Document:

EX-10.23

 Exhibit 10.23 

DONEGAL MUTUAL INSURANCE COMPANY 

DONEGAL GROUP INC. 
 2020
ANNUAL EXECUTIVE INCENTIVE PLAN 
 Purpose 

The 2020 Annual Executive Incentive Plan (this “Plan”) provides for the payment of performance-based bonuses to Plan participants based upon the
Donegal Insurance Group’s achievement of performance objectives for individual performance measures according to the weighting assigned to each performance measure. 

The performance objectives correlate to incentive levels that represent percentages of a participant’s 2020 base salary (as defined in this Plan). The
potential bonuses available for Plan participants with respect to the performance measures will be based on the incentive levels, performance objectives and weighting percentages as outlined in Appendix 1. The Compensation Committee of the Boards of
Directors of Donegal Mutual Insurance Company and Donegal Group Inc. (the “Committee”) shall have the sole and absolute discretion to interpret and apply the terms of this Plan, including, but not limited to, the determination of the
achievement of the performance objectives of Appendix 1. 
 Scope 

The performance measures and objectives, unless otherwise specified, relate to the statutory financial results of the Donegal Insurance Group, which includes
the following legal entities for the purposes of this Plan: 
 Donegal Mutual Insurance Company 

Atlantic States Insurance Company 
 Michigan Insurance Company

 Mountain States Commercial Insurance Company 
 Mountain
States Indemnity Company 
 Peninsula Indemnity Company 

Peninsula Insurance Company 
 Southern Insurance Company of
Virginia 
 Southern Mutual Insurance Company 

Performance Measures 
 Commercial Lines Premium
Growth—annual growth in commercial lines direct premiums written compared to the previous calendar year total. 
 Personal Lines Premium
Growth—annual growth in personal lines direct premiums written compared to the previous calendar year total. 
 Adjusted Statutory Combined
Ratio—reported statutory combined ratio excluding any catastrophe adjustment, all executive incentive plan bonus accruals and a stock option expense adjustment (see definitions below). 

Operating Return on Equity—Donegal Group Inc.’s consolidated GAAP net income divided by average GAAP stockholders’ equity excluding accumulated
other comprehensive income or loss (average of current year-end and prior year-end values). 

Bonus Formula 
 Each participant in this Plan shall
be eligible to receive a bonus that represents the sum of the performance bonuses such participant earns for each respective performance measure. Each performance bonus shall be calculated by multiplying the participant’s 2020 base salary, as
defined in this Plan, by the bonus percentage that correlates to the incentive level achieved and multiplying that result by the weighting percentage assigned to the respective performance measure. The calculation methodology is illustrated below:

  

	 	•	 	 Base Salary x Incentive Level Bonus % x Weighting % = Performance Bonus 

 

	 	•	 	 Sum of Performance Bonuses = Total Bonus Earned 

 No bonus is payable under this Plan unless the employee and managers of Donegal Mutual Insurance Company
qualify for bonuses under their respective incentive plans. 
 The Committee shall have the sole and absolute discretion to calculate Plan participant
bonuses under this Plan, including, but not limited to, the interpretation of the achievement and application of the performance measures as set forth in Appendix 1. 

Key Definitions 
 Base Salary—total wages as
reported on a participant’s W-2 for 2020, excluding any taxable fringe benefits, short and long-term disability pay, gains from exercise of stock options and prior-year bonus. 

Statutory Combined Ratio—sum of the net loss and loss expense ratio (net losses and loss expenses incurred divided by net premiums earned), the expense
ratio (underwriting expenses less installment fee income divided by net premiums written) and the dividend ratio (policyholder dividends incurred divided by net premiums earned). 

Catastrophe Adjustment—an adjustment will be provided to the statutory combined ratio for the purpose of this Plan to limit the net effect of up to two
catastrophe events. For purposes of this provision, a catastrophe event is defined as an event for which the Property Claims Services unit of Insurance Services Office issues a catastrophe serial number and for which the net effect to the Donegal
Insurance Group exceeds $5 million when aggregating losses incurred, loss expenses incurred and reinstatement premiums. The statutory combined ratio for the purposes of this Plan will be charged with: 

 

	 	•	 	 The first $5 million of the net effect of a catastrophe 

 

	 	•	 	 One-half of the amount between $5 million and $10 million

  

	 	•	 	 None of the net effect above $10 million 

In the event that more than two catastrophe events, as defined above, occur within the calendar year, the statutory combined ratio for the purposes of this
Plan will be charged with all of the net effect of the third and subsequent catastrophe events. 
 Stock Option Expense Adjustment—an adjustment will
be provided to statutory combined ratio for the purpose of this Plan to remove the effect of stock option compensation expense included in the statutory financial statements. 

