Document:

EX-10.7

 Exhibit 10.7 
 THE PROGRESSIVE CORPORATION 
 2012 GAINSHARING PLAN 

1. The Plan. The Progressive Corporation and its subsidiaries (collectively, “Progressive” or the
“Company”) have adopted The Progressive Corporation 2012 Gainsharing Plan (the “Plan”) as part of their overall compensation program. The Plan is performance-based and is administered under the direction of the Compensation
Committee of the Board of Directors of The Progressive Corporation (the “Committee”). Plan years will coincide with Progressive’s fiscal years. 
 2. Participants. Plan participants for each Plan year shall include all officers and regular employees of Progressive, unless determined otherwise by the Committee. The Gainsharing
opportunity, if any, for those executive officers who participate in The Progressive Corporation 2007 Executive Bonus Plan (the “Executive Bonus Plan”) will be provided by the Executive Bonus Plan, although participants in that plan may
also participate in this Plan if and to the extent determined by the Committee. 
 3. Gainsharing Formula. Annual
Gainsharing Payments under the Plan will be determined by application of the following formula: 
  

					
	Annual Gainsharing = Paid Eligible Earnings x Target Percentage x Performance Factor
	 Payment
	  	

 4. Paid Eligible Earnings. Paid Eligible Earnings for any Plan year shall mean and include
the following: regular, Earned Time Benefit pay (excluding the payout of unused Earned Time Benefit pay at termination), sick, holiday pay, funeral pay, overtime pay, military make-up pay, shift differential and shift credit, and retroactive
payments of any of the foregoing items, received by the participant during the Plan year for work or services performed as an officer or employee of Progressive. 
 For purposes of the Plan, Paid Eligible Earnings shall exclude all other types of compensation, including, without limitation, any short-term or long-term disability payments made to the participant, the
earnings replacement component of any workers’ compensation award, any bonus, Gainsharing or other incentive compensation or equity-based awards, including, without limitation, payments from any discretionary cash fund, any dividend payments
and unused Earned Time Benefit. 
 5. Target Percentages. Target Percentages vary by position. Target Percentages
for Plan participants typically are as follows: 

  

					
	 POSITION
	  	TARGET
%	 
		
	 Senior Executives and Executive Level Managers
	  	 	60 - 150%	  
		
	 Business Leaders
	  	 	35 - 60%	  
		
	 Directors and Senior Directors
	  	 	20 - 35%	  
		
	 Middle Managers and Senior Managers
	  	 	15 - 20%	  
		
	 Senior Professionals and Entry Level Managers
	  	 	8 - 20%	  
		
	 Administrative Support and Entry Level Professionals
	  	 	0 - 8%	  

 Target Percentages will be established within the above ranges by, and may be changed with the approval of, the following
officers of The Progressive Corporation (collectively, the “Designated Executives”): (a) the Chief Executive Officer, and (b) either the Chief Human Resource Officer or the Chief Financial Officer; provided that the Chief Human
Resource Officer may establish appropriate procedures to evaluate the need for, and if appropriate, implement individual exceptions to the foregoing ranges. Target Percentages may be changed from year to year by the Designated Executives.
Notwithstanding anything herein to the contrary, only the Committee may establish or modify the Target Percentages for the Company’s executive officers. 
 If a participant’s Target Percentage changes during a Plan year, the Target Percentages used to calculate such participant’s Annual Gainsharing Payment hereunder shall be weighted appropriately
to reflect such participant’s tenure in each such position during the Plan year. 
 6. The Performance Factor. 

A. Core Business Defined 
 The Performance Factor shall be determined by the performance of the Core Business during the Plan year, pursuant to the procedures and calculations described below. The “Core Business” shall be
comprised of the following: 
  

	 	•	 	 The Agency Auto business unit, consisting of the auto business produced by independent agents or brokers, including Strategic Alliances Agency auto,
but excluding all Agency Special Lines businesses; 

  

	 	•	 	 The Direct Auto business unit, consisting of the personal auto business produced by phone, over the Internet, or via a mobile device, but excluding all
Direct Special Lines businesses; 

  

	 	•	 	 The Special Lines business unit, consisting of Special Lines business generated by agents and brokers or directly by phone, over the Internet, or via a
mobile device, but excluding umbrella policies; and 

  

	 	•	 	 The Commercial Auto business unit. 

