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Section 1: DEF 14A (DEF 14A)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant     ☒
Filed by a party other than the Registrant     ☐
Check the appropriate box:
☐    Preliminary Proxy Statement
☐    Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒    Definitive Proxy Statement
☐    Definitive Additional Materials
☐    Soliciting Materials under § 240.14a-12
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UNITED FIRE GROUP, INC.
(Name of registrant as specified in its charter)
Payment of Filing Fee (Check the appropriate box):
☒    No fee required.
☐    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which the transaction applies:
(2)
Aggregate number of securities to which the transaction applies:
(3)
Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)
Proposed maximum aggregate value of transaction:    
(5)
Total fee paid:
☐    Fee paid previously with preliminary materials.
☐    Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:

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UNITED FIRE GROUP, INC.
118 Second Avenue SE
Cedar Rapids, Iowa 52401
April 5, 2018
Dear Fellow Shareholder:
I am pleased to invite you to join us at United Fire Group, Inc.’s 2018 Annual Meeting of Shareholders (the "Annual Meeting"). This year’s meeting will be held at the Eastbank Venue at 97 Third Avenue SE in Cedar Rapids, Iowa. The meeting will take place on Wednesday, May 16, 2018 at 10:00 a.m. Central Time.
At this year’s meeting, you will be asked to vote on the following proposals:
Proposals
Recommended Vote
1.
Election of four Class C Directors identified in the proxy statement.
FOR
2.
Ratification of the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018.
FOR
3.
Approval, on an advisory basis, of the compensation of the Company’s named executive officers.
FOR
Management will also report on United Fire Group, Inc.’s business and shareholders will have an opportunity to ask questions of management and Ernst & Young LLP.
Attached you will find a notice of the Annual Meeting and a proxy statement that contains additional information about the meeting and explains the methods you can use to vote your proxy, including by telephone and over the Internet.
Your vote is important. Whether or not you plan to attend the Annual Meeting, we encourage you to sign your proxy card and return it in the enclosed postage-paid envelope or vote by telephone or Internet prior to the meeting. This ensures that your shares of United Fire Group, Inc.'s Common Stock will be represented and voted at the meeting, even if you cannot attend.
For the Board of Directors,
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Jack B. Evans
Chairman of the Board

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UNITED FIRE GROUP, INC.
118 Second Avenue SE
Cedar Rapids, Iowa 52401
Notice of 2018 Annual Meeting of Shareholders of United Fire Group, Inc.
Date and time:
Wednesday, May 16, 2018, at 10:00 a.m. Central Time
Place:
Eastbank Venue, 97 Third Avenue SE, Cedar Rapids, Iowa 52401
Items of business:
At the meeting, we will ask shareholders to:
1)
Elect four Class C Directors identified in the attached proxy statement to three-year terms expiring in 2021.
2)
Ratify the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018.
3)
Approve, on an advisory basis, the compensation of our named executive officers.
4)
Vote upon such other matters as may properly come before the meeting or at any adjournment or postponement thereof.
Who can vote:
You can vote if you were a shareholder of record on March 19, 2018.
On or about April 5, 2018, we will begin mailing to our shareholders a Notice Regarding the Availability of Proxy Materials, which will indicate how to access our proxy materials on the Internet. By furnishing the Notice Regarding the Availability of Proxy Materials, we are lowering the costs and reducing the environmental impact of our Annual Meeting.
The Board of Directors recommends that shareholders vote FOR the election of each director nominee named in Proposal 1 of the proxy statement and FOR Proposals 2 and 3.
By Order of the Board of Directors,
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Neal R. Scharmer
Corporate Secretary
Dated April 5, 2018 at Cedar Rapids, Iowa
Your vote is important. Instructions on how to vote are contained in this proxy statement and in the Notice Regarding the Availability of Proxy Materials. Please cast your vote by telephone or over the Internet as described in those materials. Alternatively, if you requested a copy of the proxy/voting instruction card by mail, you may mark, sign, date and return the proxy/voting instruction card in the envelope provided.

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UNITED FIRE GROUP, INC.
118 Second Avenue SE
Cedar Rapids, Iowa 52401
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2018
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 16, 2018:
The Notice of the Annual Meeting, this Proxy Statement, the 2017 Annual Report on Form 10-K and the 2017 Annual Report to Shareholders are available at: http:// ir.ufginsurance.com.
This solicitation of proxies is made by the Board of Directors of United Fire Group, Inc. (the “Company,” “we,” “us,” or “our,” as the context requires). Proxies will be used at the Annual Meeting of Shareholders (the "Annual Meeting") of United Fire Group, Inc., an Iowa corporation, to be held on May 16, 2018 at 10:00 a.m. Central Time, and at any adjournment or postponement thereof. This year’s meeting will be held at the Eastbank Venue at 97 Third Avenue SE in Cedar Rapids, Iowa. With respect to shares of our $0.001 par value common stock (“Company Common Stock”) held in the United Fire Group, Inc. 401(k) Plan (the “401(k) Plan”), the Board of Directors is soliciting participants on behalf of the Trustee of the 401(k) Plan to direct the Trustee as to how to vote the shares held in the plan.
Under rules adopted by the Securities and Exchange Commission (“SEC”), the Company has chosen to provide its shareholders with the choice of accessing the Annual Meeting proxy materials on the Internet, rather than receiving printed copies of those materials through the mail. In connection with this process, a Notice Regarding the Availability of Proxy Materials (the “Notice”) is being mailed to the Company’s shareholders who have not previously requested electronic access to its proxy materials or printed proxy materials. The Notice contains instructions on how you may access and review the Company’s proxy materials on the Internet and how you may vote your shares over the Internet. The Notice will also tell you how to request the Company’s proxy materials, in either printed form or by email, at no charge. The Notice contains a control number that you will need to vote your shares. We suggest you keep the Notice for your reference through the meeting date.
The Company anticipates that the Notice will be mailed to shareholders and participants in the 401(k) Plan beginning on or about April 5, 2018.
We will solicit proxies principally by mail, but our directors and employees may also solicit proxies by telephone, facsimile, or e-mail. Our directors and employees may also conduct personal solicitations. Our directors and employees will not receive any additional compensation in connection with their solicitation efforts.

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ANNUAL MEETING OF SHAREHOLDERS
Questions and Answers About the Annual Meeting
What is the purpose of the Annual Meeting?
At the Annual Meeting, shareholders will act upon the matters listed in the Notice of the Annual Meeting, including (i) the election of four Class C Directors identified in this proxy statement to serve three-year terms expiring 2021, (ii) the ratification of the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018, and (iii) the approval, on an advisory basis, of the compensation of our named executive officers. Our management will also report on our performance during fiscal year 2017. Representatives of Ernst & Young LLP will be present at the meeting, will have the opportunity to make a statement if they choose to, and will be available to respond to appropriate shareholder questions.
Who may attend the Annual Meeting?
All shareholders of record as of March 19, 2018 or their duly appointed proxies may attend the Annual Meeting. If you hold your shares through a broker, bank or other nominee, you will not be admitted to the Annual Meeting unless you bring a copy of a statement (such as a brokerage statement) from your nominee reflecting your stock ownership as of March 19, 2018.
Who is entitled to vote at the Annual Meeting?
Shareholders of Record
If your shares are registered in your name with Computershare Trust Company, N.A. our transfer agent and registrar, you are considered a shareholder of record. Shareholders of record at the close of business on March 19, 2018 are entitled to receive notice of and to vote at the Annual Meeting or at any postponement or adjournment thereof. At the close of business on March 19, 2018, there were 24,907,672 shares of Company Common Stock issued and outstanding. Each share of Company Common Stock entitles its record holder to one vote.
Brokerage and Other Account Holders
If your shares are held in a brokerage account or by a bank or other nominee, your name does not appear anywhere in the Company’s shareholder records. Instead, the “street name” of your broker, bank or other nominee who holds the shares for you appears on our records and you are the beneficial owner of the shares. Access to our proxy materials is being forwarded to you by your brokerage firm, bank or other nominee. As the beneficial owner, you have the right to direct your brokerage firm, bank or other nominee how to vote your beneficial shares by filling out and returning the voting instruction form provided to you from such other institution. Telephone and Internet voting options may also be available to beneficial owners. As a beneficial owner, you are invited to attend the Annual Meeting, but you must obtain a legal proxy from the record holder of your shares in order to vote in person at the Annual Meeting and bring a copy of a statement (such as a brokerage statement) from your nominee reflecting your stock ownership as of March 19, 2018.
401(k) Plan Participants
If you are a participant in our 401(k) Plan, your proxy card shows the number of shares of Company Common Stock held for your benefit in those plans, plus any other shares you may own. If you hold stock through the 401(k) Plan, voting your proxy also serves as confidential voting instructions to the Trustee of the 401(k) Plan (Principal Financial Group). The Trustee will vote your shares in accordance with the specific voting instructions that you indicate on your proxy card. If you provide no specific voting instructions, the Trustee of the 401(k) Plan will vote your shares in proportion to the voting instructions it receives from those plan participants who do submit voting instructions.

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What constitutes a quorum for the Annual Meeting?
The presence at the Annual Meeting of a majority of the outstanding shares (50% plus one share) of Company Common Stock represented either in person or by proxy will constitute a quorum for the transaction of business at the meeting. Abstentions and broker non-votes will each be counted as present for purposes of determining the existence of a quorum at the Annual Meeting.
What is a broker non-vote?
A “broker non-vote” occurs when a broker submits a proxy but lacks discretionary power to vote on a “non-routine” proposal and a beneficial owner fails to give the broker voting instructions on that matter. The ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal year 2018 is the only matter to be presented at the Annual Meeting that is considered a "routine" matter, and brokers have the discretionary power to vote on this matter without any instructions from the beneficial owners. Each of the other matters to be presented at the Annual Meeting are considered "non-routine."
Therefore, if you hold your shares in “street name” you should give voting instructions to your broker to ensure your shares are counted in the election of directors, and the advisory vote to approve executive compensation. Broker non-votes will have no effect on the voting results of the matters presented at the Annual Meeting.
How do I vote my shares?
You may vote in the following ways:
•
In person: We will distribute paper ballots to anyone who wishes to vote in person at the Annual Meeting. However, if you hold your shares in street name, you must request a legal proxy from your broker and bring it to the Annual Meeting in order to vote in person at the Annual Meeting.
•
By mail: Complete and sign your proxy card and return it by mail in the enclosed business reply envelope. If you mark your voting instructions on the proxy card, your shares will be voted as you instruct. If an additional proposal comes up for a vote at the Annual Meeting that is not on the proxy card, your shares will be voted in the best judgment of the authorized proxies, Jack B. Evans and Neal R. Scharmer.
If you sign and return your proxy card without marking voting instructions, your shares will be voted FOR the election of each of the director nominees identified in this proxy statement, FOR the ratification of the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018, and FOR approval, on an advisory basis, of the resolution regarding the compensation of our named executive officers.
•
By telephone: To vote your shares by telephone, call the toll-free telephone number on your proxy card. You must have a touch-tone or cellular telephone to use this voting method. You will need to follow the instructions on your proxy card and the voice prompts to vote your shares.
•
Over the Internet: You may go to the website listed on your proxy card to vote your shares over the Internet. You will need to follow the instructions on your proxy card and the website to vote your shares.
Telephone and Internet voting options are available 24 hours a day, seven days a week. The deadline for voting by telephone or the Internet is 12:00 a.m. Central Time on May 16, 2018. When prompted, you will need to enter the control number shown on your proxy card. You will then be able to vote your shares and confirm that your instructions have been properly recorded. If you vote by telephone or over the Internet, your vote authorizes the proxies in the same manner as if you had signed, dated and returned your proxy card by mail. Telephone and Internet voting procedures, including the use of control numbers found on the proxy cards, are designed to authenticate shareholders’ identities, to allow shareholders to vote their shares securely and to confirm that their instructions have been properly recorded. If you vote by telephone or over the Internet, you do not need to return your proxy card.
If you hold your shares in street name, you may vote by telephone or over the Internet only if your bank, broker or other nominee makes those methods available to you, in which case your bank, broker or other nominee will provide specific instructions for using those options.
If I hold my shares in a brokerage account and do not return voting instructions, will my shares be voted?
If your shares are held in a brokerage account or by a bank or other nominee, your broker, bank or other nominee will ask you how you want your shares to be voted. If you provide voting instructions, your shares must be voted as you direct. If you do not furnish voting instructions, one of two things can happen, depending upon whether a proposal is “routine.” Under the rules that govern brokers who have record ownership of shares beneficially owned by their clients, brokers have discretion to cast votes on routine matters, such as the ratification of the choice of auditor, without receiving voting instructions from their clients. Brokers are not permitted, however, to cast votes on “non-routine” matters, such as the election of directors, or executive compensation matters, without receiving client voting instructions. A “broker non-vote” occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting authority for that proposal and has not received voting instructions from the beneficial owner. The proposal to approve the ratification of the Audit Committee’s appointment of

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Ernst & Young LLP as our independent registered public accounting firm for 2018 is the only routine matter being voted on at the Annual Meeting and, therefore, is the only proposal that may be voted by your broker, bank or other nominee in its discretion without having received voting instructions from you.
Can I revoke my proxy or change my vote after I return my proxy?
Yes. Even after you submit a proxy, you may revoke your proxy or change your vote at any time before the proxy is exercised and vote cast at the Annual Meeting by:
•
delivering written notice to our transfer agent, Computershare, P.O. Box 505000, Louisville, KY 40233-5000, or via overnight delivery to Computershare, 462 South 4th St. Ste 1600, Louisville, KY 40202;
•
delivering written notice to the Corporate Secretary of United Fire Group, Inc. at P.O. Box 73909, Cedar Rapids, Iowa 52407-3909;
•
executing and delivering a later-dated proxy;
•
voting again by telephone or Internet; or
•
appearing and voting in person at the Annual Meeting. Attendance at the Annual Meeting will not, by itself, revoke a previously granted proxy.
If you hold your shares in street name, you may contact your bank, broker or other nominee for instructions as to how to revoke or change your vote.
Who pays for this proxy solicitation?
United Fire Group, Inc. will pay the expenses of this solicitation of proxies. Expenses may include reimbursement to brokerage firms and others of their cost for forwarding solicitation materials to beneficial owners.
Does United Fire Group, Inc. deliver proxy materials electronically?
Yes. In accordance with the SEC’s “Notice and Access” rules, United Fire Group, Inc. mailed the Notice to shareholders beginning on or about April 5, 2018. The Notice describes the matters to be considered at the Annual Meeting and how shareholders may access the proxy materials over the Internet. It also provides instructions on how shareholders may vote their shares. If you received the Notice, you will not receive a printed version of the proxy materials unless you request one. If you would like to receive a printed version of the proxy materials, free of charge, please follow the instructions in the Notice.
What are the benefits of electronic delivery?
Electronic delivery reduces United Fire Group, Inc.’s printing and mailing costs as well as the environmental impact of the Annual Meeting. It is also a convenient way for you to receive your proxy materials and makes it easy to vote your shares over the Internet.
How may I obtain copies of United Fire Group, Inc.’s corporate governance documents?
The following documents are available free of charge to any shareholder who requests them by writing to United Fire Group, Inc., Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909, or on our public website, http:// ir.ufginsurance.com, by selecting Overview and then Governance Documents.
•
Anti-Hedging Policy
•
Clawback Policy
•
Code of Ethics and Business Conduct
•
Corporate Governance Guidelines
•
Committee Charters – Audit Committee, Compensation Committee, Executive Committee, Investment Committee, Nominating and Governance Committee and Risk Management Committee
In addition, copies of our Articles of Incorporation and Bylaws are available free of charge to any shareholder who requests them by writing to United Fire Group, Inc., Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909. Our Articles of Incorporation and Bylaws are also available free of charge on the SEC's EDGAR website at www.sec.gov.
Delivery of One Set of Annual Meeting Materials to Shareholders in a Single Residence ("Householding")
SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and annual reports to shareholders with respect to two or more shareholders sharing the same address by delivering a single proxy statement and annual report to shareholders addressed to those shareholders. This process, commonly referred to as “householding,” provides cost savings for companies. We and some brokers household proxy materials and annual reports to shareholders unless contrary

