation Plan. To compensate for the Code's limitations on SICA's matching contributions for the NEOs under the Retirement Savings Plan, SICA matched our NEOs' contributions to the Deferred Compensation Plan in 2024 as follows: 100% of each NEO's salary deferrals to the Retirement Savings Plan and the Deferred Compensation Plan up to 3% of the employee's base salary, and 50% of the NEO's salary deferrals to the Retirement Savings Plan and the Deferred Compensation Plan above 3%, up to 6% of the NEO's base salary, less any matching contributions to the Retirement Savings Plan. To the extent provisions of the Code and the Retirement Savings Plan limit non-elective contributions to the Retirement Savings Plan, SICA makes non-elective contributions of 4% of base salary to participants' Deferred Compensation Plan accounts. The "Nonqualified Deferred Compensation" section of this Proxy Statement includes additional information about the Deferred Compensation Plan.
SICA also maintains broad-based health and welfare benefit plans in which eligible employees, including the NEOs, participate.
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EMPLOYMENT AGREEMENTS
SICA has entered into employment agreements with its key executive officers, including the NEOs. Each employment agreement provides for severance in the event of termination: (i) due to death or Disability; (ii) without "Cause"; (iii) due to resignation for "Good Reason" within two years following a "Change in Control" (as each capitalized term is defined in the applicable employment agreement); (iv) due to resignation of the NEO within two years of the company first imposing a requirement, without the consent of the NEO, that relocates the NEO's business location more than 50 miles; and (v) for the CEO, a resignation at any time for Good Reason. The CHCC believes these agreements are important for the recruitment and retention of key executives, and its Compensation Consultant advised that the terms of the employment agreements, when executed, were market-competitive within our peer group. Furthermore, after or in connection with a change in control, uncertainty may arise among our key executives about their continued employment, possibly leading to their distraction or departure. The purpose of the employment agreements is to retain our key executives and reinforce and encourage their continued attention and dedication during the potentially critical period of a change in control.
The change in control provisions of the NEOs' employment agreements concerning severance payments, outstanding awards under our stock and cash plans, and continued insurance coverages or coverage reimbursement, are triggered following the NEO's employment termination without Cause or the resignation of the NEO for Good Reason within two years following a change in control. This double trigger ensures such a payout does not automatically occur upon a change in control only.
The employment agreements are described in the section entitled, "Employment Agreements and Potential Payments upon Termination or Change in Control" section of this Proxy Statement. This section includes information on multipliers used in calculating the severance payment and duration of reimbursement for the cost of certain benefit coverages provided to individual executives upon termination. We believe these multipliers are consistent with each NEO's level and value of position to the organization. SICA's current employment agreements do not contain excise tax gross-up provisions.
TAX TREATMENT AND ACCOUNTING
Code Section 162(m) generally disallows a federal income tax deduction to public companies for annual compensation over
GAAP requires compensation expense to be measured on the income statement for all stock-based payments at grant date fair value for equity instruments (including restricted stock unit awards) and at market value on the date of vesting for liability instruments (including cash incentive unit awards). The CHCC has considered the impact of GAAP on our use of stock-based compensation as a retention tool. The CHCC has determined that the current estimated costs of using stock-based compensation relative to the benefits they provide are appropriate and do not warrant any change to our current incentive framework.
We have designed our compensation programs and awards to executive officers to be exempt from or, where applicable, comply with the provisions of Section 409A of the Code. For example, if the executives are "specified employees" under Section 409A of the Code, any payments of deferred compensation under our nonqualified deferred compensation plans that are triggered by the executive officer's separation from service are not payable before the first day of the seventh month after the executive's date of separation from service.
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COMPENSATION COMMITTEE REPORT
The
Submitted by the
*
The Compensation Committee Report does not constitute soliciting material, and it shall not be deemed to be filed or incorporated by reference into any other Selective filing under the Securities Act of 1933, as amended ("Securities Act"), or the Exchange Act, except to the extent that Selective specifically incorporates the Compensation Committee Report by reference therein.
POLICIES AND PRACTICES RELATED TO THE GRANT OF CERTAIN EQUITY AWARDS CLOSE IN TIME TO THE RELEASE OF MATERIAL NON-PUBLIC INFORMATION
In response to Item 402(x)(1) of Regulation S-K, Selective does not currently grant new awards of stock options, stock appreciation rights, or similar option-like instruments. Selective, however, maintains a Policy on Granting Equity and Cash Incentive Unit Awards specifying that Selective will grant LTIP awards, other than new hire awards and interim promotion and retention awards, at a meeting of the CHCC held following the release of the Company's fourth quarter and year-end earnings results. Under the policy, LTIP awards to Section 16 "officers" must be approved by the CHCC at a meeting or by unanimous written consent. The grant date of any LTIP award approved at a meeting, or by unanimous consent, of the CHCC will be the date of such meeting or unanimous written consent.
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SUMMARY COMPENSATION TABLE
The following Summary Compensation Table reflects the compensation earned by or paid to the NEOs during 2024, 2023, and 2022.
Position |
Year |
Salary ($) |
Bonus ($) |
Stock Awards ($)(1) |
Non-Equity Incentive ($)(2) |
Change in Pension Value and Nonqualified Deferred Compensation Earnings($)(3) |
All Other Compensation ($)(4) |
Total ($) |
|
President and Chief Executive Officer |
2024 2023 2022 |
1,042,308 1,000,000 988,462 |
3,979,260 2,764,181 2,628,160 |
1,200,000 2,000,000 2,100,000 |
- 130,795 - |
93,096 88,850 93,565 |
6,314,664 5,983,826 5,810,187 |
|
|
EVP, Chief Financial Officer |
2024 | 160,000 | 220,000(5) | 1,052,548(6) | 500,000 | - | - | 1,932,548 |
|
SVP, Chief Accounting Officer and Former Interim Chief Financial Officer |
2024 2023 |
634,958 381,842 |
- 20,052(7) |
354,292 223,495 |
500,000 335,967 |
- 38,804 |
54,644 32,325 |
1,543,895 1,032,485 |
|
EVP, Chief Investment Officer |
2024 | 443,538 | 592,386 | 500,000 | - | 38,801 | 1,574,725 | |
|
EVP, Chief Operating Officer, Standard Lines |
2024 2023 2022 |
556,154 529,615 490,769 |
984,851 636,374 580,954 |
365,000 610,000 610,000 |
- 32,328 - |
51,523 52,192 46,915 |
1,957,528 1,860,510 1,728,638 |
|
|
EVP, General Counsel and Chief Compliance Officer |
2024 2023 2022 |
593,769 585,923 578,462 |
550,068 550,077 525,097 |
305,000 510,000 530,000 |
- 78,462 - |
53,807 52,803 57,169 |
1,502,644 1,777,265 1,690,728 |
(1)This column reflects the aggregate grant date fair value of the 2024, 2023, and 2022 grants of performance-based restricted stock unit awards and 2024, 2023, and 2022 grants of performance-based cash incentive unit awards and, for
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The grant date fair values for the performance-based restricted stock unit and performance-based cash incentive unit awards granted to the NEOs are as follows:
| Year |
Performance-Based Restricted Stock Units($) |
Performance-Based Cash Incentive Units($) |
|
|
2024 2023 2022 |
2,979,260 2,064,181 1,953,160 |
1,000,000 700,000 675,000 |
|
| 2024 | N/A | N/A | |
|
2024 2023 |
262,992 166,195 |
91,300 57,300 |
|
| 2024 | 442,386 | 150,000 | |
|
2024 2023 2022 |
734,851 473,874 430,954 |
250,000 162,500 150,000 |
|
|
2024 2023 2022 |
412,568 412,577 393,797 |
137,500 137,500 131,300 |
The aggregate grant date fair value reported in this column assumes the following: (i) the predetermined performance goals for the restricted stock unit grants are probable of being attained; (ii) initial per unit values for the cash incentive unit awards of $100; and (iii) a 100% peer group unit multiplier for cash incentive unit awards. For further discussion of the fair value calculation of the awards in this column, please refer to Note 16. "Share-Based Payments" to the consolidated financial statements in our 2024 Annual Report. The maximum value assuming the highest level of performance conditions for the performance-based restricted stock units are consistent with the amounts above. Although the maximum number of performance-based cash incentive units potentially issuable is 150% of the original grant for the 2022, 2023, and 2024 grants, the ultimate maximum value of the 2022, 2023, and 2024 grants cannot be determined at this time because the initial value of each unit is adjusted based on the TSR of Selective common stock over the grant's three-year performance period.
