EX-10.3



 Exhibit 10.3 
 RESTRICTED STOCK UNIT AWARD AGREEMENT 
 (2013 Performance-Based
Award – Investment Results) 
 This Agreement (“Agreement”) is made this <Grant Date> by and between
<Participant Name> (“Participant”) and The Progressive Corporation (the “Company”). 
 1.
Definitions. Unless otherwise defined in this Agreement, each capitalized term in this Agreement shall have the meaning given to it in The Progressive Corporation 2010 Equity Incentive Plan, as amended (collectively, the “Plan”).
References herein to performance results of the Company mean the applicable results achieved by the Subsidiaries and Affiliate of the Company. 
 2. Award of Restricted Stock Units. The Company grants to Participant an award (the “Award”) of performance-based restricted stock units (“Restricted Stock Units” or
“Units”), pursuant and subject to the Plan. The Award is based on an initial award value of <# of Units> Units (the “Initial Award Value”). The number of Restricted Stock Units that are ultimately earned pursuant to the
Award (if any) will be determined based on the Initial Award Value and the procedures and calculations set forth in this Agreement. The maximum potential Award is a number of Units equal to two (2) times the Initial Award Value (the
“Maximum Award Value”). 
 3. Condition to Participant’s Rights under this Agreement. This Agreement shall
not become effective, and Participant shall have no rights with respect to the Award or any Restricted Stock Units, unless and until Participant has fully executed this Agreement and delivered it to the Company. In the Company’s sole
discretion, such execution and delivery may be accomplished through electronic means. 
 4. Restrictions; Vesting.
Subject to the terms and conditions of the Plan and this Agreement, Participant’s rights in and to Restricted Stock Units shall vest, if at all, as follows: 

a. Evaluation Period. The “Evaluation Period” shall be the three-year period comprised of the calendar
years 2013, 2014 and 2015. 
 b. Certification. The Award shall vest (if at all) only if, to the extent,
and when the Compensation Committee of the Board of Directors (the “Committee”) certifies: 
 i. the
Performance Ranking of, and Performance Factor for, the Company’s Fixed-Income Portfolio (as each of those terms are defined in Subparagraph c. below); and 
 ii. the corresponding number of Restricted Stock Units (if any) that have vested as a result of such performance. 
 If the Committee certifies the vesting of a number of Units that is less than the Maximum Award Value, then with respect to all other Units that could have been earned under this Agreement, the Award will
terminate and be forfeited automatically. 
 c. Number of Units Vesting. The number of Restricted Stock
Units (if any) that vest in connection with the Award will be determined by application of the following formula: 

  
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 Number of Units Vesting = Initial Award Value x Performance Factor

 i. The Performance Factor will be determined after the expiration of the Evaluation Period based on the fully
taxable equivalent total return of the Company’s fixed-income investment portfolio (the “Fixed-Income Portfolio” or “Portfolio”), in comparison to the total returns of the group of comparable investment firms identified by
Rogers Casey (the “Investment Benchmark”), each calculated for the three calendar years comprising the Evaluation Period. After the end of the Evaluation Period, Rogers Casey will determine the firms that are included in the Investment
Benchmark in accordance with the criteria specified on Exhibit I hereto. Rogers Casey will also supply to the Company the monthly total return data for each of the Investment Benchmark firms for the three-year period ending on the last day of
the Evaluation Period. 
 Investment results for the Fixed-Income Portfolio will be marked to market, including the benefit of
any state premium tax abatements for municipal securities held in the Portfolio that are realized by the Company during the Evaluation Period, in order to calculate the Portfolio’s fully taxable equivalent total return, compounded on a monthly
basis, for the Evaluation Period. The investment performance achieved by the Fixed-Income Portfolio for the Evaluation Period will then be compared against the total returns of the firms included in the Investment Benchmark for the same period, also
compounded on a monthly basis, as determined by the Company from the monthly performance data supplied by Rogers Casey for each firm in the Investment Benchmark, to determine where the Fixed-Income Portfolio’s performance falls on a percentile
basis when compared to the firms in the Investment Benchmark, as further described in Exhibit II hereto (“Performance Ranking”). 
 The Portfolio’s Performance Ranking will be used to determine a performance score of between 0.00 and 2.00 for the Evaluation Period, based on the following schedule: 

