Kevin M. Kraft, Sr.

About Kevin M. Kraft, Sr.

Kevin M. Kraft, Sr. is an independent Class B director of Donegal Group Inc. (DGICA), age 72, serving on the board since 2009. He is CEO of Clyde W. Kraft Funeral Home (since 1995) and is registered as an insurance agent with the Pennsylvania Department of Insurance, bringing small-business operating and insurance distribution perspective. He also serves on the boards of Donegal Mutual Insurance Company (since 2003), Conestoga Title Insurance Company (a subsidiary), and a Lancaster County-based water utility. Other than the CEO, DGICA states all directors are independent under applicable standards.

Past Roles

External Roles

Board Governance

• Committee assignments and chair roles (2024):

  • Executive Committee: Member (Chair: Kevin G. Burke)
  • Nominating Committee: Member (Chair: Jon M. Mahan)
  • Compensation Committee: Member (Chair: Jack L. Hess)
  • Not a member of the Audit Committee; audit committee designated “financial experts” are Hess, Huber, Szady .

• Attendance and engagement (2024):

  • Committee meeting attendance: Executive 12/12; Nominating 2/2; Compensation 3/3 .
  • DGICA reports each director attended ≥75% of board and committee meetings, and all directors attended the 2024 annual meeting .

• Independence and structure:

  • Independent director (DGICA notes all directors other than CEO are independent). DGICA is a NASDAQ “controlled company” due to Donegal Mutual’s ~70% voting power and is exempt from some NASDAQ governance requirements; no separate Lead Independent Director .
  • A Special Committee of non–Donegal Mutual directors exists to evaluate stockholder matters but did not meet in 2024 .

Fixed Compensation

Performance Compensation

DGICA states it does not reprice options without stockholder approval and follows set timing practices (e.g., annual option grants after the December board meeting and avoiding grants around major filings). These controls mitigate timing/repricing concerns.

Other Directorships & Interlocks

• Current public company boards: None disclosed for Mr. Kraft beyond DGICA; other roles include Donegal Mutual (mutual insurer), Conestoga Title Insurance Company (subsidiary), and a local water utility .
• Interlocks/potential conflicts:
  • DGICA is a controlled company; six of ten directors (post-2025 meeting) also serve on Donegal Mutual’s board, the controlling shareholder. Mr. Kraft is on both boards. Intercompany pooling, reinsurance, and services are overseen by a joint Coordinating Committee (DGI reps were Barry Huber and David King in 2024; Mr. Kraft is not listed), with annual fairness reviews and board approvals at both entities .

Expertise & Qualifications

• Small-business operator and CEO experience in a regulated service industry (funeral home) .
• Insurance credential (registered agent), relevant to distribution dynamics .
• Governance experience on DGICA’s Compensation and Nominating Committees and the Executive Committee (not an Audit “financial expert”) .

Equity Ownership

Option grant schedule detail (12/31/2024):

• Exercisable: 4,500 @ $14.43 exp. 12/17/2025; 4,500 @ $14.39 exp. 12/16/2026; 3,000 @ $14.09 exp. 12/15/2027; 1,500 @ $13.87 exp. 12/21/2028 .
• Unexercisable: 1,500 @ $14.09 exp. 12/15/2027; 3,000 @ $13.87 exp. 12/21/2028; 4,500 @ $15.76 exp. 12/19/2029 .

Governance Assessment

• Strengths

  • Independent director; full committee attendance (Exec 12/12, Nominating 2/2, Compensation 3/3); all directors ≥75% attendance and attended the 2024 annual meeting, indicating engagement.
  • Service on Compensation and Nominating Committees adds governance influence; Audit Committee independence and financial expertise are maintained at committee level.
  • Equity alignment through annual RSUs and multi-year vesting stock options; DGICA avoids option repricing without stockholder approval and follows structured grant timing.
  • Related-party safeguards: a Coordinating Committee (without Mr. Kraft) reviews intercompany agreements with Donegal Mutual annually for fairness to both entities, with both boards’ subsequent approvals.

• Risks and RED FLAGS

  • Controlled company: Donegal Mutual controls ~70% voting power; DGICA avails itself of NASDAQ controlled company exemptions and has no Lead Independent Director—potentially constraining independent oversight and minority stockholder influence.
  • Hedging policy gap: DGICA has not adopted a policy restricting hedging/derivative transactions by directors/officers—a misalignment risk versus best practices.
  • Special Committee (meant to consider non–Donegal Mutual stockholder matters) did not meet in 2024, raising questions about active minority-protection oversight.
  • Interlocks: Mr. Kraft sits on both DGICA and Donegal Mutual boards amid material intercompany pooling, reinsurance, and services—elevated conflict sensitivity despite Coordinating Committee process (of which he is not a member).

• Additional observations

  • Section 16(a) compliance: DGICA reports timely director/officer filings in 2024; a late Form 4 was noted for Donegal Mutual (controlling shareholder), not for Mr. Kraft.

Overall signal: Mr. Kraft is an engaged independent director with relevant operating and insurance distribution expertise and meaningful option-based alignment. However, DGICA’s controlled-company status, absence of a Lead Independent Director, lack of a hedging prohibition, and the special committee’s inactivity present governance risk factors investors should weigh alongside the Coordinating Committee’s related-party safeguards.