(2)Amounts in this column are ACIP awards to the NEOs earned in 2024 and paid in 2025, earned in 2023 and paid in 2024, and earned in 2022 and paid in 2023. These awards were granted under the Cash Incentive Plan.
(3)Amounts in this column reflect the actuarial increase in the present value of each NEO's pension benefits under all defined benefit pension plans of SICA, determined using the same interest rate and mortality assumptions as those used for financial statement reporting purposes. There were no changes to the benefit formulas under the defined pension benefit plans in 2024, as the plans were amended to cease further accruals effective as of March 31, 2016. The decreases in pension values excluded from this column are primarily attributable to an increase in the discount rate used to calculate the present value. These decreases are partially offset by aging and a mortality assumption update. The decreases in present value of the accumulated benefit for the qualified Retirement Income Plan were as follows:
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(4)For 2024, amounts in this column for each NEO (other than
| ◾ |
| ◾ |
| ◾ |
| ◾ |
| ◾ |
(5)Amount reflects
(6)Amount reflects
(7)Amount reflects a cash bonus for services rendered in connection with
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GRANTS OF PLAN-BASED AWARDS
The following table shows the grants of plan-based awards to our NEOs in 2024:
| Grant Date | Estimated Future Payouts under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts under Equity Incentive Plan Awards(2) |
All other stock awards: number of shares of stock or units (#) |
Grant Date Fair Value of Cash Incentive Unit and Restricted Stock Units Awards($)(4) |
||||||
| Cash Incentive Unit Awards(3) | Restricted Stock Unit Awards (#) |
|||||||||
|
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
Maximum (#) |
||||
| 2/2/2024 | 30,185 | 2,979,260 | ||||||||
| 2/2/2024 | 4,400 | 10,000 | 15,000 | 1,000,000 | ||||||
| 0 | 3,675,000 | |||||||||
| 10/8/2024 | 12,036(5) | 1,052,548 | ||||||||
| - | 500,000(6) | - | ||||||||
| 2/2/2024 | 2,755 | 262,992 | ||||||||
| 2/2/2024 | 402 | 913 | 1,370 | 91,300 | ||||||
| 0 | 1,601,713 | |||||||||
| 2/2/2024 | 4,528 | 442,386 | ||||||||
| 2/2/2024 | 660 | 1,500 | 2,250 | 150,000 | ||||||
| 0 | 675,000 | |||||||||
| 2/2/2024 | 7,547 | 734,851 | ||||||||
| 2/2/2024 | 1,100 | 2,500 | 3,750 | 250,000 | ||||||
| 0 | 840,000 | |||||||||
| 2/2/2024 | 4,151 | 412,568 | ||||||||
| 2/2/2024 | 605 | 1,375 | 2,063 | 137,500 | ||||||
| 0 | 892,500 | |||||||||
(1)Except with respect to
(2)Performance-based cash incentive unit awards were granted under the Cash Incentive Plan, and performance-based restricted stock unit awards were granted under the Omnibus Stock Plan. For a description of the material terms of such awards, see the section of the Compensation Discussion and Analysis entitled, "Elements of Long-Term Compensation."
(3)The number of performance-based cash incentive units paid can range from 0%-150%, and therefore, the amount payable could be $0. The threshold selected represents performance compared to the 30th percentile of the Cash Incentive Unit Peer Group, the target represents performance compared to the 50th percentile of the Cash Incentive Unit Peer Group, and the maximum represents performance greater than or equal to the 80th percentile of the Cash Incentive Unit Peer Group.
(4)The grant date fair value reported in this column assumes the following: (i) the predetermined performance goals for the restricted stock unit grants are probable of being attained; (ii) initial per unit values for the cash incentive unit awards of $100; and (iii) a 100% peer group unit multiplier for cash incentive unit awards. For further discussion of the fair value calculation of the awards in this column, please refer to Note 16. "Share-Based Payments" to the consolidated financial statements in our 2024 Annual Report. For
(5)Amount reflects
(6)Reflects
| Page 66 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table shows the unvested stock awards of our NEOs as of December 31, 2024:
| Stock Awards | ||||
| No. of Shares or Units of Stock That Have Not Vested (#)(1) |
Market Value of Shares or Units of Stock That Have Not Vested ($) |
Equity Incentive Plan Awards: No. of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(8) |
|
| 34,075(2) | 3,759,379(3) |
7,000(4) 21,276(5) 10,000(6) 30,631(7) |
1,138,539 1,989,705 1,416,081 2,864,620 |
|
| 12,036(9) | 1,125,607(9) | - | - | |
| 2,777(2) | 306,384(3) |
573(4) 1,742(5) 913(6) 2,796(7) |
93,198 162,878 129,288 261,455 |
|
| 3,219(2) | 355,203(3) |
875(4) 2,660(5) 1,500(6) 4,595(7) |
142,317 248,785 212,412 429,717 |
|
| 7,573(2) | 835,504(3) |
1,625(4) 4,939(5) 2,500(6) 7,659(7) |
264,304 461,920 354,020 716,226 |
|
| 6,627(2) | 731,131(3) |
1,375(4) 4,180(5) 1,375(6) 4,212(7) |
223,642 390,907 194,711 393,939 |
|
(1)In the event of a termination of employment on or after an individual attains Early Retirement Age, as defined under the 2022, 2023, and 2024 restricted stock unit award agreements (the "Award Early Retirement Age"), holders of performance-based restricted stock unit awards granted in 2022, 2023, and 2024 are vested in such awards subject only to the attainment of applicable performance measures. The respective dates upon which each NEO attained, or is anticipated to attain, their Award Early Retirement Age are as follows:
(2)Reflects number of performance-based restricted stock units initially granted on February 7, 2022, and the related accrued DEUs, which were vested and paid on February 7, 2025. Also reflects number of performance-based cash incentive units initially granted on February 7, 2022, to the NEOs for the three-year performance period ended December 31, 2024, which vested on February 7, 2025. In the event of a termination of employment on or after an individual's Award Early Retirement Age, holders of such awards are vested in such awards, with the initial number of units and the value of each unit subject to adjustment, based on the attainment of specified performance measures. Award Early Retirement Age dates for the NEOs are set forth in footnote 1. Settlement of the 2022 cash incentive unit awards will be made as soon as practicable in the 2025 calendar year, following the determination of the attainment of the applicable performance measures. The amounts reflected in this column are attributable to the number of performance-based restricted stock units and related accrued DEUs as follows:
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(3)Reflects a $93.52 per unit value and a $118.91 per unit value for the restricted stock units and cash incentive units, respectively, granted on February 7, 2022. The amounts assume maximum performance level for the cash incentive units.
(4)Reflects number of performance-based cash incentive units initially granted on February 6, 2023, to the NEOs for the three-year performance period ending December 31, 2025, which generally will vest on February 6, 2026, following the determination of the attainment of the applicable performance measures. In the event of a termination of employment on or after an individual's Award Early Retirement Age, holders of such awards are vested in such awards, with the initial number of units and the value of each unit subject to adjustment, based on the attainment of specified performance measures. Award Early Retirement Age dates for the NEOs are set forth in footnote 1. Settlement of the 2023 cash incentive unit awards will be made as soon as practicable in the 2026 calendar year, following the determination of the attainment of the applicable performance measures.