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instructions have been received from the affected shareholders. Once you have received notice from us, your broker, or other designated intermediary that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent.
If, at any time, you no longer wish to participate in householding and would prefer to receive a separate printed proxy statement and annual report to shareholders, notify us by calling our transfer agent at (877) 373-6374, or submit a written request via regular mail to Computershare, P.O. Box 505000, Louisville, KY 40233-5000, or via overnight delivery to Computershare, 462 South 4th St. Ste 1600, Louisville, KY 40202.
Shareholders who currently receive multiple copies of their proxy materials and would like to request householding should submit a written request to: Computershare Trust Company, N.A. at either address above.
Please include the Company’s name, United Fire Group, Inc., and your account number(s) in any correspondence regarding householding. Street name shareholders wishing to cancel or request householding of their proxy materials should contact their brokers directly.
Electronic Availability of Proxy Materials
Electronic versions of our Notice of the Annual Meeting, this Proxy Statement and 2017 Annual Report to Shareholders are available on our public website, http:// ir.ufginsurance.com by selecting Financial Documents and then Annual Reports and Proxy.
BOARD OF DIRECTORS
Our Board of Directors currently consists of 12 directors. The current membership includes: John-Paul E. Besong, Scott L. Carlton, Brenda K. Clancy, Christopher R. Drahozal, Jack B. Evans (Chairman), Sarah Fisher Gardial, George D. Milligan, James W. Noyce, Mary K. Quass, Randy A. Ramlo, Kyle D. Skogman and Susan E. Voss.
Corporate Governance
In order to promote the highest standards of management for the benefit of shareholders, our Board of Directors follows certain governance practices regarding how the Board of Directors conducts its business and fulfills its duties. United Fire Group, Inc.’s Corporate Governance Guidelines may be obtained free of charge by writing to United Fire Group, Inc., Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909, or on our public website, http:// ir.ufginsurance.com, by selecting Overview and then Governance Documents. Among the governance practices used by the Board of Directors are:
Board Size, Composition and Independence Determination
Our Board of Directors determined that the Board of Directors shall consist of 12 members, effective as of May 2017. The Board of Directors is divided among three classes. Each class consists of four members.
The Board of Directors requires a majority of our directors to be independent, as defined in the listing rules of The NASDAQ Global Select Market (“NASDAQ”). The Board of Directors determines director independence by applying the definition of independence contained in the applicable NASDAQ Listing Rules, both for purposes of NASDAQ’s rule requiring that a majority of the Board of Directors consist of independent directors and its rules requiring the Audit Committee, Nominating and Governance Committee and Compensation Committee to be made up entirely of independent directors.
The Board of Directors has analyzed the independence of each director who served on the Board of Directors during 2017 and director nominee and determined that 11 of our 12 directors are independent and Casey D. Mahon, a former director who served on the Board of Directors until May 2017, was also independent. The following directors are independent within the meaning of the NASDAQ Listing Rules, and each is free of any relationship that would interfere with his or her exercise of independent judgment in carrying out the responsibilities of a director: Christopher R. Drahozal, Jack B. Evans, George D. Milligan, James W. Noyce, Mary K. Quass, Kyle D. Skogman, John-Paul E. Besong, Scott L. Carlton, Susan E. Voss, Sarah Fisher Gardial and Brenda K. Clancy. Additionally, Ms. Mahon was independent during her service on the Board of Directors under the same standards. Randy A. Ramlo is not independent due to his employment by our Company.
In determining that Mr. Skogman is independent, the Board considered that the Company maintains a relationship with an insurance agency in which Mr. Skogman is a 25% owner. The services provided by us to this agency were in the ordinary course of business on substantially the same terms and conditions as those prevailing at the time for comparable transactions with other customers. The value of the services provided by us to this agency represented an immaterial amount to each party and did not rise to the level requiring formal review and approval by the Board of Directors under its written policy regarding related party transactions. We expect to continue providing services to this agency in the future.

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Qualifications, Skills and Diversity of Directors and Director Nominees
Our Nominating and Governance Committee, with input from our Chief Executive Officer, reviews and evaluates all director nominees, including incumbent nominees. The Nominating and Governance Committee and the Board of Directors seek qualified individuals who possess the minimum qualifications and the desirable qualities or skills described under the heading Director Nomination Process in this proxy statement.
All of our incumbent directors possess both the specific minimum qualifications and the desirable qualities or skills. The following charts reflect the diversity of our Board of Directors and the qualifications of each of the directors.
Summary of Director Diversity, Qualifications and Experience
John-Paul Besong
Scott Carlton
Brenda Clancy
Chris-
topher
Drahozal
Jack Evans
Sarah Fisher Gardial
George Milligan
James Noyce
Mary Quass
Randy Ramlo
Kyle Skogman
Susan Voss
Academia & Education (1)
 
 
 
X
 
X
 
 
 
 
 
 
Accounting (2)
 
X
X
 
 
 
 
X
 
 
 
 
Actuarial (3)
 
 
 
 
 
 
 
X
 
 
 
 
Senior Administration (4)
X
X
X
 
X
X
X
X
X
X
X
 
Business Operations (5)
X
X
X
 
X
X
X
X
X
X
X
 
Corporate Governance (6)
X
X
X
X
X
 
X
X
X
X
X
X
Finance & Capital (7)
 
X
X
 
X
 
 
X
 
X
 
X
Financial Statements (8)
X
X
X
X
X
X
X
X
X
X
X
X
Insurance Industry (9)
 
 
X
 
 
 
X
X
 
X
 
X
Investment (10)
 
 
 
 
X
 
X
X
 
X
 
 
Marketing (11)
 
 
 
 
 
X
 
 
X
X
X
 
Regulatory & Government (12)
 
 
 
 
 
 
 
 
 
 
 
X
Risk Management (13)
 
X
X
 
 
 
X
X
 
X
 
 
Technology & Systems (14)
X
 
X
 
 
 
 
 
 
 
 
 
(1)
Experience in academia and education is important because the disciplines of management, organization and research are relevant to our business.
(2)
Experience as head of an accounting department is important in understanding and evaluating our financial statements, managing our capital structure, and interacting with our independent public accounting firm.
(3)
Actuarial experience gives our directors a strong understanding of reserving, which is very important to our business, and in analyzing actuarial reports.
(4)
Experience as a senior administrator or head of a business is important for our directors in understanding our Company, managing human resources, and identifying and developing talent.
(5)
Experience with business operations helps our directors understand, develop, and assess our operating and business strategies.
(6)
Corporate governance experience supports our goals of having strong Board and management accountability, transparency and protection of shareholder interests.
(7)
Finance and capital allocation expertise is important in evaluating our financial statements and capital structure.
(8)
The ability to read and understand financial statements is important because it assists directors in understanding and overseeing our financial reporting and internal controls.
(9)
Insurance industry experience is important in understanding and reviewing our business and strategy.
(10)
Investment experience is important for our directors to be able to evaluate and review our investments, set investment policy, and understand our financial statements.
(11)
Marketing experience is important for our directors to be able to evaluate new market strategies and branding of our products.

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(12)
Regulatory and government experience enhances our directors' ability to understand our highly regulated industry.
(13)
Risk management experience is necessary to understand and manage the risks that our company faces.
(14)
Technology and systems experience is important, as our business is dependent upon technology and we may face disruption of our operations and reputation due to unauthorized data access, cyber-attacks or cyber-terrorism and other security breaches.
Diversity
Our directors provide an effective mix of experience and fresh perspective, as shown on the following tables.
 
45–50
51–60
61–70
71+
 
Age at December 31, 2017
1
3
8
—
 
 
 
 
 
 
 
 
0–5
6–10
11–15
15–20
20+
Years of service as a Director of the Company through December 31, 2017
4
3
—
3
2
 
 
 
 
 
 
Male Directors:
8
 
 
 
 
Female Directors:
4
 
 
 
 
Attendance at Director and Shareholder Meetings
The full Board of Directors met four times during 2017. All of the directors attended 75% or more of the aggregate number of meetings of the Board of Directors and the committees on which they served. Our Corporate Governance Guidelines require directors to attend our Annual Meeting. All directors serving at the time of the 2017 annual meeting of shareholders (the "2017 Annual Meeting") attended that meeting.
Director Retirement
According to our Bylaws, each director must submit his or her resignation from the Board of Directors no later than the first day of February after he or she reaches age 72, and such resignation must be effective no later than the next Annual Meeting.
Director Stock Ownership
We believe that non-employee directors should own and hold Company Common Stock to further align their interests and actions with the interests of our shareholders. Our Articles of Incorporation require that all of our directors own shares of Company Common Stock. The Board of Directors has adopted stock ownership guidelines indicating that each non-employee director should beneficially own at least 100 shares of Company Common Stock when he or she joins the Board of Directors and at least 5,000 shares of Company Common Stock within five years of first being elected to the Board of Directors. A non-employee director shall not sell any shares of Company Common Stock received as a result of an award: (a) if the non-employee director has not met the stock ownership requirement; or (b) if the sale would cause the ownership of the non-employee director to fall below the stock ownership requirement.
Current beneficial stock ownership for each director can be found in the table under Security Ownership by Certain Beneficial Owners in this proxy statement.
Board Leadership Structure
Our Board of Directors is led by an independent Chairman who is responsible for providing guidance to our Chief Executive Officer, setting the agenda for Board meetings and presiding at all shareholder and director meetings. We also have an independent Vice Chairman who is responsible for presiding in the Chairman’s absence. Neither our Chairman nor our Vice Chairman serves as our Chief Executive Officer. Our Chief Executive Officer is responsible for setting the strategic direction for our Company and providing day-to-day leadership. We currently separate the roles of Chairman and Chief Executive Officer. We feel that this is the most appropriate leadership structure for our Board of Directors and executive management at this time because we recognize the benefits of separating the two roles to allow full utilization of the different skill sets required to most effectively and efficiently perform these functions to meet the needs of the Company. Our Board of Directors does not have a formal policy requiring the positions of Chairman and Chief Executive Officer to be separate, preferring instead to preserve the freedom to decide from time to time what is in the best interest of the Company. Our Board of Directors strongly endorses the concept of an independent director being in a position to lead our

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independent directors. If at any time neither our Chairman nor our Vice Chairman is an independent director, the independent directors serving at that time will elect an independent director to serve as lead director.
The Board of Directors has six standing committees: Audit Committee, Compensation Committee, Executive Committee, Investment Committee, Nominating and Governance Committee and Risk Management Committee. Only independent directors may serve on the Audit Committee, Compensation Committee and Nominating and Governance Committee. Each committee is governed by a written charter that is reviewed and approved annually by the applicable committee, the Nominating and Governance Committee, and the full Board of Directors. All committee charters are available for review either on our public website, http:// ir.ufginsurance.com by selecting Overview and then Governance Documents, or in paper form upon written request to: United Fire Group, Inc., Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909.
Risk Oversight by the Board of Directors
The Risk Management Committee’s charter requires it to assist the Board of Directors in identifying and evaluating risks inherent in our business and to oversee and review the significant policies, procedures, and practices employed to manage risks.
Enterprise Risk Management (“ERM”) is a methodology that helps us assess and manage our overall exposure to risk. In addition to our Risk Management Committee, we have an executive enterprise risk management committee (“executive ERM committee”) that consists of our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Claims Officer, Vice President and Corporate Underwriting Manager, Chief Investment Officer, Director of Internal Audit, Corporate Safety Manager, the Chief Operating Officer of our life insurance subsidiary (United Life Insurance Company), and United Life Insurance Company’s independent actuary.
The executive ERM committee meets independently of the Risk Management Committee, with representatives from the Risk Management Committee in attendance. Members of the executive ERM committee are invited to attend and participate in meetings of the Risk Management Committee. During 2017, the executive ERM committee met on a quarterly basis to implement risk management strategies. During its meetings, the executive ERM committee discusses the risks that our Company faces and the controls that are in place to mitigate those risks, and identifies potential additional risks.
Collectively, the Risk Management Committee and the executive ERM committee have identified two broad categories of risk faced by our Company: insurance risk and operational risk. We employ a multi-disciplinary approach to risk identification and evaluation, analyzing risk from the point of view of claims, underwriting, finance, and investments. Types of insurance risks generally include, but are not limited to, those risks associated with catastrophes, loss reserving practices, underwriting practices, policy pricing, geographical concentrations of property insured, competition and business mix. Types of operational risks we face generally include, but are not limited to, those risks associated with the diversification and quality of our investments, information technology, regulatory and legal compliance, business continuity planning, executive succession planning and the application of accounting policies and procedures.
ERM issues are also discussed during quarterly meetings of our full Board of Directors, where directors are updated on ERM issues and the ongoing efforts of the executive ERM committee and our Risk Management Committee. The work of our executive ERM committee, in conjunction with the Risk Management Committee and the Board of Directors, has led to the development of new tools, such as the CATography Underwriter™ tool, designed to aid in the evaluation and mitigation of our Company’s business risks.
In addition, certain Board committees oversee risk within their respective areas of responsibility. For example, the Audit Committee has been delegated with primary oversight of financial, accounting and securities related risk, and the Compensation Committee oversees the risks associated with the Company’s compensation policies and practices, including conducting an annual risk assessment of such policies and practices. Together with the Audit Committee, the Compensation Committee has concluded that the risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
Clawback Policy
To further align management's interests with the interest of shareholders and support good governance practices, the Board of Directors has adopted a clawback policy applicable to incentive-based compensation to executive officers. In the event the Company is required to prepare an accounting restatement due to errors, omissions or fraud, the Board of Directors may direct the Company to recover from each of the executive officers the excess value received from any incentive award over the value actually earned based on the restated performance. Our Clawback Policy may be obtained free of charge by writing to United Fire Group, Inc., Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909, or on our public website, http:// ir.ufginsurance.com, by selecting Overview, then Governance Documents and then Clawback Policy.
Anti-Hedging Policy
Our policies do not permit our directors or executive officers, including our named executive officers, to "hedge" their ownership by: (a) trading in publicly-traded options, puts, calls, or other derivative instruments related to the Company’s equity or debt securities;

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or (b) purchase financial instruments, including prepaid variable forward contracts, instruments for the short sale or purchase or sale of call or put options, equity swaps, collars, or units of exchangeable funds, that are designed to or that may reasonably be expected to have the effect of hedging or offsetting a decrease in the market value of any securities of the Company. Our Anti-Hedging Policy may be obtained free of charge by writing to United Fire Group, Inc., Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909, or on our public website, http:// ir.ufginsurance.com, by selecting Overview, then Governance Documents and then Anti-Hedging Policy.
Chief Executive Officer Performance Evaluation
Representatives of the Executive Committee and Compensation Committee meet each year with our Chief Executive Officer Randy A. Ramlo to review his goals for the current year. During the year, the Executive Committee meets regularly with our Chief Executive Officer to review his performance. The Executive Committee and the Chair of the Compensation Committee annually review the performance of our Chief Executive Officer and assess his performance for that year. The Chief Executive Officer also meets with the Compensation Committee, which considers his performance for the year.
Code of Ethics
Our Board of Directors has adopted a Code of Ethics and Business Conduct that applies to all of our officers, directors, and employees. United Fire Group, Inc.’s Code of Ethics and Business Conduct may be obtained free of charge by writing to United Fire Group, Inc., Attn: Investor Relations, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909, or on our public website, http:// ir.ufginsurance.com by selecting Overview, then Governance Documents and then Code of Ethics and Business Conduct. The Code of Ethics and Business Conduct sets forth certain expectations of business conduct and identifies various violations of the code and establishes procedures regarding the reporting of such violations. We intend to include on our website information about any amendments to, or waivers from, a provision of the Code of Ethics and Business Conduct that apply to our principal executive officer, principal financial, principal accounting officer or controller.
Board Effectiveness Assessment
Our Nominating and Governance Committee conducts an annual survey of the directors to assess the effectiveness of our Board of Directors. The Nominating and Governance Committee reviews and considers the results of the survey, reports its findings to the Board of Directors and addresses any areas of concern. The committee also makes recommendations to the Board of Directors regarding our corporate governance practices. All standing committees of our Board of Directors also conduct annual self-assessments and report such self-assessments to the Board of Directors.
Director Compensation
We have designed the compensation of our non-employee directors to attract and retain qualified directors and to align directors’ interests with the interests of our shareholders. See Director Compensation in this proxy statement for a description of our directors’ compensation program and the fees paid to our non-employee directors during 2017.
Board Agendas and Meetings
Each year the Board of Directors establishes the dates of regularly scheduled meetings of the Board of Directors. The Chairman of the Board, working with our Chief Executive Officer and Committee Chairpersons, establishes agendas for each meeting of the Board of Directors and distributes the agendas in advance of each meeting. Each director may suggest agenda items. At each regular meeting of the Board of Directors, the Board receives reports of each of the Committees.
Executive Sessions of Independent Directors
The independent directors meet in executive session following each meeting of the Board of Directors. The Chairman of the Board presides at meetings of the independent directors. These sessions allow the independent directors to discuss topics without management present. Four executive sessions were held in 2017.
Access to Management and Independent Advisers
The independent directors have access to management and, as necessary and appropriate, to independent advisers.

