DONEGAL GROUP INC

For the period ended Apr 18, 2024. Filed Mar 15, 2024.

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Apr 18, 2024 · Filed Mar 15, 2024

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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

(Amendment No. )

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 Material Pursuant to §240.14a-12

Donegal Group Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☒	No fee required

☐	Fee paid previously with preliminary materials

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11

NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS

WE WILL HOLD ON APRIL 18, 2024

To the Stockholders of

DONEGAL GROUP INC.:

We encourage you to read the accompanying proxy statement and our 2023 Annual Report to stockholders (our “2023 Annual Report”). The accompanying proxy statement, together with the enclosed form of proxy card, is first being mailed to our stockholders on or about March 15, 2024.

We will hold our 2024 annual meeting of stockholders (our “2024 Annual Meeting”) as a “virtual meeting” on Thursday, April 18, 2024 at 10:00 a.m., Eastern time. Stockholders will not be able to attend the meeting in person. You will be able to attend our 2024 Annual Meeting, vote and submit questions during our 2024 Annual Meeting via live webcast only atwww.virtualshareholdermeeting.com/DGICA2024. In order to participate, vote and submit questions in our 2024 Annual Meeting, you will need to have your 16-digit control number that is included on the proxy card we include with this notice of our 2024 Annual Meeting and our proxy statement relating to our 2024 Annual Meeting. Guests may participate in the webcast but will not have the ability to vote or ask questions during our 2024 Annual Meeting.

At our 2024 Annual Meeting, our stockholders will vote on the following items of stockholder business:

•	The election of the four persons our board of directors has nominated to serve as Class B directors, each for a term of three years and until the election of their respective successors and their respective successors take office;

•	The approval of our proposal to adopt our 2024 equity incentive plan for employees so that we will have sufficient shares available under our equity incentive plans for employees to continue those plans for our employees;

•	The approval of our proposal to adopt our 2024 equity incentive plan for directors so that we will have sufficient shares available under our equity incentive plans for directors to continue those plans for our directors; and

•	The ratification of the appointment by our audit committee of KPMG LLP to serve as our independent registered public accounting firm for our fiscal year ending December 31, 2024.

Our advance notice by-laws require that our stockholders submit to us, not later than 90 days and not earlier than 120 days prior to the first anniversary of the date on which we first mailed our proxy statement to stockholders for our most recent year’s annual meeting of stockholders, the information specified in those by-laws regarding any nomination by a stockholder of a candidate for election as a director or any proposal by a stockholder of any other item of stockholder business a stockholder wishes our stockholders to consider at our next forthcoming annual meeting of stockholders. Those dates were between November 18, 2023 and December 18, 2023 with respect to our 2024 Annual Meeting and are between November 15, 2024 and December 15, 2024 with respect to our 2025 annual meeting of stockholders. No stockholder made another nomination or other proposal for consideration by our stockholders at our 2024 Annual Meeting.

Our board of directors has established the close of business on March 1, 2024 as the record date for the determination of the holders of our Class A common stock and for the determination of the holders of our Class B common stock entitled to notice of, and to vote at, our 2024 Annual Meeting.

We include our 2023 Annual Report with this notice of our 2024 Annual Meeting and our proxy statement relating to our 2024 Annual Meeting. You may vote at our 2024 Annual Meeting by mail, by telephone or via the Internet as we describe on the enclosed proxy card that you may use to vote by proxy at our 2024 Annual Meeting.

By order of our board of directors,

Kevin G. Burke,

President and Chief Executive Officer

Marietta, Pennsylvania

Important Notice Regarding the Availability of Our Proxy Materials for

Our April 18, 2024 Annual Meeting

This mailing includes our notice of our 2024 Annual Meeting, our proxy statement with respect to our 2024 Annual Meeting and our 2023 Annual Report. You may also view each of these documents on the Internet atwww.proxyvote.com. No information on our website other than our notice of our 2024 Annual Meeting, this proxy statement with respect to our 2024 Annual Meeting and our 2023 Annual Report constitutes a part of our proxy solicitation materials for our 2024 Annual Meeting or part of our 2023 Annual Report.