(5)Reflects number of performance-based restricted stock units initially granted on February 6, 2023, and the related accrued DEUs for which the applicable performance measures will be evaluated as of December 31, 2025, which generally will vest and be payable on February 6, 2026.
(6)Reflects number of performance-based cash incentive units initially granted on February 2, 2024, to the NEOs for the three-year performance period ending December 31, 2026, which generally will vest on February 2, 2027, following the determination of the attainment of the applicable performance measures. In the event of a termination of employment on or after an individual's Award Early Retirement Age, holders of such awards are vested in such awards, with the initial number of units and the value of each unit subject to adjustment, based on the attainment of specified performance measures. Award Early Retirement Age dates for the NEOs are set forth in footnote 1. Settlement of the 2024 cash incentive unit awards will be made as soon as practicable in the 2027 calendar year, following the determination of the attainment of the applicable performance measures.
(7)Reflects number of performance-based restricted stock units initially granted on February 2, 2024, and the related accrued DEUs: (i) for which the attainment of the applicable performance measures will be calculated at the end of the performance period on December 31, 2026; and (ii) that generally will vest and be payable on February 2, 2027, subject to the attainment of the applicable performance measures.
(8)The amounts in this column reflect: (i) a $108.4323 per unit value for the February 6, 2023 cash incentive unit grant, and a $94.4054 per unit value for the February 2, 2024 cash incentive unit grant based on the TSR of Selective common stock at December 31, 2024; and (ii) an $93.52 per unit value for the February 6, 2023 and February 2, 2024 restricted stock unit grants. The amounts assume maximum performance for the cash incentive units.
(9)Amount reflects
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OPTION EXERCISES AND STOCK VESTED
The following table shows the stock vesting of awards by our NEOs in 2024:
| Stock Awards | ||
|
Number of Shares Acquired on Vesting(#)(1) |
Value Realized on Vesting($)(2) |
|
| 34,678 | 3,833,129 | |
| - | - | |
| 2,995 | 331,071 | |
| 4,021 | 444,490 | |
| 7,881 | 871,171 | |
| 7,881 | 871,171 | |
(1)Amounts in this column include the number of performance-based restricted stock units and related accrued DEUs that vested in 2024, and performance-based cash incentive units paid in 2024. The amounts reflected in this column are attributable to the number of performance-based restricted stock units and related accrued DEUs as follows:
(2)Amounts in this column include the value of performance-based restricted stock units and related accrued DEUs that vested in 2024, and the amount paid for performance-based cash incentive units in 2024. The amounts reflected in this column are attributable to the number of performance-based restricted stock units and related accrued DEUs as follows:
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PENSION BENEFITS
SICA maintains a tax-qualified, non-contributory defined benefit pension plan, the Retirement Income Plan. Many SICA employees, including
Benefits under the Retirement Income Plan and SERP were curtailed in the first quarter of 2013, when both plans were amended to cease accrual of additional benefits for all participants as of March 31, 2016. Participants as of March 31, 2016, remain entitled to the benefits already earned but have not earned additional benefits since that date.
The Retirement Income Plan was amended as of July 1, 2002, to provide for different calculations based on age and company service as of that date. Monthly benefits payable at normal retirement age under the Retirement Income Plan and the SERP for the NEOs are computed as follows. Defined terms used in this section, but not defined in this Proxy Statement, have the meanings given to them in the Retirement Income Plan.
| 1. | If a participant: (i) completed at least five years of Vesting Service on or before July 1, 2002; and (ii) the sum of a participant's age and Vesting Service is 55 or more on or before July 1, 2002, a participant's benefit is equal to the sum of: (a) 2% of Average Monthly Compensation (base salary), less 1 3/7% of Primary Social Security benefit multiplied by the number of years of Benefit Service through June 30, 2002 (up to 35 years) reduced by the monthly amount, if any, of retirement annuity payable under the group annuity contract issued by |
| 2. | If a participant first became eligible for the plan before July 1, 2002, but did not qualify for 1 above, the participant's benefit is equal to the greater of: (i) the benefit accrued as of June 30, 2002 equal to 2% of Average Monthly Compensation less 1 3/7% of Primary Social Security Benefit multiplied by years of Benefit Service reduced by the monthly amount, if any, of retirement annuity payable under the group annuity contract issued by |
| 3. | If a participant first became a participant in the plan after July 1, 2002, the benefit is equal to 1.2% of Average Monthly Compensation multiplied by years of Benefit Service. |
The earliest retirement age is 55 with 10 years of service or the attainment of 70 points (age plus years of service). If a participant chooses to begin receiving benefits before their 65th birthday, the amount of the monthly benefit will be reduced as follows:
| ◾ | By 1/180th for each complete calendar month for the first 60 months by which the first early retirement benefit payment precedes the attainment of Normal Retirement Age (age 65); |
| ◾ | By 1/360th for each complete calendar month for the next 60 months by which the first early retirement benefit payments precede Normal Retirement Age; and |
| ◾ | By 40% plus 1/600th per month for each month before age 55. |
At retirement, participants receive monthly pension payments. There are four optional forms of payments that can be chosen as alternatives to the normal form of payment, which for a married participant is an automatic 50% joint and surviving spouse annuity, and for an unmarried participant is a single life annuity.
The following table shows information regarding the pension benefits of our NEOs. Based on
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| Plan |
Number of Years Credited Service(#)(2) |
Present Value of Accumulated Benefit($)(3) |
Payments During Last Fiscal Year ($) |
|
| Retirement Income Plan | 17.25 | 378,275 | - | |
| SERP | 17.25 | 612,722 | - | |
| Retirement Income Plan | 15.58 | 273,152 | - | |
| SERP | 15.58 | 1,609 | - | |
| Retirement Income Plan | 13.42 | 271,488 | - | |
| SERP | 13.42 | 11,685 | - | |
| Retirement Income Plan | 10.67 | 352,614 | - | |
| SERP | 10.67 | 336,798 | - |
(1)Messrs. Marchioni, Harnett, and Lanza and
(2)The Retirement Income Plan imposes a one-year waiting period for plan participation, which year is not included in years of credited service.
(3)Present value as of December 31, 2024, is calculated based on Normal Retirement Age of 65 using a 5.69% discount rate. For further discussion, see Note 15. "Retirement Plans" to the consolidated financial statements in our 2024 Annual Report.
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NONQUALIFIED DEFERRED COMPENSATION
The Deferred Compensation Plan allows participants to defer receipt of up to 50% of base salary and up to 100% of their annual bonus (subject to certain limitations to provide for required tax withholding). Participant accounts are credited with a notional rate of retu(positive or negative) based on the performance of investment options selected by the participants from a menu of notional investment options. Participants can elect to schedule in-service withdrawals or withdrawals upon separation from service.
SICA makes matching contributions to a participant's Deferred Compensation Plan account to supplement matching contributions under the Retirement Savings Plan. For 2024, such matching contributions consisted of 100% of the first 3% of base salary and 50% of the next 3% of base salary deferred to the Retirement Savings Plan and the Deferred Compensation Plan together, minus any matching contribution made to a participant's Retirement Savings Plan account. Effective January 1, 2010, the Deferred Compensation Plan was amended for participants ineligible to participate in the Retirement Income Plan to provide a non-elective contribution to the extent not made to a participant's Retirement Savings Plan account due to limitations under the Code and the Retirement Savings Plan. The non-elective contribution to the Deferred Compensation Plan is equal to 4% of a participant's base salary, minus any non-elective contribution made to the Retirement Savings Plan. In conjunction with the amendment of the Retirement Income Plan and the SERP to cease accrual of further benefits under those plans effective as of March 31, 2016, all participants affected by the curtailment, including the NEOs, became eligible for the non-elective contribution effected on April 5, 2013.