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Committees of the Board
The current membership of six standing committees of the Board of Directors is shown in the following table:
Director Name
Audit Committee
Compensation Committee
Executive Committee
Investment Committee
Nominating and Governance Committee
Risk Management Committee
Executive Director
 
 
 
 
 
 
Randy A. Ramlo
 
 
M
M
 
M
Independent Directors
 
 
 
 
 
 
Jack B. Evans, Chairman
M
 
C
M
M
 
John-Paul E. Besong
M
 
 
 
 
M
Scott L. Carlton
F
M
 
M
 
 
Brenda K. Clancy
F
M
 
 
 
M
Christopher R. Drahozal
M
 
M
 
 
C
Sarah Fisher Gardial
 
M
 
 
 
M
George D. Milligan
M
 
 
C
M
 
James W. Noyce, Vice Chair
C, F
M
M
 
M
 
Mary K. Quass
 
C
 
 
M
M
Kyle D. Skogman
M
 
M
M
C
 
Susan E. Voss
 
M
 
M
 
M
M = Member | C = Chair | F = Audit Committee Financial Expert
Audit Committee
We have a separately designated standing Audit Committee, as defined in Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee is governed by a charter which requires that each member of the Audit Committee be an independent director. All of the members of the Audit Committee are independent under the NASDAQ Listing Rules, applicable law, and the applicable rules and regulations of the SEC, including Section 10A(m)(3) of the Exchange Act. The Board of Directors has determined that Messrs. Carlton and Noyce and Ms. Clancy each possess the skills necessary to qualify as audit committee financial experts as defined by Item 407(d)(5) of Regulation S-K under the Exchange Act.
The Audit Committee is directly responsible for the appointment, compensation and retention (or termination) of our independent registered public accounting firm. The Audit Committee is also responsible for oversight of our internal audit function. The Audit Committee seeks to maintain free and open communications between the directors, the independent registered public accounting firm, the internal auditor and management. Its duties consist of reviewing recommendations by the internal auditor and the independent registered public accounting firm on accounting matters and internal controls; advising the Board of Directors on the scope of audits; reviewing our annual Consolidated Financial Statements and the accounting standards and principles followed; appointing the independent registered public accounting firm; and, if necessary, conducting independent inquiries. The Audit Committee met four times during 2017, including one time in a joint session with the Risk Management Committee and one continuing education meeting.
Compensation Committee
We have a separately designated standing Compensation Committee. The Compensation Committee is governed by a charter which requires that each member of the Compensation Committee be an independent director. The Board of Directors has determined that each member of our Compensation Committee is independent under the NASDAQ Listing Rules, applicable law, and the applicable rules and regulations of the SEC, including Section 10C(a) of the Exchange Act. No Compensation Committee member is an employee or former employee of our Company, its subsidiaries or affiliates. With the exception of compensation for his or her service on the Board of Directors, no Compensation Committee member received any consulting, advisory, or other compensatory fee from us. No Compensation Committee member had any relationship requiring disclosure under the heading Transactions with Related Persons in this proxy statement. No Compensation Committee member had any relationship that, in the opinion of the directors, would interfere with his or her exercise of independent judgment as a member of the committee.
Compensation Committee Interlocks and Insider Participation
During 2017, none of our executive officers served on the compensation committee (or its equivalent) or Board of Directors of another entity whose executive officer(s) served on our Board of Directors or Compensation Committee.

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Responsibilities and Authority
The role of the Compensation Committee is to assist the Board of Directors in its' responsibilities relating to compensation of our senior executive officers and directors. The Compensation Committee oversees all aspects of the compensation of our executive officers and directors, including our director and management equity plans and deferred compensation plans, and other management incentive compensation programs. In overseeing those plans, the Compensation Committee may delegate authority to Company officers for day-to-day plan administration and interpretation. Management provides information to assist the committee regarding participation and award levels in the management plans. The Compensation Committee may not delegate authority for matters affecting the executive officers. The Compensation Committee’s primary processes with respect to compensation of our named executive officers can be found under the heading Compensation Discussion and Analysis in this proxy statement. During 2017, the Compensation Committee engaged the services of Frederic W. Cook & Co. ("FW Cook") as its independent outside compensation consultant to provide advice on executive and director compensation matters. For a discussion of the specific services provided by FW Cook, see Compensation Discussion and Analysis in this proxy statement. The Compensation Committee met four times during 2017.
Executive Committee
The Executive Committee meets during the intervals between Board of Directors’ meetings and has the right and authority to exercise the full powers of our Board of Directors, except where limited by law, or where responsibility and authority is reserved to the Board of Directors or vested in another committee of the Board of Directors. This committee also meets regularly with our Chief Executive Officer, participates with management in the development of our strategic initiatives, and monitors the implementation of these initiatives. In addition, the Executive Committee provides regular advice and counsel to management. The Executive Committee met four times during 2017.
Investment Committee
The Investment Committee develops and oversees the Investment Policies and Acquisition/Holding Investment Practices of the Company and its subsidiaries. In addition, it reviews the Company’s investments and the quality and performance of, and the risks related to, the Company’s investment portfolios. The Investment Committee meets regularly with our Chief Investment Officer and his staff. The Investment Committee met four times during 2017.
Nominating and Governance Committee
The Nominating and Governance Committee is governed by a charter which requires that each member of the Nominating and Governance Committee be an independent director, as defined in the NASDAQ Listing Rules, and that each member be free from any relationship that, in the opinion of the Board of Directors, would interfere with his or her exercise of independent judgment.
The Nominating and Governance Committee is responsible for reviewing all director nominees, including incumbents, and making recommendations of nominees to the entire Board of Directors. The committee is also responsible for assessing and reporting on nominee qualifications, making assessments of director independence, identifying and reviewing related person transactions, and other matters, including director education and succession planning. The Nominating and Governance Committee met four times during 2017.
Risk Management Committee
For a description of responsibilities and activities of the Risk Management Committee, see Risk Oversight by the Board of Directors in this proxy statement. During 2017, the Risk Management Committee met four times as a committee, including one time in a joint session with the Audit Committee, as we believe that both committees should be involved in addressing our Company’s risks.
Director Nomination Process
The Nominating and Governance Committee has adopted a written policy with regard to the consideration of director candidates, including candidates recommended by shareholders. The Nominating and Governance Committee evaluates candidates recommended by shareholders in the same manner as it evaluates other candidates. The committee seeks candidates with the following minimum qualifications:
•
Each candidate must be prepared to represent the best interests of all of our shareholders and not just one particular constituency.
•
Each candidate must be an individual who has demonstrated integrity and ethics in the candidate’s personal, business, and professional life and has an established record of business and professional accomplishment.

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•
Neither the candidate nor the candidate’s family members (as defined in the NASDAQ Listing Rules), affiliates or associates (as defined in Rule 405 promulgated under the Securities Act of 1933) shall have any material personal, financial, or professional interest in any present or potential competitor of ours.
•
Each candidate must, as a director, agree to participate fully in Board of Directors activities, including active membership on at least one Board committee and attendance at, and active participation in, meetings of the Board of Directors and the committee(s) of which he or she is a member and not have other personal, business or professional commitments that would interfere with or limit his or her ability to do so.
•
Each candidate must be willing to make, and financially capable of making, an investment in Company Common Stock as required by our Articles of Incorporation and the non-employee director stock ownership guidelines adopted by our Board of Directors.
The Nominating and Governance Committee considers it very desirable for candidates to possess the following qualities or skills:
•
Each candidate should contribute to the Board of Directors' overall diversity, which is broadly construed to mean a variety of opinions, perspectives, personal experience, business experience, professional experience, and backgrounds (such as gender, race, and ethnicity), as well as other differentiating characteristics.
•
Each candidate should contribute positively to the existing chemistry and collaborative culture among the directors.
•
Each candidate should possess professional, business, and personal experience and expertise relevant to the Company’s business. In this regard, the Nominating and Governance Committee will consider financial, management and business background, personal and educational background and experience, community leadership, independence and other qualifications, attributes and potential contributions.
The Nominating and Governance Committee identifies and screens candidates for director and makes its recommendations for director to the Board of Directors. The Nominating and Governance Committee selects and recommends each candidate to the Board of Directors each year based on its assessment of, among other things:
•
the candidate’s personal qualifications as discussed above;
•
the past and potential contributions of our current directors, and the value of continuity and prior experience on our Board of Directors;
•
the need for a director to possess particular attributes or particular experience or expertise; and
•
other factors that it considers relevant, including any specific qualifications the Nominating and Governance Committee adopts from time to time.
Any shareholder may recommend a person to be considered as a candidate or nominate one or more persons for election as a director of our Company. A shareholder who desires to make such a recommendation must comply with the same requirements applicable to director nominations set forth in Sections 8 and 9 of Article I of our Bylaws. Our Board of Directors encourages shareholders who wish to recommend candidates to the Nominating and Governance Committee to send their recommendations in writing addressed to the Nominating and Governance Committee, United Fire Group, Inc., Attention: Corporate Secretary, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909 using the procedures discussed below.
Communicating with the Board of Directors
Concerns and Complaints
United Fire Group, Inc. has adopted a process for communicating with our Board of Directors or individual directors. To communicate with our Board of Directors or individual directors regarding issues of concern to or about our Company, access our website, http:// ir.ufginsurance.com, by selecting Investor Resources and then Concerns/Complaints, call toll free by telephone at 1-877-256-1056, or write to our Audit Committee at United Fire Group, Inc., Attention: Audit Committee—Confidential, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909. Our Vice President, General Counsel and Corporate Secretary, Neal R. Scharmer, and Audit Committee Chair, James W. Noyce, are responsible for reviewing and reporting such communications to our Board of Directors and individual directors. If requested, and to the extent possible, all communications with our Board of Directors are kept strictly confidential.
Shareholder Proposals and Director Nominations for the 2019 Annual Meeting
To be eligible for inclusion in the proxy materials for the annual meeting of shareholders in 2019 (the "2019 Annual Meeting"), a shareholder proposal must be received by our Corporate Secretary by the close of business on December 6, 2018. All proposals must comply with Rule 14a-8 under the Exchange Act, which lists the requirements for the inclusion of shareholder proposals in company-

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sponsored proxy materials. Proposals must be delivered to our Corporate Secretary at United Fire Group, Inc., Attention: Corporate Secretary, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909.
Any shareholder proposal that is not submitted for inclusion in next year’s proxy statement under SEC Rule 14a-8, but is instead sought to be presented directly at our 2019 Annual Meeting, or any director nomination for our 2019 Annual Meeting, must be received at our principal executive offices no earlier than the close of business on December 17, 2018 and no later than the close of business on January 16, 2019. Proposals and nominations must be delivered to our Chairman at United Fire Group, Inc., Attention: Chairman of the Board, P.O. Box 73909, Cedar Rapids, Iowa 52407-3909.
According to our Articles of Incorporation, minority shareholders who collectively hold at least one-fifth of our outstanding Company Common Stock are entitled to nominate a proportionate number of directors as set forth in Article VII, Section 1(e) of our Articles of Incorporation. Shareholders nominating directors pursuant to this provision must also comply with the provisions of our Bylaws governing director nominations.
PROPOSAL ONE – ELECTION OF DIRECTORS
Our Articles of Incorporation require that our Board of Directors be divided into three classes, A, B and C, with one class elected at each Annual Meeting. The Board of Directors must consist of no more than fifteen and no less than nine members, with the number fixed by the directors. The membership of our Board of Directors is currently fixed at 12, divided among three classes, with each class consisting of four members. The four Class C directors identified in this proxy statement are to be elected at this year’s Annual Meeting.
Upon the recommendation of the Nominating and Governance Committee, our Board of Directors has nominated the following individuals for election to our Board of Directors this year.
Director Nominees
Directors (Class C) – Terms Expiring in 2018
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Christopher R. Drahozal
Director since 1997
Mr. Drahozal, 56, is an internationally known legal scholar. He is the John M. Rounds Professor of Law and Associate Dean for Research and Faculty Development at the University of Kansas School of Law in Lawrence, Kansas, where he has taught since 1994. During Fall 2015 he was, and during Fall 2018 he will be, the Mason Ladd Distinguished Visiting Professor of Law at the University of Iowa College of Law. He is on the Board of Directors of The McIntyre Foundation and of Arbitrator Intelligence, Inc., a nonprofit working to enhance transparency, fairness, and accountability in the selection of international arbitrators.
From 2012 to 2016, Mr. Drahozal has also served as special advisor to the Consumer Financial Protection Bureau, a government agency headquartered in Washington, D.C., on matters related to the use of arbitration clauses in consumer financial services contracts. Prior to teaching, Mr. Drahozal was in private law practice in Washington, D.C., and served as a law clerk for the Iran-U.S. Claims Tribunal, the United States Court of Appeals for the Fifth Circuit and the United States Supreme Court. Mr. Drahozal is a first cousin by marriage to Mr. Carlton, another director of the Company.

