Steven Johnston
CINCINNATI FINANCIALAbout Steven Johnston
Steven J. Johnston, age 65, is Executive Chairman of Cincinnati Financial Corporation; he served as CEO from 2011 to May 2024 and has been a director since 2011. He is an actuary and investment professional (FCAS, MAAA, CFA, CERA) with prior roles as CFO (2008–2011), president (2011–2022), and CEO (2011–May 2024) . Under the company’s framework, 2024 value creation ratio (VCR) was 19.8% and three-year TSR was 36.5%, which drove maximum annual incentive payouts and threshold PSU vesting across NEOs .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Cincinnati Financial | Chief Financial Officer, SVP and Secretary (also Company Treasurer) | 2008–2011 | Strengthened finance, accounting and actuarial rigor; prepared for CEO succession . |
| Cincinnati Financial | President (company and U.S. subsidiaries) | 2011–2022 | Led operations and technology/efficiency initiatives; agent-centered growth . |
| Cincinnati Financial | Chief Executive Officer | 2011–May 2024 | Oversaw profitable growth, underwriting discipline, and investment strategy; liaison with board and stakeholders . |
| Cincinnati Financial | Executive Chairman of the Board | 2020–present | Chairs Executive and Investment Committees; facilitates board business and supports management . |
External Roles
| Organization | Role | Years |
|---|---|---|
| American Property Casualty Insurance Association | Board Member | 2021–present |
| Ohio Business Roundtable | Executive Committee | 2023–present |
| Cincinnati Business Committee | Executive Committee and Past Chair | 2011–present |
| Professional credentials | Fellow, Casualty Actuarial Society; Member, American Academy of Actuaries; Chartered Financial Analyst; Chartered Enterprise Risk Analyst | Various (1990–present; 1987–present; 1997–present; 2013–present) |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base salary paid (SCT) ($) | 1,132,781 | 1,195,649 | 753,716 |
| Board-designated base rate(s) during year | — | — | $1,254,399 as of Feb 2024; reduced to $500,000 in May 2024 upon CEO→Executive Chairman transition |
Notes:
- No guaranteed bonuses; no discretionary cash bonuses for NEOs since 2010 .
- Perquisites totaled $45,441 for 2024 (health premiums, limited spouse travel/meals, auto use, umbrella policy, exec health exam, etc.) .
Performance Compensation
Annual Incentive (Cash) – Structure and 2024 Outcome
- Design: Primary metric is one-year VCR relative to a nine-company peer group; premium growth and combined ratio can add up to +4 placements. Threshold/Target/Max at >3/≥5/≥7 peers; payout 30%/100%/200% of target. Targets are formulaic, company-level, and relative to peers .
- 2024 results: VCR 19.8% exceeded 6 peers; premium growth 15% ≥3% and combined ratio 93.4% met the “≤95%” step, lifting to final placement of >8 peers; payout at maximum 200% of target .
| Executive | Base annual salary used for formula ($) | Target (% of salary) | Performance factor | 2024 payout ($) |
|---|---|---|---|---|
| Steven J. Johnston | 1,254,399 | 200% | 200% | 5,017,596 |
Additional context: CEO pay-for-performance tracking shows directional alignment of CEO compensation with VCR and three-year TSR; 2024 CEO SCT total reflected leadership transition (Spray as CEO in 2024) .
Long-Term Incentives (Equity)
Award types and vesting:
- Nonqualified Stock Options: 3-year ratable vesting; 10-year term; granted at FMV; no repricing/exchange .
- Performance-based RSUs (PSUs): 3-year performance period; vest at 0–200% of target based on 3-year TSR vs peers; payout in shares; 2024 grant performance period 2024–2026, vest/payout March 1, 2027 if earned .
- Service-vesting RSUs (RSUs): ratable over 3 years; 2024 grant vests 1/3 each on March 1, 2025/2026/2027 .
2024 grants to Steven J. Johnston:
| Instrument | Quantity | Exercise/Grant price | Grant date | Vesting |
|---|---|---|---|---|
| Stock options | 56,812 | $112.36 | Feb 19, 2024 | 1/3 on each of 2/19/2025, 2/19/2026, 2/19/2027; expire 2/19/2034 . |
| PSUs (target) | 16,747 | Grant at FMV; relative TSR metric | Feb 19, 2024 | Performance period 2024–2026; payable 3/1/2027 if hurdles met . |
| RSUs | 2,792 | FMV on grant | Feb 19, 2024 | 1/3 on 3/1/2025; 1/3 on 3/1/2026; 1/3 on 3/1/2027 . |
Recent PSU vesting (performance realized):
| Performance period | Target PSUs (#) | Achievement | Vested PSUs (#) | Vest value ($) |
|---|---|---|---|---|
| 2022–2024 | 13,772 | Threshold (30%) | 4,132 | 593,768 (at $143.70) |
Equity Ownership & Alignment
| Item | Amount |
|---|---|
| Beneficial ownership (shares) | 837,904; 0.54% of outstanding |
| Includes options exercisable within 60 days | 463,733 shares |
| Includes shares in nonqualified savings plan | 182,495 shares (no voting rights) |
| Pledged shares | Not disclosed for Johnston; pledging permitted but <0.1% of outstanding pledged by all directors/officers; 25 of 28 do not pledge ; pledge footnotes list others, not Johnston |
| Ownership guidelines | CEO 5x salary; other NEOs 3.5x salary; all directors/officers in compliance as of Mar 5, 2025 |
Outstanding equity detail (illustrative highlights):
- Multiple option series outstanding with expirations spanning 2026–2034; 2024 award expires 2034 .
