Rli Corp DEF 14A, filed Mar 26, 2026
Rli Corp (RLI)
About this DEF 14A
Rli Corp filed this DEF 14A on March 26, 2026.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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◻ | Soliciting Material Pursuant to Section 24 0.14a-12 |
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| 9025 N. LINDBERGH DRIVE PEORIA, IL 61615 |
RLI Corp.
9025 N. Lindbergh Drive
Peoria, Illinois 61615
March 26, 2026
Dear Fellow Shareholders:
Please consider this letter your personal invitation to attend the 2026 RLI Corp. Annual Shareholders Meeting, which will be conducted via live audio webcast on May 14, 2026, at 9:00 a.m. CDT. In order to provide expanded access, improved communication and cost savings for our shareholders and our Company, this year’s Annual Meeting will be a completely “virtual” meeting of shareholders. You will be able to attend the virtual Annual Meeting, vote your shares and submit questions during the meeting via the live webcast by visiting www.virtualshareholdermeeting.com/rli2026. To participate, you will need the 16-digit control number included in your proxy materials or on your proxy card. We encourage you to allow ample time for online check-in, which will begin at 8:45 a.m. CDT. Please note that there will be no in-person meeting for you to attend.
Business scheduled to be considered at the meeting includes the election of Directors, an advisory vote on our executive compensation, and ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the current year. In addition, we will review significant events of 2025 and their impact on you and the Company.
Again, this year we are furnishing our proxy materials via the Internet. Shareholders will receive a mailed notice card with instructions on how to view our proxy materials over the Internet and other information.
Thank you for your interest in RLI as well as your confidence in, and support of, our future.
Sincerely,
David B. Duclos
Chairman of the Board
RLI Corp. | 9025 N. Lindbergh Drive | Peoria, Illinois 61615
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 14, 2026
To the Shareholders of RLI Corp.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of RLI Corp. (“Company”) will be conducted via live audio webcast on Thursday, May 14, 2026, at 9:00 a.m. Central Daylight Time at www.virtualshareholdermeeting.com/rli2026 for the following purpose:
| 1. | to elect as Directors the ten (10) nominees named in the attached proxy statement for a one-year term expiring at the 2027 Annual Meeting of Shareholders; |
| 2. | to hold an advisory vote to approve executive compensation (the “Say-on-Pay” vote); |
| 3. | to ratify the selection of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the current year; and |
| 4. | to transact such other business as may properly be brought before the meeting. |
Only holders of Common Stock of the Company of record at the close of business on March 16, 2026, are entitled to notice of and to vote at the Annual Meeting.
| By Order of the Board of Directors |
| |
| |
| Christina G. Dean |
| Corporate Secretary |
Peoria, Illinois
March 26, 2026
It is important, regardless of the number of shares you hold, that you attend the Annual Meeting via the live webcast or be represented by proxy. Even if you expect to attend via the live webcast, we encourage you to promptly submit your proxy by any method described below to ensure your vote is counted:
| ● | By Internet: submit your proxy over the Internet in accordance with the instructions provided on your proxy card or Notice of Internet Availability of Proxy Materials; |
| ● | By Phone: submit your proxy by telephone, toll-free, in accordance with the instructions provided on your proxy card, or |
| ● | By Mail: if you received your proxy card by mail, complete the proxy card and sign, date and return it as promptly as possible. |
You have the right to revoke your proxy at any time prior to the Annual Meeting by filing a written notice of revocation with the Corporate Secretary of the Company prior to the convening of the Annual Meeting, or by submitting another proxy card with a later date or voting by telephone or over the Internet at a later date. If you attend the Annual Meeting via live webcast, you may change your vote by voting online while the meeting is in progress by visiting www.virtualshareholdermeeting.com/rli2026. You will need your 16-digit control number included in your proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials.
RLI Corp. 2026 Proxy Statement | 1
PROXY SUMMARY
This Proxy Statement Summary (“Summary”) highlights information contained in this Proxy Statement, the Annual Report on Form 10-K, or on our website at www.rlicorp.com. This Summary does not contain all the information you should consider, so please read the entire Proxy Statement carefully before voting. For more information regarding our 2025 performance, please review the Annual Report on Form 10-K for the year ended December 31, 2025, a copy of which is available at the Investors section of our website at www.rlicorp.com.
MATTERS TO BE VOTED ON:
The following is a summary of the proposals to be voted on at the Annual Meeting and the Board’s voting recommendations with respect to each proposal:
| | Board | | |
| | | | |
PROPOSAL 1: Election of Directors | | FOR | | 14 |
| | | | |
PROPOSAL 2: Non-Binding, Advisory Vote to Approve the Compensation of the Company’s Named Executive Officers | | FOR | | 28 |
PROPOSAL 3: Ratification of the Selection of Independent Registered Public Accounting Firm | | FOR | | 53 |
CORPORATE GOVERNANCE HIGHLIGHTS:
| ● | Annual election of Directors |
| ● | 9 of our 10 Director nominees are Independent |
| ● | Split Chairman & CEO roles |
| ● | Independent Chairman of the Board |
| ● | Comprehensive Code of Conduct that applies to all employees and Directors |
| ● | Executive sessions of Independent Directors conducted at regularly scheduled board meetings |
| ● | Oversight of executive succession planning by the Human Capital & Compensation Committee of the Board |
| ● | Directors elected by majority vote |
| ● | Regular Board, Committee, and Director Evaluations |
| ● | Ethics and corporate compliance program and anonymous whistleblower hotline |
| ● | Stock ownership guidelines for Directors and Officers |
BOARD COMPOSITION & EXPERIENCE:
Our Directors bring a balance of skills, qualifications, and experience to their oversight of our Company. The matrix on the following page identifies certain skills, qualifications, and experience of Directors that the Board believes are relevant to our business; support sound governance; and are aligned with the Company’s strategic plans. These skills, qualifications, and experience may have been gained through job experience, other board service, education or otherwise and do not necessarily indicate a given Director is a subject matter expert where indicated. A Director may possess other skills, qualifications, and experience not indicated in the matrix that may be relevant and valuable to their service on our Board.
4 | RLI Corp. 2026 Proxy Statement
CEO or Senior Executive Role Experience in an executive leadership position provides the perspective required to understand and direct business operations, analyze risk, manage human capital, oversee implementation of organizational change, and develop and execute strategic plans. | • | • | | • | • | • | • | • | • | • | ||||||||||||||||||||
Customer Experience, Branding, Marketing Experience with customer experience, branding, or marketing provides insight that assists the Board in overseeing the operation of our business and implementation of our strategic plan. | | • | | • | • | • | | • | • | • | ||||||||||||||||||||
Strategy Planning and Formulation Experience with strategic planning provides insights to evaluate and challenge strategic plans. | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||
Financial Reporting, Audit, Accounting Knowledge of or experience in accounting, financial reporting or auditing processes and standards assists the Board in overseeing our financial position and condition and ensuring accuracy and transparency in reporting. | • | • | • | • | • | • | • | • | • | • | ||||||||||||||||||||
Risk Management, Actuarial Risk is inherent in the operation of our business. Having directors with experience and expertise in risk management or actuarial allows the Board to provide guidance in its independent oversight of the design and implementation of our risk management framework. | • | • | • | | | • | • | • | | • | ||||||||||||||||||||
Information Technology, Cybersecurity Experience with and understanding of technology, data and analytics, information systems, and cybersecurity is important in overseeing our ongoing investment in and development of critical technology, as well as the security of our operations, digital assets and systems. | • | • | | • | | • | • | • | | • | ||||||||||||||||||||
Human Capital Management Directors with an understanding of human capital management and compensation help the Board to effectively oversee our efforts to recruit, retain and develop key talent and provide valuable insight in determining compensation of the CEO and other executive officers. | • | • | • | | • | • | • | • | • | • | ||||||||||||||||||||
Insurance or Financial Services Industry Knowledge with experience in the insurance or financial services industry provide insight into our strategic planning, risk management, and market conditions. | • | • | • | • | | • | • | • | | • | ||||||||||||||||||||
Investments, Capital Markets, M&A Invested assets represent one of RLI’s largest balance sheet exposures, providing a foundation of support to insurance operations and a resource for long term growth in book value. Knowledge of investment strategy, capital markets and macroeconomic influences provides the appropriate oversight of governance, portfolio allocation and capital structure. | • | • | • | • | • | • | • | • | | • | ||||||||||||||||||||
Demographics | ||||||||||||||||||||||||||||||
Race/Ethnicity | | | | | | | | | | | ||||||||||||||||||||
African American | | | | | • | | • | | | • | | |||||||||||||||||||
White / Caucasian | | • | • | • | | • | | • | • | | • | |||||||||||||||||||
Gender | | | | | | | | | | | ||||||||||||||||||||
Male | | • | | • | • | • | • | • | • | | • | |||||||||||||||||||
Female | | | • | | | | | | | • | | |||||||||||||||||||
RLI Corp. 2026 Proxy Statement | 5
|
2025 FINANCIAL PERFORMANCE
FINANCIAL RESULTS:
As a result of the efforts of our associates, we achieved outstanding financial results in 2025. These results included posting an 83.6 combined ratio, which marked our 30th consecutive year of underwriting profit; delivering return on equity of 23.7 percent, a testament to our sustained profitability; growing book value per share by 33 percent during the year, inclusive of dividends; and continuing to reward shareholders through regular dividends and a $2.00 per share special dividend which resulted in returning $184 million to shareholders in 2025 and paying more than $1.6 billion in dividends over the last 10 years.
| | |
Gross Premiums Written (in millions) $2,027 Compared to $2,013 million in the previous year | | Comprehensive Earnings (in millions) $489.0 Compared to $338.4 million in the previous year |
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Combined Ratio 83.6 30th consecutive year below 100 | | Net Cash Flow from Operations (in millions) $614.2 Compared to $560.2 million in the previous year |
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Regular / Special Dividend Per Share Paid in 2025 $0.63 / $2.00 50 years of paying and increasing regular dividends | | Book Value per Share at December 31 $19.35 33% increase from year-end 2024, inclusive of dividends |
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FINANCIAL STRENGTH:
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AM Best A++ (Superior) Upgraded from A+ on February 20, 2026 | | Standard & Poor’s A (Strong) |
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Moody’s A2 | | Ward’s 50® Top P&C Performer 35 Consecutive Years The only company named every year since inception |
| | |
8 | RLI Corp. 2026 Proxy Statement
SUSTAINABLE BUSINESS PRACTICES
The Company is a specialty underwriting company and our financial performance starts with our entrepreneurial and ownership culture. We are steadfast in our belief that to deliver strong returns for our shareholders, we must also remain a sustainable organization. Our approach to sustainability reflects our focus on doing the right thing – for our customers, our employees, our communities, and the environment. With that philosophy guiding our efforts, we are committed to continue integrating sound and relevant sustainable business practices into our business. Additional detail on how we are integrating these principles into our work can be found in our Sustainability Report which can be viewed at www.rlicorp.com/sustainability.
Ethical Business Conduct:
Our Code of Conduct, which applies to all employees and Directors, provides guidance on ethical business behavior to support our strong reputation as a leading specialty property and casualty insurance company. Annually, employees and Directors are asked to read, understand, agree to comply with the Code and other Company policies, and confirm they have complied with the Code in the last year. No waiver of the Code was made in 2025 for any executive or Director. We also maintain a Third-Party Code of Conduct for our suppliers, vendors, consultants, and business partners to communicate ethical business standards under which third-parties are expected to operate when providing goods and services to the Company.
Talented Workforce:
The Company strives to cultivate a talented workforce to perpetuate our ownership culture, deliver excellent customer service and continue to achieve superior business results. Our goal is to attract, develop and retain the best talent with a variety of experiences, perspectives and skillsets, while promoting a culture where different viewpoints are valued and individuals feel respected, are treated fairly and have an opportunity to excel in their chosen careers. Our Total Rewards program is designed to attract the best talent in the industry and we strive to help all employees realize their potential through training, mentoring and professional development.
The Company believes in fostering an open and collaborative workplace that encourages employees to take ownership of their performance and development. We consistently track employee engagement and satisfaction metrics, along with other workforce data and insights, to assess the health of our workforce culture on an ongoing basis and make improvements based on employee feedback. Every two years, we conduct an employee engagement survey. Results from RLI’s last employee engagement survey reflected strong employee engagement scores exceeding a finance and insurance benchmark.
Environmental Stewardship:
Information on the Company’s environmental stewardship and climate change-related risk management can be found at www.rlicorp.com/environment.
The Company has demonstrated its commitment to a renewable future through its $5 million investment in a 1.8-megawatt solar field on our corporate campus in Peoria, Illinois. Located on six and a half acres, the 4,752-panel solar field is capable of producing annual electrical power equal to or exceeding annual electrical usage for our office buildings in Peoria, which house approximately 40% of our workforce.
RLI Corp. 2026 Proxy Statement | 9
RLI Corp. | 9025 N. Lindbergh Drive | Peoria, Illinois 61615
PROXY STATEMENT
Annual Meeting of Shareholders to be held May 14, 2026
GENERAL INFORMATION
This Proxy Statement is furnished to the shareholders of RLI Corp., a Delaware corporation (“Company”), in connection with the solicitation by the Board of Directors of the Company (“Board” or “Board of Directors”) of proxies to be used at the Annual Meeting of Shareholders (“Annual Meeting”) to be held at 9:00 a.m. Central Daylight Time on Thursday, May 14, 2026 which will be conducted via live webcast at www.virtualshareholdermeeting.com/rli2026 and at any adjournments or postponements of the Annual Meeting.
This year, we are pleased to again be taking advantage of a Securities and Exchange Commission (“SEC”) rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to our shareholders a Notice of Internet Availability of Proxy Materials (“E-Proxy Notice”) instead of a paper copy of the proxy materials. The E-Proxy Notice contains instructions that will enable shareholders receiving the E-Proxy Notice to access these materials over the Internet and, if so desired, to request a paper copy of these proxy materials by mail. Shareholders who do not receive the E-Proxy Notice will receive a paper copy of the proxy materials by mail. The Company intends to mail the E-Proxy Notice to shareholders on or about March 26, 2026.
VOTING AND QUORUM
Pursuant to the Company’s Bylaws, at least a majority in voting power of the stock issued and outstanding and entitled to vote must be present (in person or by proxy) at the Annual Meeting to conduct the meeting, which is known as a “quorum” of shares. Even if you expect to attend the virtual Annual Meeting, we encourage you to promptly submit your proxy by any method described below to ensure your vote is counted.
Whether you hold your shares directly as the shareholder of record or through a broker, trustee, or other nominee (“in street name”), you may vote by the following methods:
| ● | Internet: Shareholders may submit their proxy over the Internet by following the instructions provided on the proxy card or on the E-Proxy Notice. Shareholders will need to have the 16-digit control number appearing on their proxy card or E-Proxy Notice available in order to submit their proxy over the Internet. |
| ● | Telephone: Shareholders may submit their proxy by telephone, toll-free, by following the instructions provided on the proxy card or on the E-Proxy Notice. Shareholders will need to have the 16-digit control number appearing on their proxy card or E-Proxy Notice available in order to submit their proxy by telephone. |
| ● | Mail: Shareholders who receive a paper copy of a proxy card by mail may submit their proxy by signing, dating, and returning the proxy card as promptly as possible in the envelope enclosed for that purpose. |
| ● | Virtually During the Meeting: Shareholders may vote during the Annual Meeting at www.virtualshareholdermeeting.com/rli2026 by using the 16-digit control number included with these proxy materials provided. However, as explained below, shares held in the RLI Corp. Employee Stock Ownership Plan (“ESOP”) must be voted before 11:59 p.m. on May 11, 2026. |
Each proxy will be voted in accordance with the shareholder’s specifications. If you return a signed proxy card without providing voting instructions or do not designate a voting preference when using the other methods, your shares will be voted as recommended by the Board of Directors, except that if your shares are held in the Company’s (“ESOP”) and no vote is received for those shares by 11:59 p.m. on May 11, 2026, the Trustee (as defined herein) of the ESOP will vote such shares in proportion to other ESOP votes cast unless contrary to applicable law.
All proxies delivered pursuant to this solicitation are revocable at any time prior to the meeting by giving written notice to the Corporate Secretary at 9025 North Lindbergh Drive, Peoria, Illinois, 61615, or by submitting a proxy by any method bearing a later date, or by voting electronically at the Annual Meeting. Attending the virtual Annual Meeting will not, in and of itself, revoke a proxy. Beneficial shareholders may revoke any prior voting instructions by contacting the broker, bank, or other nominee that holds their shares or by voting online during the meeting.
SHAREHOLDERS ENTITLED TO VOTE
Shareholders of record at the close of business on March 16, 2026, the record date, shall be entitled to vote at the 2026 Annual Meeting. As of the record date, the Company had 91,933,931 shares of Common Stock outstanding and entitled to vote. Common share ownership entitles the holder to one vote per share upon each matter to be voted at the 2026 Annual Meeting.
10 | RLI Corp. 2026 Proxy Statement
VOTES REQUIRED TO APPROVE THE PROPOSALS
The following chart describes the proposals to be considered at the meeting, the vote required to elect directors and to adopt each other proposal, and the manner in which votes will be counted:
In the election of directors, a nominee for director will be elected if the votes cast for such nominee exceed the votes cast against such nominee. For all other matters approval will require the affirmative vote of a majority of the votes cast.
If you are a beneficial holder with your shares in street name and do not provide specific voting instructions to your broker, the organization that holds your shares will not be authorized to vote your shares, which would result in “broker non-votes” on proposals other than the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm. Any shares represented by “broker non-votes” are not considered votes cast or entitled to vote and therefore will not impact the outcome of such proposals. Accordingly, we encourage you to vote promptly, even if you plan to attend the virtual annual meeting.
ATTENDING THE VIRTUAL ANNUAL MEETING
In order to provide expanded access, improved communication and cost savings for our shareholders and our Company, this year’s Annual Meeting will be a completely “virtual” meeting of shareholders, which will be conducted via live audio webcast. We believe that hosting a virtual meeting will enable more of our shareholders to attend and participate in the meeting since our shareholders can participate from any location around the world with Internet access.
You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/rli2026. Such questions must be confined to matters properly before the Annual Meeting and of general Company concern. Except for shares held in the ESOP, you will be able to vote your shares electronically at the Annual Meeting. To participate, you will need your 16-digit control number included in your proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials. If you are not a shareholder of record but hold shares as a beneficial owner in street name, you may be required to provide proof of beneficial ownership, such as your most recent account statement as of the record date, a copy of the voting instruction form provided by your broker, trustee or other nominee, or other similar evidence of ownership. If your shares are held in the ESOP, you will not be able to vote your shares at the virtual Annual Meeting. Shares held in the ESOP that are not voted before 11:59 p.m. on May 11, 2026, will be voted by the Trustee (as defined herein) in proportion to other ESOP votes cast, unless contrary to applicable law.
The meeting will begin promptly at 9:00 a.m. Central Daylight Time. We encourage you to access the meeting prior to the start time. Online access will open at 8:45 a.m. Central Daylight Time, and you should allow ample time to log in to the meeting webcast and test your computer audio system. We recommend that you carefully review the procedures needed to gain admission in advance.
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during check-in or during the meeting, please call the technical support number that will be posted on the virtual shareholder meeting login page at www.virtualshareholdermeeting.com/rli2026.
A replay of the Annual Meeting will be posted as soon as practical at www.virtualshareholdermeeting.com/rli2026 along with answers to shareholder questions pertinent to meeting matters that are received before and during the Annual Meeting that cannot be answered during the Annual Meeting due to time constraints.
PROXY SOLICITATION
The Company will bear the cost of proxy solicitation. In addition to the use of the mail, proxies may be solicited in person or by telephone, facsimile or other electronic means, by Directors, officers, or employees of the Company. No additional compensation will be paid to such persons for their services. In accordance with the regulations of the SEC and the NYSE, the Company will reimburse banks, brokerage firms, investment advisors and other custodians, nominees, fiduciaries, and service bureaus for their reasonable out-of-pocket expenses for forwarding soliciting material to beneficial owners of the Company’s Common Stock and obtaining their proxies or voting instructions.
ELECTRONIC ACCESS TO PROXY MATERIALS AND ANNUAL REPORT TO SHAREHOLDERS
This Notice of 2026 Annual Meeting and Proxy Statement and the Company’s 2025 Annual Report to Shareholders are available on the Company’s website at www.rlicorp.com.
RLI Corp. 2026 Proxy Statement | 11
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS
The following table includes persons or entities known to the Company who beneficially own more than 5 percent of the Company’s Common Stock as of December 31, 2025 and adjusted for a 2-for-1 stock split as of January 15, 2025:
| | | | |
Name and Address | | Number of Shares | | Percent of Outstanding |
of Beneficial Owner | | Beneficially Owned | | Common Stock |
The Vanguard Group, Inc. (1) |
| 9,129,998 | | 10.01% |
100 Vanguard Boulevard |
| | | |
Malvern, Pennsylvania 19355 |
| | | |
| | | | |
State Street Corporation (2) |
| 8,679,190 | | 9.51% |
One Lincoln Street |
| | | |
Boston, Massachusetts 02111 |
| | | |
| | | | |
Kayne Anderson Rudnick Investment Management LLC (3) |
| 7,297,517 | | 7.9% |
1800 Avenue of the Stars, 2nd Floor |
| |
| |
Los Angeles, CA 90067 |
| |
| |
| | | | |
BlackRock, Inc.(4) |
| 7,093,260 | | 7.8% |
55 East 52nd Street |
| | | |
New York, New York 10055 |
| | | |
| (1) | The information shown is based solely on a Schedule 13G dated February 13, 2024, filed with the SEC by The Vanguard Group, Inc. (“Vanguard”). According to the Schedule 13G, as of December 31, 2023, Vanguard is the beneficial owner of 9,129,998 shares, and has no sole voting power with respect to any shares held, sole dispositive power with respect to 9,013,194 shares, shared voting power with respect to 29,864 shares and shared dispositive power with respect to 116,804 shares. |
| (2) | The information shown is based solely on a Schedule 13G dated January 30, 2024, filed with the SEC by State Street Corporation (“State Street”). According to the Schedule 13G, as of December 31, 2023, State Street is the beneficial owner of 8,679,190 shares, has shared voting with respect to 8,435,088 shares, shared dispositive power with respect to 8,679,190 shares, and no sole voting or sole dispositive power with respect to any shares beneficially held. State Street further disclosed that State Street Global Advisors Trust Company, a subsidiary of State Street, is the beneficial owner of 6,573,228 shares, has shared voting with respect to 6,400,310 shares, shared dispositive power with respect to 6,573,228 shares, and no sole voting or sole dispositive power with respect to any shares beneficially held. |
| (3) | The information shown is based solely on a Schedule 13G dated February 13, 2026, filed with the SEC by Kayne Anderson Rudnick Investment Management, LLC (“Kayne Anderson”). According to the Schedule 13G, as of December 31, 2025, Kayne Anderson is the beneficial owner of 7,297,517 shares, and has sole voting power with respect to 4,611,077 shares, sole dispositive power with respect to 5,915,199 shares, shared voting and share dispositive power with respect to 1,382,318 shares. |
| (4) | The information shown is based solely on a Schedule 13G dated January 26, 2024, filed with the SEC by BlackRock, Inc. (“BlackRock”). According to the Schedule 13G, as of December 31, 2023, BlackRock is the beneficial owner of 7,093,260 shares, has sole voting power with respect to 6,931,444 shares, sole dispositive power with respect to 7,093,260 shares and no shared voting or shared dispositive power with respect to any shares beneficially held. |
12 | RLI Corp. 2026 Proxy Statement
DIRECTORS AND OFFICERS
The following is information regarding beneficial ownership of the Company’s Common Stock by each Director and Named Executive Officer (“NEO”) (whose compensation is disclosed in this Proxy Statement), and the Directors and executive officers of the Company as a group, as of March 16, 2026:
Name of Individual or | | Number of Shares | | Percent of Outstanding |
Number of Persons in Group | | Beneficially Owned (1) | | Common Stock |
Michael E. Angelina (2) (3) |
| 40,279 |
| * |
Todd W. Bryant (4) (6) |
| 234,197 |
| * |
Aaron P. Diefenthaler (4) (5) (6) |
| 189,154 |
| * |
David B. Duclos (2) (3) |
| 25,763 |
| * |
Jeffrey D. Fick (4) (6) | | 237,090 | | * |
Susan S. Fleming (2) (3) |
| 26,504 |
| * |
Jordan W. Graham (2) (3) |
| 131,030 |
| * |
Clark C. Kellogg (3) | | 3,244 | | * |
Craig W. Kliethermes (4) (5) (6) |
| 418,021 |
| * |
Jennifer L. Klobnak (4) (6) |
| 305,202 |
| * |
Paul B. Medini (2) (3) | | 8,589 | | * |
Robert P. Restrepo, Jr. (3) |
| 26,501 |
| * |
Debbie S. Roberts (2) (3) |
| 28,354 |
| * |
Michael J. Stone (3) |
| 434,585 |
| * |
| | | | |
Directors and executive officers as a group (15 persons) (4) (5) (6) |
| 2,222,095 |
| 2.39% |
* Less than 1 percent of Class.
| (1) | Unless otherwise noted, each person has sole voting power and sole dispositive power with respect to the shares reported. |
| (2) | Includes shares held by a bank trustee under an irrevocable trust established by the Company with respect to the RLI Corp. Nonemployee Director Deferred Compensation Plan (“Director Deferred Plan”) for the benefit of the following: Mr. Angelina 14,694 shares; Mr. Duclos 16,035 shares; Dr. Fleming 20,925 shares; Mr. Graham 116,427 shares; Mr. Medini 6,840 shares; and Ms. Roberts 26,605 shares. Each participating Director has no voting or investment power with respect to such shares. |
| (3) | The above number of shares beneficially owned includes 1,749 Restricted Stock Units (“RSUs”) (1,681 RSU’s granted plus dividend equivalents through March 16, 2026) granted to nonemployee Directors on May 13, 2025. Directors can elect to either receive the RSUs as shares of Company stock upon vesting or defer receipt of those shares under the Director Deferred Plan. RSUs have dividend rights that accrue as additional RSUs payable upon vesting or distribution from the Director Deferred Plan. The RSUs will vest, under the terms of the Award, on the date of the Company’s 2026 Annual Meeting. |
| (4) | Includes shares allocated to the NEOs and one other executive officer under the ESOP as of March 16, 2026 with respect to which such persons have sole voting power (pursuant to their ability to direct the Trustee to vote their shares) and no investment power. As of March 16, 2026, the following shares were allocated under the ESOP for the NEOs: Mr. Bryant 65,111 shares; Mr. Diefenthaler 10,417 shares; Mr. Fick 25,929 shares; Mr. Kliethermes 17,332 shares; and Ms. Klobnak 44,309 shares. |
| (5) | Includes shares allocated to the NEO’s and one other executive officer in which shares are held by a bank trustee under an irrevocable trust established by the Company with respect to the RLI Corp. Executive Deferred Compensation Plan (“Deferred Plan”) for the benefit of the following NEOs: Mr. Diefenthaler 3,174 shares; and Mr. Kliethermes 24,199 shares. Each participant has no voting or investment power with respect to such shares. |
| (6) | Includes shares that may be acquired by NEOs, and one other executive officer within 60 days after March 16, 2026. Under the 2015 and 2023 LTIP (as described herein), upon the exercise of outstanding stock options as follows for the NEOs: Mr. Bryant 98,600 shares; Mr. Diefenthaler 103,800 shares; Mr. Fick 69,100 shares; Mr. Kliethermes 232,500 shares; and Ms. Klobnak 160,575 shares. |
The information with respect to beneficial ownership of Common Stock of the Company is based on information furnished to the Company by each individual included in the table.
