Jeffery T. Hay
About Jeffery T. Hay
Jeffery T. Hay is Executive Vice President and Chief Underwriting Officer of Donegal Group Inc. and Donegal Mutual, promoted to EVP in 2025 after serving as SVP and CUO since 2021; he is age 50 and is a Fellow of the Casualty Actuarial Society (FCAS) and a Member of the American Academy of Actuaries (MAAA), with a B.S. in Actuarial Science & Economics from The Ohio State University . Company performance during his tenure has improved materially: 2024 net income rose to $50.9 million from $4.4 million in 2023, while the combined ratio improved to 98.6% from 104.4% and Class A TSR rose to 130.65 (value of $100 since 2019) .
Company financial trajectory (context for incentive alignment):
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| Revenues ($USD) | $775,041,991* | $809,988,505* | $858,405,343* | $924,165,177* | $984,623,978* |
| EBITDA ($USD) | $71,190,530* | $37,071,922* | $1,824,018* | $10,009,735* | $67,158,113* |
*Values retrieved from S&P Global.
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Donegal Group/Donegal Mutual | SVP & Chief Underwriting Officer (then EVP & CUO from 2025) | 2021–present | Led underwriting oversight and modernization leveraging analytics to support profitable growth |
| Willis Towers Watson | Senior Director, Insurance Consulting & Technology | 2018–2021 | Led commercial lines pricing, product and claims consulting; applied advanced analytics to pricing/underwriting |
| The Hartford | Head of Personal Lines Product Mgmt; Chief Actuary Small Commercial; other leadership roles | 2005–2018 | Product management, ratemaking, field underwriting finance; drove pricing and underwriting execution |
| Nationwide | Actuarial leadership (early career) | Not disclosed | Personal lines actuarial leadership foundation |
External Roles
No public company directorships or committee roles disclosed in the filings reviewed.
Fixed Compensation
Multi-year summary of Hay’s reported pay components:
| Component ($) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary | 442,000 | 459,000 | 459,000 |
| Annual Cash Bonus | 112,627 | — | 332,775 |
| Long-Term Cash Bonus | 44,167 | — | — |
| Stock Awards (Director RSUs, if any) | — | — | — |
| Option Awards (Grant-date FV) | 26,640 | 27,180 | 28,200 |
| All Other Compensation (primarily 401(k) match) | 13,815 | 15,095 | 20,425 |
| Total | 639,249 | 501,275 | 840,400 |
Notes:
- 2023 annual bonus was zero amid below-threshold results; 2024 bonus restored on achievement of plan targets .
Performance Compensation
Annual incentive plan (2024) – design and outcomes:
- Plan range: each NEO could earn 40%–100% of base salary based on results vs three metrics .
- Metrics, weights, and actuals:
| Metric | Weight | Target | Actual 2024 | Notes |
|---|---|---|---|---|
| Commercial Lines Direct Premium Growth | 15% | 2.0% | 4.3% | Above maximum schedule; growth driver |
| Adjusted Statutory Combined Ratio (DIG) | 65% | 97.0% | 96.9% | Slightly better than target |
| Operating Return on Equity (DGI) | 20% | 9.0% | 8.6% | Slightly below target |
- Result: Hay earned a 2024 cash bonus of $332,775 (vs $0 in 2023) under this formulaic plan .
Long-term incentives (equity options):
- Structure: Non-qualified stock options, 5-year term, three equal annual cumulative vesting installments; strike = prior-day close; no repricing without stockholder approval .
| Grant Year | Grant Date | Shares | Exercise Price | Term | Vesting Commences |
|---|---|---|---|---|---|
| 2024 | 12/19/2024 | 20,000 | $15.76 | 5 years | 7/1/2025 |
| 2023 | 12/21/2023 | 18,000 | $13.87 | 5 years | 7/1/2024 |
| 2022 | 12/15/2022 | 18,000 | $14.09 | 5 years | 7/1/2023 |
| 2021 | 12/16/2021 | 18,000 | $14.39 | 5 years | 7/1/2022 |
Vesting schedules (near-term supply watch):
- 2024 grant: 6,666 shares vest on 7/1/2025; 6,667 on 7/1/2026; 6,667 on 7/1/2027 .
- 2023 grant: 6,000 on 7/1/2024; 6,000 on 7/1/2025; 6,000 on 7/1/2026 .
