Anthony D. Harnett
SELECTIVE INSURANCE GROUPAbout Anthony D. Harnett
Senior Vice President and Chief Accounting Officer at Selective Insurance Group since 2016; served as Interim Chief Financial Officer from November 2023 to October 2024. Age 52; B.S. in Accounting from Albright College; Certified Public Accountant (Pennsylvania); member of the American Institute of CPAs and the Pennsylvania Institute of CPAs . During his interim CFO tenure, Selective navigated a challenging year: GAAP ROE 7.0% and non-GAAP operating ROE 7.1% vs a 12% target, combined ratio 103.0% (with 7.1 points of prior-year casualty reserve strengthening), net premiums written up 12%, and after-tax net investment income $363 million; 2024 annualized TSR was -4.6% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Selective Insurance Group | Interim Chief Financial Officer | Nov 2023–Oct 2024 | Led SEC and statutory reporting, investor engagement, reinsurance renewals, sustainability disclosures, budgeting/forecasting, and billing enhancements; supported CFO transition . |
| Selective Insurance Group | SVP, Controller | 2010–2016 | Oversaw controllership and reporting functions . |
| Selective Insurance Group | VP, Controller | 2008–2010 | Advanced financial control and reporting processes . |
| Selective Insurance Group | Senior Accountant & Finance positions | 1999–2008 | Built finance foundation and controls . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| Albright College | B.S. in Accounting | Not disclosed | Degree credential . |
| Certified Public Accountant (Pennsylvania) | CPA License | Not disclosed | Active professional credential . |
| American Institute of Certified Public Accountants | Member | Not disclosed | Professional membership . |
| Pennsylvania Institute of Certified Public Accountants | Member | Not disclosed | Professional membership . |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Salary ($) | $381,842 | $634,958 |
| Stock Awards ($) | $223,495 | $354,292 |
| Non-Equity Incentive ($) | $335,967 | $500,000 |
| All Other Compensation ($) | $32,325 | $54,644 |
| Total Compensation ($) | $1,032,485 | $1,543,895 |
Base salary rate events:
- February 24, 2024: $640,685 (reflecting interim CFO role and an 86.9% increase approved earlier in 2024) .
- Effective December 30, 2024: $379,995 (post-interim CFO transition) .
Performance Compensation
Annual Cash Incentive Program (ACIP) – 2024
| Component | Weighting (% of opportunity) | Target | Actual 2024 Result | Payout |
|---|---|---|---|---|
| GAAP Combined Ratio | 50% | 95% combined ratio | 103.0% | 0% of financial component |
| Strategic Measures | Up to 50% (+5-point upside) | 13 designated measures | 12 of 13 achieved; funded at 50 points | 50 points |
Individual ACIP outcome (Harnett):
- Minimum/Maximum ACIP Opportunity: 0% / 250% of base salary .
- Actual 2024 ACIP payout: 79% of base salary; $500,000; +48.8% vs 2023 .
Long-Term Incentive Program (LTIP) – Design
- RSUs: 3-year vest; payout contingent on achieving cumulative non-GAAP operating ROE ≥12% or 5% cumulative growth in policy count or statutory NPW over the performance period .
- Cash Incentive Units (CIUs): Initial $100 per unit; earned units scale 0–150% based on cumulative 3-year TSR and statutory NPW growth and statutory operating return on policyholder surplus relative to a peer index; payout reflects Selective TSR over the performance period .
Harnett LTIP Grants and Vesting
| Grant Year | Instrument | Grant Date | Target Units/Shares | Grant-Date Fair Value ($) | Performance Metric | Vest/Payout Timing |
|---|---|---|---|---|---|---|
| 2024 | RSUs | 2/2/2024 | 2,755 | $262,992 | ROE ≥12% or growth targets | Vests/payable ~2/2/2027 (subject to performance) |
| 2024 | CIUs | 2/2/2024 | Target 913; Threshold 402; Max 1,370 | $91,300 | TSR + statutory metrics vs peer | Pays ~2027 (post performance period) |
| 2023 | RSUs | 2/6/2023 | 1,742 (incl. DEUs as of 12/31/2024) | Part of $166,195 RSU grant (aggregate) | ROE ≥12% or growth targets | Vests/payable ~2/6/2026 (subject to performance) |
| 2023 | CIUs | 2/6/2023 | 573 | Part of $57,300 CIU grant (aggregate) | TSR + statutory metrics vs peer | Pays ~2026 (post performance period) |
| 2022 | RSUs | 2/7/2022 | 2,227 (incl. DEUs; vested) | Unit value $93.52 (as referenced) | ROE ≥12% or growth targets | Vested/paid 2/7/2025 (subject to performance) |
| 2022 | CIUs | 2/7/2022 | 550 (vested) | Unit value $118.91; up to 150% units earned | TSR + statutory metrics vs peer | Settlement in 2025 (post performance determination) |
2021 LTIP peer-indexed results (for context): three-year TSR 154.53%, statutory operating ROE 41%, NPW growth 49%; 150% of CIUs earned .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial ownership (common shares) | 17,298 (less than 1%) |
| Shares pledged/margin | None pledged; no margin accounts (policy) |
| Stock options | None exercisable; no RSUs vesting within 60 days of Feb 20, 2025 |
| Outstanding RSUs (unearned as of 12/31/2024) | 1,742 (2023 grant) and 2,796 (2024 grant) |
| Outstanding CIUs (unearned as of 12/31/2024) | 573 (2023 grant) and 913 (2024 grant) |
| Ownership guideline (role-based) | Senior Vice President: 1.5x base salary |
| Retention requirement | Must retain ≥75% of net shares from equity awards until guideline met |
| Compliance status | All officers have met or are on track to meet guidelines |
| Hedging/Pledging policy | Hedging prohibited; pledging prohibited |
Stock vesting realized in 2024: 2,995 shares acquired on vesting; value realized $331,071 (includes RSUs/DEUs and CIUs paid in 2024) .
