Jennifer Klobnak
RLIAbout Jennifer Klobnak
Chief Operating Officer of RLI Corp. since January 1, 2022; executive officer since 2016. Age 53; education not disclosed in the proxy . Under her tenure within senior leadership, RLI delivered 2024 gross premiums written of $2.01B, operating ROE of 18.9%, combined ratio of 86.2 (29th consecutive year of underwriting profit), and MVP of $241.9M; book value per share grew 24% in 2024 and five-year book value growth ranked 2nd among 12 peers; TSR ranks versus peers were 6th (1‑yr), 5th (3‑yr), 3rd (5‑yr) . RLI’s Say‑on‑Pay received >97% support in 2024, signaling investor alignment with pay design .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| RLI principal insurance subsidiaries | Senior Vice President, Operations | 2016–2021 | Operations leadership across subsidiaries |
| RLI Corp. | Chief Operating Officer | 2022–present | Enterprise operations oversight |
External Roles
No public company directorships or external roles for Ms. Klobnak are disclosed in the proxy .
Fixed Compensation
Base Salary (Multi-year)
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | $474,539 | $491,539 | $520,577 |
2024 Perquisites and Benefits (selected)
| Item | 2024 Detail |
|---|---|
| Aircraft personal use | Approved up to 25 hours; she did not use in 2024 |
| ESOP contribution | $30,015 (company contribution) |
| 401(k) contribution | $30,114 (company contribution) |
| Deferred compensation (executive election) | No contributions; no balance for 2024 |
Performance Compensation
Annual Incentive (MVP Program – strategic objectives component)
| Metric | Weighting | Target | Actual Achieved | Payout ($) | Vesting/Timing |
|---|---|---|---|---|---|
| Customer focus | 30% | Qualitative stretch goals (not numerically disclosed) | Factor included in 95% overall achievement | $689,284 | Paid annually if MVP positive |
| Continuous improvement | 30% | Qualitative stretch goals (not numerically disclosed) | Included in 95% overall achievement | — | Paid annually if MVP positive |
| Community | 30% | Qualitative stretch goals (not numerically disclosed) | Included in 95% overall achievement | — | Paid annually if MVP positive |
| Success metrics (combined ratio, premium growth; engagement, CX) | 10% | Not disclosed; includes combined ratio and premium growth plus trended engagement and CX benchmarks | Combined ratio 86.2; premium growth 11% (company level) | — | Paid annually if MVP positive |
Notes:
- MVP percentage award for Ms. Klobnak: 1.5% for 2024; increased to 1.6% for 2025 .
- 2024 MVP (after tax) created: $241,854,000 .
Long-Term Incentive (MVP Program – financial component and bonus bank)
| Component | Value ($) | Reference |
|---|---|---|
| Preliminary 2024 MVP award (1.5% of MVP) | $3,627,810 | |
| Peer adjustment factor (5‑yr BVPS growth vs peers) | 125% | |
| 2024 award credited to long‑term bonus bank | $3,627,810 (after peer factor reflected in schedule) | |
| Beginning bank balance (incl. accrued interest) | $3,795,178 | |
| 2024 payout from bank (33% of pre‑payout balance) | $2,449,586 | |
| Remaining at‑risk bonus bank balance | $4,973,402 |
Program mechanics:
- 80% of MVP award credited/charged to long‑term bonus bank; annual payout at 33% of positive bank; negative future MVP can claw back bank (economic clawback) .
- Financial component adjusted −20% to +25% based on 5‑yr BVPS growth percentile vs peers (target at 60th percentile; max at ≥90th percentile) .
Stock Options (LTIP)
2024 Grants (vesting 20% per year; 8‑year expiration):
| Grant Date | Options (#) | Exercise Price ($/sh) | Grant Date Fair Value ($) |
|---|---|---|---|
| 02/01/2024 | 8,000 | 67.97 | 122,400 |
| 05/02/2024 | 7,750 | 71.58 | 120,939 |
| 08/01/2024 | 7,750 | 74.52 | 125,899 |
| 11/01/2024 | 7,750 | 78.61 | 131,595 |
Vesting/retirement provisions:
- Options vest 20% annually over five years or upon death, Disability, or qualified Retirement (age + service ≥75); options expire eight years from grant .