 Each of the Agency Auto, Direct Auto, Special Lines and Commercial Auto business units is
referred to herein as a “Business Unit” or “Unit.” For all purposes under this Plan, the results of the Professional Liability business, the CAIP Servicing Group, the Company’s Australia operations, the Midland Financial
Group, Inc., umbrella policies, and other businesses in run-off are excluded from the Core Business results. 
 Notwithstanding
the foregoing, net operating results from any business that is not included in and is not specifically excluded from the descriptions above, if any, will be apportioned among the appropriate Business Units or Sub-units (as defined below) in
accordance with the respective amount(s) of net earned premiums generated by each such Business Unit or Sub-unit, and the apportioned net operating results will be included in the calculation of the GAAP combined ratio for such Business Unit(s) or
Sub-unit(s). Assigned risk business is not included in determining the growth of any Business Unit or Sub-unit, but the net operating gains/losses for such assigned risk business will be included in determining the GAAP combined ratio for the
applicable Business Unit or Sub-unit. 
  

	 	B.	Matrices 

 For purposes of
computing a performance score for the Core Business, operating performance results for each Business Unit, or a specified portion of the business written by a Business Unit , as hereafter defined (referred to as a “Business Sub-unit” or a
“Sub-unit”), are evaluated using a performance matrix for the Plan year. Each matrix assigns performance scores to various combinations of profitability and growth outcomes for the applicable Business Unit or Sub-unit. 

For 2012, and for each Plan year thereafter until otherwise determined by the Committee: (i) the Direct Auto Business Unit will be
evaluated according to the performance of its respective “New” and “Renewal” Business Sub-units, using the performance measures further described below; and (ii) each of the Agency Auto, Commercial Auto and Special Lines
Business Units will be evaluated according to the performance of the Business Unit as a whole, without regard to any Sub-unit performance. Therefore, separate Gainsharing matrices will be established by the Committee for the following: 

 

	 	•	 	 Agency Auto; 

  

	 	•	 	 Direct Auto – New Sub-unit; 

  

	 	•	 	 Direct Auto – Renewal Sub-unit; 

  

	 	•	 	 Special Lines; and 

  

	 	•	 	 Commercial Auto. 

  

	 	C.	Performance Measures 

Growth. The growth measure for the Plan year under all matrices will be based on policies in force (“PIFs”). 

 For all matrices other than those for the Direct Auto Business Unit, growth will be measured
by the percentage change in average PIFs for the Plan year compared to the average PIFs of the immediately preceding fiscal year. Average PIFs for the Plan year and for the immediately preceding fiscal year will be determined by adding the
fiscal-month-end number of PIFs for each month during such year and dividing the total by twelve. 
 For Direct Auto, the
following will apply to the matrix for the applicable Business Sub-unit: 
  

	 	(i)	For the “New” Business Sub-unit matrix, growth will be measured by the change in (a) the number of new policies written by the Direct Auto Business Unit
during the applicable Plan year that remain in force (including, without limitation, as a result of renewal thereof) as of the last day of the Plan year, as compared with (b) the number of new policies written by such Business Unit during the
immediately preceding Plan year that remained in force as of the last day of such immediately preceding Plan year. 

  

	 	(ii)	For the “Renewal” Business Sub-unit matrix, growth will be measured by the PIF retention rate of the Direct Auto Business Unit for the Plan year – i.e.,
the percentage of the policies that were in force in such Business Unit on the first day of the Plan year that remain in force (including, without limitation, as a result of renewal thereof) as of the last day of the Plan year.

 Profitability. For all Business Unit and Sub-unit matrices, the measurement of profitability will be the
GAAP combined ratio for the Plan year for the applicable Unit or Sub-unit. 
  