The following table shows information regarding nonqualified deferred compensation of our NEOs:
| Executive Contributions in 2024($)(1) |
Company Contributions in 2024($)(2) |
Aggregate Earnings in 2024($)(3) |
Aggregate Withdrawals/ Distributions($) |
Aggregate Balance at December 31, 2024 ($)(4) |
|
| 43,308 | 56,950 | 257,395 | - | 1,966,677 | |
| - | - | - | - | - | |
| 52,768 | 4,407 | 12,260 | (74,072) | 218,754 | |
| 45,542 | 6,525 | 49,912 | - | 277,518 | |
| 89,885 | 16,967 | 145,645 | - | 973,411 | |
| 67,599 | 21,753 | 190,378 | - | 1,389,660 |
(1)Amounts in this column are attributable to (i) 2024 salaries deferred by Messrs. Marchioni, Harnett, Eppers, and Lanza and
(2)Amounts in this column are included in the All Other Compensation column of the Summary Compensation Table for the year in which it was paid.
(3)Amounts in this column are not included in the Summary Compensation Table because such earnings or losses were not above-market or preferential.
(4)The following amounts represent NEO and SICA contributions to the Deferred Compensation Plan that were reported as compensation in the Summary Compensation Table for fiscal 2024 and previous fiscal years, commencing with fiscal year 2009 for
The All Other Compensation column of the Summary Compensation Table includes company matching contributions under the Deferred Compensation Plan added to the NEOs account in 2025 with respect to compensation earned in plan-year 2024.
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EMPLOYMENT AGREEMENTS AND POTENTIAL PAYMENTS UPON
TERMINATION OR CHANGE IN CONTROL
SICA entered into employment agreements or amended employment agreements, as applicable, with: (i)
The following tables summarize the principal provisions of the Employment Agreements.
| Term | Initial three-year term, automatically renewed for additional one-year periods unless terminated by either party with written notice.(1) |
| Compensation | Base salary.(2) |
| Benefits | Eligible to participate in cash incentive compensation plan, stock plan, 401(k) plan, and any other stock option, stock appreciation right, stock bonus, pension (based on date of hire), group insurance, retirement, profit sharing, medical, disability, accident, life insurance, relocation plan or policy, or any other plan, program, policy or arrangement of Selective or SICA intended to benefit SICA's employees generally. |
| Vacation and Reimbursements | Vacation time and reimbursements for ordinary travel and entertainment expenses per SICA's policies. |
| Perquisites | Suitable offices, administrative and other services, and other perquisites to which other SICA executives are generally entitled. |
| Severance and Benefits on Termination without Change in Control |
◾ For Cause or Resignation by NEO other than for Good Reason: Salary and benefits accrued through termination date. ◾ Death or Disability: Multiple(3) of: (i) NEO's salary; plus (ii) average of three most recent annual cash incentive payments; provided that any such severance payments be reduced by life or disability insurance payments under policies with respect to which SICA paid premiums, paid in 12 equal installments. ◾ Without Cause by SICA, Relocation of Office over 50 Miles (without NEO's consent), Resignation for Good Reason by CEO: ◾ Multiple(3) of: (i) NEOs salary; plus (ii) average of three most recent annual cash incentive payments paid in 12 equal installments. ◾ Partial reimbursement for the cost of medical, dental, and vision insurance coverage in effect for NEO and dependents until the earlier of specified period of months(4) following termination or commencement of equivalent benefits from a new employer. ◾ Stock Awards: Except for termination for Cause or resignation by the NEO other than for Good Reason, immediate vesting and possible extended exercise period, as applicable, for any previously granted stock options, stock appreciation rights, cash incentive units, restricted stock, restricted stock units, and stock bonuses. |
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| Severance and Benefits on Termination after Change in Control |
For termination without Cause or resignation for Good Reason for: (i) CEO at any time; or (ii) other NEO within two years following a Change in Control (as defined in the Employment Agreement), NEO is entitled to: ◾ Severance payment equal to multiple(5) of the greater of: (i) NEO's salary plus target annual cash incentive payment; or (ii) NEO's salary plus the average of NEO's annual cash incentive payments for the three calendar years prior to the calendar year in which the termination occurs, paid in lump sum. ◾ Partial reimbursement for the cost of medical, dental, and vision insurance coverage in effect for NEO and dependents until the earlier of a period of months(6) following termination or commencement of equivalent benefits from a new employer. ◾ Stock awards, same as above, except that the initial number of cash incentive units is multiplied by 150%. |
| Release; Confidentiality and Non-Solicitation |
◾ Receipt of severance payments and benefits conditioned upon: ◾ Entry into release of claims; and ◾ No disclosure of confidential or proprietary information, or solicitation of employees to leave Selective or its subsidiaries for a period of two years following the termination of the Employment Agreement, and assignment of intellectual property rights. |
(1)The initial three-year term ended or will end as follows:
| NEO | Date |
| January 31, 2023 | |
| October 1, 2027 | |
| November 1, 2026 | |
| February 28, 2025 | |
| September 30, 2022 | |
| March 2, 2023 |
(2)The annual base salary rates for the NEOs, as of February 24, 2024, were as follows:
(3)For
(4)For
(5)For
(6)For
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The following table shows information regarding payments and benefits to which our NEOs would be entitled under the terms of their respective Employment Agreements and the scenarios shown as of December 31, 2024:
| Resignation(1) or Termination For Cause($) |
Retirement ($)(2) |
Death or Disability($)(3) |
Termination without Cause or Resignation with Good Reason($)(4) |
Termination Following Change in Control($)(5) |
|
| - | 9,915,462 | 16,282,129 | 16,332,415 | 22,232,002 | |
| - | 1,125,607 | 2,100,607 | 2,138,296 | 2,138,296 | |
| - | 846,341 | 2,198,288 | 2,235,977 | 2,284,963 | |
| - | 1,232,259 | 2,557,259 | 2,596,172 | 2,701,976 | |
| - | 2,336,684 | 4,091,684 | 4,129,373 | 4,369,663 | |
| - | 1,716,814 | 3,419,314 | 3,457,003 | 3,694,518 |
(1)Other than a resignation for Good Reason.
(2)This column includes the value of earned and unearned performance-based restricted stock units granted under the Omnibus Stock Plan and any related accrued DEUs. These performance-based awards would normally vest upon: (i) achievement of early or normal retirement eligibility or continuation in service through the end of the applicable performance period; and (ii) the achievement of the specified performance goals applicable to each such award and be payable following the end of the applicable three-year performance period. As each of Messrs. Marchioni and Lanza have attained their early retirement ages, their respective restricted stock unit awards have vested, but their ultimate payment value will only be determined upon achievement of each award's applicable performance condition. This column also includes the value of performance-based cash incentive units awarded under the Cash Incentive Plan to the NEOs. The value of such awards is calculated using: (i) the target 100% unit multiplier for the number of cash incentive units granted; and (ii) the per unit value at December 31, 2024. Under the Cash Incentive Plan, the NEOs' awards would fully vest upon achievement of early or normal retirement eligibility or continuation in service through the end of the payment date and be payable following the end of the applicable three-year performance period. As each of Messrs. Marchioni and Lanza have attained their early retirement ages, their respective cash incentive unit awards have vested, but their ultimate payment value will only be determined upon achievement of each award's applicable performance conditions.
(3)This column includes the value of unvested performance-based restricted stock units granted under the Omnibus Stock Plan and any related accrued DEUs. In the event of total disability, these performance-based awards would normally vest for all the NEOs upon the achievement of the specified performance goals applicable to each such award and be payable following the end of the applicable three-year performance period. In the event of death, these performance-based awards are immediately vested and payable for all the NEOs. This column also includes the value of performance-based cash incentive units awarded under the Cash Incentive Plan to the NEOs. The value of such awards is calculated using: (i) the target 100% unit multiplier for the number of cash incentive units granted; and (ii) the per unit value at December 31, 2024. Under the Cash Incentive Plan, in the event of death or total disability, the NEOs' awards would fully vest and be payable following the end of the applicable three-year performance period. This column also includes the cash severance payment provided for in each NEO's Employment Agreement.