Option exercises and realized value:
| Year | Options Exercised (#) | Value Realized ($) |
|---|---|---|
| 2024 | 80,000 | $4,009,000 |
Short‑ vs long‑term pay mix (2024):
| Metric | Short‑Term as % of Total | Long‑Term as % of Total |
|---|---|---|
| Klobnak | 58% | 42% |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 253,022 shares (less than 1% of outstanding) |
| ESOP allocation | 42,022 shares (within beneficial ownership) |
| Options exercisable/unexercisable (12/31/2024) | 88,000 exercisable; 121,250 unexercisable |
| Options exercisable within 60 days (as of 03/17/2025) | 115,550 shares |
| Stock ownership guideline | COO must hold ≥4.0× base salary; all NEOs met guidelines as of 12/31/2024 |
| Hedging/pledging policy | Executives are prohibited from hedging and pledging company securities; no margin accounts permitted for executive officers |
Employment Terms
| Term | Disclosure |
|---|---|
| Employment agreement | None of the NEOs (including COO) have employment contracts with RLI |
| Clawback | Formal recoupment policy for incentive compensation upon accounting restatement; MVP bank forfeits on negative MVP; equity proceeds within 6 months of termination subject to clawback for certain covenant breaches (non‑solicitation, confidentiality) |
| Severance and change‑of‑control economics (as of 12/31/2024) | See table below |
Post-Termination Compensation (as of 12/31/2024)
| Scenario | MVP/MIP/UPP ($) | LTIP ($) | Total ($) |
|---|---|---|---|
| Departure other than death, Disability, or Retirement | N/A | N/A | N/A |
| Departure from death, Disability, or Retirement | $8,112,272 | $5,413,433 | $13,525,705 |
| For cause | $0 | $0 | $0 |
| Change in control | $8,112,272 | $5,413,433 | $13,525,705 |
Additional policies:
- No tax gross‑ups for executive compensation (general practice) .
- Insider trading windows and 10b5‑1 plan framework; anti‑hedging/anti‑pledging reinforced in Insider Trading Policy .
Compensation Peer Group (Benchmarking)
2024 peer set used for assessing compensation competitiveness (insurance specialty peers), including Axis, Global Indemnity, Hanover, James River, Kemper, Kinsale, Old Republic, ProAssurance, Selective, United Fire, W.R. Berkley; Markel added for 2025 comparisons . RLI ranked 2nd among peers on price/book, ROE, and combined ratio; TSR ranks: 6th (1‑yr), 5th (3‑yr), 3rd (5‑yr) based on 2023 data reviewed in 2024 .
Say‑on‑Pay & Shareholder Feedback
- 2024 advisory vote on NEO compensation passed with over 97% support; HCCC maintained approach given strong support .
Investment Implications
- Strong alignment: Large long‑term MVP bonus bank ($4.97M remaining at risk) directly ties Klobnak’s compensation to long‑term value creation and relative performance vs peers; negative MVP would claw back bank balances .
- Low pledging/hedging risk: Executives are prohibited from hedging and pledging; reduces forced‑sale/structured hedging overhang .
- Option activity: 80,000 options exercised in 2024 with $4.009M value realized; monitor for any future Form 4 sales around vesting schedules (options vest 20% annually, expire after 8 years), though proxy shows exercises not necessarily net share sales .
- Change‑of‑control exposure: Accelerated vesting/awards result in ~$13.5M payable under CoC or retirement scenarios; no employment contract severance multiples disclosed, but equity/incentive awards create transaction economics to factor into deal modeling .
- Governance support: High Say‑on‑Pay approval and explicit clawback/forfeiture design suggest robust pay‑for‑performance architecture, lowering compensation‑related headline risk .