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Jack B. Evans
Director since 1995
Mr. Evans, 69, became Chairman of our Board of Directors in October 2009. He has served as a director since 1995 and as Vice Chairman from 1997–2009. Mr. Evans has a very strong business background and currently holds the position of President of The Hall-Perrine Foundation, a private philanthropic corporation located in Cedar Rapids, Iowa. He has held that position since 1996.
From 1993 to 1995, he served as President of SCI Financial Group, a regional financial services firm located in Cedar Rapids, Iowa that provided brokerage, insurance and related services to its clients. Mr. Evans has extensive experience with public companies. He currently serves on the Board of Trustees of registered investment companies in the Nuveen Mutual Funds complex. He has served as a director of Alliant Energy Corporation of Madison, Wisconsin, a utility company, and as a director of the Federal Reserve Bank of Chicago. Mr. Evans is also a former member of the Iowa Board of Regents, which oversees the state’s public university system. As a long-serving director of our Company, Mr. Evans has gained broad knowledge of the insurance industry generally and our Company in particular.
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Sarah Fisher Gardial
Director since 2016
Dr. Gardial, 60, is Dean for the Henry B. Tippie College of Business at the University of Iowa in Iowa City, Iowa, occupying this role since 2012. Previously, Ms. Gardial served as the Vice Provost for Faculty Affairs at the University of Tennessee (2008–2012). She also held the Beaman Professorship at the University of Tennessee (2006–2012).
She has a strong background in business, having taught business principles at the collegiate level for over 30 years. The Board of Directors believes that Dr. Gardial’s qualifications to serve as director include her vast business acumen, especially regarding the growth and improvement of marketing principles and customer value. Dr. Gardial also serves as a member of the Board of Directors of University of Iowa Community Credit Union.
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George D. Milligan
Director since 1999
Mr. Milligan, 61, has a strong business background, with service since 1985 as President of The Graham Group, Inc., of Des Moines, Iowa. The Graham Group, Inc. consists of a real estate firm specializing in developing office buildings and a construction firm

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specializing in constructing hospital facilities. Since 2005, Mr. Milligan has also served as a director of West Bancorporation, Inc. of West Des Moines, Iowa, a bank holding company.
Mr. Milligan serves as a director on the loan committee and nominating and governance committee of the West Bancorporation, Inc. Board of Directors. Mr. Milligan previously served as director of Allied Life Insurance Company. Mr. Milligan is a long-time community leader and supporter, being active with the Boy Scouts of America, the Dowling Foundation, and the Variety Club of Iowa.
Vote Required and Board Recommendation
Directors in uncontested elections are elected by a majority vote of the shares, represented either in person or by proxy, and entitled to vote in the election at the Annual Meeting at which a quorum is present. In tabulating the voting results for the election of directors, “FOR” votes are counted in favor of the election of a director, and “AGAINST” votes are counted against the election of a director. Abstentions will have the same effect as a vote against the director.
The Board of Directors recommends a vote FOR the election to the Board of each of the four director nominees identified in this proxy statement.
Continuing Directors
The following individuals are continuing members of our Board of Directors who are not up for election at the Annual Meeting.
Directors (Class B) – Terms Expiring in 2019
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John-Paul E. Besong
Director since 2013
Mr. Besong, 64, has a strong technical, business and management background, having previously held the position of Senior Vice President of e-Business and Chief Information Officer for Rockwell Collins, a Fortune 500 company based in Cedar Rapids, Iowa, that provides aviation electronics for both commercial and military aircraft. He was appointed Senior Vice President and Chief Information Officer in 2003, serving until 2015. Beginning in 1979, when he joined Rockwell Collins as a chemical engineer, Mr. Besong has held management roles having increasingly more responsibility within the company, including vice president of e-Business and Lean Electronics™, head of the SAP initiative and Director of the Printed Circuits and Fabrication businesses. Since 2015, Mr. Besong has served as a director of QCR Holdings, Inc. of Moline, Illinois, a multi-bank holding company.
Mr. Besong is a strong community supporter and member of various industry and community boards. He serves on the board of directors of Lean Aerospace Initiative (LAI), Junior Achievement of Eastern Iowa (Cedar Rapids Area), Mercy Medical Center, Iowa Public Television Foundation and Technology Association of Iowa (TAI) CIO Advisory Board, where he serves as a member and former chair of the executive board of TAI. Mr. Besong’s business background provides him with a very strong understanding of technological advances critical to the insurance industry. The Board of Directors believes that Mr. Besong’s qualifications to serve as director include his business acumen and distinguished management career as an officer and information technology expert of a Fortune 500 company.

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James W. Noyce
Director since 2009
Mr. Noyce, 62, has a strong business, accounting and insurance industry background, with extensive public company experience. Before retiring, Mr. Noyce had nearly three decades of experience in the financial services industry, most recently as Chief Executive Officer and Director of FBL Financial Group, Inc. (“FBL”), an insurance holding company headquartered in West Des Moines, Iowa. While at FBL, Mr. Noyce served as Chief Executive Officer and Director (2007–2009), Chief Financial Officer (1996–2007), and Chief Administrative Officer (2002–2007). From January 2000 to July 2002 he was Executive Vice President and General Manager of the property casualty companies managed by FBL. Mr. Noyce began his employment with FBL and its affiliates in 1985.
In March 2016, Mr. Noyce served as Interim CEO of the Greater Des Moines YMCA while the organization performed a search for a permanent CEO. Since 2009, Mr. Noyce has served as a director of West Bancorporation, Inc. of West Des Moines, Iowa, a bank holding company, where he chairs its audit committee.
Mr. Noyce has held or still holds numerous professional certifications and designations including certified public accountant; Fellow, Casualty Actuarial Society; Associate, Society of Actuaries; Fellow, Life Management Institute; and Member, American Academy of Actuaries. He was named Outstanding CPA in Business and Industry by the Iowa Society of CPAs and was inducted into the American Institute of Certified Public Accountants’ Business and Industry Hall of Fame in 2007.
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Mary K. Quass
Director since 1998
Ms. Quass, 67, is President and Chief Executive Officer of NRG Media, LLC, headquartered in Cedar Rapids, Iowa, a position that she has held since 2005. NRG Media, LLC is a broadcast group consisting of 42 analog radio stations and 20 digital streaming radio stations in the Midwest. Ms. Quass previously served as President and Chief Executive Officer of New Radio Group, LLC (2002–2005). She also served as President and CEO of Central Star, a division of Capstar Broadcasting Partners, Inc. from 1998 through the merger of Capstar Broadcasting Partners, Inc. in 2001 into AMFM.
Ms. Quass has a strong business background and has been a long-time community leader and supporter. She serves on the board of directors for Van Meter Inc., a distributor of electrical and mechanical supplies, services and solutions in Cedar Rapids, Iowa, and the Cedar Rapids, Iowa, region of U.S. Bank. Ms. Quass’ service extends to community boards as Chair for Mercy Medical Center in Cedar Rapids, Iowa; past Chair of the Entrepreneurial Development Center, a public/private sponsored business accelerator in Cedar Rapids, Iowa; Trustee of United Way East Central Iowa; and past Chair of the Cedar Rapids Chamber of Commerce. Ms. Quass is involved in professional organizations including service on the Board of Directors and Executive Committee of the National Association of Broadcasters and the Radio Advertising Bureau Executive Committee, and as Treasurer of the QMac IBA Foundation and past Chair of the Iowa Broadcasters Association. Ms. Quass has been recognized by the broadcast industry including being named as Radio Ink Magazine Broadcaster of the Year for 1999 and one of the 40 Most Powerful Broadcasters (2005–2010). She has been inducted into the Iowa Broadcasters Association Hall of Fame and is the recipient of the Rivers Humanitarian Award. Ms. Quass has a very strong understanding of the insurance industry in general and our business operations in particular due to her service on our Board of Directors.

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Kyle D. Skogman
Director since 2000
Mr. Skogman, 67, possesses a strong business background. Since 1990, he has served as President of Skogman Construction Co. of Iowa, a company that specializes in residential construction and real estate sales, primarily in Cedar Rapids, Iowa. Skogman Homes has built over 6,200 homes since Mr. Skogman became President. Mr. Skogman also owns an interest in a property-casualty insurance agency. He was inducted into the Cedar Rapids Area Homebuilders Association Hall of Fame.
Nominees for Directors (Class A) – Terms Expiring in 2020
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Scott L. Carlton
Director since 2012
Mr. Carlton, 49, has a strong international business background and extensive experience within the finance and accounting functions in a global public company. He is currently the President of Tokai Carbon GE LLC, the US subsidiary of Tokai Carbon, a global leader in carbon-based materials, a position he has held since 2017. Prior to this position, Mr. Carlton was the President of SGL Carbon LLC for 10 years, leading a subsidiary of SGL Group—The Carbon Company, a leading worldwide manufacturer of carbon-based products with 42 facilities worldwide, including 12 locations in North America. From 2002 until 2007, Mr. Carlton served as Vice President of Finance and Controlling for the largest business unit of SGL Carbon Group, and in that capacity was responsible for the controlling, finance and accounting functions.
Since beginning his career with SGL Carbon Group in 1994, Mr. Carlton has worked in a variety of accounting and financial positions at various locations within and outside of the US. Mr. Carlton holds a bachelors degree in financial management, a masters of business administration degree and completed the Senior Executive Education Program at the London Business School. He has a strong background in finance, with particular expertise in accounting, financial oversight and reporting. Mr. Carlton also has insurance experience on both a domestic and international scale. Mr. Carlton is actively involved on corporate boards and in the community. He is also a director of the Carolina chapter of the National Association of Corporate Directors (“NACD”) and is a registered NACD Governance Fellow. Mr. Carlton serves on the board of E4 Carolinas and the German Language and Culture Foundation of Charlotte, North Carolina. Mr. Carlton is a first cousin by marriage to Mr. Drahozal, another director of the Company.

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Brenda K. Clancy
Director since 2016
Ms. Clancy, 63, has a wealth of valuable experience in the insurance industry, having most recently served as the Global Chief Technology Officer for AEGON N.V. ("AEGON") (2013–2016), which is a multinational life insurance, pensions and asset management company headquartered in The Hague, Netherlands. AEGON is a parent company of Transamerica Corporation, an American holding company for various life insurance companies and investment firms doing business primarily in the United States, offering life and supplemental health insurance, investments, and retirement services.
Throughout her 40-year career with AEGON, Ms. Clancy held numerous financial leadership positions including President of Transamerica Life Insurance Company (2008–2016), Executive Vice President and Chief Operating Officer of Transamerica Life Insurance Company (2004–2008), Senior Vice President, Information & Finance and Treasurer of Life Investors Insurance Co. of America (1997–2004), and Vice President and Controller of Life Investors Insurance Co. of America (1992–1997). She was actively involved in all major acquisitions, strategy development, change initiatives and business integration.
392907272_ramlo125.gif
Randy A. Ramlo
Director since 2008
Mr. Ramlo, 56, has served as our President and Chief Executive Officer since May 2007. He previously served as Chief Operating Officer (2006–2007), as Executive Vice President (2004–2007), and as Vice President, Fidelity and Surety (2001–2004). Mr. Ramlo has been with the Company since 1984 and has a very strong knowledge of our business and the insurance industry. He holds numerous professional insurance designations, including Chartered Property and Casualty Underwriter, Associate in Fidelity and Surety Bonding, Associate in Management and Associate in Risk Management.
Mr. Ramlo is a long-time community leader and supporter, with service to many diverse organizations. He serves as a director of Cedar Rapids Metro Economic Alliance, an economic development organization, a member of the board of trustees of the Cedar Rapids Public Library, a member of the University of Northern Iowa School of Business Executive Advisory Board, a trustee on the Iowa College Foundation Board and a trustee of the Eastern Iowa Branch of the Juvenile Diabetes Research Foundation International.

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392907272_voss125.gif
Susan E. Voss
Director since 2014
Susan E. Voss, 62, joined American Enterprise Group, Inc. as its Vice President and General Counsel in November 2013. Headquartered in Des Moines, Iowa, American Enterprise Group provides personal and customized health and life insurance solutions for individuals, families and small business owners. Prior to joining American Enterprise Group, Inc., Ms. Voss had her own consulting firm in 2013, Voss Consulting, LLC, which provided consulting and expert witness services in the areas of insurance and financial product regulation and compliance issues.
Before Voss Consulting, Ms. Voss worked in Iowa state government for 31 years, the last 20 of which were spent with the Iowa Insurance Division. In 2005 she was appointed by then-Governor Tom Vilsack to serve as Iowa Insurance Commissioner, a position she held until 2013. Ms. Voss was elected by her peers as an officer of the National Association of Insurance Commissioners (“NAIC”) in 2007 and served as its President in 2011. During her time as Iowa Insurance Commissioner and her tenure with the NAIC, Ms. Voss served on a number of NAIC committees including: Market Conduct and Regulation Committee (which she chaired from 2005 to 2006), the Principles-Based Reserving Working Group (which she chaired in 2012), International Insurance Committee (which she chaired in 2012), Life and Annuities Committee, Financial Condition Committee and Financial Regulation Standards and Accreditation Committee.


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PROPOSAL TWO – RATIFICATION OF THE AUDIT COMMITTEE’S APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Information About Our Independent Registered Public Accounting Firm
The Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm for 2018 and has directed that management submit the selection of the independent registered public accounting firm to shareholders for ratification at the Annual Meeting. Ernst & Young LLP has served as our independent registered public accounting firm since 2002. Representatives from Ernst & Young LLP will attend the Annual Meeting, will have the opportunity to make a statement if they wish to do so, and will be available to respond to appropriate shareholder questions. Although shareholder ratification of the appointment of our independent registered public accounting firm is not required by our Articles of Incorporation, Bylaws or otherwise, the Board of Directors is seeking ratification as a matter of good corporate governance. The Audit Committee will consider the outcome of this vote in future deliberations regarding the appointment of our independent registered public accounting firm.
Fees Billed to United Fire Group, Inc. During 2017 and 2016
The following table represents the total fees billed for services rendered to us by Ernst & Young LLP for the fiscal years ended December 31, 2017, and December 31, 2016, respectively:
Services
2017 Fees ($)

2016 Fees ($)

Audit (1)
1,433,520

1,410,000

Audit-Related (2)
—

27,500

Tax (3)
101,051

85,870

All Other (4)
—

—

Total Fees
1,534,571

1,523,370

(1)
Audit Fees. “Audit” fees consist of fees for professional services rendered for the audit of United Fire Group, Inc.’s Consolidated Financial Statements and internal control over financial reporting, review of the interim Consolidated Financial Statements included in quarterly reports, services that are normally provided by the independent registered public accounting firm in connection with statutory or regulatory filings or engagements, and services that generally only the independent registered public accounting firm can reasonably provide.
(2)
Audit-Related Fees. “Audit-Related” fees consist of fees for assurance and related services that are traditionally performed by the independent registered public accounting firm and are reasonably related to the performance of the audit or the review of our financial statements, but are not reported as “Audit” fees. During 2016, the audit-related fees billed to us by Ernst & Young LLP related to out-of-scope work performed for the SEC comment letter received by the Company.
(3)
Tax Fees. Tax fees billed to us by Ernst & Young LLP in 2017 and 2016 related to tax compliance, tax advice, or tax planning services rendered to us.
(4)
All Other Fees. During 2017 and 2016, there were no fees billed to us by Ernst & Young LLP for any professional services rendered other than those described above.
Audit Committee Pre-Approval
The Audit Committee of our Board of Directors is governed by a charter that requires the Audit Committee to appoint, evaluate, and oversee our independent registered public accounting firm. As part of its responsibilities, the Audit Committee reviews and approves the provision of all audit and non-audit services for the purpose of assuring the independence of our independent auditors. The Audit Committee pre-approved all of the services provided and the fees charged by Ernst & Young LLP during 2017 and 2016.
Vote Required and Board Recommendation
Ratification of the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm for 2018 requires the affirmative vote of a majority of the votes cast on this proposal. In tabulating the voting results for the ratification of the appointment of Ernst & Young LLP, abstentions will not affect the voting results on this proposal because only “FOR” and “AGAINST” votes are counted as votes cast.
The Audit Committee and the Board of Directors recommend a vote FOR ratification of the Audit Committee’s appointment of Ernst & Young LLP as United Fire Group, Inc.’s independent registered public accounting firm for 2018.

