John P. Sauerland
PROGRESSIVE CORP/OH/About John P. Sauerland
Progressive’s Vice President and Chief Financial Officer (age 60) with at least the last five years in the CFO role; he signs the company’s Sarbanes‑Oxley certifications and internal control attestations, indicating primary responsibility over financial reporting and controls . Company performance context over 2020‑2024 shows strong value creation: Progressive’s cumulative TSR reached $370.40 vs. $222.44 for the S&P 500 P/C peer group, with 2024 net income of $8.5B and a 2024 combined ratio of 88.8, against prior years’ 95.8 (2022) and 94.9 (2023) . His incentive design is tightly tied to underwriting profitability (combined ratio), premium/PIF growth, and investment portfolio returns, aligning pay with shareholder outcomes via the Gainshare cash plan and multi‑year performance RSUs (0–250% vesting) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| The Progressive Corporation | Vice President & Chief Financial Officer | Last five years (per 10‑K executive officer disclosure) | Principal financial officer and SOX 302/906 certifier; co‑responsible for internal control effectiveness reporting |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No external directorships or outside roles disclosed for Sauerland in company filings reviewed |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary (paid; Summary Compensation Table) | $672,116 | $697,115 | $730,962 |
| Annual Salary Rate (per CD&A) | — | — | $735,000 |
| All Other Compensation (401(k) employer contribution) | $12,000 | $12,000 | $12,000 |
Notes:
- Progressive targets salaries at/below market median, with greater emphasis on at‑risk incentives . For 2024, Sauerland received a 5.0% salary increase, and the committee noted NEO salaries generally remained below market median .
Performance Compensation
Annual Cash Incentive (Gainshare)
| Year | Threshold | Target | Maximum | Actual Paid | Core Metrics |
|---|---|---|---|---|---|
| 2024 | $0 | $1,096,442 | $2,192,884 | $1,951,667 | Combined ratio and PIF growth (companywide Gainshare construct) |
- The Gainshare program ties payouts to profitability (combined ratio) and growth; in 2024, company results satisfied/exceeded combined ratio targets for most businesses .
Equity Awards – 2024 Grant Detail (March 19, 2024)
| Component | Units/Amount | Vesting/Range | Grant Date Fair Value |
|---|---|---|---|
| Time‑based RSUs (target units) | 3,577 units | Time‑based per schedule below | $735,038 |
| Performance RSUs – “Performance vs Market” (target) | 9,837 units | 0–250% based on market share growth and profitability (96 combined ratio guardrail) | $2,021,405 |
| Performance RSUs – “Investment Results” | 1,610 units (separate investment‑based tranche) | 0–250% based on 3‑yr fixed‑income portfolio returns vs. benchmark | Included in stock awards fair value |
| Total Stock Awards (SCT fair value) | — | — | $2,756,443 (aggregate 2024 stock awards) |
Stock Awards (SCT fair value) trend:
| Year | Stock Awards (SCT fair value) |
|---|---|
| 2022 | $2,531,445 |
| 2023 | $2,625,224 |
| 2024 | $2,756,443 |
Key design points:
- Since 2021, award agreements include a non‑compete and updated death/disability/retirement provisions .
- Performance RSUs can vest 0–250% depending on outcomes (market growth awards) and 0–250% for investment‑based awards; a 96 combined ratio profitability requirement applies for market awards .
Equity Ownership & Alignment
Beneficial Ownership and Units
| As‑of Date | Total Common Shares Beneficially Owned | % of Class | Units Equivalent to Common Shares | Total Interest (Shares + Unit Equivalents) |
|---|---|---|---|---|
| Jan 31, 2025 | 355,670 | <1% | 15,577 | 371,247 |
| Dec 31, 2023 (proxy table components) | 400,335 (Other Common Shares Beneficially Owned; no RS director units/beneficial units) | — | — | 400,335 (implied total for 2023) |
- Ownership Guidelines: NEOs must hold ≥3x salary (can include 401(k) shares, EDCP units, and unvested time‑based RSUs; excludes unvested performance RSUs). As of Jan 31, 2025, each NEO, including Sauerland, satisfied the guideline .
- Hedging/Pledging: Prohibited; the company is not aware of any pledges by directors or executive officers .
