Avrohom Kess
Vice Chairman and Chief Legal Officer at TRV
Executive
About Avrohom Kess
Avrohom J. (“A.J.”) Kess is Vice Chairman and Chief Legal Officer of Travelers, overseeing Legal Services (including Government Relations), Corporate Communications, Public Policy and the Travelers Institute; he joined Travelers in December 2016 after serving as a Partner at Simpson Thacher & Bartlett, heading its Public Company Advisory Practice and acting as Travelers’ lead outside counsel . He holds a B.S. in accounting from Brooklyn College and a J.D. from NYU School of Law; public profiles list his age as 56 and senior management tenure since 2016 . Company performance context during his tenure includes strong core income ($5.0B), core ROE (17.2%), record underwriting income, 8% net written premium growth in 2024, and TSR of ~29%/64%/97% for 1/3/5 years ended 12/31/2024 (59th/64th/61st percentile vs peers) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Simpson Thacher & Bartlett LLP | Partner; Head, Public Company Advisory Practice | — | Led corporate/securities/governance advisory; served as Travelers’ lead outside counsel |
| The Conference Board Commission on Public Trust & Private Enterprise | Special Counsel | — | Corporate governance thought leadership |
External Roles
| Organization/Institution | Position | Years | Notes |
|---|---|---|---|
| Practical Law | Advisory Board Member | 2012 | Governance advisory (as listed on profile) |
| Brooklyn College | Alpha Sigma Lambda Society (member) | — | Academic distinction (profile listing) |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 937,692 | 950,000 | 950,000 |
| Annual Cash Bonus ($) | 3,125,000 | 2,970,000 | 3,500,000 |
Performance Compensation
Annual Equity Grants (most recent grant)
| Grant Date | Performance Shares Target (#) | Performance Shares Max (#) | Options Granted (#) | Option Exercise Price ($/sh) | Grant-Date Fair Value – PSUs ($) | Grant-Date Fair Value – Options ($) |
|---|---|---|---|---|---|---|
| Feb 6, 2024 | 8,028 | 16,056 | 20,196 | 213.01 | 1,710,044 | 1,140,021 |
- Annual long-term incentive sizing: 3× base salary for Kess (consistent in 2024 and 2025) .
- LTI mix design: performance shares ~60% and stock options ~40% (NEOs) .
Performance Share Design and Payout Mechanics
| Element | Details |
|---|---|
| Metric | Core Return on Equity (ROE) (defined in award) |
| Vesting Schedule | 3-year performance period; threshold 8% core ROE → 50% vest; target 11% → 100% vest; max 16% → 200% vest (plus dividend equivalents accrue) |
| Relative TSR Modifier | Starting with 2025 grants, rTSR modifier ±20 percentage points; overall cap 200% |
| Option Vesting | Options vest 100% on 3rd anniversary of grant |
| Grant Timing & Pricing Controls | Fixed grant calendar; exercise price/fair value set at NYSE close on grant date; no option repricing without shareholder approval |
Realized in 2024
| Metric | 2024 |
|---|---|
| Shares Acquired on Vesting (PSUs) (#) | 18,918 |
| Value Realized on Vesting ($) | 4,557,390 |
| Options Exercised (#) | — (none) |
Equity Ownership & Alignment
| Item | Amount | Notes |
|---|---|---|
| Shares Owned Directly/Indirectly | 48,387 | As of March 24, 2025 |
| Options Exercisable within 60 days | 353,987 | As of March 24, 2025 |
| Total Stock-Based Ownership (shares + short-term exercisable options) | 402,374 | As of March 24, 2025 |
| Unvested Performance Shares (#) | 18,848 (2/7/2023 grant) | Market/payout value $4,540,192 |
| Unvested Performance Shares (#) | 16,353 (2/6/2024 grant) | Market/payout value $3,939,202 |
| Unexercisable Options (#, selected grants) | 23,858 (2/7/2023), 30,246 (2/8/2022), 20,196 (2/6/2024) | Exercise prices $189.01, $172.50, $213.01 |
| Stock Ownership Guideline | 300% of base salary for other NEOs; compliance achieved as of 12/31/2024 | |
| Hedging/Pledging | Hedging prohibited; pledging requires consent—no pledges reported |
Employment Terms
| Provision | Terms (Kess/NEOs) |
|---|---|