RLI Corp. 2026 Proxy Statement | 13
PROPOSAL ONE: ELECTION OF DIRECTORS
GENERAL
At this year’s Annual Meeting, 10 Directors are to be elected, each to hold office for a one-year term expiring at the 2027 Annual Meeting and until such Director’s successor is elected and qualified or until such Director’s earlier death, resignation, or removal. Unless otherwise instructed, the shares represented by a signed proxy card will be voted for the election of each of the 10 nominees named below. The affirmative vote of a majority of the votes cast is required for the election of each Director. Votes will be tabulated by an Inspector of Election appointed at the Annual Meeting. Shares may be voted for, against or abstained from, each nominee. Cumulative voting for the Directors is not permitted under the Company’s Amended and Restated Certificate of Incorporation.
NOMINEES
Dr. Susan S. Fleming, Ms. Debbie S. Roberts and Messrs. Michael E. Angelina, David B. Duclos, Jordan W. Graham, Clark C. Kellogg, Craig W. Kliethermes, Paul B. Medini, Robert P. Restrepo, Jr., and Michael J. Stone, each a current Director, are standing for election. Each is nominated to serve for a one-year term expiring at the 2027 Annual Meeting.
The Board of Directors has no reason to believe that any nominee will be unable to serve if elected. In the event that any nominee shall become unavailable for election, the shares represented by a proxy will be voted for the election of a substitute nominee selected by the persons appointed as proxies and recommended by the Board, unless the Board should determine to reduce the number of Directors pursuant to the Company’s Bylaws or allow the vacancy to stay open until a replacement is designated by the Board.
The Board of Directors recommends that the shareholders vote “FOR” the election of all 10 nominees listed below.
David B. Duclos | |
Age: 68 Director since: 2017 Chairman of the Board Committees: ● Chair, Human Capital & Compensation ● Nominating & Corporate Governance | BACKGROUND Mr. Duclos retired as CEO of QBE, North America in July 2016, which he was appointed to in April 2013. He retired December 2012 from XL Group, having served as Chief Executive of XL Insurance from January 2008 through December 2011. Mr. Duclos joined XL in October 2003 and served in several senior level underwriting and field operations roles, including running XL’s global specialty business. From September 1999 through July 2003, Mr. Duclos was the President, Small Business Group of Kemper Insurance Company. Mr. Duclos was employed at Cigna Corporation from July 1979 through July 1999 in various underwriting and managerial positions. The positions included Branch Underwriting, Marketing Manager, Branch Executive, AVP-Field Operations, Region President and Specialty Business Leader. He previously served as a Director of RLI Corp. from August 16, 2012 until February 26, 2013. |
QUALIFICATIONS Mr. Duclos brings over 45 years of experience with various companies related to the insurance and reinsurance industries. Mr. Duclos has broad global reinsurance and insurance expertise, and executive management experience. Mr. Duclos has a Bachelor’s degree in Business Administration from Eastern Illinois University and is a graduate of the Advanced Insurance Executive Education Program at the Wharton School of the University of Pennsylvania. | |
OTHER COMPANY BOARD SERVICE Mr. Duclos serves as Non-Executive Chair of Westfield International Specialty Managing Agency (Syndicate 1200); Chair of the Board of Directors of Brightway Insurance Agency; and a Director of Maguire Academy of Insurance and Risk Management at Saint Joseph’s University. He is the former Chair of QBE Group subsidiary board, QBE Capital, Ltd., a former member of the board and served as Chairman of the American Association of Insurance Services, a former Director of QBE Latin American Insurance Holdings Limited, formerly known as QBE Emerging Markets Holdings Limited and former non-executive Chairman of Lloyd’s Global Network, an advisory Board of Lloyd’s of London. | |
14 | RLI Corp. 2026 Proxy Statement
Michael E. Angelina | |
Age: 59 Director since: 2013 Independent Director Committees: ● Chair, Audit ● Finance & Risk | BACKGROUND Mr. Angelina is an Executive in Residence of the Maguire Academy of Insurance and Risk Management at Saint Joseph’s University since January 2021. Prior to this position he was the Executive Director of the Maguire Academy where he led the Risk Management and Insurance program within the Haub School of Business and coordinated the Maguire Academy activities. From June 2005 to April 2012, Mr. Angelina was the Chief Risk Officer and Chief Actuary for Endurance Specialty Holdings, Ltd., where he was a functional leader of pricing, reserving and risk management and the leader of the Enterprise Risk Management Initiative. From January 2000 to June 2005, Mr. Angelina was the Managing Principal of Tillinghast-Towers Perrin where he led the Philadelphia office and co-led the Tillinghast Asbestos practice. |
| QUALIFICATIONS Mr. Angelina has significant insurance industry experience including his extensive risk management background. Mr. Angelina has a Bachelor’s degree in Mathematics from Drexel University. |
| OTHER COMPANY BOARD SERVICE Mr. Angelina serves on the board of directors of Hagerty Reinsurance, Ltd. and CoAction Specialty. He formerly served as Chairman of the Board for Hagerty, Inc (NYSE: HGTY), former director of QBE Capital, Ltd., former member of American Academy of Actuaries Committee on Property & Liability Financial Reporting, and former Chair of AAA Casualty Practice Council. |
Susan S. Fleming | |
Age: 55 Director since: 2018 Independent Director Committees: ● Chair, Finance & Risk ● Audit | BACKGROUND Dr. Fleming is a former Senior Lecturer, Cornell University and former Partner, Capital Z Financial Services Partners, L.P. From 2009 through 2018, she served as a Senior Lecturer of management and entrepreneurship at the School of Hotel Administration and the Johnson Graduate School of Management of Cornell University. From 2004 through 2009, she pursued a Masters and PhD from Cornell University. From 1998 until December 2003, she was Partner and Principal of Capital Z Financial Services Partners, a private equity fund focused on the financial services industry. From 1994 until December 2003, she served as Vice President, Insurance Partners Advisors, L.P., a private equity fund focused on the insurance and healthcare industries. From 1992 until 1994 she was an analyst with Morgan Stanley & Co. |
| QUALIFICATIONS With her years of experience in private equity, investment banking, and education, Dr. Fleming brings expertise in financial services, corporate finance, mergers and acquisitions, and organizational leadership to our Board. Dr. Fleming holds a Bachelor’s Degree in Economics and Asian Studies from the University of Virginia and a Master’s Degree and PhD in Management and Organizations from Cornell University. |
| OTHER COMPANY BOARD SERVICE Dr. Fleming currently serves on the board of directors for Virtus Investment Partners, Inc. (NYSE: VRTS). She was formerly a Director of Endurance Specialty Holdings, Ltd.; Quanta Capital Holdings, Ltd.; Ceres Group, Inc.; PXRE Group, Ltd.; Universal American Financial Group, Inc; and Fleming Reinsurance Ltd. |
RLI Corp. 2026 Proxy Statement | 15
Jordan W. Graham | |
Age: 65 Director since: 2004 Independent Director Committees: ● Nominating & Corporate Governance ● Audit | BACKGROUND Mr. Graham has been Managing Director with Quotient Partners since May 2011, providing business strategy and merger/acquisition advisory services to financial services, digital media, internet, and information services companies. From 2010 to 2011, he served as President of FICO Consumer Services and Executive Vice President of Credit Scoring and Predictive Analytics at Fair Isaac, Inc. From 2007 to 2010, Mr. Graham was Managing Director and Head of North America Business Development for the Global Transaction Services (GTS) Division of Citigroup responsible for strategic planning, global partnerships, and acquisitions. For the preceding two years, he was retained as a full-time consultant to the CEO of Citigroup GTS and provided strategy and acquisition advisory services. From 1998 to 2004, he was an executive with Cisco Systems, serving as Vice President of the Internet Business Solutions Group, Services Industries Strategy Consulting, leading internet business strategy consulting practices for the financial services, healthcare, energy, and media/entertainment industries globally. Previously, he was Managing Director and Global Head of Cisco’s Financial Services Industry Consulting Practice providing internet business strategy services to CXO level executives in Global 500 insurance, banking, and securities firms. He has also been the CEO of two successful venture capital-backed businesses, a financial services technology company and an internet cloud-based solutions provider, and an advisor to the Board of Directors of Hagerty, Inc. |
| QUALIFICATIONS Mr. Graham has strong financial services, strategy, merger/acquisition, and advisory experience as well as deep information technology and digital/internet background. He has over 30 years of experience working both in and providing information technology-based products and services to the financial services industry globally. Mr. Graham has a Bachelor’s degree in Business Entrepreneurship from the University of Southern California. |
| OTHER COMPANY BOARD SERVICE Mr. Graham currently serves on the board of directors of Yiftee, Inc. Mr. Graham previously served as a Director and member of the Investment Committee for Securitas Capital, a SwissRe and Credit Suisse backed private equity fund investing in insurance and risk-related ventures. |
Clark C. Kellogg | |
Age: 64 Director since: 2024 Independent Director Committees: ● Human Capital & Compensation ● Finance & Risk | BACKGROUND Mr. Kellogg is a basketball commentator at CBS Sports. At CBS, he has been a lead studio and game analyst since 1997. Mr. Kellogg spent a total of thirty-two years with the Indiana Pacers; most recently as Vice Present of Player Relations, and also as a broadcaster and player. |
| QUALIFICATIONS Mr. Kellogg brings over 30 years of experience, expertise, and background in customer experience matters as well as executive management experience. He has a Bachelor’s degree in Marketing from Ohio State University. |
| OTHER COMPANY BOARD SERVICE Mr. Kellogg currently serves on the Board of Directors of First Merchants Bank (Nasdaq: FRME), where he serves on the Audit and Compensation and Human Resources Committees, and the Columbus Foundation Governing Committee. He previously served on The Ohio State Alumni Association Board and The Ohio State Board of Trustees. |
16 | RLI Corp. 2026 Proxy Statement
Craig W. Kliethermes | |
Age: 61 Director since: 2021 Management Director Committees: ● Finance & Risk | BACKGROUND Mr. Kliethermes has been the President and Chief Executive Officer of the Company since January 1, 2022 and was President and Chief Operating Officer of the Company in 2021. From 2016 until 2021, Mr. Kliethermes was the President and Chief Operating Officer of the Company’s insurance subsidiaries and from 2013 until 2016 he was Executive Vice President, Operations of the Company’s insurance subsidiaries. Mr. Kliethermes joined the Company in 2006. Prior to joining RLI, he served in leadership roles with Lockton Companies, GE Insurance/Employers Reinsurance and John Deere Insurance Company. |
| QUALIFICATIONS Mr. Kliethermes has over 40 years of industry experience including over 20 years at the Company where, in his current role, he is responsible to ensure the effective and profitable operations of the Company’s business. He has a Bachelor’s degree in Mathematics from Maryville University, a Fellow of the Casualty Actuarial Society; a member of the American Academy of Actuaries; and a member of the Chartered Property & Casualty Underwriters Society. |
| OTHER COMPANY BOARD SERVICE Mr. Kliethermes serves as a Director of the American Property and Casualty Insurance Association; Chairman of the American Property and Casualty Insurance Association Executive Advisory Board; a Director of Maguire Academy of Insurance and Risk Management at Saint Joseph’s University; a Director of The Institutes, and a Director of the Heart of Illinois Big Brothers Big Sisters. Mr. Kliethermes previously served as a Director of Maui Jim, Inc. |
Paul B. Medini | |
Age: 68 Director since: 2022 Independent Director Committees: ● Audit ● Human Capital & Compensation | BACKGROUND Mr. Medini retired in 2020 as Sr. Vice President and Chief Accounting Officer of Chubb Ltd., a position held for 17 years. Prior to his role at Chubb, Mr. Medini spent 24 years at PriceWaterhouseCoopers ultimately serving as partner in the firm’s New York property & casualty insurance practice. |
| QUALIFICATIONS Mr. Medini has extensive knowledge in accounting and auditing in the property and casualty insurance and reinsurance industries and brings to the Board in-depth experience of financial accounting controls, SEC reporting, insurance-related M&A execution and integration, and statutory and GAAP insurance accounting. He was a certified public accountant and has a Bachelor’s and Master’s degree in Business Administration from Pace University. |
| OTHER COMPANY BOARD SERVICE Mr. Medini serves as Chairman of the Audit Committee on the board of directors of ABR Reinsurance Capital Holdings Ltd. |
RLI Corp. 2026 Proxy Statement | 17
Robert P. Restrepo, Jr. | |
Age: 75 Director since: 2016 Independent Director Committees: ● Chair, Nominating & Corporate Governance
| BACKGROUND Mr. Restrepo retired in May 2015 as CEO and President of State Auto Insurance Companies and as Chairman in December 2015. Mr. Restrepo joined and was appointed Chairman, CEO and President of State Auto in 2006. From 2005 to 2006, Mr. Restrepo served as Senior Vice President, Insurance Operations of Main Street America Group and was responsible for personal lines, commercial lines, bonds, claims, marketing, information technology and customer service. From 1998 to 2003, Mr. Restrepo was the President and CEO, Property & Casualty of Allmerica Financial. From 1996 to 1998, Mr. Restrepo was the President and CEO, Personal Lines at Travelers Property & Casualty and was responsible for the newly combined personal property and casualty operations of Travelers and Aetna. In 1972, Mr. Restrepo joined Aetna Life & Casualty and held various managerial positions through 1996, including positions in marketing, technology, and field management, and ended as Senior Vice President, Personal Lines. |
| QUALIFICATIONS Mr. Restrepo brings over 40 years of experience with various companies related to the insurance industries. He has extensive insurance expertise, executive management, finance, regulatory, and risk management experience. He has a Bachelor’s degree in English from Yale University. |
| OTHER COMPANY BOARD SERVICE Mr. Restrepo serves on the board of directors of Enact Holdings, Inc. (Nasdaq: ACT), Genworth Financial (NYSE: GNW), and the Larry H. Miller Group. Mr. Restrepo is a former Director of Majesco; Nuclear Electric Insurance Limited; Big I Reinsurance Company; Property Casualty Insurers Association of America (now known as American Property Casualty Insurance Association); Insurance Information Institute; and The Institutes. |
Debbie S. Roberts | |
Age: 61 Director since: 2018 Independent Director Committees: ● Human Capital & Compensation ● Nominating & Corporate Governance | BACKGROUND Ms. Roberts retired as Executive Vice President and Chief Operations Officer of Panera Bread Co. in June 2025, where she served since September 2020. From 2016 until her retirement in 2018, Ms. Roberts was the President East Zone at McDonald’s Corporation. From 2014 to 2016, Ms. Roberts served as President Northeast Zone at McDonald’s Corporation. In her 28-year career at McDonald’s Corporation, she gained increasingly progressive responsibilities in the areas of accounting, marketing and operations including roles as Sr. Vice President, Restaurant Support Officer-East, President Northeast Zone and President East Zone being responsible for $18.7 billion in sales and 7,000 restaurants. |
| QUALIFICATIONS Ms. Roberts brings over 30 years of experience, expertise, and background in accounting matters as well as various executive management experience. Ms. Roberts holds a Bachelor’s degree in Accounting from the University of Illinois. |
| OTHER COMPANY BOARD SERVICE Ms. Roberts is a former director of Krispy Kreme, Inc. (Nasdaq: DNUT), Women’s Foodservice Forum, The American Red Cross University of Illinois Champaign Alumni, and Catalyst. |
18 | RLI Corp. 2026 Proxy Statement
Michael J. Stone | |
Age: 77 Director since: 2012 Independent Director Committees: ● Finance & Risk ● Human Capital & Compensation | BACKGROUND Mr. Stone is the former President and Chief Operating Officer of the Company’s principal insurance subsidiaries from January 2002 until his retirement in December 2015. Mr. Stone joined the Company in May 1996 and held various executive officer positions. From 1977 to May 1996, Mr. Stone held various managerial and executive officer positions with Travelers Insurance Group. |
| QUALIFICATIONS Mr. Stone has nearly 40 years of insurance industry expertise and 19 years at the Company where he was responsible for the overall direction of the Company’s principal insurance subsidiaries. He has a Bachelor’s degree in Political Science from Bellarmine College, and received his Law degree, magna cum laude, from the University of Louisville. |
| OTHER COMPANY BOARD SERVICE Mr. Stone serves on the board of directors of SILAC, Inc. He is also a former member of Board of Directors of Kairos Acquisition Corp., former Chairperson of UnityPoint Health Board of Directors, and former member of the Bellarmine University Board of Trustees. |
CORPORATE GOVERNANCE AND BOARD MATTERS
CORPORATE GOVERNANCE PRINCIPLES
The Company is committed to having sound corporate governance principles that are designed to ensure that the Board exercises reasonable business judgment in discharging its obligations to the Company and its shareholders. Corporate governance practices also help to ensure that full and transparent disclosures are made to the Company’s shareholders and the SEC.
The Company’s published Corporate Governance Guidelines, which are publicly available on the Company’s website under the Investors section at www.rlicorp.com, outline the Directors’ responsibilities, which include attendance at shareholder, Board, and committee meetings. All 10 Directors then in office attended the 2025 Annual Meeting of Shareholders and were available to respond to appropriate questions from shareholders.
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
The Company has developed an orientation process for new Directors and encourages new Directors to attend a Director seminar in their first year as a Director. Directors are also required to maintain the necessary level of expertise to perform their responsibilities and to help ensure that they remain currently informed on corporate governance, financial and accounting practices, ethical issues for Directors and management, industry related topics, and similar matters. The sources through which Directors acquire and maintain this knowledge include webinars, websites, periodicals, newsletters, blog posts, director education programs, conferences, seminars, and director educational and compliance presentations by the Company. Service on another public company or insurance company board of directors is another means to gain exposure and insight on such matters. Directors are encouraged to attend annually a forum, conference or conferences that will contribute to their performance on the Company Board and the Company reimburses Directors for the reasonable costs of attending Director education programs. The Nominating & Corporate Governance Committee annually reviews Director education to ensure all Directors are receiving regular education on appropriate topics.
DIRECTOR INDEPENDENCE
The Board is required to affirmatively determine the independence of each Director and to disclose such determination in the Proxy Statement for each Annual Meeting of Shareholders of the Company. The Board has established guidelines, which are set forth below, to assist it in making this determination, which incorporate all the NYSE independence standards. Only Independent Directors may serve on the Company’s Audit Committee, Human Capital & Compensation Committee, and Nominating & Corporate Governance Committee.
It is the policy of the Board of Directors of the Company that a majority of its members be Independent, which is also a requirement for listing on the NYSE. To be considered independent under the NYSE Listing Standards, the Board must affirmatively determine that a Director or Director nominee (collectively referred to as “Director”) has no material relationship with the Company (directly or as a partner, shareholder or officer of an organization that has a relationship with the Company), and also meets other specific independence tests. The Board examines the independence of each of its members once per year, and again if a member’s outside affiliations change substantially during the year.
RLI Corp. 2026 Proxy Statement | 19
The Board has established the following categorical standards, incorporating the NYSE’s independence standards to assist it in determining if a Director is “Independent”:
(a) | A Director will not be “Independent” if: |
| (i) | the Director is, or has been within the last three years, an employee of RLI, or an immediate family member of the Director is, or has been within the last three years, an executive officer of RLI; |
| (ii) | the Director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from RLI, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); |
| (iii) | (A) the Director is a current partner or employee of a firm that is RLI’s internal or external auditor; (B) the Director has an immediate family member who is a current partner of such firm; (C) the Director has an immediate family member who is a current employee of such firm and personally works on RLI’s audit; or (D) the Director or an immediate family member was within the last three years a partner or employee of such a firm and personally worked on RLI’s audit within that time; |
| (iv) | the Director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of RLI’s present executive officers at the same time serves or served on that company’s compensation committee; or |
| (v) | the Director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, RLI for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2 percent of such other company’s consolidated gross revenues. |
(b) | The following commercial and charitable relationships will not be considered to be material relationships that would impair a Director’s independence: |
| (i) | if a Director, or an immediate family member of the Director, is an executive officer, Director, employee, or holder of an equity interest of a company that has made payments to, or received payments from, RLI for property or services in an amount which, in the last fiscal year, does not exceed the greater of $1 million, or 2 percent of such other company’s consolidated gross revenues; |
| (ii) | if a Director, or an immediate family member of the Director, is an executive officer, Director, employee, or holder of an equity interest of a company that is indebted to RLI, or to which RLI is indebted, and the total amount of either company’s indebtedness to the other does not exceed the greater of $1 million, or 2 percent of such other company’s total consolidated assets; |
| (iii) | if a Director, or an immediate family member of the Director, is an executive officer, Director, or employee of a company in which RLI owns an equity interest, and the amount of RLI’s equity interest in such other company does not exceed the greater of $1 million, or 2 percent of such other company’s total shareholders’ equity; |
| (iv) | if a Director, or an immediate family member of the Director, is a holder of an equity interest of a company of which a class of equity security is registered under the Exchange Act and in which RLI owns an equity interest; |
| (v) | if a Director, or an immediate family member of the Director, is an executive officer, Director, employee, or holder of an equity interest of a company that owns an equity interest in RLI; and |
| (vi) | if a Director, or an immediate family member of the Director, serves as an officer, Director or trustee of a tax-exempt organization, and the contributions from RLI to such tax-exempt organization in the last fiscal year do not exceed the greater of $1 million, or 2 percent of such tax-exempt organization’s consolidated gross revenues. (RLI’s automatic matching of employee charitable contributions will not be included in the amount of RLI’s contributions for this purpose.) |
(c) | For relationships not covered by the standards in subsection (b) above, the determination of whether the relationship is material or not, and therefore whether the Director would be “Independent” or not, shall be made by the Directors who satisfy the independence standards set forth in subsections (a) and (b) above. RLI is required to explain in its proxy statement the basis for any Board determination that a relationship was immaterial, despite the fact that it did not meet the categorical standards of immateriality set forth in subsection (b) above. |
BOARD INDEPENDENCE STATUS
The following table identifies the independence status of our Directors who served on the Board during 2025:
Director | Independent | Management |
Michael E. Angelina | ● | |
David B. Duclos | ● | |
Susan S. Fleming | ● | |
Jordan W. Graham | ● | |
Clark C. Kellogg | ● | |
Craig W. Kliethermes | | ● |
Paul B. Medini | ● | |
Robert P. Restrepo, Jr. | ● | |
Debbie S. Roberts | ● | |
Michael J. Stone | ● | |
20 | RLI Corp. 2026 Proxy Statement
The following relationships were reviewed in connection with determining Director independence but were determined to not be material relationships and to not affect such person’s independence under the Board independence standards:
| ● | Mr. Angelina is Chairman of the Board of Hagerty Reinsurance Ltd. (“Hagerty Re”) and former Chairman of the Board and Chairman of the Board of Hagerty, Inc. (“Hagerty”). Hagerty Re has reinsurance arrangements with the Company’s principal insurance subsidiaries. Hagerty Insurance Agency, a subsidiary of Hagerty, also produces insurance business for the Company’s principal insurance subsidiaries. Neither arrangement exceeds the greater of $1 million or 2% of Hagerty’s consolidated gross revenues. |
DIRECTOR EVALUATION PROCESS
To ensure that thorough attention is given to individual and collective Directors’ performance and optimizing the composition of our Board, the Board and Committees utilize an annual evaluation process. Each Director completes an evaluation that assesses the performance of the Committees on which the Director serves and the Board as a whole. In addition, Directors are annually asked to complete a self-evaluation on individual performance, and members of senior management evaluate the Board. Finally, periodically Directors are asked to complete a peer-evaluation on the contributions and performance of each other Director. A peer evaluation was last conducted in 2023. The annual Board Evaluation focuses on board processes, policies, effectiveness, strategy, and individual Director performance. Each Directors’ individual performance and each Committee’s performance in relationship to its respective Charter, effectiveness, functionality, areas of improvement and overall performance are also considered. This process is handled by the Nominating & Corporate Governance Committee.
Further, annually the Chairman of the Board meets with each Director to discuss, among other matters, (1) Director and Board performance; (2) recommendations to improve meetings; (3) Committees’ structure and leadership; (4) the effectiveness of the Chairman of the Board; (5) whether key topics are sufficiently considered by the Board; (6) support from management; (7) succession planning; and (8) compensation. The Chairman of the Board provides an overview of discussions with the Nominating & Corporate Governance Committee.