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Report of the Audit Committee*
February 2018
The Audit Committee reviews United Fire Group, Inc.’s financial reporting process on behalf of the Board of Directors. Management has primary responsibility for the financial statements and the reporting process, including the system of internal controls. In accordance with standards established by the Public Company Accounting Oversight Board (United States), Ernst & Young LLP, our independent registered public accounting firm, is responsible for performing an audit of United Fire Group, Inc.’s Consolidated Financial Statements, assessing the effectiveness of United Fire Group, Inc.’s internal control over financial reporting and issuing reports thereon. The Audit Committee monitors these processes. The Audit Committee consists entirely of independent directors and operates pursuant to a charter adopted by it and by the Board of Directors. The Audit Committee met four times during 2017.
The Audit Committee has:
•
reviewed and discussed the audited Consolidated Financial Statements with management;
•
discussed with Ernst & Young LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC;
•
received from Ernst & Young LLP the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence; and
•
discussed with the independent auditors, the auditors' independence.
The Audit Committee has discussed with United Fire Group, Inc.’s internal auditor and with Ernst & Young LLP the overall scope and plans for their respective audits. The Audit Committee met with the internal auditor and Ernst & Young LLP both with and without management present, to discuss the results of their examinations, the evaluations of United Fire Group, Inc.’s internal controls and the overall quality of United Fire Group, Inc.’s financial reporting process.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board of Directors has approved) that the audited Consolidated Financial Statements be included in United Fire Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017, for filing with the Securities and Exchange Commission. The Audit Committee appointed Ernst & Young LLP as United Fire Group, Inc.’s independent registered public accounting firm for the year ending December 31, 2018 and recommends that the shareholders ratify the appointment.
Audit Committee Members
James W. Noyce, Chair
John-Paul E. Besong
Scott L. Carlton
Brenda K. Clancy
Christopher R. Drahozal
Jack B. Evans
George D. Milligan
Kyle D. Skogman
*
This report is not “soliciting material” and is not deemed “filed” with the SEC. The incorporation by reference of this proxy statement into any document filed with the SEC by the Company shall not be deemed to include this report unless such report is specifically stated to be incorporated by reference into such document.

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PROPOSAL THREE – SHAREHOLDER ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS
Say-On-Pay Advisory Vote
As required pursuant to Section 14A of the Exchange Act, shareholders have the opportunity to vote, on a non-binding advisory basis, on the compensation of our named executive officers (“Say-on-Pay Vote”). Our Board of Directors is committed to corporate governance best practices and recognizes the interest of shareholders in executive compensation matters. Although the vote is advisory and is not binding on the Board of Directors, the Compensation Committee will review the voting results and consider the constructive feedback obtained through the shareholder advisory vote in making decisions about future compensation arrangements for our named executive officers.
Based on the voting results of the 2017 Annual Meeting with respect to the frequency of future Say-on-Pay votes, the Board had decided to include a Say-on-Pay vote in our proxy statement on an annual basis until the next required advisory vote on the frequency of future Say-on-Pay votes.
As discussed in Compensation Discussion and Analysis in this proxy statement, the Board of Directors believes that our current executive compensation program directly links executive compensation to our Company’s performance and aligns the interests of our named executive officers with those of our shareholders. For example:
•
Our executive compensation program encourages executive decision-making that is aligned with the long-term interests of our shareholders;
•
Bonuses and performance stock unit awards for named executive officers are tied to specific performance goals;
•
We encourage long-term stock ownership by our executive officers with award features such as time-based vesting;
•
We have adopted stock ownership guidelines for our executive officers; and
•
Our compensation uses a balance of short- and long-term performance metrics to encourage the efficient management of our business and minimize excessive risk-taking.
The Board of Directors believes that United Fire Group, Inc.’s executive compensation program is designed to meet the objectives discussed in the Compensation Discussion and Analysis section of this proxy statement. Accordingly, the Board recommends that shareholders vote in favor of the following resolution: “RESOLVED, that the compensation paid to United Fire Group, Inc.’s named executive officers as described in the proxy statement under Executive Compensation, including the Compensation Discussion and Analysis section, the compensation tables and other narrative disclosure, contained therein, is hereby APPROVED.”
Vote Required and Board Recommendation
Approval of the resolution regarding the compensation of our named executive officers requires the affirmative vote of a majority of the votes cast on this proposal. In tabulating the voting results for the resolution regarding executive compensation, abstentions will not affect the voting results on this proposal because only “FOR” and “AGAINST” votes are counted as votes cast.
The Board of Directors recommends a vote FOR the approval, on an advisory basis, of the compensation of our named executive officers.

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Security Ownership of Certain Beneficial Owners
The following table sets forth information as of March 19, 2018, with respect to persons known to us to beneficially own more than five percent of the Company Common Stock, based solely on our review of filings with the SEC pursuant to Section 13(d) or 13(g) of the Exchange Act. Except as otherwise indicated, each of the shareholders listed in the following table has sole voting and dispositive power over the shares beneficially owned:
Title of Class
Name and Address
of Beneficial Owner
Amount and Nature of Beneficial Ownership (#)
Percent
of Class (%)
Common
Dee Ann McIntyre
1218 Bishops Lodge Rd
Santa Fe NM 87501-1099
2,996,832

(1)
12.0%
Common
BlackRock, Inc.
55 East 52nd St
New York NY 10055
2,376,503

(2)
9.5%
Common
Dimensional Fund Advisors LP
6300 Bee Cave Rd
Austin TX 78746
2,105,446

(3)
8.5%
Common
The Vanguard Group
100 Vanguard Blvd
Malvern PA 19355
1,966,691

(4)
7.9%
Common
EARNEST Partners LLC
1180 Peachtree St NE Ste 2300
Atlanta GA 30309
1,412,421

(5)
5.7%
(1)
Based on a Schedule 13G (Amendment No. 6) filed with the SEC on February 14, 2017, which is the most-recent available as of March 19, 2018, the number of securities beneficially owned by Mrs. McIntyre as of December 31, 2016 includes: 2,524,969 shares for which Mrs. McIntyre holds sole voting and dispositive power, and 471,863 shares for which Mrs. McIntyre holds shared voting and dispositive power.
(2)
Based on a Schedule 13G (Amendment No. 8) filed with the SEC on January 23, 2018, the number of securities beneficially owned by BlackRock, Inc. as of December 31, 2017 includes: 2,334,257 shares for which it holds sole voting power and 2,376,503 shares for which it holds sole dispositive power.
(3)
Based on a Schedule 13G (Amendment No. 9) filed with the SEC on February 9, 2018, the number of securities beneficially owned by Dimensional Fund Advisors LP as of December 31, 2017 includes: 2,058,029 shares for which it holds sole voting power and 2,105,446 shares for which it holds sole dispositive power.
(4)
Based on a Schedule 13G (Amendment No. 3) filed with the SEC on February 9, 2018, the number of securities beneficially owned by The Vanguard Group as of December 31, 2017 includes: 24,127 shares for which it holds sole voting power, 4,820 shares for which is holds shared voting power, 1,939,822 shares for which it holds sole dispositive power and 26,869 shares for which it holds shared dispositive power.
(5)
Based on a Schedule 13G (Amendment No. 16) filed with the SEC on February 14, 2018, the number of securities beneficially owned by EARNEST Partners, LLC as of December 31, 2017 includes: 314,497 shares for which it holds sole voting power, 96,537 shares for which it holds shared voting power and 1,412,421 shares for which it holds sole dispositive power.

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Security Ownership of Management
The following table sets forth certain information regarding the beneficial ownership of our Company Common Stock as of March 19, 2018, with respect to each of our directors, director nominees, named executive officers and all of our directors and executive officers as a group. As of March 19, 2018, we had 24,907,672 shares of Company Common Stock outstanding. Except as otherwise indicated, each of the shareholders listed in the following table has sole voting and dispositive power over the shares beneficially owned:
Name of Beneficial Owner
Amount and Nature of Beneficial Ownership (#) (1)
Percent of Common Stock Outstanding (%)
John-Paul E. Besong
8,721

(2)
*
Scott L. Carlton
120,581

(3)
*
Brenda K. Clancy
1,293

(4)
*
Christopher R. Drahozal
885,023

(5)
3.55
Barrie W. Ernst
46,302

(6)
0.19
Jack B. Evans
58,236

(7)
*
Sarah Fisher Gardial
2,541

(8)
*
Dawn M. Jaffray
11,549

(9)
0.05
George D. Milligan
35,654

(10)
*
James W. Noyce
17,632

(11)
*
Mary K. Quass
27,986

(12)
*
Randy A. Ramlo
141,705

(13)
0.57
Neal R. Scharmer
29,106

(14)
0.12
Kyle D. Skogman
36,336

(15)
*
Susan E. Voss
5,486

(16)
*
Michael T. Wilkins
71,798

(17)
0.29
All other executive officers (includes two persons)
55,427

(18)
0.22
All directors and executive officers as a group
1,555,376

 
6.24
*
Represents less than 1% of the issued and outstanding shares of Company Common Stock as of March 19, 2018.
(1)
The inclusion in this table of any shares shown as beneficially owned does not constitute admission of beneficial ownership. None of the shares disclosed in the table are pledged as security. In computing the number of shares of Company Common Stock beneficially owned by a person and the percentage ownership of that person, we deemed outstanding shares Company Common Stock subject to options held by that person that are currently exercisable or exercisable within 60 days from March 19, 2018, and Company Common Stock issuable upon the vesting of restricted stock units ("RSU") within 60 days from March 19, 2018, to be outstanding. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
(2)
Includes 6,966 shares owned individually by Mr. Besong and stock options for 1,755 shares that are exercisable by Mr. Besong on or before 60 days from March 19, 2018.
(3)
Includes 81,790 shares owned individually by Mr. Carlton, 37,660 shares owned in accounts for the benefit of Mr. Carlton’s children, and stock options for 1,131 shares that are exercisable by Mr. Carlton on or before 60 days from March 19, 2018.
(4)
Includes 1,293 shares owned individually by Ms. Clancy.
(5)
Includes 19,108 shares owned individually by Mr. Drahozal, 243,086 shares owned individually by Mr. Drahozal’s wife, 74,714 shares owned in accounts for the benefit of Mr. Drahozal’s children, 471,863 shares owned by The McIntyre Foundation, of which Mr. Drahozal and his wife serve as directors, 66,898 shares owned by the J. Scott McIntyre Trust FBO the Kaye Drahozal Family, of which Mr. Drahozal and his wife serve as co-trustees, and stock options for 9,354 shares that are exercisable by Mr. Drahozal on or before 60 days from March 19, 2018.
(6)
Includes 4,533 shares owned individually by Mr. Ernst, 7,025 shares owned in a Company 401(k) account for Mr. Ernst’s benefit, 1,178 shares held individually by Mr. Ernst’s wife, and stock options for 33,566 shares that are exercisable by Mr. Ernst on or before 60 days from March 19, 2018.
(7)
Includes 48,082 shares owned individually by Mr. Evans, 2,000 shares held in a 401(k) account for Mr. Evan’s benefit, 3,674 shares held in an individual retirement account for Mr. Evans’ benefit, 2,024 shares held in an IRA account for the benefit of Mr. Evans’ wife, and stock options for 2,456 shares that are exercisable by Mr. Evans on or before 60 days from March 19, 2018.
(8)
Includes 2,541 shares owned individually by Ms. Gardial.

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(9)
Includes 1,163 shares owned individually by Ms. Jaffray and stock options for 10,386 shares that are exercisable by Ms. Jaffray on or before 60 days from March 19, 2018.
(10)
Includes 33,899 shares owned individually by Mr. Milligan and stock options for 1,755 shares that are exercisable by Mr. Milligan on or before 60 days from March 19, 2018.
(11)
Includes 9,505 shares owned individually by Mr. Noyce, 1,500 shares held in a trust account for Mr. Noyce’s wife, and stock options for 6,627 shares that are exercisable by Mr. Noyce on or before 60 days from March 19, 2018.
(12)
Includes 15,632 shares owned individually by Ms. Quass and stock options for 12,354 shares that are exercisable by Ms. Quass on or before 60 days from March 19, 2018.
(13)
Includes 21,746 shares owned individually by Mr. Ramlo, 359 shares owned individually by Mr. Ramlo’s wife, 2,035 shares owned by a Company 401(k) account for Mr. Ramlo’s benefit; and stock options for 117,565 shares that are exercisable by Mr. Ramlo on or before 60 days from March 19, 2018.
(14)
Includes 5,743 shares owned individually by Mr. Scharmer, 2,419 shares held in a Company 401(k) account for Mr. Scharmer’s benefit, and stock options for 20,944 shares that are exercisable by Mr. Scharmer on or before 60 days from March 19, 2018.
(15)
Includes 26,241 shares owned individually by Mr. Skogman, 5,650 shares owned by Mr. Skogman’s wife, and stock options for 4,445 shares that are exercisable by Mr. Skogman on or before 60 days from March 19, 2018.
(16)
Includes 5,486 shares owned individually by Ms. Voss.
(17)
Includes 15,819 shares owned individually by Mr. Wilkins, 2,585 shares held in a Company 401(k) account for Mr. Wilkins’s benefit, and stock options for 53,394 shares that are exercisable by Mr. Wilkins on or before 60 days from March 19, 2018.
(18)
Includes 5,002 shares owned individually by the executive officers not otherwise named, 5,894 shares held in a Company 401(k) account for the benefit of the executive officers not otherwise named, and stock options for 44,531 shares that are exercisable by the executive officers not otherwise named on or before 60 days from March 19, 2018.
Equity Compensation Plan Information
The United Fire Group, Inc. Stock Plan authorizes the Board of Directors to grant stock options and other stock awards to employees of the Company or its subsidiaries and affiliates, with 3,400,000 shares initially reserved for such awards and 996,828 shares remaining available for future issuance at December 31, 2017.
The 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan authorizes the Board of Directors to grant stock options and restricted stock to non-employee directors, with 300,000 shares initially reserved for such awards and 61,813 shares remaining available for future issuance at December 31, 2017.
The following table shows information, as of December 31, 2017, regarding shares of Company Common Stock authorized for issuance under our equity compensation plans.
Equity Compensation Plan Information – 2017
Plan Category
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (#)
(a)

 
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($) (b) (1)

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (#)
(c)

 
Equity Compensation Plans Approved by Security Holders
1,351,581

(2)
31.16

1,058,641

(3)
Equity Compensation Plans Not Approved by Security Holders
—

 
—

—

 
Total
1,351,581

 
 
1,058,641

 
(1)
The weighted-average exercise price is calculated based solely on the exercise prices of outstanding stock options and does not reflect the shares that will be issued upon the vesting of outstanding PSUs or RSUs that have no exercise price.
(2)
Includes 1,101,051 stock options, 211,271 RSUs, and 39,259 PSUs (assuming probable achievement estimated as of December 31, 2017).
(3)
Includes 996,828 shares available for issuance under the United Fire Group, Inc. Stock Plan and 61,813 shares available for issuance under the 2005 Non-Qualified Non-Employee Director Stock Option and Restricted Stock Plan.

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Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities (collectively “Reporting Persons”) to file initial reports of ownership and reports of changes in ownership of Company Common Stock and other equity securities with the SEC. SEC regulations require us to identify in this proxy statement any Reporting Person who failed to timely file a report during the most recent calendar year. Based solely on our review of copies of reports filed under Section 16(a) and written representations made to us by Reporting Persons, we believe that all applicable filing requirements were complied with for the fiscal year ended December 31, 2017 with the following exception: on May 23, 2017, George Milligan exercised stock options resulting in the acquisition of 3,000 shares, which was reported late on Form 4 on October 30, 2017.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
The Compensation Committee of our Board of Directors is responsible for developing the philosophy and structure of the compensation program for our named executive officers. The Compensation Committee is also responsible for recommending the annual performance measures and goals, and the compensation of our named executive officers and submitting those to the full Board of Directors for approval.
Executive Overview
Financial Results – Performance Highlights
Below is a brief summary of our fiscal year 2017 financial performance. The numbers below are presented according to U.S. Generally Accepted Accounting Principles ("GAAP"). The combined ratio is a commonly used financial measure of property and casualty underwriting performance. A combined ratio below 100% generally indicates a profitable book of business.
•
Our return-on-equity decreased to 5.3% in 2017 from 5.5% in 2016.
•
Our combined ratio increased to 104.0% in 2017 from 100.3% in 2016.
•
Our net income increased to $51.0 million in 2017 from $49.9 million in 2016.
•
Our catastrophe losses increased to $74.0 million in 2017 from $61.2 million in 2016.
•
The book value of our common stock increased to $39.06 in 2017 from $37.04 in 2016.
During 2017, our results were heavily impacted by Hurricanes Harvey, Irma and Maria in the third quarter as well as two separate large wildfires in California during the third and fourth quarters. We also continued to battle a deterioration in our commercial and personal auto lines of business through the first three quarters, while the fourth quarter showed some improvement in those lines due to initiatives put in place. Our fourth quarter and year-end results also benefited from the Tax Cuts & Jobs Act which passed into law on December 22, 2017.
Capital Management
In 2017, we declared and paid cash dividends of $1.09 per share to shareholders. We have paid a quarterly dividend every quarter since March 1968. In 2017, we also repurchased 701,899 shares of our Company Common Stock at an average cost of $42.43 per share and a total cost of $29.8 million. We are authorized by the Board of Directors to purchase an additional 2,236,572 shares of Company Common Stock under our current share repurchase program, which expires in August 2018. The amount and timing of any future repurchases will be at management’s discretion.
Consideration of Say-on-Pay Results
In 2017, approximately 98% of our shareholders who voted on the “say-on-pay” proposal at our 2017 Annual Meeting approved the compensation of our named executive officers as described in our 2017 proxy statement. The Compensation Committee carefully considered the results of this advisory, non-binding shareholder vote and did not implement any changes to the compensation programs for our named executive officers as a result of the shareholder vote.