(4)This column includes the value of unvested performance-based restricted stock units granted under the Omnibus Stock Plan and any related accrued DEUs. These performance-based awards would normally vest upon: (i) a termination without Cause or resignation for Good Reason; and (ii) the achievement of the specified performance goals applicable to each such award and be payable following the end of the applicable three-year performance period. This column also includes the value of performance-based cash incentive units awarded under the Cash Incentive Plan to the NEOs. The value is calculated using: (i) the target 100% unit multiplier for the number of cash incentive units granted; and (ii) the per unit value at December 31, 2024. The cash incentive unit awards would fully vest and be payable following the end of the applicable three-year performance period. This column also includes the cash severance payment and the value of applicable medical, dental, and vision coverages, as provided for in each respective NEO's Employment Agreement.
(5)This column includes the value of unvested performance-based restricted stock units granted under the Omnibus Stock Plan, and any related accrued DEUs, which would immediately vest and be payable upon a termination of employment within two years following a change in control. This column also includes the value of performance-based cash incentive units awarded under the Cash Incentive Plan to the NEOs, all of which would vest upon a
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termination of employment within two years following a change in control. The value of such awards is calculated using: (i) a 150% per unit multiplier; and (ii) the per unit value at December 31, 2024. This column also includes the cash severance payment and the value of applicable medical, dental, and vision coverages, as provided for in each NEO's Employment Agreement.
CEO PAY RATIO
Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") and Item 402(u) of Regulation S-K requires us to provide the ratio of the annual total compensation of our CEO,
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PAY VERSUS PERFORMANCE
The table below discloses "Compensation Actually Paid" ("CAP"), calculated under
Pay Versus Performance Table
| Value of Initial Fixed $100 Investment Based On: |
||||||||||
| Fiscal Year (a) |
Summary Compensation Table ("SCT") Total for PEO($)(1) (b1) |
SCT Table Total for PEO ($)(1) (b2) |
CAP to PEO ($)(1)(2)(3) (c1) |
CAP to PEO($)(1)(2)(4) (c2) |
Average SCT Total for Non- PEO NEOs ($)(5) (d) |
Average CAP to Non-PEO NEOs ($)(2)(5)(6) (e) |
Total Share- Holder Return ($)(7) (f) |
Total Share- holder Return ($)(7) (g) |
Net Income ($) (In Thousands) (h) |
GAAP Combined Ratio (%) (i) |
| 2024 | 6,314,664 | - | 5,813,139 | - | 1,702,268 | 1,648,875 | 154.01 | 161.18 | 207,012 | 103.0 |
| 2023 | 5,983,826 | - | 7,598,807 | - | 1,603,837 | 992,458 | 161.42 | 123.18 | 365,238 | 96.5 |
| 2022 | 5,810,187 | - | 7,100,961 | - | 1,958,112 | 2,282,919 | 142.03 | 108.70 | 224,886 | 95.1 |
| 2021 | 5,435,625 | - | 7,471,943 | - | 1,889,803 | 2,490,130 | 129.52 | 101.26 | 403,837 | 92.8 |
| 2020 | 5,130,406 | 5,370,502 | 5,319,126 | 5,606,083 | 2,196,253 | 2,287,992 | 104.46 | 90.45 | 246,355 | 94.9 |
(1) The dollar amounts reported in columns (b1) and (b2) are the amounts of total compensation reported for the Company's PEO for each corresponding fiscal year in the "Total" column of the SCT.
(2)Consistent with
| ◾ | Deducted the actuarial increase in the present value of each applicable NEO's pension benefits under SICA's defined benefit pension plans, which represented changes in pension values primarily attributable to an increase in the discount rate used to calculate present value and the use of the most-recently released mortality tables. See tables below for quantitative detail for the PEOs and non-PEO NEOs. |
| ◾ | Added changes in pension values attributable to current years' service and any change in pension value attributable to plan amendments made during each fiscal year. Our pension plan is closed to new entrants and existing participants ceased accruing benefits after March 31, 2016. There were no amendments to the pension plan in each fiscal year that changed that pension value. |
| ◾ | Deducted the grant date fair values for the performance-based restricted stock unit ("RSU") and performance-based cash incentive unit ("CIU") awards granted to the NEOs. See tables below for quantitative detail for the PEOs and non-PEO NEOs. |
| ◾ | Added the fair values of performance-based RSU (and related accrued dividend equivalent units) and performance-based CIU awards granted to the NEOs in each year, valued as of each fiscal year end. See tables below for quantitative detail for the PEO and non-PEO NEOs. |
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| ◾ | Added the year-over-year change in fair value of the prior years' unvested performance-based RSU (and related accrued dividend equivalent units) and performance-based CIU awards, and the awards that vested during each fiscal year. See tables below for quantitative detail for the PEO and non-PEO NEOs. |
Additionally, assumptions made in the valuation of the 2024, 2023, 2022, 2021, and 2020 grants of performance-based RSU awards, and the 2024, 2023, 2022, 2021, and 2020 grants of performance-based CIU awards that differ materially from those disclosed as of the grant date of such awards include adjustment of:
| ◾ | Selective's common stock price per share and reinvested dividends to reflect the measurement date value (instead of the common stock price per share and reinvested dividends at grant date). Measurement date represents each fiscal year end or the date of vesting for those awards that vested in each fiscal year. |
| ◾ | Per unit values for the performance-based CIU awards for the TSR value at the measurement date (instead of using the initial per unit value of $100). |
| ◾ | The peer group multiplier for CIU awards to reflect the |
(3)The following table reconciles SCT Total for PEO (b1) to Total CAP to PEO (c1):
| PEO (c1): | Fiscal Year 2024 |
Fiscal Year 2023 |
Fiscal Year 2022 |
Fiscal Year 2021 |
Fiscal Year 2020 |
| SCT Total ($) (A) | 6,314,664 | 5,983,826 | 5,810,187 | 5,435,625 | 5,130,406 |
| Deducted from SCT: Pension Value and Nonqualified Deferred Compensation Earnings ($) (B) | - | 130,795 | - | - | 239,169 |
| Added to CAP: Pension Value Attributable to Fiscal Years' Service and Plan Amendments ($) (C) | - | - | - | - | - |
| Deducted from SCT: Grant Date Fair Value of Awards ($) (D) | 3,979,260 | 2,764,181 | 2,628,160 | 2,124,100 | 1,648,685 |
| Added to CAP: Fair Value of Awards Granted in Fiscal Year ($)(a) (E) | 4,044,688 | 3,264,588 | 3,420,746 | 3,075,273 | 1,810,867 |
| Added to CAP: Change in Fair Value of |
(496,125) | 1,001,299 | 584,812 | 1,093,366 | 244,246 |
| Added to CAP: Change in Fair Value of |
(70,828) | 244,070 | (86,623) | (8,221) | 21,461 |
| Total CAP (A - B + |
5,813,139 | 7,598,807 | 7,100,961 | 7,471,943 | 5,319,126 |
(a)The table below shows information on performance-based RSU awards and performance-based CIU awards previously granted to PEO (c1).
