2002 SENIOR EXECUTIVE COMPENSATION BONUS PROGRAM
The Senior Executive Bonus Program is a measure of the three areas often looked at when comparing results of
different companies or in comparing current company results from one year to the next.
1. To provide a motivational tool in the form of compensation to help executives focus on specific organizational
goals to improve profits, surplus and service in all areas of the corporation.
2. To maintain competitive advantage in terms of recruitment and retention of senior executives.
3. To provide a plan based on EMC results and industry results, to provide a better measure of performance.
4. Reward superior results more appropriately.
5. Provide a maximum bonus difficult to attain so there is incentive to strive for better results.
6. To provide a measure of safety to the company so that senior officers' total compensation is reduced if
company performance declines.
GENERAL BONUS CALCULATION
The bonus plan uses production, surplus growth and the combined ratio, all valid measures of performance, as
1. EMC WRITTEN PREMIUM - Compares consolidated written premium to a goal that is established each
2. CHANGE IN SURPLUS
3. COMBINED RATIO - Compares EMC combined ratio to a target ratio established by the Committee each
year. Also compares EMC's combined ratio to that of the industry.
Fifty percent of any bonus would be based on the industry estimate published in January by A.M. Best and paid
at that time. The remaining fifty percent would be paid when final numbers are released by A.M. Best (generally
ALL CALCULATIONS ARE ROUNDED TO THE NEAREST ONE TENTH OF ONE PERCENT.
The factors in each of the formulas are subject to change each year with final approval by the Senior Executive
Compensation and Incentive Stock Option Committee.
This component is based on actual net written premium growth compared to a consolidated written premium goal
established each year and