Unvested/Unearned Equity at FY‑End 2024
| Category | Units | Market Value (at $239.61/sh) |
|---|---|---|
| Time‑based RSUs unvested | 21,591 | $5,173,420 |
| Equity incentive plan awards (uneared units) | 1,753 | $420,036 |
| Performance‑based RSUs (uneared units) | 92,342 | $22,126,067 |
Vesting schedule for time‑based RSUs (remaining tranches as of 12/31/2024):
| Vest Date | Units |
|---|---|
| 1/01/2025 | 3,506 |
| 1/21/2025 | 4,550 |
| 1/20/2026 | 6,243 |
| 1/19/2027 | 4,965 |
| 1/18/2028 | 2,886 |
| 1/16/2029 | 1,194 |
Qualified retirement eligibility and value:
- Sauerland met “Rule of 70” (age/service) as of 12/31/2024. If he had retired on 12/31/2024, time‑based equity would vest (estimated $4,315,267) and performance‑based equity would remain outstanding and vest per actual performance (at maximum assumption: $18,024,849) . 2024 awards become eligible 1/1/2025, which would add ~$858,243 (time‑based) and ~$5,900,569 (PB at max) to those figures .
Employment Terms
Quantitative terms
| Provision | Terms/Amount |
|---|---|
| Separation Allowance (Severance) | 3x base salary (salary only; excludes bonuses/equity/perks) plus up to 18 months medical/dental/vision at company cost, with employee contributions; estimated for Sauerland at 12/31/2024: $2,205,000 severance and $28,502 health benefits |
| Change‑in‑Control (Equity) | Double‑trigger: if awards are not honored/assumed/replaced, they vest and cash‑out at FMV (performance awards at higher of target or performance‑based multiple to date). If honored/assumed/replaced, vest on termination without cause or for “good reason” within 24 months post‑CIC. Estimated CIC equity value at 12/31/2024: $15,407,642 for Sauerland |
| Non‑compete | Included in award agreements since 2021 |
| Clawback | Dodd‑Frank Clawback Policy on file as Exhibit 97 to the 10‑K ; clawback/disqualifying activity references also appear in equity plan provisions |
| Hedging/Pledging | Prohibited for executives/directors; no pledges known |
| Pension/SERP | None provided to executives |
| Deferred Compensation (EDCP) – 2024 | Contributions: $0; Earnings: $22,359; Withdrawals/Distributions: $201,595; Aggregate Balance at YE: $0 |
Performance Compensation – Metric Design and Payout Dynamics
| Program | Metric(s) | Notes on Calibration/Payout |
|---|---|---|
| Gainshare (annual cash) | Combined ratio; Policies in Force growth | Cash plan pays out annually; adverse combined ratios reduce payouts; 2024 payouts reflected achieving/exceeding profitability targets for most businesses |
| Performance RSUs – Insurance operations | Market share growth vs. industry with 96 combined ratio guardrail | 3‑year performance; vesting 0–250% of target units based on growth vs. market and profitability |
| Performance RSUs – Investment results | 3‑year fixed‑income portfolio return vs. benchmark | 0–250% vesting based on investment performance; Sauerland had a separate 1,610‑unit grant in 2024 |
Compensation mix and benchmarking context:
- Other NEOs averaged 82% of target compensation in at‑risk equity and cash incentives in 2024; time‑based awards ~1.0x salary; performance awards averaged ~2.16x target (up to ~6.9x salary), cash incentives between 1.0x–1.5x target .
- Program aims for salaries at/below market median, with the potential for above‑median total pay when challenging goals are achieved ; 2024 NEO salaries (incl. Sauerland) generally remained below market median .
Investment Implications
- Alignment: Pay is heavily at‑risk and linked to underwriting profitability, growth, and investment returns, with explicit 0–250% performance RSU factors and a Gainshare cash plan tied to combined ratio and PIF growth—supportive of pay‑for‑performance and shareholder alignment .
- Retention/overhang: Sauerland is retirement‑eligible under Rule of 70; time‑based RSUs would fully vest at retirement and performance RSUs would remain outstanding to settle per outcomes, increasing flexibility but also creating potential succession risk optionality; the unvested equity overhang (21,591 time‑based; 92,342 performance‑based units) is meaningful .
- Selling pressure: Time‑based RSU vesting clusters in January each year (e.g., ~8.1K units scheduled across 1/1/2025 and 1/21/2025), which can create periodic liquidity events; hedging and pledging are prohibited, and ownership guidelines are met, mitigating alignment concerns .
- Downside protections: Severance equals 3x salary only (no bonus multiplier), relatively restrained versus market; CIC equity is double‑trigger—reducing immediate cash‑out risk absent termination, though the estimated CIC equity value is significant ($15.4M at 12/31/2024) .
- Governance/sentiment: Say‑on‑pay support was strong at 95% in 2024; no pensions/SERP; explicit clawback policy in place .
Overall: Sauerland’s incentives reinforce profitable growth and investment discipline; retirement eligibility and sizable unvested equity create retention/transition dynamics to monitor, while January vesting cadence may produce periodic selling windows. Strong governance features (double‑trigger CIC, no pledging/hedging, clawback) and high say‑on‑pay support reduce compensation‑related risk .