	 	D.	Calculation of Performance Factor  

 Performance Scores 
 Using the actual performance results and the
Gainsharing matrix for each Business Unit or Sub-unit, as applicable, the GAAP combined ratio for each such Unit or Sub-unit will be matched with the growth levels achieved by such Unit or Sub-unit, to determine the performance score for each such
Unit or Sub-unit. 
 The performance score for each of the Agency Auto, Special Lines and Commercial Auto Business Units, which
will be used to calculate the Performance Factor as described further below, can vary from 0 to 2.0 and will be determined by reference to the applicable matrix. 
 The performance score for the Direct Auto Business Unit used to calculate the Performance Factor will be calculated by: 

	 	(i)	Weighting the performance scores determined under the matrices for the New and Renewal Direct Auto Sub-units, using the following weighting factors:

  

	 	•	 	 Two-thirds (2/3) from the score determined under the matrix for the Renewal Sub-unit; and 

 

	 	•	 	 One-third (1/3) from the score determined under the matrix for the New Sub-unit; and 

 

	 	(ii)	Adding the weighted performance scores for the New and Renewal Sub-units to produce the Direct Auto Business Unit performance score. 

The performance score for each of the Sub-Units of the Direct Auto Business Unit (and, therefore, for the Direct Auto Business Unit as a
whole) can vary from 0 to 3.0. If, however, the performance score for the Direct Business Unit exceeds 2.0, such score shall be rounded down to 2.0 before the calculation of the Performance Factor as described immediately below. 

Performance Factor 
 The resulting performance scores for each of the Agency Auto, Direct Auto, Commercial Auto and Special Lines Business Units will then be multiplied by a weighting factor, which shall be a fraction or
decimal equivalent, determined by dividing the net earned premiums generated by such Business Unit during the Plan year by the net earned premiums generated by all of the Business Units comprising the Core Business in the aggregate. The sum of these
weighted performance scores will be the Performance Factor for the Plan year. 
  

	 	E.	Limitations 

 The final
Performance Factor cannot exceed 2.0, regardless of the results of any individual matrix. 
 7. Payment Procedures;
Deferral. Subject to Paragraph 9 below, no later than December 31 of each Plan year, each participant will receive an initial payment in respect of his or her Annual Gainsharing Payment for that Plan year equal to 75% of an amount
calculated on the basis of Paid Eligible Earnings for the first 24 pay periods of the Plan year, estimated earnings for the remainder of the Plan year, and performance data through the first 11 months of the Plan year (estimated, if necessary). No
later than February 28 of the following year, each participant will receive the balance of his or her Annual Gainsharing Payment, if any, for such Plan year, based on his or her Paid Eligible Earnings and performance data for the entire Plan
year. 
 Any Plan participant who is then eligible to participate in The Progressive Corporation Executive Deferred Compensation Plan
(“Deferral Plan”) may elect to defer all or a portion of the Annual Gainsharing Payment otherwise payable to him/her under this Plan, subject to and in accordance with the terms of the Deferral Plan. 

 8. Other Plans. If, for any Plan year, an employee has been selected to
participate in both this Plan and another cash incentive plan offered by the Company, then with respect to such employee, the Gainsharing formula set forth in Paragraph 3 hereof shall be appropriately adjusted by applying a weighting factor to
reflect the proportion of the employee’s total annual incentive opportunity that is being provided by this Plan. The Committee shall have full authority to determine the incentive plan or plans in which any employee will participate during any
plan year and, if an employee is selected to participate in more than one plan, the weighting factor that will apply to each such plan. 
 9. Qualification Date; Leave of Absence; Withholding. Unless otherwise determined by the Committee, and except as expressly provided herein, in order to be entitled to receive an Annual
Gainsharing Payment for any Plan year, the participant must be an active officer or regular employee of the Company on November 30 of the Plan year (“Qualification Date”). Individuals who are hired on or after December 1 of any
Plan year are not entitled to an Annual Gainsharing Payment for that Plan year. 
 Any participant who is on a leave of absence covered by the
Family and Medical Leave Act of 1993, as amended, personal leave of absence with the approval of the Company, military leave or short or long-term disability on the Qualification Date with respect to any Plan year will be entitled to receive an
Annual Gainsharing Payment for such Plan year, calculated as provided in Paragraphs 3 through 6 above and based on the amount of Paid Eligible Earnings received by such participant during the Plan year. 

All payments made hereunder will be net of any legally required deductions for federal, state and local taxes and other items. 

10. Non-Transferability. The right to any Annual Gainsharing Payment hereunder may not be sold, transferred, assigned or
encumbered by any participant. Nothing herein shall prevent any participant’s interest hereunder from being subject to involuntary attachment, levy or other legal process. 