Based on the cumulative results of each Director’s overall performance, the Nominating & Corporate Governance Committee reviews and evaluates the Board candidates and their respective qualifications in detail to determine if it is in the best interest of the Company and its shareholders to nominate each Director to stand for election.
DIRECTOR NOMINATIONS
The Nominating & Corporate Governance Committee of our Board considers Director candidates based upon a number of qualifications. As minimum qualifications, a nominee should have:
| ● | A reputation for the highest professional and personal ethics and values, fairness, honesty, and good judgment; |
| ● | A significant breadth of experience, knowledge, and abilities to assist the Board in fulfilling its responsibilities; |
| ● | Been in a generally recognized position of leadership in his or her field of endeavor; and |
| ● | A commitment to enhancing shareholder value. |
A nominee should not have a conflict of interest that would impair the nominee’s ability to represent the interests of the Company’s shareholders and fulfill the responsibilities of a Director.
The Nominating & Corporate Governance Committee conducts an annual assessment of the composition of the Board and its committees. In its annual assessment and when conducting a director search, the Nominating & Corporate Governance Committee reviews the appropriate skills and characteristics required of Board members with a goal of establishing diversity among directors reflecting backgrounds, experiences and perspectives which may include a range of characteristics. The Nominating & Corporate Governance Committee is committed to seek such balance in each director search it undertakes through a third-party search firm. Annually, the Nominating & Corporate Governance Committee will review this Policy and assess its effectiveness in bringing forth Board candidates from a variety of backgrounds that meet the qualifications and have the capabilities to provide strategic direction, governance, and oversight to the Company.
The Nominating & Corporate Governance Committee relies upon recommendations from a wide variety of its business contacts, including current executive officers, Directors, and shareholders as sources for potential director candidates, and may also utilize third-party search firms. The Nominating & Corporate Governance Committee will consider qualified director candidates recommended by shareholders assuming the appropriate biographical and background material (including qualifications) is provided for candidates recommended by shareholders. The Nominating & Corporate Governance Committee will evaluate those candidates by following substantially the same process and applying substantially the same criteria as for candidates recommended by other sources. Shareholders may also nominate director candidates directly pursuant to the procedures set forth in our Bylaws and referenced under Shareholder Proposals on page 55.
CODE OF CONDUCT
The Company has adopted a Code of Conduct, which is designed to help Directors, officers, and employees maintain ethical behavior and resolve ethical issues in an increasingly complex global business environment. The Code of Conduct applies to all Directors, officers, and employees, including specifically the Chief Executive Officer, Chief Financial Officer, Controller, Chief Operating Officer, Chief Legal Officer, and any other employee with any responsibility for the preparation and filing of
RLI Corp. 2026 Proxy Statement | 21
documents with the SEC. The Code of Conduct covers topics including, but not limited to, ethical behavior, conflicts of interest, corporate opportunities, confidentiality of information, fair dealing, protection and proper use of Company assets, and compliance with laws and regulations. The Company conducts an annual compliance acknowledgement completed by all Directors, officers, and employees to ensure compliance with the Code of Conduct as well as other Company policies. A copy of our Code of Conduct is available at the Company’s website under the Investors section at www.rlicorp.com. Any amendments to the Code of Conduct or waiver that applies to a Director or executive officer will be posted on our website.
INSIDER TRADING POLICY
All Directors, Officers and employees are subject to the Company’s
The Company’s Insider Trading Policy also prohibits Directors, executive officers, and other officers of the Company at the level of Vice President or higher from engaging hedging transactions or using financial instruments to reduce the risk of holding Company stock including, without limitation, short sales, or put or call options. In addition, it prohibits Directors and executive officers from holding Company securities in a margin account or pledging Company securities as collateral for a loan. Officers of the Company at the level of Vice President or higher who are not executive officers may hold in margin accounts or pledge as collateral for loans a limited number of Company securities, subject to certain preclearance procedures. Other employees of the Company are not prohibited from hedging or pledging Company shares, but may not enter into such a transaction during a Company blackout period established prior to each quarterly earnings release (and which may also be established in connection with other transactions or events).
SHAREHOLDER AND INTERESTED PARTIES COMMUNICATIONS
Any shareholder or other interested party who desires to communicate with the Board’s Chairman of the Board, the Board’s Independent Directors, or any of the other members of the Board of Directors may do so electronically by sending an email to the following address: chairman@rlicorp.com. Alternatively, a shareholder or other interested party may communicate with the Chairman of the Board or any of the other members of the Board by writing to: Chairman of the Board, RLI Corp. 9025 N. Lindbergh Drive, Peoria, Illinois 61615. Communications may be addressed to the Chairman of the Board, an individual Director, a Board Committee, the Independent Directors, or the full Board. Communications received by the Chairman of the Board will then be distributed to the appropriate directors. Solicitations for the sale of merchandise, publications, or services of any kind will not be forwarded to the directors.
COMPANY POLICY ON RELATED PARTY TRANSACTIONS
The Company recognizes that related party transactions present a heightened risk of conflicts of interest and/or improper valuation (or the perception thereof) and therefore has adopted a written Related Party Transaction Policy, which shall be followed in connection with all related party transactions involving the Company. The Related Party Transaction Policy generally requires review and approval by the Nominating & Corporate Governance Committee prior to the original or renewal effective date for all transactions valued in excess of $50,000 to be entered into between the Company and its Directors, officers, shareholders owning in excess of 5 percent of the Common Stock of the Company, and their family members and affiliates. The Policy also provides that related party transactions in the form of ordinary course business transactions meeting specific conditions are deemed ratified or approved and do not require Committee or Board pre-approval. In 2025, the Nominating/Corporate Governance Committee did not approve any related party transactions, but has previously approved one related party transaction between the Company and SS&C Technologies Holdings, Inc. (“SS&C”) as described immediately below
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since January 1, 2025, the transactions, or series of similar transactions to which the Company was a party and in which any Director, executive officer, or holder of more than 5 percent of the Common Stock of the Company (or any of their immediate family members) had a direct or indirect material interest are set forth below:
In 2013, the Company entered into a contract with SS&C to license SS&C’s off-the-shelf investment portfolio accounting software for an annual amount based on the value of the Company’s investment portfolio. The Company’s agreement with SS&C is solely related to the use of the software product and related transaction processing services which provide operational support and are not advisory in nature. On October 1, 2018, the Company renewed the SS&C contract for an
22 | RLI Corp. 2026 Proxy Statement
additional five-year term. The contract with SS&C was approved after a request for proposal process that considered multiple vendors against the Company’s needs, the levels of service offered, and costs. In 2019, the Company entered into an addendum to the contract with SS&C to provide upgrades and enhancements to its software. The addendum commenced on July 1, 2019 for a five-year term. In 2024, the Company’s contract with SS&C automatically renewed absent notice to terminate. In advance of said renewal, the Committee reviewed and reaffirmed the Company’s transaction with SS&C as being on terms reasonably comparable to those that could be obtained in arm’s length dealings with an unrelated third-party. SS&C does not provide advisory services to the Company nor does it earn a commission from the Company. The Company paid SS&C $599,316 in 2025.
The Chairman and CEO of SS&C is the brother of Mr. Stone, a Director, and former Chief Operating Officer of the Company’s principal insurance subsidiaries. Neither Mr. Stone nor the Chairman and CEO of SS&C were involved in negotiations, contract review, term-setting, final decisions, or any other aspect of the process for the initial contract, renewal, or addendum.
This transaction falls within the purview of the Related Party Transaction Policy described in the previous paragraphs and was subject to review and approval by the Nominating & Corporate Governance Committee pursuant to that Policy.
In addition, our external portfolio managers may at times invest in securities issued by SS&C. Such securities are purchased in ordinary course, arms-length transactions and the Company is not directly involved in the investment decision.
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), requires the Company’s directors, executive officers, and beneficial owners of more than 10 percent of the Common Stock of the Company to file with the SEC certain reports regarding their ownership of Common Stock or any changes in such ownership.
Based solely on its review of the copies of such reports received by it, and/or written representations from certain reporting persons, the Company believes that during the year ended December 31, 2025, the reporting persons have complied with all filing requirements of Section 16(a), except that a Form 4 was not timely filed for: 1) Mr. Paul Medini, Dr. Susan Fleming, and Ms. Debbie Roberts, each Directors, for a transactions occurring on January 31, 2025 due to an inadvertent administrative oversight, but each such Form 4 was subsequently filed on February 6, 2025; and 2) Mr. Seth Davis, Vice President & Controller, for a transaction occurring on August 1, 2025, due to an inadvertent administrative oversight, but such Form 4 was subsequently filed on August 11, 2025.
BOARD’S ROLE IN RISK OVERSIGHT
In 2025, the Company’s Finance & Risk Committee had responsibility for overall oversight of the Company’s enterprise risk management (“ERM”) program. The Finance & Risk Committee also had oversight for specific areas of ERM, as do the other Board committees, as specified in their respective charters, which can be found at the Company’s website at www.rlicorp.com, and which are listed in the table below. The chart and paragraphs below reflect the Company’s areas of ERM oversight in 2025.
Board Committee | Areas of ERM oversight |
Finance & Risk | Overall ERM oversight Underwriting Market & Growth Information Technology Cybersecurity Investment Capital |
Human Capital & Compensation | Talent development Management succession Culture Compensation and benefits |
Nominating & Corporate Governance | Corporate governance matters Regulatory and legislative |
Audit | Catastrophe exposure Reserving Reinsurance Business Continuity Third Party Management |
RLI Corp. 2026 Proxy Statement | 23
Annually, the Finance & Risk Committee ensures that processes are in place to enable Board oversight of each area of ERM by conducting an ERM risk mapping review. For each ERM risk focus area, the mapping review details the primary Board committee responsible for oversight, considers management reports that are provided to Board committees, and the frequency at which such reports are provided. The mapping review also provides a summary description of each risk, mitigating factors, and means by which each risk is monitored by the Company.
The Board’s risk oversight is achieved through management assessing and reporting on risk to Board Committees, which Committees in turn report out to the full Board at each meeting. Annually, the Company provides a Company-wide ERM report to the full Board, which is periodically updated for each risk to the respective Board committee identified below. The Chief Executive Officer and other members of senior management have responsibility for assessing and managing the Company’s risk exposure through a management Risk Committee. The management Risk Committee meets quarterly to reassess its risk environment and relies on the expertise of outside advisors with respect to several risks to anticipate future threats and trends.
In addition, the Company’s Internal Audit department regularly assesses key risks in its audits and reports to the Audit Committee and the full Board. Management, in turn, reports to the Board Committees identified above on specific risks. In addition to regular reports from management related to areas of overall ERM, an in-depth report is provided on each area of ERM oversight on a biennial basis, and if appropriate, in a joint meeting with the Committee responsible for oversight of the selected topic.
CYBERSECURITY RISK MANAGEMENT
Oversight of the cybersecurity ERM focus area is the responsibility of the Finance & Risk Committee. The Company’s Vice President, Operations, Vice President, Information Technology, and the head of the Company’s IT Security department, who also serves as the Company’s Chief Information Security Officer (CISO), present quarterly to the Finance & Risk Committee on technology matters including information technology, cybersecurity, and artificial intelligence risks and the Company’s strategies and actions to assess and manage those risks. Management oversight of cybersecurity risks is provided through the management Risk Committee. Among its responsibilities, the Risk Committee identifies the Company’s material risks and reviews the strategies, processes and controls in place to facilitate the understanding, identification, prevention, measurement, reporting and mitigation of those risks. The Company’s IT Security department, which operates under general oversight of the Company’s CISO, is responsible for day-to-day assessment and management of cybersecurity risks, including efforts to prevent and, if necessary, mitigate the effects of a cybersecurity incident. For more information on our cybersecurity risk management, please see our Annual Report on Form 10-K filed February 21, 2025.
COMMITTEES OF THE BOARD OF DIRECTORS
In 2025, the Board had four standing committees: Audit, Human Capital & Compensation, Finance & Risk, and Nominating & Corporate Governance. The Audit, Human Capital & Compensation and Nominating & Corporate Governance Committees are composed solely of Independent Directors in compliance with the Company’s requirements and the NYSE Listing Standards. The Nominating & Corporate Governance Committee annually evaluates both Committee members and Committee Chairs, and rotates members as deemed necessary. At his discretion, the Chairman of the Board may attend any or all Committee meetings. All committees meet at least quarterly and also hold informal discussions from time to time. Charters for each Committee are available on the Company’s website under the Investors section at www.rlicorp.com.
COMMITTEE MEMBERSHIP
| | | | | | | | | | |
| | | | | | Human Capital & | | Nominating & | | Finance & |
Director | | Board | | Audit | | Compensation | | Corporate Governance | | Risk |
Michael E. Angelina |
| · |
| Chair | | | | |
| · |
David B. Duclos |
| Chair | | |
| Chair | | · | | |
Susan S. Fleming |
| · | | · | | |
| | | Chair |
Jordan W. Graham |
| · | | · |
| | | · | | |
Clark W. Kellogg | | · | | | | · | | | | · |
Craig W. Kliethermes |
| · | | | | | |
| · | |
Paul B. Medini | | · | | · | | · | | | | |
Robert P. Restrepo, Jr. |
| · | | |
| | | Chair |
| |
Debbie S. Roberts |
| · | | |
| · | | · |
| |
Michael J. Stone |
| · | | | | · | | |
| · |
Number of Meetings in 2025 |
| 5 | | 9 | | 5 | | 4 | | 4 |
AUDIT COMMITTEE
The Company’s Audit Committee, composed exclusively of Independent Directors, met nine times in 2025 to consider various audit and financial reporting matters, including the Company’s outside audit firm relationship and to discuss the planning of the Company’s annual outside audit and its results. The Audit Committee also:
| ● | Monitored the Company’s management of its exposures to risk of financial loss; |
24 | RLI Corp. 2026 Proxy Statement
| ● | Reviewed the adequacy of the Company’s internal controls, including the Company’s continued adherence to the Committee of Sponsoring Organizations of the Treadway Commission Internal Control - Integrated Framework (COSO) 2013 update; |
| ● | Reviewed the extent and scope of audit coverage; |
| ● | Reviewed quarterly financial results; |
| ● | Reviewed Company loss reserves; |
| ● | Monitored selected financial reports; |
| ● | Assessed the auditors’ performance; and |
| ● | Selected the Company’s independent registered public accounting firm. |
The Audit Committee also meets in executive session, with no members of management present, after its regular meetings, as well as private executive sessions with the independent registered public accounting firm and various members of management. The Chair of the Audit Committee is notified directly by the Company’s anonymous whistleblower complaint hotline provider any time a complaint is made through that system.
The Audit Committee is responsible for approving every engagement of KPMG, LLP, Ernst & Young LLP, Deloitte & Touche LLP, RSM US LLP, Sikich LLP, and PricewaterhouseCoopers LLP (or their successors) to perform audit or non-audit services on behalf of the Company or any of its subsidiaries before any of the above-mentioned firms are engaged to provide those services. The Chair of the Audit Committee is authorized to pre-approve non-audit services and then reports those services to the full Audit Committee, as described in the Audit Committee Report. The Audit Committee evaluates the effects that the provision of non-audit services may have on such firms’ independence with respect to the current, or potential, audit of our financial statements.
The Audit Committee is also responsible for enterprise risk management in the areas of business continuity risk, catastrophe risk, reinsurance risk, reserving risk, and third-party risk. The Audit Committee receives either quarterly, semi-annual, or annual reports on various risk management topics to ensure the Audit Committee provides appropriate compliance oversight. From time to time the Audit Committee will also engage a third party to assist in providing appropriate compliance oversight.
The Board of Directors has determined that two Audit Committee members, Messrs. Angelina and Medini, qualify as an “audit committee financial expert” as defined by the SEC. In 2025, the members of the Audit Committee were Messrs. Angelina, Graham, Medini, and Dr. Fleming.
HUMAN CAPITAL & COMPENSATION COMMITTEE
The Company’s Human Capital & Compensation Committee (“HCCC”), composed exclusively of Independent Directors, met five times in 2025 to evaluate and recommend compensation of the CEO and certain key executive officers of the Company, discuss and evaluate the Company’s Market Value Potential Executive Incentive Program (“MVP Program”), select the Company’s compensation peer group, and evaluate the overall effectiveness of the executive compensation programs. The HCCC reviews and evaluates the corporate goals for the senior leadership team, management development, succession planning, the Company’s annual and long-term incentive programs, and retirement and medical programs. For additional details on the HCCC, see “Compensation Discussion & Analysis – How the HCCC Operates” on page 31.
The HCCC is responsible for enterprise risk management in the area human capital management and effectiveness, including but not limited to topics such as management succession, talent development, employee benefits, incentive compensation, and culture. The Committee reviews periodic reports on plans, actions, and metrics related to Company culture and human capital, including: employee survey results; workforce planning; employee headcount and turnover; and legal, regulatory, and policy developments and compliance. The HCCC receives either quarterly, semi-annual, or annual reports on various risk management topics, to ensure the HCCC provides appropriate compliance oversight. In 2025, the members of the HCCC were Messrs. Duclos (Chair), Kellogg, Medini, and Stone and Ms. Roberts.
FINANCE & RISK COMMITTEE
The Company’s Finance & Risk Committee oversees the Company’s investment and corporate finance transactions, policies, and guidelines, which includes reviewing investment performance, capital needs and financing plans, investment risk management exposure and the Company’s capital structure.
The Finance & Risk Committee also provides oversight for overall enterprise risk management, risk profile, and risk assessment, including risks from the Company’s underwriting; insurance market & growth; information technology which includes artificial intelligence; cybersecurity; investment; and capital matters. The Finance & Risk Committee receives either quarterly, semi-annual, or annual reports on various risk management topics to ensure the Finance & Risk Committee provides appropriate compliance oversight.
The Company’s Finance & Risk Committee met four times in 2025 to oversee ongoing financial, investment and capital matters, provide oversight for overall enterprise risk management, risk profile, and risk assessment, including risks from the
RLI Corp. 2026 Proxy Statement | 25
Company’s underwriting, information technology, insurance market, business continuity, third-party risk management, and business growth.
Effective January 1, 2025, the RLI Corp. Strategy & Risk Committee was disbanded. Oversight of the overall corporate strategy was moved to RLI Board of Directors as a whole, while overall ERM oversight was moved to the Finance & Investment Committee which retained all of its existing oversight responsibilities and which was renamed the Finance & Risk Committee. In 2025, members of the Committee were Dr. Fleming (Chair) and Messrs. Angelina, Kellogg, Kliethermes, and Stone.
NOMINATING & CORPORATE GOVERNANCE COMMITTEE
The Company’s Nominating & Corporate Governance Committee, composed exclusively of Independent Directors, met four times in 2025 to guide the Company’s corporate governance program, to monitor and discuss current and emerging corporate governance principles and procedures. The Committee also held numerous informal discussions related to the director evaluation process and CEO and director succession planning. The Nominating & Corporate Governance Committee provides oversight of Company enterprise risk management in areas including but not limited to regulatory; legislative; corporate governance, environmental, health and safety, corporate social responsibility, sustainability and related matters, in coordination with other Board committees as appropriate. The Nominating & Corporate Governance Committee also counsels the Board with respect to Board and Committee organization, compensation, membership, function, and Board and Committee performance assessments, individually and collectively. The Nominating & Corporate Governance Committee also identifies and reviews qualified individuals as potential new Director candidates. In 2025, the members of the Nominating & Corporate Governance Committee were Messrs. Restrepo (Chair) Duclos, and Graham and Ms. Roberts.
BOARD MEETINGS AND COMPENSATION
MEETINGS
During 2025, five meetings of the Board of Directors were held and all Directors were in attendance except for one meeting in which two Directors were unable to attend. No Director attended fewer than 75 percent of the aggregate number of meetings of the Board and Board committees for the period in which he or she served. In connection with each Board meeting, the Independent Directors also meet in executive session with no members of management present. Effective May 2, 2024, David B. Duclos, an Independent Director, was elected as Chairman of the Board and Mr. Duclos was re-elected as Chairman in May 2025 and continues to serve in that role. Pursuant to the Company’s Corporate Governance Guidelines, any Independent Director may serve as Chairman of the Board. Among other responsibilities, the Chairman of the Board presides at the Board’s executive sessions.
2025 DIRECTOR COMPENSATION
During 2025, the Company’s Independent Directors were compensated as set forth in the following table and as described below:
| | | |
Annual Board Retainer: | | $ | 80,000 |
Restricted Stock Units: | | $ | 125,000 |
Annual Committee Retainer: | |
| |
Audit | | $ | 15,000 |
All Other Committees | | $ | 10,000 |
Chairman of the Board Retainer: | | $ | 100,000 |
One-half to be paid in cash and one-half in RSU's granted on the date of Annual Shareholders Meeting | | | |
Additional Annual Committee Chair Retainer: | |
| |
Audit | | $ | 20,000 |
Human Capital & Compensation | | $ | 20,000 |
All Other Committees | | $ | 10,000 |
Each Independent Director then in office was granted a whole number of Restricted Stock Units (“RSUs”) corresponding with $125,000 in value on May 13, 2025, which will vest on the earlier of one year after grant or the date of the 2026 Annual Shareholders Meeting. RSUs will be granted upon election at the 2026 Annual Shareholders Meeting. In recommending changes, the Nominating & Corporate Governance Committee used market, industry, and peer data to assess the overall competitiveness and reasonableness of the Company’s nonemployee Director compensation program.
Directors may elect to either receive the RSUs as shares of Company stock upon vesting or defer receipt of those shares under the Nonemployee Director Deferred Compensation Plan (the “Director Deferred Plan”). In addition, the RSUs have dividend rights, which accrue as additional RSUs payable upon vesting or distribution from the Director Deferred Plan.
Directors are reimbursed for actual travel and related expenses incurred and are provided a travel accident policy funded by the Company. Directors are also eligible to participate in the Company’s charitable foundation matching gift program pursuant to which the Company will match qualifying charitable contributions of up to $3,000 per calendar year.
26 | RLI Corp. 2026 Proxy Statement
The table below provides the compensation of the Company’s nonemployee Directors earned for the fiscal year ended December 31, 2025.
| | | | | | | | | | | | | | |
| | | | | | | | | | Change in | | | | |
| | | | | | | | | | Pension | | | | |
| | | | | | | | | | Value and | | | | |
| | | | | | | | Non-Equity | | Nonqualified | | | | |
| | Fees Earned | | | | | | Incentive Plan | | Deferred | | All Other | | |
| | or Paid in | | Stock | | Option | | Compensation | | Compensation | | Compensation | | |
Name | | Cash ($) (1) | | Awards ($) (2) | | Awards ($) | | ($) | | Earnings | | ($) | | Total ($) |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) |
Michael E. Angelina |
| 125,000 |
| 124,999 |
| |
| |
| |
| |
| 249,999 |
David B. Duclos (3) |
| 170,000 |
| 174,969 |
| |
| |
| |
| |
| 344,969 |
Susan S. Fleming |
| 115,000 |
| 124,999 |
| |
| |
| |
| |
| 239,999 |
Jordan W. Graham |
| 105,000 |
| 124,999 |
| |
| |
| |
| |
| 229,999 |
Clark Kellogg | | 100,000 | | 124,999 | | | | | | | | | | 224,999 |
Paul B. Medini | | 105,000 | | 124,999 | | | | | | | | | | 229,999 |
Robert P. Restrepo, Jr. |
| 100,000 |
| 124,999 |
| |
| |
| |
| |
| 224,999 |
Debbie S. Roberts |
| 100,000 |
| 124,999 |
| |
| |
| |
| |
| 224,999 |
Michael J. Stone |
| 100,000 |
| 124,999 |
| |
| |
| |
| |
| 209,919 |
| (1) | Nonemployee Directors elect the form of their Annual Board Retainer, Annual Committee Retainer, Chairman of the Board Retainer and Annual Committee Chair Retainer, if applicable, which may be received either in cash or deferred, in accordance with the Director Deferred Plan, defined below. Amounts shown in column (b) shows total fees earned, whether or not deferred. |
| (2) | For nonemployee Directors, 1,681 RSUs were granted upon election at the 2025 Annual Shareholders’ Meeting. Directors can elect to either receive the RSUs as shares of Company stock upon vesting or defer receipt of those shares under the Director Deferred Plan. In addition, the RSUs have dividend rights that accrue as additional RSUs payable upon vesting or distribution from the Director Deferred Plan. The amounts reported in this column were calculated in accordance with FASB ASC Topic 718 based on the Company’s stock price as of the grant date. Please refer to footnote 2 to the beneficial ownership table on page 13 for the number of shares held for each Director in the rabbi trust established with respect to the Director Deferred Plan. |
| (3) | For 2025, the Board approved annual compensation for Mr. Duclos, in connection with his role as Independent Chairman of the Board, in the amount of $100,000, half of which will be paid in cash and half of which will be paid in shares of RLI. Therefore, a total of 2,353 shares were granted to Mr. Duclos upon election at the 2025 Annual Shareholders’ Meeting. |
NONEMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN (DIRECTOR DEFERRED PLAN)
Prior to the beginning of each year, a nonemployee Director may elect to defer the compensation otherwise payable or awarded to the Director during the succeeding year pursuant to the Director Deferred Plan. Under the Director Deferred Plan, a Director may elect to direct deferred amounts to a notional investment in one or more of several mutual funds, or Company shares.
If deferred amounts are directed to RLI shares, a Director’s account is credited with RLI stock credits equal to the number of Company shares that could be purchased by the amount of compensation deferred, with any cash dividend similarly converted to additional Company stock credits. The Company transfers to a bank trustee, under an irrevocable trust established by the Company, cash equal to the compensation deferred which is used to purchase an equivalent amount of Company common stock to be held in the trust. The assets held in this trust are subject to the claims by the Company’s creditors. Dividends on these shares are used to purchase additional shares of Company stock. Director Deferred Plan benefits deferred to Company shares are distributed, in the form of Company common stock, while other amounts deferred to other notational investments is distributed in cash, consistent with each Director’s investment election. Directors have the option to choose to receive a scheduled distribution beginning when the Director’s status terminates or while actively serving on the Board.
