Exhibit 10.3
THE PROGRESSIVE CORPORATION
DIRECTORS RESTRICTED STOCK DEFERRAL PLAN
(2008 Amendment and Restatement)
WHEREAS , The Progressive
Corporation (“Company”) maintains The Progressive
Corporation Directors Restricted Stock Deferral Plan pursuant to a
plan document dated February 1, 2004, and one amendment
thereto; and
WHEREAS , it is desired to
amend and restate the Plan;
NOW, THEREFORE , effective
January 1, 2008, the Plan is hereby amended and restated in
its entirety to provide as follows:
ARTICLE I
PURPOSE; PARTICIPATION
1.1 Purpose . The purpose of this plan,
which shall be known as The Progressive Corporation Directors
Restricted Stock Deferral Plan (the “Plan”) is to
provide directors of the Company who are not employees of the
Company or its subsidiaries with an opportunity to defer the
receipt of Common Shares with respect to Eligible Restricted Stock
Awards.
ARTICLE II
DEFINITIONS
For
purposes of this Plan, the following terms shall have the following
meanings:
“Board” means the Board of Directors of
the Company.
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“Change in Control” means a change in the
ownership of the Company, a change in effective control of the
Company or a change in the ownership of a substantial portion of
the Company’s assets, each as determined in accordance with
Section 409A of the Code.
“Code” means the Internal Revenue Code of
1986, as amended, and the regulations promulgated pursuant
thereto.
“Committee” means the Compensation
Committee of the Board.
“Company” means The Progressive
Corporation, an Ohio corporation, and its successors.
“Company Directors Equity Plan” means any
equity compensation plan for directors who are not employees of the
Company or its subsidiaries maintained by the Company providing for
the award of Restricted Stock, including but not limited to, The
Progressive Corporation 2003 Directors Equity Incentive Plan.
“Deferral Election” means an election,
filed with the Committee, pursuant to which a Participant elects to
have all or part of an Eligible Restricted Stock Award converted
into Stock Units under this Plan, and to have such Stock Units
credited to his or her Stock Account under the Plan pursuant to
Section 4.2 hereof.
“Designated Deferral Period” shall mean
the deferral period selected by the Participant with respect to an
Eligible Restricted Stock Award, which deferral period shall
specify the date on which distribution of Shares with respect to
such Eligible Restricted Stock Award shall be made or begin.
“Dividend Equivalent Amounts” means the
amount of dividends or other distributions to shareholders of the
Company that a Participant would have received had the
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Participant’s Stock Units been actual Shares as of the date
of a dividend or other distribution by the Company.
“Eligible Restricted Stock Award” means
an award of Restricted Stock made, or to be made, under a Company
Directors Equity Plan.
“Participant” means any director of the
Company who is not an employee of the Company or its subsidiaries
and who participates in this Plan by timely completing a Deferral
Election.
“Plan Year” means each calendar year
during the term of this Plan.
“Restricted Stock” means Shares awarded,
or to be awarded, to a Participant in the form of restricted stock
under and pursuant to the terms of a Company Directors Equity
Plan.
“Shares” means the Common Shares, $1.00
par value, of the Company.
“Stock Account” means an individual
bookkeeping account established for each Participant pursuant to
Section 4.3 hereof, with respect to Stock Units credited to
the Participant.
“Stock Units” means the units credited to
a Participant’s Stock Account, as described in
Sections 4.2 and 4.4 hereof. Each Stock Unit credited to a
Participant’s Stock Account shall represent the right,
subject to the terms and conditions of this Plan, to receive one
(1) Share at the end of the Participant’s Designated
Deferral Period or at such other time as this Plan may specify for
distribution to be made or begin.
ARTICLE III
PARTICIPATION
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3.1 Eligibility and Participation .
Directors who shall be eligible to participate in this Plan shall
be those directors who are not employees of the Company or its
subsidiaries.