11. Administration. The Plan shall be administered by or under the direction of the Committee. The Committee shall have the
authority to adopt, amend, revise and repeal such rules, guidelines, procedures and practices governing the Plan as it shall, from time to time, in its sole discretion, deem advisable. 
 The Committee shall have full authority to determine the manner in which the Plan will operate, to interpret the provisions of the Plan and to make all determinations hereunder. All such interpretations
and determinations shall be final and binding on Progressive, all Plan participants and all other parties. No such interpretation or determination shall be relied on as a precedent for any similar action or decision. 

Unless otherwise determined by the Committee, all of the authority of the Committee hereunder (including, without limitation, the authority to administer
the Plan, select the persons entitled to participate herein, interpret the provisions thereof, waive any of the requirements specified herein and make determinations hereunder and to select, approve, establish, change or

 
modify the Business Units or Sub-units and the Gainsharing formulae, weighting factors, performance targets and Target Percentages) may be exercised by the Designated Executives; provided,
however, that only the Committee may take such actions or make such determinations for the Company’s executive officers. In the event of a dispute or conflict, the determination of the Committee will govern. 

12. Termination; Amendment. The Plan may be terminated, amended or revised, in whole or in part, at any time and from time
to time by the Committee, in its sole discretion. 
 13. Unfunded Obligations. The Plan will be unfunded and all
payments due under the Plan shall be made from Progressive’s general assets. 
 14. No Employment Rights.
Nothing in the Plan shall be construed as conferring upon any person the right to remain a participant in the Plan or to remain employed by Progressive, nor shall the Plan limit Progressive’s right to discipline or discharge any of its officers
or employees or change any of their job titles, duties or compensation. 
 15. Set-Off Rights. Progressive shall
have the unrestricted right to set off against or recover out of any Annual Gainsharing Payment or other sums owed to any participant under the Plan any amounts owed by such participant to Progressive. 

16. Prior Plans. This Plan supersedes all prior plans, agreements, understandings and arrangements regarding bonuses or
other cash incentive compensation payable to participants by or due from Progressive. Without limiting the generality of the foregoing, this Plan supersedes and replaces The Progressive Corporation 2011 Gainsharing Plan (the “Prior Plan”),
which is and shall be deemed to have terminated on the last day of the Company’s 2011 fiscal year (the “Prior Plan Termination Date”); provided, however, that any bonuses or other sums earned and payable under the Prior Plan with
respect to any Plan year ended on or prior to the Prior Plan Termination Date shall be unaffected by such termination and shall be paid to the appropriate participants when and as provided thereunder. 

17. Effective Date. This Plan is adopted, and is to be effective, as of the first day of Progressive’s 2012 fiscal
year. This Plan shall be effective for the 2012 Plan year and for each Plan year thereafter unless and until terminated by the Committee. 
 18. Governing Law. This Plan shall be interpreted and construed in accordance with the laws of the State of Ohio.EX-10.8

 Exhibit 10.8 
 THE PROGRESSIVE CORPORATION 
 2007 EXECUTIVE BONUS PLAN 

 

	1.	The Plan. The Progressive Corporation and its subsidiaries (“Progressive”) have designed an executive compensation program consisting of three
components: salary, annual bonus and equity-based incentives. These components have been structured to reflect the market for executive compensation and to promote both the achievement of corporate goals and performance that is in the long-term
interest of shareholders. The annual bonus component of this program is performance-based and focuses on current results. 

 This 2007 Executive Bonus Plan (the “Plan”) provides, in whole or in part, the annual bonus component of Progressive’s executive compensation program for Plan participants. 

 

	2.	Administration. The Plan shall be administered by or under the direction of the Compensation Committee (the “Committee”) of the Board of Directors (the
“Board”) of The Progressive Corporation. The Committee will have the authority to adopt, amend, revise and repeal such rules, guidelines, procedures and practices governing the Plan as it, from time to time, in its sole discretion deems
advisable. The Committee will have full authority to determine the manner in which the Plan will operate, to interpret the provisions of the Plan and to make all determinations hereunder. All such interpretations and determinations will be final and
binding on Progressive, all Plan participants and all other parties. No such interpretation or determination may be relied on as a precedent for any similar action or decision. The Plan will be administered by the Committee in accordance with the
requirements of Section 162(m) of the Internal Revenue Code, as amended, and the rules and regulations promulgated thereunder (the “Code”). 