 

					
	 Score = 0.00
	 	 Score = 1.00
	 	 Score = 2.00

	 Rank at or below
	 	 Rank equal to
	 	 Rank at or above

			
	25th Percentile	 	50th Percentile	 	75th Percentile

 A Performance Ranking between the values identified in the schedule will be interpolated on a
straight-line basis to generate the Performance Factor, as further described on Exhibit II. 
 ii. The Company will work with Rogers Casey to ensure, to the extent practicable, that the list of firms comprising the Investment Benchmark and all data necessary to calculate the Performance Ranking and
the Performance Factor are received by March 1st of
the year immediately following the Evaluation Period. In all events, distributions under this Agreement must be made on or before March 15th of the year immediately following the Evaluation Period. 

iii. In the event that Rogers Casey (or its successors or assigns) ceases to provide or publish the information required
to calculate the Performance Factor, or modifies the information in such a way as to render the comparisons required by this Agreement to be not meaningful, in the Committee’s sole judgment, the determinations required above shall be made using
such comparable Company and other investment data 

  
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as may be available from another recognized provider of investment industry data as the Committee may approve in its sole discretion. 

d. Committee Discretion. Notwithstanding anything to the contrary contained in this Agreement, at or prior to the
time of vesting, the Committee, in its sole discretion, may reduce the number of Restricted Stock Units that otherwise would vest according to this Agreement, or eliminate the Award in full. The Committee, in its sole discretion, may treat
individual participants differently for these purposes. Any such determination by the Committee shall be final and binding on the Participant. Under no circumstances shall the Committee have discretion to increase the award to any Participant in
excess of the number of Units that would have been awarded at vesting based on this Paragraph 4 (excluding adjustments required by Section 3(c) of the Plan). 
 The Award shall vest in accordance with and subject to the foregoing except to the extent that, prior to the Committee’s certification of the Award, the Award has been forfeited under the terms and
conditions of the Plan or this Agreement. 
 5. Dividend Equivalents. Subject to this Paragraph 5, Participant shall be
credited with Dividend Equivalents with respect to the outstanding Award prior to the applicable vesting date. All Dividend Equivalents so credited will be deemed to be reinvested in Restricted Stock Units on the date that the applicable dividend or
distribution is made to the Company’s shareholders, based on the Initial Award Value and any Units resulting from prior reinvestments of Dividend Equivalents, in the number of Units determined by dividing the value of the Dividend Equivalents
by the Fair Market Value of the Company’s Stock on such date (rounded to the nearest thousandth of a whole Unit or as otherwise reasonably determined by the Company); provided, however, that if Dividend Equivalents cannot be reinvested in Units
due to the operation of Section 3(a) of the Plan, such Dividend Equivalents will be credited to Participant as a cash value based on the Initial Award Value and any Units resulting from prior reinvestments of Dividend Equivalents, which cash
value shall be held by the Company (without interest) subject to this Agreement. The Units and, if applicable, cash value resulting from the reinvestment of such Dividend Equivalents shall be subject to the same terms and conditions, and shall vest
or be forfeited (if applicable) at the same time, upon the same conditions, and in the same proportion, as the Initial Award Value set forth in this Award. 
 6. Units Non-Transferable. No Restricted Stock Units (and no Dividend Equivalents credited hereunder) shall be transferable by Participant other than by will or by the laws of descent and
distribution, and then only in accordance with the Plan. In the event any Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company, and the Company shall have the right to
offset against such Award any expenses (including attorneys’ fees) incurred by the Company in connection with such transfer or assignment. 
 7. Deferral of Award. If Participant is eligible, and has made the appropriate election, to defer the Award into The Progressive Corporation Executive Deferred Compensation Plan (the “Deferral
Plan”), at the time of vesting, the Restricted Stock Units that would otherwise vest under this Agreement shall be considered to be deferred pursuant to the Deferral Plan, subject to and in accordance with the terms and conditions of the
Deferral Plan and any related deferral agreement. 
 8. Termination of Employment. Except as otherwise provided in the
Plan or in this Paragraph 8, or as determined by the Committee, if Participant’s employment with the Company is terminated for any reason other than death or Qualified Retirement, the Award and all Restricted Stock Units held by Participant
that are unvested or subject to restriction at the time of such termination shall be forfeited automatically. In the event that any such termination of employment occurs, for any reason 

