Michael Sewell
CINCINNATI FINANCIALAbout Michael Sewell
Michael J. Sewell, CPA, is Chief Financial Officer, Executive Vice President and Treasurer of Cincinnati Financial Corporation (CINF) and has served as an executive officer since at least 2011, when the company established a deferred compensation arrangement upon his hire . Under his tenure as a named executive officer, CINF’s 2024 performance produced a value creation ratio (VCR) of 19.8% and three‑year total shareholder return (TSR) of 36.5% through December 31, 2024, driving maximum annual incentive payouts for 2024 and threshold PSU vesting for the 2022–2024 performance cycle . The company’s pay program features at‑risk pay tied to relative VCR and three‑year TSR vs. a nine‑company peer set, with strict clawback and double‑trigger CIC provisions and no tax gross‑ups .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Cincinnati Financial Corporation | Chief Financial Officer, Executive Vice President and Treasurer | 2011–present | Executive leadership of finance during periods that delivered a 2024 VCR of 19.8% and three‑year TSR of 36.5% (ended 12/31/2024), supporting maximum annual bonus outcomes in 2024 . |
External Roles
- No external board or role disclosures specific to Mr. Sewell were identified in the company’s 2025 proxy –.
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 943,156 | 995,500 | 1,038,235 |
| All Other Compensation ($) | 230,382 (includes company retirement matches and perquisites) | 222,681 | 233,804 (includes $137,613 company 401(k)/Top Hat match and $44,081 annual distribution under 2011 deferred comp agreement) |
- 2024 base salary rate was increased to $1,044,415 in February 2024 (SCT salary differs due to timing) .
Performance Compensation
Annual Incentive (Cash) – Plan Mechanics and 2024 Outcome
| Item | Plan design / targets | 2024 actual | Payout impact |
|---|---|---|---|
| Primary metric | One‑year VCR relative to 9‑company peer set; threshold/target/maximum at >3/>=5/>=7 peers outperformed | CINF VCR 19.8%; baseline exceeded 6 peers | Baseline placement = >6 peers |
| Growth gate | Net written premium growth goal >=3% | 15% growth | Gate achieved; proceed to profitability step |
| Profitability step | Combined ratio thresholds (<=97/95/93/91 add +1/+2/+3/+4 placements) | 93.4% combined ratio | +2 placements (<=95%), final placement >8 of 9 peers |
| Payout factor | 0%/30%/100%/200% at <threshold/threshold/target/maximum | Maximum (200% of target) | Drives 2.0x target payout |
| 2024 individual calc (Sewell) | Salary x tier target % x performance factor | $1,044,415 x 125% x 200% | $2,611,038 |
Long‑Term Equity – 2024 Grants and Program
| Award type | 2024 Sewell grant | Vesting | Performance metric / strike | Notes |
|---|---|---|---|---|
| Nonqualified Stock Options (#) | 29,564 | Ratable over 3 years | Strike $112.36; expire 2/19/2034 | Options valued at grant; considered performance‑based (value only if stock appreciates) |
| Performance‑based RSUs (PSUs) (# target) | 8,715 | Cliff at 3 years | 3‑yr TSR vs peers; 30%/100%/200% at 30th/50th/75th pctls | Payout March 1, 2027 if hurdles achieved |
| Service RSUs (RSUs) (#) | 2,324 | Ratable over 3 years | N/A | Restricted stock plan; no dividends on unvested |
PSU realization history (performance cycles ending 2024):
- 2022–2024 PSUs vested at threshold 30%: Sewell 2,151 shares, $309,099 value based on $143.70 close on 12/31/2024 .
- 2021–2023 and 2020–2022 PSU cycles paid below threshold (0) .
Option Exercise/Vesting Activity (2024)
| Item | 2024 |
|---|---|
| Options exercised (shares) | 7,205; value realized $571,357 |
| Stock awards vested (shares) | 2,101; value realized $238,169 |
Equity Ownership & Alignment
Beneficial Ownership and Alignment Factors
| Item | Detail |
|---|---|
| Beneficial ownership | 345,090 CINF shares; 0.22% of outstanding |
| Options exercisable within 60 days | 231,323 shares (included in beneficial ownership) |
| Shares in nonqualified savings plan | 14,064 shares (no voting rights) |
| Pledging | Pledging permitted but monitored; year‑end 2024 pledged shares by directors/execs <0.1% of outstanding; Sewell not listed among individuals with pledged shares |
| Ownership guidelines | CEO 5x salary; other NEOs 3.5x salary; all directors and executive officers in compliance as of March 5, 2025 |
Outstanding Unvested/Unearned Equity (12/31/2024)
| Instrument | Tranche | Count | Indicative value/terms |
|---|---|---|---|
| RSUs (not vested) | 2024 grant | 2,324 | $333,959 market value |
| RSUs (not vested) | 2023 grant | 1,333 | $191,552 market value |
| RSUs (not vested) | 2022 grant | 637 | $91,537 market value |
| PSUs (unearned) | 2024 target | 8,715 | $1,252,346 market/payout value basis |
| PSUs (unearned) | 2023 target | 7,498 | $1,077,463 market/payout value basis |
| PSUs (unearned) | 2022 target | 7,167 | $1,029,898 market/payout value basis |
| 2024 options | Grant | 29,564 | $112.36 strike; exp. 2/19/2034; vest ratably over 3 years |
Vesting cadence and potential supply:
- RSUs vest ratably over three years; PSUs cliff‑vest after three years; options vest 1/3 annually over three years; options/stock awards are subject to trading windows and blackout policies .