  

	3.	Participants; Plan Years. Executive officers of Progressive may be selected by the Committee to participate in the Plan for one or more Plan years. Plan
participants may also be eligible to participate in other Progressive bonus or Gainsharing plans, as determined by the Committee. Plan years shall coincide with Progressive’s fiscal years. 

 

	4.	Formula; Maximum Bonus. Subject to the following sentence, the amount of the annual bonus earned by any participant under the Plan for any Plan year
(“Annual Bonus”) will be determined by application of the following formula: 

 Annual Bonus = Paid
Salary x Target Percentage x Performance Factor 
 The Annual Bonus payable to any participant with respect to any Plan year
shall not exceed $5,000,000. 
  

	5.	 Paid Salary. The salary rate of each Plan participant for any Plan year shall be established by the Committee no later than ninety
(90) days after commencement of such Plan year. For purposes of the Plan, “Paid Salary” shall include regular, used Earned 

	 	
Time Benefit, sick, holiday and funeral pay, and retroactive payments of any of the foregoing items, received by the participant during the Plan year for work or services performed by the
participant as an officer or employee of Progressive, but shall exclude all other types of compensation, including, without limitation: any short-term or long-term disability payments, discretionary or other bonus or incentive payments, any dividend
payments, unused Earned Time Benefit, and the earnings replacement component of any workers’ compensation award. 

  

	6.	Target Percentages. The Target Percentages for the participants in the Plan shall be determined by the Committee, but will not exceed 200% for any participant.
Target Percentages may vary among Plan participants and may be changed from year to year by the Committee. 

  

	7.	The Performance Factor 

  

	 	A.	General 

 The Performance
Factor shall consist of one or more of the following components: a Core Business Component, one or more Business Unit Components, an Investment Component or a Net Promoter Score Component (the “Bonus Components” or “Components”).
An appropriate combination of Bonus Components will be designated for each participant, and the designated Bonus Components will be weighted, based on such participant’s assigned responsibilities, as determined by the Committee. 

The relative weighting of the Bonus Components may vary among Plan participants and may be changed from year to year by the Committee.

 For purposes of computing the Performance Factor for any Plan year, a performance score will be calculated for each of the
designated Bonus Components, based on the performance of the business(es), product(s) or function(s) being measured by that Component, as described below. The performance score will equal 1.0 if specified performance objectives are achieved, and can
vary from 0 to 2.0, based on actual performance versus the pre-established objectives. The performance score achieved for each of the designated Bonus Components will then be multiplied by the applicable weighting factor to produce a weighted
performance score for that Component. The sum of the weighted performance scores for the applicable Bonus Components will equal the Performance Factor, which can likewise vary from 0 to 2.0. The Performance Factor cannot exceed 2.0, regardless of
results. 
 Actual performance results achieved for any Plan year, which will be used to calculate the performance score achieved
for each of the applicable Bonus Components, must be certified by the Committee prior to payment of the Annual Bonus. 

	 	B.	Core Business Component 

The Core Business Component measures the overall operating performance of Progressive’s Core Business for the Plan year for which an
Annual Bonus payment is to be made. The Core Business will consist of the Drive (Agency) business unit, the Direct business unit, the Commercial Auto business unit, the Special Lines business unit and/or such other business unit(s) (as described
below), if any, as shall be designated and defined by the Committee for the Plan year (the “Core Business Units”). The performance score for this Component is based on the operating performance results for the Core Business Units for the
Plan year in question. 
 In the discretion of the Committee, the performance score for the Core Business may be determined
either by the performance of the Core Business considered as a whole or by the weighted performance results of the individual Core Business Units. 
  