| PEO (c1): | ||||
| Fiscal Year | Fair Value of Equity Awards Granted in Fiscal Year at Fiscal Year End ($) |
Change in Fair Value of |
Change in Fair Value of Fiscal Year($) |
Equity Fair Value Included in Compensation Actually Paid($) |
| 2024 | ||||
| RSUs | 2,864,620 | (186,201) | (70,828) | 2,607,591 |
| CIUs | 1,180,068 | (309,924) | - | 870,144 |
| Total | 4,044,688 | (496,125) | (70,828) | 3,477,735 |
| 2023 | ||||
| RSUs | 2,071,218 | 696,533 | 244,070 | 3,011,821 |
| CIUs | 1,193,370 | 304,766 | - | 1,498,136 |
| Total | 3,264,588 | 1,001,299 | 244,070 | 4,509,957 |
| 2022 | ||||
| RSUs | 2,310,409 | 406,192 | (86,623) | 2,629,977 |
| CIUs | 1,110,337 | 178,620 | - | 1,288,957 |
| Total | 3,420,746 | 584,812 | (86,623) | 3,918,934 |
Page 78
| 2021 | ||||
| RSUs | 2,052,416 | 598,684 | (36,748) | 2,614,352 |
| CIUs | 1,022,857 | 494,682 | 28,527 | 1,546,066 |
| Total | 3,075,273 | 1,093,366 | (8,221) | 4,160,419 |
| 2020 | ||||
| RSUs | 1,255,857 | 117,570 | 54,475 | 1,427,902 |
| CIUs | 555,010 | 126,676 | (33,014) | 648,673 |
| Total | 1,810,867 | 244,246 | 21,461 | 2,076,575 |
(4) The following table reconciles SCT Total for PEO (b2) to Total CAP to PEO (c2):
| PEO (c2): | Fiscal Year 2024 |
Fiscal Year 2023 |
Fiscal Year 2022 |
Fiscal Year 2021 |
Fiscal Year 2020 |
| SCT Total ($) (A) | n/a | n/a | n/a | n/a | 5,370,502 |
| Deducted from SCT: Pension Value and Nonqualified Deferred Compensation Earnings ($) (B) | n/a | n/a | n/a | n/a | 380,329 |
| Added to CAP: Pension Value Attributable to Fiscal Years' Service and Plan Amendments ($) (C) | n/a | n/a | n/a | n/a | - |
| Deducted from SCT: Grant Date Fair Value of Awards ($) (D) | n/a | n/a | n/a | n/a | 2,100,004 |
| Added to CAP: Fair Value of Awards Granted in Fiscal Year ($)(a) (E) | n/a | n/a | n/a | n/a | 2,284,638 |
| Added to CAP: Change in Fair Value of |
n/a | n/a | n/a | n/a | 395,669 |
| Added to CAP: Change in Fair Value of |
n/a | n/a | n/a | n/a | 35,607 |
| Total CAP (A - B + |
n/a | n/a | n/a | n/a | 5,606,083 |
(a)The table below shows information on performance-based RSUs and performance-based CIUs previously granted to PEO (c2).
| PEO (c2): | ||||
| Fiscal Year | Fair Value of Equity Awards Granted in Fiscal Year at Fiscal Year End($) |
Change in Fair Value of |
Change in Fair Value of in Fiscal Year($) |
Equity Fair Value Included in Compensation Actually Paid($) |
| 2024 | ||||
| RSUs | n/a | n/a | n/a | n/a |
| CIUs | n/a | n/a | n/a | n/a |
| Total | n/a | n/a | n/a | n/a |
| 2023 | ||||
| RSUs | n/a | n/a | n/a | n/a |
| CIUs | n/a | n/a | n/a | n/a |
| Total | n/a | n/a | n/a | n/a |
| 2022 | ||||
| RSUs | n/a | n/a | n/a | n/a |
| CIUs | n/a | n/a | n/a | n/a |
| Total | n/a | n/a | n/a | n/a |
| 2021 | ||||
| RSUs | n/a | n/a | n/a | n/a |
| CIUs | n/a | n/a | n/a | n/a |
| Total | n/a | n/a | n/a | n/a |
| 2020 | ||||
| RSUs | 1,599,049 | 190,096 | 90,788 | 1,879,933 |
| CIUs | 685,589 | 205,573 | (55,181) | 835,981 |
| Total | 2,284,638 | 395,669 | 35,607 | 2,715,914 |
(5) The dollar amounts reported in column (d) are the average amounts of total compensation reported for the Non-PEO NEOs for each corresponding fiscal year in the "Total" column of the SCT. For 2024, the Non-PEO NEOs were Messrs. Brennan, Harnett, Eppers, and Lanza and
Page 79
Harnett, Lanza, Senia, and Wilcox and
(6) The following table reconciles Average SCT Total for Non-PEO NEOs (d) to Average CAP to Non-PEO NEOs (e):
| Average for Non-PEO NEOs: | Fiscal Year 2024 |
Fiscal Year 2023 |
Fiscal Year 2022 |
Fiscal Year 2021 |
Fiscal Year 2020 |
| SCT Total ($) (A) | 1,702,268 | 1,603,837 | 1,958,112 | 1,889,803 | 2,196,253 |
| Deducted from SCT: Pension Value and Nonqualified Deferred Compensation Earnings ($) (B) | - | 29,919 | - | - | 101,198 |
| Added to CAP: Pension Value Attributable to Fiscal Years' Service and Plan Amendments ($) (C) | - | - | - | - | - |
| Deducted from SCT: Grant Date Fair Value of Awards ($) (D) | 706,829 | 615,769 | 665,944 | 580,838 | 637,958 |
| Added to CAP: Fair Value of Awards Granted in Fiscal Year ($)(a) (E) | 722,054 | 437,329 | 863,214 | 835,690 | 698,107 |
| Added to CAP: Change in Fair Value of |
(59,313) | 132,153 | 158,607 | 348,738 | 120,014 |
| Added to CAP: Change in Fair Value of |
(9,305) | 62,458 | (31,070) | (3,263) | 12,774 |
| Deducted from CAP: Fair Value at End of Prior Fiscal Year on Awards Granted in Prior Fiscal Years Not Meeting Vesting Conditions ($)(a) (H) | - | 597,631(b) | - | - | - |
| Total CAP (A - B + |
1,648,875(d) | 992,458(c) | 2,282,919 | 2,490,130 | 2,287,992 |
(a)The table below shows information on performance-based RSUs and performance-based CIUs previously granted to the Non-PEO NEOs.
| Average for Non-PEO NEOs: | |||||
| Fiscal Year |
Fair Value of Equity Awards Granted in Fiscal Year at Fiscal Year End($) |
Change in Fair Value of Prior Years' Awards Unvested($) |
Change in Fair Value of in Fiscal Year($) |
Fair Value at End of Prior Fiscal Year on Awards Granted in Prior Fiscal Years Not Meeting Vesting Conditions($) |
Equity Fair Value Included in Compensation Actually Paid($) |
| 2024 | |||||
| RSUs | 573,649 | (21,576) | (9,305) | - | 542,768 |
| CIUs | 148,405 | (37,737) | - | - | 110,668 |
| Total | 722,054 | (59,313) | (9,305) | - | 653,436 |
| 2023 | |||||
| RSUs | 277,099 | 90,533 | 62,458 | (399,002) | 31,088 |
| CIUs | 160,230 | 41,620 | - | (198,629) | 3,221 |
| Total | 437,329 | 132,153 | 62,458 | (597,631) | 34,309 |
| 2022 | |||||
| RSUs | 583,518 | 108,458 | (31,070) | - | 660,907 |
| CIUs | 279,695 | 50,149 | - | - | 329,844 |
| Total | 863,214 | 158,607 | (31,070) | - | 990,751 |
| 2021 | |||||
| RSUs | 559,612 | 188,746 | (14,317) | - | 734,040 |
| CIUs | 276,078 | 159,992 | 11,054 | - | 447,124 |
| Total | 835,690 | 348,738 | (3,263) | - | 1,181,165 |
| 2020 | |||||
| RSUs | 485,891 | 55,881 | 32,425 | - | 574,197 |
| CIUs | 212,216 | 64,133 | (19,651) | - | 256,698 |
| Total | 698,107 | 120,014 | 12,774 | - | 830,894 |
(b)Average includes a ($2,988,157) adjustment related to
Page 80
(c)Average includes no fair value adjustment related to
(d)Average includes no 2024 CIU award granted to
(7) We used our peer group for purposes of Item 201(e) of Regulation S-K to calculate peer group total shareholder return. The peer group is a select group of peer companies comprised of Nasdaq-listed companies in SIC Code 6330-6339, Fire, Marine, and Casualty Insurance provided to us by Research Data Group, Inc. The peer group was comprised of the same companies for the 2020-2022 data presented. In 2023,
Narrative Discussion ofRelationship between CAP and Performance Measures
We believe that the Pay Versus Performance Table reflects an alignment of CAP with Selective's performance of key financial performance measures. The information in the below charts further demonstrates that generally there is correlation among the CAP amounts set forth in columns (c1), (c2), and (e) and Selective'sTSR, net income, and GAAP combined ratio. As noted above, the amount set forth in column (c2) includes
In addition to reviewing this discussion and the Pay Versus Performance Table above, we encourage you to read the Compensation Discussion and Analysis section of this Proxy Statement, which explains our executive compensation philosophy and programs and compensation decisions relating to 2024 compensation for our NEOs.
