John Drago
SAFETY INSURANCE GROUPAbout John Drago
John P. Drago, age 58, is Vice President – Marketing at Safety Insurance Group, appointed on February 1, 2016 after serving as Director of Marketing; he has been employed by Safety’s insurance subsidiaries for over 30 years . Company performance context: Safety’s total shareholder return (TSR) since IPO is 1,428% through December 31, 2024 ; 2024 Direct Written Premiums rose 20.4% with policy counts up 8.5% and average premium up 10.9% . The annual incentive metric for 2024 (“earnings before interest, taxes, changes in unrealized gains on equity securities and credit loss expense”) achieved $86.4m vs a $62.3m target, driving a 139% payout factor .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Safety Insurance Group, Inc. | Director of Marketing | Prior to 2016 (exact years not disclosed) | Not disclosed in proxy |
External Roles
No external directorships/committee roles are disclosed for Mr. Drago in the executive officer biographies section .
Fixed Compensation
| Component | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 260,000 | 271,100 | 281,300 |
| Time‑Vested Stock Awards (Grant‑date fair value $) | 146,250 | 146,250 | 180,000 |
| Performance‑Based Stock Awards (Grant‑date fair value $) | 178,750 | 178,750 | 220,000 |
| Non‑Equity Incentive Plan Compensation ($) | 115,440 | — (no payout) | 234,600 |
| All Other Compensation ($) | 186,064 | 62,293 | 139,822 |
| Total Compensation ($) | 886,504 | 658,393 | 1,055,722 |
Additional details:
- 2024 grant date and price: February 27, 2024 at $85.61 per share .
- 2023 grant date and price: February 22, 2023 at $87.06 per share .
- 2022 grant date and price: February 23, 2022 at $84.98 per share .
Performance Compensation
-
Annual Cash Incentive (Company‑wide metric):
- Metric: Earnings before interest, taxes, changes in unrealized gains on equity securities and credit loss expense .
- 2024 Target vs Actual: $62.3m target; $86.4m actual; payout factor 139% .
- Mr. Drago’s 2024 payout: $234,600; 2023 payout: $0 .
- 2024 bonus range for Drago: Threshold $84,390, Target $168,780, Maximum $253,170 .
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Long‑Term Incentives (Performance‑Based Restricted Shares):
- LTI mix in 2024: 55% performance‑based, 45% time‑based (company‑wide) .
- Performance metrics and payout curve (3‑year period):
Metric Weighting Target (100% payout) Payout Range Combined Ratio (2022–2024) 60% 96.7% 50% at threshold (103.0%); up to 200% at 94.6% or better Relative 3‑yr TSR (vs peer group) 40% 50th percentile 0% below 30th; 200% at 90th percentile - Vesting: 3‑year performance periods; awards settle after period end .
- Status as of 12/31/24: 2024 performance awards projected to pay ~60%; 2023 performance awards projected to pay 0% (subject to final results) .
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Time‑Based RS Vesting Schedules:
- 2022 grants: 30% vest 2/23/2023; 30% 2/23/2024; 40% 2/23/2025, service‑based .
- 2023 grants: 30% vest 2/22/2024; 30% 2/22/2025; 40% 2/22/2026, service‑based .
- 2024 grants: 30% vest 2/27/2025; 30% 2/27/2026; 40% 2/27/2027, service‑based .
Equity Ownership & Alignment
- Beneficial ownership (Record Date March 17, 2025): 30,068 shares; 0.2% of class .
- Stock ownership guidelines: 3x base salary for executive officers; all NEOs meet guidelines .
- Hedging/pledging: Insider trading policy prohibits hedging and pledging; insider sales must occur via pre‑approved plans .
- Options: No stock options granted since 2003; NEOs hold none .
Outstanding unvested restricted stock at FY‑end 2024 (market value calculated at $82.40/share):
| Grant Type | Effective Date | Shares Unvested | Market Value ($) | Notes |
|---|---|---|---|---|
| Time‑based RS | 2/23/2022 | 688 | 56,724 | 30/30/40 vesting to 2/23/2025 |
| Performance‑based RS | 2/23/2022 | 1,970 | 162,328 | Earn‑out per combined ratio/TSR |
| Time‑based RS | 2/22/2023 | 1,176 | 96,902 | 30/30/40 vesting to 2/22/2026 |
| Performance‑based RS | 2/22/2023 | 1,967 | 162,081 | Earn‑out per combined ratio/TSR |
| Time‑based RS | 2/27/2024 | 2,103 | 173,287 | 30/30/40 vesting to 2/27/2027 |
| Performance‑based RS | 2/27/2024 | 2,442 | 201,221 | Earn‑out per combined ratio/TSR |
Restricted stock vested in 2024:
| Shares Acquired on Vesting (#) | Value Realized ($) |
|---|---|
| 2,896 | 247,799 |
2024 equity grants (LTI):
| Grant Date | Time‑Based Shares | Performance‑Based Shares | Total Shares | Total Grant Value ($) |
|---|---|---|---|---|
| 2/27/2024 | 2,103 | 2,442 | 4,545 | 400,000 |
Employment Terms
- Contract term and renewal: Employment agreements for NEOs, including Mr. Drago, are renewed annually effective January 1; the Compensation Committee renewed for a one‑year term ending December 31, 2025. Renewal requires formal action ≥90 days before expiration unless the executive declines ≥120 days prior .
