Kevin G. Burke
About Kevin G. Burke
Kevin G. Burke, age 59, is President and Chief Executive Officer (since 2015) and Chairman of the Board of Donegal Group Inc. (DGICA) and also serves as President and CEO of Donegal Mutual; he has been a DGICA director since October 2016 and a Donegal Mutual director since 2014 . DGICA’s 2024 results improved materially: revenues rose 6.7% to $989.6 million, net income was $50.9 million (vs. $4.4 million in 2023), and Class A share price ended 2024 at $15.47 (up 10.6% YoY); the consolidated adjusted statutory combined ratio was 96.9% and operating ROE was 8.6% for 2024 under DGICA’s incentive definitions . Pay-versus-performance disclosure shows Class A TSR (value of $100 since 2019 base) at $130.65 for 2024 alongside $50.9 million of net income and a 98.6 combined ratio (statutory) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Donegal Group Inc. | President & Chief Executive Officer | 2015–present | Leads strategy and operating priorities; presides over board as Chairman . |
| Donegal Mutual Insurance Company | President & Chief Executive Officer | Sep 2018–present | Leads mutual parent of DGICA; aligns operating model across Donegal Insurance Group . |
| Donegal Mutual Insurance Company | Executive Vice President & Chief Operating Officer | 2014–Aug 2018 | Operational leadership prior to CEO appointment . |
| Donegal Mutual & DGICA | Senior Vice President, Human Resources | 2005–2014 | Led HR for group entities . |
| Donegal Mutual & DGICA | Vice President, Human Resources | 2001–2005 | Early HR leadership role . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Donegal Mutual Insurance Company | Director | 2014–present | Affiliate board seat; DGICA is a “controlled company” under NASDAQ with Donegal Mutual at ~70% voting power as of Mar 3, 2025 . |
| Other public company boards | — | — | No other public company directorships disclosed . |
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 725,000 | 750,000 | 750,000 |
| Director Fees included in “All Other” ($) | 101,? (not disclosed by year) | 101,300 | 101,800 |
| 401(k) Match in “All Other” ($) | 19,? (not disclosed by year) | 19,800 | 20,425 |
| Total “All Other Compensation” ($) | 119,375 | 121,100 | 122,225 |
Notes:
- DGICA pays directors an annual retainer of $97,735 (comprised of $90,000 cash and 500 Class A restricted shares valued at $7,735 at 12/31/2024); additional meeting fees apply . A standard periodic director option grant of 4,500 options at $15.76 on 12/19/2024 was provided to directors other than Mr. Burke .
Performance Compensation
- Annual cash bonus framework (2024): three metrics with weightings—Commercial Lines Direct Premium Growth (15%), Adjusted Statutory Combined Ratio (65%), and Operating Return on Equity (20%) .
- 2024 outcomes versus targets: 4.3% Commercial Lines growth; 96.9% adjusted statutory combined ratio; 8.6% operating ROE; named executives earned bonuses on these results .
- 2024 actual bonus paid to Mr. Burke: $543,750 .
- Long-term cash incentive plan (adopted Dec 2022): payout based on 3-year average adjusted statutory combined ratio for 2023–2025; must be employed on 12/31/2025 to receive payment .
| Metric (2024 Plan) | Weight | Threshold | Target | Maximum | Actual (2024) | Payout Result |
|---|---|---|---|---|---|---|
| Commercial Lines Direct Premium Growth | 15% | 0.5% | 2.0% | 3.5% | 4.3% | Contributed to bonus earned |
| Adjusted Statutory Combined Ratio | 65% | 100.0% | 97.0% | 94.0% | 96.9% | Contributed to bonus earned |
| Operating Return on Equity | 20% | 7.5% | 9.0% | 10.5% | 8.6% | Contributed to bonus earned |
Equity awards (options):
- 12/19/2024: 24,000 non-qualified options at $15.76; 5-year term; vest 1/3 annually starting 7/1/2025 .
- Option grant values for 2024: $33,840 fair value .
Option exercises and vesting (2024):
- Options exercised: 90,000 shares; value realized $115,380 .
- Restricted stock (director award) vested: 500 shares; value realized $6,995 .
Multi-Year Summary Compensation (CEO)
| Year | Salary ($) | Annual Cash Bonus ($) | Long-Term Cash Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|---|
| 2022 | 725,000 | 184,728 | 108,663 | 7,145 | 35,520 | 119,375 | 1,180,431 |
| 2023 | 750,000 | — | — | 7,100 | 36,240 | 121,100 | 914,440 |
| 2024 | 750,000 | 543,750 | — | 6,995 | 33,840 | 122,225 | 1,456,810 |
Equity Ownership & Alignment
- Beneficial ownership (3/3/2025): 89,823 Class A shares; options currently exercisable: 75,000 shares; less than 1% ownership .