Deferred compensation (balance and activity):
- Executive contributions: $52,768; company contributions: $4,407; earnings: $12,260; withdrawals: $(74,072); aggregate balance: $218,754 (as of Dec 31, 2024) .
Pension benefits present value (as of Dec 31, 2024):
- Retirement Income Plan: $273,152; SERP: $1,609 .
Employment Terms
| Term/Provision | Details |
|---|---|
| Agreement Term | Initial 3-year term; auto-renews annually unless terminated by either party with notice . |
| Severance (no change-in-control) | If death/disability or termination without cause: 1.5x (salary + average of last 3 annual cash incentives) paid over 12 months; partial reimbursement of medical/dental/vision for 18 months . |
| Change-in-Control (double trigger) | If terminated without cause or resigns for good reason within 2 years post COC: lump sum of 1.5x (salary + target or average bonus as specified); 18 months benefits reimbursement; CIUs initial units multiplied by 150% upon qualifying termination . |
| Equity Treatment on Termination | Immediate vesting (except for cause or resignation without good reason) with potential extended exercise periods; performance conditions still apply to RSUs/CIUs except in death where RSUs become vested/payable . |
| Clawback | SEC/Nasdaq-compliant clawback policy effective Dec 1, 2023 . |
| Tax Gross-Ups | No excise tax gross-up provisions in current agreements . |
| Covenants | Release of claims required; confidentiality; non-solicitation of employees for two years post-termination . |
Potential payments (as of Dec 31, 2024):
| Scenario | Total ($) |
|---|---|
| Retirement | $846,341 |
| Death or Disability | $2,198,288 |
| Termination without Cause / Resignation with Good Reason | $2,235,977 |
| Termination Following Change-in-Control | $2,284,963 |
Compensation Structure Analysis
- 2024 ACIP funding produced payouts despite a >100% combined ratio, driven entirely by strategic measure achievement; Harnett’s ACIP outcome was 79% of base salary ($500,000) versus a 0% financial component, reflecting design features that balance financial and strategic objectives .
- Harnett’s 2024 base salary rate rose to $640,685 while serving as interim CFO, then reverted to $379,995 post-transition; his 2024 salary paid was $634,958, with total compensation of $1.54 million .
- LTIP mix emphasizes performance-contingent RSUs and peer-relative cash units; 2021 grant results delivered 150% of CIUs and strong TSR/ROPS outcomes, reinforcing a performance orientation .
- Benchmarking: CHCC set NEO total compensation ~15.9% below combined benchmark median in 2024 (Harnett excluded due to interim CFO pro-ration); cash compensation was ~21.5% below median and LTIP grant-date fair value ~2.6% below median .
Say-On-Pay & Shareholder Feedback
- 2024 say-on-pay approval exceeded 99% of votes cast, reinforcing support for the executive pay program .
- Compensation peer group used for benchmarking includes leading P&C insurers (Arch, AXIS, Cigna-influenced roles, Hartford, Hanover, Erie, RLI, W. R. Berkley, etc.) and industry survey data; peer group remained consistent year-over-year .
Investment Implications
- Alignment: No hedging or pledging; stringent ownership and retention requirements; RSUs/CIUs performance-based with multi-year vesting reduce near-term selling pressure and align incentives over longer horizons .
- Retention/transition: Strong severance economics under both standard and COC scenarios (~$2.2–$2.3M potential) and multi-year LTIP grants support retention; Harnett’s demonstrated execution in reporting, ratings engagement, and reinsurance renewals during a reserve-challenged period suggests operational reliability amid industry social inflation headwinds .
- Pay-for-performance risk controls: SEC/Nasdaq clawback policy; no excise tax gross-ups; no option repricing; equity grants timed post year-end results—support investor-friendly governance .
- Watch items: ACIP design allowed meaningful payouts on strategic achievements despite a >100% combined ratio; monitor future calibration of financial vs strategic weightings, combined ratio trajectory, and reserve trends for continued pay-performance alignment .