Michael Klein
Executive Vice President and President, Personal Insurance at TRV
Executive
About Michael F. Klein
Executive Vice President and President, Personal Insurance at The Travelers Companies, Inc. (TRV). Age 57; in current role since July 2015 and at Travelers since 1990, with prior leadership across Commercial Accounts, Middle Market, and Business Insurance co-president roles . Company performance context during his tenure includes strong 2024 results: net income $5.0B, core income $5.0B, core ROE 17.2%, net written premiums up 8% to $43.4B, and 1/3/5-year TSR of ~29%/64%/97% (59th/64th/61st percentile vs peer group) . In Q1 2025, Personal Insurance delivered a record underlying combined ratio of 79.9% and 5% NPW growth despite California wildfire losses, reflecting underlying margin recovery in Auto and Homeowners .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Travelers | EVP & President, Personal Insurance | Jul 2015 – present | Leads U.S. Personal Lines; focus on pricing adequacy, catastrophe exposure management, and margin recovery in Auto & Home |
| Travelers | EVP & Co‑President, Business Insurance | Jul 2014 – Jul 2015 | Co-led largest segment, preceding move to Personal Insurance |
| Travelers | EVP, Middle Market; President, Middle Market | Nov 2012 – Jul 2014; Mar 2010 – Nov 2012 | Led Middle Market underwriting and distribution |
| Travelers | President, Commercial Accounts; SVP, Industry & Product Group | Sep 2007 – Mar 2010; Jun 2006 – Sep 2007 | Led national accounts and industry programs |
| Travelers | Various roles | 1990 – 2006 | Progressive leadership across underwriting and product |
External Roles
- None disclosed .
Fixed Compensation
| Metric (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary | $775,385 | $800,000 | $800,000 |
| Annual Cash Bonus (Non‑Equity Incentive) | $2,500,000 | $2,300,000 | $2,900,000 |
Notes:
- Base salary unchanged in 2024; bonus increased YoY on stronger company performance .
Performance Compensation
LTI design and metrics
- Mix: 60% performance shares (PSUs) and 40% stock options for NEOs; no time‑based RSUs in ongoing program .
- Annual bonus is discretionary with core ROE as a principal factor; also considers core income/EPS, premium growth, investment income, expense and capital management; no formulaic weighting disclosed .
- Performance shares vest on 3‑year performance period based on “Performance Period ROE” with thresholds below; 2025 grants add an rTSR modifier (+/‑20 pp) vs S&P 500 Financials .
| Performance Period ROE (3‑yr avg) | 0% | 50% | 75% | 100% | 120% | 140% | 160% | 180% | 200% |
|---|---|---|---|---|---|---|---|---|---|
| 2024 Grant | <8.00% | 8.00% | 9.50% | 11.00% | 11.50% | 12.50% | 13.00% | 14.50% | 16.00% |
| 2025 Grant | <8.75% | 8.75% | 10.25% | 11.75% | 12.25% | 13.25% | 13.75% | 15.25% | 16.75% |
- 2022–2024 PSU cycle paid at 189.33% on adjusted ROE of 15.2% (certified Feb 2025) .
- Options: 10‑year term; 3‑year cliff vest; strike = NYSE close on grant date; no repricing without shareholder approval .
Annual LTI grant values (grant‑date fair value)
| Component (USD) | 2022 | 2023 | 2024 |
|---|---|---|---|
| Stock Awards (PSUs) | $1,740,008 | $1,919,964 | $1,920,072 |
| Option Awards | $1,159,836 | $1,279,770 | $1,280,012 |
- 2025 equity approved at 4× base salary for Klein (mix 60% PSUs/40% options); will appear in 2026 proxy .
2024 grant details (awarded Feb 6, 2024)
| Type | Target/Qty | Max | Strike | Vesting |
|---|---|---|---|---|
| Performance Shares | 4,507 target | 18,028 | n/a | End of 2024–2026 performance period; ROE schedule above |
| Stock Options | 22,676 | n/a | $213.01 | 100% after 3 years; 10‑year term |
2024 realizations
| 2024 Activity | Quantity | Value (USD) |
|---|---|---|
| Options Exercised | 52,287 | $4,686,737 |
| Shares Vested (PSUs incl. dividends) | 20,321 | $4,895,153 |
Equity Ownership & Alignment
- Ownership guideline: 300% of base salary for NEOs; all NEOs in compliance as of Dec 31, 2024 .
- Hedging banned; pledging prohibited without consent—no pledges have been made .
- Clawbacks: Dodd‑Frank compliant and additional misconduct-based recovery; forfeiture/recoupment applies to incentive comp .
| Beneficial Ownership (as of Mar 24, 2025) | Amount |
|---|---|
| Shares owned directly/indirectly | 35,490 |
| Options exercisable within 60 days | 126,139 |
| Total stock‑based ownership (shares + options counted as if exercised) | 161,629 |
| Note | No individual NEO owns ≥1% of shares outstanding |
Outstanding awards (Dec 31, 2024):
- Performance Shares unearned: 21,162 (2023 grant); 18,361 (2024 grant) .