DIRECTOR SHARE OWNERSHIP
Effective January 1, 2025, Nonemployee Directors are encouraged to own shares of the Common Stock of the Company having a dollar value of $1,000,000 to be met within five years of initial appointment to the Board. The Chairman of the Board is encouraged to own shares of the Common Stock of the Company having a dollar value of $1,500,000 to be met within five years of initial appointment as Chairman of the Board. Shares held directly and amounts notionally invested in Company deferred compensation plans are counted to satisfy the guideline. The Nominating & Corporate Governance Committee monitors Directors’ share ownership annually. Directors may not sell shares of Company stock until the Stock Ownership Guideline is satisfied. Each Director serving on the Board as of January 1, 2025, will have five years from that date to attain the increased level of director share ownership guidelines. Shares beneficially owned by each Director are reflected on page 13. As of December 31, 2025, all Directors had met their respective goal or were within the five-year grace period.
RLI Corp. 2026 Proxy Statement | 27
BOARD LEADERSHIP STRUCTURE
The Company’s Board Chairman and CEO roles were separated effective January 1, 2022. Mr. Duclos, an Independent Director, was appointed Lead Independent Director in May 2023 and served in that role until May 2, 2024 at which time he was elected Chairman of the Board and the Lead Independent Director position was discontinued. Mr. Duclos was re-elected to that position on the date of the 2025 Annual Meeting of Shareholders and continues to serve in that role.
The Company does not have a formal policy regarding separation of the offices of Chairman of the Board and Chief Executive Officer. The Board believes that the decision whether or not to combine or separate such positions depends upon the Company’s particular circumstances at a given point in time. The Corporate Governance Guidelines provide that the when the Chairman of the Board is not an Independent Director, a Lead Independent Director will be elected and may be any Independent Director nominated by the Nominating & Corporate Governance Committee and elected/confirmed by the Board’s Independent Directors. Several factors promote a strong and Independent Board at our Company. Currently all Directors, except for Mr. Kliethermes, is Independent as defined in the applicable NYSE listing standards (as adopted by the Company). In addition, our Independent Directors meet quarterly in executive session without management present.
The Chairman of the Board: (a) ensures effective Board governance policies and practices are in place, (b) approves Board meeting agenda topics; (c) works with Committee chairs to set Committee agendas, considering strategic issues facing the Company, and with input from other Board members and the CEO; (d) calls meetings of the Independent Directors when needed; (e) approve Board and Committee meeting materials; (f) presides over Board and annual shareholder meetings; (g) attends Committee meetings as appropriate; (h) ensures effective communication between respective Committee chairs and members of management; (i) assists in identifying and selecting candidates for Board membership (working with chair of Nominating and Corporate Governance Committee with CEO input); (j) ensures effective orientation for new Directors and ongoing education for Directors; (k) conducts annual Director evaluations with the chair of Nominating & Corporate Governance Committee; and (l) proposes the membership of Board Committees and Committee Chairs.
PROPOSAL TWO: NON-BINDING, ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer Protection Act and related SEC regulations require that we seek an advisory (non-binding) vote from our shareholders to approve the compensation of our Named Executive Officers (“NEOs”) as disclosed in the Compensation Discussion & Analysis (“CD&A”), compensation tables and related disclosures in this Proxy Statement.
As discussed in our CD&A starting on page 29, our executive compensation programs have been designed to provide a competitive total executive compensation program linked to Company performance that will attract, retain and motivate talented executives critical to the Company’s long-term success.
The Human Capital & Compensation Committee of our Board (“HCCC”) developed an overall compensation philosophy that is built on a foundation of the following principles:
| ● | The focus is on the linkage between long-term shareholder value creation and executive pay; |
| ● | Incentives for executives directly involved in underwriting are based on underwriting profit measured over a period of years consistent with the income and risk to the Company; |
| ● | Compensation should reflect both the Company’s and individual’s performance; |
| ● | A meaningful element of equity-based compensation and significant executive equity holdings are important to ensure alignment of management and shareholder interests; |
| ● | The Company’s overall executive pay levels must be competitive in the marketplace for executive talent to enable the Company to attract, motivate and retain the best talent; and |
| ● | Appropriate safeguards must be in place to ensure annual incentives are aligned with long-term risk and value creation to protect against unnecessary and excessive risk to the Company. |
We are asking you to indicate your support for our executive compensation programs as described in this Proxy Statement. This proposal gives you the opportunity to express your views on our 2025 executive compensation policies and procedures for NEOs. This non-binding vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the policies and procedures described in this Proxy Statement. Accordingly, we ask the shareholders to vote “FOR” the following resolution at the Annual Meeting:
RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the CD&A, compensation tables and any related material disclosed in the Company’s Proxy Statement is hereby APPROVED.
Your vote is advisory, and therefore not binding on the HCCC or the Board. However, we value your opinions and to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we will consider our shareholders’ concerns. The HCCC will evaluate whether any actions are necessary to address those concerns.
The Board of Directors recommends that the shareholders vote “FOR” the proposal to approve the compensation of the Company’s NEOs as described in this Proxy Statement.
28 | RLI Corp. 2026 Proxy Statement
EXECUTIVE MANAGEMENT
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Information regarding our executive officers as of December 31, 2025 is provided below:
Name | Age | Position with Company | Executive Officer |
Craig W. Kliethermes (1) | 61 | President & Chief Executive Officer | 2007 |
Todd W. Bryant (2) | 57 | Chief Financial Officer | 2009 |
Jennifer L. Klobnak (3) | 54 | Chief Operating Officer | 2016 |
Aaron P. Diefenthaler (4) | 52 | Chief Investment Officer & Treasurer | 2012 |
Jeffrey D. Fick (5) | 65 | Chief Legal Officer | 2016 |
Seth A. Davis | 54 | Vice President, Controller | 2019 |
| (1) | Mr. Kliethermes was promoted to President & Chief Executive Officer of the Company effective January 1, 2022. Prior to his promotion, Mr. Kliethermes was President & Chief Operating Officer of the Company since 2021 and was President & Chief Operating Officer of the Company’s principal insurance subsidiaries since 2016. |
| (2) | Mr. Bryant was promoted to Chief Financial Officer effective July 1, 2019. Mr. Bryant retired from the position of Chief Financial Officer effective December 31, 2025 and beginning January 1, 2026 became Advisor to the CFO. |
| (3) | Ms. Klobnak was promoted to Chief Operating Officer of the Company effective January 1, 2022. Prior to her promotion, Ms. Klobnak was Sr. Vice President, Operations of the Company’s principal insurance subsidiaries since January 2016. |
| (4) | Mr. Diefenthaler was Chief Investment Officer & Treasurer through December 31, 2025. Effective January 1, 2026, Mr. Diefenthaler was promoted to Chief Financial Officer. |
| (5) | Mr. Fick was promoted to Chief Legal Officer & Corporate Secretary on January 1, 2020. Effective May 2, 2025, Mr. Fick’s title was changed to Chief Legal Officer. |
HUMAN CAPITAL & COMPENSATION COMMITTEE REPORT
The Human Capital & Compensation Committee has reviewed and discussed with management of the Company the Compensation Discussion & Analysis section of this Proxy Statement. Based on the Human Capital & Compensation Committee’s review and discussions, it recommended to the Board, and the Board approved, that the Compensation Discussion and Analysis be included in this Proxy Statement and its Annual Report on Form 10-K for the year ended December 31, 2025.
MEMBERS OF THE HUMAN CAPITAL & COMPENSATION COMMITTEE
David B. Duclos (Chair)
Clark C. Kellogg
Paul B. Medini
Debbie S. Roberts
Michael J. Stone
COMPENSATION DISCUSSION & ANALYSIS
INTRODUCTION
The Human Capital & Compensation Committee (“HCCC”) of the Company’s Board of Directors, with the review and approval of the Board of Directors, administers specific compensation programs for senior executive officers and oversees other executive compensation programs and management succession and development processes. The following Compensation Discussion & Analysis (“CD&A”) describes our executive compensation programs and actions with respect to the following Named Executive Officers (“NEOs”) for 2025:
Craig W. Kliethermes, President & Chief Executive Officer
Todd W. Bryant, Chief Financial Officer
Jennifer L. Klobnak, Chief Operating Officer
Aaron P. Diefenthaler, Chief Investment Officer & Treasurer
Jeffrey D. Fick, Chief Legal Officer
RLI Corp. 2026 Proxy Statement | 29
EXECUTIVE SUMMARY
With the exception of gross premiums written, the following financial metrics are used as targets in our incentive plans and our results are used to calculate annual incentives for our senior executive officers. These financial measures (other than gross premiums written and combined ratio) are non-GAAP and should not be considered substitutes for GAAP measures. We consider them key performance indicators and employ them as well as other factors in determining senior management incentive compensation. The calculation of these non-GAAP metrics can be found in the discussions below with respect to the incentive plans in which those metrics are used:
| | | | | ||||
Our Results in 2025 and 2024: | | 2025 | | 2024 | ||||
Gross Premiums Written: | | $2.03 billon | | $2.01 billion | ||||
Operating Earnings (1) | | $320.8 million | | $269.3 million | ||||
(Net Earnings minus Realized Gains and Unrealized Gains (Losses) on Equity Securities Net of Tax) | | | | | ||||
Combined Ratio | | 83.6 | | 86.2 | ||||
(Net Loss and Operating Expense/Net Premiums Earned) | | | | | ||||
Operating Return on Equity | | 21.2% | | 18.9% | ||||
(Operating Earnings/Shareholders' Equity) | | | | | ||||
Market Value Potential (MVP) | | $284.4 million | | $241.9 million | ||||
(After Tax Returns Above Cost of Capital) | | | | | ||||
Five-Year Growth in Book Value: Rank Among Peer Companies (including the Company) | | 2/13 | | 2/12 | ||||
| (1) | In 2025, Equity in earnings of unconsolidated investees and the related taxes were removed from operating earnings, resulting in consistent exclusion of unrealized changes in equity investments from operating results. Prior period amounts, in 2024, have been recast to conform to the current definition. |
In 2025, the Company continued to grow revenue and posted solid underwriting and operating performance. Gross premiums written were $2.03 billion, an increase of 1% percent over 2024. We posted $616.1 million of positive net cash flow from operating activities in 2025, which was used to support insurance operations, expand our investment portfolio, and allow us to return capital to our shareholders in the form of ordinary and special dividends.
The Company achieved an 83.6 combined ratio. Combined ratio is a common industry measure of profitability defined as expenses and losses as a percentage of net premiums earned. Thus, a combined ratio below 100 signifies an underwriting profit. Our results in 2025 represent our 30th consecutive year of a combined ratio below 100.
Market Value Potential (“MVP”), which is a measure of our after-tax returns above our cost of capital (explained in more detail on page 34) increased to $284.4 million from $241.9 million last year due to improved underwriting and investment returns in 2025 compared to 2024. At year-end 2025, we were second among our 13 peers when comparing the five-year growth in book value.
KEY ATTRIBUTES OF RLI EXECUTIVE COMPENSATION
| ● | Performance-based compensation: Total executive compensation is directly linked to Company performance. As in prior years, all executives participate in an incentive plan, through which they are eligible to earn compensation based on achievement of Company financial objectives and strategic objectives that are designed to be aligned with shareholder value creation. |
| ● | At risk compensation: A significant portion of annual incentive compensation for our President & CEO, COO, CFO, and each executive with oversight responsibility for product group underwriting is paid over time through a bonus bank concept to provide an incentive for sustained shareholder value creation. Amounts credited to the bonus bank are reduced dollar-for-dollar should negative results occur in a future period. As a result, net losses in a future period reduce the amount available in the bonus bank and could result in a negative balance. |
| ● | Compensation based on relative company performance: Each year we conduct a review of executive compensation within an insurance peer group to evaluate whether the Company’s executive compensation remains fair, competitive, and consistent with the Company’s absolute and relative performance. The MVP Program for the President & CEO, COO, and CFO includes an adjustment factor (positive and negative) for relative Company performance compared to selected Peer Companies. |
| ● | Significant executive stock ownership: Our compensation programs encourage our employees to build and maintain an ownership interest in the Company. We have established specific executive stock ownership guidelines and our NEOs, as well as our other executive officers, currently maintain significant share ownership in the Company. As reflected on page 13, as of March 16, 2026, executive officers and Directors beneficially held 2.39% of Company shares, providing strong alignment with shareholders. |
The HCCC believes that the Company’s overall compensation approach provides meaningful incentives for the talented management team at the Company to deliver outstanding results for shareholders again in 2025.
30 | RLI Corp. 2026 Proxy Statement
HOW THE HCCC OPERATES
HCCC RESPONSIBILITIES
The HCCC operates under a Charter, which can be found on the Company’s website under the Investors section at www.rlicorp.com. The HCCC Charter is reviewed annually by the HCCC and any proposed changes to the Charter are submitted to the Nominating & Corporate Governance Committee for recommendation to the full Board for approval. The HCCC is responsible to the Board for: (1) reviewing and providing advice regarding the Company’s executive compensation; (2) reviewing and providing advice regarding the Company’s management succession and development processes; (3) monitoring compensation actions by management below the executive level; (4) producing an annual report on executive compensation for approval by the Board for inclusion in the Company’s proxy statement; (5) reviewing the Company’s employee benefit plans; and (6) monitoring the Company’s culture and human capital effectiveness.
HCCC MEETINGS
The HCCC held five meetings in 2025. The agenda for each HCCC meeting is established by the Chair of the HCCC, in consultation with other HCCC members and Mr. Kliethermes and Ms. Kathleen M. Kappes, Vice President, Human Resources. Materials are prepared by Mr. Kliethermes and Ms. Kappes with input from members of senior management and are reviewed and approved by Chair Duclos, both as HCCC Chair and the Chairman of the Board, in advance of distribution to HCCC members. The HCCC meetings are attended by Mr. Kliethermes and Ms. Kappes, and from time-to-time, other members of senior management, who are excused from the meeting during the Committee’s executive session.
RESPONSE TO 2025 SAY-ON-PAY VOTE
At the 2025 Annual Shareholder’s Meeting, we held a shareholder advisory vote on the compensation of our named executive officers, referred to as a Say-on-Pay vote, with over 96 percent of shareholder votes cast on that item in favor of our executive compensation programs. We considered this vote to represent strong support by shareholders for our long-standing executive compensation policies and practices. In 2025, therefore, the HCCC continued its general approach to executive compensation, as described above in “KEY ATTRIBUTES OF RLI EXECUTIVE COMPENSATION,” and did not make any changes to the Company’s executive compensation programs in response to the 2025 Say-on-Pay vote.
INPUT FROM MANAGEMENT
Mr. Kliethermes played an important role in the HCCC’s consideration of executive compensation levels and the design of executive compensation plans and programs for other senior executive officers in 2025. For these individuals, Mr. Kliethermes recommended the following components of executive compensation to the HCCC for review and recommendation to the Board:
| ● | annual base salary levels; |
| ● | annual incentive targets and financial and personal goals; and |
| ● | the form and amount of long-term incentives. |
Mr. Kliethermes made such compensation recommendations based on external market data; achievement of respective performance criteria by each executive; and his judgment related to internal pay equity among Company executives, potential for advancement, and contribution to team initiatives. Mr. Kliethermes also relied upon the input of the senior leadership team when making such recommendations.
COMPENSATION CONSULTANT
The HCCC Charter specifically provides that if a compensation consultant is to assist in the evaluation of CEO or senior executive compensation, the HCCC has sole authority to retain and terminate the consulting firm including sole authority to approve the firm’s fees and retention terms. Management also has authority to retain a compensation consultant but may not retain the same compensation consulting firm retained by the HCCC without approval in advance by the HCCC. The HCCC did not retain a compensation consultant in 2025. Management retained Lockton Financial Advisors, LLC in 2025 to provide advice regarding various elements of executive compensation.
RLI Corp. 2026 Proxy Statement | 31
MARKET DATA
For 2025, the HCCC considered its normal pay practices when setting executive compensation, using market data to assess the overall competitiveness and reasonableness of the Company’s executive compensation program.
The table below outlines Peer Companies that were used to evaluate 2025 executive compensation. Markel Corporation was added as a peer company and no other changes were made in 2025.
Peer Companies for Assessing 2025 Compensation | |
Axis Capital Holdings Limited Global Indemnity Limited The Hanover Insurance Group, Inc. James River Group Holdings, Ltd. Kemper Corporation Kinsale Capital Group, Inc. | Markel Corporation Old Republic International Corporation ProAssurance Corporation Selective Insurance Group, Inc. United Fire Group, Inc. W.R. Berkley Corporation |
The HCCC selected these Peer Companies based on its judgment and input from other relevant sources. Each of the Peer Companies competes within the property and casualty insurance industry and sells a variety of specialty insurance products that serve both commercial entities and individuals that can generally be defined as specialty in nature or targeted toward niche markets. The Peer Companies have established records of financial performance, and all have been publicly traded for at least five years, facilitating the comparison of the Company’s financial performance to that of the Peer Companies. The HCCC also reviews the market capitalization of the Company compared to the Peer Companies to ensure that the Company is at or near the median market capitalization among those companies at the time of the Company’s review of the Peer Companies. For the Peer Company comparison performed in 2025 (using 2024 data), the Company’s market capitalization was fifth among thirteen companies within the Peer Companies, which includes the Company.
Each year, the HCCC compares the relative ranking among the Company and Peer Companies based on the most recently available public data (2024 data reviewed in early 2025) for base salaries and total compensation for the President & CEO, COO and CFO positions to the relative performance ranking for the following publicly available performance metrics for the prior year: price-to-book ratio; return on equity; combined ratio; and total shareholder return ("TSR") for one, three and five-year time frames to determine the overall competitiveness of the Company’s executive compensation. The Company’s rank among the Peer Companies for 2025 (13 companies including RLI), based on 2024 results, is shown in the table below:
| | | | | | | | | | | | |
Performance Metric | | Price/Book | | Return on Equity | | Combined Ratio | | One-Year TSR | | Three-Year TSR | | Five-Year TSR |
RLI Rank | | 2 | | 3 | | 2 | | 6 | | 5 | | 3 |
Base salaries and total compensation for other NEOs and executive positions are established by reference to publicly available survey data, including median base salary levels, for comparable executives in the insurance industry. The compensation information was primarily gathered from a survey of companies with assets greater than $1.5 billion with a median of $4.5 billion; and a survey with data regressed to the Company’s revenue size.
32 | RLI Corp. 2026 Proxy Statement
OVERVIEW OF RLI EXECUTIVE COMPENSATION
OBJECTIVE
The objective of the Company’s executive compensation program is to provide a competitive total executive compensation program linked to Company performance that will attract, retain, and motivate talented executives critical to the Company’s long-term success.
ELEMENTS OF COMPANY EXECUTIVE COMPENSATION
The Company’s total executive compensation program is comprised of the following components, each of which is described in greater detail below:
| ● | Total annual cash compensation consisting of: |
| o | Base salary; |
| o | Annual incentive awards under the MVP Program, which incorporates annual and long-term design features, for the President & CEO, COO, and CFO; |
| o | Annual incentive awards under the Management Incentive Program (“MIP”) for other home office executives; and |
| o | Annual incentive awards under the Underwriting Profit Program (“UPP”) for executives with oversight responsibility for product group underwriting. |
| ● | Long-term incentive compensation grants: equity-based awards under the LTIP to all NEOs and other management members; long-term components through at-risk payouts over time under: 1) the MVP Program for the President & CEO, COO, and CFO; and 2) the UPP Program for the then Chief Investment Officer & Treasurer. |
| ● | Clawback and forfeiture provisions: |
| o | The Company has adopted the RLI Corp. Policy on Recoupment of Incentive Compensation (“Clawback Policy”) which provides for the recovery, in the event of a required accounting restatement, of incentive-based compensation received by current or former executive officers where that compensation is based on the erroneously reported financial information; |
| o | All outstanding annual incentive awards for the current performance period and all outstanding long-term incentive awards are forfeited if a participant’s employment is terminated for cause; |
| o | A bonus bank is forfeited if a participant leaves RLI’s employment for any reason other than death, disability, or retirement, as specified under the RLI Corp. Annual Incentive Plan. As explained further on page 34, some or all of an MVP Program Bonus bank is subject to forfeiture in the event of negative financial returns. Post-employment payouts from a bonus bank are also subject to forfeiture if a participant fails to comply with certain covenants, including employee and customer non-solicitation provisions, among others; and |
| o | Proceeds from equity awards granted in 2022 and later, received within 6 months of termination of employment, are subject to clawback in the event of misconduct in the form of pre- or post-termination of employment breach of covenants related to customer and employee non-solicitation and protection of Company confidential information. |
| ● | Limited perquisites. All Company executives are provided with travel accident insurance and are reimbursed for out-of-pocket costs for an annual health examination not covered by the Company’s health plan. The President & CEO, COO, and CFO are permitted to use the Company’s fractionally-owned aircraft for personal use for an hourly rate approved by the Board of Directors, with maximum annual use limited to a set number of hours. The Company generally does not provide any income tax gross-ups for our executive compensation. |
BALANCE OF SHORT-TERM AND LONG-TERM COMPENSATION
The HCCC works to balance short-term and long-term elements of total compensation, as described in the following sections. The goal is to provide a meaningful level of long-term compensation to align with long-term value creation and mitigate the risk that members of management make decisions or take actions solely to increase short-term compensation while adding excessive risk to the Company. In that regard, the HCCC believes that a greater percentage of total compensation should be in the form of long-term compensation for more senior positions.
We consider those salary and annual incentive amounts earned in 2025 and paid for 2025 to be short-term compensation. MVP Program payments made in 2025 from amounts earned in prior years, UPP payments in 2025 for prior underwriting years, and the grant date fair value of stock options awards in 2025, on the other hand, are considered long-term compensation. The following table compares the percentage of total compensation, which is short-term in nature, to the percentage, which is long-term in nature.
RLI Corp. 2026 Proxy Statement | 33
| | | | |
| | Short-Term as % of Total Compensation | | Long-Term as % of Total Compensation |
| | (Salary and Annual Incentive Earned | | (Payment from Bonus Bank for Prior Years and |
Name | | and Paid in 2025) | | Grant Date Fair Value of Stock Options Awarded) |
Craig W. Kliethermes |
| 52% | | 48% |
Todd W. Bryant |
| 55% | | 45% |
Jennifer L. Klobnak |
| 57% | | 43% |
Aaron P. Diefenthaler (1) (2) |
| 64% | | 36% |
Jeffrey D. Fick (1) |
| 77% | | 23% |
(1) | In 2025, Messrs. Fick and Diefenthaler participate in the MIP, which does not have a long-term component, instead of MVP, which does have a long-term component, and consequently their long-term percentage is less than the other NEOs. |
(2) | Mr. Diefenthaler also participated in UPP in 2025 and prior year, which does have a long-term payout component. |
MARKET VALUE POTENTIAL EXECUTIVE INCENTIVE PROGRAM (MVP PROGRAM) — GENERAL
MVP Defined. As discussed in further detail below, the MVP Program provides a mechanism with which the HCCC can correlate incentive compensation to long-term shareholder value creation. The MVP Program uses an economic profit measure called “Market Value Potential” (“MVP”), which measures the after-tax returns earned by the Company above its cost of capital, as a gauge of shareholder value creation. MVP is defined as (1) the Actual Return (the increase in adjusted GAAP book value as defined immediately below), less (2) the Required Return (beginning capital multiplied by the blended cost of capital). If the Company does not earn the Required Return in a given year and MVP is negative, no incentive award is made pursuant to the MVP Program for that year.
For the purposes of the MVP Program, the increase or decrease in GAAP book value is calculated as ending capital less beginning capital. Ending capital is defined as ending GAAP book value, less unrealized gains or losses net of tax on available-for-sale fixed income investments, plus outstanding long-term debt instruments at the end of the period; and adjusted for capital transactions during the year. Beginning capital is defined as beginning GAAP book value, less unrealized gains or losses net of tax on available-for-sale fixed maturity investments, plus outstanding long-term instruments at the beginning of the period. The Company’s blended cost of capital is defined as the weighted average of the cost of equity capital and the cost of debt capital. The cost of equity capital is the average ten-year U.S. Treasury Note rate, plus a market risk premium of five percent modified by the Company’s ten-year beta versus the S&P 500 index. The Company’s cost of debt capital is the forward market rate on its outstanding long-term debt.
MVP Program Participation. Participation in the MVP Program, percentage incentive awards and the formula to calculate MVP are recommended by the HCCC and approved annually by the Independent Directors of the Board for Mr. Kliethermes and by the entire Board for other participants. In 2025, participation in the MVP Program was limited to Messrs. Kliethermes and Bryant and Ms. Klobnak. The Board has concluded based on the position responsibilities and ongoing assessment of individual performance against operational and financial goals that the senior executive management team is most responsible for the operating and investment decisions and actions that directly impact the creation of long-term shareholder value, and, therefore, should be rewarded with a portion of their incentive compensation being directly and exclusively tied to the creation of MVP. Mr. Bryant ceased participation in the MVP Program effective December 31, 2025 due to his retirement from the Chief Financial Officer role and Mr. Diefenthaler became a participant in the MVP Program effective January 1, 2026.
MVP Components. As discussed in more detail below, there are two components to the MVP Program. The first component, based on strategic objectives, represents annual compensation. The second component, based on financial objectives, is paid out over time out of amounts credited to a bonus bank, which is at risk of forfeiture based on future performance and as such represents long-term compensation. The component based on financial objectives is also adjusted based on a relative comparison of the Company's five-year growth in book value to that of the Peer Companies. The Company’s relative growth in book value, in turn, is calculated by comparing its compound annual growth rate (“CAGR”) in GAAP comprehensive earnings over the applicable five-year period to that of the Peer Companies. CAGR in comprehensive earnings is calculated based on publicly disclosed comprehensive earnings of Peer Companies for the five-year period ending at the third quarter of the fifth year.
