

The Board's Role in Enterprise Risk Management

Risk management activities include the development of strategies and implementation of actions intended to anticipate, identify, assess, monitor, mitigate and manage risks. Our Board views enterprise risk management as an integral part of our business and strategic planning.

~~Our~~ senior management has direct responsibility for enterprise risk management. ~~In 2015, we utilized~~We utilize an enterprise risk management working committee comprised of our Chief ~~Executive Officer, our Chief~~ Risk Officer ("CRO") ~~and other senior executives. In 2016, the enterprise risk management committee was renamed the enterprise risk management working committee. It is comprised of the CRO~~ and key members of management selected by State Auto senior executives representing the entire Company. The CRO ~~will report upon~~reports the activities of the committee including escalating appropriate issues and recommendations to senior management and the ~~Board’s~~Board's Risk Committee.

Responsibilities of the enterprise risk working committee include providing guidance and support for development and refinement of the overall risk management program, including policies, procedures, systems, processes, ensuring best practices are periodically evaluated, agreed upon and implemented. Among other things, this ~~committee~~Committee works with business units across the Company in carrying out its responsibility of anticipating, identifying, assessing, monitoring, mitigating and managing risks that could materially impact the Company, including its reputation, and the successful execution of its strategy.

Our Board's role in the process of enterprise risk management is one of oversight. The independent structure of our Board enables objective oversight of the process through a governance structure that includes our Board and senior management. Our Board has established a Risk Committee whose primary responsibility is to assist the Board in fulfilling its oversight responsibilities, including oversight of the Company's enterprise risk management systems and processes. The Risk Committee's charter specifies that the Risk Committee is responsible to review with management the ~~Company’s~~Company's risk appetite, including quarterly reviews to measure compliance with the risk appetite. The charter also provides that the Risk Committee is responsible to monitor and discuss with management the Company's major enterprise risk exposures and the strategies and programs management has implemented or anticipates implementing into its practices, processes and control structure to address these exposures. The Risk Committee discusses with management at least annually information and technology risks, including business continuity and crisis management. Cyber security related risks are reviewed quarterly so the Risk Committee is aware of the Company's performance in this rapidly changing area. The Risk Committee annually reviews and evaluates the Risk Committee's own effectiveness in performing its enterprise risk management oversight duties. The Risk Committee provides quarterly reports on its enterprise risk oversight activities to our Board.

To assist the Risk Committee in discharging its duties under its charter, the enterprise risk management working committee provides quarterly reports which monitor the status of major risks inherent in our business, including credit, market, liquidity, underwriting, operational, strategic, legal, litigation, compliance and regulatory risks. In addition, the Risk Committee regularly meets with our CRO, who reports to the Chief Financial Officer. The CRO has direct access to the Risk Committee, including quarterly executive sessions without other members of management in attendance. Besides meeting with the CRO, the Risk Committee also meets periodically with other members of management as the Risk Committee deems appropriate.

Other Board committees provide enterprise risk management oversight in their specific areas of responsibility. The Risk Committee coordinates with these Board committees to avoid overlaps as well as potential gaps in overseeing the ~~Company’s~~Company's enterprise risk management.

The Audit Committee is responsible for oversight of risks related to accounting, auditing and financial reporting, establishing and maintaining effective internal controls, and the process for establishing insurance reserves. Management provides periodic reports on these and other related risks, and the Audit Committee meets periodically with our officers responsible for the adequacy of legal and regulatory compliance. The CRO and General Counsel have direct access to the Audit Committee, including quarterly executive sessions without other members of management in attendance.

The Investment and Finance Committee considers financial risks relevant to our investment portfolio and activities, including credit and market risks, capital management and availability, liquidity and financing arrangements.

The Compensation Committee oversees the risks related to human capital and people risk, including our compensation plans and arrangements. As required by its charter, the Compensation Committee annually reviews and monitors incentive compensation arrangements to confirm ~~that~~ incentive pay policies and practices do not encourage unnecessary risk taking and are aligned with competitive market practices, utilizing our independent compensation consultant and outside legal counsel in this process. The Compensation Committee reviews and discusses, at least annually, the relationship between the Company's risk management policies and practices, corporate strategy and executive management compensation. Also, the Compensation Committee annually reviews and discusses with our ~~Company’s~~Company's management any disclosures required by SEC rules and regulations relating to the

~~Company’s~~ Company's compensation risk management. This discussion includes, among other things, whether and the extent to which the Company compensates and incentivizes our associates in ways that may create risks that are reasonably likely to have a material adverse effect on the Company.

Risk Assessment in Compensation Programs

Following the Compensation Committee's review of potential risks within the compensation programs with senior management, our independent compensation consultant and outside legal counsel, ~~of potential risks within the compensation programs,~~ the Compensation Committee has concluded ~~that~~ no risks exist due to the compensation programs that are reasonably likely to have a material adverse effect on the Company.



Directors

Nomination of Directors

The Nominating and Governance Committee sets the minimum qualifications for persons it will consider to recommend for nomination for election or re-election (election and re-election are hereafter collectively referred to as "election") as a director of the Company. These minimum qualifications are described in the Nominating and Governance Committee's charter, which is posted on our website. See below "Availability of Corporate Governance Documents." The following matters will be considered in the Nominating and Governance Committee's determination of persons to recommend for nomination as directors of the Company: (i) freedom from relationships or conflicts of interest that could interfere with that person's duties as a director of the Company or to its shareholders; (ii) status as independent based on the then-current Nasdaq listing rules; (iii) business or professional skill and experience; (iv) temperament; (v) integrity; (vi) educational background; and (vii) judgment. The objective of the Nominating and Governance Committee in this regard is to nominate for election as directors persons who share our values and possess the following minimum qualifications: high personal and professional integrity; the ability to exercise sound business judgment; an inquiring mind; professional demeanor; and the time available to devote to Board activities and the willingness to do so. The Nominating and Governance Committee will consider these criteria in the context of an assessment of the perceived needs of our Board as a whole. Ultimately, the Nominating and Governance Committee's intention is to select nominees for election to our Board who the Nominating and Governance Committee believes will be effective, in conjunction with the other members of our Board, in collectively serving the long-term interests of the shareholders. In the context of recommending an incumbent director to be re-nominated for election to our Board, the Nominating and Governance Committee will focus its assessment on the contributions of such person during his or her Board tenure and such person's independence at that time.

As required by its charter, the Nominating and Governance Committee seeks to achieve diversity of occupational and personal backgrounds. The Nominating and Governance Committee considers diversity as a factor in director nominations. In making such selections, the Nominating and Governance Committee views diversity in a broad context to include race, gender, geography, industry experience and personal expertise.

In addition to incumbent directors who will be evaluated for re-nomination as described above, the Nominating and Governance Committee may maintain a list of other potential candidates whom the Nominating and Governance Committee may evaluate pursuant to the criteria set forth above for consideration as Board members. By following the procedures set forth below, shareholders may recommend potential candidates to be included on this list. As a matter of policy, the Nominating and Governance Committee will consider and evaluate such candidates recommended by shareholders in the same manner as all other candidates for nomination to our Board who are not incumbent directors.

The charter of the Nominating and Governance Committee details the process by which our Board of Directors fills vacancies on the Board. The Nominating and Governance Committee's charter provides that in the absence of extraordinary circumstances, when a director vacancy arises for any reason, the Nominating and Governance Committee will first look to the list of names of potential nominees, as described above, and make a preliminary evaluation of such person(s) based on the criteria set forth above. If there are no names on the list or if all of the names on this list are eliminated following such evaluation process, the Nominating and Governance Committee may solicit other potential nominees' names from our other directors, directors of our parent, the chairman or other persons who the Nominating and Governance Committee reasonably believes would have the opportunity to possess firsthand knowledge of a suitable candidate based on the criteria described above. The Nominating and Governance Committee may also hire a director search firm to identify potential candidates. Once the Nominating and Governance Committee has preliminarily concluded ~~that~~ a person(s) may meet the criteria described above, the Nominating and Governance Committee will, at a minimum, obtain from such person(s) a completed Prospective Director Questionnaire which shall solicit information regarding the person's business experience, educational background, personal information, potential conflicts of interest and information relating to the person's business, personal or family relationships with the Company and other directors, among other matters. Following a review of such completed Prospective Director Questionnaire by the Nominating and Governance Committee and the Chairman and Counsel for the Company, the Nominating and Governance Committee will conduct at least one interview with a person(s) whose candidacy it desires to pursue. Based on all information secured from the prospective nominee, including

a background check and a criminal record check, the Nominating and Governance Committee will meet and decide whether or not to recommend such person(s) for nomination for election as a director of the Company. Any decision by the Nominating and Governance Committee in this regard will reflect its judgment of the ability of the person(s) to fulfill the objectives outlined above.

We have adopted procedures by which shareholders may recommend individuals for membership to our Board. As described in its charter, it is the policy of the Nominating and Governance Committee to consider and evaluate candidates recommended by shareholders for membership on our Board in the same manner as all other candidates for nomination to our Board who are not incumbent directors. If a shareholder desires to recommend an individual for Board membership, then that shareholder must provide a written notice to the Company's Corporate Secretary at 518 East Broad Street, Columbus, Ohio 43215 (the "Recommendation Notice"). For a recommendation to be considered by the Nominating and Governance Committee, the Recommendation Notice must contain, at a minimum, the following: (i) the name and address, as they appear on our books, and telephone number of the shareholder making the recommendation, including information on the number of shares owned; (ii) if such person is not a shareholder of record or if such shares are owned by an entity, reasonable evidence of such person's ownership of such shares or such person's authority to act on behalf of such entity; (iii) the full legal name, address and telephone number of the individual being recommended, together with a reasonably detailed description of the background, experience and qualifications of that individual; (iv) a written acknowledgement by the individual being recommended that he or she has consented to that recommendation and consents to our undertaking of an investigation into that individual's background, experience and qualifications in the event ~~that~~ the Nominating and Governance Committee desires to do so; (v) the disclosure of any relationship of the individual being recommended with our Company or any of our subsidiaries or affiliates, whether direct or indirect; and (vi) if known to the shareholder, any material interest of such shareholder or individual being recommended in any proposals or other business to be presented at our next annual meeting of shareholders (or a statement to the effect that no material interest is known to such shareholder).

Director Independence

No director or director nominee will be considered "independent" unless the Board affirmatively determines such individual has (or would have) no relationship that would interfere with the exercise of independent judgment in carrying out responsibilities as a director. When making "independence" determinations, the Board broadly considers all relevant facts and circumstances, as well as any other considerations specified by the Nasdaq listing rule, by law, or by any rule or regulation of any other regulatory body or self-regulatory body applicable to the Company. When assessing a director's relationship with the Company, the Board considers the issue not merely from the standpoint of the director or director nominee but also from that of persons or organizations with which such individual has an affiliation. Relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships (among others).

The Nominating and Governance Committee has affirmatively determined that seven of our eight incumbent directors ~~namely Robert~~(Robert E. Baker, Michael J. Fiorile, Kym M. Hubbard, Eileen A. Mallesch, David R. Meuse, Setareh Pouraghabagher and S. Elaine Roberts) and Thomas E. Markert, ~~David R. Meuse and S. Elaine Roberts, are "independent"~~who served as ~~determined~~a director until his resignation effective January 7, 2019, meet the criteria for independence required by the Nasdaq listing rules. The Nominating and Governance Committee made this determination based upon its review of information included in director questionnaires provided by each of the ~~incumbent~~ directors and a report by our General Counsel.

The information reviewed by the Nominating and Governance Committee included information on the relationship between Mr. Meuse and Stonehenge Financial Holdings, a company in which he has an ownership interest. From time to time we make investments in debt and equity funds sponsored by affiliates of this company. The Nominating and Governance Committee of our Board affirmatively determined that Mr. Meuse is independent as determined under the Nasdaq listing rules because our investments in the funds sponsored by, and the fees paid to, this company and its affiliates are not material to us or to them and Mr. Meuse's relationships with these companies do not interfere with the exercise of his independent judgment in carrying out his responsibilities as a director. The fees paid to either Stonehenge Financial Holdings or its affiliates in 2016 did not exceed $200,000. The information reviewed by the Nominating and Governance Committee also included information on the relationship between Ms. Hubbard and Ernst & Young LLP, the Company's independent registered public accounting firm and Ms. Hubbard's former employer. Ms. Hubbard retired from Ernst & Young LLP in April 2016 and joined our Board in September 2016. The Nominating and Governance Committee of our Board affirmatively determined that Ms. Hubbard is independent as determined under the objective independence standards set forth in the Nasdaq listing rules and that her prior employment relationship with Ernst & Young LLP does not interfere with the exercise of her independent judgment in carrying out her responsibilities as a director of the Company. Finally, the information reviewed by the Nominating and Governance Committee included information on the relationship of Mr. Baker and Mr. Fiorile as directors of State Auto Mutual. The Nominating and Governance Committee ~~of our Board~~ affirmatively determined ~~that~~ Mr. Baker and Mr. Fiorile are independent as determined under the objective independence standards set forth in the Nasdaq listing

rules and ~~that~~ their service as directors of State Auto Mutual does not interfere with the exercise of their independent judgment in carrying out their responsibilities as directors of the Company.

Our Corporate Governance Guidelines expressly provide that ~~five~~four of the six standing committees (Audit, Compensation, Independent, and Nominating and Governance) are to be comprised solely of independent directors. ~~Our Board's Audit, Compensation, Independent, Nominating and Governance, and Risk Committees~~All of these committees meet this standard. Our Board of Directors has concluded that the Investment and Finance Committee does not need to be comprised solely of independent directors. Michael E. LaRocco, who is our employee, and thus does not qualify as an independent director as determined under the Nasdaq listing rules, is a member of the Investment and Finance Committee.

Compensation of Outside Directors and Outside Director Compensation Table

of our shareholders. Directors who are also employees of the Company (currently, only Mr. LaRocco) receive no additional compensation for services as a director.

The charter for the Compensation Committee requires the Compensation Committee to annually review the compensation of our outside directors and recommend any changes to such compensation to our Board. Because the Boards of Directors of our Company and State Auto Mutual have two common directors on each Board, the Compensation Committees of our Company and State Auto Mutual meet jointly to consider the director compensation arrangements for both Boards. At these meetings, usually held in November, the Compensation Committees review peer group compensation and market data provided by Pay Governance LLC, the compensation consultant for the Compensation Committee. For ~~2015~~2017 and ~~2016,~~2018, the total annual retainer paid to our outside directors was ~~$145,000,~~$155,000, with ~~$75,000,~~$80,000, or 52%, paid in cash and ~~$70,000,~~$75,000, or 48%, paid in equity in the form of Restricted Share Units ("RSUs"). For ~~2017,~~2019, our Compensation Committee recommended to our Board, and our Board approved, increasing the total annual retainer paid to our outside directors to ~~$155,000,~~$170,000, with ~~$80,000,~~$87,000, or 52%, to be paid in cash and ~~$75,000,~~$83,000, or 48%, to be paid in equity in the form of RSUs.

No meeting fees are payable to any of our directors, as our directors are expected to attend and participate in all meetings of the Board and the Board committees on which they serve without the incentive of additional compensation. Our Board may, however, elect to pay additional meeting fees to directors if it determines ~~that~~ extraordinary circumstances warrant the formation of a special committee or necessitate a large number of meetings. ~~No additional meeting fees were paid to our directors in 2016.~~ For ~~2017,~~2018, each chairperson of our permanent Board committees ~~is to receive~~received an additional $7,500 annual cash retainer, the same amount as paid in ~~2016,~~2017, other than the chairpersons of the Audit Committee and the Compensation Committee, who ~~are to receive~~received an additional ~~annual~~ cash retainer of $17,500 and $12,500, respectively, the same ~~amounts~~amount as paid in ~~2016.~~2017. Our Lead Director ~~will receive~~received an additional cash retainer of $20,000, the same amount as paid in ~~2016.~~2017. We reimburse our outside directors for the travel expenses they incur to attend Board and committee meetings and an annual Board retreat. The Company also reimburses each of our outside directors for the travel expenses incurred by a guest of the outside director to attend the annual Board retreat, subject to applicable tax laws.

Our outside directors may defer all or any portion of the cash compensation they receive for Board or committee service under our deferred compensation plan for directors. The amount of cash compensation earned by each director in ~~2016,~~2018, whether or not deferred, is included in the amounts shown in the "Fees Paid or Earned in Cash" column of the "~~2016~~2018 Outside Director Compensation" table set forth below.

Our outside directors also have received equity compensation in the form of RSUs granted pursuant to our Outside Directors Restricted Share Unit Plan (the "Directors' RSU Plan"). An RSU is a unit representing one common share. The value of each RSU, on any particular day, is equal to the last reported sale price of a common share on the Nasdaq Stock Market on the immediately previous trading day. Following each annual meeting of shareholders, each outside director automatically receives an annual award of RSUs. Under the Directors' RSU Plan, the number of RSUs awarded annually will be determined by the administrative committee in accordance with the terms of the Directors' RSU Plan. The Compensation Committee has the power to increase or decrease the number of RSUs to be awarded to each of the outside directors not to exceed a maximum annual award of 10,000 RSUs. For ~~2016,~~2018, our Compensation Committee determined, ~~that~~ each outside director would be awarded a number of RSUs equal to the targeted annual equity compensation for outside directors divided by the average daily closing price of a common share during the prior ~~(2015)~~(2017) calendar year. This calculation resulted in each outside director receiving an award of ~~2,988~~2,885 RSUs following the ~~2016~~2018 annual meeting of the shareholders.

Under the Directors' RSU Plan, whenever a dividend is paid with respect to our common shares, an amount equal to the value of the dividend is paid to the holders of RSUs with respect to each RSU in their account on the dividend record date in the form of additional RSUs. RSUs vest upon the completion of six months of service as an outside director from the date of grant. Outside directors are generally required to hold their RSUs until their service on the Board terminates, at which time such outside director may settle his or her RSUs in cash or common shares payable, at the ~~director’s~~director's election, in a single lump sum or in annual installments over a five- or ten-year period. An outside director elected or appointed to the Board outside of an annual meeting of our shareholders

will be granted a pro rata amount of RSUs based upon the number of anticipated days after the date of election or appointment until our next annual meeting of shareholders.

~~2016~~2018 Outside Director Compensation

In ~~2016,~~2018, our outside directors received the following compensation:

Name Fees Paid or Earned in Cash ($)
Restricted Share Unit Awards ($)⁽¹⁾
Total Compensation ($)
Robert E. Baker ⁽²⁾
87,500 61,463 148,963
David J. D'Antoni 75,000 61,463 136,463
Michael J. Fiorile ⁽²⁾
82,500 61,463 143,963
Kym M. Hubbard ⁽³⁾
18,750 47,728 66,478
Eileen A. Mallesch 92,500 61,463 153,963
Thomas E. Markert 78,750 61,463 140,213
David R. Meuse 102,500 61,463 163,963
S. Elaine Roberts 75,000 61,463 136,463
Alexander B. Trevor ⁽⁴⁾
41,250 — 41,250

⁽¹⁾  The total dollar amount shown in the Restricted Share Unit Awards column represents the cash value of the total number of RSUs awarded in 2016 valued at the closing price of common shares on the grant valuation date ($20.57 per RSU). This valuation, required for proxy statement reporting purposes, is based on a single day's market value, which differs substantially from the one-year average price used to determine the actual grant. We believe the valuation methodology used by the Company is more representative of the value of the RSUs at the time of grant.
⁽²⁾  The total compensation paid to Mr. Baker and Mr. Fiorile excludes any compensation they receive for their service on the State Auto Mutual Board of Directors.
⁽³⁾  Ms. Hubbard was first elected a director on September 13, 2016. Therefore, she was only eligible for a prorated RSU award and prorated amount of director fees for 2016.
⁽⁴⁾  Mr. Trevor's term as a director expired concurrently with the holding of the annual meeting of shareholders held May 6, 2016. Therefore, he was ineligible to be awarded any RSUs during 2016.



Name	Fees Paid or Earned in Cash ($)	Restricted Share Unit Awards ($)⁽¹⁾	Total Compensation ($)
Robert E. Baker ⁽²⁾	92,500	85,511	178,011
Michael J. Fiorile ⁽²⁾	95,000	85,511	180,511
Kym M. Hubbard	80,000	85,511	165,511
Eileen A. Mallesch	97,500	85,511	183,011
Thomas E. Markert ⁽³⁾	87,500	85,511	173,011
David R. Meuse	107,500	85,511	193,011
Setareh Pouraghabagher	80,000	85,511	165,511
S. Elaine Roberts	80,000	85,511	165,511

⁽¹⁾ The total dollar amount shown in the Restricted Share Unit Awards column represents the cash value of the total number of RSUs awarded in 2018 valued at the closing price of common shares on the grant valuation date ($29.64 per RSU). This valuation, required for proxy statement reporting purposes, is based on a single day's market value, which differs substantially from the one-year average price used to determine the actual grant. We believe the valuation methodology used by the Company is more representative of the value of the RSUs at the time of grant.
⁽²⁾ The total compensation paid to Mr. Baker and Mr. Fiorile excludes any compensation they receive for their service on the State Auto Mutual board of directors.
⁽³⁾ Thomas E. Markert, resigned as a Director effective January 7, 2019. Mr. Markert's term as a Director would have expired at the 2019 Annual Meeting.