- Beneficial ownership (3/1/2024): 154,243 Class A shares; options currently exercisable: 141,000 shares .
- Stock ownership guidelines: not disclosed in proxy .
- Hedging/pledging: Company has not adopted a policy restricting hedging transactions; no specific pledging disclosure provided .
Outstanding equity awards at 12/31/2024 (CEO):
| Grant | Exercisable (#) | Unexercisable (#) | Exercise Price ($) | Expiration |
|---|---|---|---|---|
| Option | 27,000 | — | 14.43 | 12/17/2025 |
| Option | 24,000 | — | 14.39 | 12/16/2026 |
| Option | 16,000 | 8,000 | 14.09 | 12/15/2027 |
| Option | 8,000 | 16,000 | 13.87 | 12/21/2028 |
| Option (12/19/2024) | — | 24,000 | 15.76 | 12/19/2029 |
| Restricted stock (director) | — | — | — | 500 shares outstanding at 12/31/2024 with $7,735 market value |
Insider selling/pressure signals:
- 2024 saw sizable option exercises (90,000) with realized value of $115,380; incremental vested supply begins 7/1/2025 from the 24,000-option grant vesting in equal thirds (potential supply cadence) .
Employment Terms
- Contract term and renewal: CEO employment agreement current term runs to March 31, 2026; auto-renews annually unless ~60 days’ notice prior to term end .
- Non-compete and non-solicit: Two-year non-compete post-termination for Mr. Burke; customary indemnification, confidentiality, non-solicit terms .
- Participation in annual and long-term incentive plans: Eligible as determined by Compensation Committees .
- Change-of-control definition: Includes (among others) >25% voting acquisition, mergers where surviving entity ownership falls below 60%, sale of substantially all assets, or board-composition change; only deemed upon closing .
- COE/severance triggers: If employment terminates within 12 months after a Change-of-Control by the company without cause or by the executive with or without Good Reason, severance is payable as described below (i.e., voluntary resignation within 12 months qualifies) .
Estimated payments as of 12/31/2024:
| Event | Severance Benefits ($) | Stock Options ($) | Other Benefits ($) | Total ($) |
|---|---|---|---|---|
| Involuntary Termination | 2,625,000 | 88,880 | 56,217 | 2,770,097 |
| Change-in-Control (with termination within 12 months) | 2,625,000 | 88,880 | 56,217 | 2,770,097 |
Notes:
- Severance multiple: 36 months of base salary, plus an additional 6 months of salary for Mr. Burke (and Mr. Miller), paid in installments; continuation-value of medical/insurance benefits for 36 months; excise tax gross-up amount payable if applicable .
- Equity acceleration: Unvested options generally do not automatically accelerate upon a business combination unless otherwise provided; options accelerate upon death or disability; standard five-year terms on grants; the 12/19/2024 grant vests 1/3 per year starting 7/1/2025 .
Board Governance
- Roles and structure: Mr. Burke serves as Chairman and CEO; DGICA does not have a separate lead independent director and is a “controlled company” under NASDAQ; majority of directors also serve on Donegal Mutual’s board . DGICA cites combined Chair/CEO as providing “clear and consistent leadership” and uses a committee structure and a management risk committee for oversight .
- Committees and attendance (2024): Executive (12 meetings; Burke Chair; attended 12), Audit (8), Nominating (2), Compensation (3); all directors attended ≥75% of their board and committee meetings .
- Special committee: Comprised solely of directors not on Donegal Mutual’s board; did not meet in 2024 .
- Related-party structure: Coordinating Committee (split between DGICA and Donegal Mutual directors) reviews intercompany arrangements annually; DGICA remains a controlled company with Donegal Mutual at ~70% combined voting power as of Mar 3, 2025 .
Director Compensation (Burke-specific notes)
- Director retainer mechanics: $90,000 cash + 500 restricted Class A shares valued at $7,735 as of 1st business day of 2025; meeting fees paid per committee (e.g., $750 for audit; $500 most others; $300 for compensation/executive) .
- Options to directors: Standard 4,500 options at $15.76 (12/19/2024 grant) to directors other than Mr. Burke (he does not receive the director option grant) .