CAP versus Selective TSR
In each of 2023, 2022, 2021, and 2020, Selective's TSR was positive and markedly outperformed the Peer Group TSR. However, in 2024, Selective's TSR was negative and trailed the Peer Group TSR. The relationship between CAP to PEO (c1) and Average CAP to Non-PEO NEOs to Selective's TSR was largely correlated, as both CAP to PEO (c1) and Average CAP to Non-PEO NEOs increased from 2020 to 2021, as Selective's TSR increased. However, from 2021 to 2022, CAP to PEO (c1) and Average CAP to Non-PEO NEOs decreased, while Selective's TSR increased. From 2022 to 2023, CAP to PEO (c1) increased as TSR also increased, but Average CAP to Non-PEO NEOs decreased primarily due to
Page 81
CAP versus Selective Net Income
The relationship between CAP to PEO (c1) and Average CAP to Non-PEO NEOs to Selective's net income was reasonably correlated for 2020 through 2024. CAP to PEO (c1) and Average CAP to Non-PEO NEOs increased as net income increased from 2020 to 2021. CAP to PEO (c1) and Average CAP to Non-PEO NEOs decreased as net income decreased from 2021 to 2022. From 2022 to 2023, CAP to PEO (c1) increased as net income increased, but Average CAP to Non-PEO NEOs decreased primarily due to
CAP versus Selective GAAP Combined Ratio
For each of 2023, 2022, 2021, and 2020 Selective generated strong GAAP combined ratio results. However, for 2024, the GAAP combined ratio was adversely impacted primarily by unfavorable prior year casualty reserve development. The relationship between CAP to PEO (c1) and Average CAP to Non-PEO NEOs to Selective's GAAP combined ratio for 2020 through 2024 was reasonably correlated. CAP to PEO (c1) and Average CAP to Non-PEO NEOs increased as the GAAP combined ratio improved from 2020 to 2021. CAP to PEO (c1) and Average CAP to Non-PEO NEOs decreased for 2021 to 2022 as the GAAP combined ratio weakened. From 2022 to 2023, CAP to PEO (c1) increased modestly due to stock price appreciation as the GAAP combined ratio weakened marginally, while the Average CAP to Non-PEO NEOs decreased, in part due to
Page 82
Important Financial Performance Measures
The following unranked tabular list sets forth the most important performance measures used by Selective to link CAP for all NEOs to company performance for 2024:
| GAAP Combined Ratio |
| Cumulative non-GAAP operating ROE* / cumulative statutory operating retuon policyholders' surplus |
| Cumulative policy count growth |
| Cumulative statutory net premiums written growth |
| Profitability improvement |
| Expense management and operational efficiency |
| Customer experience |
* See the Compensation Discussion and Analysis section of this Proxy Statement for a discussion of non-GAAP operating ROE, which is a non-GAAP performance measure.
Page 83
DIRECTOR COMPENSATION
We compensate non-employee directors for their Board service with a combination of cash and equity in amounts commensurate with their role and involvement, and consistent with peer company practices. In setting director compensation, we consider the significant amount of time and effort our directors expend fulfilling their duties, and the skill level required of members of our Board. We intend to compensate our non-employee directors competitively to attract and retain high-caliber directors and align their interests with those of our stockholders.
The CHCC, which is comprised solely of independent directors, has the primary responsibility for reviewing and approving compensation for non-employee directors, including the following elements: retainer; meeting fees; committee member fees; committee chairperson fees; lead independent director fee; and equity compensation. In October 2023, the CHCC reviewed the form and amount of compensation paid to our non-employee directors for their Board service for 2024. The CHCC considered the results of an independent analysis completed by the Compensation Consultant, who reviewed non-employee director compensation trends and data from companies comprising the Proxy Peer Group that the CHCC uses in its review of executive compensation. After consulting with the Compensation Consultant, and in light of peer data, the CHCC determined not to make any changes to the Company's non-employee director compensation program for 2024 compared to 2023, other than establishing an Annual Committee Chairperson Fee for the newly-created Risk Committee.
The following table summarizes the types and amounts of compensation paid to our non-employee directors in 2024:
| Type of Compensation | Amount($) |
| Annual Retainer Fee | 100,000 |
| Grant Date Fair Value of Annual Equity Award | 110,000 |
| Board Meeting Attendance | - |
| Annual Committee Member Retainer Fees* | |
| First Committee | 0 |
| Second Committee | 0 |
| Third Committee | 8,000 |
| Annual Committee Chairperson Fees** | |
| Audit Committee | 35,000 |
| CHCC | 25,000 |
| Corporate Governance and Nominating Committee | 25,000 |
| Finance and Investments Committee | 35,000 |
| Risk Committee | 25,000 |
| Lead Independent Director Fee | 40,000 |
| Expenses | Reasonable |
* Directors do not receive annual committee member retainer fees for service on two standing committees. Any Director who serves on a third Board committee will be paid an annual retainer for that committee service. Non-standing committees and the Executive Committee have no annual committee member retainer fees or annual chairperson fees unless otherwise determined by the CHCC.
** A Director who receives an annual chairperson fee for a committee does not also receive an annual committee member retainer fee for such committee.
As the table above shows, in 2024, the non-employee directors received compensation in the forms of restricted stock units and cash for their director service. The CHCC annually reviews and approves the compensation for non-employee directors, including the Annual Retainer Fee. For 2024, non-employee directors had the election to receive up to 100% of their Annual Retainer Fee in shares of Selective common stock. Any remaining balance of the Annual Retainer Fee was paid in cash. Non-employee directors made this election before December 31, 2023. The Annual Retainer Fee was paid in one installment on the second business day following Selective's 2024 Annual Meeting of Stockholders.
| Page 84 |
For 2024, the annual equity grant under Selective's non-employee director compensation program was made entirely in restricted stock units granted under the Company's 2024 Omnibus Stock Plan. Shares of Selective common stock paid to directors as a portion of their Annual Retainer Fee were issued under the Company's 2024 Omnibus Stock Plan. Annual Committee Member Fees, Annual Committee Chairperson Fees, and the Lead Independent Director Fee were paid in cash as reflected in the table above.
The following table shows compensation earned by or paid to our non-employee directors during 2024 for 2024 service:
| Fees Earned or Paid in Cash($)(1) |
Stock Awards($)(2) | Total($) | |
| 100,074 | 110,004 | 210,078 | |
| 100,000 | 110,004 | 210,004 | |
| 100,074 | 110,004 | 210,078 | |
| 100,000 | 110,004 | 210,004 | |
| 140,000 | 110,004 | 250,004 | |
| 135,074 | 110,004 | 245,078 | |
| 108,000 | 110,004 | 218,004 | |
| 135,000 | 110,004 | 245,004 | |
| 125,000 | 110,004 | 235,004 | |
| 50,273 | 0 | 50,273 | |
| 125,037 | 110,004 | 235,041 | |
| 33,333 | 0 | 33,333 | |
| 125,005 | 110,004 | 235,009 |
(1)Information on the election by directors to receive shares of Selective common stock instead of cash for their 2024 annual retainer is included below under the heading "Annual Retainer Stock Election."