Outside Directors' Ownership of Restricted Share Units

The following table sets forth the aggregate number of RSUs owned by each of our current outside directors as of March ~~10, 2017:~~15, 2019:



Name		Number of Restricted Share Units
Robert E. Baker		~~30,618~~
~~David J. D’Antoni~~		~~34,296~~37,806
Michael J. Fiorile		~~6,400~~12,914
Kym M. Hubbard		~~1,923~~8,312
Eileen A. Mallesch		~~23,818~~
~~Thomas E. Markert~~		~~30,618~~30,816
David R. Meuse		~~32,448~~39,687
Setareh Pouraghabagher		5,893
S. Elaine Roberts		~~34,296~~41,585

Outside directors receive no other forms of compensation from the Company other than as described in this section.

No stock options have been awarded to any of the outside directors since 2004, and all previously awarded stock options have been exercised or have expired by their terms.



Communications with the Board

As further described in our Corporate Governance Guidelines, we provide a process by which shareholders may send communications to our Board. Any security holder who desires to communicate with one or more of our directors may send such communication to any or all directors through our Corporate Secretary, by e-mail to corporatesecretary@stateauto.com or in writing to the Corporate Secretary at our principal executive offices, 518 East Broad Street, Columbus, Ohio 43215. Security holders should designate whether such communication should be sent to a specific director or to all directors. The Corporate Secretary is responsible for forwarding such communication to the director or directors so designated by the security holder.



Other Governance Issues of Interest

Directors' Stock Ownership Guidelines

Our Company's Corporate Governance Guidelines contain the expectation that each of our outside directors will own Company shares or RSUs granted under the Directors RSU Plan having a total market value of at least four times the then current cash portion of the director's annual retainer, which was ~~$75,000~~$80,000 for ~~2016.~~2018. Each director has five years to attain this level of ownership. Our directors are required to hold all RSUs until their membership on the Board terminates.

As of March ~~10, 2017,~~15, 2019, all of our current directors had satisfied their ownership requirements under these guidelines or were within the five-year period for satisfying their ownership requirement.

~~Anti-Hedging Policy~~Audit Committee

~~A policy adopted~~The Audit Committee is charged with several responsibilities, including: (1) appointment, compensation, evaluation, retention and oversight of the work performed by our independent registered public accounting firm; (2) reviewing our accounting functions, operations and management; (3) considering the adequacy and effectiveness of our internal controls and internal auditing methods and procedures; (4) meeting and consulting with our independent registered public accounting firm and with our financial and accounting personnel concerning the foregoing matters; (5) reviewing with our independent registered public accounting firm the scope of their audit and the results of their examination of our financial statements; (6) participating in the process of administering our Associate Code of Business Conduct, Code of Ethics for Senior Financial Officers, and our Board ~~prohibits all~~of Directors' Ethical Principles as set forth in our Corporate Governance Guidelines; (7) establishing procedures for receipt, retention and treatment of compliance regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by associates of concerns regarding accounting or auditing matters; and (8) approving in advance any other work performed by our independent registered public accounting firm that it is permitted by law to perform for us. The Audit Committee also prepares the Report of the Audit Committee that SEC rules require the Company ~~employees~~to include in this Proxy Statement. See below "Audit Committee Matters—Audit Committee Report for the Fiscal Year Ending December 31, 2018."

Compensation Committee

The Compensation Committee is charged with several responsibilities, including: (1) evaluating and approving the compensation and fringe benefits provided to our executive officers and adopting compensation policies and practices that appropriately align pay and performance; (2) approving stock-based compensation plans and grants thereunder to associates or members of the Board; and (3) evaluating the compensation provided to the members of the Board ~~from engaging~~and its committees.

Our executive officers also serve as executive officers of State Auto Mutual, and, in ~~certain hedging transactions~~general, during 2018 the compensation expenses associated with ~~respect~~our executive officers were allocated 65% to ~~Company securities held by them, including short sales~~us and ~~other transactions that shift~~our subsidiaries and 35% to State Auto Mutual and its subsidiaries and affiliates under the ~~economic consequences of ownership of Company securities to a third party. Another policy adopted by~~Pooling Arrangement. See below "Related Person Transactions—Transactions Involving State Auto Mutual." It is for this reason the Board ~~prohibits our Section 16 officers and~~of Directors of State Auto Mutual has its own compensation committee. The members of the State Auto Mutual compensation committee attend meetings of our Compensation Committee with regard to the compensation and benefit matters applicable to our and their executive officers, and report on such matters to the State Auto Mutual Board ~~from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.~~of Directors. Present members of the State Auto Mutual compensation committee are Chairperson Robert E. Baker, Michael J. Fiorile, James E. Kunk and Dwight E. Smith. See below "Compensation ~~Discussion~~Committee Matters."

Nominating and ~~Analysis—Anti-Hedging Policy.~~Governance Committee

The Nominating and Governance Committee is charged with several responsibilities, including: (1) recommending nominees for election as directors; (2) reviewing the performance of our Board and individual directors; and (3) annually reviewing and recommending to our Board changes to our Associate Code of Business Conduct, Corporate Governance Guidelines and Board of Directors' Ethical Principles. See below "Nomination of Directors."

Risk Committee

The Risk Committee's purpose is to assist the Board in fulfilling its risk management oversight responsibilities, including oversight of the Company's enterprise risk management systems and processes. Some of the Risk Committee's chief duties include: (1) reviewing with management the Company's risk appetite statement; (2) monitoring and discussing with management the Company's major enterprise risk exposures and the strategies and programs addressing these exposures; and (3) discussing information and technology risks with management. See below "The Board's Role in Enterprise Risk Management."

Investment and Finance Committee

The Investment and Finance Committee oversees our investment functions and those of our insurance subsidiaries. Its duties and responsibilities include considering and determining the Company's investment policy and guidelines to be recommended to the Board and upon approval from the Board, to be implemented by the Company. The Investment and Finance Committee ensures the investments and investment practices contemplated reflect the Company's objectives and constraints.

Independent Committee of STFC and State Auto Mutual

Both STFC and State Auto Mutual have standing Independent Committees. The members of the STFC Independent Committee must be independent from State Auto management and State Auto Mutual. Likewise, the members of the State Auto Mutual Independent Committee must be independent from State Auto management and STFC. The members of both Independent Committees must also be independent as determined under the Nasdaq listing rules.

These Independent Committees principally serve to review related person transactions between or among us and our subsidiaries, and State Auto Mutual and its subsidiaries and affiliates. Accordingly, before our Company and State Auto Mutual may enter into a related person transaction, each of these Independent Committees must separately review the agreement and separately recommend approval to their respective Boards. Also, each of these Independent Committees separately reviews, on an annual basis, related person transactions which by their terms contain no specific termination date or which renew automatically at the end of the current term, and each of these Independent Committees separately decides whether to recommend that their respective Boards approve the renewal of such related person transaction.

These Independent Committees also help to determine which entity, our Company or State Auto Mutual, is best suited to take advantage of transactional opportunities presented by a third party. In evaluating business opportunities, these Independent Committees may elect to meet jointly, but in any event it is understood that each Independent Committee must receive substantially identical information in making its respective evaluation of the business opportunity. In this context, our Independent Committee strives to vigorously protect the interests of STFC and its shareholders, considering only the merits of the proposal, free from extraneous considerations or influences. As part of the review process, each of these Independent Committees must separately evaluate the business opportunity and separately recommend approval to their respective Boards before the two Boards of Directors may vote on any joint recommendation to proceed with the business transaction.



~~Availability of Corporate Governance Documents~~The Board's Role in Enterprise Risk Management

Our senior management has direct responsibility for enterprise risk management. We utilize an enterprise risk management working committee comprised of our Chief Risk Officer ("CRO") and key members of management selected by State Auto senior executives representing the entire Company. The ~~following documents~~CRO reports the activities of the committee including escalating appropriate issues and recommendations to senior management and the Board's Risk Committee.

Responsibilities of the enterprise risk working committee include providing guidance and support for development and refinement of the overall risk management program, including policies, procedures, systems, processes, ensuring best practices are ~~available~~periodically evaluated, agreed upon and implemented. Among other things, this Committee works with business units across the Company in carrying out its responsibility of anticipating, identifying, assessing, monitoring, mitigating and managing risks that could materially impact the Company, including its reputation, and the successful execution of its strategy.

Our Board's role in the process of enterprise risk management is one of oversight. The independent structure of our Board enables objective oversight of the process through a governance structure that includes our Board and senior management. Our Board has established a Risk Committee whose primary responsibility is to assist the Board in fulfilling its oversight responsibilities, including oversight of the Company's enterprise risk management systems and processes. The Risk Committee's charter specifies that the Risk Committee is responsible to review with management the Company's risk appetite, including quarterly reviews to measure compliance with the risk appetite. The charter also provides that the Risk Committee is responsible to monitor and discuss with management the Company's major enterprise risk exposures and the strategies and programs management has implemented or anticipates implementing into its practices, processes and control structure to address these exposures. The Risk Committee discusses with management at least annually information and technology risks, including business continuity and crisis management. Cyber security related risks are reviewed quarterly so the Risk Committee is aware of the Company's performance in this rapidly changing area. The Risk Committee annually reviews and evaluates the Risk Committee's own effectiveness in performing its enterprise risk management oversight duties. The Risk Committee provides quarterly reports on its enterprise risk oversight activities to our ~~website at www.stateauto.com~~Board.

To assist the Risk Committee in discharging its duties under ~~"Investors"~~its charter, the enterprise risk management working committee provides quarterly reports which monitor the status of major risks inherent in our business, including credit, market, liquidity, underwriting, operational, strategic, legal, litigation, compliance and ~~then under "Corporate Governance" then under "Governance Documents":~~regulatory risks. In addition, the Risk Committee regularly meets with our CRO, who reports to the Chief Financial Officer. The CRO has direct access to the Risk Committee, including quarterly executive sessions without other members of management in attendance. Besides meeting with the CRO, the Risk Committee also meets periodically with other members of management as the Risk Committee deems appropriate.



Ÿ	~~The Charters for our Audit Committee, Compensation Committee, Nominating and Governance Committee, Risk Committee, Investment and Finance Committee and standing Independent Committee;~~
Ÿ	~~Our Corporate Governance Guidelines, including Board of Directors’ Ethical Principles;~~
Ÿ	~~Our Associate Code of Business Conduct; and~~
Ÿ	~~Our Code of Ethics for Senior Financial Officers.~~

~~AUDIT COMMITTEE MATTERS~~The Audit Committee is responsible for oversight of risks related to accounting, auditing and financial reporting, establishing and maintaining effective internal controls, and the process for establishing insurance reserves. Management provides periodic reports on these and other related risks, and the Audit Committee meets periodically with our officers responsible for the adequacy of legal and regulatory compliance. The CRO and General Counsel have direct access to the Audit Committee, including quarterly executive sessions without other members of management in attendance.

The Compensation Committee oversees the risks related to human capital and people risk, including our compensation plans and arrangements. As required by its charter, the Compensation Committee annually reviews and monitors incentive compensation arrangements to confirm incentive pay policies and practices do not encourage unnecessary risk taking and are aligned with competitive market practices, utilizing our independent compensation consultant and outside legal counsel in this process. The Compensation Committee reviews and discusses, at least annually, the relationship between the Company's risk management policies and practices, corporate strategy and executive management compensation. Also, the Compensation Committee annually reviews and discusses with our Company's management any disclosures required by SEC rules and regulations relating to the Company's compensation risk management. This discussion includes, among other things, whether and the extent to which the Company compensates and incentivizes our associates in ways that may create risks that are reasonably likely to have a material adverse effect on the Company.

Risk Assessment in Compensation Programs

Following the Compensation Committee's review of potential risks within the compensation programs with senior management, our independent compensation consultant and outside legal counsel, the Compensation Committee has concluded no risks exist due to the compensation programs that are reasonably likely to have a material adverse effect on the Company.



~~Audit Committee Report for the Fiscal Year Ending December 31, 2016~~Directors

Nomination of Directors

The ~~Audit~~Nominating and Governance Committee ~~provides assistance~~sets the minimum qualifications for persons it will consider to recommend for nomination for election or re-election (election and re-election are hereafter collectively referred to as "election") as a director of the Company. These minimum qualifications are described in the Nominating and Governance Committee's charter, which is posted on our website. See below "Availability of Corporate Governance Documents." The following matters will be considered in the Nominating and Governance Committee's determination of persons to recommend for nomination as directors of the Company: (i) freedom from relationships or conflicts of interest that could interfere with that person's duties as a director of the Company or to its shareholders; (ii) status as independent based on the then-current Nasdaq listing rules; (iii) business or professional skill and experience; (iv) temperament; (v) integrity; (vi) educational background; and (vii) judgment. The objective of the Nominating and Governance Committee in this regard is to nominate for election as directors persons who share our values and possess the following minimum qualifications: high personal and professional integrity; the ability to exercise sound business judgment; an inquiring mind; professional demeanor; and the time available to devote to Board activities and the willingness to do so. The Nominating and Governance Committee will consider these criteria in the context of an assessment of the perceived needs of our Board as a whole. Ultimately, the Nominating and Governance Committee's intention is to select nominees for election to our ~~directors~~Board who the Nominating and Governance Committee believes will be effective, in ~~fulfilling their responsibility~~conjunction with the other members of our Board, in collectively serving the long-term interests of the shareholders. In the context of recommending an incumbent director to be re-nominated for election to our Board, the Nominating and Governance Committee will focus its assessment on the contributions of such person during his or her Board tenure and such person's independence at that time.

The charter of the Nominating and Governance Committee details the process by which our Board of Directors fills vacancies on the Board. The Nominating and Governance Committee's charter provides that in the absence of extraordinary circumstances, when a director vacancy arises for any reason, the Nominating and Governance Committee will first look to the list of names of potential nominees, as described above, and make a preliminary evaluation of such person(s) based on the criteria set forth above. If there are no names on the list or if all of the names on this list are eliminated following such evaluation process, the Nominating and Governance Committee may solicit other potential nominees' names from our other directors, directors of our parent, the chairman or other persons who the Nominating and Governance Committee reasonably believes would have the opportunity to possess firsthand knowledge of a suitable candidate based on the criteria described above. The Nominating and Governance Committee may also hire a director search firm to identify potential candidates. Once the Nominating and Governance Committee has preliminarily concluded a person(s) may meet the criteria described above, the Nominating and Governance Committee will, at a minimum, obtain from such person(s) a completed Prospective Director Questionnaire which shall solicit information regarding the person's business experience, educational background, personal information, potential conflicts of interest and information relating to ~~corporate accounting, reporting practices, internal controls relating to financial reporting, and~~ the quality and integrity of our financial reports. In so doing, the Audit Committee maintains free and open communication between our directors, independent registered public accounting firm, internal auditors and senior management. Notwithstanding the foregoing, it is not the duty of the Audit Committee to planperson's business, personal or ~~conduct audits or to determine that our financial statements and disclosures are complete, accurate and in accordance~~family relationships with ~~generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of our management and our independent registered public accounting firm, respectively.~~

In the course of fulfilling its responsibilities, the Audit Committee reviewed the audited financial statements in our Company's Annual Report on Form 10-K for the 2016 fiscal year with our management, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee also reviewed with our independent registered public accounting firm, who are responsible for expressing an opinion on the conformity of those audited financial statements with United States' generally accepted accounting principles ("US GAAP"), their judgments as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with the Audit Committee under auditing standards generally accepted in the United States, including those matters required to be discussed by Auditing Standard ("AS") No. 1301 (previously AS No. 16), Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board. In addition, the Audit Committee discussed with our independent registered public accounting firm its independence from our management and considered the compatibility of any permitted and pre-approved non-audit services with the independent registered public accounting firm's independence. The Audit Committee also received written disclosures regarding the independent auditors' independence from management and the Company and ~~received~~other directors, among other matters. Following a ~~letter confirming that fact~~review of such completed Prospective Director Questionnaire by the Nominating and Governance Committee and the Chairman and Counsel for the Company, the Nominating and Governance Committee will conduct at least one interview with a person(s) whose candidacy it desires to pursue. Based on all information secured from the ~~independent auditors, which included applicable requirements~~prospective nominee, including a background check and a criminal record check, the Nominating and Governance Committee will meet and decide whether or not to recommend such person(s) for nomination for election as a director of the ~~Public~~Company. Any decision by the Nominating and Governance Committee in this regard will reflect its judgment of the ability of the person(s) to fulfill the objectives outlined above.

We have adopted procedures by which shareholders may recommend individuals for membership to our Board. As described in its charter, it is the policy of the Nominating and Governance Committee to consider and evaluate candidates recommended by shareholders for membership on our Board in the same manner as all other candidates for nomination to our Board who are not incumbent directors. If a shareholder desires to recommend an individual for Board membership, then that shareholder must provide a written notice to the Company's Corporate Secretary at 518 East Broad Street, Columbus, Ohio 43215 (the "Recommendation Notice"). For a recommendation to be considered by the Nominating and Governance Committee, the Recommendation Notice must contain, at a minimum, the following: (i) the name and address, as they appear on our books, and telephone number of the shareholder making the recommendation, including information on the number of shares owned; (ii) if such person is not a shareholder of record or if such shares are owned by an entity, reasonable evidence of such person's ownership of such shares or such person's authority to act on behalf of such entity; (iii) the full legal name, address and telephone number of the individual being recommended, together with a reasonably detailed description of the background, experience and qualifications of that individual; (iv) a written acknowledgement by the individual being recommended that he or she has consented to that recommendation and consents to our undertaking of an investigation into that individual's background, experience and qualifications in the event the Nominating and Governance Committee desires to do so; (v) the disclosure of any relationship of the individual being recommended with our Company ~~Accounting Oversight~~or any of our subsidiaries or affiliates, whether direct or indirect; and (vi) if known to the shareholder, any material interest of such shareholder or individual being recommended in any proposals or other business to be presented at our next annual meeting of shareholders (or a statement to the effect that no material interest is known to such shareholder).

Director Independence

No director or director nominee will be considered "independent" unless the Board ~~regarding the independent accountant's communications~~affirmatively determines such individual has (or would have) no relationship that would interfere with the ~~Audit Committee concerning independence.~~exercise of independent judgment in carrying out responsibilities as a director. When making "independence" determinations, the Board broadly considers all relevant facts and circumstances, as well as any other considerations specified by the Nasdaq listing rule, by law, or by any rule or regulation of any other regulatory body or self-regulatory body applicable to the Company. When assessing a director's relationship with the Company, the Board considers the issue not merely from the standpoint of the director or director nominee but also from that of persons or organizations with which such individual has an affiliation. Relationships can include commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships (among others).

The ~~Audit~~Nominating and Governance Committee ~~discussed with~~has affirmatively determined that seven of our ~~internal auditor~~eight incumbent directors (Robert E. Baker, Michael J. Fiorile, Kym M. Hubbard, Eileen A. Mallesch, David R. Meuse, Setareh Pouraghabagher and ~~independent registered public accounting firm~~S. Elaine Roberts) and Thomas E. Markert, who served as a director until his resignation effective January 7, 2019, meet the ~~overall scope~~criteria for independence required by the Nasdaq listing rules. The Nominating and ~~plans for their respective audits. The Audit~~Governance Committee ~~regularly monitors our compliance with Section 404~~made this determination based upon its review of information included in director questionnaires provided by each of the ~~Sarbanes-Oxley Act.~~ directors and a report by our General Counsel.

The ~~Company uses~~information reviewed by the Nominating and Governance Committee included information on the relationship of ~~Sponsoring Organizations~~Mr. Baker and Mr. Fiorile as directors of State Auto Mutual. The Nominating and Governance Committee affirmatively determined Mr. Baker and Mr. Fiorile are independent as determined under the objective independence standards set forth in the Nasdaq listing

rules and their service as directors of State Auto Mutual does not interfere with the exercise of their independent judgment in carrying out their responsibilities as directors of the ~~Treadway Commission (COSO) framework~~Company.

Our Corporate Governance Guidelines expressly provide that four of the six standing committees (Audit, Compensation, Independent, and Nominating and Governance) are to ~~evaluate~~be comprised solely of independent directors. All of these committees meet this standard.