  
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other than for Cause, after the end of the Evaluation Period but prior to the Committee’s certification of results for the Evaluation Period, the Award shall not be forfeited at the time of
Participant’s termination, and Participant shall be eligible to participate in the vesting of Restricted Stock Units under this Agreement only to the extent certified by the Committee, subject to the provisions of the Plan; provided, however,
that if the Committee determines that Participant is engaging in, or has engaged in, a Disqualifying Activity and that such Disqualifying Activity occurred before the vesting of the Award, the Award and all applicable Restricted Stock Units that are
then unvested or subject to restriction shall be forfeited or deemed to be forfeited automatically as of the Disqualification Date determined by the Committee and, if the vesting has already occurred, the provisions of Section 10(d)(ii) of the
Plan will apply (without regard to whether a Qualified Retirement has occurred). Any determination by the Committee that the Participant is engaging in, or has engaged in, any Disqualifying Activity, and of the Disqualification Date, shall be final
and conclusive on Participant. 
 9. Distribution at Vesting. Subject to the provisions of the Plan and this Agreement,
upon vesting of all or part of the Award, the Company shall distribute to Participant one share of the Company’s Stock in exchange for each such vested Restricted Stock Unit, and the remaining Restricted Stock Units (if any) shall be cancelled.
Unless determined otherwise by the Company at any time prior to the applicable distribution, each fractional Restricted Stock Unit shall vest and be settled in an equal fraction of a share of the Company’s Stock. 

10. Taxes. No later than the date as of which an amount relating to the Award first becomes taxable, Participant shall pay to the
Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state and local taxes and other items of any kind required by law to be withheld with respect to such amount. The obligations of the Company under the
Plan shall be conditional on such payment or arrangements and the Company and its Subsidiaries and Affiliate, to the extent permitted by law, shall have the right to deduct any such taxes from any payment of any kind otherwise due to Participant. At
vesting, Restricted Stock Units awarded under this Agreement will be valued at the Fair Market Value of the Company’s Stock on such date. 
 Participant must satisfy the minimum statutory tax withholding obligations resulting from the vesting of Restricted Stock Units (“Minimum Withholding Obligations”) either (a) by
surrendering to the Company Restricted Stock Units that are then vesting with a value sufficient to satisfy the Minimum Withholding Obligations, or (b) by paying to the Company the appropriate amount in cash or, if acceptable to the Company, by
check or other instrument. Unless Participant advises the Company of his or her election to use an alternative payment method, Participant shall be deemed to have elected to surrender to the Company Restricted Stock Units that are then vesting with
a value sufficient to satisfy the Minimum Withholding Obligations. If Participant requests that the Company withhold taxes in addition to the Minimum Withholding Obligations, such additional withholding must be satisfied by Participant either
(x) by paying to the Company the appropriate amount in cash or, if acceptable to the Company, by check or other instrument, or (y) provided that Participant has obtained the approval of either the Company or the Committee (as required
under rules adopted by the Committee) prior to the date of vesting, by surrendering unrestricted shares of the Company’s Stock that are not being distributed to Participant as a result of the vesting event and that have then been owned by
Participant in unrestricted form for more than six (6) months. 
 Under no circumstances will Participant be entitled to
satisfy any such additional withholding by surrendering Restricted Stock Units, shares of the Company’s Stock that are being distributed to Participant as a result of the vesting event, or other shares of Stock that have then been owned by
Participant in unrestricted form for six (6) months or less. In addition, under no circumstances will Participant be entitled to satisfy any Minimum Withholding Obligations or additional withholding by surrendering Restricted Stock Units that
are not then vesting or any Restricted Stock Units that Participant 

  
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has elected to defer under Paragraph 7 above. All payments, surrenders of Units or shares, elections or requests for approval must be made by Participant in accordance with such procedures as may
be adopted by the Company in connection therewith, and subject to such rules as have been or may be adopted by the Committee. 