(2)This column reflects the aggregate grant date fair value for the 2024 grants of restricted stock units to directors, based on a grant date fair value of $96.41 per share, calculated in accordance with ASC Topic 718. Information on unvested restricted stock units held by each director as of December 31, 2024, is set forth below under the heading "Unvested Restricted Stock Units."
(3)
(4)
(5)
| Page 85 |
Annual Retainer Stock Election
Directors elected to receive shares of Selective common stock for all, or a portion of, their 2024 Annual Retainer Fee as follows:
| Number of Shares | Payment Date Value of Stock($) | |
| 1,038 | 100,074 | |
| - | - | |
| 1,038 | 100,074 | |
| - | - | |
| - | - | |
| 1,038 | 100,074 | |
| - | - | |
| - | - | |
| - | - | |
| - | - | |
| 519 | 50,037 | |
| - | - | |
| 695 | 67,005 |
Unvested Restricted Stock Units*
The aggregate number of unvested restricted stock units held by each director as of December 31, 2024, was as follows:
| Unvested Restricted Stock Units(#) | |
| 1,141 | |
| 1,141 | |
| 1,141 | |
| 1,141 | |
| 1,141 | |
| 1,141 | |
| 1,141 | |
| 1,141 | |
| 1,141 | |
| - | |
| 1,141 | |
| - | |
| 1,141 |
* No directors held any outstanding stock options as of December 31, 2024.
Director Stock Ownership and Retention Requirements
Selective believes that stock ownership by directors encourages the enhancement of stockholder value. Selective's stock ownership guidelines, based on prevailing corporate governance practices, are detailed in the Corporate Governance Guidelines.
Each non-employee director must own five times the amount of their annual retainer within five years of their first election to the Board. The following count toward satisfying the guidelines: (i) shares of Selective common stock of which the director is deemed to be the "beneficial owner" (as such term is defined under Section 16 of the Exchange Act); (ii) awards of restricted stock and restricted stock units (including related dividend equivalent units) not yet vested; (iii) shares of Selective common stock held in benefit plan investments (i.e., 401(k) Plan); and (iv) deferred shares of Selective common stock held in accounts of directors. Unexercised stock options are not counted. All our directors have met, or are on track to meet, the required ownership guidelines.
| Page 86 |
INFORMATION ABOUT PROPOSAL 2
The Dodd-Frank Act requires our Board to provide Selective's stockholders the opportunity to vote annually to approve, on an advisory (non-binding) basis, the compensation of our named executive officers disclosed according to the
We urge stockholders to read the Compensation Discussion and Analysis section of this Proxy Statement, which discusses our compensation philosophy, policies, and procedures. The following resolution is being submitted to stockholders for approval at the Annual Meeting pursuant to Section 14A of the Exchange Act:
"RESOLVED, that the stockholders of
If a majority of stockholders vote against this proposal, neither the Board nor the CHCC will be required to take any specific action because this vote is non-binding and advisory. Nonetheless, consistent with our record of stockholder responsiveness, the CHCC will consider our stockholders' concerns and take them into account in future determinations concerning our executive compensation programs. The Board recommends you indicate your support for the compensation of our named executive officers as outlined in the above resolution.
Unless the Board modifies its policy on the frequency of holding say-on-pay votes, the next say-on-pay advisory vote will be held at our 2026 Annual Meeting of Stockholders. The next vote on the proposal regarding the frequency of the say-on-pay advisory vote (also referred to as "say-on-frequency") is expected to occur at the 2029 Annual Meeting of Stockholders.
Board Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ADVISORY RESOLUTION APPROVING THE 2024 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
| Page 87 |
INFORMATION ABOUT PROPOSAL 3
Ratification of Appointment of
Independent Registered Public Accounting Firm
The Audit Committee has appointed
Stockholder ratification of the appointment of
A representative of
Board Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2025.
FEES OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
| Category | 2024 | 2023 |
| Audit Fees(1) | $2,195,000 | $1,859,436 |
| Audit-Related Fees(2) | $0 | $65,000 |
| Tax Fees(3) | $0 | $6,295 |
| All Other Fees(4) | $115,000 | $110,500 |
| TOTAL | $2,310,000 | $2,041,231 |
(1)Audit Fees for 2024 include fees associated with the issuance of Form S-8 and Form S-3 consents.
(2) Audit-Related Fees for 2023 include fees associated with agreed upon procedures performed related to a catastrophe bond transaction and work paper access by state insurance examiners.
(3)Tax Fees for 2023 were for tax consulting services.
(4)All Other Fees for 2024 and 2023 consisted of amounts associated with independent actuarial reviews and reserve opinions. The Audit Committee has a pre-approval policy that requires pre-approval of audit, audit-related, and permitted non-audit services on an annual basis and authorizes the Audit Committee to delegate, to one or more of its members, pre-approval authority for permitted services. The Audit Committee delegated the authority to pre-approve audit, audit-related, and permitted non-audit services by
| Page 88 |
AUDIT COMMITTEE REPORT
The Audit Committee oversees Selective's financial reporting processes on behalf of the Board. Management has the primary responsibility for overseeing the preparation of the financial statements and the overall reporting processes, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee has:
| ◾ | Periodically met with and held discussions with management regarding the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in Selective's financial statements. |
| ◾ | Reviewed and discussed the audited financial statements for the year ended December 31, 2024, included in the Annual Report on Form 10-K and any amendments thereto, with management, which represented to the Audit Committee that: (i) the financial statements were prepared in accordance with |
| ◾ | Reviewed and discussed with |
| ◾ | Received the written disclosures and the letter from |
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, the inclusion of the audited financial statements in Selective's Annual Report on Form 10-K and any amendments thereto for the year ended December 31, 2024.
Submitted by the Audit Committee of the Board,
*
The Audit Committee Report does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other Selective filing under the Securities Act or the Exchange Act, except to the extent that Selective specifically incorporates the Audit Committee Report by reference therein.
| Page 89 |
STOCKHOLDER PROPOSALS AND NOMINATIONS
Proposals for Inclusion in 2025 Proxy Statement
From time to time, stockholders may present proposals for inclusion in the proxy statement and consideration at an annual meeting. Under
Other Proposals and Nominations
Section 3.4 of our By-Laws establishes requirements for stockholders who intend to: (i) present a proposal outside of Rule 14a-8 under the Exchange Act; or (ii) nominate a person for election as a director of the Company. Under our By-Laws, stockholders must deliver notice to the Corporate Secretary, in proper written form and in accordance with the requirements of the By-Laws, not less than 120 days nor more than 150 days prior to the first anniversary of the preceding year's annual meeting. Accordingly, notice for the 2026 Annual Meeting of Stockholders must be received by the Corporate Secretary not earlier than December 1, 2025 or after December 31, 2025. In addition, stockholders who intend to solicit proxies in support of director nominees other than Selective's nominees must comply with the additional requirements of Rule 14a-19(b).
HOUSEHOLDING
As permitted by the rules of the
Individual copies of the proxy and 2024 Annual Report can by requested by writing to
* * * * * * * *
It is important that your shares be represented at the Annual Meeting, regardless of the number of shares that you hold. ACCORDINGLY, YOU ARE URGED TO PROMPTLY VOTE YOUR SHARES BY: (1) COMPLETING, DATING, AND SIGNING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE ENCLOSED ENVELOPE; (2) CALLING THE TOLL-FREE TELEPHONE NUMBER LISTED ON THE PROXY CARD; OR (3) ACCESSING THE INTERNET WEB SITE LISTED ON THE PROXY CARD.
By Order of the Board of Directors:
Corporate Secretary
March 26, 2025
| Page 90 |
|
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, |
|
V63244-P24493 TO VOTE BY INTERNET OR TELEPHONE, SEE REVERSE SIDE OF THIS PROXY CARD. |
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