- Options by grant date (exercisable/unexercisable; strike; expiry): 2019: 9,044/— @ $126.18 (exp. 2/5/2029); 2020: 48,572/— @ $132.58 (2/4/2030); 2021: 36,037/— @ $139.83 (2/2/2031); 2022: —/32,486 @ $172.50 (2/8/2032); 2023: —/26,788 @ $189.01 (2/7/2033); 2024: —/22,676 @ $213.01 (2/6/2034) .
Employment Terms
- Severance (non‑CEO executives): under non‑solicit/non‑disclosure agreements and executive severance plan; generally 21–24 months of total monthly cash comp (base + greater of avg prior two bonuses or 125% of base) for qualifying terminations; six‑month non‑compete election can trigger additional lump sum and health continuation .
- Change‑in‑Control (double‑trigger): service vest waived for equity upon involuntary termination without cause/for good reason within 24 months; options vest; PSUs continue to depend on actual performance (CEO terms differ) .
- Clawbacks and restrictive covenants embedded in equity award agreements; “Retirement Rule” allows continued vesting with non‑compete conditions (jurisdictional carve‑outs apply) .
Potential payments for Michael F. Klein (as of Dec 31, 2024; closing price $240.89):
| Scenario | Cash Severance | Equity Acceleration | Benefits/Other | Total |
|---|---|---|---|---|
| Involuntary termination without cause | $9,599,955 | $4,243,686 | $11,674 | $13,855,315 |
| Voluntary termination (no good reason) | $3,199,955 | $4,243,686 | $7,044 | $7,450,685 |
| Disability | — | $4,243,686 | — | $4,243,686 |
| Death | — | $9,004,064 | — | $9,004,064 |
Compensation Structure Notes (pay-for-performance signals)
- Mix heavily performance‑based (88% for average NEOs) with no time‑based RSUs; PSUs require ROE outperformance, and option value requires stock appreciation .
- Targets raised: 2025 PSU ROE curve shifted +75 bps at all points; rTSR modifier added (+/‑20 pp) .
- Annual bonus: Committee preserves discretion but expanded hard caps to all NEOs starting with 2025 performance (5× base salary cap for NEOs; CEO cap $10M) .
- Market stance: Salaries near 50th percentile; total pay varies with performance; no excise tax gross‑ups; no option repricing; no dividends on unvested PSUs .
Compensation Peer Group (for benchmarking)
AIG; Allstate; Chubb; Hartford; Progressive; Aflac; American Express; BNY Mellon; Humana; Lincoln National; Marsh & McLennan; MetLife; Prudential Financial .
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay earned a “substantial majority” but lower support than prior years; company increased PSU rigor, added rTSR modifier, and extended bonus caps to all NEOs following outreach to holders representing ~45% of shares .
Equity Vesting Schedules (mechanics)
- Stock options: 100% vest at 3 years; 10‑year term; strikes at grant‑date close; no repricing .
- Performance shares: 3‑year performance period; vesting per ROE curve; for 2025 grants, rTSR modifier applies .
- Retirement eligibility can allow continued vesting subject to non‑compete; award agreements include non‑solicit and confidentiality obligations with jurisdictional modifications -.
Performance & Track Record (Personal Insurance and Enterprise)
- Personal Insurance (Q1 2025): Combined ratio 115.2% including California wildfires; underlying combined ratio 79.9% (record); NPW +5%; Auto underlying CR 87.5% with favorable frequency/severity; Homeowners underlying CR 72.6% aided by pricing and lower non‑weather losses .
- Enterprise (2024): Core ROE 17.2%; record underlying underwriting income $4.5B after‑tax; NPW +8% to $43.4B; expense ratio 28.5%; TSR ~29%/64%/97% over 1/3/5 years vs peers 59th/64th/61st percentile .
- Q1 2025 Company: Core income $443M; trailing 12‑mo core ROE 14.5%; underlying combined ratio 84.8%; operating cash flow $1.4B; dividend raised 5% to $1.10 .
Investment Implications
- Alignment and incentives: High at‑risk pay with tightened PSU hurdles and rTSR overlay enhances pay-for-performance. No time‑based RSUs and meaningful ownership guidelines reduce misalignment risk .
- Retention risk: Competitive severance, six‑month non‑compete election, and continued vesting under retirement rule mitigate near‑term flight risk, though market demand for seasoned personal lines leaders remains high .
- Selling pressure: 2024 realized liquidity from option exercises ($4.69M) and PSU vesting ($4.90M) suggests periodic tax‑related share dispositions; no pledging and anti‑hedging policy reduce red flags .
- Execution: Personal Insurance underlying margins improved materially; continued pricing/IV (insured value) alignment and exposure management in high‑cat geographies remain key levers under Klein’s leadership .