MVP Percentage Award. For 2025, each participant in the MVP Program received an MVP incentive award expressed as a percentage of MVP created by the Company in that calendar year. Each year the HCCC confirms that the percentage awards remain appropriate by reviewing historical incentive award payouts, projected future payouts, and resulting total compensation for MVP Program participants, which in turn, is compared to the performance of the Company necessary to achieve such payouts. The HCCC compares the performance of the Company and total compensation of the MVP Program participants with comparable performance metrics and compensation at the Peer Companies. The MVP percentage award, expressed as a percentage of MVP, for each participant for 2025 was as follows: 2.25 percent for Mr. Kliethermes; 1.1 percent for Mr. Bryant; and 1.6 percent for Ms. Klobnak, which remained the same for Messrs. Kliethermes and Bryant and was increased from 1.5 percent for Ms. Klobnak. The HCCC set the percentage incentive awards for 2025 based on the factors described above and the range of expected MVP to be created by the Company in 2025 and the projected incentive awards and incentive payouts that would result. For 2026, the HCCC approved Mr. Diefenthaler’s participation in MVP
34 | RLI Corp. 2026 Proxy Statement
effective January 1, 2026, with a preliminary award equal to 1% of the Company’s “Market Value Potential”. As a transition for 2026, Mr. Diefenthaler will receive the greater of: (a) the bonus determined by the MVP Program; or (b) bonuses under the incentive plans in which he participated in 2025, the Management Incentive Program (“MIP”) based on 2026 corporate metrics and the Underwriting Profit Program (“UPP”) for 2025 and prior underwriting years.
Individual MVP Award payments during any fiscal year, including payments from amounts credited to a bonus bank in prior years, are capped at $7.5 million under the terms of the RLI Corp. Annual Incentive Compensation Plan. Pursuant to the Annual Incentive Compensation Plan under which the MVP Program operates, the Board of Directors may exercise discretion to alter MVP Awards based on such objective or subjective criteria it deems appropriate.
ANNUAL COMPENSATION
BASE SALARY
Executive base salaries are targeted to be at the median base salary for comparable positions in the insurance industry, taking into account performance, experience, potential and the level of base salary necessary to attract and retain top executive talent.
In 2025, the HCCC set base salary ranges for the President & CEO, CFO and COO based on publicly available executive compensation data for 2024 from the Peer Companies described on page 32.
At the May 13, 2025 Board meeting, when the annual review of base salaries was conducted by the HCCC, management recommended no base salary increase for Mr. Kliethermes. Based on an assessment of annual cash compensation levels (base salary and annual incentive program payouts), Mr. Kliethermes recommended no base salary increase for Ms. Klobnak and Mr. Bryant, a 3.4% increase for Mr. Diefenthaler, and a 3.8% increase for Mr. Fick in light of the placement of their respective base salaries compared to other similar positions in the insurance industry. The HCCC and Board approved Mr. Kliethermes’ recommendations. Effective January 1, 2026 and in connection with his promotion to Chief Financial Officer, Mr. Diefenthaler received an increase in pay to an annual base salary of $400,000.
MARKET VALUE POTENTIAL EXECUTIVE INCENTIVE PROGRAM — ANNUAL INCENTIVE COMPENSATION COMPONENT
Twenty percent of the preliminary MVP award calculated for each participant is evaluated against annual objectives and an achievement rating of 0 to 100 percent is assigned to that portion of the award. This amount represents the annual compensation component of the MVP Program award (The long-term incentive component of the MVP Program is explained under the section Long-Term Compensation on pages 37-38).
For 2025, Messrs. Kliethermes and Bryant and Ms. Klobnak shared annual objectives weighted as follows: customer focus (30 percent); continuous improvement (30 percent); community (30 percent); and success metrics (10 percent). The success metrics include two annual metrics: combined ratio and premium growth, and two trended metrics: employee engagement scores and customer experience benchmarks. One of the annual success metrics, combined ratio, is non-GAAP and should not be considered a substitute for GAAP measures. The calculation of this non-GAAP metric is described on page 30. The annual premium growth goal relates to premium growth over one-, three-, and five-years. The employee engagement scores are based on results of biennial employee engagement survey results and the customer experience benchmark relates to maintaining a strong ease of doing business and competitive positional benchmark scores among the Company’s insurance production customers.
Under each annual objective category, there were a number of shared goals against which performance would be assessed to determine whether the annual objectives had been achieved. The evaluation of performance relative to these objectives is inherently subjective, involving a high degree of judgment by the CEO and the Board. The annual objectives are established as difficult stretch goals, requiring superior effort and execution to achieve 100 percent on all goals.
The annual objectives component of an MVP award will only be paid if objectives are achieved and if positive MVP is created for shareholders. If MVP is positive and annual objectives are achieved, the annual objectives component of the award will be paid annually to provide direct linkage of annual incentive compensation for the achievement of those annual goals. However, if MVP is negative for a year, no MVP award will be made for that year with respect to the annual objective’s component.
For 2025, the Committee evaluated annual objectives and a 98% percent overall achievement factor was applied. The following annual incentive compensation component was paid to each participant under the MVP Program:
Calculation of MVP Program Annual Incentive Award
| | | | | | | | | | | | | | | | |
| | (A) | | (B) | | (C = A x B) | | (D = C x 20%) | | (E = % Achieved) | | (F = D x E) | ||||
| | 2025 MVP | | Percentage | | 2025 Preliminary | | 20% Annual Component | | Achievement | | 2025 Annual | ||||
Participant | | Created (*) | | Award | | MVP Award | | Based on Strategic Goals | | Rating | | Incentive Award | ||||
C. Kliethermes | | $ | 284,395,000 | | 2.25% | | $ | 6,398,888 | | $ | 1,279,778 | | 98% | | $ | 1,254,182 |
T. Bryant | | $ | 284,395,000 | | 1.1% | | $ | 3,128,345 | | $ | 625,669 | | 98% | | $ | 613,156 |
J. Klobnak | | $ | 284,395,000 | | 1.6% | | $ | 4,550,320 | | $ | 910,064 | | 98% | | $ | 891,863 |
RLI Corp. 2026 Proxy Statement | 35
MANAGEMENT INCENTIVE PROGRAM (MIP)
Participants in the MIP include home office vice presidents, assistant vice presidents and other senior managers. Awards are granted annually and expressed as a percentage of year-end base pay based on targets for three financial goals and annual objectives related to strategic goals. The financial goals are: operating return on equity (“ROE”), combined ratio, and MVP. The annual objectives for 2025 were the same annual objectives for the MVP Program: customer focus (30 percent); continuous improvement (30 percent); community (30 percent); and success metrics (10 percent). Awards are based on actual results for the annual success metrics and an assessment of achievement of annual objectives as discussed above in relation to the MVP Program.
ROE and combined ratio are used as financial goals to provide an incentive to increase annual profitability. ROE is a ratio calculated as our operating earnings divided by our beginning equity adjusted for capital transactions such as share repurchases and special dividends. Operating earnings, in turn, are our net earnings minus realized investment gains or losses and unrealized gains or losses on equity securities, net of tax. The calculation of ROE excluded the net gain from the sale of the Company’s interest in Maui Jim subsequently received by the Company. Combined ratio is a profitability measure and is calculated as the sum of our incurred losses and settlement expenses plus our policy acquisition costs and operating expenses, divided by our net premiums earned. The difference between the combined ratio and 100 reflects the per-dollar rate of underwriting income or loss. MVP is used as a financial goal as a proxy for shareholder value creation and is explained beginning on page 34.
Actual awards for a year are paid in the first quarter of the following year. The HCCC approves award levels for MIP participants at the senior vice president and vice president levels, who are designated as executive officers under Section 16 of the Exchange Act. Mr. Kliethermes approves award levels for other MIP participants.
For 2025, Mr. Kliethermes recommended, and the HCCC approved, an MIP maximum annual incentive opportunity for Messrs. Diefenthaler and Fick of 100 percent of their respective year-end base, 40 percent of which will be based on the achievement of financial goals of MVP, 20 percent on the ROE goal, 20 percent on the combined ratio goal, and 20 percent on the achievement of annual objectives.
For 2025, targets levels and corresponding achievement levels for actual results for financial goals are measured according to the following proportionate payout ranges.
2025 MIP Maximum – Diefenthaler and Fick
| | Payout Range | | | ||
Management Incentive Plan Goals | | 0% Payout | | 100% Payout | | Bonus Opportunity |
STRATEGIC GOALS |
| |
| |
| |
Annual Objectives |
| 0% achievement |
| 100% achievement |
| 20.00% |
FINANCIAL GOALS |
| |
| |
| |
Operating Return on Equity (ROE) |
| 7% | | 16% | | 20.00% |
Market Value Potential (MVP) |
| $0 | | $100M |
| 40.00% |
Combined Ratio |
| 100% | | 85% | | 20.00% |
|
| | | | | MAXIMUM BONUS |
|
| | | | | 100.00% |
In 2025, the following MIP awards were calculated based on the corresponding actual results with respect to financial goals and an aggregate 98% achievement of annual objectives based upon an assessment by senior management of achievement of each annual objective:
2025 MIP Award
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | Actual | | | | | | | |
| | MIP | | | | | | | | | | | Actual | | | | Strategy | | | | | | Total | |
| | Level | | Actual | | Bonus | | Actual | | | | Combined | | | | Scorecard | | | | Total | | MIP | ||
Participant | | % | | ROE % | | % | | MVP | | Bonus % | | Ratio | | Bonus % | | % | | Bonus % | | MIP % | | Bonus | ||
Aaron P. Diefenthaler | | 100 | | 21.2 | | 20 | | $ | 284,395,000 | | 40 | | 83.6 | | 20 | | 98 | | 19.6 | | 99.6 | | $ | 378,480 |
Jeffrey D. Fick |
| 100 | | 21.2 | | 20 | | $ | 284,395,000 | | 40 | | 83.6 | | 20 | | 98 | | 19.6 | | 99.6 | | $ | 413,340 |
UNDERWRITING PROFIT PROGRAM (UPP) – ANNUAL INCENTIVE COMPENSATION COMPONENT
Executives with oversight responsibility for product group underwriting participate in UPP and are eligible to earn an annual incentive based on a percentage of underwriting profit created by that product for a given underwriting year. In addition to his other duties as Chief Investment Officer & Treasurer in 2025, Mr. Diefenthaler had oversight responsibility for underwriting for two products. Under the terms of the UPP, Mr. Diefenthaler is eligible to receive a UPP bonus for each of these products based on 2% of the underwriting profit created over the respective payout periods for those products (six to ten years for one of the products and four to eight years for the other product). Effective January 1, 2026, Mr. Diefenthaler became a participant in the MVP Program with a preliminary award equal to 1% of the Company’s “Market Value Potential” and ceased participation in UPP. As a transition for 2026, Mr. Diefenthaler will receive the greater of: (a) the bonus determined by the MVP Program; or (b) bonuses under the incentive plans in which he participated in 2025, the MIP based on 2026 corporate metrics and the UPP for 2025 and prior underwriting years.
36 | RLI Corp. 2026 Proxy Statement
For UPP, underwriting profit is calculated as premiums earned net of reinsurance (“Premium”) minus expenses and actual and estimated losses (collectively “Losses”). Because Losses are determined over a multi-year payout period over which they may develop, only a partial incentive award based on underwriting profit is paid each year until all actual Losses likely to develop have occurred and a final underwriting profit figure can be determined for the applicable underwriting year. If expenses and Losses exceed the Premium, there is an underwriting loss (negative underwriting profit) for a given underwriting year in the payout period. This such negative amount will be deducted from underwriting profit from other years to determine a UPP payout. If in aggregate a negative amount results in a given year for all underwriting years the amount will be deducted from Mr. Diefenthaler’s MIP bonus for that given year. The percentage of the incentive award paid out ranges from 20% to 100%, based on product and year in the payout period, with the cumulative payout percentage increasing for later years in the payout period. Mr. Diefenthaler’s UPP award calculation also includes an adjustment for investment income over a payout period, which is calculated by multiplying the investment rate by the unpaid award balance as of the previous year-end or December 31, 2024. The investment rate, 4.292 percent, was derived by matching the duration of the product reserves to a matching bond term and is net of investment expenses of 0.15 percent.
For UPP payouts, the payout for the same calendar year as the underwriting year is deemed annual incentive compensation, while payouts based on underwriting profit in prior underwriting years are deemed long-term compensation. The following table illustrates the UPP award calculation, determined on an aggregate basis for both products.
| | | | | | | | | | | | | | | |
UPP Award Calculation | |||||||||||||||
| | (A) | | | | | | | | (E) | | | | (G = E - F) | |
| | Underwriting Profit | | (B) | | (C = A x B) | | (D) | | Cumulative | | (F) | | UPP Payout | |
| | Losses) | | Percentage | | Award | | Percentage | | Award | | Date | | Year | |
Award Year | | ($) | | (%) | | ($) | | (%) | | ($) | | ($) | | ($) | |
2025 Underwriting Year |
| (476,993) | | 2 | | (9,540) | | (2.8) | | 263 | | — | | 263 | |
Prior Underwriting Years |
| 69,019,902 | | 2 | | 1,380,398 | | 95.9 | | 1,323,488 | | 1,128,592 | | 194,896 | |
Total 2025 UPP Award (sum of G) |
| | | | | | | | | | | | | 197,767 | (1) |
| (1) | Under the terms of the UPP Program, $2,608 of investment income accrued on the unpaid profit-sharing balance as described above and is included in the 2025 UPP Award. |
LONG-TERM COMPENSATION
MARKET VALUE POTENTIAL EXECUTIVE INCENTIVE PROGRAM — LONG-TERM INCENTIVE COMPENSATION COMPONENT AND FORFEITURE PROVISION (CLAWBACK)
The MVP Program is described beginning on page 34. Eighty percent of the preliminary MVP award calculated under that program (which will be positive if MVP is positive or negative if MVP is negative) is subject to an assessment of Company performance compared to the Peer Companies (the “financial component”). This represents the long-term component of the MVP award. The financial component of a preliminary award will be adjusted in a range from a 20 percent reduction (minimum) to a 25 percent increase (maximum) based on the Company’s long-term performance relative to the Peer Companies measured by five-year growth in book value per share. The Company’s relative growth in book value per share is calculated by comparing its CAGR in GAAP comprehensive earnings over the applicable five-year period to that of the Peer Companies. CAGR in comprehensive earnings is calculated based on publicly disclosed comprehensive earnings of Peer Companies for the five-year period ending at the third quarter of the fifth year. The adjustment to the financial component is made according to the following schedule:
Adjustment of Preliminary Financial Award Based on RLI’s Relative Five-Year Book Value per Share Growth
| | |
Relative Performance | | Adjustment |
90th percentile of peers or greater |
| 125% (maximum) |
60th percentile of peers |
| 100% (target) |
33rd percentile of peers or less |
| 80% (minimum) |
Results between the stated values for relative performance will be interpolated to determine the achievement rating. | ||
As noted above, the Company must perform at the 60th percentile, above the median of long-term performance of its Peer Companies, in order for 100 percent of the long-term financial component of an MVP award otherwise earned to be made.
The financial component of an MVP award earned is not immediately paid to participants; rather it is credited (if positive) or charged (if negative) to each participant’s long-term bonus bank. A bonus bank, in turn, may be positive or negative based on prior year results. The aggregate bonus bank balance for all prior years is paid out annually at a rate of 33 percent, if the balance is positive, meaning that it will take more than 10 years to completely pay out an incentive award for a given year deposited into a bonus bank since 33% of the remaining balance from a prior year (if positive) is paid in a given year.
Until paid out, all amounts in the MVP Program bonus bank are subject to a risk of forfeiture if future financial performance results in a negative MVP calculation. In other words, negative MVP charged to a bonus bank will reduce a positive balance in that bonus bank from prior years, effectively causing a forfeiture of such positive balance. If the aggregate bonus bank is negative after the financial component of an MVP award for a given year is credited or charged to a bonus bank, no award will be paid from the bank until the aggregate balance is positive as a result of future positive amounts credited to the bank
RLI Corp. 2026 Proxy Statement | 37
from future year awards. The forfeiture provision in the MVP Program bonus bank in the event of negative MVP, in effect, operates as a clawback for negative shareholder results by reducing the amount payable from the bonus bank when the Company has negative MVP.
The Company’s MVP in 2025 was $284.4 million, compared to MVP of $241.9 million in 2024. The following table shows the manner in which 2025 annual and long-term MVP award payouts and remaining at-risk bank balances were calculated for Messrs. Kliethermes, Bryant, and Ms. Klobnak.
2025 MVP Program Incentive Awards and Payouts | | |||
Annual Objectives Achieved | | | 98.0 | % |
Peer Company Adjustment Factor |
| | 125.00 | % |
|
| | (A) | |
2025 MVP Achieved (after tax) | | $ | 284,395,000 | |
| | | | | | | | | | | | |
Formula for | | | | | | | | | | | | |
2025 MVP Award: | | (B) | | (C = A x B) | | (D = C x 20%) | | (E = D x % Achieved) | | (F = C x 80%) | | (G = F x Peer Factor) |
| | | | | | Annual | | Annual | | | | Financial |
| | | | Preliminary | | Objectives | | Objectives | | Financial | | Award |
Participant | | MVP % | | MVP Award ($) | | Component ($) | | Award ($) | | Component ($) | | ($) |
Craig W. Kliethermes |
| 2.25 | % | 6,398,888 | | 1,279,778 | | 1,254,182 | | 5,119,110 | | 6,398,888 |
Todd W. Bryant |
| 1.1 | % | 3,128,345 | | 625,669 | | 613,156 | | 2,502,676 | | 3,128,345 |
Jennifer L. Klobnak |
| 1.6 | % | 4,550,320 | | 910,064 | | 891,863 | | 3,640,256 | | 4,550,320 |
| | | | | | | | | | |
Formula for 2025 | | | | | | | | | | |
Payout from MVP Bank: | | (H) | | (G) (from above) | | (I = G + H) | | (J = I x 33%) | | (K = I - J) |
| | Beginning Bank | | 2025 Award | | Total Pre-Payout | | Payout | | Remaining |
Participant | | Balance ($) (1) | | Credited to Bank ($) | | Balance ($) | | of Bank ($) | | At-Risk Bank |
Craig W. Kliethermes |
| 8,210,619 | | 6,398,888 | | 14,609,507 | | 4,821,137 | | 9,788,370 |
Todd W. Bryant |
| 3,887,957 | | 3,128,345 | | 7,016,302 | | 2,315,380 | | 4,700,922 |
Jennifer L. Klobnak |
| 5,185,766 | | 4,550,320 | | 9,736,086 | | 3,212,908 | | 6,523,178 |
| | | | | | |
Formula for Total | | | | | | |
2025 MVP Payout: | | | | (E) (from above) | | |
| | (J) (from above) | | Payout of 2025 | | (L = J + E) |
| | Payout | | Annual Objectives | | Total 2025 |
Participant | | of Bank ($) | | Component ($) | | Payout ($) |
Craig W. Kliethermes |
| 4,821,137 | | 1,254,182 | | 6,075,319 |
Todd W. Bryant |
| 2,315,380 | | 613,156 | | 2,928,536 |
Jennifer L. Klobnak |
| 3,212,908 | | 891,863 | | 4,104,771 |
| (1) | Under the terms of the MVP Program, interest at the three-year U.S. Government Treasury Note rate (4.27 percent) was accrued on the unpaid bonus bank balance on December 31, 2024. The following interest was accrued to the December 31, 2025 bonus bank balance as follows: Mr. Kliethermes, $336,236; Mr. Bryant, $159,217; and Ms. Klobnak $212,364. |
UNDERWRITER PROFIT-SHARING PROGRAM — LONG-TERM INCENTIVE COMPENSATION COMPONENT
As noted on page 36, payouts based on underwriting profit for prior underwriting years are deemed long-term compensation. For Mr. Diefenthaler, UPP payouts of $194,896 in 2025 for prior underwriting years 2016-2024 are deemed long-term incentive compensation.
LONG-TERM INCENTIVE PLAN
The Company has two long-term incentive plans that cover awards of equity/stock-based compensation to participants, the 2015 Long-Term Incentive Plan (“2015 LTIP”) and the 2023 Long-Term Incentive Plan (“2023 LTIP”). The 2015 LTIP is inactive, and the 2023 LTIP is currently in effect. The 2023 LTIP, described immediately below, was adopted in 2023 and replaced the 2015 LTIP. Together, these plans are referred to sometimes as “LTIPs”. Messrs. Kliethermes, Bryant, Diefenthaler, Fick and Ms. Klobnak have outstanding stock option awards under the 2015 LTIP and the 2023 LTIP.
The purpose of our LTIP’s is to align the interests of the Company’s shareholders and recipients of equity awards by increasing the proprietary interest of such recipients in the Company’s growth and success; advance the interests of the Company by attracting and retaining officers, other employees, non-employee directors, consultants, independent contractors and agents; and motivate such persons to act in the long-term best interests of the Company and its shareholders. The grant of equity awards, the value of which is related to the value of the Company’s Common Stock, aligns the interests of the Company’s executive officers with that of shareholders. The HCCC believes this arrangement develops a strong incentive for Company executives to put forth maximum effort for continued creation of shareholder value and long-term growth of the Company.
Under the Company’s 2023 LTIP, certain employees, officers, and Directors of the Company are eligible to receive equity awards in a variety of forms including non-qualified stock options; incentive stock options (within the meaning of Section 422
38 | RLI Corp. 2026 Proxy Statement
of the Internal Revenue Code); stock appreciation rights (“SARs”); restricted stock, restricted stock units and other stock awards (collectively “Stock Awards”); and performance awards. All executives at the Company are required to own a significant level of Company stock, stated as a multiple of base salary. Equity grants provide a means for executives to meet their ownership requirement. As explained further on page 40, executives are required to hold all net shares from an equity grant until their stock ownership level is met.
The HCCC believes equity awards serve as incentives to executives to maximize long-term growth and profitability of the Company, an arrangement that benefits executives, shareholders, and other stakeholders of the Company. Equity awards also provide a means to attract and retain key employees. The HCCC establishes and recommends to the Independent Directors of the Board the annual equity award for Mr. Kliethermes, which is established based on a review of long-term incentive compensation of CEO positions among the Peer Companies described above, an assessment of his performance and initiatives underway and a comparison of his equity awards compared to awards to other executives. A target range of the value of annual equity awards, expressed as a percentage of base salary based on comparisons with respect to Peer Companies and executive compensation benchmarking surveys has been established for all other Company executives.
In 2025, the Company awarded long-term incentives in the form of non-qualified stock option grants to the NEOs in amounts recommended by the HCCC and approved by the Board of Directors (Independent Directors with respect to Mr. Kliethermes’ award). Grant amounts in 2025 were based upon market data, year-to-date Company performance, Company stock price performance in 2024 and through the grant date in 2025, and executive retention considerations. The HCCC believes that non-qualified stock options provide an effective form of performance-based compensation to align the interests of NEOs and shareholders. In reaching that conclusion, the HCCC considered the following: stock options provide more leverage than equity awards such as restricted stock; stock options are directly aligned with shareholder interests since they provide rewards only with share price appreciation; and, stock options are understood and supported by recipients.
The Company targets long-term incentives at approximately the median of competitive market data. Mr. Kliethermes recommends to the HCCC proposed long-term incentive awards within the target range for each executive officer based on the executive officer’s position and a subjective assessment of the executive officer’s individual performance and anticipated future contributions to the Company. The HCCC considers Mr. Kliethermes’ recommendations and then approves and recommends stock option awards to the Board for approval. Options expire eight years after grant. In determining 2025 stock option awards the Committee considered peer company compensation, compensation survey benchmarking, and individual and Company performance.
Stock options vest over five years at the rate of 20 percent per year, or upon termination of employment due to the death, Disability, or qualified Retirement of the recipient as defined under the LTIPs (generally age and years of service of 75). Upon termination of employment (other than due to death, Disability, or Retirement), vested options must be exercised within the earlier of 90 days of termination or expiration of the option award, except that options are forfeited in the event the employment of an option recipient is terminated for cause.
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
The Company’s ESOP offers another performance-based means of retaining and motivating employees, including executive officers, who work 1,000 or more hours per year, by offering ownership in the Company on a long-term basis. The Board may approve an annual contribution to the ESOP based on the profitability of the Company that is used by the ESOP to purchase Common Stock on behalf of participating employees, including executive officers. For 2025, the HCCC recommended, and the Board approved, a discretionary profit-sharing contribution to the ESOP of 9.0 percent of participants’ eligible compensation. In addition, plan forfeitures equal to 0.169 percent of eligible compensation were added to all participants’ accounts for 2025.
401(K) PLAN
The Company sponsors a 401(k) Plan in which all employees, including executive officers, scheduled to work 1,000 or more hours per year, are entitled to participate. All participants receive a “safe harbor” annual contribution by the Company to their 401(k) accounts of three percent of eligible compensation. The Board may also approve discretionary profit-sharing contributions to the 401(k) Plan. For 2025, in addition to the safe harbor three percent annual contribution, the HCCC recommended, and the Board approved a discretionary profit-sharing contribution to the 401(k) of 6.0 percent of participants’ eligible compensation. Plan forfeitures equal to 0.083 percent of eligible compensation were added to all participants’ accounts for 2025.
