Craig Kliethermes
RLIAbout Craig Kliethermes
Craig W. Kliethermes, age 60, is President & CEO of RLI Corp. since January 1, 2022 and a management director on the Board; he currently serves on the Board’s Finance & Risk Committee . He joined RLI in 2006 and has held senior operating roles (President & COO of RLI subsidiaries 2016–2021; EVP, Operations 2013–2016; President & COO of RLI in 2021) . He holds a Bachelor’s in Mathematics (Maryville University), is a Fellow of the Casualty Actuarial Society, and a member of the American Academy of Actuaries and the CPCU Society . RLI’s 2024 performance under his leadership included an 86.2 combined ratio, 22.2% ROE, 24% book value per share growth, and $2.01B gross premiums written; five-year TSR grew to 215.73 from a $100 base and MVP reached $241.9M in 2024 .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| RLI Corp. | President & CEO | Since Jan 1, 2022 | Leads specialty P&C underwriting strategy, capital deployment, and shareholder value creation (MVP-driven incentives) . |
| RLI Corp. | President & COO | 2021 | Transition leadership ahead of CEO role; oversight of operations . |
| RLI Insurance Subsidiaries | President & COO | 2016–2021 | Drove underwriting discipline across product groups; multi-year profitability focus . |
| RLI Insurance Subsidiaries | EVP, Operations | 2013–2016 | Operations leadership; underwriting execution and process improvement . |
| Lockton Companies | Leadership roles | Not disclosed | Broadened distribution and specialty insurance experience . |
| GE Insurance/Employers Reinsurance | Leadership roles | Not disclosed | Reinsurance and risk management expertise . |
| John Deere Insurance Company | Leadership roles | Not disclosed | Specialty P&C foundations and operational experience . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| American Property & Casualty Insurance Association | Executive Advisory Board Member | Not disclosed | Industry policy and market oversight . |
| Maguire Academy of Insurance & Risk Management (Saint Joseph’s University) | Director | Not disclosed | Talent pipeline and education in risk management . |
| The Institutes | Director | Not disclosed | Professional education and credentialing governance . |
| Heart of Illinois Big Brothers Big Sisters | Director | Not disclosed | Community leadership and corporate social responsibility . |
| Maui Jim, Inc. | Former Director | Not disclosed | Prior private company board experience . |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 648,942 | 650,000 | 671,731 |
Notes:
- No employment contract; NEOs, including the CEO, have no employment agreements .
- Limited perquisites; personal aircraft use reimbursed at Board-approved rates (CEO used 12.6 hours in 2024; incremental cost $23,915) .
Performance Compensation
| Component | Metric/Structure | Weighting/Targets | 2024 Actuals | 2024 Payout | Vesting/Timing |
|---|---|---|---|---|---|
| MVP Program – Annual Objectives | Customer focus (30%), continuous improvement (30%), community (30%), success metrics (10: combined ratio & premium growth; engagement; CX benchmarks) | Requires positive MVP and goal achievement | Achievement factor 95% | $1,033,926 | Cash in-year; only pays if MVP positive . |
| MVP Program – Financial Component | 2.25% of MVP, adjusted by peer 5-year BV growth (60th percentile=100%; 90th+ =125%) | 80% of preliminary MVP award subject to peer adjustment | MVP $241,854,000; Peer factor 125% | $5,441,715 credited to bank; 33% payout ($3,878,427) | Long-term bonus bank; 33% paid annually; remaining at risk to future MVP (clawback via negative MVP) . |
| Total 2024 MVP Payout | Sum of annual + bank payout | — | — | $4,912,353 | Mix of current cash and long-term bank payout schedule. |
MVP details and mechanics:
- Preliminary MVP award for CEO: 2.25% of MVP; 20% annual objectives; 80% financial component with peer adjustment (125% in 2024) .
- Bonus bank payout rate: 33% of aggregate positive bank each year; negative MVP reduces the bank (forfeiture feature) .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 340,640 shares; less than 1% of outstanding . |
| ESOP Allocation | 16,138 shares allocated as of Mar 17, 2025 . |
| Deferred Compensation Plan (Rabbi Trust) | 23,212 shares allocated; no voting/investment power for participant . |
| Stock Ownership Guidelines (Executives) | CEO 6x base salary; COO 4x; CFO 3x; others 2x–1.5x; all NEOs met guidelines as of Dec 31, 2024 . |
| Hedging/Pledging Policy | Hedging and pledging prohibited for directors and executive officers; no Rule 10b5-1 plans entered in 2024 . |
| Options – Outstanding (12/31/24) | Detailed option table shows grants from 2020–2024; 20% vest per year; 8-year expiry; full vest upon Retirement (age+service ≥75) . |
| 2024 Option Exercises | 43,000 shares exercised; $1,741,060 value realized . |
Employment Terms
| Term | Provision |
|---|---|
| Employment Contract | None for NEOs; CEO has no employment agreement . |
| Severance | No standalone severance agreements; termination for cause forfeits unpaid bonuses, bonus bank, and unexercised options . |
| Retirement Eligibility | Age+service ≥75 qualifies; immediate vesting of unvested options; bank paid per schedule; subject to non-compete/non-solicit/confidentiality covenants . |
| Change-in-Control (CIC) – Equity | Board either substitutes awards with substantially similar terms (full vest on qualifying terminations within 2 years, i.e., double-trigger) or permits exercise/cash-out at CIC . |
| CIC – Bonuses | Bonus banks and earned amounts are not forfeited and paid per program terms . |
| Clawback Policy | Recoupment for incentive compensation in event of accounting restatement; proceeds from equity awards within 6 months of termination subject to clawback for misconduct (non-solicit/confidential info breach) . |
| Tax Gross-Ups | Company generally does not provide income tax gross-ups . |
Board Governance
- Role and Independence: Management Director (not independent); serves on Finance & Risk Committee; previously Finance & Investment and Strategy & Risk .