Compensation of Outside Directors and Outside Director Compensation Table

The Company's philosophy is to provide competitive compensation necessary to attract and retain high-quality non-employee directors, who we refer to as our "outside directors." Outside directors receive compensation for the ~~effectiveness~~services they perform as members of our ~~internal control over financial reporting.~~Board and the Board committees on which they serve. The ~~Audit Committee periodically reviews~~Board believes a substantial portion of director compensation should consist of equity-based compensation to assist in aligning the ~~suitability of this framework~~outside directors' interests with ~~management. The Audit Committee and management currently believe that~~ the ~~COSO 2013 framework is a suitable framework for its evaluation~~interests of our ~~internal control over financial reporting because it is free from bias, permits reasonably qualitative and quantitative measurements~~shareholders. Directors who are also employees of the Company (currently, only Mr. LaRocco) receive no additional compensation for services as a director.

The charter for the Compensation Committee requires the Compensation Committee to annually review the compensation of our ~~internal controls, is sufficiently complete so that those relevant factors that would alter a conclusion about~~outside directors and recommend any changes to such compensation to our Board. Because the ~~effectiveness~~Boards of Directors of our ~~internal controls are not omitted~~Company and is relevant to an evaluation of internal control over financial reporting. The Audit Committee meets with our internal auditor and independent registered public accounting firm, with and without management present, to discussState Auto Mutual have two common directors on each Board, the ~~results of their examinations, their evaluations~~Compensation Committees of our ~~internal controls,~~Company and State Auto Mutual meet jointly to consider the ~~overall quality~~director compensation arrangements for both Boards. At these meetings, usually held in November, the Compensation Committees review peer group compensation and market data provided by Pay Governance LLC, the compensation consultant for the Compensation Committee. For 2017 and 2018, the total annual retainer paid to our outside directors was $155,000, with $80,000, or 52%, paid in cash and $75,000, or 48%, paid in equity in the form of Restricted Share Units ("RSUs"). For 2019, our financial reporting. The Audit Committee also meets with our Chief Financial Officer and our General Counsel without the rest of management present to discuss any matters of interest to the Audit Committee. The Audit Committee receives the annual Actuarial Report on Loss and Loss Adjustment Expense Reserves from the Chief Actuarial Officer who may present more often on any matters of interest to the Audit Committee. The Audit Committee meets with our Chief Actuarial Officer without the rest of management present to discuss any matters of interest to the Audit Committee. The Audit Committee receives a quarterly report from members of management on selected risk areas. In reliance on the reviews and discussions referred to above, the AuditCompensation Committee recommended to our Board, ~~of Directors (and~~and our Board ~~has approved) that~~approved, increasing the ~~audited financial statements~~total annual retainer paid to our outside directors to $170,000, with $87,000, or 52%, to be ~~included~~paid in cash and $83,000, or 48%, to be paid in equity in the form of RSUs.

No meeting fees are payable to any of our ~~Annual Report~~directors, as our directors are expected to attend and participate in all meetings of the Board and the Board committees on ~~Form 10-K for~~which they serve without the ~~2016 fiscal year for filing with~~incentive of additional compensation. Our Board may, however, elect to pay additional meeting fees to directors if it determines extraordinary circumstances warrant the ~~SEC.~~

~~The full responsibilities~~formation of a special committee or necessitate a large number of meetings. For 2018, each chairperson of our permanent Board committees received an additional $7,500 annual cash retainer, the same amount as paid in 2017, other than the chairpersons of the Audit Committee ~~are~~and the Compensation Committee, who received an additional cash retainer of $17,500 and $12,500, respectively, the same amount as paid in 2017. Our Lead Director received an additional cash retainer of $20,000, the same amount as paid in 2017. We reimburse our outside directors for the travel expenses they incur to attend Board and committee meetings and an annual Board retreat. The Company also reimburses each of our outside directors for the travel expenses incurred by a guest of the outside director to attend the annual Board retreat, subject to applicable tax laws.

Our outside directors may defer all or any portion of the cash compensation they receive for Board or committee service under our deferred compensation plan for directors. The amount of cash compensation earned by each director in 2018, whether or not deferred, is included in the amounts shown in the "Fees Paid or Earned in Cash" column of the "2018 Outside Director Compensation" table set forth below.

Our outside directors also have received equity compensation in ~~its charter.~~the form of RSUs granted pursuant to our Outside Directors Restricted Share Unit Plan (the "Directors' RSU Plan"). An RSU is a unit representing one common share. The ~~charter~~value of each RSU, on any particular day, is ~~reviewed~~equal to the last reported sale price of a common share on the Nasdaq Stock Market on the immediately previous trading day. Following each annual meeting of shareholders, each outside director automatically receives an annual award of RSUs. Under the Directors' RSU Plan, the number of RSUs awarded annually will be determined by the ~~Audit~~administrative committee in accordance with the terms of the Directors' RSU Plan. The Compensation Committee ~~and~~has the power to increase or decrease the number of RSUs to be awarded to each of the outside directors not to exceed a maximum annual award of 10,000 RSUs. For 2018, our ~~Board and, if deemed necessary following such review, amended. In addition~~Compensation Committee determined, each outside director would be awarded a number of RSUs equal to the ~~foregoing, these responsibilities include sole authority~~targeted annual equity compensation for ~~selecting our independent registered public accounting firm, reviewing with management~~outside directors divided by the ~~adequacy~~average daily closing price of ~~loss reserves, pre-approving expenditures for services~~a common share during the prior (2017) calendar year. This calculation resulted in each outside director receiving an award of ~~our independent registered public accounting firm, sole authority to retain independent advisors, receipt and disposition~~2,885 RSUs following the 2018 annual meeting of matters relating to allegations of accounting or other improprieties, reviewing matters relating to our Code of Business Conduct and participating in disclosure control procedures and functioning as our qualified legal compliance committee. The Audit Committee also consults with our General Counselthe shareholders.

Under the Directors' RSU Plan, whenever a dividend is paid with respect to ~~legal matters affecting~~our common shares, an amount equal to the ~~Company.~~

~~As discussed above,~~value of the ~~Audit Committee~~dividend is ~~responsible~~paid to ~~monitor and review our financial reporting process~~the holders of RSUs with respect to each RSU in their account on ~~behalf~~the dividend record date in the form of additional RSUs. RSUs vest upon the completion of six months of service as an outside director from the date of grant. Outside directors are generally required to hold their RSUs until their service on the Board terminates, at which time such outside director may settle his or her RSUs in cash or common shares payable, at the director's election, in a single lump sum or in annual installments over a five- or ten-year period. An outside director elected or appointed to the Board outside of an annual meeting of our Board of Directors. However, it is not the duty or responsibility of the Audit Committee to conduct auditing or accounting reviews or procedures. Members of the Audit Committee are not our employees, and some members are not accountants or auditors byshareholders

~~profession~~will be granted a pro rata amount of RSUs based upon the number of anticipated days after the date of election or ~~experts~~appointment until our next annual meeting of shareholders.

2018 Outside Director Compensation

In 2018, our outside directors received the following compensation:



Name	Fees Paid or Earned in Cash ($)	Restricted Share Unit Awards ($)⁽¹⁾	Total Compensation ($)
Robert E. Baker ⁽²⁾	92,500	85,511	178,011
Michael J. Fiorile ⁽²⁾	95,000	85,511	180,511
Kym M. Hubbard	80,000	85,511	165,511
Eileen A. Mallesch	97,500	85,511	183,011
Thomas E. Markert ⁽³⁾	87,500	85,511	173,011
David R. Meuse	107,500	85,511	193,011
Setareh Pouraghabagher	80,000	85,511	165,511
S. Elaine Roberts	80,000	85,511	165,511

⁽¹⁾ The total dollar amount shown in the Restricted Share Unit Awards column represents the cash value of the total number of RSUs awarded in 2018 valued at the closing price of common shares on the grant valuation date ($29.64 per RSU). This valuation, required for proxy statement reporting purposes, is based on a single day's market value, which differs substantially from the one-year average price used to determine the actual grant. We believe the valuation methodology used by the Company is more representative of the value of the RSUs at the time of grant.
⁽²⁾ The total compensation paid to Mr. Baker and Mr. Fiorile excludes any compensation they receive for their service on the State Auto Mutual board of directors.
⁽³⁾ Thomas E. Markert, resigned as a Director effective January 7, 2019. Mr. Markert's term as a Director would have expired at the 2019 Annual Meeting.

Outside Directors' Ownership of Restricted Share Units

The following table sets forth the aggregate number of RSUs owned by each of our current outside directors as of March 15, 2019:



Name		Number of Restricted Share Units
Robert E. Baker		37,806
Michael J. Fiorile		12,914
Kym M. Hubbard		8,312
Eileen A. Mallesch		30,816
David R. Meuse		39,687
Setareh Pouraghabagher		5,893
S. Elaine Roberts		41,585

Outside directors receive no other forms of compensation from the Company other than as described in ~~the fields of accounting or auditing. Therefore, the Audit Committee has relied, without independent verification, on management's representation that the financial statements~~this section.

No stock options have been ~~prepared~~awarded to any of the outside directors since 2004, and all previously awarded stock options have been exercised or have expired by their terms.



Communications with the Board

As further described in our Corporate Governance Guidelines, we provide a process by which shareholders may send communications to our Board. Any security holder who desires to communicate with ~~integrity and objectivity and~~one or more of our directors may send such communication to any or all directors through our Corporate Secretary, by e-mail to corporatesecretary@stateauto.com or in ~~conformity with US GAAP and~~writing to the Corporate Secretary at our principal executive offices, 518 East Broad Street, Columbus, Ohio 43215. Security holders should designate whether such communication should be sent to a specific director or to all directors. The Corporate Secretary is responsible for forwarding such communication to the director or directors so designated by the security holder.



Other Governance Issues of Interest

Directors' Stock Ownership Guidelines

Our Company's Corporate Governance Guidelines contain the expectation that each of our outside directors will own Company shares or RSUs granted under the Directors RSU Plan having a total market value of at least four times the then current cash portion of the director's annual retainer, which was $80,000 for 2018. Each director has five years to attain this level of ownership. Our directors are required to hold all RSUs until their membership on the ~~audit opinions~~Board terminates.

As of March 15, 2019, all of our independent registered public accounting firm included in its report on our financial statements. The Audit Committee's review does not provide the Audit Committee with an independent basis to determine that management has maintained appropriate accounting and financial reporting principlescurrent directors had satisfied their ownership requirements under these guidelines or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee's considerations and discussions with management and our independent registered public accounting firm do not assure that our financial statements are presented in accordance with US GAAP, that the audit of our financial statements has been carried out in accordance with the standards of the Public Company Accounting Oversight Board (United States), or that our independent auditors are in fact "independent."

~~The Audit Committee receives regular reports from our Compliance Directors with respect to matters coming~~were within the scope of our Associate Code of Business Conduct. Our Chief Executive Officer and principal financial officers have each agreed to be bound by our Associate Code of Business Conduct and the Sarbanes-Oxley Act mandated Code of Ethicsfive-year period for Senior Financial Officers as a Special Supplement to our Associate Code of Business Conduct. We have also implemented and applied our Associate Code of Business Conduct throughout our Company. We have also implemented procedures for the receipt of complaints concerning our accounting, internal accounting controls, or auditing practices, including the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing practices.satisfying their ownership requirement.

Audit Committee

The Audit Committee is charged with several responsibilities, including: (1) appointment, compensation, evaluation, retention and oversight of the work performed by our independent registered public accounting firm; (2) reviewing our accounting functions, operations and management; (3) considering the adequacy and effectiveness of our internal controls and internal auditing methods and procedures; (4) meeting and consulting with our independent registered public accounting firm and with our financial and accounting personnel concerning the foregoing matters; (5) reviewing with our independent registered public accounting firm the scope of their audit and the results of their examination of our financial statements; (6) participating in the process of administering our Associate Code of Business Conduct, Code of Ethics for Senior Financial Officers, and our Board of Directors' Ethical Principles as set forth in our Corporate Governance Guidelines; (7) establishing procedures for receipt, retention and treatment of compliance regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission by associates of concerns regarding accounting or auditing matters; and (8) approving in advance any other work performed by our independent registered public accounting firm that it is permitted by law to perform for us. The Audit Committee also prepares the Report of the Audit Committee that SEC rules require the Company to include in this Proxy Statement. See below "Audit Committee Matters—Audit Committee Report for the Fiscal Year Ending December 31, 2018."

Compensation Committee

Our executive officers also serve as executive officers of State Auto Mutual, and, in general, during 2018 the compensation expenses associated with our executive officers were allocated 65% to us and our subsidiaries and 35% to State Auto Mutual and its subsidiaries and affiliates under the Pooling Arrangement. See below "Related Person Transactions—Transactions Involving State Auto Mutual." It is for this reason the Board of Directors of State Auto Mutual has its own compensation committee. The members of the State Auto Mutual compensation committee attend meetings of our Compensation Committee with regard to the compensation and benefit matters applicable to our and their executive officers, and report on such matters to the State Auto Mutual Board of Directors. Present members of the State Auto Mutual compensation committee are Chairperson Robert E. Baker, Michael J. Fiorile, James E. Kunk and Dwight E. Smith. See below "Compensation Committee Matters."

Nominating and Governance Committee

Risk Committee

Investment and Finance Committee

Independent Committee of STFC and State Auto Mutual



The Board's Role in Enterprise Risk Management

Our senior management has direct responsibility for enterprise risk management. We utilize an enterprise risk management working committee comprised of our Chief Risk Officer ("CRO") and key members of management selected by State Auto senior executives representing the entire Company. The CRO reports the activities of the committee including escalating appropriate issues and recommendations to senior management and the Board's Risk Committee.

Responsibilities of the enterprise risk working committee include providing guidance and support for development and refinement of the overall risk management program, including policies, procedures, systems, processes, ensuring best practices are periodically evaluated, agreed upon and implemented. Among other things, this Committee works with business units across the Company in carrying out its responsibility of anticipating, identifying, assessing, monitoring, mitigating and managing risks that could materially impact the Company, including its reputation, and the successful execution of its strategy.

Our Board's role in the process of enterprise risk management is one of oversight. The independent structure of our Board enables objective oversight of the process through a governance structure that includes our Board and senior management. Our Board has established a Risk Committee whose primary responsibility is to assist the Board in fulfilling its oversight responsibilities, including oversight of the Company's enterprise risk management systems and processes. The Risk Committee's charter specifies that the Risk Committee is responsible to review with management the Company's risk appetite, including quarterly reviews to measure compliance with the risk appetite. The charter also provides that the Risk Committee is responsible to monitor and discuss with management the Company's major enterprise risk exposures and the strategies and programs management has implemented or anticipates implementing into its practices, processes and control structure to address these exposures. The Risk Committee discusses with management at least annually information and technology risks, including business continuity and crisis management. Cyber security related risks are reviewed quarterly so the Risk Committee is aware of the Company's performance in this rapidly changing area. The Risk Committee annually reviews and evaluates the Risk Committee's own effectiveness in performing its enterprise risk management oversight duties. The Risk Committee provides quarterly reports on its enterprise risk oversight activities to our Board.

The Compensation Committee oversees the risks related to human capital and people risk, including our compensation plans and arrangements. As required by its charter, the Compensation Committee annually reviews and monitors incentive compensation arrangements to confirm incentive pay policies and practices do not encourage unnecessary risk taking and are aligned with competitive market practices, utilizing our independent compensation consultant and outside legal counsel in this process. The Compensation Committee reviews and discusses, at least annually, the relationship between the Company's risk management policies and practices, corporate strategy and executive management compensation. Also, the Compensation Committee annually reviews and discusses with our Company's management any disclosures required by SEC rules and regulations relating to the Company's compensation risk management. This discussion includes, among other things, whether and the extent to which the Company compensates and incentivizes our associates in ways that may create risks that are reasonably likely to have a material adverse effect on the Company.

Risk Assessment in Compensation Programs

Following the Compensation Committee's review of potential risks within the compensation programs with senior management, our independent compensation consultant and outside legal counsel, the Compensation Committee has concluded no risks exist due to the compensation programs that are reasonably likely to have a material adverse effect on the Company.



Directors

Nomination of Directors

The charter of the Nominating and Governance Committee details the process by which our Board of Directors fills vacancies on the Board. The Nominating and Governance Committee's charter provides that in the absence of extraordinary circumstances, when a director vacancy arises for any reason, the Nominating and Governance Committee will first look to the list of names of potential nominees, as described above, and make a preliminary evaluation of such person(s) based on the criteria set forth above. If there are no names on the list or if all of the names on this list are eliminated following such evaluation process, the Nominating and Governance Committee may solicit other potential nominees' names from our other directors, directors of our parent, the chairman or other persons who the Nominating and Governance Committee reasonably believes would have the opportunity to possess firsthand knowledge of a suitable candidate based on the criteria described above. The Nominating and Governance Committee may also hire a director search firm to identify potential candidates. Once the Nominating and Governance Committee has preliminarily concluded a person(s) may meet the criteria described above, the Nominating and Governance Committee will, at a minimum, obtain from such person(s) a completed Prospective Director Questionnaire which shall solicit information regarding the person's business experience, educational background, personal information, potential conflicts of interest and information relating to the person's business, personal or family relationships with the Company and other directors, among other matters. Following a review of such completed Prospective Director Questionnaire by the Nominating and Governance Committee and the Chairman and Counsel for the Company, the Nominating and Governance Committee will conduct at least one interview with a person(s) whose candidacy it desires to pursue. Based on all information secured from the prospective nominee, including a background check and a criminal record check, the Nominating and Governance Committee will meet and decide whether or not to recommend such person(s) for nomination for election as a director of the Company. Any decision by the Nominating and Governance Committee in this regard will reflect its judgment of the ability of the person(s) to fulfill the objectives outlined above.

We have adopted procedures by which shareholders may recommend individuals for membership to our Board. As described in its charter, it is the policy of the Nominating and Governance Committee to consider and evaluate candidates recommended by shareholders for membership on our Board in the same manner as all other candidates for nomination to our Board who are not incumbent directors. If a shareholder desires to recommend an individual for Board membership, then that shareholder must provide a written notice to the Company's Corporate Secretary at 518 East Broad Street, Columbus, Ohio 43215 (the "Recommendation Notice"). For a recommendation to be considered by the Nominating and Governance Committee, the Recommendation Notice must contain, at a minimum, the following: (i) the name and address, as they appear on our books, and telephone number of the shareholder making the recommendation, including information on the number of shares owned; (ii) if such person is not a shareholder of record or if such shares are owned by an entity, reasonable evidence of such person's ownership of such shares or such person's authority to act on behalf of such entity; (iii) the full legal name, address and telephone number of the individual being recommended, together with a reasonably detailed description of the background, experience and qualifications of that individual; (iv) a written acknowledgement by the individual being recommended that he or she has consented to that recommendation and consents to our undertaking of an investigation into that individual's background, experience and qualifications in the event the Nominating and Governance Committee desires to do so; (v) the disclosure of any relationship of the individual being recommended with our Company or any of our subsidiaries or affiliates, whether direct or indirect; and (vi) if known to the shareholder, any material interest of such shareholder or individual being recommended in any proposals or other business to be presented at our next annual meeting of shareholders (or a statement to the effect that no material interest is known to such shareholder).

Director Independence

The Nominating and Governance Committee has affirmatively determined that seven of our eight incumbent directors (Robert E. Baker, Michael J. Fiorile, Kym M. Hubbard, Eileen A. Mallesch, David R. Meuse, Setareh Pouraghabagher and S. Elaine Roberts) and Thomas E. Markert, who served as a director until his resignation effective January 7, 2019, meet the criteria for independence required by the Nasdaq listing rules. The Nominating and Governance Committee made this determination based upon its review of information included in director questionnaires provided by each of the directors and a report by our General Counsel.

The information reviewed by the Nominating and Governance Committee included information on the relationship of Mr. Baker and Mr. Fiorile as directors of State Auto Mutual. The Nominating and Governance Committee affirmatively determined Mr. Baker and Mr. Fiorile are independent as determined under the objective independence standards set forth in the Nasdaq listing

rules and their service as directors of State Auto Mutual does not interfere with the exercise of their independent judgment in carrying out their responsibilities as directors of the Company.

Our Corporate Governance Guidelines expressly provide that four of the six standing committees (Audit, Compensation, Independent, and Nominating and Governance) are to be comprised solely of independent directors. All of these committees meet this standard.