PROXY STATEMENT

This proxy statement contains information relating to our 2024 Annual Meeting. We will hold our 2024 Annual Meeting as a “virtual meeting” on Thursday, April 18, 2024 at 10:00 a.m., Eastern time. You will be able to attend our 2024 Annual Meeting, vote and submit questions during our 2024 Annual Meeting via live webcast only atwww.virtualshareholdermeeting.com/DGICA2024. In order to participate, vote and submit questions in our 2024 Annual Meeting, you will need to have your 16-digit control number that is included on the proxy card we include with this notice of our 2024 Annual Meeting and our proxy statement relating to our 2024 Annual Meeting. Guests may participate in the webcast but will not have the ability to vote or ask questions during our 2024 Annual Meeting.

On March 15, 2024, we commenced the mailing to our stockholders of record at the close of business on March 1, 2024 of:

•	this proxy statement;

•	a form of proxy card;

•	a postage-paid return envelope for the convenience of our stockholders in returning their completed and signed proxy card to the firm that tabulates the results of the proxy votes of our stockholders; and

We ask our stockholders to return their completed proxy cards promptly unless a stockholder prefers to vote by telephone or via the Internet atwww.proxyvote.com.

We will pay the costs of preparing and mailing our proxy materials for our 2024 Annual Meeting to our stockholders and making those materials available for our stockholders to view on the Internet. We will, upon request, reimburse brokers, nominees, fiduciaries, custodians and other record holders for their reasonable expenses in forwarding our proxy solicitation materials for our 2024 Annual Meeting to the beneficial owners of our Class A common stock and to the beneficial owners of our Class B common stock for whom such persons serve as record holders. We may also solicit proxies from some stockholders in person, by mail, by e-mail or by telephone through our directors, officers and regular employees whom we do not employ specifically for proxy solicitation purposes and none of whom will receive any additional compensation for performing such services.

(i)

Summary of Our 2023 Performance

For 2023, our total revenues increased 9.3% compared to 2022, with the increase largely related to a 7.2% increase in net premiums earned for 2023 compared to 2022. We had net income of $4.4 million and net income per diluted Class A share of 14 cents for 2023, compared to a net loss of $2.0 million and a net loss per Class A share of 6 cents for 2022. The following table depicts our total revenues, net income (loss), net income (loss) per diluted Class A share and net income (loss) per Class B share for the three years ended December 31, 2023, 2022 and 2021. For further information, we refer you to the financial statements we include in our 2023 Annual Report.

	Year Ended December 31
	2023	2022	2021
Total revenues	$927.3 million	$848.2 million	$816.5 million
Net income (loss)	4.4 million	(2.0) million	25.3 million
Net income (loss) per diluted Class A share	0.14	(0.06)	0.83
Net income (loss) per Class B share	0.11	(0.07)	0.74

We use the following defined terms in this proxy statement:

•	“Annual Meeting” or “2024 Annual Meeting” means our annual meeting of stockholders that we will hold virtually on April 18, 2024;

•	“Atlantic States” means Atlantic States Insurance Company;

•	“Code” means the Internal Revenue Code of 1986, as amended;

•	“Computershare” means Computershare Trust Company, N.A., the transfer agent for our Class A common stock and our Class B common stock;

•	“DGCL” means the Delaware General Corporation Law, as amended;

•	“DGI,” “we,” “us” or “our” means Donegal Group Inc.;

•	“Donegal Mutual” means Donegal Mutual Insurance Company;

•	“Exchange Act” means the Securities Exchange Act of 1934, as amended;

•	“MICO” means Michigan Insurance Company;

•	“PCAOB” means the Public Company Accounting Oversight Board (United States);

•	“PHCA” means the Pennsylvania Insurance Holding Companies Act, as amended; and

•	“SEC” means the Securities and Exchange Commission.