DEFERRED COMPENSATION PLAN (DEFERRED PLAN)
Under the Company’s Deferred Plan, an executive officer may elect to defer up to 100 percent of total cash compensation after payroll deductions. Upon an election by an executive officer to defer compensation (a “Participant”), the Participant may elect to direct deferred amounts to a notional investment in one or more of several mutual funds or RLI shares. If deferred amounts are directed to RLI shares, the Company allocates to the Participant RLI stock credits equal to the number of shares that could be purchased with the amount deferred. Additional RLI stock credits are allocated to a Participant’s account equal to shares of RLI stock that could be purchased with dividends paid on RLI stock credited to a Participant’s account. The Company transfers cash equal to the amount deferred to a bank trustee under an irrevocable trust established by the Company, and the trustee purchases a number of shares of common stock of the Company representing an amount equal to the compensation deferred by the Participant. Dividends paid on the shares in such trust are used by the trustee to
RLI Corp. 2026 Proxy Statement | 39
purchase additional shares of common stock of the Company, which are placed in the trust. The trust is considered to be a “Rabbi Trust” or grantor trust for tax purposes. The assets of the trust are subject to claims by the Company’s creditors. Deferred Plan benefits are distributable, in the form of Company common stock or cash, consistent with each participant’s investment election. Participants have the option to choose to receive a scheduled distribution while still employed or to have their account distributed upon termination of employment. In either case, distributions may be paid in a lump sum, or in annual installments ranging from five to 15 years. Messrs. Kliethermes, Bryant, Fick and Ms. Klobnak did not elect to defer any income for 2025 while Mr. Diefenthaler elected to defer income in 2025. Messrs. Kliethermes, Diefenthaler, and Fick have deferred income under the Deferred Plan in prior years.
STOCK OWNERSHIP/RETENTION GUIDELINE
It is the Company’s belief that key executives should hold significant amounts of Company common stock. The value of all shares owned, including those held outright and those in the ESOP or Executive Deferred Compensation Plan, must equal or exceed a multiple of their annual base salary, as shown below:
| | |
Position | | $ Value of Shares |
Chief Executive Officer |
| 6.0 x Base Salary |
Chief Operating Officer |
| 4.0 x Base Salary |
Chief Financial Officer |
| 3.0 x Base Salary |
Chief Legal Officer, Chief Investment Officer, Sr. VP |
| 2.0 x Base Salary |
Vice President |
| 1.5 x Base Salary |
Executives to whom this Guideline applies are encouraged to reach their respective stock ownership level within five years of the date on which an individual assumes an executive position covered by this Guideline. Until an executive reaches the required ownership level, all net shares obtained from the exercise of stock options or other long-term incentive awards must be retained and may not be sold. The HCCC reviews the progress of executives, to whom the Guideline applies, toward their stock ownership goal each year. As of December 31, 2025, all NEOs have met their respective stock ownership goals.
The Company prohibits NEOs from using financial instruments to reduce the risk of holding Company stock (hedging), or from using Company shares for margin trading or collateral purpose. Refer to our “Insider Trading Policy” on page 22 for further details.
EXECUTIVE COMPENSATION
2025 SUMMARY COMPENSATION TABLE
The aggregate compensation earned from the Company and its subsidiaries during the last fiscal year is set forth below for the Company’s President & CEO; CFO; and the other three most highly compensated executive officers, referred to herein collectively as NEOs. None of the NEOs have an employment contract with the Company.
The key elements of compensation presented in the 2025 Summary Compensation Table include base salary (column c); payouts under annual incentive programs (column g); and stock option awards (column f). Amounts reflected in column (g) titled “Non-Equity Incentive Plan” for Messrs. Kliethermes, Bryant, and Ms. Klobnak includes payouts from each of their respective MVP Program bonus bank accounts of amounts earned in prior years based on financial performance of the Company in those years. As described in detail on pages 34-35, payouts under the long-term component of the MVP Program are reflective of amounts earned in prior years, which are banked and paid out over a period of time of up to 10 years.
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Change In Pension | | | | |
| | | | | | | | | | | | | | Value and | | | | |
| | | | | | | | | | | | Non-Equity | | Nonqualified | | | | |
| | | | | | | | Stock | | Option | | Incentive Plan | | Deferred | | All Other | | |
Name and | | | | | | Bonus | | Awards | | Awards | | Compensation | | Compensation | | Compensation | | |
Principal Position | | Year | | Salary ($) | | ($) | | ($) | | ($) (1) | | ($) (2) | | Earnings ($) | | ($) (3)(4) | | Total ($) |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
Craig W. Kliethermes |
| 2025 |
| 677,596 | | 0 | | 0 | | 831,805 | | 6,075,319 | | — | | 107,012 | | 7,691,732 |
President & Chief Executive Officer |
| 2024 |
| 671,731 | | 0 | | 0 | | 937,535 | | 4,912,353 | | — | | 94,492 | | 6,616,111 |
|
| 2023 |
| 650,000 | | 0 | | 0 | | 626,025 | | 3,811,008 | | — | | 98,419 | | 5,185,452 |
Todd W. Bryant |
| 2025 |
| 416,596 | | 0 | | 0 | | 345,915 | | 2,928,536 | | — | | 110,586 | | 3,801,633 |
Chief Financial Officer |
| 2024 |
| 413,115 | | 0 | | 0 | | 388,605 | | 2,342,019 | | — | | 82,155 | | 3,225,894 |
|
| 2023 |
| 391,539 | | 0 | | 0 | | 490,684 |
| 1,777,668 |
| — |
| 84,803 |
| 2,744,694 |
Jennifer L. Klobnak |
| 2025 |
| 527,019 | | 0 | | 0 | | 448,885 | | 4,104,771 | | — | | 81,242 | | 5,161,917 |
Chief Operating Officer |
| 2024 |
| 520,577 | | 0 | | 0 | | 500,833 | | 3,138,870 | | — | | 70,577 | | 4,230,857 |
|
| 2023 |
| 491,539 | | 0 | | 0 | | 333,880 | | 2,345,466 | | — | | 69,506 | | 3,240,391 |
Aaron P. Diefenthaler |
| 2025 |
| 377,066 | | 0 | | 0 | | 211,960 | | 576,247 | | — | | 79,550 | | 1,244,823 |
Chief Investment Officer & Treasurer |
| 2024 |
| 366,096 | | 0 | | 0 | | 218,470 | | 587,780 | | — | | 70,577 | | 1,242,923 |
|
| 2023 |
| 349,923 | | 0 | | 0 | | 200,475 | | 555,754 | | — | | 69,506 | | 1,175,658 |
Jeffrey D. Fick | | 2025 | | 411,173 | | 0 | | 0 | | 205,940 | | 413,340 | | — | | 79,550 | | 1,110,003 |
Chief Legal Officer | | 2024 | | 396,308 | | 0 | | 0 | | 228,280 | | 389,600 | | — | | 70,577 | | 1,084,765 |
| | 2023 | | 373,231 | | 0 | | 0 | | 257,906 | | 369,615 | | — | | 69,506 | | 1,070,258 |
| (1) | The amounts shown in column (f) reflect the aggregate grant date fair value of stock option awards computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in footnote |
40 | RLI Corp. 2026 Proxy Statement
| 8 to the Company’s audited financial statements for the fiscal year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 20, 2026. |
| (2) | The amount shown in column (g) for Messrs. Kliethermes, Bryant, and Ms. Klobnak reflects the cash awards paid under the MVP Program, which is discussed in further detail on pages 34-35, and includes the annual award payout under the MVP Program and long-term payout reflecting 33 percent of their respective bonus bank balances. The bank balance, in turn, includes amounts credited to their bonus banks for 2025. The amount reflected in column (g) for Mr. Diefenthaler reflects the cash award paid under the MIP, which is discussed in further detail on page 36, and the cash award paid under the UPP, which is discussed in further detail on page 36. The amount reflected in column (g) for Mr. Fick reflects the cash award paid under the MIP. |
| (3) | The amounts shown in column (i) include: |
| a. | A Company contribution to the ESOP of $32,090 for 2025 for each of the NEOs. |
| b. | A Company contribution to the 401(k) Plan of $31,791 for 2025 for each of the NEOs. |
| c. | The amounts reflected in this column represent the maximum amount expended on an individual annual executive physical examination for a NEO. The maximum amount is used for all NEOs to ensure that no protected health-related information is disclosed. |
| d. | The proportionate amounts of travel accident insurance provided for all Company management at the assistant vice president level and above. |
| (4) | Messrs. Kliethermes, Bryant and Ms. Klobnak were authorized by the Board to use the Company’s fractionally-owned aircraft for personal use in 2025, at an hourly rate established from time to time by the Board, with personal hours flown limited by a set number of hours reviewed and approved annually by the Board. For 2025, the Board approved personal use of: 30 hours for Mr. Kliethermes; 25 hours for Ms. Klobnak; and 20 hours for Mr. Bryant. In connection with Mr. Bryant’s retirement and Mr. Diefenthaler’s appointment as Chief Financial Officer effective January 1, 2026, Mr. Bryant will be permitted to continue to use the Company’s fractionally-owned aircraft for up to 10 hours while employed at the Company in 2026 and Mr. Diefenthaler will be permitted to use the Company’s fractionally-owned aircraft for up to 15 hours for calendar year 2026. The amounts included in the All Other Compensation column for Messrs. Kliethermes and Bryant reflect the difference between the Company’s hourly variable operating costs, less the hourly rates paid by each, respectively, for all personal hours flown as reflected in column (e) in the following table: |
| | | | | | | | | | | | | | | | |
| | | | (a) | | (b) | | (c) | | (d = b - c) | | (e = a x d) | ||||
|
| |
| |
| | |
| | |
| | |
| Total aggregate | |
| | | | | | | | | | | | Aggregate | | incremental | ||
| | | | | | Company | | | | | incremental | | cost to | |||
| | | | | | variable | | Hourly rate | | cost to | | Company | ||||
| | | | | | operating | | charged for | | Company | | for all personal | ||||
| | | | Personal | | cost per | | personal | | | per personal | | hours flown | |||
| | Year | | hours flown | | hour flown | | hours flown | | hour flown | | in year | ||||
Craig W. Kliethermes |
| 2025 | | 14.6 | | $ | 4,281 | | $ | 2,400 | | $ | 1,881 | | $ | 27,463 |
Jennifer L. Klobnak | | 2025 | | 0.9 | | $ | 4,281 | | $ | 2,400 | | $ | 1,881 | | $ | 1,693 |
Todd W. Bryant | | 2025 | | 16.5 | | $ | 4,281 | | $ | 2,400 | | $ | 1,881 | | $ | 31,037 |
2025 GRANTS OF PLAN-BASED AWARDS
The table on the next page sets forth information about estimated possible payouts under non-equity incentive plan awards, which consist of potential payouts under the long-term component of the MVP Program for Messrs. Kliethermes, Bryant, and Ms. Klobnak, under MIP for Mr. Fick, and under the MIP and UPP for Mr. Diefenthaler. The table shows information regarding grants of stock options made to the NEOs under the 2023 LTIP. The number of options and exercise price reflect the two-for-one stock split effective January 15, 2025.
RLI Corp. 2026 Proxy Statement | 41
| (1) | The MVP Program applicable to Messrs. Kliethermes, Bryant and Ms. Klobnak discussed in further detail on pages 34-35, does not provide for a minimum threshold award level. Messrs. Diefenthaler and Fick participate in the MIP and the amounts shown in column (c) represent the minimum award under MIP, discussed in further detail on page 36, which is equal to zero if strategic objectives and financial goals are not met. The amount shown in column (c) for Mr. Diefenthaler also includes UPP, discussed in further detail on page 38, which does not provide a minimum threshold award level. |
| (2) | The MVP Program applicable to Messrs. Kliethermes, Bryant and Ms. Klobnak does not provide for a target award. The amounts shown in column (d) are their respective 2024 MVP Program payouts for 2024 performance, which are shown as representative amounts for a target MVP Program award for 2025. For Mr. Diefenthaler, the amount in column (d) reflects the amount he received as a payout under both MIP ($357,945) and UPP ($229,835) for 2024, which is representative of a target award for 2025. For Mr. Fick, the amount in column (d) reflects the amount he received as a payout under MIP for 2024, which is representative of a target award for 2025. |
| (3) | The amounts shown in column (e) reflect the maximum incentive award permitted under the RLI Corp. Annual Incentive Compensation Plan approved by shareholders in 2016 and amended in 2018 and 2020, which governs the MVP Program, MIP, and UPP. |
| (4) | Twenty percent of each option grant becomes exercisable one year after the date of the grant and each year thereafter in 20 percent increments. Options expire on the eighth anniversary of the grant date. Grants prior to May 4, 2023 were granted pursuant to the 2015 LTIP and grants on or after May 4, 2023 were granted pursuant to the 2023 LTIP. The stock option grants vest upon the death or the termination of employment of a stock option recipient due to Disability or Retirement. Retirement is defined generally under the 2015 LTIP and 2023 LTIP as a termination of employment of an employee with combined age and years of service of 75 or greater. |
Annually in May of each year the Board of Directors approves equity awards to the named executive officers and other recipients. Under FASB ASC Topic 718, option awards to recipients who are current employees, but who qualify for retirement upon departure from the Company, are expensed at the time of grant, rather than over the five-year vesting period. Since 2006, the Company has made annual equity awards on a quarterly basis (one fourth of aggregate annual grant granted in May, August and November of the current year, and February of the subsequent year) to recipients who are Retirement eligible (age and years of service equal to or greater than 75) at the time of the annual grant in May or who will become Retirement eligible in the calendar year of grant. Quarterly grants are used for those who are retirement eligible to avoid a disproportionate expense in the quarter of grant if the option award was made in a single annual grant. In 2025, quarterly stock option awards as described above were made to Messrs. Kliethermes, Bryant, Fick and Ms. Klobnak since their age and years of service exceeded 75.
OUTSTANDING EQUITY AWARDS AT 2025 FISCAL YEAR-END
The table on the following page sets forth information with respect to the NEOs regarding the outstanding stock option awards as of December 31, 2025. None of our NEOs hold outstanding RSUs or other equity-based awards with respect to the Company. The number of options and exercise price reflect the two-for-one stock split effective January 15, 2025.
42 | RLI Corp. 2026 Proxy Statement
| | | | | Option Awards | | ||||||||
| | | | | | | | | Equity | | | | | |
| | | | | | | | | Incentive | | | | | |
| | | | | Number of | | Number of | | Plan Awards | | | | | |
| | | | | Securities | | Securities | | Number of | | | | | |
| | | | | Underlying | | Underlying | | Underlying | | | | | |
| | | | | Unexercised | | Unexercised | | Unexercised | | Option | | Option | |
| | | | | Options (#) | | Options (#) | | Unearned | | Exercise | | Exercise | |
Name | | Grant Date | | | Exercisable (1) | | Unexercisable (1) | | Options (#) | | Price (2) | | Date | |
(a) |
| (b) | |
| (c) |
| (d) |
| (e) |
| (f) |
| (g) | |
Craig W. Kliethermes |
| 08/21/20 | | | 40,000 | | 0 | | | | 43.12 | | 08/21/28 | |
|
| 05/06/21 | | | 22,400 | | 5,600 | | | | 53.01 | | 05/06/29 | |
|
| 05/05/22 | | | 90,000 | | 60,000 | | | | 54.80 | | 05/05/30 | |
|
| 05/04/23 | | | 6,000 | | 9,000 | | | | 68.295 | | 05/04/31 | |
| | 08/01/23 | | | 6,000 | | 9,000 | | | | 67.205 | | 08/01/31 | |
| | 11/01/23 | | | 6,000 | | 9,000 | | | | 67.61 | | 11/01/31 | |
| | 02/01/24 | | | 3,000 | | 12,000 | | | | 67.97 | | 02/01/32 | |
| | 05/02/24 | | | 2,900 | | 11,600 | | | | 71.575 | | 05/02/32 | |
| | 08/01/24 | | | 2,900 | | 11,600 | | | | 74.515 | | 08/01/32 | |
| | 11/01/24 | | | 2,900 | | 11,600 | | | | 78.605 | | 11/01/32 | |
| | 02/03/25 | | | 0 | | 14,500 | | | | 74.51 | | 02/03/33 | |
| | 05/13/25 | | | 0 | | 15,000 | | | | 74.36 | | 05/13/33 | |
| | 08/01/25 | | | 0 | | 15,000 | | | | 65.89 | | 08/01/33 | |
| | 11/3/2025 | | | 0 | | 15,000 | | | | 58.66 | | 11/03/33 | |
Todd W. Bryant |
| 02/03/20 | | | 1,500 | | 0 | | | | 43.81 | | 02/03/28 | |
|
| 08/21/20 | | | 2,000 | | 0 | | | | 43.12 | | 08/21/28 | |
|
| 11/02/20 | | | 2,000 | | 0 | | | | 41.14 | | 11/02/28 | |
|
| 02/01/21 | | | 8,000 | | 2,000 | | | | 45.32 | | 02/01/29 | |
|
| 05/06/21 | | | 4,800 | | 1,200 | | | | 53.01 | | 05/06/29 | |
|
| 08/02/21 | | | 4,800 | | 1,200 | | | | 50.535 | | 08/02/29 | |
|
| 11/01/21 | | | 4,800 | | 1,200 | | | | 51.51 | | 11/01/29 | |
|
| 02/01/22 | | | 3,600 | | 2,400 | | | | 48.925 | | 02/01/30 | |
|
| 05/05/22 | | | 10,200 | | 6,800 | | | | 54.80 | | 05/05/30 | |
|
| 08/01/22 | | | 10,200 | | 6,800 | | | | 51.78 | | 08/01/30 | |
| | 11/01/22 | | | 10,200 | | 6,800 | | | | 62.99 | | 11/01/30 | |
| | 02/01/23 | | | 6,800 | | 10,200 | | | | 65.89 | | 02/01/31 | |
| | 05/04/23 | | | 2,500 | | 3,750 | | | | 68.295 | | 05/04/31 | |
| | 08/01/23 | | | 2,500 | | 3,750 | | | | 67.205 | | 08/01/31 | |
| | 11/01/23 | | | 2,500 | | 3,750 | | | | 67.61 | | 11/01/31 | |
| | 02/01/24 | | | 1,250 | | 5,000 | | | | 67.97 | | 02/01/32 | |
| | 05/02/24 | | | 1,200 | | 4,800 | | | | 71.575 | | 05/02/32 | |
| | 08/01/24 | | | 1,200 | | 4,800 | | | | 74.515 | | 08/01/32 | |
| | 11/01/24 | | | 1,200 | | 4,800 | | | | 78.605 | | 11/01/32 | |
| | 02/03/25 | | | 0 | | 6,000 | | | | 74.51 | | 02/03/33 | |
| | 05/13/25 | | | 0 | | 6,250 | | | | 74.36 | | 05/13/33 | |
| | 08/01/25 | | | 0 | | 6,250 | | | | 65.89 | | 08/01/33 | |
| | 11/3/2025 | | | 0 | | 6,250 | | | | 58.66 | | 11/03/33 | |
Jennifer L. Klobnak |
| 08/21/20 | | | 40,000 | | 0 | | | | 43.12 | | 08/21/28 | |
|
| 05/06/21 | | | 22,400 | | 5,600 | | | | 53.01 | | 05/06/29 | |
| | 05/05/22 | | | 51,600 | | 34,400 | | | | 54.80 | | 05/05/30 | |
| | 05/04/23 | | | 3,200 | | 4,800 | | | | 68.295 | | 05/04/31 | |
| | 08/01/23 | | | 3,200 | | 4,800 | | | | 67.205 | | 08/01/31 | |
| | 11/01/23 | | | 3,200 | | 4,800 | | | | 67.61 | | 11/01/31 | |
| | 02/01/24 | | | 1,600 | | 6,400 | | | | 67.97 | | 02/01/32 | |
| | 05/02/24 | | | 1,550 | | 6,200 | | | | 71.575 | | 05/02/32 | |
| | 08/01/24 | | | 1,550 | | 6,200 | | | | 74.515 | | 08/01/32 | |
| | 11/01/24 | | | 1,550 | | 6,200 | | | | 78.605 | | 11/01/32 | |
| | 02/03/25 | | | 0 | | 7,750 | | | | 74.51 | | 02/03/33 | |
| | 05/13/25 | | | 0 | | 8,125 | | | | 74.36 | | 05/13/33 | |
| | 08/01/25 | | | 0 | | 8,125 | | | | 65.89 | | 08/01/33 | |
| | 11/3/2025 | | | 0 | | 8,125 | | | | 58.66 | | 11/03/33 | |
Aaron P. Diefenthaler |
| 05/02/19 | | | 15,000 | | 0 | | | | 37.83 | | 05/02/27 | |
|
| 08/21/20 | | | 25,000 | | 0 | | | | 43.12 | | 08/21/28 | |
| | 05/06/21 | | | 12,800 | | 3,200 | | | | 53.01 | | 05/06/29 | |
|
| 05/05/22 | | | 22,800 | | 15,200 | | | | 54.80 | | 05/05/30 | |
| | 05/04/23 | | | 6,000 | | 9,000 | | | | 68.295 | | 05/04/31 | |
| | 05/02/24 | | | 2,800 | | 11,200 | | | | 71.575 | | 05/02/32 | |
| | 05/13/25 | | | 0 | | 14,000 | | | | 74.36 | | 05/13/33 | |
Jeffrey D. Fick |
| 08/21/20 | | | 8,334 | | 0 | | | | 43.12 | | 08/21/28 | |
|
| 11/02/20 | | | 8,334 | | 0 | | | | 41.14 | | 11/02/28 | |
|
| 02/01/21 | | | 6,664 | | 1,668 | | | | 45.32 | | 02/01/29 | |
| | 05/06/21 | | | 3,200 | | 800 | | | | 53.01 | | 05/06/29 | |
| | 08/02/21 | | | 3,200 | | 800 | | | | 50.535 | | 08/02/29 | |
| | 11/01/21 | | | 3,200 | | 800 | | | | 51.51 | | 11/01/29 | |
| | 02/01/22 | | | 2,400 | | 1,600 | | | | 48.925 | | 02/01/30 | |
| | 05/05/22 | | | 4,500 | | 3,000 | | | | 54.80 | | 05/05/30 | |
| | 08/01/22 | | | 4,500 | | 3,000 | | | | 51.78 | | 08/01/30 | |
| | 11/01/22 | | | 4,500 | | 3,000 | | | | 62.99 | | 11/01/30 | |
| | 02/01/23 | | | 3,000 | | 4,500 | | | | 65.89 | | 02/01/31 | |
| | 05/04/23 | | | 1,500 | | 2,250 | | | | 68.295 | | 05/04/31 | |
| | 08/01/23 | | | 1,500 | | 2,250 | | | | 67.205 | | 08/01/31 | |
| | 11/01/23 | | | 1,500 | | 2,250 | | | | 67.61 | | 11/01/31 | |
| | 02/01/24 | | | 750 | | 3,000 | | | | 67.97 | | 02/01/32 | |
| | 05/02/24 | | | 700 | | 2,800 | | | | 71.575 | | 05/02/32 | |
| | 08/01/24 | | | 700 | | 2,800 | | | | 74.515 | | 08/01/32 | |
| | 11/01/24 | | | 700 | | 2,800 | | | | 78.605 | | 11/01/32 | |
| | 02/03/25 | | | 0 | | 3,500 | | | | 74.51 | | 02/03/33 | |
| | 05/13/25 | | | 0 | | 3,750 | | | | 74.36 | | 05/13/33 | |
| | 08/01/25 | | | 0 | | 3,750 | | | | 65.89 | | 08/01/33 | |
| | 11/03/25 | | | 0 | | 3,750 | | | | 58.66 | | 11/03/33 | |
| (1) | Options vest 20 percent per year over five years and expire on the eighth anniversary of the grant date. The number of |
RLI Corp. 2026 Proxy Statement | 43
| options and exercise price reflect the two-for-one stock split effective January 15, 2025. |
| (2) | Option exercise prices for grants prior to December 20, 2022 were adjusted to reflect a reduction in the exercise price equal to the split-adjusted $3.50 special dividend paid on that date in connection with the sale of the Company’s interest in Maui Jim to all our shareholders in order to prevent dilution to stock options holders. The number of options and exercise price reflect the two-for-one stock split effective January 15, 2025. |
2025 OPTION EXERCISES AND STOCK VESTED
The following table sets forth information with respect to the NEOs regarding the exercise of options during 2025. Value realized on exercise is the excess of the fair market value of the underlying stock on the exercise date over the exercise price under the option. The number of options and exercise price reflect the two-for-one stock split effective January 15, 2025.
| | | | | |
| | Option Awards | |||
| | Number of Shares | | Value Realized | |
Name | | Acquired on Exercise (#) | | on Exercise ($) | |
(a) | | (b) | | (c) | |
Craig W. Kliethermes |
| 0 |
| 0 |
|
Todd W. Bryant |
| 0 |
| 0 |
|
Jennifer L. Klobnak |
| 0 |
| 0 |
|
Aaron P. Diefenthaler |
| 18,000 |
| 645,660 |
|
Jeffrey D. Fick |
| 0 |
| 0 |
|
2025 NON-QUALIFIED DEFERRED COMPENSATION
The following table sets forth information on the non-qualified deferred compensation for the NEOs in 2025. The Company does not make contributions to the deferred compensation plan.
| | | | | | | | |
| | Executive Contributions | | Aggregate Earnings | | Aggregate Withdraws/ | | Aggregate Balance |
| | in Last FY | | in Last FY | | Distributions | | at Last FYE |
Name | | ($) | | ($) | | ($) | | ($) |
(a) | | (b) | | (c) | | (d) | | (e) |
Craig W. Kliethermes (2) |
| 0 | | (342,634) | | 0 | | 1,776,531 |
Todd W. Bryant (3) |
| 0 | | 0 | | 0 | | 0 |
Jennifer L. Klobnak (3) |
| 0 | | 0 | | 0 | | 0 |
Aaron P. Diefenthaler (1)(2) |
| 108,100 | | (9,621) | | 0 | | 570,577 |
Jeffrey D. Fick (2) |
| 0 | | 61,463 | | 0 | | 519,611 |
| (1) | The amounts shown for Mr. Diefenthaler in column (b) reflect the amounts of deferred compensation earned in 2025. This amount was included in the amounts shown in the 2025 Summary Compensation Table for Mr. Diefenthaler. |
| (2) | The amounts shown for Messrs. Kliethermes, Diefenthaler, and Fick in column (c) reflect the dividends paid on, and change in the value of, the investments held in their accounts under the Deferred Plan, which is described in further detail on page 39. Dividends paid on Company shares held in the Deferred Plan are also deferred and are used to purchase additional shares held in the Deferred Plan. Amounts deferred in previous years were included in the Summary Compensation Table in the year of such deferrals. |
| (3) | Mr. Bryant and Ms. Klobnak have not participated in the Deferred Plan in any prior years. |
44 | RLI Corp. 2026 Proxy Statement
ELEMENTS OF POST-TERMINATION COMPENSATION AND BENEFITS
The table below shows potential amounts payable to each NEO had their employment terminated on December 31, 2025 based on the following scenarios: departure other than death, Disability, or Retirement; departure from death, Disability, or Retirement; for cause; and change in control.