Compensation of Outside Directors and Outside Director Compensation Table

The charter for the Compensation Committee requires the Compensation Committee to annually review the compensation of our outside directors and recommend any changes to such compensation to our Board. Because the Boards of Directors of our Company and State Auto Mutual have two common directors on each Board, the Compensation Committees of our Company and State Auto Mutual meet jointly to consider the director compensation arrangements for both Boards. At these meetings, usually held in November, the Compensation Committees review peer group compensation and market data provided by Pay Governance LLC, the compensation consultant for the Compensation Committee. For 2017 and 2018, the total annual retainer paid to our outside directors was $155,000, with $80,000, or 52%, paid in cash and $75,000, or 48%, paid in equity in the form of Restricted Share Units ("RSUs"). For 2019, our Compensation Committee recommended to our Board, and our Board approved, increasing the total annual retainer paid to our outside directors to $170,000, with $87,000, or 52%, to be paid in cash and $83,000, or 48%, to be paid in equity in the form of RSUs.

No meeting fees are payable to any of our directors, as our directors are expected to attend and participate in all meetings of the Board and the Board committees on which they serve without the incentive of additional compensation. Our Board may, however, elect to pay additional meeting fees to directors if it determines extraordinary circumstances warrant the formation of a special committee or necessitate a large number of meetings. For 2018, each chairperson of our permanent Board committees received an additional $7,500 annual cash retainer, the same amount as paid in 2017, other than the chairpersons of the Audit Committee and the Compensation Committee, who received an additional cash retainer of $17,500 and $12,500, respectively, the same amount as paid in 2017. Our Lead Director received an additional cash retainer of $20,000, the same amount as paid in 2017. We reimburse our outside directors for the travel expenses they incur to attend Board and committee meetings and an annual Board retreat. The Company also reimburses each of our outside directors for the travel expenses incurred by a guest of the outside director to attend the annual Board retreat, subject to applicable tax laws.

Our outside directors may defer all or any portion of the cash compensation they receive for Board or committee service under our deferred compensation plan for directors. The amount of cash compensation earned by each director in 2018, whether or not deferred, is included in the amounts shown in the "Fees Paid or Earned in Cash" column of the "2018 Outside Director Compensation" table set forth below.

Our outside directors also have received equity compensation in the form of RSUs granted pursuant to our Outside Directors Restricted Share Unit Plan (the "Directors' RSU Plan"). An RSU is a unit representing one common share. The value of each RSU, on any particular day, is equal to the last reported sale price of a common share on the Nasdaq Stock Market on the immediately previous trading day. Following each annual meeting of shareholders, each outside director automatically receives an annual award of RSUs. Under the Directors' RSU Plan, the number of RSUs awarded annually will be determined by the administrative committee in accordance with the terms of the Directors' RSU Plan. The Compensation Committee has the power to increase or decrease the number of RSUs to be awarded to each of the outside directors not to exceed a maximum annual award of 10,000 RSUs. For 2018, our Compensation Committee determined, each outside director would be awarded a number of RSUs equal to the targeted annual equity compensation for outside directors divided by the average daily closing price of a common share during the prior (2017) calendar year. This calculation resulted in each outside director receiving an award of 2,885 RSUs following the 2018 annual meeting of the shareholders.

Under the Directors' RSU Plan, whenever a dividend is paid with respect to our common shares, an amount equal to the value of the dividend is paid to the holders of RSUs with respect to each RSU in their account on the dividend record date in the form of additional RSUs. RSUs vest upon the completion of six months of service as an outside director from the date of grant. Outside directors are generally required to hold their RSUs until their service on the Board terminates, at which time such outside director may settle his or her RSUs in cash or common shares payable, at the director's election, in a single lump sum or in annual installments over a five- or ten-year period. An outside director elected or appointed to the Board outside of an annual meeting of our shareholders

will be granted a pro rata amount of RSUs based upon the number of anticipated days after the date of election or appointment until our next annual meeting of shareholders.

2018 Outside Director Compensation

In 2018, our outside directors received the following compensation:



Name	Fees Paid or Earned in Cash ($)	Restricted Share Unit Awards ($)⁽¹⁾	Total Compensation ($)
Robert E. Baker ⁽²⁾	92,500	85,511	178,011
Michael J. Fiorile ⁽²⁾	95,000	85,511	180,511
Kym M. Hubbard	80,000	85,511	165,511
Eileen A. Mallesch	97,500	85,511	183,011
Thomas E. Markert ⁽³⁾	87,500	85,511	173,011
David R. Meuse	107,500	85,511	193,011
Setareh Pouraghabagher	80,000	85,511	165,511
S. Elaine Roberts	80,000	85,511	165,511

⁽¹⁾ The total dollar amount shown in the Restricted Share Unit Awards column represents the cash value of the total number of RSUs awarded in 2018 valued at the closing price of common shares on the grant valuation date ($29.64 per RSU). This valuation, required for proxy statement reporting purposes, is based on a single day's market value, which differs substantially from the one-year average price used to determine the actual grant. We believe the valuation methodology used by the Company is more representative of the value of the RSUs at the time of grant.
⁽²⁾ The total compensation paid to Mr. Baker and Mr. Fiorile excludes any compensation they receive for their service on the State Auto Mutual board of directors.
⁽³⁾ Thomas E. Markert, resigned as a Director effective January 7, 2019. Mr. Markert's term as a Director would have expired at the 2019 Annual Meeting.

Outside Directors' Ownership of Restricted Share Units

The following table sets forth the aggregate number of RSUs owned by each of our current outside directors as of March 15, 2019:



Name		Number of Restricted Share Units
Robert E. Baker		37,806
Michael J. Fiorile		12,914
Kym M. Hubbard		8,312
Eileen A. Mallesch		30,816
David R. Meuse		39,687
Setareh Pouraghabagher		5,893
S. Elaine Roberts		41,585

Outside directors receive no other forms of compensation from the Company other than as described in this section.

No stock options have been awarded to any of the outside directors since 2004, and all previously awarded stock options have been exercised or have expired by their terms.



Communications with the Board



Other Governance Issues of Interest

Directors' Stock Ownership Guidelines

Our Company's Corporate Governance Guidelines contain the expectation that each of our outside directors will own Company shares or RSUs granted under the Directors RSU Plan having a total market value of at least four times the then current cash portion of the director's annual retainer, which was $80,000 for 2018. Each director has five years to attain this level of ownership. Our directors are required to hold all RSUs until their membership on the Board terminates.

As of March 15, 2019, all of our current directors had satisfied their ownership requirements under these guidelines or were within the five-year period for satisfying their ownership requirement.

Anti-Hedging Policy

A policy adopted by our Board prohibits all Company associates and members of the Board from engaging in certain hedging transactions with respect to Company securities held by them, including short sales and other transactions that shift the economic consequences of ownership of Company securities to a third party. Another policy adopted by the Board prohibits our Section 16 officers and members of the Board from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan. See below "Compensation Discussion and Analysis—Anti-Hedging Policy."



Availability of Corporate Governance Documents

The following documents are available on our website at www.stateauto.com under "Investors" and then under "Corporate Governance" then under "Governance Documents":



•	The Charters for our Audit Committee, Compensation Committee, Nominating and Governance Committee, Risk Committee, Investment and Finance Committee and standing Independent Committee;
•	Our Corporate Governance Guidelines, including Board of Directors' Ethical Principles;
•	Our Associate Code of Business Conduct; and
•	Our Code of Ethics for Senior Financial Officers.

AUDIT COMMITTEE MATTERS



Audit Committee Report for the Fiscal Year Ending December 31, 2018

The Audit Committee provides assistance to our directors in fulfilling their responsibility to our shareholders in the oversight of our corporate accounting, reporting practices, internal controls over financial reporting, and the quality and integrity of our financial reports. In so doing, the Audit Committee maintains free and open communication between our directors, independent registered public accounting firm (independent auditor), internal auditors and management. Five independent directors comprise our Audit Committee, with two qualified as "audit committee financial experts" under the SEC and Nasdaq Rules.

Notwithstanding the foregoing, it is not the duty of the Audit Committee to plan or conduct audits or to determine that our financial statements and disclosures are complete, accurate and in accordance with generally accepted accounting principles and applicable rules and regulations. These are the responsibilities of our management and our independent auditor, respectively. Management is responsible for preparation of our financial statements and disclosures and confirmation that they are complete, accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations. Our independent auditor, Ernst & Young LLP, is responsible for expressing an opinion on the conformity of those audited financial statements with United States' generally accepted accounting principles ("US GAAP"), its judgment as to the quality, not just the acceptability, of our accounting practices and such other matters as are required to be discussed with the Audit Committee under auditing standards generally accepted in the United States, including those matters required to be discussed by Auditing Standard ("AS") No. 1301 (previously AS No. 16), Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board ("PCAOB").

In the course of fulfilling its responsibilities, the Audit Committee reviewed the audited financial statements in our Company's Annual Report on Form 10-K for the 2018 fiscal year with our management and independent auditor, including a discussion of the quality, not just the acceptability, of our accounting practices, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. In addition, the Audit Committee discussed with our independent auditor its independence from our management and considered the compatibility of any permitted and pre-approved non-audit services with the independent auditor's independence. The Audit Committee also received written disclosures regarding the independent auditor's independence from management and the Company and received a letter confirming that fact from the independent auditor, which included applicable requirements of the PCAOB regarding the independent auditor's communications with the Audit Committee concerning independence.

The Audit Committee discussed with our internal auditor and independent auditor the overall scope and plans for their respective audits. The Audit Committee regularly monitors our compliance with Section 404 of the Sarbanes-Oxley Act. The Company uses the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") framework to evaluate the effectiveness of our internal control over financial reporting. The Audit Committee periodically reviews the suitability of this framework with management. The Audit Committee and management currently believe the COSO 2013 framework is a suitable framework for its evaluation of our internal control over financial reporting. The Audit Committee meets with our internal auditor and independent auditor, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting. The Audit Committee also meets with our Chief Financial Officer, Chief Accounting Officer, Chief Risk Officer, General Counsel and Chief Actuarial Officer, as needed, without the rest of management present to discuss any matters of interest to the Audit Committee. The Audit Committee receives the annual Actuarial Report on Loss and Loss Adjustment Expense Reserves from the Chief Actuarial Officer who may present more often on any matters of interest to the Audit Committee.

The full responsibilities of the Audit Committee are set forth in its charter. The charter is reviewed annually by the Audit Committee and our Board and, if deemed necessary following such review, amended. In addition to the foregoing, these responsibilities include sole authority for selecting, overseeing, evaluating, compensating and replacing our independent auditor, responsibility for appointment, evaluation, and termination of the head of internal audit, reviewing with management the adequacy of loss reserves, pre-approving expenditures for services of our independent auditor, sole authority for retaining independent advisors, receipt and disposition of matters relating to allegations of accounting or other improprieties, reviewing matters relating to our Associate Code of Business Conduct and participating in disclosure control procedures and functioning as our qualified legal compliance committee. The Audit Committee also consults with our General Counsel with respect to legal matters affecting the Company. Additionally, the Audit Committee receives a quarterly report from members of management on select risk areas. Finally, the Audit Committee conducts an annual evaluation, in concert with management and certain finance staff, of the performance of the independent auditor.

As discussed above, the Audit Committee is responsible to monitor and review our financial reporting process on behalf of our Board of Directors. However, it is not the duty or responsibility of the Audit Committee to conduct auditing or accounting reviews

or procedures. Members of the Audit Committee are not our associates, and some members are not accountants or auditors by profession or experts in the fields of accounting or auditing. Therefore, the Audit Committee has relied, without independent verification, on management's representation that the financial statements have been prepared with integrity and objectivity and in conformity with US GAAP and on the audit opinions of our independent auditor included in its report on our financial statements. The Audit Committee's review does not provide the Audit Committee with an independent basis to determine management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee's considerations and discussions with management and our independent auditor do not assure our financial statements are presented in accordance with US GAAP, the audit of our financial statements has been carried out in accordance with the standards of the PCAOB (United States), or our independent auditor is in fact "independent."

The Audit Committee receives regular reports from our Compliance Directors with respect to matters coming within the scope of our Associate Code of Business Conduct. Our chief executive officer and principal financial officers have each agreed to be bound by our Associate Code of Business Conduct and the Sarbanes-Oxley Act mandated Code of Ethics for Senior Financial Officers as a Special Supplement to our Associate Code of Business Conduct. We have also implemented and applied our Associate Code of Business Conduct throughout our Company. We have also implemented procedures for the receipt of complaints concerning our accounting, internal accounting controls or auditing practices, including the confidential, anonymous submission by our associates of concerns regarding questionable accounting or auditing practices. Our Audit Committee Chairperson receives transcripts for any report to the Company's Ethics Hotline.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to our Board of Directors (and our Board has approved) the audited financial statements be included in our Annual Report on Form 10-K for the 2018 fiscal year for filing with the SEC.

Audit Committee

Eileen A. Mallesch, Chairperson

Robert E. Baker

~~David J. D'Antoni~~

Kym M. Hubbard

David R. Meuse

Setareh Pouraghabagher



Independent Registered Public Accounting Firm's Audit and Other Services Fees

Ernst & Young LLP served as our independent registered public accounting firm for ~~2016.~~2018. It is anticipated that representatives of Ernst & Young LLP will be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so. Such representatives will be available to respond to appropriate questions. The Audit Committee has selected Ernst & Young LLP as our independent registered public accounting firm for ~~2017.~~2019. See above "Proposal Three: Ratification of Selection of Ernst & Young LLP as the Company's Independent Registered Public Accounting Firm."

All services to be provided by Ernst & Young LLP are pre-approved by the Audit Committee, including audit services, audit-related services, tax services and certain other services. See below "Audit ~~Committee’s~~Committee's Pre-Approval Policies and Procedures." Aggregate fees billed to or incurred by the Company for services performed for the years ending December 31, ~~2016~~2018 and ~~2015,~~2017, respectively, by Ernst & Young LLP were as follows:


		2016		2015			2018		2017⁽⁶⁾
Audit fees ⁽¹⁾		$	1,749,927	$	1,724,075		$	1,863,100	$	1,797,824
Audit related fees(2)		—		—			—		38,738
Tax fees ⁽³⁾⁽⁴⁾		52,212		68,787			43,150		45,216
All other fees		—		—			5,200		2,145
Total ⁽⁴⁾⁽⁵⁾		$	1,802,139	$	1,792,862		$	1,911,450	$	1,883,923

⁽¹⁾ Includes services rendered for the audit of our annual financial statements, review of financial statements included in our quarterly reports on Form 10-Q and other audit services normally provided by Ernst & Young LLP in connection with statutory and regulatory filings or engagements.	⁽¹⁾ Includes services rendered for the audit of our annual financial statements, review of financial statements included in our quarterly reports on Form 10-Q and other audit services normally provided by Ernst & Young LLP in connection with statutory and regulatory filings or engagements.					⁽¹⁾Includes services rendered for the audit of our annual financial statements, review of financial statements included in our quarterly reports on Form 10-Q and other audit services normally provided by Ernst & Young LLP in connection with statutory and regulatory filings or engagements.
⁽²⁾The Audit Committee has considered whether the provision of these services is compatible with maintaining the independence of our registered public accounting firm. The Audit Committee must pre-approve any non-audit services performed by our independent registered public accounting firm to the extent such services are not prohibited by law from being performed by such independent registered public accounting firm. See below "Audit Committee's Pre-Approval Policies and Procedures."
⁽³⁾ Includes services for tax research and compliance.
⁽⁴⁾ All Ernst & Young LLP fees are on a State Auto Group basis.
⁽²⁾ Fees for agreed upon procedures performed on behalf of the Michigan Catastrophic Claims Association for the 2017 audit year.						⁽²⁾ Fees for agreed upon procedures performed on behalf of the Michigan Catastrophic Claims Association for the 2017 audit year.
⁽³⁾The Audit Committee has considered whether the provision of these services is compatible with maintaining the independence of our registered public accounting firm. The Audit Committee must pre-approve any non-audit services performed by our independent registered public accounting firm to the extent such services are not prohibited by law from being performed by such independent registered public accounting firm. See below "Audit Committee's Pre-Approval Policies and Procedures."						⁽³⁾The Audit Committee has considered whether the provision of these services is compatible with maintaining the independence of our registered public accounting firm. The Audit Committee must pre-approve any non-audit services performed by our independent registered public accounting firm to the extent such services are not prohibited by law from being performed by such independent registered public accounting firm. See below "Audit Committee's Pre-Approval Policies and Procedures."
⁽⁴⁾ Includes services for tax research and compliance.						⁽⁴⁾ Includes services for tax research and compliance.
⁽⁵⁾ All Ernst & Young LLP fees are on a State Auto Group basis.						⁽⁵⁾ All Ernst & Young LLP fees are on a State Auto Group basis.
⁽⁶⁾Includes services performed for the 2017 audit year after the 2018 Proxy Statement record date.						⁽⁶⁾Includes services performed for the 2017 audit year after the 2018 Proxy Statement record date.



Audit Committee's Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy under which audit and non-audit services to be rendered by our independent registered public accounting firm are pre-approved. The Audit Committee's policy is to pre-approve all auditing services and our use of the independent public accountants to perform any non-audit or tax services which are not prohibited by Section 10A(g) of the Securities Exchange Act of 1934, subject to the de minimus exception for non-audit services described in Section 10A(i)(1)(B) of such Act. No services were provided by Ernst & Young LLP in ~~2016~~2018 or ~~2015~~2017 that were approved by the Audit Committee under SEC Regulation S-X Section 2-01(c)(7)(i)(C) (which addresses certain services considered de minimus approved by the Audit Committee after such services have been performed).

COMPENSATION COMMITTEE MATTERS



Compensation Committee Interlocks and Insider Participation

The Compensation Committee currently consists of the following four members of our Board of Directors: Chairperson Robert E. Baker; Kym M. Hubbard; Eileen A. Mallesch; ~~Thomas E. Markert;~~ and S. Elaine Roberts. None of the members of the Compensation Committee is, or was, an officer or ~~employee~~associate of our Company or any of our subsidiaries or of State Auto Mutual. Also, during ~~2016~~2018 none of our executive officers served as a member of a compensation committee or as a director of any entity for which any of our directors served as an executive officer.



Compensation Committee Report

The Compensation Committee of our Board of Directors oversees our compensation programs on behalf of our Board. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth in this Proxy Statement. Based upon the review and discussions referred to above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the ~~2016~~2018 fiscal year and in this Proxy Statement.

Compensation Committee

Robert E. Baker, Chairperson

Kym M. Hubbard

Eileen A. Mallesch

~~Thomas E. Markert~~

S. Elaine Roberts

CEO PAY RATIO DISCLOSURE

The amount earned in 2018 by our chief executive officer with respect to the Performance Award Units ("PAUs") awarded to him in 2016 under the State Auto Financial Corporation Long-Term Incentive Plan, as amended, for the 2016-2018 performance period is not calculable as of the date of this Proxy Statement because the final performance data for the 2016-2018 performance period that determines the number of PAUs earned was not available as of the date of this Proxy Statement. As a result, we have omitted the CEO pay ratio disclosure required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K from this Proxy Statement pursuant to Instruction 6 to Item 402(u) of Regulation S-K. We expect to determine the amount payable to our chief executive officer with respect to such PAUs in May 2019 and will include such amount and the required CEO pay ratio disclosure in a Current Report on Form 8-K to be filed no later than four business days after the Compensation Committee approves the chief executive officer's PAU award, if any, for the 2016-2018 performance period.

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes the compensation program for our Named Executive Officers ("NEOs").



Executive Summary

~~2016~~2018 Compensation Summary

Base Salary. The salaries of our NEOs increased on average by ~~approximately 3%~~9.1% in ~~2016, which is consistent with the practices~~March of ~~other financial services and insurance companies.~~

~~Short-Term Cash Compensation.~~ None of the NEOs earned a performance bonus award for 2016 under the State Auto Financial Corporation One Team Incentive Plan ("OTIP"). The Compensation Committee awarded a discretionary bonus to each NEO under the OTIP in an amount equal to 30% of their OTIP target performance bonus award for 20162018 in recognition of ~~external factors and~~ their ~~respective contributions~~continued significant efforts in ~~implementing foundational changes that~~connection with the ~~Compensation Committee believes will position~~turnaround of the ~~Company to achieve improved results and deliver shareholder value over the long-term despite the Company’s 2016 results.~~Company.

~~Performance Award Units.~~ ~~In 2016,~~

•

Short-Term Incentive Compensation. The payout under the State Auto Financial Corporation One Team Incentive Plan ("OTIP") for 2018 as a percentage of the target bonus (where the target percentage equals 100%) was 150% for each of the NEOs as a result of the achievement by the personal and commercial segments of the State Auto Group in 2018 of a combined ratio (as defined below in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of 98.8% and net written premium growth (as defined below in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of 12.5%.