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Compensation and Benefits Philosophy
Compensation arrangements for our named executive officers are designed to:
•
attract and retain qualified individuals;
•
provide compensation that is fair, reasonable and competitive with our industry peers; and
•
provide sufficient incentive opportunities that are linked to the execution of our business strategy and the interests of our shareholders.
The Compensation Committee Charter governs the Compensation Committee’s activities and sets forth its responsibilities regarding compensation arrangements for our named executive officers. Some key features of that charter include:
•
The Compensation Committee must be composed of only independent directors, with a minimum of three members;
•
The Compensation Committee must meet at least twice each calendar year; and
•
The Compensation Committee is directly responsible for and has the resources and authority to retain and compensate any outside counsel, expert, consultant or advisor it deems appropriate and necessary.
The responsibilities and functions of the Compensation Committee that relate to compensation of the named executive officers and our independent directors are as follows:
•
Annually review and approve the salaries, incentive awards and other compensation for all of our executive officers;
•
Review and discuss with management the information reported in the Compensation Discussion and Analysis section of the Company’s proxy statement, and based on the review and discussions recommend to the Board of Directors that it be included in the proxy statement for our annual meeting and incorporated by reference in our Annual Report on Form 10-K;
•
Prepare and approve the Compensation Committee Report for inclusion in the proxy statement for our annual meeting;
•
Approve and grant stock options, RSUs, and other types of equity-based compensation in accordance with the terms of our equity-based compensation plans;
•
Periodically review, evaluate and report to the Board of Directors concerning the competitiveness of our compensation programs for the named executive officers; and
•
Annually evaluate the Compensation Committee Charter and the Compensation Committee’s performance and make such reports to the Board of Directors as it deems warranted.
When determining the compensation levels for our named executive officers, the Compensation Committee considers the following principles:
•
Performance. The Compensation Committee has linked the compensation of our named executive officers to the Company’s attainment of key performance goals. The Compensation Committee considers the individual’s performance and contribution to Company performance and, where applicable, to the performance of their business unit or functional area. The Compensation Committee and Board of Directors believe that tying each named executive officer’s compensation to key performance goals creates an incentive for the executive to attain the Company’s objectives and further align his or her interests with our shareholders.
•
Fairness and Reasonableness. We strive to provide compensation and benefit programs that are fair and competitive with our industry peers, while reasonably rewarding our named executive officers for their service based on their performance.
•
Cost. We strive to provide appropriate incentives and motivation to our named executive officers that will continue to increase value to our shareholders by designing compensation programs that we believe are cost-effective and affordable.
Our Compensation Committee and Board of Directors use a comprehensive approach to determine the compensation of our named executive officers, including the use of both currently-paid and long-term incentive compensation. Currently-paid compensation, coupled with long-term incentives, provides the Compensation Committee and the Board of Directors the flexibility necessary to design a compensation program for our named executive officers that they consider to be fair, appropriate and competitive.
Competitive Market Review
The Compensation Committee engaged FW Cook as an independent compensation consultant to assist it in analyzing our peer group and evaluating the competitiveness and design of our compensation program for our named executive officers. The Compensation Committee used FW Cook’s Top Officer Competitive Compensation Analysis ("Analysis") to evaluate the reasonableness of 2017 salary recommendations for our named executive officers. As described below, FW Cook’s Analysis used both comparison group

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data and published survey data. The companies included in the 20-company comparison group were determined during 2016 by the Compensation Committee based upon the recommendations of FW Cook.
Companies included in the comparison group met the following criteria:
•
Industry group: property and casualty, life and health, and multi-line insurance carriers;
•
Traits: national geographic scope, identifies us as a comparison company, identified as a comparison company by proxy advisory firms;
•
Revenues between $350 million and $3.3 billion; and
•
Market capitalization between $250 million and $4.4 billion.
The following 20 companies were included in the 2016 comparison group used to assist with setting 2017 target compensation. This was the same peer group that was used to evaluate 2016 compensation decisions except for the additions noted below and the deletion of Kansas City Life Insurance Company and Meadowbrook Insurance Group Inc. due to not meeting the criteria identified above.
•
Amerisafe, Inc. #
•
National General Holdings Corporation
•
Argo Group International Holdings Ltd 
•
National Interstate Corporation
•
Donegal Group Inc.
•
Navigators Group Inc.
•
EMC Insurance Group Inc.
•
OneBeacon Insurance Group
•
Employers Holdings Inc.
•
ProAssurance Corporation 
•
FBL Financial Group Inc. 
•
RLI Corporation
•
Horace Mann Educators Corporation
•
Safety Insurance Group Inc.
•
Infinity Property & Casualty Corporation
•
Selective Insurance Group Inc.
•
Kemper Corporation 
•
State Auto Financial Corporation
•
MBIA Inc.
•
Stewart Information Services 
(#)    Addition to comparison group from 2016.
In addition to comparison group data, the FW Cook Analysis also utilized data from Ward Group® Property & Casualty Insurance—US Survey, a published third-party compensation survey in which the Company participates.
FW Cook's Analysis compared the total direct compensation of our named executive officers to the average of median market data from the comparison group and the industry survey data. While the Compensation Committee reviewed FW Cook's Analysis to evaluate the market competitiveness of the compensation program, the Compensation Committee also considered a number of other factors in evaluating the 2017 overall compensation of our named executive officers. These other factors included the Company’s performance during 2016, the cost of living and quality of life in the geographical areas in which the executive is located, the executive’s experience level, the responsibilities of the executive’s position, the executive’s role in maintaining a culture that values our employees, our existing compensation structure, and the relationship in compensation between our named executive officers and our other employees.
Risk Considerations
We believe that the design and objectives of our compensation program for named executive officers provides an appropriate balance of fixed compensation (base salary) and at-risk compensation (incentives). Total direct compensation of our named executive officers is intended to provide a balanced program that encourages the named executive officers to take appropriate risks aimed at improving Company performance and enhancing long-term shareholder value, while avoiding inappropriate risks. In this regard, our compensation program for named executive officers includes, among other things, the following design features:
•
a balanced mix of cash-based and equity-based compensation;
•
variable compensation based on a variety of key performance goals, including Company metrics, business unit metrics, where appropriate, and individual performance goals;
•
a balanced mix of short-term and long-term incentives;
•
threshold performance levels that must be achieved to earn incentives;
•
maximum award limits for annual incentive awards and equity-based compensation;
•
time-based vesting requirements for equity-based compensation; and

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•
stock ownership guidelines for named executive officers.
After reviewing our Company's incentive plans applicable to all employees, we have determined that none of these plans create risks that would have a material adverse effect on the Company.
Elements of Compensation
We compensate our named executive officers using direct compensation and Company-sponsored benefit plans. As direct compensation, we pay competitive base salaries and performance-based cash and equity awards. Our named executive officers participate in Company-sponsored health and welfare benefit plans available generally to all salaried employees of the Company. In addition, we provide nonqualified deferred compensation plans and limited perquisites to our named executive officers as discussed below.
Direct Compensation
During 2017, direct compensation consisted of: (a) base salary; (b) annual performance-based cash awards; and (c) long-term equity-based awards. We pay these elements of direct compensation because we believe each of the following to be true:
•
a fair, reasonable and competitive base salary is essential to attract and retain strong management;
•
annual performance-based cash awards recognize and reward both individual achievement and the named executive officer’s role in overall Company performance; and
•
equity-based compensation helps our named executive officers to “think like owners” and, therefore, aligns their interests with those of our shareholders.
Annual Base Salary
We establish base salary levels to recruit and retain experienced executives who can help us achieve our business goals. We determine a named executive officer’s initial base salary level by considering a variety of factors, including the executive’s experience level, the responsibilities of the executive’s position, our existing compensation structure, compensation levels at peer companies, the cost of living and quality of life in the geographical area in which the executive is located and the executive’s role in maintaining a culture that values our employees. In addition, to determine increases in base salary, we consider individual and Company performance, pertinent experience with us, scope of responsibility and changes in our competitive marketplace. In particular, for 2017, the Compensation Committee recommended, and the Board of Directors approved, a 10% increase to Ms. Jaffray's base salary level in order to further align her compensation with the comparison group described above in the Compensation and Benefits Philosophy section of this proxy statement.
The following table shows the 2016 and 2017 base salary levels , as in effect as of the last day of each year, for each of our named executive officers:
Annual Base Salary – 2016 and 2017
Name and Principal Position
2016 Base Salary Level ($)
2017 Base Salary Level ($)
Change in Base Salary Level (%)
Randy A. Ramlo – President/Chief Executive Officer
800,000
800,000
—
Michael T. Wilkins – Executive Vice President/Chief Operating Officer
470,000
490,000
4.3
Dawn M. Jaffray – Senior Vice President/Chief Financial Officer
400,000
440,000
10.0
Barrie W. Ernst – Vice President/Chief Investment Officer
345,000
375,000
8.7
Neal R. Scharmer – Vice President/General Counsel/Corporate Secretary
315,000
327,000
3.8
Annual Incentive Plan
The Compensation Committee’s philosophy concerning performance-based cash awards and the application of that philosophy to determine cash-based compensation remained unchanged from 2016. We have an Annual Incentive Plan that provides annual performance-based cash awards to all Company employees, including all of our named executive officers. This plan links a portion of each employee’s annual compensation directly to our financial performance. Our objective in using the annual incentive plan is to provide a strong financial incentive for all employees to achieve critical corporate and business unit goals.
To determine the amount of performance-based cash awards for each named executive officer, we used four performance measures that are defined further below: (1) adjusted return-on-equity; (2) premium growth rate; (3) loss ratio; and (4) underwriting expense ratio. As illustrated in the table below, we weight each performance measure and establish threshold, target and maximum performance

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goals for each performance measure, with increasingly higher awards for attaining increasingly higher performance. Each named executive officer can receive a performance-based cash award for each performance measure. We pay no performance-based cash award for a performance measure if the threshold level of performance for that measure is not attained.
Potential awards for our named executive officers ranged from 0% to a maximum of 150% of target based upon the attainment of certain pre-determined goals and the considerations set forth in greater detail below. Awards under the Annual Incentive Plan are calculated separately for each performance measure as follows:
Base Salary × Bonus Opportunity ×
Weighting × Performance Factor
=
Annual Award Payment
Adjusted ROE – The Compensation Committee chose adjusted return-on-equity ("Adjusted ROE") as an Annual Incentive Plan performance measure because it believes that Adjusted ROE is a good overall measure for evaluating our operating performance and that the value of our Company Common Stock is closely related to ROE performance. Accordingly, the Compensation Committee believes that achieving Adjusted ROE target goals should enhance our stock value and shareholder return. "Adjusted ROE" means return-on-equity, calculated in accordance with GAAP, excluding the impact of (a) unrealized gains and losses on investments, (b) a change in accounting standards or principles, (c) a significant acquisition or divestiture, (d) a significant capital transaction, or (e) any other unusual, nonrecurring items that are separately identified and quantified in the Company's audited financial statements, so long as, in the case of an accounting change, the change is required, and in the case of an acquisition, divestiture, capital transaction or other nonrecurring item, the event occurs during the performance period, and any such adjustments are confirmed by the Compensation Committee at the time that achievement is certified.
Premium Growth Rate – The Compensation Committee chose Premium Growth Rate, as compared to 2016, as an Annual Incentive Plan performance measure because we believe it encourages expanding agency penetration, expanding our geographic footprint, and entering new distribution channels. Premium Growth Rate means direct written premium annual growth, calculated in accordance with GAAP, excluding: (a) our discontinued life insurance and annuity operations; and (b) assumed and ceded reinsurance operations.
Loss Ratio – The Compensation Committee chose Loss Ratio as an Annual Incentive Plan performance measure because it believes it is reflective of our underwriting performance and overall profitability. Loss Ratio means direct losses and allocated direct case loss adjustment expenses divided by earned premium, calculated in accordance with Statutory Accounting Principles, excluding our discontinued life insurance and annuity operations.
Underwriting Expense Ratio – The Compensation Committee chose Underwriting Expense Ratio as an Annual Incentive Plan performance measure because we are more likely to achieve profitability and value for our shareholders when we keep expenses in line with our established guidelines. Underwriting Expense Ratio means all underwriting-related expenses (e.g. agent commissions, employee compensation, premium taxes, marketing, etc.) divided by written premium in accordance with statutory items paid, pursuant to Statutory Accounting Principles, excluding accruals and our discontinued life insurance and annuity operations.
The following table shows the 2017 performance goals and achievement for each performance measure. Payments to named executive officers under our annual incentive plan were made in February 2018 for performance during 2017 and are reported in the Summary Compensation Table – 2017 of this proxy statement under the Non-Equity Incentive Plan Compensation column.
Annual Incentive Plan Goals – 2017
 
2017 Plan Goals (%)
2017 Annual Incentive Plan Achievement (%)
Performance Measures
Threshold
Target
Maximum
Adjusted ROE
5
8
11
3.7
Premium Growth Rate
4
6
8
5.9
Loss Ratio
58
55
52
64.1
Underwriting Expense Ratio
32
31
30
30.1

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Annual Incentive Plan Target Bonus Opportunity and Weighting of Performance Measures – 2017
Named Executive Officer
Target Bonus Opportunity as % of Base Salary
Weighting of Each Performance Measure (%)
Adjusted ROE
Premium Growth Rate
Loss Ratio
Underwriting Expense Ratio
Randy A. Ramlo
65
40
20
20
20
Michael T. Wilkins
50
40
20
20
20
Dawn M. Jaffray
50
40
20
20
20
Barrie W. Ernst
40
55
20
15
10
Neal R. Scharmer
30
50
5
25
20
Potential awards for our named executive officers ranged from 0% to a maximum of 150% of target based upon the achievement of certain pre-determined goals and the considerations set forth above.
Long-Term Incentive Plan
In 2017, with the assistance of FW Cook, the Compensation Committee modified its approach to delivering equity compensation. Historically, equity compensation was granted at the beginning of each fiscal year based on the prior year's Adjusted ROE performance. Based on its review of market practices as reported by FW Cook, the Compensation Committee redesigned the equity compensation program so that equity awards will be granted at the beginning of the year, based on a review of market data and individual performance, with a portion of the equity grant vesting over a three-year performance period based on performance goals established by the Compensation Committee.
Because 2017 represented a transition year in which the Compensation Committee transitioned to the new structure, two annual equity grants are reflected in the Summary Compensation Table - 2017. While the equity grants that occurred in February 2017 related to 2016 performance, under the SEC disclosure rules, these grants are reflected as compensation in the year of grant rather than the year in which performance was measured. In addition, while the March 2017 grants will be earned over a three-year period based on continued service and, in the case of a portion of the award, the achievement of performance goals, the March 2017 grants are also reflected as 2017 compensation. Accordingly, the Summary Compensation Table - 2017 captures two annual equity grants, with one grant relating to 2016 performance and the other grant designed to reward future performance.
Prior Plan Year Long-Term Incentive Plan Awards – 2016 Performance
As previously reported in our 2017 Proxy Statement, the Compensation Committee granted equity awards in 2017 based on 2016 performance. The size of awards granted to named executive officers under our equity compensation program was initially tied to each executive’s base salary. Under the equity compensation program, our named executive officers were assigned to one of three tiers. We established five levels of performance, with increasingly higher awards for attaining increasingly higher performance. Each participant within each tier received a proportionate share of the pool of equity awards designated annually by the Board of Directors. The size of the pool was adjusted based on our prior year’s Adjusted ROE, so that as the Adjusted ROE increases, our named executive officers could receive higher annual incentive awards and more equity. In a year when prior-year results failed to reach the threshold target, the awards were eliminated, as was the case in 2012. The Adjusted ROE levels for the 2016 pool of equity awards were as follows:
•
Adjusted ROE lower than 4%, plan participants receive no awards;
•
Adjusted ROE between 4% and 8%, plan participants receive awards equal to 35% of the equity pool;
•
Adjusted ROE between 8% and 12%, plan participants receive awards equal to 50% of the equity pool;
•
Adjusted ROE between 12% and 20%, plan participants receive awards equal to 65% of the equity pool; and
•
Adjusted ROE greater than 20%, plan participants receive awards equal to 80% of the equity pool.
Our Adjusted ROE for 2016 was 6.4%, resulting in plan participants receiving awards equal to 35% of the equity pool in 2017 for 2016 performance. These grants are reflected as 2017 compensation in the Summary Compensation Table - 2017 because they were awarded in 2017.