- Severance and change‑of‑control economics (estimated as of 12/31/2024):
Scenario Estimated Incremental Payment ($) Change in Control followed by termination without cause or for Good Reason (double trigger) 1,652,165 Involuntary Termination with Cause 78,855 Involuntary Termination without Cause 793,456 Resignation for Good Reason 315,421 Death or Disability 1,167,964 - Components under CIC+termination include accelerated vesting of restricted stock (estimated $852,543), target‑level annual incentive ($168,780), and lump‑sum multiple of base+bonus (2x for non‑CEO) ($562,600) .
- Life & health insurance: Under CIC termination, benefits of $68,242; under certain involuntary termination scenarios, $34,121 estimated .
- Equity vesting mechanics: Double‑trigger vesting upon CIC+termination; if terminated without cause (non‑CIC), unvested RS not granted in the termination year will vest; if resignation for Good Reason (non‑CIC), unvested RS are forfeited .
- Clawback: Adopted August 2023; mandates recovery of erroneously awarded incentive‑based compensation (Section 10D) for “Big R” and “little r” restatements, with no committee discretion; applies to current/former Section 16 officers .
- Tax gross‑ups: No excise tax gross‑ups on change‑of‑control payments .
- Equity plan safeguards: Prohibits option repricing and share recycling without stockholder approval .
Nonqualified deferred compensation (EICP):
| Item | 2024 Amount ($) |
|---|---|
| Performance‑based EICP allocation (credited, paid only at termination) | 92,061 |
| Employer match under EICP for 2024 | $0 |
| Nonqualified deferred compensation account – registrant contributions credited Jan 2024 (for 2023 plan year) | 4,329 |
| Nonqualified deferred compensation account – aggregate balance at FY‑end 2024 | 1,366,780 |
Compensation Structure Analysis
- Mix shows rising at‑risk pay: 2024 included both time‑based and performance‑based RS grants ($180k and $220k fair value), plus higher annual incentive vs 2023 ($234.6k vs $0), signaling pay linked to performance outcomes .
- Options de‑emphasized: No stock options granted to NEOs since 2003; none outstanding—equity compensation is entirely RS/PSUs, which lower risk relative to options and strengthen alignment through vesting/performance hurdles .
- Performance rigor: 2023 performance awards currently project to 0% payout; 2024 awards project to ~60% as of 12/31/24, reflecting combined ratio/TSR outcomes—supporting a pay‑for‑performance framework .
- Ownership alignment: 3x salary ownership guideline for NEOs; pledging and hedging prohibited; all NEOs currently meet guidelines .
Compensation Peer Group (Benchmarking)
Peer group used for 2024 benchmarking includes property‑casualty insurers (e.g., Selective Insurance Group, RLI, Mercury General, Palomar, Heritage, NI Holdings, Donegal, HCI Group), with Skyward Specialty added and Hallmark and Hanover removed due to size/market cap considerations .
Equity Ownership & Insider Selling Pressure Indicators
- Unvested RS balances are meaningful (total 10,346 unvested shares with $856,643 market value at 12/31/24), creating ongoing vesting supply but with double‑trigger change‑of‑control acceleration constraints .
- 2024 vesting realized value $247,799 on 2,896 shares; tax‑related sales are governed by pre‑approved trading plans and anti‑hedging/pledging policy .
Performance & Track Record
- Company TSR since IPO: 1,428% through 12/31/24 .
- 2024 growth: Direct Written Premiums +20.4% (policy count +8.5%; average premium +10.9%) .
- Annual incentive metric: 2024 actual $86.4m vs $62.3m target; 139% payout factor .
Employment Terms – Additional Governance
- Annual employment agreement renewals; bonus eligibility at Board/Committee discretion; benefits include severance, health/life insurance, and paid time off .
Investment Implications
- Alignment: Strong pay‑for‑performance design—annual incentives tied to a defined earnings metric and LTI performance shares driven by combined ratio and relative TSR—supports long‑term value alignment; anti‑hedging/pledging and ownership guidelines further reduce misalignment risk .
- Retention risk: Annual one‑year contracts and meaningful unvested RS balances (service/performance‑based through 2027) create retention hooks; EICP balances paid only upon termination add stickiness, reducing near‑term flight risk .
- Change‑of‑control economics: Double‑trigger vesting with 2x salary+bonus multiple (non‑CEO) and defined health benefits present a moderate CIC cost profile; absence of gross‑ups is shareholder‑friendly, lowering potential deal friction .
- Trading signals: 2024 vesting and projected PS payouts (60% for 2024 grant; 0% for 2023 grant) indicate management incentives are sensitive to underwriting performance and market TSR; monitor future proxy updates and Form 4 activity for any increases in equity sales as time‑based tranches vest, noting sales are controlled via pre‑approved plans .