- 2023/2022 PSU and RSU tranches scheduled per standard cycles; PSU payouts contingent on relative TSR .
Implication: A sizable option overhang is immediately exercisable (463,733 shares within 60 days), representing potential selling pressure if exercised and sold, though hedging is prohibited and pledging is minimal at the enterprise level .
Employment Terms
- At-will employment; no executive employment contracts; no guaranteed bonuses or salary increases .
- Change-in-control: Double-trigger acceleration in stock plans and annual incentive plan (CIC event plus qualifying termination) .
- Clawback: Company-wide policy for recovery of erroneously awarded incentive compensation adopted in 2023; applies to executives; plus existing recoupment provisions in plan documents .
- Hedging/pledging: Hedging prohibited; pledging permitted under oversight (enterprise pledging <0.1% of outstanding at YE 2024) .
- Tax gross-ups: None for executives other than limited de minimis circumstances; company does not provide gross-ups on executive comp .
- Retirement/deferral: Johnston participates in defined contribution/Top Hat plans (not in defined benefit pension); 2024 Top Hat contributions $189,961 (executive), $169,261 (company match); YE 2024 aggregate balance $25,473,607 .
Board Governance
- Role: Executive Chairman (since 2020); not independent .
- Committees: Chairs Executive and Investment Committees .
- Board structure: CEO/Chair split in 2024; strong Lead Independent Director; fully independent Audit, Compensation, and Nominating committees .
- Attendance: 100% board/committee attendance in 2024 across directors .
- Director pay: Employee directors (Johnston) receive no additional compensation for board service .
Compensation Committee Analysis and Peer Group
- Committee members (2024): Linda W. Clement-Holmes; David P. Osborn (Chair); Gretchen W. Schar (Thomas J. Aaron served part-year) .
- Independence: Committee members independent; non-employee directors under SEC rules .
- Consultants: No external compensation consultant used; references Equilar and public filings for peer/context .
- Peer group (for performance comparisons): Allstate, CNA Financial, Hanover, Hartford, Markel, Selective, Travelers, United Fire, W.R. Berkley .
- Say-on-Pay: >95% support at 2024 Annual Meeting; annual frequency favored by >98% in 2023 .
Compensation Structure Summary (Alignment Levers)
- Cash vs equity mix: Majority at-risk; program emphasizes formulaic, relative metrics (VCR and TSR) and profitability/growth gates; CEO TDC ~80% performance-based; others ~71% in 2024 .
- Metric rigor: 2024 annual incentive at max due to VCR outperformance plus premium growth and combined ratio achievements; PSUs for 2022–2024 vested at threshold only (30%), reflecting balanced design sensitivity to multi-year TSR relative to peers .
- No option repricing/exchanges; grants at FMV on a fixed cadence shortly after earnings .
- Ownership alignment: Robust guidelines; hedging prohibited; pledging allowed but minimal; all insiders compliant .
Related-Party, Risk Indicators, and Controls
- Related-party transactions: 2024 approvals disclosed for several directors; none flagged for Johnston .
- Risk controls: Annual compensation risk assessment by CRO; capped payouts; negative discretion; clawbacks; formulaic peer-relative metrics reduce individual discretion .
- No Section 16(a) delinquencies in 2024 .
Director Service Details (History, Committees, Independence)
| Attribute | Detail |
|---|---|
| Years on CINF board | Director since 2011 |
| Current role | Executive Chairman; Chairs Executive and Investment Committees |
| Independence | Not independent (executive) |
| Board attendance (2024) | 100% for board/committees across directors |
| Lead Independent Director | Dirk J. Debbink |
| Governance practices | CEO/Chair split, independent key committees, proxy access, no poison pill, stock ownership guidelines |
Multi-Year Compensation (SCT) – Steven J. Johnston
| Year | Salary ($) | Stock awards ($) | Option awards ($) | Non-equity incentive ($) | All other comp ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2022 | 1,132,781 | 2,208,212 | 1,706,714 | 2,275,759 | 273,044 | 7,596,511 |
| 2023 | 1,195,649 | 2,730,976 | 1,809,258 | 2,412,305 | 233,323 | 8,381,511 |
| 2024 | 753,716 | 1,994,070 | 1,881,613 | 5,017,594 | 237,727 | 9,884,720 |
Ownership and Option Liquidity Snapshot
| Item | Quantity / Detail |
|---|---|
| Beneficial shares | 837,904 (0.54%) |
| Options exercisable within 60 days | 463,733 |
| Plan shares (nonqualified savings plan) | 182,495 (no voting rights) |
| Notable option expiries | 2026–2034 (e.g., 2017 grant exp. 2/10/2027; 2024 grant exp. 2/19/2034) |
Investment Implications
- Pay-for-performance alignment: 2024 maximum annual incentive (200%) reflects strong one-year value creation and underwriting/growth outcomes, but three-year TSR-based PSUs paid at only threshold for the 2022–2024 cycle—balanced signal that limits windfalls and ties major equity to multi-year shareholder returns .
- Potential selling pressure: 463,733 options are exercisable within 60 days for Johnston, creating potential supply overhang if monetized, though hedging is prohibited, pledging by insiders is minimal, and ownership guidelines reinforce alignment .
- Governance: CEO/Chair split and an empowered Lead Independent Director mitigate dual-role risks; clawback, no gross-ups, double-trigger CIC, and no option repricing are shareholder-friendly .
- Retention: Absence of employment contracts is offset by meaningful ongoing equity, standard CIC protection, and role as Executive Chairman with committee chair influence; no bespoke severance multiples disclosed for executives, but equity acceleration under double-trigger CIC supports retention through potential transitions .