•

Long-Term Incentive Compensation. In 2018, we awarded performance units and cash-based performance award units ("PAUs") to our NEOs under the State Auto Financial Corporation 2017 Long-Term Incentive Plan ("2017 Long-Term Incentive Plan"). The performance units and PAUs will vest and be earned, if at all, after the completion of the performance period, which is the three-year period from January 1, 2018, through December 31, 2020, based on the combined ratio (as defined below in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") and net written premium growth (as defined below in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of the personal and commercial segments of the State Auto Group during the performance period.

Retention Equity Awards. In 2018, retention equity awards were granted under the 2017 Long-Term Incentive Plan to our NEOs ~~for~~in the ~~2016-2018 performance period under the State Auto Financial Corporation Long-Term Incentive Plan, as amended ("Existing LTIP").~~

~~Equity Compensation. In 2016, we awarded stock options and~~form of time-based restricted common shares, to Messrs. English, Garland, Tacchetti and Stachura in the form of performance-based restricted common shares and to Mr. LaRocco in the form of time-based and performance-based deferred stock units pursuant to his employment agreement. The time-based restricted common shares that were granted to all of our NEOs ~~under~~will vest equally in one-third increments over a three-year period beginning on December 31, 2018. The 10,000 additional time-based restricted common shares that were granted to each of Messrs. English, Garland, Tacchetti and Stachura will vest equally in one-quarter increments over a four-year period beginning on December 31, 2018. The performance-based restricted common shares will vest equally in one-quarter increments beginning on the first anniversary of the grant date based upon our achievement of the performance goals applicable to our annual performance bonus program (OTIP) for the immediately preceding calendar year. The time-based deferred stock units will vest equally in one-third increments over a three-year period beginning on the day preceding the first anniversary of the grant date. The performance-based deferred stock units will vest and be earned, if at all, based on the combined ratio of the personal and commercial segments of the State Auto ~~Financial Corporation 2009 Equity Incentive Compensation Plan, as amended ("2009 Equity Plan").~~Group during the three-year performance period from January 1, 2018, through December 31, 2020, and the compound annual growth rate of our stock price during the three-year performance period from March 1, 2018, through March 1, 2021.

The following table shows for each NEO: (i) the targeted performance bonus award payout under the OTIP for ~~2016~~2018 and the actual ~~discretionary~~ bonus award payout under the OTIP for ~~2016;~~2018; (ii) the targeted value of the PAUs granted for the ~~2014-2016~~2016-2018 performance period and the amount accrued by the Company for the PAUs granted for the ~~2014-2016~~2016-2018 performance period; ~~and~~ (iii) the targeted value of the retention equity ~~compensation~~awards awarded to our NEOs in ~~2016~~2018 and the value of the retention equity ~~compensation~~awards awarded to our NEOs in ~~2016~~2018 as of December 31, ~~2016.~~2018; and (iv) the targeted value of the performance units awarded to our NEOs in 2018 and the value of the performance units awarded to our NEOs in 2018 as of December 31, 2018.



	Short-Term Incentive Compensation				PAUs				Equity Compensation				TOTAL				Short-Term Incentive Compensation				PAUs				Retention Equity Awards				Performance Units				TOTAL
	Target		Actual		Target		Accrued		Target		Value		Target		Value		Target		Actual		Target		Accrued		Target		Value		Target		Value		Target		Value
Michael E. LaRocco Chairman, President and Chief Executive Officer	$	875,000	$	262,500	—		—		$	428,750	$	371,273	$	1,303,750	$	633,773	$	1,248,000	$	1,872,000	$	796,250	$	676,813	$	1,337,237	$	1,646,277	$	936,000	$	1,910,052	$	4,317,487	$	6,105,142
Steven E. English Senior Vice President, Chief Financial Officer	$	359,213	$	107,764	$	219,375	$	72,394	$	134,106	$	116,139	$	712,694	$	296,297	$	387,545	$	581,318	$	249,054	$	211,696	$	645,268	$	794,391	$	206,691	$	492,695	$	1,488,558	$	2,080,100
Jessica E. Clark Senior Vice President, Director of Commercial and Specialty Lines	$	341,319	$	102,396	$	158,438	$	144,179	$	119,462	$	103,453	$	619,219	$	350,028
Kim B. Garland Senior Vice President, Director of Standard Lines	$	341,305	$	102,392	—		—		$	119,457	$	103,453	$	460,762	$	205,845
Kim B. Garland Senior Vice President, Director of Commercial Lines and State Auto Labs																	$	371,732	$	557,599	$	221,848	$	188,571	$	640,678	$	788,741	$	185,866	$	438,844	$	1,420,124	$	1,973,755
Gregory A. Tacchetti Senior Vice President, Chief Information and Strategy Officer																	$	292,500	$	438,750	$	152,090	$	129,277	$	618,696	$	761,679	$	146,250	$	328,826	$	1,209,536	$	1,658,532
Paul M. Stachura Senior Vice President, Chief CARE Officer	$	210,142	$	63,043	—		—		$	86,923	$	75,282	$	297,065	$	138,325	$	286,000	$	429,000	$	161,428	$	137,214	$	617,563	$	760,283	$	143,000	$	323,176	$	1,207,991	$	1,649,673

Impact of State Auto Group on Compensation of NEOs

Our executive compensation program reflects our corporate and management structure and our relationship with State Auto Mutual and its subsidiaries and affiliates. The Company and our subsidiaries operate and manage our businesses together with State Auto Mutual and its subsidiaries and affiliates under various pooling, management and cost sharing agreements under the leadership and direction of the same senior management team. See below "Related Person Transactions—Transactions Involving State Auto Mutual" for a discussion of these agreements.

As a result, our NEOs are also officers of State Auto Mutual and provide services to the Company, our subsidiaries, State Auto Mutual and its subsidiaries and affiliates (e.g., Mr. LaRocco serves as the President and Chief Executive Officer of both the Company and State Auto Mutual). Therefore, when determining the compensation of our NEOs, the Compensation Committee takes into account the services our NEOs perform for the Company and its subsidiaries and the services they perform for State Auto Mutual and its subsidiaries and affiliates. ~~In 2016~~For 2018 and prior years, the Compensation Committee initially targeted the total amount of each element of compensation payable to our NEOs at or close to the median compensation level in our competitive market, which we define as insurance companies similar in size to the State Auto Group, as opposed to insurance companies similar in size to the ~~Company~~Company. (See below "How the Amount of Executive Compensation is Determined—Benchmarking of Executive Compensation Program Elements"). In addition, the performance measures applicable to the OTIP performance bonus award, the PAUs, the performance units, the performance-based restricted common shares and the ~~PAUs~~performance-based deferred stock units awarded to our NEOs in ~~2016~~2018 are based on the performance of the personal and commercial segments of the State Auto Group ~~except for Ms. Clark whose PAU awards are~~(partially in the case of the performance-based deferred stock units, the vesting of which is also based on the ~~performance~~compound annual growth rate of our ~~specialty group and the State Auto Group.~~stock price). The charts below set forth the total revenues and total assets of the median company within the NEO Peer Group (as defined below in "How the Amount of Executive Compensation is Determined—Benchmarking of Executive Compensation Program Elements") and the Company and the total net written premiums and total admitted assets of

the State Auto Group, in each case for the year ended and at December 31, ~~2015~~2017 (the companies included in the NEO Peer Group used for ~~2016~~2018 compensation decisions were selected based on ~~2015~~2017 financial data).

Because our NEOs perform services for the Company and its subsidiaries and State Auto Mutual and its subsidiaries and affiliates, we generally allocated the compensation expenses in ~~2016~~2018 for such services as follows: 65% to the Company and its subsidiaries and 35% to State Auto Mutual and certain of its other subsidiaries and affiliates. ~~The~~However, the compensation of our NEOs as disclosed in this Proxy Statement ~~however,~~ includes all compensation expenses for the services performed by our NEOs for the Company, State Auto Mutual and the other members of the State Auto Group. As a result, any analysis conducted regarding the Company

and its peers based on the compensation disclosed in this Proxy Statement should consider ~~that~~ such disclosure includes compensation provided to our NEOs for services they performed for State Auto Mutual and the other members of the State Auto Group. The following table allocates the compensation reported for each NEO in the "Total" column of the Summary Compensation Table of this Proxy Statement between the Company ~~on the one hand, and~~as well as State Auto Mutual and certain of its other subsidiaries and affiliates ~~on the other hand,~~ based on the compensation expense allocation in effect on December 31, ~~2016~~2018 (i.e., 65% to the Company and 35% to State Auto Mutual and certain of its other subsidiaries and affiliates):


	2016				2015				2014				2018				2017				2016
	State Auto Financial		State Auto Mutual		State Auto Financial		State Auto Mutual		State Auto Financial		State Auto Mutual		State Auto Financial		State Auto Mutual		State Auto Financial		State Auto Mutual		State Auto Financial		State Auto Mutual
Michael E. LaRocco	$	1,100,657	$	592,662	$	951,113	$	512,138	—		—		$	4,024,757	$	2,167,177	$	1,076,249	$	579,519	$	1,100,657	$	592,662
Steven E. English	$	577,727	$	311,084	$	587,818	$	316,518	$	963,162	$	518,626	$	1,434,363	$	772,349	$	600,222	$	323,197	$	577,727	$	311,084
Jessica E. Clark	$	515,857	$	277,769	$	755,662	$	406,895	$	802,895	$	432,238
Kim B. Garland	$	497,351	$	267,805	$	476,452	$	256,551	—		—		$	1,385,654	$	746,121	$	454,522	$	244,742	$	497,351	$	267,805
Gregory A. Tacchetti													$	1,204,701	$	648,685	$	349,875	$	188,394	$	—	$	—
Paul M. Stachura	$	392,611	$	211,406	—		—		—		—		$	1,177,635	$	634,111	$	349,662	$	188,280	$	392,611	$	211,406

Pay for Performance

The Compensation Committee conducted a pay for performance analysis comparing (i) the total realizable pay earned by our ~~CEO~~chief executive officer over the five-year period ended December 31, ~~2015,~~2017, to the total realizable pay earned by the ~~CEOs~~chief executive officers of each member of the NEO Peer Group over that period, and (ii) the total shareholder return ("TSR"), premium growth, GAAP combined ratio, total equity growth and return on equity of the Company over the five-year period ended December 31, ~~2015,~~2017, to the TSR, premium growth, GAAP combined ratio, total equity growth and return on equity of the members of the NEO Peer Group over that period.

The total realizable pay used in our pay for performance analysis includes:

base salary earned during the five-year period;

actual annual cash bonuses earned during the period;

value of cash incentives earned for multi-year performance plans that began and ended during the period;

the vesting date value (as opposed to grant date value) of ~~service-based~~time-based restricted common share awards granted during the period and the value of any unvested restricted common share awards made during the period based on the Company’s stock price as of December 31, ~~2015;~~2017; and

any ~~exercise~~exercised gains on options granted during the period and the paper value of any gains on any unexercised options received during the period based on the Company’s stock price as of December 31, ~~2015.~~2017.

Based on input from its compensation consultant, Pay Governance LLC, the Compensation Committee concluded ~~that~~ total realizable pay provides a more accurate basis for comparing the historical alignment of pay and performance than the information reported in the Summary Compensation ~~Table.~~Table. Unlike the amounts reported in the Summary Compensation Table, total realizable pay increases or decreases depending on our annual and long-term results and increases or decreases in our stock price and, as a result, better reflects the Company's performance in comparison to the results of our peers.

The Compensation Committee uses a five-year period in its analysis to provide a long-term perspective and includes multiple complete PAU performance periods. The Compensation Committee uses the NEO Peer Group (which includes insurance companies comparable to the State Auto Group in terms of both size and type of business) in its analysis because the Compensation Committee (i) takes into account the services our ~~CEO~~chief executive officer performs for the Company and the services he performs for State Auto Mutual and the other members of the State Auto Group when determining the amount of his compensation and (ii) ~~targets the total amount of each element of compensation payable to our CEO at~~uses competitive or ~~close to the~~ median ~~compensation level~~pay levels in our competitive market, which we define as insurance companies similar in size to the State Auto Group ~~(See~~(see below "How the Amount of Executive Compensation is Determined—Benchmarking of Executive Compensation Program Elements" of this Proxy Statement for a more detailed description of the NEO Peer Group)., as a starting point in making compensation decisions.

As shown in the chart below, (i) the total realizable pay earned by our ~~CEO~~chief executive officer during the five-year period ended December 31, ~~2015,~~2017, placed the Company in the ~~17th~~24th percentile when compared to the NEO Peer Group (the individual members of which are identified as diamonds in the chart below) and (ii) the TSR of the Company over the five-year period ended December 31, ~~2015,~~2017, placed the Company in the ~~4th~~45th percentile when compared to the NEO Peer Group. Relative pay and performance were aligned for the period examined, with relative results for shareholders slightly better than relative pay levels.

The premium growth, GAAP combined ratio, total equity growth and return on equity of the Company over the five-year period ended December 31, ~~2015,~~2017, placed the Company in the ~~42nd~~7th percentile, ~~4th~~11th percentile, ~~51st~~15th percentile and ~~30th~~11th percentile, respectively, when compared to the NEO Peer Group. Based on the percentile rankings of the Company yielded by our pay for performance analysis, both the Compensation Committee and Pay Governance LLC concluded ~~that~~ the compensation we paid to our ~~CEO~~chief executive officer for the five-year period ended December 31, ~~2015,~~2017, was aligned with our performance for the period.

~~2016~~2018 "Say-on-Pay" Vote

We held our annual shareholder advisory vote regarding the compensation of our NEOs, commonly referred to as a "say-on-pay" vote, at our ~~2016~~2018 annual meeting of shareholders. Our shareholders overwhelmingly approved the compensation of our NEOs, with more than 99% of the votes cast in favor of our ~~2016~~2018 "say-on-pay" resolution. Since our ~~2016~~2018 annual meeting of shareholders, the Compensation Committee has considered the results of the ~~2016~~2018 "say-on-pay" vote in its evaluation of our executive compensation programs and practices. Based on the strong support our shareholders expressed at our ~~2016~~2018 annual meeting of shareholders, the Compensation Committee did not make any changes to our executive compensation program as a result of the ~~2016~~2018 "say-on-pay" vote.

Compensation Policies and Practices

We endeavor to maintain governance policies and practices that are consistent with what we believe represent current best practices, including with respect to the oversight of our executive compensation program. Our compensation policies and practices include the following:


•	No Tax Gross-Up Payments in Change of Control Agreements. The executive change of control agreements between the Company and our NEOs do not entitle our NEOs to any tax gross-up ~~payments~~payments. (See below "Agreements with Named Executive Officers").

~~Acceleration of Vesting of Equity Awards Subject to "Double Trigger."~~ The 2009 Equity Plan and the change of control agreements with our NEOs permit the accelerated vesting of equity awards upon a change of control only if the recipient’s employment with the Company terminates within one year of the change of control, provided, that if the change of control involves a change in the ownership of the Company and the successor entity does not provide benefits to the recipient of equal or greater value at the time of the change of control transaction, the award will automatically vest upon the closing of the transaction.

•

Stock Ownership Holding Periods. The Company's Ownership Guidelines (as defined below in "Stock Ownership Guidelines") require our Section 16 officers to hold the net amount of common shares obtained through the exercise of stock options or vesting of restricted common shares until the date on which the officer satisfies the applicable Ownership Target ~~Amounts~~Amount (as defined below in "Stock Ownership Guidelines").


•	Anti-Hedging and Anti-Pledging Policies. All Company associates, including our NEOs, and members of the Board are prohibited from engaging in certain hedging transactions with respect to Company securities held by them. Our executive officers and members of the Board are also prohibited from pledging Company securities as collateral for a loan. (See below "Anti-Hedging and Anti-Pledging Policy").

~~Anti-Hedging Policy.~~ All Company employees, including our NEOs, and members of the Board are subject to a Company policy that prohibits them from engaging in certain hedging transactions with respect to Company securities held by them, including short sales and other transactions that shift the economic consequences of ownership of Company securities to a third party. Our executive officers and members of the Board are also subject to a Company policy that prohibits them from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.

Independent Compensation Consultant. The Compensation Committee's independent compensation consultant, Pay Governance LLC, is engaged directly by the Compensation Committee and performs services solely for the Compensation Committee.

•

"Clawback" Obligations ~~Imposed in Change of Control Agreements~~ and ~~Clawback~~"Clawback" Policy. The employment ~~agreement and executive change of control~~ agreement between the Company and Mr. LaRocco and the ~~executive~~ change of control agreements between the Company and our ~~other~~ NEOs ~~include a "clawback" provision that authorizes~~authorize the Board to require the NEO to repay all or any portion of the severance benefits paid to the NEO thereunder upon the occurrence of the events described below in "Agreements with Named Executive ~~Officers."~~Officers" Ifand require the Board to seek repayment of such severance benefits if the Board determines ~~that~~ the NEO engaged in fraudulent ~~conduct, the Board must seek repayment of such severance benefits.~~conduct. In addition, ~~we adopted a~~our clawback policy ~~in March 2016 which provides that~~requires the Company to seek to recover certain incentive compensation paid to our executive officers if the Company is required to prepare an accounting restatement (as defined in the clawback policy) or amend previously filed financial statements to correct errors to those financial statements, the Company will seek to recover from any current and future Section 16 officer of the Company the portion of pre-tax incentive compensation granted and paid to the officer on or after March 1, 2016, in excess of what should have been paid to the officer if the payment was determined based on the restated or amended financial statements. (See below "Clawback Policy")

Limited Committee Discretion to Increase Awards. The Compensation Committee may not increase awards to Covered Employees (as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")) under our short-term or long-term incentive plans, provided ~~that~~ the Compensation Committee may ~~award~~grant discretionary ~~bonuses~~awards to our NEOs under the ~~OTIP.~~OTIP and the 2017 Long-Term Incentive Plan. The Compensation Committee retains the discretion to decrease awards under our short-term and long-term incentive plans. None of our NEOs have been paid nor are eligible for multi-year guaranteed bonuses.

No Repricing of Underwater Stock Options. As stated in the 2009 Equity Plan, the Company will not reprice, replace or repurchase underwater stock options without first obtaining shareholder approval.



Executive Compensation Philosophy

The Compensation Committee and management believe ~~that~~ the insurance industry is radically transforming and ~~experiencing a rapid influx~~becoming increasingly competitive due to evolving industry and marketplace conditions, the introduction of new "non-traditional insurance" entities into the ~~marketplace. This industry transformation, together with the Company's need to effectively adapt to the evolving~~marketplace and ~~increasingly competitive marketplace, have caused the~~changes in consumer expectations regarding product and delivery. The Compensation Committee ~~to reconsider its~~determined that the evolution of the industry requires an executive compensation philosophy and ~~objectives. As a result, they have worked to restructure~~objectives that focus on effectively recruiting, incentivizing, rewarding and retaining elite contributors. In furtherance of this focus, the Compensation Committee restructured our executive compensation program ~~by making changes to our approach for attracting, rewarding, incentivizing and retaining executive talent. The Company began to implement these changes~~ in ~~2016 by~~recent years by: (i) replacing the Leadership Bonus Plan ("LBP") with the OTIP ~~and we hope to complete the restructuring of our executive compensation program~~ in ~~2017 by~~2016; (ii) replacing the ~~Existing LTIP~~State Auto Financial Corporation Long-Term Incentive Plan, as amended ("Prior LTIP"), and the 2009 Equity Plan with the 2017 Long-Term Incentive Plan ~~subject to shareholder approval (as discussed~~ in ~~Proposal Two~~),2017; and (iii) aligning the performance measures and performance goals applicable to the awards under the OTIP with the performance measures and performance goals applicable to the awards under the 2017 Long-Term Incentive ~~Plan. Now, more than ever, our long-term success depends on our ability to effectively recruit, retain and reward top talent.~~Plan in 2017. Our restructured executive compensation program ~~will seek~~seeks to promote the following philosophy and objectives:

Incentivize our Executives to Deliver Exceptional Results. The ~~executive compensation program that the~~ Compensation Committee ~~intends to implement if our shareholders adopt the 2017 Long-Term Incentive Plan at the Annual Meeting would modify~~modified the long-term equity compensation opportunity awarded to our executives by awarding ~~stock-settled~~ performance units subject to our achievement of profitable growth instead of service-based stock ~~options and restricted stock.~~options. The maximum long-term compensation opportunities ~~that~~ the Compensation Committee ~~contemplates providing~~awarded under the 2017 Long-Term Incentive Plan would exceed the maximum long-term compensation opportunities historically offered by traditional P&C insurers, but only when our management team delivers exceptional results.

