Karen B. Bailo
PROGRESSIVE CORP/OH/About Karen B. Bailo
Karen B. Bailo is Progressive’s Commercial Lines President, serving in this role since October 2020 and a long-tenured leader at the company with prior roles spanning Commercial Lines, Personal Lines, and Agency Distribution . She holds a bachelor’s degree in psychology (minor in statistics) from the University of South Carolina and an MBA from Case Western Reserve University . As of FY 2024 reporting, Progressive’s cumulative TSR reached $370.40 versus $244.66 in 2023 and $156.68 in 2021, materially outperforming the S&P 500 Property & Casualty peer group over the same period . Progressive’s revenues grew from $50.5B in FY 2022 to $73.6B in FY 2024 and EBITDA expanded from $1.7B to $11.3B over the same period, reflecting strong underwriting recovery and growth in policies in force in Bailo’s tenure as Commercial Lines President* [GetFinancials: Revenues FY2022 $50,477M; FY2024 $73,602M; EBITDA FY2022 $1,697M; FY2024 $11,276M].
*Values retrieved from S&P Global.
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Progressive | Commercial Lines President | Oct 2020–present | Leads Commercial Lines; oversight included Protective Insurance acquisition/integration to expand fleet and workers’ comp capabilities . |
| Progressive | GM, Acquisition & Small Business Insurance (Commercial Lines) | 2020 | Drove small business and acquisition growth initiatives within CL . |
| Progressive | Commercial Lines Controller | 2018–2019 | Finance and control leadership supporting CL pricing and performance management . |
| Progressive | Personal Lines General Manager | Various years | Led PL business units and performance execution . |
| Progressive | Agency Distribution Business Leader | ~9 years | Built Agency Distribution organization, positioning Progressive as a preferred supplier in the channel . |
| Progressive | Early Career (Claims Rep, Management Trainee) | Early career | Foundation in claims/customer service; shaped data-driven, operational focus . |
External Roles
- No external public company directorships disclosed in Progressive filings reviewed .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 550,000 | 594,231 | 635,385 |
| Annual Salary Rate ($) | 550,000 | — | 640,000 |
| All Other Compensation ($) | 12,000 | 12,000 | 12,000 |
- 2024 salary increased 6.7% year over year to improve market competitiveness; 2024 NEO salaries remained below market median (except Murphy), per committee review .
Performance Compensation
| Component | Metric | Weighting/Structure | Target | Actual/Payout | Vesting/Key Terms |
|---|---|---|---|---|---|
| Gainshare (Cash) – 2024 | Company Gainshare Factor tied to profitability and growth matrices (PIF growth, combined ratio), with eligibility cut-off Nov 30 | Target 1.0x assigned % of paid salary; payout 0–3.0x salary for NEOs | $794,231 | $1,413,731 | Paid Feb 2025 after committee certification; formula Paid Salary × Target % × Gainshare Factor . |
| Time-based RSUs – 2024 grant | Time-based equity | Sized at ~1.0x salary for NEOs | 3,115 units | — | Vest in equal installments Jan 2027, Jan 2028, Jan 2029 (qualified retirement provisions apply) . |
| PB RSUs – Market Share (Insurance Ops) – 2024 grant | Company growth vs industry growth with profitability gate over 2024–2026 | For NEOs (ex-CEO/CFO: no investment portfolio award) | 4,672 units | Max 11,680 units | Performance period 2024–2026; vest subject to performance certification and change-in-control double-trigger protections . |
| PB RSUs – Vesting Results (prior awards) | Market-based awards | Achieved high vesting factors | — | 2024 vest at 2.42x factor on July 19, 2024; another award at 1.34x on Mar 11, 2024 (company-wide) | Illustrates strong performance alignment; significant value delivered upon vesting . |
Most important performance measures used to link pay to performance for Bailo: Combined Ratio, Premium Growth, Policies in Force (PIF) Growth .
Multi-Year Compensation (NEO Summary)
| Year | Salary ($) | Stock Awards ($) | Non-Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|
| 2022 | 550,000 | 1,375,024 | 473,000 | 12,000 | 2,410,024 |
| 2023 | 594,231 | 1,500,148 | 1,057,731 | 12,000 | 3,164,110 |
| 2024 | 635,385 | 1,600,150 | 1,413,731 | 12,000 | 3,661,266 |
- 2024 NEO pay is heavily at-risk; equity and cash incentives average ~82% of target compensation for other NEOs .