11. Non-Solicitation. In consideration of the Award made to Participant under this Agreement, for a period of twelve
(12) months immediately following Participant’s Separation Date (defined below), Participant shall not directly or indirectly recruit or solicit for hire, or hire, or assist in any manner in the recruitment, solicitation for hire or
hiring, of any employee or officer of the Company or any of its Subsidiaries, or in any way induce any such employee or officer to terminate his or her employment with the Company or any of its Subsidiaries. For purposes of this Paragraph,
“Separation Date” means the date on which Participant’s employment with the Company or its Subsidiaries is terminated for any reason. 
 12. Recoupment. If the Securities and Exchange Commission adopts final rules under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that require, as a condition to
the Company’s continued listing on a national securities exchange, that the Company develop and implement a policy requiring the recovery of erroneously awarded compensation, and such regulations are applicable to Participant and the Award
granted pursuant to this Agreement, then the following shall apply: 
 In the event that the Company is required to prepare a
restatement of one or more of its financial statements due to the material noncompliance of the Company with any financial reporting requirement under the federal securities laws, the Company will be entitled to recover from Participant, and
Participant will promptly upon written demand return to the Company (whether or not Participant remains an employee of the Company at the time of such restatement or thereafter), the amount of any Award granted hereunder that (i) was paid or
distributed to Participant (or any assignee or transferee permitted under Paragraph 6 above) during the three year period preceding the date on which the Company is required to prepare such restatement, and (ii) is in excess of what would have
been paid or distributed to Participant (or any such assignee or transferee) under the restatement, or such other amount as may be required by the rules of the Securities and Exchange Commission or, if applicable, the New York Stock Exchange.

 The provisions of this Paragraph 12 are in addition to the rights of the Company as set forth in Section 14(h) of the Plan. 

13. Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other
agreement, representation or communication, whether oral or in writing, between the parties relating to the Award, provided that the Agreement shall be at all times subject to the Plan. 

14. Amendment. The Committee, in its sole discretion, may amend the terms of this Award, but no such amendment shall be made that
would impair the rights of Participant, without Participant’s consent. 
 15. Acknowledgments. Participant:
(a) acknowledges receiving a copy of the Plan Description relating to the Plan, and represents that he or she is familiar with all of the material provisions of the Plan, as set forth in such Plan Description; (b) accepts this Agreement
and the Award subject to all provisions of the Plan and this Agreement; and (c) agrees to accept as binding, conclusive and final all decisions and interpretations of the Committee relating to the Plan, this Agreement or the Award. 

  
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 Participant evidences his or her agreement with the terms and conditions of this Agreement,
and his or her intention to be bound by this Agreement, by electronically accepting the Award pursuant to the procedures adopted by the Company. Upon such acceptance by Participant, this Agreement will be immediately binding and enforceable
against Participant and the Company. 
  

			
	THE PROGRESSIVE CORPORATION
		
	By:	 	 /s/ Charles E. Jarrett

		 	Vice President & Secretary



  
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 EXHIBIT I 

INVESTMENT BENCHMARK CRITERIA 
 After the end of the Evaluation Period, Rogers Casey will determine the firms comprising the Investment Benchmark for the Plan year from its records and will supply to the Company the monthly total
returns and any other relevant data for each of those firms for the Evaluation Period. 
 A firm will be included in the Investment Benchmark if
Rogers Casey is able to determine from its records that: 
  

	1.	The firm has provided monthly data regarding its holdings and investment return, as necessary to determine or calculate such firm’s monthly total return, and to
evaluate such firm’s compliance with each of the criteria set forth below, for the entire Evaluation Period; and 

  

	2.	At all times during the Evaluation Period, the information provided by the firm shows, or Rogers Casey is able to calculate, that such firm’s investment portfolio
satisfies each of the following criteria: 

  

			
	 Duration:
	  	Effective Duration between 1.5 years and 5.0 years
	 Credit Quality Average
	  	= A, or = AA, or = AAA, or = AAA+
	 Convexity (%)
	  	>= -1
	 Sector Allocation:
	  	U.S. High-Yield Corporate Debt <= 10%
	 Sector Allocation:
	  	Mortgages <= 60%
	 Sector Allocation:
	  	U.S. Investment-Grade Corporate Debt <= 60%
	 Sector Allocation:
	  	CMBS <= 60%
	 Sector Allocation:
	  	ABS <= 60%
	 Sector Allocation:
	  	Emerging Markets Debt <= 5%