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Restructuring the Long Term Incentive Plan
As noted above, the Compensation Committee adopted a new structure for long-term incentives beginning with 2017. Under this new structure, the Compensation Committee will grant equity awards at the beginning of each year based on its review of the competitive market and individual performance. Once the 2017 grant level was determined, the Compensation Committee allocated the grant to a mix of performance stock units (weighted 50%), restricted stock units (weighted 25%), and stock options (weighted 25%), as summarized below:
Grant Type
Allocation (%)
Vesting
PSUs
50
"cliff" vest of the third anniversary of the grant date (assuming achievement of performance goals)
RSUs
25
"cliff" vest of the third anniversary of the grant date
Stock Options
25
one-third of the options vest on each of the three anniversaries of the grant date
The target award opportunities and allocation to each grant type for our named executive officers are summarized below:
Named Executive Officer
Total Stock Award ($)
PSUs ($)
RSUs ($)
Stock Options ($)
Randy A. Ramlo
650,000
325,000
162,500
162,500
Michael T. Wilkins
300,000
150,000
75,000
75,000
Dawn M. Jaffray
300,000
150,000
75,000
75,000
Barrie W. Ernst
250,000
125,000
62,500
62,500
Neal R. Scharmer
150,000
75,000
37,500
37,500
Performance Stock Units ("PSUs")
PSUs are:
•
performance-based RSUs that are earned over a three-year performance period, subject to continued employment;
•
earned only to the extent that goals are satisfied among four separate, equally weighted, performance measures tied to our 2020 Vision performance milestones, relating to profit, growth, employee satisfaction and customer service; and
•
released between 0% and 150% of the target award based upon the results achieved.
The performance goals established for the 2017 PSUs were designed to be challenging, but achievable, given the economic and market conditions at the time the targets were set, with vesting at the maximum levels designed to be stretch goals.
Restricted Stock Units ("RSUs")
The RSUs "cliff" vest of the third anniversary of the grant date and release into an equivalent number of shares of Company Common Stock, in each case, generally subject to the executive remaining employed by us through the applicable vesting date. The principal purpose of the awards is to encourage executive retention.
Stock Options
Each option has a ten-year term and, provided the executive remains employed by us through such dates, vests as to one-third of the options on each of the first three anniversaries of the grant date. Stock options directly align a portion of total compensation with our stock performance since they become valuable only if and to the extent the share price increases over a longer period of time after the date of grant. Additionally, because stock options do not fully vest for three years, they encourage executive retention.
Additional Compensation
Company-Sponsored Benefit Plans
We believe the insurance and retirement benefit plans we sponsor are an important part of fair and reasonable compensation for all of our employees, including our named executive officers. We design these benefit plans to attract and retain a strong employee base, to provide a measure of financial security for our employees and to assist our employees in providing for their own financial security in a manner that recognizes individual needs and preferences. We also provide these programs because we believe that employees who have a plan for health and financial security are better employees. We apply these programs equally to all employees. Our benefit plans consist of an insurance plan that provides health, vision, dental, disability and basic term life insurance coverage and various retirement plans, including a 401(k) plan with a Company match.

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Deferred Compensation Plans
On May 21, 2014, the Company’s Board of Directors and the Board of Directors of its subsidiary, United Fire & Casualty Company (“UFC”), each adopted an Executive Nonqualified Excess Plan (“Excess Plan”) which covers certain officers of the Company (who are all employees of UFC), including our named executive officers. The Excess Plan is an unfunded, nonqualified deferred compensation plan pursuant to which the Company is authorized to make discretionary, matching contributions to participants’ accounts at a three-to-one match, up to 25% of a participant’s salary. The Company’s discretionary, matching contributions remain unvested for a period of time and require a matching contribution from the officer. The Compensation Committee established the terms of the Excess Plan based on a review of similar plans and standards within the industry. We believe that requiring the participating officers to have a meaningful stake in the plan aligns their goals and interests with the Company’s performance.
We also maintain a nonqualified deferred compensation plan for certain officers, including our named executive officers. We use this plan to provide eligible executives the opportunity to plan and supplement their retirement income by deferring receipt of a portion of their base salary and/or annual performance-based cash award.
We offer these plans to provide our named executive officers with security and the ability to plan for their financial futures. The Compensation Committees believes that these plans benefit the Company by allowing us to attract and retain key talent.
Perquisites
We do not rely upon perquisites as a method of providing significant compensation to any of our employees, preferring instead to use direct compensation and incentive plans. We provide only those perquisites that are related to our business or that we believe are necessary to attract and retain key executive personnel. For 2017, we paid for country club dues for three of our named executive officers so they have a club available for business entertainment on our behalf. Perquisites and other personal benefits paid to a named executive officer are reported in the All Other Compensation column of the Summary Compensation Table – 2017.
For security reasons, our Board of Directors requires Mr. Ramlo to use our corporate aircraft for business travel whenever it is practical to do so. We expect our other named executive officers to use our corporate aircraft for business travel whenever it is reasonable to do so. Occasionally, a spouse or other guest may accompany executive officers on corporate aircraft when the aircraft is already scheduled for business purposes and can accommodate additional passengers. In those cases, there is no aggregate incremental cost to the Company. However, under Internal Revenue Service regulations, we are required to treat a spouse or guest's use as personal use. Accordingly, we reported the value of this travel as ordinary income to the applicable employee.
We permit Mr. Ramlo to use our corporate aircraft for personal travel and under limited circumstances directors and executive officers may be permitted to use the aircraft for personal use as well.
Annual Compensation Process
Role of Management
Our Chief Executive Officer has a key role in determining compensation levels for all named executive officers other than his own. He directs the collection and compilation of data for consideration by the Compensation Committee. Guided by the principles discussed under Compensation and Benefits Philosophy, our Chief Executive Officer:
•
identifies appropriate performance measures and recommends to the Compensation Committee performance targets that the Compensation Committee and the Board of Directors may use to determine annual and long-term incentive awards;
•
develops compensation guidelines for each named executive officer position other than his own;
•
annually recommends to the Compensation Committee the base salary for each executive position other than his own; and
•
briefs each named executive officer on the performance goals and stock ownership guidelines established for that executive’s position.
Role of the Compensation Committee and the Board of Directors
The Compensation Committee and the Board of Directors refer to the principles discussed under Compensation and Benefits Philosophy to guide them in determining and implementing compensation programs for our named executive officers. For named executive officers other than our Chief Executive Officer, the Compensation Committee receives and reviews Mr. Ramlo’s recommendations as described above and makes recommendations to the full Board of Directors. The full Board of Directors then acts on these recommendations to set the compensation of our named executive officers.
The Compensation Committee and the Board of Directors take the following steps to approve the compensation of our Chief Executive Officer:
•
The Compensation Committee identifies appropriate performance measures.

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•
The Compensation Committee considers the compensation principles discussed under the heading Compensation and Benefits Philosophy as well as each of the Company’s compensation elements, and reviews market data from the executive compensation study. Based on that consideration and review, it annually recommends to the Board of Directors the base salary, annual incentive compensation and long-term incentive awards for our Chief Executive Officer. The Board of Directors reviews and considers the proposals of the Compensation Committee and makes its final determination based on what it believes to be in the interests of the Company and our shareholders.
Role of Independent Consultants
Under its charter, the Compensation Committee, in its sole discretion, has the authority, resources and funds necessary to retain or obtain the advice of outside advisers, including independent compensation advisers, legal counsel and other advisers and experts. Prior to retaining or obtaining advice from such outside advisers, the committee evaluates their independence by reference to the NASDAQ Listing Rules.    
During 2017, the Compensation Committee engaged FW Cook to advise it on compensation matters for our named executive officers. FW Cook reported directly to the Compensation Committee and provided services related to named executive officer compensation. Management did not participate in the selection process and did not recommend FW Cook, nor did management participate in specific matters assigned to FW Cook by the Compensation Committee. Although particular assignments may vary, compensation consultant engagements by the Compensation Committee have generally included:
•
reviewing and advising on all principal aspects of compensation for named executive officers, including base salaries, equity awards and annual incentive plan awards for named executive officers;
•
reviewing and advising the Compensation Committee on compensation for non-employee directors; and
•
providing advice and input to the Compensation Committee on the identification and selection of appropriate peer companies.
The Compensation Committee engaged FW Cook during 2017 to assist in evaluating our comparison group and to advise the Compensation Committee generally on compensation matters related to the compensation programs of our named executive officers.
Compensation Consultant Independence
The Compensation Committee carefully considers the independence of the consultants it hires prior to engagement. To maintain the independence of the compensation consultant, the Compensation Committee has the sole authority to retain or terminate FW Cook. In connection with its engagement of FW Cook, the Committee considers various factors bearing upon FW Cook's independence including, but not limited to, the amount of fees received by FW Cook from the Company as a percentage of FW Cook's total revenue, FW Cook's policies and procedures designed to prevent conflicts of interest, and the existence of any business or personal relationship with a member of the Compensation Committee or management that could impact FW Cook's independence. After reviewing these and other factors, the Committee determined that FW Cook was independent and that its engagement did not present any conflicts of interest.
Named Executive Officers as Shareholders
We believe that ownership of Company Common Stock by our executive officers, including our named executive officers, promotes the alignment of their interests with those of our Company and our shareholders. A Board of Directors policy sets forth guidelines for stock ownership by certain of our executive officers, including our named executive officers. These guidelines include target levels of stock ownership for each covered executive officer. The goal of these guidelines is to have our executive officers, including our named executive officers, hold a meaningful stake in our Company.
The following table shows the target number of shares to be owned by each named executive officer and each named executive officer’s share ownership as of March 19, 2018:
Name
Tier (1)
Target Number of Shares of Common Stock to be Held (2)
Number of Qualifying Shares of Common Stock Held at Record Date
Randy A. Ramlo
3
49,895
62,478
Michael T. Wilkins
2
22,348
37,256
Dawn M. Jaffray
2
14,728
9,837
Barrie W. Ernst
1
11,165
24,636
Neal R. Scharmer
1
9,595
17,705
(1)
Equity ownership targets for Mr. Ramlo as a Tier 3 executive were calculated as the number of shares equal to two times his base salary on January 1, 2014 divided by the closing price of Company Common Stock on December 31, 2013. Equity ownership targets for Michael

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T. Wilkins as a Tier 2 executive were calculated as the number of shares equal to one and one-half times his base salary on January 1, 2014 divided by the closing price of Company Common Stock on December 31, 2013. Equity ownership targets for Dawn M. Jaffray as a Tier 2 executive were calculated as the number of shares equal to one and one-half times her base salary on May 10, 2016 divided by the closing price of Company Common Stock on May 10, 2016. Equity ownership targets for executive officers in Tier 1 were calculated as the number of shares equal to their base salary on January 1, 2014 divided by the closing price of our Company Common Stock on December 31, 2013.
(2)
Shares held either directly or indirectly and any RSUs (whether vested or unvested) held by the named executive officer are counted toward the target number of shares. Any unexercised stock options or PSUs (whether vested or unvested) held by the named executive officer are not counted toward the target number of shares. The target number of shares are the number of shares to be held by the named executive officer by December 31, 2019, or within five years of becoming subject to the stock ownership guidelines for officers, whichever is later.
Report of the Compensation Committee
February 2018
The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s annual proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
Compensation Committee
Mary K. Quass, Chair
Scott L. Carlton
Brenda K. Clancy
Sarah Fisher Gardial
James W. Noyce
Susan E. Voss

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Summary Compensation Table – 2017
Name and Principal Position
Year
Salary ($)

Bonus ($)

Stock Awards ($) (1)

Option Awards ($) (2)

Non-Equity Incentive Plan Compensation ($) (3)

Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) (4)

All Other Compensation ($) (5)

Total ($)

Randy A. Ramlo
2017
784,616

—

677,489

352,475

246,075

304,172

259,024

2,623,851

President, CEO
2016
800,000

—

332,370

332,377

192,000

118,590

259,359

2,034,696

2015
751,000

—

243,764

243,762

322,930

30,862

239,324

1,831,642

Michael T. Wilkins
2017
480,577

—

316,940

166,914

115,939

277,804

105,551

1,463,725

EVP, COO
2016
470,000

—

164,748

164,748

94,000

104,837

108,630

1,106,963

2015
452,000

—

119,887

119,886

117,520

20,728

101,457

931,478

Dawn M. Jaffray
2017
440,000

30,007

303,222

153,221

106,150

52,712

30,276

1,115,588

SVP, CFO
2016
400,000

18,652

133,020

133,032

64,000

62,862

27,576

839,142

2015
241,846

—

—

—

94,900

—

22,600

359,346

Barrie W. Ernst
2017
367,789

—

240,523

115,520

49,725

176,393

43,654

993,604

VP, Chief Investment Officer
2016
345,000

—

95,066

95,073

55,200

92,551

40,698

723,588

2015
332,000

—

70,587

70,589

86,320

54,437

39,053

652,986

Neal R. Scharmer
2017
320,712

—

160,866

85,904

32,460

262,927

37,584

900,453

VP, General Counsel, Secretary
2016
315,000

—

83,053

83,052

23,625

130,529

34,884

670,143

2015
290,000

—

60,657

60,664

75,400

95,701

2,632

585,054

(1)
Amounts in this column represent the aggregate grant date fair value for options, PSUs and RSUs, as applicable, granted during 2017, 2016 and 2015. Amounts in this column are calculated in accordance with FASB ASC Topic 718, Compensation - Stock Compensation. The grant date fair value for stock awards is measured based on the closing price of our Company Common Stock on the grant date, and the probable satisfaction of the performance conditions for the PSU awards as of the date of grant. Assuming the highest level of performance is achieved for the 2017 PSUs, the maximum value of these awards at the grant date would be as follows: Mr. Ramlo, $487,542; Mr. Wilkins, $225,045; Ms. Jaffray, $225,045; Mr. Ernst, $187,510; and Mr. Scharmer, $112,480. The values shown have not been adjusted to reflect that these units are subject to forfeiture. For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
(2)
To calculate the option amounts we use the Black-Scholes option pricing model. This model estimates the fair value of traded options, which have different characteristics than employee stock options. Changes to the subjective assumptions used in the model can result in materially different fair value estimates. For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
(3)
All employees are eligible to participate in our annual performance-based cash award plan if they are in our employ at the time the cash awards for that year are paid. The amounts shown in this column are those amounts earned by the executive for the year shown. These amounts were determined and paid in the subsequent year. For example, any non-equity incentive plan awards shown for 2017 were earned in 2017, but determined and paid in 2018.
(4)
The 2017 amount in this column reflects the change in pension value under the United Pension Plan that is described further in the Pension Benefits section and above market earnings under the Company's nonqualified deferred compensation plan. The 2017 amount for Mr. Ramlo includes $483 in above market deferred compensation earnings. The 2017 amount in this column for Mr. Wilkins includes $183 in above market deferred compensation earnings. The 2017 amount in this column for Ms. Jaffray includes $0 in above market deferred compensation earnings. The 2017 amount in this column for Mr. Ernst includes $121 in above market deferred compensation earnings. The 2017 amount in this column for Mr. Scharmer represents $139 in above market deferred compensation earnings. The amounts for prior years have been updated to reflect the change in actuarial present value as compared to 2016 as compared to the prior reporting of the accrued pension benefit reported with respect to such year.