	 	1.	Performance Score Determined by Weighted Operating Results of Core Business Units  

Each Plan year, one or more separate performance matrices for each Core Business Unit will be established by or under the direction of
the Committee. Each such performance matrix will assign a performance score to various combinations of profitability and growth outcomes for the applicable Core Business Unit (or an applicable portion of a Core Business Unit), based on the following
performance criteria, as determined by the Committee: 
  

	 	•	 	 profitability will be measured by one of the following, as designated by the Committee: 

 

	 	•	 	 combined ratio 

  

	 	•	 	 weighted combined ratio 

  

	 	•	 	 variation in combined ratio from a targeted combined ratio 

 

	 	•	 	 cohort combined ratio (the expected lifetime combined ratio for a group of policies commencing during a specified time period)

  

	 	•	 	 return on equity, or 

  

	 	•	 	 return on revenue, and 

  

	 	•	 	 growth will be measured by changes from year to year or during a Plan year in one of the following, as designated by the Committee:

  

	 	•	 	 policies in force 

  

	 	•	 	 vehicles insured 

  

	 	•	 	 net earned premiums 

  

	 	•	 	 earned premium per policy or per vehicle 

  

	 	•	 	 earned car years, or 

  

	 	•	 	 net written premiums. 

 The Committee may select different performance criteria for the various Core Business Units
in a single Plan year, and the performance criteria may be changed from year to year by the Committee. 
 Profitability and
growth will be separately determined for each of the Core Business Units (or the applicable portion of a Core Business Unit), using the performance criteria designated by the Committee for the Plan year, and will then be matched using the applicable
performance matrix, to determine a performance score for each Core Business Unit (or the applicable portion of a Core Business Unit). Where more than one performance matrix is used for a particular business unit, the performance scores from each
portion of such business unit, as determined by the separate performance matrix, will then be combined based on a weighting factor approved by the Committee to determine the performance score for the entire business unit. 

The resulting performance scores for each Core Business Unit will then be multiplied by a weighting factor (based on the percentage of
the total net earned premiums of the Core Business generated by such Core Business Unit during the Plan year or such other factor(s) as shall be approved by the Committee), the weighted performance scores will be combined and the sum of the weighted
performance scores will be the performance score for the Core Business Component. 
  

	 	2.	Performance Score Determined by Core Business as a Whole (Single Matrix)  

 In the discretion of the Committee, the performance score for the overall Core Business for a Plan year may be measured using a single performance matrix, established by or under the direction of the
Committee. The performance matrix will assign a performance score to various combinations of profitability and growth outcomes for the Core Business as a whole, based on the performance criteria described above, as selected by the Committee.
Profitability and growth for the Core Business Units will be calculated on an aggregate basis for the applicable Plan year, and will then be matched using the performance matrix to determine a performance score for the Core Business for such Plan
year. 
  

	 	C.	Business Unit Component 

The Business Unit Component measures the performance of one or more designated business units (as described below) in terms of any one or
more of the following criteria selected by the Committee: 

	 	•	 	 profitability will be measured by one of the following, as designated by the Committee: 

 

	 	•	 	 combined ratio 

  

	 	•	 	 weighted combined ratio 

  

	 	•	 	 variation in combined ratio from a targeted combined ratio 

 

	 	•	 	 cohort combined ratio ( the expected lifetime combined ratio for a group of policies commencing during a specified time period)

  

	 	•	 	 return on equity, or 

  

	 	•	 	 return on revenue; and 

  

	 	•	 	 growth will be measured by changes from year to year or during a Plan year in one of the following, as designated by the Committee:

  

	 	•	 	 policies in force 

  

	 	•	 	 vehicles insured 

  

	 	•	 	 net earned premiums 

  

	 	•	 	 earned premium per policy or per vehicle 

  

	 	•	 	 earned car years, or 

  

	 	•	 	 net written premiums. 

 A business unit may consist of a distribution channel, business group, product, class or type of business (e.g., designated types of policies written in a distribution channel or by a business group),
function, process or other business category, such as new or renewal business. 
 The Committee may designate one or more
Business Unit Components for an individual Plan participant for any Plan year and, for each such Component, will determine the applicable criteria by which performance of the unit (or an applicable portion of the business unit) will be measured, the
goals to be achieved and the performance scores that will result from various levels of performance, and the relative weighting thereof. The applicable performance criteria, related goals and resulting performance scores may be set forth in one or
more performance matrices, or other format approved by the Committee, for such business unit. Business Unit Components, performance criteria, goals, resulting performance scores and relative weightings may vary among participants and may be changed
from year to year by the Committee. 