•

Reward Profitable Growth. The Compensation Committee has historically utilized peer group and insurance industry compensation data to evaluate the competitiveness of the elements of our executive compensation program and to determine the value of the PAUs ultimately earned by our NEOs. As a result of the radical transformation of, and the increased competition in, the insurance industry, the Compensation Committee believes the Company now needs to attract and retain executive talent from both within and outside the insurance industry. In addition, the Compensation Committee wants the short-term and long-term incentive compensation awards to better focus management on achieving profitable growth. The Compensation Committee believes profitable growth (as measured by the combined ratio and net written premium growth (each as defined below in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of the personal and commercial segments of the State Auto Group) is the most critical result for delivering long-term success and shareholder value. Accordingly, the Compensation Committee primarily values the short-term and long-term incentive compensation awarded to our executives based on the extent to which we achieve profitable growth instead of the compensation practices or performance of peer group companies or the insurance industry. The Compensation Committee believes subjecting all incentive compensation awards to performance measures based on profitable growth will: (i) enhance the alignment between pay and performance; (ii) solidify our One Team structure; (iii) allow us to remain competitive with other industries for top talent; (iv) increase accountability among The Compensation Committee has historically utilized peer group and insurance industry compensation data to evaluate the competitiveness of the elements of our executive compensation program and to determine the value of the PAUs ultimately earned by our NEOs. As a result of the rapidly changing conditions, new entrants in the industry and a change in consumer expectations regarding product and delivery, the Compensation Committee believes that the Company now needs to attract and retain executive talent from both within and outside the

insurance industry. In addition, the Compensation Committee wants the short-term and long-term incentive compensation awards to better focus management on achieving profitable growth. The Compensation Committee believes that profitable growth (as measured by the Company's combined ratio and net written premium growth) is the most critical result for delivering long-term success and shareholder value. Accordingly, the Compensation Committee intends to value the short-term and long-term incentive compensation awarded to our executives in 2017 and going forward based on the extent to which we achieve profitable growth instead of the compensation practices or performance of peer group companies or the insurance industry. The Compensation Committee believes that subjecting all incentive compensation awards to performance measures based on profitable growth will (i) enhance the alignment between pay and performance, (ii) solidify our One Team structure, (iii) allow us to remain competitive with other industries for top talent, (iv) increase accountability among our management ~~team,~~team; (v) improve our ability to ~~effectively~~ adapt to the evolving and increasingly competitive insurance ~~industry,~~industry; and (vi) align executive compensation with the value delivered to shareholders.

•

Increase Executive Ownership of Common Shares. Our restructured executive compensation program places a renewed focus on common share ownership within our management team, which we believe will more directly align the interests of management with the interests of our shareholders. We hope to achieve increased executive ownership of our common shares through the award of stock-settled performance units pursuant to the 2017 Long-Term Incentive Plan (as discussed in ~~Proposal Two)~~. Our restructured executive compensation program places a renewed focus on common share ownership within our management team, which we believe will more directly align the interests of management with the interests of our shareholders. We intend to achieve increased executive ownership of our common shares through the stock-settled performance units, restricted common shares, and deferred stock units awarded pursuant to the 2017 Long-Term Incentive Plan.

Each element of our executive compensation program serves a unique role in establishing an appropriate balance between the rewards for short-term and long-term performance ~~that~~ we believe will support our efforts to improve our performance and increase the price of our common shares over the ~~long-term.~~long term. (See below "~~2016~~2018 Executive Compensation Program ~~Elements."~~Elements").



How the Amount of Executive Compensation is Determined

Role of the Compensation Committee, Senior Management, Compensation Consultants and Other Advisors

In carrying out its responsibilities, the Compensation Committee requests and receives regular input and recommendations from the Board, management, the Board of Directors and Compensation Committee of State Auto Mutual, an executive compensation consultant and other advisors. The Compensation Committee also regularly engages in discussions and continuing education to better understand compensation trends, regulatory developments relating to compensation issues and the ~~Company’s~~Company's compensation issues and objectives. Management informs and assists the Compensation Committee in establishing and monitoring performance goals, and in refining our executive compensation program.

As a result of the sharing of services and compensation expenses among the Company and the other members of the State Auto Group ~~(See~~(see above "Executive Summary—Impact of State Auto Group on Compensation of NEOs"), the Board of Directors and Compensation Committee of State Auto Mutual are involved in the performance evaluation process of our ~~CEO.~~chief executive officer. In addition, the members of State Auto Mutual's Compensation Committee attend the meetings of the STFC Compensation ~~Committee~~Committee. (See above "Corporate Governance and Board of Directors—Committees of the Board of ~~Directors."~~Directors").

In making compensation decisions related to both the form and the amount of compensation, the Compensation Committee has ~~historically relied upon~~reviewed competitive information obtained from its compensation consultant. In ~~2016,~~2018, the Compensation Committee engaged and utilized the services of Pay Governance LLC, a compensation consultant. ~~The only services Pay Governance LLC performs for STFC are services for the Compensation Committee.~~ During ~~2016,~~2018, Pay Governance LLC attended and participated in Compensation Committee meetings and advised the Compensation Committee ~~regarding~~regarding: (i) the effectiveness, competitiveness and design of our overall executive compensation program, its policies and practices and specific compensation packages for our NEOs and other ~~executives,~~executives; (ii) the competitiveness of compensation to our outside directors in comparison to their peers at similar public ~~companies,~~companies; (iii) the composition of the NEO Peer ~~Group,~~Group; (iv) the content and form of this Compensation Discussion and ~~Analysis,~~Analysis; (v) the alignment between the compensation of our NEOs and our ~~performance,~~performance; (vi) special requests of the Compensation Committee with respect to issues relating to the Company's executive compensation ~~program,~~program; and (vii) long-term incentive plan design proposals. During ~~2016,~~2018, the Company did not engage Pay Governance LLC or its affiliates for any services beyond its support of the Compensation Committee.

In ~~2016,~~2018, the Compensation Committee requested and received completed questionnaires from Pay Governance LLC and the Compensation Committee's outside legal counsel relating to their respective independence. Based on the completed questionnaires and other factors, the Compensation Committee ~~has~~ confirmed the independence of Pay Governance LLC and the Compensation Committee’s outside legal counsel and determined ~~that~~ its engagement of Pay Governance LLC and the Compensation Committee's outside legal counsel did not raise any conflict of interest.

Benchmarking of Executive Compensation Program Elements

In ~~2016~~2018 and prior years, the Compensation Committee ~~has~~ considered data from the following sources, along with an analysis of such data provided by its compensation consultant, to determine what constitutes competitive compensation for our NEOs:

proxy statements filed by other publicly-held insurance companies comparable to the State Auto Group in terms of both size and type of business (the "NEO Peer Group"); and

pay surveys of the insurance and financial services industry relating to public, private and mutually-owned insurance companies and public and private financial services companies (the "Survey Data").

~~As discussed above in~~ ~~"Executive Compensation Philosophy,"~~In addition to NEO Peer Group proxy statements and Survey Data, the ~~Compensation~~ Committee ~~has determined that the value~~examines proxy statements filed by, and pay surveys of, ~~short-term~~other companies (including larger P&C companies, financial technology companies and ~~long-term incentive compensation awarded~~technology companies) to ~~our executives in 2017 and going forward~~

determine whether modifications should be ~~based on the extent to which we achieve profitable growth as opposed~~made to the Company's executive compensation ~~practices or~~program as the ~~performance of peer companies, within the insurance industry. Accordingly, in 2017~~Company continues to grow and ~~beyond, the Compensation Committee intends to restrict~~successfully implement its ~~use of benchmarking and compensation data to reviewing base salaries.~~strategic plan.

NEO Peer Group

The Compensation Committee, with input from its compensation consultant and management, approves property and casualty insurance companies to be part of the NEO Peer Group based on ~~(i)~~ their status as public companies and ~~(ii)~~ whether their size and business overlap with the State Auto Group, which is larger than the Company. Public companies are selected because they are required to publicly disclose detailed information in their SEC filings regarding the compensation of their NEOs and their executive compensation programs, which allows us to compare the competitiveness of the compensation of our NEOs ~~and executive compensation program~~ with those of our public company competitors. In considering business overlap, companies are selected ~~that~~which have a significant portion of their business in personal and commercial automobile, homeowners, ~~specialty,~~ workers' compensation and commercial property and casualty insurance. The Compensation Committee considers premium volume, total assets, market capitalization and number of ~~employees~~associates when determining whether a company's size overlaps with the State Auto Group. Companies similar in size to the State Auto Group are selected because our NEOs are also officers of State Auto Mutual and provide services to our Company, State Auto Mutual and the other members of the State Auto Group. Some of the companies in the NEO Peer Group ~~however,~~ are ~~substantially~~ larger than the State Auto Group while others are smaller. Normally, companies included in the NEO Peer Group are within one-half to two times the size of State Auto Group. The size of the median company within the NEO Peer Group is comparable to the State Auto Group. The members of the NEO Peer Group change periodically because of mergers, acquisitions, start-ups, spin offs and similar transactions.

The NEO Peer Group used for ~~2016 compensation decisions~~2018 was comprised of the following 1820 companies:



Alleghany Corporation	Allied World Assurance Company	AmTrust Financial Services, Inc.
Argo Group International Holdings, Ltd.
Aspen Insurance Holdings Limited	Cincinnati Financial Corporation
Erie Indemnity Company	Horace Mann Educators Corporation
Infinity Property & Casualty Corporation
Kemper Corporation	Mercury General Corporation
Old Republic International Corporation
OneBeacon Insurance Group, Ltd.	RLI Corp.
Safety Insurance Group, Inc.
Selective Insurance Group Inc.	The Hanover Insurance Group
The Navigators Group, Inc.
United Fire Group, Inc.	White Mountains Insurance Group

Survey Data

The Survey Data complements the NEO Peer Group information by providing broader comparisons, which allows us to more comprehensively assess the compensation we pay to our executive officers relative to the compensation paid in the insurance and financial services industry to similar positions. For the Company's officers who are not NEOs, Survey Data represents the primary source for pay information.

Use of Compensation Data

~~When setting base salaries, short-term and long-term incentive~~As a starting point when making compensation ~~we have typically used~~decisions, the Compensation Committee uses NEO Peer Group data that relates to a comparable position at the Company and Survey Data that relates to individuals in similar positions at insurers similar in size to the State Auto Group (which we refer to as our "competitive market"). We have used NEO Peer Group data to benchmark the compensation of some NEOs and Survey Data to benchmark the compensation of our NEOs and other executives. If relevant data is available from both the NEO Peer Group and the Survey Data for a position, we have averaged the results to determine ~~the benchmark. For example, if the~~competitive or median ~~level of base salary for chief executive officers reported by the NEO Peer Group and~~

~~the Survey Data was $850,000 and $900,000, respectively, we would average the two results to establish a median base salary target of $875,000.~~

The Compensation Committee has typically targeted the total amount of compensation payable to our NEOs at or close to the median compensation level in the competitive market by setting the target amount of each element of compensation at or near the median level of compensationpay levels in the competitive market. ~~Because it believes superior performance should be rewarded,~~However, in setting targets for the Compensation Committee has typically provided our NEOs with the opportunity to earn total compensation in the 75th percentile (or higher) of the competitive market if performance significantly exceeds target results. Conversely, if performance is substantially below target or planned results, the Compensation Committee typically believes NEOs should receive substantially less than the median level of total compensation in the competitive market (~~i.e.~~, in the bottom quartile). Although the Company’s performance was below target and planned results in 2016, the Compensation Committee deviated from its typical practice and awarded a discretionary bonus to each NEO, as well as current associates, in recognition of external factors and their respective contributions in implementing foundational changes that the Compensation Committee believes will position the Company to achieve improved results and shareholder value over the long-term despite the Company’s 2016 results. The total amount and each element of compensation ~~that the Compensation Committee targeted as~~ payable to each of our NEOs, ~~for 2016 was reasonably competitive with~~ the ~~median level~~Compensation Committee evaluates the full range of ~~compensation~~pay opportunities in the market, which are derived from a variety of sources, including NEO Peer Group information and Survey Data, and the ~~Survey Data.~~NEO's skills, experience, performance and strategic importance to the State Auto Group. Depending on this evaluation, the targets for the total amount and each element of compensation payable to each of our NEOs can be positioned at different levels in the competitive market. Certain compensation elements for Mr. LaRocco, such as base salary, retirement benefits, ~~employee~~associate benefits and executive perquisites, are subject to the terms of his employment ~~agreement~~agreement. (See below "Agreements with Named Executive Officers—LaRocco Employment Agreement").

The Compensation Committee has also used the compensation data disclosed in the proxy statements of members of the NEO Peer Group to conduct pay for performance comparisons ~~that~~to help it ~~(i)~~ understand if the ~~expectations~~outcomes of ~~companies within~~the Company's pay program have been reasonably aligned relative to the pay and performance results of the NEO Peer Group ~~regarding incentive payouts and (ii) evaluate our executive compensation program and practices.~~companies. The Compensation Committee has also used the Survey Data, in combination with information for the NEO Peer Group, to assess competitive pay levels and evaluate our executive compensation program and practices.

Use of Tally Sheets

The Compensation Committee uses tally sheets in its annual review of NEO compensation to review total compensation and each element of compensation provided to our NEOs. The tally sheets used by the Compensation Committee in its review of NEO compensation for ~~2016:~~2018: (i) listed each individual element of compensation along with the amount earned in each category for ~~2013, 2014~~2015, 2016 and ~~2015;~~2017 and (ii) listed the target and maximum amounts of incentive compensation payable for ~~2015; and (iii) summarized the current value of employee benefits and perquisites.~~2017. The tally sheets provide a useful perspective on the total value of NEO compensation and show how total compensation changes from year to year. ~~The Compensation Committee also used tally sheets to evaluate each NEO's total compensation in 2017.~~



~~2016~~2018 Executive Compensation Program Elements

We believe ~~that~~ the mix of elements in our executive compensation program supports its objectives and provides appropriate reward opportunities. Each of these elements is discussed separately below, other than ~~employee~~associate benefits which we offer to our NEOs on the same basis as all of our other ~~employees.~~associates.

The Company applies the following principles in designing our executive compensation program to achieve the objectives of our executive compensation program:

The Company does not have a prescribed mix between cash and non-cash compensation and short-term and long-term compensation, ~~(except~~except for how it allocates long-term compensation between the various reward ~~elements);~~elements;

Neither the Compensation Committee nor the ~~CEO~~chief executive officer considers the other elements of compensation available to NEOs, such as salary increases, annual bonuses and equity ownership, when setting any one element; and

Awards made in prior years or in other parts of our compensation program have not influenced the opportunities or payments made available in the current year.

Some of our NEOs' compensation is governed by the terms of specific agreements between the NEO and the Company. (See below "Agreements with Named Executive ~~Officers."~~Officers").

The following chart shows the elements of our executive compensation program for ~~2016 (except~~2018, except for perquisites, which are minimal in ~~nature).~~nature.



*	In ~~2016,~~2018, all of the NEOs were granted ~~20%~~50% of their total long-term incentive opportunity in the form of ~~stock options, 65%~~target PAUs and 50% in the form of target performance units. The PAUs and ~~15% in the form of restricted common shares. The PAUs~~performance units awarded ~~in 2016~~ to the NEOs ~~(other than Ms. Clark)~~in 2018 are valued based on the ~~achievement of three equally weighted performance measures: (i) statutory~~net written premium (as defined below in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") and combined ratio ~~for~~(as defined below in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of the personal and commercial segments of the State Auto ~~Group; (ii)~~Group during the State Auto Group's net written premium growth; and (iii) the State Auto Group's surplus growth. The PAUs awarded to Ms. Clark in 2016 are valued based on the achievement of three equally weighted performance measures: (i) statutory combined ratio for our specialty group; (ii) gross written premium growth for our specialty group; and (iii) surplus growth for the State Auto Group.three-year period from January 1, 2018, through December 31, 2020.

Base Salary

Base Salary Adjustment Process

The Compensation Committee believes ~~that~~ in order for the Company to attract and retain the caliber of executives it needs to achieve both short-term and long-term success it is critical for the Company to provide the NEOs with base salaries competitive with those provided to executives in our competitive market with similar skills, competencies, experience and levels of responsibility. Accordingly, the Compensation Committee may adjust the amount of a NEO's base salary based on the median level of base salary for the NEO in our competitive market or to reflect a change in the NEO's scope of responsibility or unique skills or expertise. ~~These adjustments are subject to an aggregate base salary merit increase budget set by the Company based on our anticipated cost structure.~~

~~2016~~

2018 Base Salaries of NEOs

The Compensation Committee set the ~~2016~~2018 base salaries of the NEOs in March ~~2016~~of 2018 as ~~follows.~~set forth below. The adjustments were based on: (i) an evaluation of each individual’s ~~performance;~~skills, experience, performance and strategic importance to the State Auto Group; (ii) increases in the median base salaries for individuals in similar roles at peer companies and other insurers comparable in size to the State Auto Group; and (iii) the Company’s overall merit increase budget and policies.


	2015 Base Salary ($)	2016 Base Salary ($)	Increase (%)		2017 Base Salary ($)	2018 Base Salary ($)	Increase (%)
Michael E. LaRocco	850,000	875,000	2.9		925,000	1,040,000	12.4
Steven E. English	465,000	478,950	3.0		492,121	516,727	5.0
Jessica E. Clark	440,000	455,092	3.4
Kim B. Garland	440,000	455,073	3.4		467,588	495,643	6.0
Gregory A. Tacchetti⁽¹⁾					404,250	450,000	11.3
Paul M. Stachura	375,000	382,076	1.9		397,359	440,000	10.7
⁽¹⁾ In June 2018, the Compensation Committee further increased Mr. Tacchetti's base salary to $480,000 (an increase of 6.67% from his base salary amount set in March of 2018) to compensate him for additional duties and responsibilities that he assumed at that time.				⁽¹⁾ In June 2018, the Compensation Committee further increased Mr. Tacchetti's base salary to $480,000 (an increase of 6.67% from his base salary amount set in March of 2018) to compensate him for additional duties and responsibilities that he assumed at that time.

Short-Term Incentive Compensation

~~On March 4, 2016, the Board of Directors approved the terms of the State Auto Financial Corporation One Team Incentive Plan or "OTIP." Upon the approval of the~~The OTIP ~~by the Company's shareholders at our 2016 Annual Meeting of Shareholders, the OTIP replaced the LBP as the Company's annual cash incentive plan. The purposes of the OTIP are:~~is designed to: (i) ~~to improve our long-term profitable growth and earnings by providing~~provide incentives and rewards to ~~all employees~~associates who achieve ~~the stated~~ performance goals and strategic objectives which significantly contribute ~~significantly~~ to ~~the achievement of~~long-term profitable growth; (ii) to focus ~~employees~~associates on the key measures ~~that align and~~we believe will drive superior performance and increase shareholder value over the long term; and (iii) to assist us in recruiting and ~~maintaining~~retaining highly talented associates by providing competitive total rewards. In March ~~2016,~~of 2018, the Compensation Committee granted performance bonus awards under the OTIP to the NEOs ~~(as~~as discussed below in "OTIP Performance Bonus Awards"). After determining that the NEOs would not earn any performance bonus award under the OTIP for 2016, the Compensation Committee awarded discretionary bonuses to the NEOs under the OTIP in an amount equal to 30% of their respective target performance bonus award for 2016 (as discussed below in "OTIP Discretionary Bonus Awards").Awards."

OTIP Performance Bonus Awards

Basis for OTIP Performance Bonus Awards

The OTIP provides for an annual cash incentive bonus opportunity for all of the Company's regular, active ~~employees~~associates based upon the achievement of specified objective annual performance goals. The OTIP is designed to advance the interests of the Company and our shareholders by providing ~~employees~~associates with a performance bonus for achieving the Company's strategic objectives. ~~Unlike the LBP, which consisted of both a Company performance component and an individual performance component, the~~The OTIP performance bonus awards consisted solely of a Company performance component in ~~2016,~~2018, which is consistent with our executive compensation program objective of better focusing management on achieving the results we believe are most critical for delivering long-term success and shareholder value.

OTIP Performance Bonus Award Process

Performance bonus awards under the OTIP consist of cash amounts payable upon the achievement of specified objective performance goals during a specified performance period. The performance goals for OTIP performance bonus awards are based upon the achievement of one or more ~~of the following~~ performance measures of the Company, ~~(and/or~~which may include one or more business segments or subgroups of the ~~Company)~~Company, over the performance ~~period: (i) combined ratio; (ii) premium growth; and (iii) policies in force.~~period. Most performance periods will begin on the first day of the ~~Company’s~~Company's fiscal year and end on the last day of that year. At the beginning of a performance period for a given OTIP performance bonus award, the Compensation Committee selects the performance measures for the award, establishes the ~~threshold, target and maximum~~ performance goals for each performance measure and determines the amounts payable to each ~~NEO~~participant upon satisfaction of the ~~threshold, target and maximum~~ performance goals. After the end of the performance period, management provides the Compensation Committee with the audited financial results achieved by the Company for each performance measure selected by the Compensation Committee. Based on this information, the Compensation Committee certifies the extent to which the performance goals were achieved and determines the amount of the award that is payable. The Compensation Committee has the discretion to determine ~~that~~ the actual amount paid with respect to an OTIP performance bonus award that will be less than (but not greater than) the amount earned by the NEOs.