| Severance (involuntary w/o cause or substantial demotion) | Non-solicit/non-disclosure agreements provide 21–24 months of total monthly cash comp depending on years of service; (average monthly includes salary + greater of avg of last 2 bonuses or 125% of salary) |
| Cash Severance Illustrative Amounts (as of 12/31/2024) | Involuntary w/o cause: $10,419,333; Voluntary w/o good reason: $3,423,708 |
| Change-in-Control (double trigger) | Waiver of service vesting for options; PSUs remain subject to actual performance; additional equity acceleration value for Kess: $3,869,341 upon qualifying termination following a change in control |
| Equity Vesting on Death/Disability | Death: immediate vest of full PSUs + dividend equivalents at 100%; Disability: vest on original schedule subject to performance |
| Clawback/Recapture | Restatement + fraud/willful misconduct triggers recovery/cancellation; one-year post-departure equity recapture terms apply |
| Tax Gross-ups | No excise tax gross-ups; no perquisite tax gross-ups for NEOs |
| Non-Compete | Management-level non-compete agreements in place (company may elect payments; specifics for CEO described; NEO program referenced) |
Performance & Track Record
- 2024 financial outcomes used in incentive decisions: net income $5.0B; core income $5.0B; core ROE 17.2%; record underwriting income; expense ratio 28.5%; net written premiums +8% to $43.4B; pre-tax investment income $3.6B (+23% YoY) .
- TSR: ~29% (1yr), 64% (3yr), 97% (5yr) through 12/31/2024 vs peer percentiles 59th/64th/61st; long-term TSR since 1/1/2008 totals 575% vs indices and peers .
- Bonus plan emphasizes discretion, quality of results, and risk management with core ROE as principal factor; caps added for CEO and NEOs in response to investor feedback .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay support was a “substantial majority” but lower than prior years; committee responded by raising PSU core ROE targets by 75 bps, adding a relative TSR modifier (from 2025 grants), and expanding cash bonus caps to all NEOs .
Compensation Structure Analysis
- Mix shift and risk: Annual equity grants fixed as PSUs + options (no time-vesting RSUs); NEO mix 60% PSUs/40% options—more performance-based than peers, limiting guaranteed outcomes .
- Design enhancements: rTSR modifier introduced (±20 pts) to align with relative returns while keeping overall cap at 200% .
Related Party & Risk Indicators
- No pledging by directors/executives; hedging prohibited .
- Severance/change-in-control arrangements exclude tax gross-ups; double-trigger vesting mitigates windfall risk .
Equity Ownership & Insider Selling Pressure
- Ownership and options (near-term exercisable): 48,387 shares; 353,987 options exercisable within 60 days; total stock-based ownership 402,374 as of 3/24/2025 .
- 2024 activity: Kess had no option exercises; PSUs vested (18,918 shares; $4.56M value)—supply from vesting but absence of option exercise reduces mechanical selling pressure signals .
- Policy alignment: In compliance with 300% salary ownership guideline; hedging/pledging constraints reduce misalignment risk .
Investment Implications
- Alignment signal: High proportion of performance-based equity (PSUs + options), ownership guideline compliance, and rTSR modifier strengthen shareholder alignment, reducing risk of pay-for-underperformance outcomes .
- Retention risk: Severance protections (21–24 months cash framework; double-trigger equity vesting on CIC) and significant unvested PSUs/options suggest moderate retention risk; note Kess did not meet the “retirement rule” at YE 2024, limiting automatic vesting absent qualifying events .
- Trading signals: 2024 absence of option exercises alongside PSU vesting points to limited near-term selling pressure; monitor Form 4s around PSU vesting dates and option vest anniversaries (options vest at 3 years) .
- Pay structure durability: Discretionary bonus approach centered on core ROE and risk management, combined with raised PSU ROE targets and caps across NEOs, indicates tightening performance gates—potentially supportive of long-term multiple if sustained TSR and core ROE remain above peers .