	 	D.	Investment Component 

 The
Investment Component compares the investment performance of one or more segments of Progressive’s investment portfolio (each, a “Portfolio”) against the performance of selected groups of comparable investment funds, investment
managers, indexes or other benchmarks (“Investment Benchmarks”) over such period or periods as shall be determined by the Committee. Such Investment Benchmarks may be risk-adjusted in accordance with such formula or other method as may be
approved by the Committee. Investment results are marked to market and adjusted to include the benefit of any state premium tax abatements attributable to the Portfolio, in order to calculate total return, which is then compared against the
designated Investment Benchmarks to produce a performance score, pursuant to a formula or other criteria determined by the Committee, for each Portfolio. 
 The applicable Portfolio or Portfolios will be identified, and the related Investment Benchmarks will be determined, by the Committee and may be changed from year to year by the Committee. 

In the event that any participant’s Annual Bonus is to be determined by the performance of two or more Portfolios, the performance
scores for each of the Portfolios will be weighted, based on the average amounts invested from time to time in each of such Portfolios during the Plan year or other applicable period, and the weighted performance scores for the applicable Portfolios
will be then combined to produce the performance score for the Investment Component. Investment expense is not included in determining such performance score. 
  

	 	E.	Net Promoter Score Component 

 The Net Promoter Score (NPS) Component measures NPS (a survey-based measure of customer satisfaction and loyalty) for the Core Business as a whole or for a business unit (or portion thereof) against
objectives, as determined by the Committee. The Committee may determine the applicable criteria by which NPS performance will be measured, the goals to be achieved, the methods to determine NPS performance, the performance scores that will result
from various levels of performance and the relative weighting among the NPS results achieved by different business units, if appropriate. NPS performance criteria and goals, and relative weightings, may vary among participants and may be changed
from year to year by the Committee. 
  

	8.	Timing of Payment; Deferral. The Annual Bonus for any Plan year will be paid to participants as soon as practicable after the Committee has certified performance
results for the Plan year, but no later than March 15 of the immediately following year. The provisions of this Paragraph shall be subject to Paragraph 9 hereof. 

 Any Plan participant who is eligible to participate in The Progressive Corporation Executive
Deferred Compensation Plan (“Deferral Plan”) may elect to defer all or a portion of his or her Annual Bonus otherwise payable under this Plan, subject to and in accordance with the terms of the Deferral Plan. 

 

	9.	 Qualification Date; Leave of Absence; Tax Withholding. Unless otherwise determined by the Committee, in order to be entitled to receive an
Annual Bonus for any Plan year, the participant must be employed by Progressive on November 30th of the Plan year (“Qualification Date”). 

 Any
participant who is on a leave of absence covered by the Family and Medical Leave Act of 1993, personal leave of absence with the approval of Progressive, military leave or short or long-term disability on the Qualification Date with respect to any
Plan year will be entitled to receive an Annual Bonus payment for such Plan year, calculated as provided in Paragraphs 4 through 7 above and based on the amount of Paid Earnings received by such participant during the Plan year. 

Annual Bonus payments made to participants will be net of any legally required deductions for federal, state and local taxes and other
items. 
  

	10.	Non-Assignability. The right to any of the Annual Bonuses hereunder may not be sold, transferred, assigned or encumbered by any participant. Nothing herein shall
prevent any participant’s interest hereunder from being subject to involuntary attachment, levy or other legal process. 

  

	11.	Termination and Amendment. The Plan may be terminated, amended or revised, in whole or in part, at any time and from time to time by the Committee, in its sole
discretion; provided that the Committee may not increase the amount of compensation payable hereunder to any participant above the amount that would otherwise be payable upon attainment of the applicable performance goals, or accelerate the payment
of any portion of the Annual Bonus due to any participant under the Plan, without discounting the amount of such payment in accordance with Section 162(m) of the Code, and further provided that any amendment or revision of the Plan required to
be approved by shareholders pursuant to Section 162(m) of the Code will not be effective until approved by The Progressive Corporation’s shareholders in accordance with the requirements of Section 162(m). 

 

	12.	Unfunded Obligations. The Plan will be unfunded and all payments due under the Plan will be made from Progressive’s general assets.

  

	13.	No Employment Rights. Nothing in the Plan shall be construed as conferring upon any person the right to remain a participant in the Plan or to remain employed by
Progressive, nor shall the Plan limit Progressive’s right to discipline or discharge any of its officers or employees or change any of their job titles, positions, duties or compensation. 