Employment Terms
Contracting, CIC, Clawbacks, Hedging/Pledging
- At‑will employment; no executive employment contracts or severance plans; no guaranteed bonuses; no tax gross‑ups .
- Double‑trigger CIC provisions (plan‑based awards accelerate only upon CIC plus qualifying termination); no option repricing or exchanges .
- Clawbacks: 2023 policy for recovery of erroneously awarded compensation (Exchange Act Section 10D and Nasdaq rules), in addition to existing recoupment provisions .
- Hedging prohibited (all officers/directors); pledging permitted but monitored and expected to decline over time .
Potential Payments and Benefits (illustrative, assuming termination on 12/31/2024)
| Component | Retirement | Retirement with disability | Change in control (with qualifying termination) |
|---|---|---|---|
| Top Hat Savings Plan (deferred comp) | $10,890,543 | — | — |
| Retirement Plan / SERP | — (not a participant) | — | — |
| Stock‑based awards (acceleration) | — | $6,487,388 | $6,487,388 |
| Annual incentive (2024 outcome basis) | — | $2,611,038 | $2,611,038 |
Notes: Sewell was hired after entry to the pension plan was closed; therefore, no qualified pension/SERP benefits. For disability or CIC‑related separation, certain stock‑based awards can accelerate based on plan terms; CIC acceleration is “double‑trigger” .
Multi‑Year Compensation (Pay‑for‑Performance context)
| Component ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary | 943,156 | 995,500 | 1,038,235 |
| Stock Awards (PSUs/RSUs/Holiday) | 1,234,675 | 1,511,422 | 1,130,849 |
| Option Awards | 888,144 | 941,511 | 979,160 |
| Non‑Equity Incentive (Annual) | 1,184,251 | 1,255,307 | 2,611,038 |
| All Other Compensation | 230,382 | 222,681 | 233,804 |
| Total Compensation | 4,480,608 | 4,926,421 | 5,993,086 |
Company performance linkage:
- 2024: VCR 19.8% and three‑year TSR 36.5% → maximum annual incentive payout; PSUs (2022–2024) paid at threshold 30% .
- 2023: VCR 19.5% → target annual incentive outcome; 2021–2023 PSUs paid 0% .
- 2022: VCR −14.6% but outperformed five peers → target annual incentive; PSUs (2020–2022) paid 0% .
Compensation Structure – Design and Peer Context
- Annual plan: multi‑metric (relative VCR primary; growth and combined ratio “placement enhancers”) with 0%/30%/100%/200% payout curve and clear thresholds .
- LTI mix: Tier I NEOs target 187.5% of salary in performance equity (50% PSUs / 50% options); RSUs set at 25% of salary; options/RSUs vest over 3 years; PSUs cliff at 3 years .
- Peer group used for relative performance: Allstate, CNA, Hanover, Hartford, Markel, Selective, Travelers, United Fire, W.R. Berkley .
Governance, Say‑on‑Pay, and Risk Indicators
- Say‑on‑Pay: At the 2024 meeting, >95% of votes cast supported executive compensation; structure retained for 2024 awards .
- Risk controls: capped payouts, clawbacks, ownership guidelines, no dividends on unvested awards, no repricing; independent compensation committee oversight .
- Section 16: 2024 filings timely; historical note—one late Form 4 for Mr. Sewell in 2022 related to estate settlement of 300 shares .
Investment Implications
- Alignment and retention: Large at‑risk mix tied to relative VCR and TSR, meaningful unvested PSUs and RSUs, and significant options outstanding (231k options exercisable within 60 days) indicate continued alignment but also potential trading supply around vesting/exercise windows .
- Near‑term selling pressure watchpoints: (i) Ratable RSU and option vesting from 2024–2027; (ii) PSU cliff vest in 2027 for 2024 grants; (iii) ongoing option exercises (7,205 exercised in 2024) .
- Change‑in‑control risk mitigated: Double‑trigger provisions reduce one‑time windfalls; no employment agreements or severance plans, and clawbacks in place—supporting shareholder‑friendly posture .
- Pay‑for‑performance credibility: Maximum 2024 bonus was formulaic—driven by strong VCR, premium growth, and underwriting profitability; prior cycles with weaker TSR paid PSUs at or below threshold, reinforcing downside accountability .