~~2016~~2018 OTIP Performance Bonus Awards

The payout structure established by the Compensation Committee for the 2018 OTIP performance bonus awards provides for a bonus ranging from 0% to 300% of the target bonus based on the extent to which we achieve the performance goals for the applicable performance measures as set forth in a performance matrix established by the Compensation Committee. The Compensation Committee believes this payout structure effectively incentivizes our NEOs because of the significant upside potential it provides to our participants if they deliver exceptional results. The following table shows the ~~threshold,~~ target and maximum amounts of the ~~2016~~2018 OTIP performance bonus awards both as a percentage of the NEO's annual base salary and as a dollar amount for each of the NEOs based on the potential achievement of the ~~Company's~~ performance goals.


	Threshold		Target		Maximum		Target		Maximum
	% of Salary	Dollar Amount	% of Salary	Dollar Amount	% of Salary	Dollar Amount	% of Salary	Dollar Amount	% of Salary	Dollar Amount
Michael E. LaRocco	10.0	$87,500	100.0	$875,000	200.0	$1,750,000	120.0%	$1,248,000	360.0%	$3,744,000
Steven E. English	7.5	$35,921	75.0	$359,213	150.0	$718,426	75.0%	$387,545	225.0%	$1,162,636
Jessica E. Clark	7.5	$34,132	75.0	$341,319	150.0	$682,638
Kim B. Garland	7.5	$34,131	75.0	$341,305	150.0	$682,610	75.0%	$371,733	225.0%	$1,115,198
Gregory A. Tacchetti							65.0%	$292,500	195.0%	$877,500
Paul M. Stachura	5.5	$21,014	55.0	$210,142	110.0	$420,284	65.0%	$286,000	195.0%	$858,000

The Compensation Committee selected the combined ratio and net written premium growth of the personal and ~~policies in force~~commercial segments of the State Auto Group as the performance measures for the OTIP performance bonus awards ~~for each of the NEOs~~ in ~~2016.~~2018. The Compensation Committee selected these performance measures ~~for our NEOs~~ because it believes ~~they: (i)~~they represent the ~~results that we believe to be the~~ most critical results for delivering long-term success and shareholder ~~value;~~value and ~~(ii) enhance alignment between pay~~to align the performance measures applicable to the awards under the OTIP with the performance measures applicable to the awards under the 2017 Long-Term Incentive Plan. The Compensation Committee excluded the results of the State Auto Group's specialty insurance segment from the performance measures due to the Company's decision in 2017 to exit the specialty business. These performance measures also apply to the PAUs and ~~performance.~~performance units awarded by the Committee to the NEOs in 2018.

"combined ratio" is a measure of the State Auto ~~Group’s~~Group's statutory underwriting profitability (excluding the profitability of the State Auto Group's specialty insurance segment) and is equal to the sum of (i) the State Auto Group's loss and loss adjustment expense ratio (i.e., losses and loss expenses as a percentage of net earned premium) excluding the State Auto Group’s specialty insurance segment’s loss and loss adjustment expense ratio and (ii) the State Auto Group's expense ratio (i.e., underwriting expenses and miscellaneous expenses offset by miscellaneous income as a percentage of net written premium), excluding the State Auto Group’s specialty insurance segment's expense ratio, in each case based upon statutory accounting principles. Combined ratio includes positive or negative reserve development from prior ~~years.~~years (excluding reserve development of the State Auto Group's specialty insurance segment). Combined ratio is expressed as a percentage, and a combined ratio of less than 100% indicates underwriting profitability.

"net written premium growth" is a measure of the growth in ~~our~~the State Auto Group's total direct written premium volume from existing sources and merger and ~~acquisitions.~~

~~"policies in force" is~~acquisitions, excluding the ~~number~~total direct written premium volume of ~~policies in effect at any given time.~~the State Auto Group's specialty insurance segment.

The ~~following table shows the threshold,~~ target ~~and maximum payout percentages and~~ performance goals ~~established for each performance measure~~ applicable to ~~our NEOs' 2016~~the combined ratio and net written premium growth performance measures for the 2018 OTIP performance bonus ~~awards:~~awards were 96% and 3%, respectively. The performance matrix for the 2018 OTIP performance bonus awards provides no bonus will be payable if we achieve a combined ratio of equal to or greater than 103% or net written premium growth of less than -5%. If we achieve the threshold combined ratio required to earn a maximum bonus (i.e., 96%), the performance matrix requires that we also achieve net written premium growth of no less than 19% to earn the maximum bonus. If we achieve the threshold net written premium growth required to earn a maximum bonus (i.e., 12%), the performance matrix requires that we also achieve a combined ratio of no more than 90% to earn the maximum bonus.

Combined Ratio Premium Growth Policies in Force
Payout
as (%)
of Target

Performance
Goal
(%)

Payout
as (%)
of Target

Performance
Goal
(%)

Payout
as (%)
of Target

Performance
Goal
(%)
Threshold 10 102.8 10 (1.6) 10 (5.5)
Target 100 98.3 100 3.5 100 (2.3)
Maximum 200 94.9 200 10.0 200 0.7

Target performance ~~is equal to~~represents the ~~goal for~~Compensation Committee's anticipated median levels of performance in our industry during 2018. Given our recent performance, the financial measure set forth in the 2016 business plan presented by management and approved by the Board in March 2016 following review and discussion of the business plan with the Board of Directors of State Auto Mutual. The Compensation Committee believes that target performance ~~is reasonable to attain but includes~~goals include an element of "stretch" performance. ~~Maximum~~The performance goals which would result in a maximum bonus, if achieved, represent exceptional levels of performance the Compensation Committee believes are ~~intended to reflect superior performance and, although~~ possible but may be extremely difficult to attain. ~~Threshold~~The performance ~~which~~goals would result in a minimum bonus if achieved represent the lowest levels of performance the Compensation Committee ~~views as a minimally acceptable level of performance, is the lowest level of performance meriting~~believes would merit any form of financial ~~reward, provided that no payout is payable to the NEOs pursuant to the 2016 OTIP performance bonus awards if the combined ratio for 2016 is equal or greater than 105%.~~reward. The Compensation Committee recognizes ~~that~~ target performance may not be attained and believes ~~that~~ providing for payments to be made for attaining ~~a threshold level~~minimum levels of profitability mitigates the incentive for NEOs and others to take excessive risks to achieve the target ~~level~~levels of performance.

The Compensation Committee retains the power to reduce, but not increase, the amounts payable to the NEOs pursuant to OTIP performance bonus awards. ~~The Compensation Committee can also award discretionary bonuses under~~In 2018, the ~~OTIP. (See below~~ ~~"Tax Deductibility~~personal and commercial segments of ~~Executive Compensation."~~)

~~The following table shows (i)~~ the State Auto Group achieved a combined ratio of 98.8% and net written premium growth of 12.5%. As a result ~~achieved~~of such performance, the payout for each ~~Company performance measure applicable to~~of our ~~NEOs' 2016 OTIP performance bonus awards, (ii) the percentage payout for that result relative to the target payout for that performance measure, (iii) the weight of each such performance measure~~NEOs under the OTIP ~~performance bonus award and (iv) the value of the actual payout~~ for ~~the result achieved~~2018 as a percentage of the ~~NEO's~~ target bonus ~~under~~(where the ~~OTIP performance bonus award. The Compensation Committee assigned a greater weight to combined ratio to emphasize~~target percentage equals 100%) was 150% of the ~~Company's focus on profitability and assigned an equal weight to~~target dollar amount set forth in the ~~two growth measures (premium growth and policies in force).~~

Performance Measure 2016 Result
% of Target Payout for Result ⁽¹⁾
Weight
Payout Value
(% of Target) ⁽¹⁾
Combined Ratio 106.8% —% 0.6 —%
Premium Growth (0.8)% 22.8% 0.2 —%
Policies in Force (3.9)% 55.7% 0.2 —%

⁽¹⁾Although the Company attained the threshold performance goals for both the premium growth and policies in force performance measures, the NEOs did not receive any payout under their respective 2016 OTIP performance bonus awards because the combined ratio for 2016 exceeded 105.0%.
table above.

~~OTIP Discretionary Bonus Awards~~

In connection with its determination that the NEOs would not earn any performance bonus award under the OTIP for 2016, the Compensation Committee considered external factors and the respective contributions of the NEOs with respect to various challenging actions taken by the Company in 2016 that we believe will position the Company to achieve improved results and deliver value to shareholders over the long-term despite the Company’s 2016 results. These actions included strengthening reserves across the Company’s auto lines of business, incurring a $4 million write-off relating to an IT investment and approving increased IT spending to rapidly implement needed improvements to the Company’s infrastructure. In recognition of those contributions, the Compensation Committee awarded discretionary bonuses to the NEOs under the OTIP in an amount equal to 30% of their respective target performance bonus award for 2016.

~~The following table shows the amount of short-term cash incentive compensation paid to each NEO for 2016 under the OTIP in the form of a discretionary bonus.~~

Total
OTIP
Discretionary Bonus ($)

Total
OTIP
Bonus ⁽¹⁾
Michael E. LaRocco 262,500 30.0%
Steven E. English 107,764 30.0%
Jessica E. Clark 102,396 30.0%
Kim B. Garland 102,392 30.0%
Paul M. Stachura 63,043 30.0%

⁽¹⁾ Expressed as a percentage of the NEO's "target" performance bonus award under the OTIP where target is set at 100.0%.

Long-Term ~~Equity and Cash~~ Incentive Compensation

~~2016~~2018 Long-Term ~~Equity and Cash~~ Incentive Compensation Awards

In ~~2016,~~2018, the Compensation Committee awarded long-term equity incentive compensation to our NEOs in the form of ~~stock options and restricted common shares~~performance units under the ~~2009 Equity~~2017 Long-Term Incentive Plan and long-term cash incentive compensation to our NEOs in the form of PAUs under the ~~Existing LTIP. The Compensation Committee targeted these long-term incentive compensation awards to the NEOs at the median of long-term incentive compensation awards in our competitive market.~~2017 Long-Term Incentive Plan. For ~~2016,~~2018, the Compensation Committee provided ~~20%~~50% of each ~~NEO’s~~NEO's total long-term incentive compensation opportunity in the form of ~~stock options, 65%~~target performance unit awards and 50% in the form of target ~~PAUs and 15% in the form of restricted common shares.~~PAUs. The Compensation Committee established this allocation to effectively manage share usage and control the dilution of the interests of our shareholders, including our largest shareholder State Auto Mutual.

~~2016 Stock Option Awards~~

~~Basis for Stock Option Awards~~

In 2016, the Compensation Committee awarded stock options to our executives to (i) encourage business behaviors that drive appreciation in the price of our common shares over the long-term because the stock options we award have no value unless the price of the underlying common shares increases from the date of grant and (ii) help align the interests of our executives who hold stock options, including our NEOs, with the interests of our shareholders. Stock options also represent a significant element of the compensation paid to executives at many peer companies that we compete with for executive talent and build appropriate levels of common share ownership among our executive team. The Company has not and will not reprice or replace underwater stock options without first obtaining shareholder approval.

~~Stock Option Award Process~~

In 2016, the Compensation Committee granted stock options to our NEOs representing the number of common shares set forth in the table below. Each grant of options consisted of non-qualified stock options with a ten-year exercise period, a three-year graduated vesting schedule (~~i.e., one third of the total options granted vests on each anniversary of the grant date for three years) and an option exercise price equal to the closing price of our common shares on the grant date.~~

2016 Stock Option Awards (# of Common Shares) Exercise Price ($)
Michael E. LaRocco 32,494 21.54
Steven E. English 10,164 21.54
Jessica E. Clark 9,054 21.54
Kim B. Garland 9,054 21.54
Paul M. Stachura 6,588 21.54

The Compensation Committee granted stock options at the same time it determined other annual awards based on the CEO's recommendations to the Compensation Committee, which the CEO determined using competitive market data. Although the Compensation Committee retains the discretion to set the terms of any options granted, including the number of options granted to any optionee, the Compensation Committee did not exercise such discretion for the 2016 stock option grants and instead implemented the CEO’s recommendations for the NEOs excluding the CEO.

The Compensation Committee determined the number of stock options granted by multiplying (i) the average daily closing price of our common shares for the prior fiscal year by (ii) a "Black-Scholes" factor. The "Black-Scholes" factor is a financial model used to determine the current value of stock options and was provided to the Company by Pay Governance LLC. Pay Governance LLC advised the Compensation Committee that this method, which is consistent with the practice the Compensation Committee used in prior years, provides stability in option grants, is similar to the practices of other companies and prevents significant fluctuation in the number of options granted that may be caused by short-term swings in stock price associated with focusing on the closing stock price for a particular day.

~~2016 Restricted Common Share Awards~~

~~Basis for Restricted Common Share Awards~~

In 2016, the Compensation Committee awarded restricted common shares to our executives to (i) reduce our usage of common shares under our equity compensation plans, (ii) align the interests of the NEOs with the interests of our shareholders and (iii) encourage retention. Restricted stock also represents a significant element of the compensation paid to executives at many peer companies with whom we compete for executive talent and builds appropriate levels of common share ownership among our executive team.

~~Restricted Common Share Award Process~~

In 2016, the Compensation Committee granted restricted common shares to our NEOs representing the number of common shares set forth in the table below. These restricted common shares vest on the third anniversary of the grant date, which enhances their encouragement of retention.



		~~2016 Restricted Common Share Awards~~ ~~(# of Common Shares)~~
~~Michael E. LaRocco~~		~~7,461~~
~~Steven E. English~~		~~2,334~~
~~Jessica E. Clark~~		~~2,079~~
~~Kim B. Garland~~		~~2,079~~
~~Paul M. Stachura~~		~~1,513~~

The Compensation Committee granted restricted common shares at the same time it determined other annual awards based on the CEO's recommendations to the Compensation Committee, which the CEO determined using competitive market data. Although the Compensation Committee retains the discretion to set the terms of any restricted common shares granted, including the number of restricted common shares granted, the Compensation Committee did not exercise such discretion for the 2016 restricted common share grants and instead implemented the CEO's recommendations for the NEOs excluding the CEO.

The Compensation Committee determined the number of restricted common shares granted by dividing the portion of the NEO's target long-term incentive opportunity awarded in restricted common shares by the sum of (i) the average daily closing price of our common shares during the immediately preceding year and (ii) the estimated value of three years of anticipated cash dividends. Pay Governance LLC advised the Compensation Committee that this method, which is consistent with the practice the

Compensation Committee used in prior years, provides stability in restricted common share grants, is similar to the practices of other companies and prevents significant fluctuation in the number of restricted common shares granted that may be caused by short-term swings in stock price associated with focusing on the closing stock price for a particular day.

~~2016~~2018 Performance Award Unit Awards

~~Basis for PAU Awards~~

In 2016, the Compensation Committee awarded PAUs to our executives to (i) reward executives for achieving sustained financial results that we believe should increase the price of our common shares over the long term, (ii) balance the focus of our annual operating plan by rewarding executives for our financial results relative to the results of other property and casualty insurers, and (iii) minimize shareholder dilution as the PAUs are paid in cash.

~~PAU Award Process~~

The Compensation Committee annually awards a target number of PAUs to our NEOs, which are paid in cash at the end of a three-year performance period. The Compensation Committee structured the PAU awards made to our NEOs in 2018 to: (i) effectively incentivize our NEOs by providing significant upside potential to our NEOs if they deliver sustained exceptional results; (ii) focus our NEOs on achieving profitable growth, which the Compensation Committee believes to represent the most critical result for delivering long-term success and shareholder value; (iii) be consistent with the structure of the OTIP performance bonus awards, the performance unit awards and the performance-based restricted stock awards, which the Compensation Committee believes will solidify our One Team structure; and (iv) align pay and performance. PAUs also serve the purpose of limiting shareholder dilution as they are paid in cash.

The PAUs awarded to the NEOs in 2018 will vest and be earned, if at all, after the completion of the performance period, which is the three-year period from January 1, 2018, through December 31, 2020, based on the net written premium growth (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") and combined ratio (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of the personal and commercial segments of the State Auto Group during the performance period. The Compensation Committee selected these performance measures as representative of the most critical results for delivering long-term success and shareholder value and to align the performance measures applicable to the 2018 PAU awards with the performance measures applicable to the 2018 OTIP performance bonus awards, the 2018 performance unit awards and the 2018 performance-based restricted stock awards. The payout structure established by the Compensation Committee for the 2018 PAU awards provides the actual number of PAUs that will vest and be earned will range from 0% to 500% of the target number of PAUs awarded based on the extent to which we achieve the performance goals for the performance measures as set forth in a performance matrix established by the Compensation Committee. Each vested and earned PAU will be settled in cash for $1.00. The same performance goals apply to each NEO.

The performance goals which would result in the vesting of the target number of PAUs, if achieved, represent the Compensation Committee's anticipated median levels of performance in our industry during the performance period. Given our recent performance, the target performance goals include an element of "stretch" performance. The performance goals that would result in the vesting of the maximum number of PAUs, if achieved, represent exceptional levels of performance the Compensation Committee believes are possible but may be extremely difficult to attain. The performance goals that would result in the vesting of the minimum number of PAUs if achieved represent the lowest levels of performance the Compensation Committee believes would merit any form of financial reward. The Compensation Committee recognizes target performance may not be attained and believes providing for payments to be made for attaining minimum levels of profitability mitigates the incentive for NEOs and others to take excessive risks to achieve the target levels of performance.

Additionally, the NEO must remain employed by us through the end of the performance period for the PAUs to vest and be earned, except in the case of termination due to death, disability, retirement or through a reduction in force. In the event of the NEO's termination due to death or disability before the end of the performance period, the target number of PAUs will vest and be earned, prorated to the date of death or disability. If the NEO retires or is terminated through a reduction in force before the end of the performance period, a prorated portion of the PAUs which would have vested (based on actual performance as of the end of the performance period) will vest and be earned. The prorated amount ~~payable~~will be based on the number of days the NEO remained employed during the performance period. Any portion of the PAUs not vested due to inadequate Company performance or termination of employment will be forfeited.

For the 2018-2020 performance period, our NEOs received the target number of PAUs with the target and maximum values described below:



	2018 Target Units (#)	Target Award Value ($)	Maximum Award Value ($)
Michael E. LaRocco	936,000	936,000	4,680,000
Steven E. English	206,691	206,691	1,033,454
Kim B. Garland	185,866	185,866	929,331
Gregory A. Tacchetti	146,250	146,250	731,250
Paul M. Stachura	143,000	143,000	715,000

2018 Performance Unit Awards

In 2018, the Compensation Committee granted long-term equity compensation to our NEOs in the form of performance unit awards to: (i) effectively incentivize our NEOs by providing significant upside potential to our NEOs if they deliver sustained exceptional results; (ii) focus our NEOs on achieving profitable growth, which the Compensation Committee believes to represent the most critical result for delivering long-term success and shareholder value; (iii) be consistent with structure of the OTIP performance bonus awards, the PAU awards and the performance-based restricted stock awards, which the Compensation Committee believes will solidify our One Team structure; and (iv) align pay with performance.

The performance units awarded to the NEOs in 2018 will vest and be earned, if at all, after the completion of the performance period, which is the three-year period from January 1, 2018, through December 31, 2020, based on the net written premium growth (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") and combined ratio (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of the personal and commercial segments of the State Auto Group during the performance period. The Compensation Committee selected these performance measures because it believes they represent the most critical results for delivering long-term success and shareholder value and to align the performance measures applicable to the 2018 performance unit awards with the performance measures applicable to the 2018 OTIP performance bonus awards, the 2018 PAU awards and the 2018 performance-based restricted stock awards. The payout structure established by the Compensation Committee for the 2018 performance unit awards provides the actual number of performance units that will vest and be earned will range from 0% to 500% of the target number of performance units awarded based on the extent to which we achieve the performance goals for the performance measures as set forth in a performance matrix established by the Compensation Committee. The same performance goals apply to each NEO.

The performance goals which would result in the vesting of the target number of performance units, if achieved, represent the Compensation Committee's anticipated median levels of performance in our industry during the performance period. Given our recent performance, the target performance goals include an element of "stretch" performance. The performance goals that would result in the vesting of the maximum number of performance units, if achieved, represent exceptional levels of performance the Compensation Committee believes are possible but may be extremely difficult to attain. The performance goals that would result in the vesting of the minimum number of performance units, if achieved, represent the lowest levels of performance the Compensation Committee believes would merit any form of financial reward. The Compensation Committee recognizes target performance may not be attained and believes providing for payments to be made for attaining minimum levels of profitability mitigates the incentive for NEOs and others to take excessive risks to achieve the target levels of performance.