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(5)
All Other Compensation for 2017 includes:
Name
Registrant Contributions to SERP ($)

Matching Contributions to 401(k) Plan ($)

Perquisites and Other Personal Benefits ($)

Total ($)

Randy Ramlo
249,156

2,700

7,168

259,024

Michael Wilkins
94,359

2,700

8,492

105,551

Dawn Jaffray
26,502

2,700

1,074

30,276

Barrie Ernst
30,482

2,700

10,472

43,654

Neal Scharmer
33,810

2,700

1,074

37,584

For Mr. Ernst, the amount shown for perquisites and other personal benefits includes: (a) $9,398 for country club dues paid on Mr. Ernst's behalf; (b) $630 in premiums for a Company-sponsored life insurance policy for Mr. Ernst's benefit; and (c) $444 in parking subsidy for our Company parking ramp.
Grants of Plan-Based Awards
The Board of Directors has adopted a written policy regarding the issuance of options under the Stock Plan. This policy provides that all options shall be issued at regularly scheduled meetings of the Compensation Committee and that the exercise price for options issued under the Stock Plan shall be the closing market price on the option grant date.
Options granted to our named executive officers by our Board of Directors under the Stock Plan have the following characteristics:
•
Options granted before March 2017 vest one-fifth each year on the first five anniversaries of the grant date. Options granted during or after March 2017 vest one-third each year on the first three anniversaries of the grant date. Options vest immediately if we enter into an agreement to dispose of all or substantially all of our assets or capital stock. The Board of Directors has the authority under the Stock Plan to accelerate vesting of stock options in other circumstances at its discretion.
•
Options expire on the sooner of:
•
ten years after the option grant date;
•
one year after termination of employment for reason of death or disability; or
•
30 days after the termination of employment for any reason other than death or disability, unless extended by the Board of Directors for up to one year after termination of employment.
•
The exercise price is the closing market price for Company Common Stock on the option grant date.

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Grants of Plan-Based Awards – 2017
Name
Grant Date
Estimated future payouts under non-equity incentive plan awards
Estimated future payouts under equity incentive plan awards
All other stock awards: number of shares of stock or units (#)
All other option awards: number of securities underlying options (#)
Exercise or base price of option awards
($/sh)
Grant date fair value of stock and option awards ($) (5)
Threshold ($) (1)
Target ($) (2)
Maximum ($) (3)
Threshold (#) (4)
Target (#)
Maximum (#)
Randy A. Ramlo
2/17/2017
(6)
 
 
 
 
 
 
 
19,451

41.32

189,978

 
2/17/2017
(7)
 
 
 
 
 
 
4,598

 
 
189,989

 
3/24/2017
(8)
 
 
 
 
 
 
 
16,038

42.27

162,497

 
3/24/2017
(9)
 
 
 
961

7,689

11,534

 
 
 
325,014

 
3/24/2017
(10)
 
 
 
 
 
 
3,844

 
 
162,486

 
—
(11)
51,000

510,000

765,001

 
 
 
 
 
 
 
Michael T. Wilkins
2/17/2017
(6)
 
 
 
 
 
 
 
9,411

41.32

91,917

 
2/17/2017
(7)
 
 
 
 
 
 
2,225

 
 
91,937

 
3/24/2017
(8)
 
 
 
 
 
 
 
7,402

42.27

74,997

 
3/24/2017
(9)
 
 
 
444

3,549

5,324

 
 
 
150,016

 
3/24/2017
(10)
 
 
 
 
 
 
1,774

 
 
74,987

 
—
(11)
24,029

240,289

360,433

 
 
 
 
 
 
 
Dawn M. Jaffray
2/17/2017
(6)
 
 
 
 
 
 
 
8,009

41.32

78,224

 
2/17/2017
(7)
 
 
 
 
 
 
1,893

 
 
78,219

 
3/24/2017
(8)
 
 
 
 
 
 
 
7,402

42.27

74,997

 
3/24/2017
(9)
 
 
 
444

3,549

5,324

 
 
 
150,016

 
3/24/2017
(10)
 
 
 
 
 
 
1,774

 
 
74,987

 
—
(11)
22,000

220,000

330,000

 
 
 
 
 
 
 
Barrie W. Ernst
2/17/2017
(6)
 
 
 
 
 
 
 
5,428

41.32

53,015

 
2/17/2017
(7)
 
 
 
 
 
 
1,283

 
 
53,014

 
3/24/2017
(8)
 
 
 
 
 
 
 
6,169

42.27

62,504

 
3/24/2017
(9)
 
 
 
370

2,957

4,436

 
 
 
124,992

 
3/24/2017
(10)
 
 
 
 
 
 
1,479

 
 
62,517

 
—
(11)
7,356

147,116

220,673

 
 
 
 
 
 
 
Neal R. Scharmer
2/17/2017
(6)
 
 
 
 
 
 
 
4,956

41.32

48,405

 
2/17/2017
(7)
 
 
 
 
 
 
1,171

 
 
48,386

 
3/24/2017
(8)
 
 
 
 
 
 
 
3,701

42.27

37,499

 
3/24/2017
(9)
 
 
 
222

1,774

2,661

 
 
 
74,987

 
3/24/2017
(10)
 
 
 
 
 
 
887

 
 
37,493

 
—
(11)
2,405

96,214

144,320

 
 
 
 
 
 
 
(1)
We estimate the amounts shown in this column by assuming the achievement of the threshold level for the least-weighted performance measure used in our Annual Incentive Plan and by multiplying 2017 base salary by 6.5% for Mr. Ramlo; 5% for Mr. Wilkins and Ms. Jaffray; 2% for Mr. Ernst; and 0.75% for Mr. Scharmer.
(2)
We estimate the amounts shown in this column by assuming the achievement of target levels for all applicable performance measures used in our Annual Incentive Plan and by multiplying 2017 base salary by 65% for Mr. Ramlo; 50% for Mr. Wilkins and Ms. Jaffray; 40% for Mr. Ernst; and 30% for Mr. Scharmer.
(3)
We estimate the amounts shown in this column by assuming the achievement of maximum levels for all applicable performance measures used in our Annual Incentive Plan and by multiplying 2017 base salary by 97.5% for Mr. Ramlo; 75% for Mr. Wilkins and Ms. Jaffray; 60% for Mr. Ernst; and 45% for Mr. Scharmer.
(4)
We estimate the amounts shown in this column by assuming the achievement of the threshold level for only one of the four equal-weighted performance measures under our 2017 PSUs.
(5)
Amounts in this column represent the aggregate grant date fair value for stock options, RSUs and PSUs granted during 2017, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation - Stock Compensation. To calculate the option amounts, we use the Black-Scholes option pricing model. This model estimates the fair value of traded options, which have different characteristics than employee stock options. Changes to the subjective assumptions used in the model can result in materially different fair value estimates. The grant date fair value for RSU and PSU awards is measured based on the closing price of our Company Common Stock on the grant date and the probable satisfaction of the performance conditions for the PSU awards

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as of the date of grant. For a discussion of valuation assumptions used, see Note 9 to the Consolidated Financial Statements included in our Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
(6)
Represents option awards granted with respect to 2016 Adjusted ROE performance that vest one-fifth each year for five years beginning with the first anniversary of the grant date, provided the named executive officer remains employed through the applicable vesting date.
(7)
Represents RSU awards granted with respect to 2016 Adjusted ROE performance that vest in full on the fifth anniversary of the grant date, provided the named executive officer remains employed through the vesting date.
(8)
Represents option awards that vest one-third each year for three years beginning with the first anniversary of the grant date, provided the named executive officer remains employed through the applicable vesting date.
(9)
Represents PSUs that vest on the third anniversary of the grant date only if and to the extent the Company achieves performance goals relating to profit, growth, employee satisfaction and customer service over the 2017–2019 performance period.
(10)
Represents a grant of RSUs that vest in full on the third anniversary of the grant date, provided the named executive officer remains employed through the vesting date.
(11)
There is no specific grant date for awards under our Annual Incentive Plan. We pay awards based on our 2017 performance during the first quarter of 2018. Please see Compensation Discussion and Analysis in this proxy statement for further information regarding the Annual Incentive Plan. Actual amounts paid to each named executive officer under our Annual Incentive Plan for 2017 are shown in the Summary Compensation Table – 2017 in this proxy statement and were calculated based on each individual's base salary for 2017.

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The following table details the outstanding equity awards held by each of our named executive officers as of December 31, 2017.
Outstanding Equity Awards at Fiscal Year-End – 2017
 
Option Awards
 
Stock Awards
Name
Number of Securities Underlying Unexercised Options Exercisable (#)
Number of Securities Underlying Unexercised Options Unexercisable (#)
Option Exercise Price
($/Sh)
Option Expiration Date
 
Number of Shares or Units of Stock That Have Not Vested
(#)
Market Value of Shares or Units of Stock That Have Not Vested
($)
Equity Incentive Plan Awards: Number of Unearned Shares, Units or other Rights That Have Not Vested (#) (1)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or other Rights That Have Not Vested ($)
Randy A. Ramlo
 
 
 
 
 
 
39,596

(8)
$
1,804,786

7,689

$
350,465

 
3,000

—

$
22.42

5/19/2020
 
 
 
 
 
 
 
 
17,800

—

20.54

2/18/2021
 
 
 
 
 
 
 
 
14,887

3,722

23.96

2/16/2023
(2)
 
 
 
 
 
 
 
17,774

11,850

29.61

2/21/2024
(3)
 
 
 
 
 
 
 
19,627

29,440

29.12

2/20/2025
(4)
 
 
 
 
 
 
 
7,891

31,565

39.91

2/19/2026
(5)
 
 
 
 
 
 
 
—

19,451

41.32

2/17/2027
(6)
 
 
 
 
 
 
 
—

16,038

42.27

3/24/2027
(7)
 
 
 
 
 
 
Michael T. Wilkins
 
 
 
 
 
 
20,028

(9)
912,876

3,549

161,763

 
1,500

—

22.42

5/19/2020
 
 
 
 
 
 
 
 
6,467

—

20.54

2/18/2021
 
 
 
 
 
 
 
 
3,999

2,000

23.96

2/16/2023
(2)
 
 
 
 
 
 
 
9,583

6,388

29.61

2/21/2024
(3)
 
 
 
 
 
 
 
9,653

14,479

29.12

2/20/2025
(4)
 
 
 
 
 
 
 
3,911

15,646

39.91

2/19/2026
(5)
 
 
 
 
 
 
 
—

9,411

41.32

2/17/2027
(6)
 
 
 
 
 
 
 
—

7,402

42.27

3/24/2027
(7)
 
 
 
 
 
 
Dawn M. Jaffray
 
 
 
 
 
 
7,000

(10)
319,060

3,549

161,763

 
3,158

12,634

39.91

2/19/2026
(5)
 
 
 
 
 
 
 
—

8,009

41.32

2/17/2027
(6)
 
 
 
 
 
 
 
—

7,402

42.27

3/24/2027
(7)
 
 
 
 
 
 
Barrie W. Ernst
 
 
 
 
 
 
12,438

(11)
566,924

2,957

134,780

 
7,114

—

33.43

5/21/2018
 
 
 
 
 
 
 
 
3,000

—

22.42

5/19/2020
 
 
 
 
 
 
 
 
5,424

1,356

23.96

2/16/2023
(2)
 
 
 
 
 
 
 
5,704

3,802

29.61

2/21/2024
(3)
 
 
 
 
 
 
 
5,684

8,525

29.12

2/20/2025
(4)
 
 
 
 
 
 
 
2,257

9,029

39.91

2/19/2026
(5)
 
 
 
 
 
 
 
—

5,428

41.32

2/17/2027
(6)
 
 
 
 
 
 
 
—

6,169

42.27

3/24/2027
(7)
 
 
 
 
 
 
Neal R. Scharmer
 
 
 
 
 
 
10,152

(12)
462,728

1,774

80,859

 
—

1,015

23.96

2/16/2023
(2)
 
 
 
 
 
 
 
4,825

3,216

29.61

2/21/2024
(3)
 
 
 
 
 
 
 
4,884

7,327

29.12

2/20/2025
(4)
 
 
 
 
 
 
 
1,972

7,887

39.91

2/19/2026
(5)
 
 
 
 
 
 
 
—

4,956

41.32

2/17/2027
(6)
 
 
 
 
 
 
 
—

3,701

42.27

3/24/2027
(7)
 
 
 
 
 
 
(1)
Includes PSUs for the fiscal 2017–2019 performance period for all named executive officers. All PSUs are valued at the target award level. Subject to the named executive officer's continued employment on the applicable vesting date and the achievement of goals at the conclusion of the 2017–2019 performance period, these PSUs vest on 3/24/2020.

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(2)
The unexercisable portion of these options vests on 2/15/2018.
(3)
The unexercisable portion of these options vests one-half each on 2/21/2018 and 2/21/2019.
(4)
The unexercisable portion of these options vests one-third each on 2/21/2018, 2/21/2019 and 2/21/2020.
(5)
The unexercisable portion of these options vests one-fourth each on 2/19/2018, 2/19/2019, 2/19/2020 and 2/19/2021.
(6)
The unexercisable portion of these options vests one-fifth each on 2/17/2018, 2/17/2019, 2/17/2020, 2/17/2021 and 2/17/2022.
(7)
The unexercisable portion of these options vests one-third each on 3/24/2018, 3/24/2019 and 3/24/2020.
(8)
Subject to Mr. Ramlo’s continued employment on the applicable vesting date, 5,304 RSUs vest on 2/15/2018, 9,151 RSUs vest on 2/21/2019, 8,371 RSUs vest on 2/21/2020, 3,844 RSUs vest on 3/24/2020, 8,328 RSUs vest on 2/19/2021, and 4,598 RSUs vest on 2/17/2022.
(9)
Subject to Mr. Wilkins’ continued employment on the applicable vesting date, 2,850 RSUs vest on 2/15/2018, 4,934 RSUs vest on 2/21/2019, 4,117 RSUs vest on 2/21/2020, 1,774 RSUs vest on 3/24/2020, 4,128 RSUs vest on 2/19/2021, and 2,225 RSUs vest on 2/17/2022.
(10)
Subject to Ms. Jaffray's continued employment on the applicable vesting date, 1,774 RSUs vest on 3/24/2020, 3,333 RSUs vest on 2/19/2021 and 1,893 RSUs vest on 2/17/2022.
(11)
Subject to Mr. Ernst’s continued employment on the applicable vesting date, 1,933 RSUs vest on 2/15/2018, 2,937 RSUs vest on 2/21/2019, 2,424 RSUs vest on 2/21/2020, 1,479 RSUs vest on 3/24/2020, 2,382 RSUs vest on 2/19/2021, and 1,283 RSUs vest on 2/17/2022.
(12)
Subject to Mr. Scharmer’s continued employment on the applicable vesting date, 1,446 RSUs vest on 2/15/2018, 2,484