- 2022 grant: 6,000 on 7/1/2023; 6,000 on 7/1/2024; 6,000 on 7/1/2025 .
Insider selling/exercises (signal check):
- Hay reported no option exercises in 2022, 2023, or 2024 (vs large exercises by other NEOs), reducing near-term selling overhang from his account .
Equity Ownership & Alignment
Beneficial ownership (as of March 3, 2025) and option status:
- Beneficially owned: 52,112 Class A shares (<1%); no Class B shares .
- Options currently exercisable within 60 days: 46,000 shares (disclosed tally) .
- Outstanding option detail (12/31/2024):
| Category | Shares | Exercise Price | Expiration |
|---|---|---|---|
| Exercisable | 10,000 | $14.07 | 1/4/2026 |
| Exercisable | 18,000 | $14.39 | 12/16/2026 |
| Exercisable | 12,000 | $14.09 | 12/15/2027 |
| Exercisable | 6,000 | $13.87 | 12/21/2028 |
| Unexercisable | 6,000 | $14.09 | 12/15/2027 |
| Unexercisable | 12,000 | $13.87 | 12/21/2028 |
| Unexercisable | 20,000 | $15.76 | 12/19/2029 |
Policy notes:
- Hedging: The company has not adopted a hedging policy restricting hedges; no pledging policy disclosure was noted in the proxy .
- Option acceleration: Unvested options do not auto-accelerate on a business combination unless otherwise provided; death or disability accelerates vesting .
Employment Terms
Employment agreement/term:
- Initial term for Hay auto-renews annually; current term expires December 31, 2025 (with customary indemnification, confidentiality, non‑solicit provisions) .
- Eligible to participate in annual and long-term incentive plans; base salary reviewed by compensation committees .
Severance/change-of-control economics (contractual framework):
- If terminated within 12 months post-Change-of-Control, severance equals 36 months of base salary, payable in 36 monthly installments; benefits continuation for 36 months; also includes payment for any due incentive, plan benefits, and an excise tax payment if applicable (i.e., gross-up) .
- “Change-of-Control” includes various transactions (incl. >25% voting power acquisition, certain mergers/asset transfers, board composition change, etc.); severance triggers on termination by the company without cause or by the executive “with or without Good Reason” within 12 months post-CoC (a liberal double-trigger) .
Illustrative payout sensitivities (12/31/2024 assumptions; amounts are company estimates):
| Event | Severance Benefits ($) | Stock Options ($) | Other Benefits ($) | Total ($) |
|---|---|---|---|---|
| Involuntary Termination | 1,377,000 | 59,600 | 65,019 | 1,501,619 |
| Change-in-Control (terminated within 12 months) | 1,377,000 | 59,600 | 65,019 | 1,501,619 |
Other plan features:
- No pension or nonqualified deferred compensation plans for NEOs; perquisites are limited (e.g., 401(k) matching) .
Compensation governance context:
- External consultant (Willis Towers Watson) advised the committee in 2024; reference peer set: CINF, ERIE, THG, HMN, KMPR, PRA, RLI, SIGI, UFCS .
- No stock option repricing without stockholder approval .
Investment Implications
- Alignment improving: 2024 bonus was formulaically restored on underwriting and growth performance (combined ratio 96.9%, commercial lines growth 4.3%), reinforcing pay-for-performance after a no-bonus 2023; Hay’s 2024 cash bonus ($332,775) indicates plan sensitivity to core underwriting profitability and growth .
- Retention outlook: Significant unvested options across 2022–2024 grants and the three-year benefit continuation/severance structure reduce near-term flight risk; absence of 2022–2024 option exercises by Hay lowers immediate selling pressure risk .
- Red flags to monitor: Presence of excise tax gross-up; change-in-control severance includes “with or without Good Reason” within 12 months post-CoC; no explicit anti-hedging policy may weaken alignment vs governance best practices .
- Performance context: Company’s 2024 rebound (net income $50.9m; combined ratio down to 98.6%; TSR uplift) supports incentive credibility; continued execution on underwriting discipline and modernization remains the key lever for compensation outcomes and equity value .
Appendix: Additional Company Performance Indicators
- 2024 performance summary table (from proxy): revenues $989.6m; net income $50.9m; Class A price $15.47 (12/31/24) .
- Pay-versus-performance indicators (2020–2024): Class A TSR index 130.65 in 2024 vs 112.65 in 2023; combined ratio 98.6% in 2024 vs 104.4% in 2023 .