Additional Provisions 
  

	1.	 Participants must be employed by Donegal Mutual Insurance Company on or before October 1, 2020 to be
eligible to participate in this Plan. Participants must be employed by Donegal Mutual Insurance Company on December 31, 2020 in order to receive a bonus payment under this Plan. The Committee shall have the sole and absolute discretion to
determine eligibility for participation in this Plan. 

  

	2.	 Any bonuses earned under this Plan shall be paid prior to March 15, 2021. 

 

	3.	 Approved participants in this Plan are listed in Appendix 1. Any changes to the participants in this Plan and
the incentive levels for such participants must be approved by the Committee. 

  

	4.	 This Plan provides for a discretionary pool calculated in similar fashion to the bonuses for Plan participants
using a “base salary” equivalent of $500,000. The discretionary pool may be allocated among participants in this Plan or other officers, managers or employees in the sole discretion of the Committee. The President shall provide a
recommendation to the Committee with respect to high performers who should be considered for allocations from the discretionary pool. 

  

	5.	 Payment of bonuses under this Plan may be capped by the Committee in their sole discretion.

 Appendix 1 

The participants and incentive levels for the 2020 Annual Executive Incentive Plan are as follows: 

 

																															
	 	  	Named
Executive
Officer of	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
	 	  	Incentive Levels—Bonus % of Salary	 
	 Participants
	  	DGI	  	Threshold	 	  	Level 1	 	  	Level 2	 	  	Target	 	  	Level 3	 	  	Level 4	 	  	Maximum	 
	 Kevin G. Burke
	  	*	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Jeffrey D. Miller
	  	*	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Richard G. Kelley
	  	*	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Sanjay Pandey
	  	*	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Daniel J. Wagner
	  	*	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 	  	 	100	 
	 Kristi S. Altshuler
	  		  	 	30	 	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 
	 William A. Folmar
	  		  	 	30	 	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 
	 Christina M. Hoffman
	  		  	 	30	 	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 
	 Robert R. Long, Jr.
	  		  	 	30	 	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 
	 V. Anthony Viozzi
	  		  	 	30	 	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 
	 Discretionary Pool
	  		  	 	30	 	  	 	40	 	  	 	50	 	  	 	60	 	  	 	70	 	  	 	80	 	  	 	90	 

 Note: Francis J. Haefner, Jr., Jeffrey A. Jacobsen, and Regional Senior Officers are not included as participants in this
Plan due to their participation in individual incentive plans that are tailored to performance objectives within their specific areas of responsibility. 

Performance measures, performance objectives and weighting percentages for 2020 are as follows: 

 

																																	
	 	  	 	 	 	Performance Objectives	 
	 Performance Measure
	  	Weighting	 	 	Threshold	 	 	Level 1	 	 	Level 2	 	 	Target	 	 	Level 3	 	 	Level 4	 	 	Maximum	 
	 Commercial Lines Premium Growth
	  	 	25	% 	 	 	3	% 	 	 	4	% 	 	 	5	% 	 	 	6	% 	 	 	7	% 	 	 	8	% 	 	 	9	% 
	 Personal Lines Premium Growth
	  	 	15	% 	 	 	(3	)% 	 	 	(2	)% 	 	 	(1	)% 	 	 	—  	% 	 	 	1	% 	 	 	2	% 	 	 	3	% 
	 Adjusted Statutory Combined Ratio
	  	 	40	% 	 	 	100	% 	 	 	99	% 	 	 	98	% 	 	 	97	% 	 	 	96	% 	 	 	95	% 	 	 	94	% 
	 Operating Return on Equity
	  	 	20	% 	 	 	7.5	% 	 	 	8	% 	 	 	8.5	% 	 	 	9	% 	 	 	9.5	% 	 	 	10	% 	 	 	10.5	%EX-10.24

 Exhibit 10.24 

DONEGAL MUTUAL INSURANCE COMPANY 

DONEGAL GROUP INC. 

LONG-TERM EXECUTIVE INCENTIVE PLAN 

Purpose 
 The Long-Term Executive Incentive Plan
(this “Plan”) provides for the payment of performance-based bonuses to Plan participants based upon the Donegal Insurance Group’s achievement of profitable performance over a three-year period. The key performance measure for this
Plan is the adjusted statutory combined ratio, as defined in this Plan. 
 The Compensation Committee of the Boards of Directors of Donegal Mutual Insurance
Company and Donegal Group Inc. (the “Committee”) shall have the sole and absolute discretion to interpret and apply the terms of this Plan, including, but not limited to, the determination of the achievement of the performance objective of
Appendix 1. 
 Scope 
 The calculation of the
adjusted statutory combined ratio will be based on the combined statutory financial results for the 2020, 2021 and 2022 calendar years for the Donegal Insurance Group, which includes the following legal entities for the purposes of this Plan: 

Donegal Mutual Insurance Company 
 Atlantic States Insurance
Company 
 Michigan Insurance Company 
 Mountain States
Commercial Insurance Company 
 Mountain States Indemnity Company 