Equity Ownership & Alignment
| Category | 2024 (as of Jan 31, 2024) | 2025 (as of Jan 31, 2025) |
|---|---|---|
| Total Common Shares Beneficially Owned (#) | 40,806 | 32,345 |
| Units Equivalent to Common Shares (EDCP/time-based RSUs qualifying under Rule of 70) (#) | — | 12,612 |
| Ownership Guideline Compliance | In compliance with 3x salary guideline (includes unvested time-based RSUs) | In compliance with 3x salary guideline |
Unvested/Unearned Awards at 12/31/2024:
- Time-based RSUs: 15,594 units; market value $3,736,478 (priced at $239.61) .
- PB RSUs (uneared target/max across grants): 47,066 units; market value $11,277,484 .
- Upcoming time-based RSU vest tranches: 2,096 (1/1/2025), 3,215 (1/21/2025), 4,665 (1/20/2026), 4,184 (1/19/2027), 2,490 (1/18/2028), 1,040 (1/16/2029) .
Ownership Policies:
- Prohibition on pledging Progressive shares and on hedging/derivative transactions; no known pledges by executives/directors .
- NEO ownership guideline: 3x salary within five years; Bailo meets/exceeds guideline .
2024 Vested Awards:
- Shares acquired on vesting: 17,832; value realized: $3,720,001 .
Employment Terms
| Provision | Specifics |
|---|---|
| Role start date | Commercial Lines President since Oct 2020 |
| Severance (Executive Separation Allowance Plan) | 3× base salary; medical/dental/vision benefits up to 18 months (employee contribution at prior levels); outplacement services ~$13,000 . |
| Bailo Severance Value (as of 12/31/2024) | $1,920,000 severance + $24,537 estimated health benefits . |
| Change-in-control (Equity Plans) | Double-trigger: acceleration only if awards not honored/assumed/replaced, or if terminated without cause or resigns for good reason within 24 months post-CoC; performance-based awards earned at higher of target or performance through event date . |
| Bailo CoC Equity Value (12/31/2024) | $8,749,599 (time-based and PB RSUs valued at target; includes reinvested dividend equivalents) . |
| Clawback | Dodd-Frank compliant clawback and additional recoupment provisions for cash incentives and PB equity upon restatements . |
| Tax gross-ups | None for executive compensation/severance/change-in-control benefits (minor exceptions for broad-based relocation benefits) . |
Compensation Structure Analysis
- Mix and at-risk pay: Bailo’s compensation is dominated by equity and performance-based cash (e.g., 2024 stock awards $1.6M and non-equity incentive $1.41M vs salary $0.64M), consistent with Progressive’s philosophy to set salaries below median and emphasize variable, performance-based pay .
- Metrics rigor: PB RSUs tie to relative growth vs industry with profitability requirements; 2024 vesting factors of 2.42x and 1.34x on prior awards show strong execution against performance goals .
- Benchmarking: For Commercial Lines President roles (Callahan and Bailo), committee relied on survey data (WTW, Radford) matched by revenue scope; proxy peer data less available for these positions .
- Say-on-pay: Strong shareholder support — 95% approval in 2023 and 2024; 94% in 2022, with no remedial changes required by committee .
Company Performance Context (Investor lens)
| Metric | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|---|
| Revenues ($USD Millions) | 40,178* | 45,204 [GetFinancials] | 50,477 [GetFinancials] | 60,531 [GetFinancials] | 73,602 [GetFinancials] |
| EBITDA ($USD Millions) | 7,722* | 4,766* | 1,697* | 5,457* | 11,276* |
*Values retrieved from S&P Global.
Cumulative TSR (Indexed to $100 at 12/31/2019): $156.68 (2021), $244.66 (2023), $370.40 (2024), materially above peer group trajectory .
Investment Implications
- Alignment: Bailo’s pay is tightly linked to combined ratio, premium growth, and PIF growth, with substantial PB RSU exposure and Gainshare variability, aligning incentives to profitable growth within Commercial Lines .
- Retention risk: Formal severance (3× salary) and significant unvested RSUs with multi-year vesting suggest strong retention hooks; double-trigger CoC terms further mitigate abrupt separation risk absent qualifying events .
- Insider selling pressure: Multiple vesting dates (Jan 2025, 2026, 2027, 2028, 2029) and substantial 2024 vest deliveries may create episodic supply, though pledging/hedging are prohibited and ownership guidelines enforce ongoing equity stakes .
- Execution track record: Leadership highlights include expanding Commercial Lines addressable market and integrating Protective Insurance to move into larger fleets and transportation workers’ comp — supportive of PGR’s revenue/EBITDA recovery and outsized TSR during her tenure .
- Governance quality: No tax gross-ups, robust clawbacks, strong say-on-pay outcomes, and prohibitions on pledging/hedging reduce governance red flags and enhance investor confidence in pay-for-performance discipline .