(ii)

CONTENTS

	Page
PROXY STATEMENT	i
Introduction	i
Summary of Our 2023 Performance	ii
OUR 2024 ANNUAL MEETING	1
OUR BUSINESS STRATEGIES	11
CERTAIN BENEFICIAL OWNERS OF OUR CLASS A COMMON STOCK AND OUR CLASS B COMMON STOCK	12
Beneficial Owners of 5% or More of Our Class A Common Stock or Our Class B Common Stock	12
The Beneficial Ownership of Our Stock by Our Directors and Executive Officers	13
Delinquent Section 16(a) Reports	14
THE RELATIONSHIP OF DONEGAL MUTUAL AND DGI	14
Introduction	14
Donegal Mutual's Controlling Interest in Our Common Stock	14
The Interrelated Operations of Donegal Mutual and Our Insurance Subsidiaries	15
Inter-Company Transactions	16
The Coordinating Committee	18
The Risk Management Committee	20
CORPORATE GOVERNANCE	21
The Composition of Our Board of Directors	21
Board Leadership Structure and the Role of Our Board of Directors in Risk Oversight	22
The Committees of Our Board of Directors	23
Compensation Committee Interlocks and Insider Participation	27
Related Person Transactions	27
Our Code of Business Conduct and Ethics; Our Internal Audit Department; Hedging	27
No Material Proceedings	28
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS	28
Executive Summary	28
2023 Performance Review	28
Our Compensation Process	29
Summary of the 2023 Compensation of Our Named Executive Officers	29
Director Compensation	33
Our Compensation Philosophy and Risk Management Considerations	37
Employment Agreements with Our Named Executive Officers	39
Potential Payments to Our Named Executive Officers upon Termination or a Change-of -Control	40
Limitations on the Deductibility of Compensation	43
Our Annual Cash Incentive Bonus Plan	44
Our Long-Term Executive Incentive Plan	45
Other Aspects of Our Compensation Philosophy	46

(iii)

Summary Compensation Table	46
Grants of Plan-Based Awards	48
Stock Incentive Plans	48
Outstanding Equity Awards at December 31, 2023	50
Option Exercises and Stock Vested	51
Pension Benefits	51
Non-Qualified Deferred Compensation	51
Limitation of Liability and Indemnification	51
Pay Ratio Disclosure	52
Pay Versus Performance	53
Joint Report of the Compensation Committees of Donegal Mutual and DGI	54
Equity Compensation Plan Information	55
PROPOSAL 1 – ELECTION OF DIRECTORS	56
PROPOSAL 2 – APPROVAL OF OUR 2024 EQUITY INCENTIVE PLAN FOR EMPLOYEES	63
PROPOSAL 3 – APPROVAL OF OUR 2024 EQUITY INCENTIVE PLAN FOR DIRECTORS	68
PROPOSAL 4 – RATIFICATION OF THE APPOINTMENT BY OUR AUDIT COMMITTEE OF KPMG LLP TO SERVE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2024	71
AUDIT AND NON-AUDIT FEES	72
Report of our Audit Committee	72
STOCKHOLDER PROPOSALS FOR OUR 2025 ANNUAL MEETING OF STOCKHOLDERS	75
HOUSEHOLDING	76
DIRECTOR - STOCKHOLDER COMMUNICATIONS	77
OTHER MATTERS	77
APPENDIX A - 2024 EQUITY INCENTIVE PLAN FOR EMPLOYEES	A-1
APPENDIX B - 2024 EQUITY INCENTIVE PLAN FOR DIRECTORS	B-1

Unless we otherwise expressly indicate, all of the financial information we include or incorporate by

reference in this proxy statement for our 2024 Annual Meeting

relates to our 2023 fiscal year. Our 2023 fiscal year began

on January 1, 2023 and ended on December 31, 2023.

(iv)

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