Peninsula Indemnity Company 
 Peninsula Insurance Company 

Southern Insurance Company of Virginia 
 Southern Mutual Insurance
Company 
 Performance Measures 
 Adjusted
Statutory Combined Ratio—statutory combined ratio based on three-year financial results excluding any catastrophe adjustment(s), all executive incentive plan bonus payments and/or accruals and a stock option expense adjustment (see definitions
below). 
 Bonus Formula 
 Each participant in
this Plan shall be eligible to receive a bonus by multiplying the participant’s 2022 base salary, as defined in this Plan, by the bonus percentage shown in Appendix 1 that correlates to the average statutory combined ratio over the three-year
period. 
 The calculation methodology is illustrated below: 
  

	 	•	 	 Average Statutory Combined Ratio of 97.0% = 40% x 2022 Base Salary = Performance Bonus 

Key Definitions 
 Base Salary—total wages as
reported on a participant’s W-2 for 2022, excluding any taxable fringe benefits, short or long-term disability pay, gains from exercise of stock options and prior-year bonus. 

Statutory Combined Ratio—sum of the net loss and loss expense ratio (net losses and loss expenses incurred divided by net premiums earned), the expense
ratio (underwriting expenses less installment fee income divided by net premiums written) and the dividend ratio (policyholder dividends incurred divided by net premiums earned). 

 Catastrophe Adjustment—an adjustment will be provided to the statutory combined ratio for the purpose
of this Plan to limit the net effect of up to two catastrophe events per year. For purposes of this provision, a catastrophe event is defined as an event for which the Property Claims Services unit of Insurance Services Office issues a catastrophe
serial number and for which the net effect to the Donegal Insurance Group exceeds $5 million when aggregating losses incurred, loss expenses incurred and reinstatement premiums. The statutory combined ratio for the purposes of this Plan will be
charged with: 
  

	 	•	 	 The first $5 million of the net effect of a catastrophe 

 

	 	•	 	 One-half of the amount between $5 million and $10 million

  

	 	•	 	 None of the net effect above $10 million 

In the event that more than two catastrophe events, as defined above, occur within a given calendar year, the statutory combined ratio for the purposes of
this Plan will be charged with all of the net effect of the third and subsequent catastrophe events in that calendar year. 
 Stock Option Expense
Adjustment—an adjustment will be provided to statutory combined ratio for the purpose of this Plan to remove the effect of stock option compensation expense included in the statutory financial statements. 

Additional Provisions 
  

	1.	 Participants must be employed by Donegal Mutual Insurance Company on or before January 1, 2020 to be
eligible to participate in this Plan. Participants must be employed by the Donegal Mutual Insurance Company on December 31, 2022 in order to receive a bonus payment under this Plan. 

 

	2.	 A 50% reduction in the bonus payable under this Plan will occur if the employees and managers of Donegal Mutual
Insurance Company fail to qualify for bonuses under their respective annual incentive plans in any calendar year included in the three-year period covered by this Plan. 

 

	3.	 Any bonuses earned under this Plan shall be paid prior to March 15, 2023. 

 

	4.	 Approved participants in this Plan are listed in Appendix 1. Any changes to the participants in this Plan must
be approved by the Committee. 

  

	5.	 This plan expires on December 31, 2022. The incentive payment will be a
one-time payment based on the three-year average statutory combined ratio. Upon the expiration of this Plan, the Committee will be responsible for determining whether to implement a new long-term executive
incentive plan. 

  

	6.	 Payment of bonuses under this Plan may be capped by the Committee in their sole discretion.

 Appendix 1 

LONG-TERM EXECUTIVE INCENTIVE PLAN 

Calendar Years 2020, 2021 and 2022 
  

					
	 ADJUSTED COMBINED RATIO
	  	INCENTIVE	 
	 Over 100%
	  	 	None	 
	 99.0 - 99.99%
	  	 	15	% 
	 98.0 - 98.99%
	  	 	25	% 
	 97.0 - 97.99%
	  	 	40	% 
	 96.0 - 96.99%
	  	 	50	% 
	 95.0 - 95.99%
	  	 	60	% 
	 94.0 - 94.99%
	  	 	70	% 
	 UNDER 94.0%
	  	 	85	% 

 The participants eligible for the 2020-2022 Long-Term Executive Incentive Plan are as follows: 

 

	 	•	 	 Kevin G. Burke 

  

	 	•	 	 Jeffrey D. Miller 

  

	 	•	 	 Richard G. Kelley 

  

	 	•	 	 Sanjay Pandey 

  

	 	•	 	 Daniel J. Wagner 

  

	 	•	 	 Kristi S. Altshuler 

  

	 	•	 	 William A. Folmar 

  

	 	•	 	 Francis J. Haefner, Jr. 

 

	 	•	 	 Christina M. Hoffman 

  

	 	•	 	 Jeffrey A. Jacobsen 

  

	 	•	 	 Robert R. Long, Jr. 

  

	 	•	 	 V. Anthony Viozzi

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