	14.	Recoupment. 

  

	 	A.	Progressive shall have the right to recoup any Annual Bonus paid to a participant hereunder (or an appropriate portion thereof, as hereinafter provided) with respect to
any Plan year, if: (i) the Annual Bonus payment was predicated upon the achievement during such Plan year of certain financial or operating results (which includes, for purposes hereof, all of the performance criteria that are available to the
Committee under Paragraph 7 above); (ii) such financial or operating results were incorrect and were subsequently the subject of a restatement by Progressive within three (3) years after the date on which such Annual Bonus was paid to the
participant; and (iii) a lower payment would have been made to the participant if the restated financial or operating results had been known at the time the payment was made. Such recoupment right shall be available to Progressive whether or
not the participant in question was at fault or responsible in any way in causing such restatement. In such circumstances, Progressive will have the right to recover from each participant for such Plan year, and each such participant will refund to
Progressive, the amount by which the Annual Bonus paid to such participant for the Plan year in question exceeded the lower payment that would have been made based on the restated results, without interest; provided, however, that Progressive will
not seek to recover such amounts unless the amount due would exceed the lesser of five percent (5%) of the Annual Bonus previously paid or twenty-thousand dollars ($20,000). Such recovery, at the Committee’s discretion, may be made by lump
sum payment, installment payments, credits against future bonus payments, or other appropriate mechanism. 

  

	 	B.	Notwithstanding the foregoing subsection A., if any participant engaged in fraud or other misconduct (as determined by the Committee or the Board, in their respective
sole discretion) resulting, in whole or in part, in a restatement of the financial or operating results used hereunder to determine the Annual Bonuses for a specific Plan year, Progressive will further have the right to recover from such
participant, and the participant will refund to Progressive upon demand, an amount equal to the entire Annual Bonus paid to such participant for such Plan year plus interest at the rate of eight percent (8%) per annum or, if lower, the highest
rate permitted by law, calculated from the date that such bonus was paid to the participant. Progressive shall further have the right to recover from such participant Progressive’s costs and expenses incurred in connection with recovering such
Annual Bonus from the participant, including, without limitation, reasonable attorneys fees. There shall be no time limit on the Company’s right to recover such amounts under this subsection B., except as otherwise provided by applicable law.

  

	 	C.	The rights contained in this Section shall be in addition to, and shall not limit, any other rights or remedies that the Company may have under any applicable law or
regulation. 

	15.	Right to Set Off. Progressive shall have the unrestricted right to set off against or recover out of any bonuses or other sums owed to any participant under the
Plan any amounts owed by such participant to Progressive, including, without limitation, any amounts owed by such participant under Section 14 above. 

  

	16.	Shareholder Approval. The Plan is subject to approval by the holders of The Progressive Corporation’s Common Shares, $1.00 par value
(“shareholders”) in accordance with the requirements of Section 162(m) of the Code, and no Annual Bonus will be paid hereunder unless the Plan has been so approved. If shareholders do not approve the Plan at the Annual Meeting of
Shareholders in April 2007, this Plan shall automatically terminate and be of no further force or effect. 

  

	17.	Prior Plans. If this Plan is approved by shareholders as provided in Paragraph 16 above, this Plan shall supersede and replace The Progressive Corporation 2004
Executive Bonus Plan, as heretofore in effect (the “Prior Plan”), which is and shall be deemed to be terminated as of December 29, 2006 (the “Termination Date”); provided, that any bonuses or other sums earned under the
Prior Plan with respect to any period ended on or prior to the Termination Date shall be unaffected by such termination and shall be paid to the appropriate participants when and as provided thereunder. 

 

	18.	Effective Date. This Plan is adopted and, subject to the provisions of Paragraph 16 hereof, is to be effective, as of December 30, 2006, which is the
commencement of Progressive’s 2007 fiscal year. Subject to the provisions of Paragraph 16, this Plan shall be effective for the 2007 Plan year (which coincides with Progressive’s 2007 fiscal year) and for each Plan year thereafter unless
and until terminated by the Committee. 

  

	18.	Ohio Law. This Plan shall be interpreted and construed in accordance with the laws of the State of Ohio.

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