  

	3.	The Company will have no discretion to alter the Investment Benchmark list after it is finalized by Rogers Casey. 


  
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 EXHIBIT II 

DETERMINATION OF PERFORMANCE RANKING 
 AND PERFORMANCE FACTOR 
 Once all the total returns are calculated, the data is sorted in
descending order from highest to lowest total return. From here, the process to compute the Performance Factor is as follows: 
 INTERPOLATED
VALUES FOR SETTING TOP AND BOTTOM 25% LEVELS 
 The top 25% and bottom 25% total return rankings are computed based on the total number of firms
in the Investment Benchmark, excluding the PCM Fixed-Income Portfolio return. For example, if there were 279 participants, the return required to earn a 2.00 portfolio performance factor would be determined by interpolating between the sixty-ninth
and seventieth firm’s returns, since 25% of 279 = 69.75. The same procedure would be used to determine the 0.00 portfolio performance factor. 
 The total returns, computed by Investment Accounting, for the interpolated positions are calculated as follows (continuing to use an example of 279 survey firms): 

Interpolated Value = Firm 69 return – ((Firm 69 Return - Firm 70 Return)*0.75) 
 Firm 69 = 18.35% 
 Firm 70 = 18.23% 
 Firm 69.75 (Interpolated Value) = 18.35% - ((18.35%-18.23%)*0.75) = 18.26%. 
 In this case, the
PCM Performance Factor will equal 2.00 if its total return equals the interpolated value for Firm 69.75 or 18.26%. A similar calculation is then used to determine the bottom 25% group and interpolated value for a 0.00 performance score. 

Once the two groups are computed, top and bottom 25%, the remainder of the performance scores are calculated as follows: 

Performance score variance = (2.00) / Number of positions from first participant after the top 25% ranking to the 1st participant in the bottom 25% ranking. In the case of 279
participants, the number of positions to divide the 2.00 performance factors by would be 142. 
 The calculation for the performance score
variance from 2.00 – 0.00 would be: 
 2.00 / 142 = .014085 per position for 279 firms 

In the case of a tie in total returns between firms, each firm will have the same performance score, one step under the next higher position. The next
lowest position would then be stepped down by a factor based on the number of participants who tie. In the case of a tie between two firms, the step down will be twice the performance score variance to maintain the proper stepping to the 0.00
performance score level. 
 Example: If firms 70 and 71 each had the same total return in the 279 firm example, then firms 70 and 71 would each
have a Performance Factor of 1.985915, which is 2.00 - .014085. The number 72 position in this example would have a performance score of 1.957746, which is the required step down from 70 to 72. 

  
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 In addition, if the returns are tied between the interpolated value set for the 2.00 performance score and
any position below the 2.00 level, those lower positions will also be set to a 2.00 performance score. The step down factor in the performance score will work similarly as noted in the example above. For the last 25% group, all firms with total
returns equaling the last interpolated total return value would have the same performance score as the last interpolated value (.014085), and all others in the last 25% group would have a 0.00 Portfolio Performance Factor. 

Once all the performance scores have been created, from 2.00 to 0.00, PCM’s return is compared to the rankings to determine its Performance Factor.
If the PCM return is not in the top or bottom 25% and does not match the return of any participant, then PCM’s Performance Factor is an interpolated value between the firms with the next highest and next lowest returns. 

The interpolation computation for the Performance Factor based on PCM’s return is as follows: 

Performance score of firm below PCM return + (PCM’s Return – Return below PCM) / (Return above PCM – Return below PCM) * (Performance
score of firm above PCM – Performance score of firm below PCM) 
 Assuming the following data, using the 279 firm example: 

 

									
	 Firm
	  	Performance
score	 	  	Total
return	 
	 Firm above PCM
	  	 	.90	  	  	 	13.61	  
	 PCM
	  				  	 	13.39	  
	 Firm below PCM
	  	 	.89	  	  	 	13.34	  

 The calculation of PCM’s Performance Factor is: 
 0.89 + (13.39-13.34) / (13.61-13.34) * (0.90-0.89) = 0.89 
 The final performance score is rounded
to the nearest one-hundredth, if necessary. 

  
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