Post Termination Compensation
| | | | | | | | |
| | Termination of | | | | | | |
Name | | Employment Scenarios | | MVP/MIP/UPP ($) | | LTIP ($) | | Total ($) |
Craig W. Kliethermes (1) (2) |
| Departure Other Than Death, Disability, or Retirement |
| N/A |
| N/A |
| N/A |
|
| Departure From Death, Disability, or Retirement |
| 15,863,689 | | 2,598,360 | | 18,462,049 |
|
| For Cause |
| 0 |
| 0 |
| 0 |
|
| Change in Control |
| 15,863,689 |
| 2,598,360 |
| 18,462,049 |
Todd W. Bryant (1) |
| Departure Other Than Death, Disability, or Retirement |
| N/A |
| N/A |
| N/A |
|
| Departure From Death, Disability, or Retirement |
| 7,629,458 | | 1,029,435 | | 8,658,893 |
|
| For Cause |
| 0 |
| 0 |
| 0 |
|
| Change in Control |
| 7,629,458 |
| 1,029,435 |
| 8,658,893 |
Jennifer L. Klobnak (1) |
| Departure Other Than Death, Disability, or Retirement |
| N/A |
| N/A |
| N/A |
|
| Departure From Death, Disability, or Retirement |
| 10,627,949 | | 1,974,265 | | 12,602,214 |
|
| For Cause |
| 0 |
| 0 |
| 0 |
|
| Change in Control |
| 10,627,949 |
| 1,974,265 |
| 12,602,214 |
Aaron P. Diefenthaler (2) |
| Departure Other Than Death, Disability, or Retirement |
| 637,006 |
| 0 |
| 637,006 |
|
| Departure From Death, Disability, or Retirement |
| 637,006 |
| 1,263,470 |
| 1,900,476 |
|
| For Cause |
| 0 |
| 0 |
| 0 |
|
| Change in Control |
| 637,006 |
| 1,263,470 |
| 1,900,476 |
Jeffrey D. Fick (1) (2) |
| Departure Other Than Death, Disability, or Retirement |
| N/A |
| N/A |
| N/A |
|
| Departure From Death, Disability, or Retirement |
| 413,340 |
| 915,156 |
| 1,328,496 |
|
| For Cause |
| 0 |
| 0 |
| 0 |
|
| Change in Control |
| 413,340 |
| 915,156 |
| 1,328,496 |
| (1) | Messrs. Kliethermes, Bryant, Fick, and Ms. Klobnak have met the requisite age and years of service to qualify for Retirement upon their departure from the Company, meaning any departure, other than termination for cause, would meet the definition of Retirement. |
| (2) | Each NEO participating in a Company deferred compensation plan, upon departure for any reason, is entitled to the amounts payable to them under the Plan. For amounts due to each NEO see the table on page 44. |
The Company has not entered into any employment or severance agreements or arrangements with any of its executive officers that would compensate the executive officers for or after departing the Company. The following paragraphs describe the circumstances under which the Retirement or other termination of employment will result in a payment to a NEO under the Company’s annual and long-term incentive plans.
MVP/MIP/UPP. Under the Company’s MVP Program, an employee must be employed on the date bonuses are paid under the MVP Program in order to receive a bonus for that year, unless the employee’s termination of employment was due to death, Disability, or Retirement. Under the Company’s MIP and UPP Programs, an employee must be employed on the last calendar day of the year in order to receive a bonus for that year, unless the employee’s termination of employment was due to death, Disability, or Retirement. Retirement requires: in order to receive a bonus payout for that year, or from a bonus bank if applicable, (1) the termination of employment of an employee who has reached age and years of service equal to or greater than 75 at the time of departure; or (2) the termination of employment of an employee who satisfies a non-competition covenant or other terms and conditions specified by the Company. Under the UPP, an employee may receive award payouts for prior underwriting years until the payout period has expired. In order to receive continued UPP payout, an employee must satisfy the certain conditions for continued UPP payout described in the UPP guidelines. The amounts in the above table show annual incentives payable upon termination of employment in the event of a death, Disability, or Retirement assuming all NEOs would have met the definition of Retirement at year-end 2025. Messrs. Kliethermes, Bryant, Fick, and Ms. Klobnak have met the definition based on age and years of service.
Upon the termination of employment of a participant qualifying as Retirement, a positive MVP bonus bank calculated on the last day of the quarter during which the participant’s bonus participation ended will be paid to a participant in a lump sum on the first day of the seventh month after termination if the participant is age 65 or older, and as a quarterly annuity starting after the first day of the seventh month after termination, and continuing to age 65 using the interest rate for the five-year Treasury Note in effect at the date of Retirement if the Participant’s age is less than 65. A bonus bank balance will also be calculated at the end of the quarter prior to a participant’s bonus participation ending and the Company may, in its discretion, pay the lower of the calculated bonus banks. All such payments upon a termination of employment qualifying as Retirement are subject to ongoing restrictions on: the participant’s employment in the insurance industry; solicitation of Company employees for employment elsewhere; solicitation of business away from the Company; and disclosure of confidential information of the Company.
Long-Term Incentives. Under the terms of the 2023 LTIP, stock option grants automatically vest upon the death or Disability of an optionee but will vest upon the Retirement of an optionee only if the underlying stock option agreement so provides. The awards of stock options to the NEOs, and all other stock option recipients at the Company, provide for the immediate vesting of outstanding unvested stock options in the event of a recipient’s termination of employment qualifying as a Retirement. Retirement is defined under the 2023 LTIP as (1) the termination of employment of an employee who has
RLI Corp. 2026 Proxy Statement | 45
reached age and years of service equal to or greater than 75 at the time of departure; or (2) the termination of employment of an employee who satisfies a non-competition covenant or other terms and conditions specified by the Company. Stock options must be exercised within the earlier of one year of the death of an optionee, or three years of the termination of employment due to the Disability or Retirement of an optionee, and the original expiration date of the stock option award. In the event of the termination of employment of an optionee for reasons other than death, Disability, or Retirement, vested options must be exercised within the earlier of 90 days of the termination of employment or the original expiration of the option award. In 2025, Messrs. Kliethermes, Bryant, Fick and Ms. Klobnak met the definition of Retirement and, accordingly, upon their termination of employment with the Company, all of their respective unvested stock option grants will immediately vest, expiring on the earlier of the original expiration date or three years after termination.
For Cause. In the event of a termination for cause, all unpaid bonuses, amounts in a bonus bank, and unexercised stock options are forfeited.
Change in Control. In the event of a change in control of the Company, as defined under the 2023 LTIP, the Board must take one of two actions with respect to outstanding stock option awards. Under the first alternative, the Board must make appropriate provisions for the replacement of the outstanding awards by the substitution of equity-based awards of the surviving company with substantially similar terms and conditions, with full vesting for qualifying terminations of employment, such as involuntary termination by the Company or termination by the employee with good reason, in either case, within two years following the change in control. Alternatively, the Board must permit the options to be exercised prior to the change in control or cashed out as part of the change in control. For illustration purposes, the table shown on the previous page assumes a change in control occurred followed immediately by an involuntary termination by the Company or termination by the employee with good reason as of December 31, 2025.
The 2016 RLI Corp. Annual Incentive Compensation Plan, which governs the MVP, MIP, and UPP bonus programs, includes a change in control provision, with “change in control” defined as in the 2023 LTIP. The Annual Incentive Compensation Plan provides that upon change in control, any amounts credited to a bonus bank and any amounts earned during a full or partial performance period shall not be forfeited but will be paid out as specified under the applicable bonus program. The amounts shown in the table above show the full bonus bank balance under the MVP Program for Messrs. Kliethermes, Bryant, and Ms. Klobnak. For Mr. Diefenthaler, the amount shown is the full year bonus under the MIP and the full bonus bank balance under the UPP. For Mr. Fick, the amount shown is the full year bonus under the MIP.
RATIO OF CEO TO MEDIAN EMPLOYEE TOTAL COMPENSATION
Under the Dodd-Frank Act, the SEC requires disclosure of the CEO to median employee ratio of total compensation.
The Company calculated this ratio using the same employee as used for 2023 and 2024 since there was no change to the employee population or employee compensation arrangements that would result in a significant change to the pay ratio disclosure.
We determined the median employee for purposes of this disclosure by generating a report from our payroll system reflecting either the base salary, or wages and overtime, as appropriate, for the calendar year 2025 for every full-time, part-time, seasonal, and temporary employee (other than Mr. Kliethermes), annualizing that amount for any full-time or part-time employee who had worked for less than a full year.
The median employee is a business analyst for the Company and is paid an annual salary, participated in the Company’s Management Incentive Program, and participated in the Company’s retirement plans (401k and Employee Stock Ownership Plan). The median employee and Mr. Kliethermes receive the same percentage contributions of their respective base salaries to the retirement plans, except that the salary on which Mr. Kliethermes’s contribution is based was capped in 2025 pursuant to the IRS regulation at $350,000. We calculated the median employee’s total compensation for 2025 in the same manner used to calculate Mr. Kliethermes’ total compensation as reflected in the 2025 Summary Compensation Table on page 40. For the median employee, we included base salary, annual incentive payouts, and retirement contributions to the employee’s accounts under the Company’s retirement plans. Amounts reflected in Mr. Kliethermes’ total compensation in the form of long-term incentive awards and limited perquisites did not apply to the median employee.
46 | RLI Corp. 2026 Proxy Statement
PAY FOR PERFORMANCE
The following table sets forth information regarding the Company’s performance and the Compensation Actually Paid (“CAP”) to our NEOs, as calculated in accordance with SEC disclosure rules:
| | | | | | | | | | | | | | Value of Initial Fixed $100 Investment Based On (4): | | | | | ||
Year (1) | | Summary Compensation Table Total for PEO Kliethermes ($)(2) | | Summary Compensation Table Total for PEO Michael ($)(2) | | CAP to PEO Kliethermes ($)(3) | | CAP to PEO Michael ($)(3) | | Average Summary Compensation Table Total for Non-PEO NEOs ($)(3) | | Average CAP to Non-PEO NEOs ($)(2) | | Total Shareholder Return | | Peer Group Total Shareholder Return ($)(5) | | Net Income ($)(6) | | Company Selected Measure (MVP) ($)(7) |
(a) | | (b) | | | | (c) | | | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) |
2025 | | | | N/A | | | | N/A | | | | | | | | | | | | |
2024 | | | | N/A | | | | N/A | | | | | | | | | | | | |
2023 | | | | N/A | | | | N/A | | | | | | | | | | | | |
2022 | | | | N/A | | | | N/A | | | | | | | | | | | | |
2021 | | N/A | | | | N/A | | | | | | | | | | | | | | |
| (1) | The Principal Executive Officer (“PEO”) and NEOs for the applicable years were as follows: |
| - | 2025: Mr. Kliethermes served as the PEO for the entirety of 2025. The Company’s other NEOs for 2025 were: Todd W. Bryant, Jennifer L. Klobnak, Aaron P. Diefenthaler, and Jeffrey D. Fick. |
| - | 2024: Mr. Kliethermes served as the PEO for the entirety of 2024. The Company’s other NEOs for 2024 were: Todd W. Bryant, Jennifer L. Klobnak, Aaron P. Diefenthaler, and Jeffrey D. Fick. |
| - | 2023: Mr. Kliethermes served as the PEO for the entirety of 2023. The Company’s other NEOs for 2023 were: Todd W. Bryant, Jennifer L. Klobnak, Aaron P. Diefenthaler, and Jeffrey D. Fick. |
| - | 2022: Mr. Kliethermes served as the PEO for the entirety of 2022. The Company’s other NEOs for 2022 were: Todd W. Bryant, Jennifer L. Klobnak, Aaron P. Diefenthaler, and Jeffrey D. Fick. |
| - | 2021: Mr. Jonathan E. Michael, former Chairman of the Board until May 2024, served as the PEO for the entirety of 2021. The Company’s other NEOs for 2021 were: |
| (2) | Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation Table for the applicable year in which the NEO served as PEO in the case of Messrs. Kliethermes and Michael and (ii) the average of the total compensation reported in the Summary Compensation Table for the applicable year for the Company’s NEOs reported for the applicable year other than the individual serving as PEO during the applicable year. Because Mr. Kliethermes did not serve as PEO during 2021, his compensation is included in the average for the Non-PEO NEOs for such years. |
| (3) | To calculate Compensation Actually Paid, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Messrs. Kliethermes and Michael for the period they served as PEO and for the average of the other NEOs is set forth following the footnotes to this table. |
| (4) | Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2020. Historic stock price performance is not necessarily indicative of future stock price performance. |
| (5) | The TSR Peer Group consists of the Standard & Poor’s 500 P&C Index (the “S&P 500 P&C Index”), an independently prepared index that includes companies in the property and casualty insurance industry. |
| (6) | 2022 net income includes $ |
| (7) | As noted in “Compensation Discussion and Analysis,” “ |
RLI Corp. 2026 Proxy Statement | 47
| blended cost of capital is defined as the weighted average of the cost of equity capital and the cost of debt capital. The cost of equity capital is the average |
Reconciliation of CAP Adjustments
CAP Adjustments | ||||||||||||||||
| | | | | | | | | | | | | | | | |
| | | | Minus | | Plus | | Plus/(Minus) | | Plus | | Plus/(Minus) | | Minus | | Equals |
| | Summary Compensation Table Total | | Grant Date Fair Value of Stock Option Awards Granted in Fiscal Year | | Fair Value at Fiscal Year-End of Outstanding and Unvested Stock Option and Stock Awards Granted in Fiscal Year | | Change in Fair Value of Outstanding and Unvested Stock Option and Stock Awards Granted in Prior Fiscal Years | | Fair Value at Vesting of Stock Option and Stock Awards Granted in Fiscal Year that Vested During Fiscal Year | | Change in Fair Value as of Vesting Date of Stock Option and Stock Awards Granted in Prior Years for which Applicable Vesting Conditions Were Satisfied During Fiscal Year | | Fair Value as of Prior Fiscal Year-End of Stock Option and Stock Awards Granted in Prior Fiscal Years that Failed to Meet Applicable Vesting Conditions During Fiscal Year | | CAP |
Year | | ($)(a) | | ($)(b) | | ($)(c) | | ($)(d) | | ($)(e) | | ($)(f) | | ($)(g) | | ($) |
Craig W. Kliethermes(h) | ||||||||||||||||
2025 | | | | ( | | | | ( | | - | | ( | | - | | |
2024 | | | | ( | | | | | | - | | | | - | | |
2023 | | | | ( | | | | ( | | - | | | | - | | |
2022 | | | | ( | | | | | | - | | | | - | | |
Jonathan E. Michael | ||||||||||||||||
2021 | | | | ( | | | | | | - | | | | - | | |
Average Other NEOs(i) | ||||||||||||||||
2025 | | | | ( | | | | ( | | - | | ( | | - | | |
2024 | | | | ( | | | | | | - | | | | - | | |
2023 | | | | ( | | | | ( | | - | | ( | | - | | |
2022 | | | | ( | | | | | | - | | | | - | | |
2021 | | | | ( | | | | | | - | | | | - | | |
| (a) | Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year. With respect to the Average Other NEOs, amounts shown represent averages. |
| (b) | Represents the grant date fair value of the stock option awards granted during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
| (c) | Represents the fair value as of the indicated fiscal year-end of the outstanding and unvested stock option awards granted during such fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
| (d) | Represents the change in fair value during the indicated fiscal year of the outstanding and unvested stock option and stock awards granted in prior fiscal years held by the applicable NEO as of the last day of the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
| (e) | Represents the fair value at vesting of the stock option awards that were granted and vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
| (f) | Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each stock option and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes, including the value associated with any dividend accruals. |
| (g) | Represents the fair value as of the last day of the prior fiscal year of the stock option and stock awards that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
| (h) | For 2021, the compensation of Mr. Kliethermes, the Company’s current Chief Executive Officer, is reported in the Average Other NEOs section of this table as Mr. Kliethermes was not the PEO for any portion of those years. |
| (i) | See footnote 1 above for the NEOs included in the average for each year. |
Relationship Between Pay and Performance
We believe the “Compensation Actually Paid” in each of the years reported above and over the five-year cumulative period are reflective of the Human Capital & Compensation Committee’s emphasis on “pay-for-performance” as the “Compensation Actually Paid” fluctuated year-over-year, primarily due to the result of our stock performance and our varying levels of achievement against pre-established performance goals under our incentive programs.
48 | RLI Corp. 2026 Proxy Statement
The relationship between compensation paid and the pay of our NEOs is further described below:
| ● | Relationship Between Compensation Paid to the PEO and Average Other NEOs and the Company’s Cumulative TSR – As calculated in accordance with the SEC disclosure rules, the Compensation Actually Paid to our PEO was $7,205,891 for 2021, primarily driven by our MVP and stock price performance. During 2021, the Company’s TSR, measured assuming a $100 investment in the Company’s stock as of December 31, 2020, increased by over 10.7% to $110.70. Our TSR, measured assuming a $100 investment in the Company’s common stock as of December 31, 2020, increased to $138.00 as of December 31, 2022, to $143.20 as of December 31, 2023, to $182.60 as of December 31, 2024, and decreased to $147.70 as of December 31, 2025. The “Compensation Actually Paid” to the PEO decreased to $4,397,536 as of December 31, 2025, driven primarily by a reduction in our stock price in 2025. Compensation Actually Paid for the PEO and average Compensation Actually Paid for the other NEOs decreased by 51% and 53.5%, respectively, in 2025 compared to 2024, while 2025 TSR decreased by 19.1% compared to 2024. |
| ● | Relationship Between Compensation Paid to the PEO and Average Other NEOs and the Company’s Net Income - As required by SEC disclosure rules, we are presenting the relationship between net income and the Compensation Actually Paid to our NEOs. Net income is not a component of our executive compensation program. Although our executive compensation program is not dependent on our net income performance, our 2025 net income increased by 16.6% compared to 2024, while our Compensation Actually Paid for the PEO position and the average of our other NEOs each decreased by 51% and 53.5%, respectively, in 2025 compared to 2024. |
| ● | Relationship Between Compensation Paid to the PEO and Average Other NEOs and MVP – As noted above, the Company-Selected Measure is MVP. MVP measures the after-tax returns earned by the Company above its cost of capital, as a gauge of shareholder value creation. While MVP represents a significant component of our executive compensation program, Compensation Actually Paid is also impacted by our stock price as equity awards also represent a significant component of the Company’s executive compensation program. In particular, the equity awards granted to the PEO and NEOs in 2022 increased compared to the equity awards granted in prior years for executive retention considerations in light of our planned CEO succession that year, resulting in an increase in 2022 Compensation Actually Paid as compared to prior years, which was also compounded by the increase in our stock price over the course of 2022. By comparison, 2023 and 2024 equity awards granted to the NEOs were less than in 2022. Compensation Actually Paid for 2024 reflects a 22% increase in our share price in 2024. |
The Compensation Actually Paid to the PEO and the average for the other NEOs, in 2021, was $7,205,891 and $3,239,253, respectively, while MVP was $240,593,000 for 2021. For 2022, the MVP declined to $61,080,000, although the Compensation Actually Paid for the PEO and the average for the other NEOs increased to $7,899,333 and decreased to $2,918,561, respectively, which was driven, in part, by the increased equity awards granted in 2022 as described above, the appreciation in the value of the Company’s stock price over the course of 2022 and distributions of banked amounts for prior years’ performance under the Company’s incentive programs, as further described in the “Compensation Discussion and Analysis.” The average compensation actually paid to the other NEO’s in 2022 decreased because Mr. Kliethermes was not included as an NEO since he was promoted to CEO in that year, while Mr. Fick was added to the group and his compensation was less than Mr. Kliethermes’s compensation.
It is important to note, as described in the “Compensation Discussion and Analysis,” the 2022 MVP was negatively-impacted by the HCCC’s election to exclude the net gain from the sale of the Company’s interest in Maui Jim from the MVP calculation. In connection with the transaction, we recognized a net realized gain of $574.7 million. The RLI Corp. Annual Incentive Compensation Plan provides the HCCC authority to adjust annual performance goals or performance results to exclude the effects of an extraordinary, unusual or nonrecurring event; discontinued operations; or a divestiture, among other events. In 2022 the HCCC revised the MVP calculation to provide that the net gain in 2022 from the sale of Maui Jim shares – net of tax; net of transaction costs; and net of one-time transactions bonuses paid to all employees other than the NEOs, a total of $434.4 million - would be excluded from the calculation of the Actual Return (increase in adjusted GAAP book value), which in turn is used to calculate MVP. The HCCC made this determination on the basis of a number of factors including: the guiding principles of RLI executive compensation discussed at page 30; the unique one-time nature of the transaction; market precedent for the treatment on gains by other companies from a one-time sale or divestiture transaction; the longstanding nature of the Company’s investment in Maui Jim; RLI’s contractual obligation to sell its Maui Jim shares pursuant to a Shareholder’s Agreement with the majority owner of Maui Jim; and the minority interest held by RLI and resulting lack of direct control over Maui Jim’s business by RLI, among other factors. The election to exclude the net gain from the sale had the impact of reducing the MVP calculation for 2022.
For 2023, MVP increased to $188,408,000 while compensation actually paid to the PEO and other NEOs decreased to $5,018,113 and $2,050,036, respectively, due in part to the banking feature of the MVP Incentive Program that delays payouts to the CEO, COO, and CFO based on 2023 MVP achieved to future years, and in part due to the moderating growth of the Company’s stock price in 2023.
For 2024, MVP increased to $241,854,000 and compensation actually paid to the PEO and other NEOs increased to $8,979,634 and $3,305,774, respectively, reflecting increased MVP for 2024, the increase in RLI share price, and for the CEO, COO, and CFO, payouts from prior year MVP results from the bonus bank feature in the MVP Annual Incentive Program.
RLI Corp. 2026 Proxy Statement | 49
In 2025, MVP increased to $284,395,000 and compensation actually paid to the PEO and other NEOs decreased to $4,397,536 and $1,537,176, respectively, reflecting increased MVP for 2025, payouts from prior year MVP results from the bonus bank feature in the MVP Annual Incentive Program for the CEO, COO, and CFO, offset by the decline in RLI share price.
| ● | Relationship Between Company TSR and Peer Group TSR –Assuming a $100 investment on December 31, 2020, (i) for the period ending December 31, 2021, our TSR was $110.70 compared to our Peer Group’s TSR of $117.50, (ii) for the period ending December 31, 2022, our TSR increased to $138.00 compared to our Peer Group’s TSR of $139.70, (iii) for the period ending December 31, 2023, our TSR increased to $143.20 compared to our Peer Group’s TSR of $154.70, (iv) for the period ending December 31, 2024, our TSR increased to $182.60 compared to our Peer Group’s TSR of $209.20; and (v) for the period ending December 31, 2025, our TSR decreased to $147.70 compared to our Peer Group’s TSR of $228.80. |
Performance Measures Used to Link Company Performance and Compensation Actually Paid to the NEOs
The following is a list of financial performance measures, which in our assessment represent the most important financial performance measures used by the Company to link Compensation Actually Paid to the NEOs for 2025.
| ● |
| ● |
| ● |
| ● |
| ● |
| ● |
| ● | In addition to the metrics noted below, the Company’s MIP and MVP Program also incorporates annual objectives relating to customer experience, continuous improvement, community, and success metrics. Please see the “Compensation Discussion and Analysis” for a further description of the metrics used in the Company’s executive compensation programs, including “Market Value Potential Executive Incentive Program (MVP Program) – General”, “Market Value Potential Executive Incentive Program (MVP Program) – Annual Incentive Compensation Component”, “Management Incentive Program (MIP)”, Underwriting Profit Program (UPP) – Annual Incentive Compensation Component”, “Market Value Potential Executive Incentive Program (MVP Program) – Long-Term Incentive Compensation Component and Forfeiture Provision (Clawback)”, and “Underwriter Profit-Sharing Program – Long-Term Incentive Compensation Component” on pages 34-38. |
COMPANY PRACTICE REGARDING TIMING OF EQUITY AWARDS
Annually in May of each year the Board of Directors approves equity awards to the named executive officers and other recipients. Under FASB ASC Topic 718, option awards to recipients who are current employees, but who qualify for retirement upon departure from the Company, are expensed at the time of grant, rather than over the five-year vesting period. Since 2006, the Company has made annual equity awards on a quarterly basis (one fourth of aggregate annual grant granted in May, August and November of the current year, and February of the subsequent year) to recipients who are Retirement eligible (age and years of service equal to or greater than 75) at the time of the annual grant in May or who will become Retirement eligible in the calendar year of grant. (in 2020, due to uncertainty due to the COVID-19 pandemic, grants were not made on this schedule but in August, November, and February.) Quarterly grants are used for those who are retirement eligible to avoid a disproportionate expense in the quarter of grant if the option award was made in a single annual grant. In 2025, quarterly stock option awards as described above were made to Messrs. Kliethermes, Bryant, Fick and Ms. Klobnak since their age and years of service exceeded 75.