ARTICLE IV
DEFERRAL ELECTIONS
4.1 Deferral Elections . Each eligible
director who elects to participate in this Plan for any Plan Year
shall file a Deferral Election with the Committee before the
beginning of such Plan Year, provided that any director who was not
a director during the previous two Plan Years may file a Deferral
Election with the Committee (i) within thirty (30) days
after he/she is elected to the Board and (ii) prior to the
grant of Restricted Stock which is the subject of such Deferral
Election . The Deferral Election shall be in the form prescribed by
the Committee, and in accordance with such rules and procedures as
may be established by the Committee in its sole discretion. Once
made, a Participant’s Deferral Election shall be irrevocable.
A Deferral Election shall be deemed to have been made when the
completed and executed election form is received and accepted by
the Committee or its designated agent. A separate Deferral Election
shall be made by a Participant with respect to all or part of each
Eligible Restricted Stock Award to be subject to a Deferral
Election during such Plan Year. If an eligible Participant fails to
file an appropriate election form with respect to any Eligible
Restricted Stock Award before the deadline provided in the first
sentence of this Section, he or she shall be deemed to have elected
not to make a Deferral Election for such Plan Year.
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4.2 Effect of Deferral Election . If a
Participant timely files a Deferral Election with the Committee
with respect to an Eligible Restricted Stock Award, each share of
Restricted Stock subject to a Deferral Election will be
automatically cancelled immediately prior to vesting and will be
replaced with a corresponding Stock Unit credited to the
Participant’s Stock Account in accordance with
Section 4.3. A timely Deferral Election with respect to an
Eligible Restricted Stock Award will defer the delivery to the
Participant of the Shares subject thereto until the end of the
Participant’s Designated Deferral Period or such other time
as this Plan may specify for distribution to be made or
begin.
4.3 Stock Accounts .
The
Committee shall establish and maintain a separate bookkeeping
account in the name of each Participant who makes a Deferral
Election during the course of his or her participation in the Plan.
Each Participant’s Stock Account shall consist of the sum of
the Stock Units credited to such Participant’s Stock Account.
Each Participant’s Stock Account shall be adjusted as
follows:
(a) As of the date of vesting of an
Eligible Restricted Stock Award to which a Participant’s
Deferral Election is applicable, the Participant’s Stock
Account shall be credited with that number of Stock Units equal to
the number of Shares to which the Deferral Election relates;
(b) As of the date on which a
dividend is paid on (or any other distribution is made on account
of) Shares, the Stock Account shall be credited with that number of
Stock Units and fraction thereof equal to the number of Shares and
fraction thereof that the Dividend Equivalent Amount would have
purchased on that date based on the average of the high and low
trading prices of the Shares on that date.
(c) As of the date on which Shares
are distributed to the Participant in accordance with
Section 4.5, the Participant’s Stock Account shall be
reduced by an equal number of Stock Units, and fractions thereof,
if applicable.
In the
event of any stock split, reverse split, combination or other
changes that impact the Company’s capital structure, or Share
status, each Participant’s Stock Account and the number
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of Stock
Units credited thereto shall be equitably adjusted by the Committee
in its sole discretion in a manner consistent with the treatment of
outstanding equity awards pursuant to the Company Directors Equity
Plan.
4.4 Dividend Equivalent Amounts .
Dividend Equivalent Amounts with respect to the Participant’s
Stock Units shall result in the Participant’s Stock Account
being credited with an additional number of Stock Units and/or
fraction thereof equal to the Dividend Equivalent Amount divided by
the average of the high and low trading prices of Shares on the
date specified in Section 4.3(b) and shall become subject to
the Deferral Election applicable to the Stock Units to which the
Dividend Equivalent Amount relates.
4.5 Distribution of Shares from Stock Accounts
. Subject to any limitation set forth in this Plan or any
other limitations as may be established by the Committee in its
sole discretion, each Deferral Election shall specify the method of
distribution with respect to the Eligible Restricted Stock Award
which is subject to the Deferral Election. A Participant may elect
to have his or her Stock Units with respect to any Eligible
Restricted Stock Award which is subject to a Deferral Election
distributed in any of the following number of installments
following the earlier of (i) termination of the
Participant’s service as a director of the Company or (ii)
expiration of the Participant’s Designated
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