- Board Leadership: CEO and Chairman roles separated since Jan 1, 2022; Independent Chairman since May 2, 2024; Independent Directors meet quarterly in executive session .
- Attendance: Four Board meetings in 2024; no Director attended fewer than 75% of Board and Committee meetings .
Director Compensation
- As a management Director, Craig Kliethermes did not receive Director fees; his executive compensation is disclosed separately .
Compensation Peer Group and Benchmarking
- Peer companies used for compensation and relative performance include Axis Capital, Global Indemnity, Hanover, James River, Kemper, Kinsale, Old Republic, ProAssurance, Selective Insurance, United Fire, W.R. Berkley; Markel added for 2025 comparison .
- Relative performance adjustment in MVP long-term component uses five-year BV growth percentile (90th+ =125%; 60th=100%; 33rd or less=80%) .
Pay-for-Performance and Say‑on‑Pay
- Say‑on‑Pay approval exceeded 97% at the 2024 annual meeting; HCCC continued pay practices in 2024 .
- Company-selected performance measure MVP and TSR increased; 2024 MVP $241.854M; TSR index value at $215.73 (from $100 base at Dec 31, 2019) .
Multi-Year Compensation and Equity Detail
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Non-Equity Incentive Plan ($) | 2,513,571 | 3,811,008 | 4,912,353 |
| Option Awards – Grant Date Fair Value ($) | 1,603,500 | 626,025 | 937,535 |
| All Other Compensation ($) | 80,767 | 98,419 | 94,492 |
| Total Compensation ($) | 4,846,780 | 5,185,452 | 6,616,111 |
Bonus bank detail (2024):
| Item | Amount ($) |
|---|---|
| Beginning Bank Balance | 6,311,095 |
| 2024 Award Credited to Bank | 5,441,715 |
| Pre‑Payout Balance | 11,752,810 |
| 2024 Bank Payout (33%) | 3,878,427 |
| Remaining At‑Risk Bank | 7,874,383 |
2024 option grants (selected):
| Grant Date | Options (#) | Exercise Price ($/sh) | Fair Value ($) |
|---|---|---|---|
| 02/01/2024 | 15,000 | 67.97 | 229,500 |
| 05/02/2024 | 14,500 | 71.58 | 226,272 |
| 08/01/2024 | 14,500 | 74.52 | 235,553 |
| 11/01/2024 | 14,500 | 78.61 | 246,210 |
Outstanding options (12/31/2024) – selected lines:
| Grant Date | Exercisable (#) | Unexercisable (#) | Exercise Price ($) | Expiration |
|---|---|---|---|---|
| 08/21/2020 | 32,000 | 8,000 | 43.120 | 08/21/2028 |
| 05/06/2021 | 16,800 | 11,200 | 53.010 | 05/06/2029 |
| 05/05/2022 | 60,000 | 90,000 | 54.800 | 05/05/2030 |
| 05/04/2023 | 3,000 | 12,000 | 68.295 | 05/04/2031 |
| 02/01/2024 | 0 | 15,000 | 67.970 | 02/01/2032 |
Risk Indicators & Red Flags
- Anti‑hedging and anti‑pledging (directors and executive officers); no 10b5‑1 plans entered into in 2024 .
- Clawback policy in place; bonus bank forfeiture feature if future MVP negative; equity proceeds clawback within six months of termination for misconduct .
- Related party oversight and independence maintained; no disclosed legal proceedings regarding the CEO in proxy .
Equity Ownership & Director Independence
- Independence table confirms Kliethermes is a management Director (non‑independent), with all other nominees independent except management Directors .
- Director share ownership guidelines increased effective Jan 1, 2025; nonemployee Directors encouraged to hold $1,000,000 of RLI shares; Chairman $1,500,000; restrictions on selling until guideline met .
Compensation Structure Analysis
- Higher weight on long‑term at‑risk MVP via bonus bank and peer performance adjustment ties payouts to multi‑year value creation (mitigates short‑term risk-taking) .
- Continued use of stock options over RSUs; options vest 20% per year with eight‑year life and retirement acceleration, reinforcing upside alignment without guaranteed value .
- No tax gross‑ups, clawback policy, and anti‑hedging/pledging improve shareholder alignment .
Investment Implications
- Alignment: Strong linkage of CEO pay to MVP and peer-adjusted long‑term bank, plus sizable option exposure and strict ownership/anti‑hedging rules, supports long‑term value orientation and reduces misalignment risk .
- Retention/overhang: Significant remaining bonus bank ($7.87M) and unvested/retirement-accelerated options provide retention incentives; CIC terms include double‑trigger vesting, limiting windfall risk while ensuring continuity .
- Trading signals: 2024 option exercise activity (43,000 shares; $1.74M value realized) indicates monetization cadence; no 10b5‑1 plan usage in 2024 increases discretionary timing sensitivity around blackout windows .
- Governance comfort: Independent Chairman, quarterly executive sessions, and high Say‑on‑Pay support (>97%) point to limited governance headwinds for the CEO’s compensation program .