Name | Grant Date | # of securities underlying the option award | Exercise or Strike Price of Option Award ($/Sh) | Grant Date Fair Value | Disclosure of MNPI (1) | Percentage change in the closing market price of the securities underlying the award between the trading day ending immediately prior to the disclosure of material nonpublic information and the trading day beginning immediately following the disclosure of material nonpublic information |
Craig W. Kliethermes | 5/13/2025 | 14,500 | $ 71.58 | $ 227,100 | 5/13/2025 | -1.48% |
Jennifer L. Klobnak | 5/13/2025 | 7,750 | $ 71.58 | $ 123,013 | 5/13/2025 | -1.48% |
Todd W. Bryant | 5/13/2025 | 6,000 | $ 71.58 | $ 94,625 | 5/13/2025 | -1.48% |
Aaron P. Diefenthaler | 5/13/2025 | 14,000 | $ 71.58 | $ 211,960 | 5/13/2025 | -1.48% |
Jeffrey D. Fick | 5/13/2025 | 3,500 | $ 71.58 | $ 56,775 | 5/13/2025 | -1.48% |
| (1) | Q2FY25 Dividend Announcement: May 13, 2025 |
50 | RLI Corp. 2026 Proxy Statement
SAFEGUARDS AGAINST UNNECESSARY OR EXCESSIVE COMPENSATION RISK
Management of the Company, including leaders in legal and human resources, undertook analysis of the Company’s long-standing compensation structure considering the Company’s compensation policies and practices with respect to the NEOs, as well as the other employees of the Company, to determine whether incentives arising from compensation policies or practices relating to any of the Company’s employees would be reasonably likely to have a material adverse effect on the Company. Based on the analysis and discussions, the HCCC and management concluded that the Company’s compensation policies and practices do not create risks reasonably likely to have a material adverse effect on the Company and again confirmed that the mix of compensation types and time frames tend to align risk-taking with appropriate medium and long-term rewards for the Company.
The following is a discussion of how the Company’s compensation policies and practices for its employees will affect risk management practices and risk-taking incentives. The Company is in the business of insurance and therefore takes on the risk of others in return for appropriate premiums. The Company is therefore particularly sensitive to matching the annual incentives it pays to its employees with the long-term risk and value created by the insurance business it writes. The following discussion is broken into four areas: (1) Senior Management Compensation; (2) Underwriting Compensation; (3) Investment Practices; and (4) Employee and Executive Equity Ownership.
SENIOR MANAGEMENT COMPENSATION
In 2025, the Company’s President & CEO, COO, and CFO participated in the MVP Program, an incentive program described in further detail beginning on page 34. The MVP Program balances risk and opportunity by incorporating a risk-based cost of capital target. The MVP Program contains three features which adjust, for longer-term considerations, the annual measure of shareholder value creation used to determine incentive awards.
The first is a banking feature that deposits the financial component of MVP-based incentive awards (which may be positive or negative) into a “bonus bank,” paying out 33 percent of the bonus bank’s balance annually. A bonus bank balance is at risk based on future performance — future positive MVP will increase the bonus bank and payouts, while negative MVP will decrease the bank and payouts. By exposing the bonus bank balance to future performance, the MVP Program provides an incentive to sustain long-term shareholder value creation.
The second is a Peer Company adjustment factor applicable to the financial component of an MVP Program award that rates the relative performance of the Company to that of the peer group with respect to growth in comprehensive earnings over a five-year period.
The third is Board discretion to reduce awards resulting from excessively risky actions by management, or for other subjective or objective criteria. Additionally, the MVP Program includes a Board approval mechanism, which requires the prior approval of the Independent Directors of the Board of the financial portion of any annual award (positive or negative) contributed to an MVP bonus bank that exceeds 300 percent of a participant’s base salary. This Board approval limit gives the Board the ability to reduce an award if the Board determines that MVP did not correspondingly increase shareholder value.
The HCCC believes that the risk-based cost of capital target, long-term banking feature, Peer Company adjustment factor for five-year growth in book value and Board discretion to reduce incentive awards significantly reduce the likelihood that senior management will take high-risk actions solely to improve short-term financial results to the detriment of long-term performance.
UNDERWRITING COMPENSATION
Underwriters are paid annual incentives under one of two annual incentive programs, the Underwriting Profit Program (“UPP”) or the Underwriting Incentive Plan (“UIP”). Participants in UPP, product group executives with oversight responsibility for respective product group underwriting, earn an annual incentive equal to a percentage of underwriting profit created. All other underwriters at the Company participate in UIP. UIP provides incentives based on specific performance factors such as individual and product group loss ratio, underwriting profit, combined ratio, Gross Premiums Written, and new business generation.
To calculate underwriting profit under UPP, actual and estimated losses are subtracted from premiums to ensure that the annual incentives based on underwriting profit reflect losses that occur over several years. For most products, actual and estimated losses are measured over a four to eight-year period. Over that four to eight-year period, only a partial incentive award is paid each year until all losses develop and a final underwriting profit figure can be determined for the applicable underwriting year. For earthquake and hurricane insurance, modeled expected losses are used to calculate underwriting profit for incentive purposes since losses are typically experienced over a significantly longer period of time.
The HCCC believes that by subjecting premiums to risk of actual and estimated losses, the Company’s underwriting incentive plans, UPP and UIP, ensure that the income and risk to the Company from underwriting results are closely aligned with the incentives paid to underwriters. In this manner, UPP and UIP are designed to ensure that underwriters are not given an incentive to produce short-term underwriting results without regard to the long-term income and risk consequences of their underwriting.
RLI Corp. 2026 Proxy Statement | 51
INVESTMENT PRACTICES
The HCCC believes that the following controls protect the Company against the Company taking excessive and unnecessary risk to maximize short-term investment results:
| ● | The Company's investment portfolio is managed pursuant to the oversight of the Finance & Risk Committee (as further described on page 27) of the Board; |
| ● | The Finance & Risk Committee has established an Investment Policy Statement setting forth detailed investment objectives, benchmarks, constraints, and operating policies for the portfolio; |
| ● | All security transactions are confirmed by three Company officers; and |
| ● | All investment actions must comply with state insurance regulatory provisions related to the investments in the portfolio. |
EMPLOYEE AND EXECUTIVE EQUITY OWNERSHIP
Finally, the Company has a long-standing employee ownership culture, reflected by its ESOP implemented in 1975. The ownership culture creates strong alignment between the interests of employees and shareholders to foster a long-term shareholder value creation perspective. To further support the employee ownership culture, the HCCC has designed the executive compensation program to provide equity-based long-term incentives and has implemented a stock ownership guideline requiring significant levels of stock ownership for key executives, described in detail on page 40. The HCCC believes that significant stock holdings by employees and executives provide a strong incentive to grow long-term shareholder value and to avoid actions that increase short-term results in a manner that prevents excessive and unnecessary risk to long-term results.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2025, regarding Common Stock that may be issued under the Company’s equity compensation plans, including the Director Deferred Plan, the Deferred Plan, the 2015 LTIP, and the 2023 LTIP. As of December 31, 2025 and adjusted for a 2-for-1 stock split as of January 15, 2025, the Company had 99,966,995 shares of Common Stock outstanding. Information is included for both equity compensation plans approved and not approved by the Company’s shareholders.
| | | | | | | | |
| | | | | | | Number of securities | |
| | Number of securities | | | | | remaining available for | |
| | to be issued upon exercise | | Weighted-average exercise | | future issuance under equity | | |
| | of outstanding options, | | price of outstanding options | | compensation plans (excluding | | |
Plan Category | | warrants and rights | | warrants and rights | | securities reflected in column (a)) | | |
| | (a) | | (b) | | (c) | | |
Equity compensation plans |
| | | | | | | |
approved by shareholders (1) |
| 3,080,173 | (2) | $ | 55.69 | (3) | 6,680,890 | (4) |
| | | | | | | | |
Equity compensation plans not |
| | | | | | | |
approved by shareholders (5) |
| — | | | — | | — | (6) |
| | | | | | | | |
Total |
| 3,080,173 | | $ | 55.69 | | 6,680,890 | |
| (1) | Consists of the 2015 LTIP and 2023 LTIP. |
| (2) | Includes 1,973,545 options to purchase shares exercisable under the 2015 LTIP and 2,745 RSUs which will be issued upon vesting through May 2026 under the 2015 LTIP, and 1,013,069 options to purchase share exercisable under the 2023 LTIP and 90,814 RSUs which will be issued upon vesting in May 2026 through December 2028 under the 2023 LTIP. |
| (3) | Only applies to outstanding options, as RSU’s do not have exercise prices. |
| (4) | Shares available for future issuance under the 2023 LTIP. Pursuant to the terms of the 2023 LTIP and for purposes of calculating the number of securities remaining available for future issuance under equity compensation plans, each RSU is a Full Value Award and therefore is counted as 2.5 shares. |
| (5) | Consists of the Director Deferred Plan and the Deferred Plan. |
| (6) | No specific number of shares of the Company’s Common Stock are reserved for future issuance under these plans. Under the Company’s Director Deferred Plan and Deferred Plan, executive officers and Directors may elect to defer compensation otherwise payable to them. Under the Director Deferred Plan and Deferred Plan, the Company must transfer to a bank trustee, under an irrevocable trust established by the Company, such number of shares of Common Stock as are equal to the compensation earned and deferred. |
52 | RLI Corp. 2026 Proxy Statement
PROPOSAL THREE: RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for 2026, and the Board and the Audit Committee are recommending that shareholders ratify that selection. 2026 will be the seventh year that Deloitte will serve as the independent registered public accounting firm for the Company.
Although current law, rules and regulations, as well as the Charter of the Audit Committee, require our independent auditor to be appointed, retained and supervised by the Audit Committee, the Board considers the selection of an independent auditor to be an important matter of shareholder concern and considers a proposal for shareholders to ratify such selection to be an important opportunity for shareholders to provide direct feedback to the Board on an important issue of corporate governance. If the appointment of Deloitte is not ratified by shareholders, the Audit Committee will take such action, if any, with respect to the appointment of the independent auditor as the Audit Committee deems appropriate, which may include continued retention of such audit firm. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our shareholders.
Representatives of Deloitte are expected to be present at the virtual Annual Meeting with the opportunity to make a statement, if they desire, and will be available to respond to appropriate questions from the shareholders. The affirmative vote of the holders of at least a majority of votes cast is required for approval of this proposal.
The Board of Directors and the Audit Committee recommend that the shareholders vote “FOR” the proposal to ratify the selection of Deloitte & Touche LLP as independent registered public accounting firm of the Company for the current fiscal year.
AUDIT COMMITTEE REPORT
The following report by the Company’s Audit Committee is required by the rules of the SEC to be included in this Proxy Statement and shall not be considered incorporated by reference in other filings by the Company with the SEC. The Audit Committee is currently composed of four Independent Directors and operates under a written charter adopted by the Board of Directors.
The primary role of the Audit Committee is to assist the Board of Directors in its oversight of (a) the Company’s corporate accounting and reporting practices, (b) the quality and integrity of the Company’s financial statements, (c) the performance of the Company’s system of internal control over financial reporting, (d) the Company’s compliance with related legal and regulatory requirements over financial reporting, (e) the qualifications, independence and performance of the Company’s independent registered public accounting firm (the “Auditor”), Deloitte & Touche LLP (“Deloitte”) for 2025, including a review of the performance of the lead engagement partner and other partners involved in the audit of the Company’s financial statements, and (f) the performance of the Company’s internal audit function. In addition to those primary roles, the Audit Committee also performs other roles and functions as outlined in its charter, including preliminary review of earnings releases and other activities. The Audit Committee also acts as the audit committee for each of the Company’s insurance company subsidiaries. A more detailed description of the Audit Committee’s roles, functions and activities is set forth in the description of Board committees elsewhere in this Proxy Statement and in the Committee’s charter, which is available on the Company’s website under the Investors section at www.rlicorp.com.
The Board of Directors has determined that each of the members of the Audit Committee qualifies as “Independent” within the meaning of the NYSE Listing Standards and the rules of the SEC. The Board of Directors has further determined that Messrs. Angelina and Medini are an “audit committee financial expert” within the meaning of the SEC rules.
The Audit Committee oversees the internal audit function of the Company, including the independence and authority of its reporting obligations, the proposed audit plans for the coming year, and the coordination of such plans with the Auditor. The Company’s Internal Audit Services department provides objective assurance and consulting services designed to add value and improve the organization’s operational, financial, and compliance controls. The Company’s internal audit function operates under the terms of the RLI Internal Audit Services Charter, which is reviewed by the Audit Committee and approved by the Audit Committee’s chair and the Company’s CFO. To assist with this oversight, the Internal Audit Services department provides an annual risk-based audit plan to the Audit Committee and periodic reports are made to the Audit Committee summarizing results of internal audit activities.
The Audit Committee also provides assistance to the members of the Board of Directors in fulfilling their oversight functions of the financial reporting practices, including satisfying obligations imposed by Section 404 of the Sarbanes Oxley Act of 2002, and financial statements of the Company. It is not the duty of the Audit Committee, however, to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with U.S. generally accepted accounting principles (“GAAP”). The Auditor is responsible for planning and conducting audits of the financial statements and internal controls over financial reporting; and the Company’s management is responsible for preparing the financial statements, designing, and assessing the effectiveness of internal control over financial reporting, and determining
RLI Corp. 2026 Proxy Statement | 53
that the Company’s financial statements, including disclosures, are complete and accurate and in accordance with GAAP and applicable laws and regulations. The Audit Committee contracts with and sets the fees paid to the Auditor. The fees for Deloitte’s audit services during the past two fiscal years are set forth below.
The Audit Committee appoints and annually evaluates the performance of the Auditor. The Audit Committee obtains and reviews, at least annually, a report by the Auditor describing; the firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review, and peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues; and (to assess the Auditor’s independence) all relationships between the Auditor and the Company. Finally, the Audit Committee also reviews the most recently available Public Company Accounting Oversight Board (“PCAOB”) annual inspection reports of the Auditor, and the Auditor’s responses thereto, including quality improvement initiatives undertaken to address inspection report observations.
Pursuant to the Sarbanes Oxley Act of 2002 and the rules of the PCAOB, the Auditor’s lead engagement partner is required to rotate every five years. The current Deloitte lead engagement partner was selected for the 2025 audit and will be in the 2nd year of the five-year rotation requirement for the 2026 audit. In addition to the Audit Committee’s evaluation of the Auditor, the Audit Committee also interviews and evaluates the experience of the audit partner and other supporting partners to help ensure they possess the requisite experience and knowledge to conduct and lead the audit team’s integrated audit of the Company’s financial statements and internal control over financial reporting.
For 2025, the Audit Committee reviewed and discussed the audit of the Company’s financial statements and internal control over financial reporting with management and Deloitte. The Audit Committee also discussed with Deloitte the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. The Audit Committee received from Deloitte the written disclosures and letter required by the applicable PCAOB requirements regarding Deloitte’s communications with the Audit Committee concerning independence. The Audit Committee also discussed Deloitte’s independence with representatives from Deloitte. Additionally, the Audit Committee promotes Deloitte’s independence by ensuring that the lines of communication are always open and constant between the Auditor and the Audit Committee. The Chair of the Audit Committee was in contact with Deloitte numerous times throughout the year. This includes regularly scheduled in-person or virtual meetings, executive sessions, and periodic discussions in between regularly scheduled meetings. The purpose of this was to allow open and unobstructed access to the Audit Committee should Deloitte need to bring anything to the Audit Committee’s attention.
Based on the review and discussions referred to above, as well as the Audit Committee’s reliance on the representation of management that the Company’s consolidated financial statements were prepared in accordance with GAAP, the Audit Committee recommended to the Board of Directors that the audited financial statements of the Company be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC.
The foregoing report has been approved by all members of the Audit Committee.
MEMBERS OF THE AUDIT COMMITTEE
Michael E. Angelina (Chair)
Susan S. Fleming
Jordan W. Graham
Paul B. Medini
FEES PAID TO THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees for services rendered by Deloitte during fiscal year 2025, the Company’s independent registered public accounting firm, for the past two fiscal years for each of the following categories of services, are set forth below:
| | | | | | |
| | Fiscal Year | | Fiscal Year | ||
| | 2025 | | 2024 | ||
Audit Fees (1) | | $ | 1,305,000 | | $ | 1,250,000 |
Audit-Related Fees | | $ | — | | $ | — |
Tax Fees | | $ | — | | $ | — |
Tax Compliance | | $ | — | | $ | — |
Other Tax Services | | $ | — | | $ | — |
All Other Fees | | $ | — | | $ | — |
Total Fees | | $ | 1,305,000 | | $ | 1,250,000 |
| (1) | Audit fees relate to professional services rendered for the audit of the consolidated financial statements of the Company, audits of the statutory financial statements of certain subsidiaries, review of quarterly consolidated financial statements and assistance with review of documents filed with the SEC, including attestation as required under Section 404 of the Sarbanes-Oxley Act of 2002. |
There were no non-audit services provided by Deloitte in 2025 or 2024. Any non-audit services must be reviewed and preapproved by the Chair of the Audit Committee. The Chair will report such non-audit services to the Audit Committee no later than the next scheduled Committee meeting.
54 | RLI Corp. 2026 Proxy Statement
SHAREHOLDER PROPOSALS
To be included in the Company’s Proxy Statement for the 2027 Annual Meeting of Shareholders pursuant to Rule 14a-8 under the Exchange Act, a shareholder proposal must be received by the Company no later than November 27, 2026, and otherwise comply with all applicable federal securities laws. Proposals should be directed to the attention of the Corporate Secretary at 9025 North Lindbergh Drive, Peoria, Illinois 61615.
Pursuant to our Bylaws, in order for a shareholder to nominate a Board candidate or propose other business at the Company’s annual shareholder meetings, such nomination or notice of other business must be delivered to, or mailed and received at, the Company’s principal executive offices, in writing to the Company not less than 90 days prior, nor more than 120 days prior, to the one-year anniversary of the preceding year’s annual shareholder meeting, and otherwise comply with the information and procedural requirements set forth in our Bylaws. Therefore, in order for a shareholder to nominate a candidate for Director or raise other business at the 2027 Annual Meeting of Shareholders, the Company must have received proper notice of the nomination or the other matter no earlier than the close of business on January 14, 2027, nor any later than February 13, 2027. In addition to satisfying the requirements in our Bylaws, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of direction nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 15, 2027.
These descriptions are summaries only, and for the complete provisions, shareholders should refer to the Company’s Bylaws.
OTHER BUSINESS
The Board of Directors knows of no other business to be presented at the virtual Annual Meeting; however, if any other matters do properly come before the meeting, it is intended that the persons appointed as proxies will vote in accordance with their best judgment.
It is important that proxies be voted promptly so the presence of a quorum may be assured well in advance of the Annual Meeting, thus avoiding the expense of follow-up solicitations. Accordingly, even if you expect to attend the virtual Annual Meeting, you are requested to promptly submit your proxy in one of the manners described on page 9.
| By Order of the Board of Directors |
| |
| Christina G. Dean |
| Corporate Secretary |
Peoria, Illinois | |
March 26, 2026 | |
RLI Corp. 2026 Proxy Statement | 55
INVESTOR INFORMATION
ANNUAL SHAREHOLDERS MEETING
The 2026 Annual Meeting of Shareholders will be held at 9:00 a.m., CDT, on May 14, 2026, via live webcast at www.virtualshareholdermeeting.com/rli2026. Please note that there is no in-person meeting for you to attend.
INTERNET VOTING
As a convenience, you may submit your proxies via the Internet at http://www.proxyvote.com. Instructions are in your E-Proxy Notice or in the proxy card that you receive. Registered shareholders may sign up to access the Company’s Annual Report to Shareholders and Proxy Statement over the Internet in the future by following the instructions provided when submitting your proxy by telephone or over the Internet or provided in the E-Proxy Notice. Beneficial owners may contact the brokers, banks, or other holders of record of their stock to find out whether electronic delivery is available.
SHAREHOLDER INQUIRIES
Shareholders of record with requests concerning individual account balances, stock certificates, dividends, stock transfers, tax information or address corrections should contact the Company’s transfer agent and registrar:
Computershare Investor Services Providence, RI 02940-3006 | Computershare Investor Services Canton, MA 02021 |
Shareholder Services Number(s): 1-800-736-3001 | Investor Centre™ portal: www.computershare.com/investor |
REQUESTS FOR ADDITIONAL INFORMATION
Electronic versions of the following documents are available on our website: 2025 Annual Report to Shareholders, which contains our 2025 Annual Report on Form 10-K Annual Report, and 2026 Proxy Statement. Printed copies of these documents are available without charge to any shareholder. To request printed copies, please contact our Corporate Secretary, Christina Dean, at 309-689-3836, at christina.dean@rlicorp.com or at 9025 N. Lindbergh Drive, Peoria, Illinois 61615.
MULTIPLE SHAREHOLDERS HAVING THE SAME ADDRESS
If you and other residents at your mailing address own shares of common stock “in street name,” your broker or bank may have sent you a notice that your household will receive only one copy of this Proxy Statement, 2025 Annual Report to Shareholders and/or E-Proxy Notice. This practice, known as “householding,” is designed to reduce our printing and postage costs. If you reside at the same address as another shareholder of the Company and wish to receive a separate copy of the applicable materials, you may do so by sending your name, the name of your brokerage firm, and your account number to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717. This revocation of your consent to householding will be effective 30 days following its receipt. In any event, if you did not receive an individual copy of this Proxy Statement, 2025 Annual Report to Shareholders and/or E-Proxy Notice, or if you wish to receive individual copies of this Proxy Statement, 2025 Annual Report to Shareholders and/or E-Proxy Notice, we will send a copy to you promptly upon your written or oral request. Please contact our Corporate Secretary at the telephone number or address provided above. Shareholders who share the same address and currently receive multiple copies of the Proxy Statement, 2025 Annual Report to Shareholders and/or E-Proxy Notice who wish to receive only one copy in the future may contact their bank, broker or other holder of record, or our Corporate Secretary, Christina Dean, at the telephone number or address provided above.
CONTACTING RLI
For investor relations requests, please contact Aaron Diefenthaler, Chief Financial Officer, at 309-693-5846 or at aaron.diefenthaler@rlicorp.com.
RLI ON THE WEB
Our corporate website is www.rlicorp.com. Information on the website is not incorporated by reference into this Proxy Statement.
56 | RLI Corp. 2026 Proxy Statement
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. V92284-P47268 For Against Abstain For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Michael E. Angelina 1b. David B. Duclos 1c. Susan S. Fleming 1d. Jordan W. Graham 1e. Clark C. Kellogg 1f. Craig W. Kliethermes 1g. Paul B. Medini 1h. Robert P. Restrepo 1i. Debbie S. Roberts 1j. Michael J. Stone RLI CORP. 9025 NORTH LINDBERGH DRIVE PEORIA, IL 61615 RLI CORP. Nominees: 1. Election of Directors The Board of Directors recommends you vote FOR the following: 2. Non-Binding, Advisory Vote to Approve the Compensation of the Company's Named Executive Officers (the "Say-on-Pay" vote). 3. Ratification of the Selection of Independent Registered Public Accounting Firm. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors recommends you vote FOR proposals 2 and 3. Please sign exactly as your name(s) appear(s). Executors, trustees, and others signing in a representative capacity should include their name and the capacity in which they sign. VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 13, 2026 for shares held directly and by 11:59 p.m. Eastern Time on May 11, 2026 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/rli2026 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 13, 2026 for shares held directly and by 11:59 p.m. Eastern Time on May 11, 2026 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. SCAN TO VIEW MATERIALS & VOTEw |
V92285-P47268 Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and 10K Wrap are available at www.proxyvote.com. THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEE OF RLI CORP. The undersigned hereby appoints Jeffrey D. Fick, as Proxy, with the power to appoint his substitute, and hereby authorizes him, to represent and to vote, as indicated on the other side of this form or as indicated by phone or Internet, the shares of Common Stock of RLI Corp. held of record by the undersigned on March 16, 2026, at the RLI Corp. Annual Meeting of Shareholders to be held on May 14, 2026 at 9:00 a.m. CDT or any adjournments thereof. If no vote is provided, the Proxies shall vote (a) for each of the director nominees listed on the reverse side of this form, (b) for Proposals 2 and 3, and in their discretion, upon such other business as may properly come before the meeting. (Continued and to be signed and dated on the reverse side.) |
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. V92286-P47268 RLI CORP. 9025 NORTH LINDBERGH DRIVE PEORIA, IL 61615 For Against Abstain For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Michael E. Angelina 1b. David B. Duclos 1c. Susan S. Fleming 1d. Jordan W. Graham 1e. Clark C. Kellogg 1f. Craig W. Kliethermes 1g. Paul B. Medini 1h. Robert P. Restrepo 1i. Debbie S. Roberts 1j. Michael J. Stone RLI CORP. Nominees: 1. Election of Directors The Board of Directors recommends you vote FOR the following: 2. Non-Binding, Advisory Vote to Approve the Compensation of the Company's Named Executive Officers (the "Say-on-Pay" vote). 3. Ratification of the Selection of Independent Registered Public Accounting Firm. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. The Board of Directors recommends you vote FOR proposals 2 and 3. Please sign exactly as your name(s) appear(s). Executors, trustees, and others signing in a representative capacity should include their name and the capacity in which they sign. SCAN TO VIEW MATERIALS & VOTEw VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on May 13, 2026 for shares held directly and by 11:59 p.m. Eastern Time on May 11, 2026 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to www.virtualshareholdermeeting.com/rli2026 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on May 13, 2026 for shares held directly and by 11:59 p.m. Eastern Time on May 11, 2026 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
V92287-P47268 Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and 10K Wrap are available at www.proxyvote.com. (Continued and to be signed and dated on the reverse side.) Confidential Voting Instructions THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEE OF RLI CORP. EMPLOYEE STOCK OWNERSHIP PLAN By signing on the reverse side or by voting by phone or Internet, you direct the Trustee of the RLI Corp. Employee Stock Ownership Plan (ESOP) to vote (in person or by proxy), as provided, the number of shares of RLI Corp. Common Stock credited to this account as of March 16, 2026 under the RLI Corp. ESOP, at the RLI Corp. Annual Meeting of Shareholders to be held on May 14, 2026 at 9:00 a.m. CDT or any adjournments thereof. If no vote is provided, the Trustee shall vote (a) for each of the director nominees listed, (b) for Proposals 2 and 3, and in their discretion, all on a pro rata basis with all shares of Common Stock held in the RLI Corp. ESOP (based upon the vote of all other participants who provide voting instructions unless contrary to applicable law), and, in its discretion, upon such other business as may properly come before the meeting. |