- “All Other Compensation” for 2024 included director fees of $101,800 and 401(k) match of $20,425 for Mr. Burke .
Compensation Structure Analysis
- Mix shift 2023→2024: After no executive bonuses in 2023 (thresholds not met), bonuses resumed in 2024, with Mr. Burke receiving $543,750, reflecting improved underwriting and ROE performance; equity remains option-heavy (no executive RSUs/PSUs disclosed) .
- Risk balance: Annual and long-term cash incentives are tied to underwriting profitability and growth metrics (combined ratio, commercial lines growth, operating ROE), while long-dated, at-the-money options link upside to multi-year stock performance; DGICA states options are not repriced without shareholder approval .
- Potential shareholder-unfriendly terms: Employment agreements include excise tax gross-up eligibility and permit voluntary resignation within 12 months after a Change-of-Control to qualify for severance, which is uncommon relative to “double-trigger” best practices; DGICA has not adopted a hedging policy for insiders .
Equity Ownership & Alignment Diagnostics
| Item | Status |
|---|---|
| Total beneficial ownership | 89,823 Class A shares at 3/3/2025; less than 1% . |
| Options (exercisable/unexercisable) | 75,000 exercisable and 48,000 unexercisable at 12/31/2024; strikes $13.87–$15.76; expiries 2025–2029 . |
| In-the-money context | At 12/31/2024 price $15.47, several tranches are at/near the money; 2024 grant ($15.76) was slightly out-of-the-money at year-end . |
| Pledging | Not disclosed; no specific anti-pledging policy noted . |
| Stock ownership guidelines | Not disclosed . |
| Insider transactions signal | 90,000 options exercised in 2024; realized value $115,380 . |
Performance & Track Record
- 2024 improved fundamentals: Revenues +6.7% YoY to $989.6 million; net income $50.9 million; Class A year-end price $15.47; adjusted statutory combined ratio 96.9%; operating ROE 8.6% (comp-plan definition) .
- Pay vs performance (2020–2024): Compensation actually paid to PEO tracked improvements in TSR and net income in 2024 (Class A TSR index $130.65; net income $50.86 million; combined ratio 98.6 statutory) .
Compensation Peer Group (Benchmarking)
- 2024/2025 peer set used for external benchmarking (Willis Towers Watson consulted): Cincinnati Financial, Erie Indemnity, Hanover Insurance, Horace Mann, Kemper, ProAssurance, RLI, Selective Insurance, United Fire Group .
Say-on-Pay & Shareholder Feedback
- A say-on-pay proposal/result is not presented in the 2024 or 2025 proxies; no shareholder vote percentage disclosed (DGICA is a NASDAQ “controlled company”) .
Related-Party & Governance Considerations
- Intercompany relationships are governed by a Coordinating Committee; annual reviews approved 2025 terms with non-material adjustments; Donegal Mutual’s control is longstanding (since 1986) and is asserted to align stakeholders across entities .
- Risk oversight includes a 17-member risk management committee and quarterly reporting to the board; cybersecurity oversight by CRO and information security officer .
Risk Indicators & Red Flags
- Controlled company; combined CEO/Chair; no lead independent director .
- Hedging policy not adopted; no pledging disclosure .
- Golden parachute features: excise tax gross-up potential; severance payable upon voluntary resignation within 12 months post-Change-of-Control (“quasi-single-trigger”) .
- Intercompany complexity with Donegal Mutual; mitigated by Coordinating Committee process .
Upcoming Incentive Framework (2025)
- 8-K (Dec 19, 2024): New Annual Executive Incentive Plan for 2025 retains focus on commercial lines premium growth, statutory combined ratio, and operating ROE; Joint Compensation Committee retains discretion to adjust and may grant discretionary bonuses .
Investment Implications
- Alignment and retention: Cash bonuses resume with underwriting/ROE improvement; options remain central, creating multi-year alignment; however, absence of stock ownership guidelines and lack of hedging policy are governance gaps .
- Change-of-control economics: 42 months of salary and excise tax gross-up eligibility, coupled with voluntary quit eligibility within 12 months post-CoC, elevate potential transaction costs and may influence deal dynamics .
- Trading signals: 2024 option exercises (90,000) and upcoming 2024 grant vesting (1/3 on 7/1/2025) could add episodic insider selling pressure around vesting windows, subject to trading policies and personal decisions .
- Governance: Combined Chair/CEO at a controlled company, no lead independent director, and significant overlap with Donegal Mutual directors concentrate authority; Coordinating Committee and PHCA-compliant independent committees partially mitigate .