The Company intends to settle vested performance units in whole common shares, but reserves the right to settle in cash if appropriate. The performance units have no dividend or voting rights. Additionally, the NEO must remain employed by us through the end of the performance period for the performance units to vest and be earned, except in the case of termination due to death, disability, retirement or through a reduction in force. In the event of the NEO's termination due to death or disability before the end of the performance period, the target number of performance units will vest and be earned. If the NEO retires before the end of the performance period, the performance units will vest at the end of the performance period ~~is determined by multiplying~~and be earned as if the ~~number of PAUs by~~NEO had remained employed with the ~~"value"~~Company during the entire performance period. In the event of the ~~PAU at~~NEO's termination through a reduction in force before the end of the performance ~~period. PAUs are granted with~~period, a ~~target value of $1.00, although the final value of each PAU can range from $0.00 to $2.00 depending on our performance. The final value~~prorated portion of the ~~PAU awarded to our NEOs in 2016 depends~~performance units that would have vested (based on ~~the State Auto Group's achievement~~actual performance as of ~~performance measures selected by the Compensation Committee compared against the results of a peer group of other property and casualty insurers during the performance period (the "LTIP Peer Group").~~

Each performance measure has threshold, target and maximum levels of performance. The target level for each performance measure is achieved if the State Auto Group's performance equals the median level of performance of the companies in the LTIP Peer Group for such performance measure. The maximum level for each performance measure is achieved if the State Auto Group performs at or above the 80^th ~~percentile of the LTIP Peer Group. The threshold level of performance is achieved if the State Auto Group performs at the 20~~^th ~~percentile. No amount is payable for a performance measure if the State Auto Group performs below the 20~~^th ~~percentile. For example, if at~~ the end of the ~~2016–2018~~ performance ~~period there are 60 insurance companies in the LTIP Peer Group,~~period) will vest and if such companies are ranked 1 – 60 (best to worst) in average statutory combined ratio, each NEO will receive a target award if the State Auto Group’s three-year average statutory combined ratio is between the 30/31^st ~~ranked companies. A maximum award~~be earned. The prorated amount will be ~~received if our three-year average statutory combined ratio equals or exceeds the 12~~^th ~~ranked company (equal to the group’s 80~~^th ~~percentile). Finally, a threshold award will be received if our three-year statutory combined ratio equals the 48~~^th ~~ranked company (or the group’s 20~~^th ~~percentile). The same comparison is performed for the other performance measures, with the results equally weighted to determine the final PAU value awarded to each NEO.~~

~~PAUs awarded to each of the NEOs (except for Ms. Clark) for the 2016-2018 performance period are valued~~ based on the ~~achievement~~number of ~~target results for three equally weighted~~days the NEO remained employed during the performance measures: (i) statutory combined ratio for the State Auto Group; (ii) the State Auto Group's net written premium growth; and (iii) the State Auto Group's surplus growth. PAUs awarded to Ms. Clark for the 2016-2018 performance period are valued based on the achievement of three equally weighted performance measures: (i) statutory combined ratio for our specialty group; (ii) gross written premium growth for our specialty group; and (iii) surplus growth for the State Auto Group. The performance measures selected by the Compensation Committee focus on our ability to appropriately price and underwrite business, control expenses, develop new products and services, invest in assets that best balance risks and rewards and enter new markets. They also assess long-term profitability and the capital we need to underwrite future business. We believe sustained, high levels of performance in each of these areas should create value for our shareholders.

The LTIP Peer Group used to determine our achievement of (i) the surplus growth performance measure applicable to PAUs awarded to our NEOs in 2016 and (ii) the net written premium growth and statutory combined ratio performance measures applicable to PAUs awarded to all of our NEOs in 2016 except for Ms. Clark initially consisted of 45 insurance companies included in the A.M. Best Total U.S. P&C Agency Companies Composite with net written premiums ranging from $0.5 billion to $6.5 billion. The LTIP Peer Group used to determine our achievementperiod. Any portion of the ~~direct statutory combined ratio for our specialty group and direct written premium growth for our specialty group~~ performance ~~measures applicable~~units not vested due to ~~PAUs awarded to Ms. Clark in 2016 initially consisted~~inadequate performance or termination of ~~47 surplus line peers with annualized gross written premiums ranging from $165 million to $700 million.~~employment will be forfeited.

For the ~~2016-2018~~2018-2020 performance period, our NEOs received ~~PAUs in~~ the following target number ~~and with the target, threshold and maximum values described below:~~of performance units:

2016 Target Units (#)
Target Award Value
($)⁽¹⁾

Threshold Award Value
($)⁽¹⁾

Maximum Award Value
($) ⁽¹⁾
Michael E. LaRocco 796,250 796,250 318,500 1,592,500
Steven E. English 249,054 249,054 99,622 498,108
Jessica E. Clark 221,857 221,857 88,743 443,714
Kim B. Garland 221,848 221,848 88,739 443,696
Paul M. Stachura 161,428 161,428 64,571 322,856

⁽¹⁾ Units have a target value equal to $1.00, a threshold value of $0.40 and a maximum value of $2.00.



		2018 Target Units (#)
Michael E. LaRocco		33,851
Steven E. English		7,475
Kim B. Garland		6,722
Gregory A. Tacchetti		5,289
Paul M. Stachura		5,171

Retention Equity Awards

In 2018, the Compensation Committee awarded retention equity awards to our NEOs in the form of restricted common shares under the 2017 Long-Term Incentive Plan and to Mr. LaRocco in the form of deferred stock units under the 2017 Long-Term Incentive Plan pursuant to his employment agreement.

2018 Restricted Common Share Awards

In March of 2018, the Compensation Committee granted a retention award consisting of 10,000 time-based restricted common shares and 10,000 performance-based restricted common shares under our 2017 Long-Term Incentive Plan to each of Messrs. English, Garland, Tacchetti and Stachura. The Compensation Committee granted these retention equity awards as a result of the significant efforts of the NEOs in transforming the Company and the Company's need to retain the members of its senior leadership team to continue making progress in transforming the Company and improving the Company's operating results and performance. The Compensation Committee believes that the continuity of the Company's senior leadership team in 2018 was instrumental in achieving the Company's 2018 operating results and performance.

The time-based restricted common shares vest equally in one-quarter increments over a four-year period beginning on December 31, 2018. All unvested time-based restricted common shares will vest immediately upon the NEO's death, disability or retirement. If the NEO's employment terminates before the end of the vesting period for any reason other than his death, disability or retirement, all of the time-based restricted common shares will be forfeited as of the date of termination.

The performance-based restricted common shares will vest equally in one-quarter increments over a four-year period beginning on the first anniversary of the grant date based upon our achievement of the performance goals applicable to our annual cash incentive bonus program for the calendar year prior to the vesting date. The number of shares of restricted stock that will vest on each vesting date will be calculated by multiplying 2,500 by the percent of the target annual cash incentive bonus earned for the calendar year prior to the vesting date based on the extent to which we achieve the performance goals for the applicable performance measures as set forth in the performance matrix established by the Compensation Committee, provided that the maximum number of shares that may vest on each vesting date is 2,500. Accordingly, 2,500 restricted common shares vested on the first anniversary of the grant date based on the extent to which the personal and commercial segments of the State Auto Group achieved combined ratio and net written premium growth in 2018 (i.e., the performance measures for the OTIP annual cash incentive bonus awards for 2018).

All unvested performance-based restricted common shares will vest immediately upon the NEO's death or disability. If the NEO retires before an applicable vesting date, one-quarter of the performance-based restricted common shares will vest and any remaining unvested performance-based restricted common shares will be forfeited. If the NEO's employment terminates before the end of the performance period for any reason other than his death, disability or retirement, all of the unvested performance-based restricted common shares will be forfeited as of the date of termination. The NEO is entitled to receive dividend equivalents on both the time-based and performance-based restricted common shares, provided that such dividend equivalents are subject to the same vesting requirements that apply to the restricted common shares.

Also in March of 2018, the Compensation Committee granted to each NEO an additional award of time-based restricted common shares under our 2017 Long-Term Incentive Plan. Under these awards, each NEO was granted the following number of restricted common shares:



		2018 Restricted Common Share Awards
Michael E. LaRocco		8,363
Steven E. English		3,337
Kim B. Garland		3,171
Gregory A. Tacchetti		2,376
Paul M. Stachura		2,335

These restricted common shares will vest equally in one-third increments over a three-year period beginning on December 31, 2018. All unvested restricted common shares will vest immediately upon the NEO's death, disability or retirement. If the NEO's employment terminates before the end of the vesting period for any reason other than his death, disability or retirement, all of the time-based restricted common shares will be forfeited as of the date of termination. The NEO is entitled to receive dividend equivalents on the restricted common shares, provided that such dividend equivalents are subject to the same vesting requirements that apply to the restricted common shares.

2018 Deferred Stock Unit Awards

In March of 2018, the Compensation Committee granted 20,000 time-based deferred stock units and 20,000 performance-based deferred stock units under our 2017 Long-Term Incentive Plan to Mr. LaRocco pursuant to his employment agreement. The time-based deferred stock units will vest equally in one-third increments over a three-year period beginning on the day preceding the first anniversary of the grant date. All unvested time-based deferred stock units will vest immediately upon Mr. LaRocco's death, disability or retirement. If Mr. LaRocco's employment terminates before the end of the vesting period for any reason other than his death, disability or retirement, all of the time-based deferred stock units will be forfeited as of the date of termination. The performance-based deferred stock units will vest and be earned, if at all, based on the combined ratio of the personal and commercial segments of the State Auto Group during the three-year performance period from January 1, 2018, through December 31, 2020, and the compound annual growth rate of our stock price during the three-year performance period from March 1, 2018, through March 1, 2021. All unvested performance-based deferred stock units will vest immediately upon Mr. LaRocco's death or disability. If Mr. LaRocco retires during the performance period, the performance-based deferred stock units will vest based upon our achievement of the performance goals during the performance period. If Mr. LaRocco's employment terminates before the end of the performance period for any reason other than his death, disability or retirement, all of the performance-based deferred stock units will be forfeited as of the date of termination. Mr. LaRocco is entitled to receive dividend equivalents on the deferred stock units, provided that such dividend equivalents are subject to the same vesting requirements that apply to the deferred stock units.

Retirement and Deferred Compensation

Retirement Plans

We maintain a defined benefit pension plan, referred to as our "Retirement Plan," to recognize the career contributions and service of our associates, assist in the retention of our ~~employees~~associates and provide our ~~employees~~associates with income continuity into retirement. We also maintain a non-qualified Supplemental Executive Retirement Plan, referred to as our "SERP," to offset the impact of limitations imposed by tax laws on the amount of income or wages that can be considered in calculating benefits under traditional defined benefit pension plans, such as our Retirement Plan. Mr. English is the only current NEO who is eligible to participate in the Retirement Plan and SERP. The SERP enables highly compensated officers to achieve the same percentage of salary replacement as other ~~employees~~associates upon retirement. An NEO is automatically enrolled in the SERP when his or her annual base salary exceeds the limit that can be considered in calculating benefits under the Retirement Plan. Under the Retirement Plan, an ~~employee's~~associate's period of service has a significant impact on the amount of retirement benefits they would be eligible to receive. Under the SERP, the amount of retirement benefits ~~that~~ an ~~employee~~associate would be eligible to receive is determined solely by the ~~employee’s~~associate's actual period of service.

Defined Contribution Plan/401(k) Plan

We maintain a defined contribution plan intended to be a qualified plan under Sections 401(a) and 401(k) of the ~~Internal Revenue~~ Code, ~~of 1986, as amended (the "Code"), that~~which we refer to as our ~~"Retirement Savings Plan" or~~ "RSP." The RSP is intended to help ensure the long-term financial stability of our ~~employees.~~associates. Participation in the RSP is available on the same terms to all of our ~~employees,~~associates, including our NEOs. Each participant can elect to contribute from 1%

to 50% of his or her base salary to the RSP, subject to the limits imposed by the Internal Revenue Service. The Company may make a discretionary matching contribution of 100% of each participant's RSP contributions for the first 1% of base salary, plus 50% of each participant's RSP contribution between 2% and 6% of base salary, subject to limits imposed by the Internal Revenue Service. In 2010, all of our ~~employees~~associates hired before January 1, 2010, ~~including our NEOs,~~ made an election to either (i) continue participating in the Retirement Plan and RSP or (ii) cease participating in the Retirement Plan as of June 30, 2010, in favor of participating in an expanded benefit under the RSP beginning on July 1, 2010, under which the Company annually contributes to the RSP an additional amount equal to 5% of their annual base salary until the termination of their employment with the Company. If an ~~employee~~associate elected to participate in the expanded RSP benefit, they would continue to be eligible to receive upon retirement their accrued benefit under the Retirement Plan as of June 30, 2010. See "Deferred Compensation Plans—Defined Contribution Plan/401(k) Plan"for more information regarding the RSP.

Non-Qualified Deferred Compensation Plan/Supplemental 401(k) Plan

We maintain a non-qualified, unfunded deferred compensation plan for eligible key ~~employees,~~associates, which we refer to as our "Shadow Plan." Non-qualified plans provide highly compensated ~~employees~~associates with the same retirement savings opportunities, on a relative basis, as other ~~employees.~~associates. Participants in non-qualified plans become unsecured creditors and incur the credit risk associated with that status. ~~Employees~~Associates eligible to participate in the Shadow Plan include those who are precluded by regulatory limitations from contributing a full 6% of salary to the RSP or who may choose to defer a portion of their salary beyond the amount matched by the RSP. Each ~~employee~~associate who is eligible to participate in the Shadow Plan is credited annually with his or her allocable share of Company matching contributions on the same basis ~~that~~ contributions are matched under the RSP, provided ~~that~~ no more than 6% of any ~~employee's~~associate's base salary is subject to being matched in the aggregate under the RSP and the Shadow Plan. See below "Deferred Compensation Plans—Non-Qualified Deferred Compensation Plan/Supplemental 401(k) Plan" for more information regarding the Shadow Plan.

Executive Perquisites and Other Compensation

We provide our executive officers certain minimal perquisites not tied to individual or Company performance. We believe these benefits are below the typical practices of companies of comparable size, are highly valued by recipients, have limited cost and are part of a competitive reward program that helps us attract and retain the best executives. Certain ~~of the~~ NEOs are also entitled under the terms of their hiring arrangements to the reimbursement of certain travel expenses, and for the gross-up of related ~~taxes, they incur in connection with relocating to Columbus, Ohio.~~taxes.



Looking ~~Forward-2017~~Forward-2019 Executive Compensation

The Compensation Committee engaged Pay Governance LLC to serve as its independent outside compensation consultant for ~~2017.~~2019. In the course of the engagement, Pay Governance LLC reviewed our executive compensation program as a whole and each principal element of the program. ~~In addition, Pay Governance LLC advised the Compensation Committee regarding the restructuring of the OTIP and the adoption of the 2017 Long-Term Incentive Plan (as discussed in~~ ~~Proposal Two~~).

After reviewing our executive compensation program, consulting with Pay Governance LLC and receiving input from our ~~Chief Executive Officer~~chief executive officer and other members of management, in the first quarter of ~~2017,~~2019, the Compensation Committee established our ~~2017~~2019 executive compensation program. For 2017, the Compensation Committee awarded long-term equity compensation to the NEOs in the form of performance units under the 2017 Long-Term Incentive Plan (subject to shareholder approval at the Annual Meeting) instead of in the form of stock options and restricted common shares under the 2009 Equity Plan. In addition, the Compensation Committee restructured the OTIP performance bonus award and the PAU award granted to the NEOs (the latter subject to shareholder approval at the Annual Meeting). Set forth below is a summary ofprogram, the principal elements of ~~our 2017 executive compensation program.~~which are summarized below.

~~2017~~2019 Base Salaries of NEOs

The Compensation Committee set the ~~2017~~2019 base salaries of the NEOs in ~~March 2017 as follows.~~February of 2019. The adjustments were based on: (i) an evaluation of each ~~individual’s performance;~~individual's skills, experience, performance and strategic importance to the State Auto Group; (ii) increases in the median base salaries for individuals in similar roles at peer companies and other insurers comparable in size to the State Auto Group; and (iii) the ~~Company’s~~Company's overall merit increase budget and policies.


	2016 Base Salary ($)	2017 Base Salary ($)	Increase (%)	2018 Base Salary ($)	2019 Base Salary ($)	Increase (%)
Michael E. LaRocco	875,000	925,000	5.7	1,040,000	1,090,024	4.8
Steven E. English	478,950	492,121	2.8	516,727	533,521	3.3
Jessica E. Clark	455,092	467,607	2.8
Kim B. Garland	455,073	467,588	2.8	495,643	515,469	4.0
Gregory A. Tacchetti				480,000	494,400	3.0
Paul M. Stachura	382,076	397,359	4.0	440,000	458,700	4.3

~~2017~~

2019 OTIP Performance Bonus Awards

For ~~2017,~~2019, each NEO is eligible to receive a cash performance bonus payable based upon the achievement of specified objective performance goals during ~~2017.~~2019. The Compensation Committee selected the combined ratio (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") and net written premium growth (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of the personal and commercial segments of the State Auto Group as the performance measures for the OTIP performance bonus awards for each of the NEOs in ~~2017.~~2019. The Compensation Committee excluded the result of the State Auto Group's specialty insurance segment from the performance measures due to the Company's decision in 2017 to exit the specialty business. The actual performance bonus payable to each NEO may be increased by up to 300% (from the target bonus) if we achieve the maximum performance levels for both of the performance measures and be decreased to zero if we fail to meet the minimum performance levels for the net written premium growth and/or combined ratio.

The following table shows the target and maximum amounts of the ~~2017~~2019 OTIP performance bonus awards, both as a percentage of the ~~NEO’s~~NEO's annual base salary and as a dollar amount, for each of the NEOs based on the potential achievement of the applicable performance goals.


	Target			Maximum			Target			Maximum
	% of Salary	Dollar Amount		% of Salary	Dollar Amount		% of Salary	Dollar Amount		% of Salary	Dollar Amount
Michael E. LaRocco	100.0%	$	925,000	300	$	2,775,000	120%	$	1,308,029	360%	$	3,924,086
Steven E. English	75.0%	$	369,091	225	$	1,107,273	85%	$	453,493	255%	$	1,360,479
Jessica E. Clark	75.0%	$	350,705	225	$	1,052,115
Kim B. Garland	75.0%	$	350,691	225	$	1,052,073	85%	$	438,149	255%	$	1,314,446
Gregory A. Tacchetti							85%	$	420,240	255%	$	1,260,720
Paul M. Stachura	65.0%	$	258,283	225	$	774,849	75%	$	344,025	225%	$	1,032,075

The Compensation Committee restructured the OTIP performance bonus awards based on its belief that the revised structure more effectively incentivizes our NEOs by offering significant upside potential to our NEOs if they deliver exceptional results. 2019 Performance Unit Awards

In ~~addition, the modified OTIP awards are also more consistent with the structure~~February of ~~our 2017 long-term cash incentive awards and long-term equity awards which~~2019, the Compensation Committee ~~believes will solidify our One Team structure.~~

~~2017 Long-Term Equity Compensation~~

~~In March 2017, the Compensation Committee conditionally~~ granted to each NEO a performance unit award under our 2017 Long-Term Incentive ~~Plan subject to shareholder approval at the Annual Meeting.~~Plan. Under these performance unit awards, each NEO was granted the following target number of performance units:



		~~2017~~2019 Performance Unit Awards (Target # of Performance Units)
Michael E. LaRocco		~~28,056~~29,136
Steven E. English		~~7,237~~
~~Jessica E. Clark~~		~~6,446~~7,130
Kim B. Garland		~~6,446~~6,889
Gregory A. Tacchetti		6,607
Paul M. Stachura		~~4,747~~5,108

The performance units will vest and be earned, if at all, after the completion of the performance period, which is the three-year period from January 1, ~~2017,~~2019, through December 31, ~~2019,~~2021, based on ~~our~~the net written premium growth (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation")and combined ratio (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of the personal and commercial segments of the State Auto Group during the performance period. The payout structure established by the Compensation Committee for the 2019 performance unit awards provides the actual number of performance units that will vest and be earned ~~by each NEO~~ may ~~be increased by up~~increase to an amount equal to 500% ~~(from~~of the target ~~number)~~number of performance units awarded if we achieve the maximum performance ~~levels~~goals for both of the performance measures and ~~be decreased~~decrease to zero if we fail to meet the minimum performance levels for both of the ~~net written premium growth and/or combined ratio~~ performance measures. The ~~same minimum, target and maximum~~Company intends to settle vested performance ~~levels apply~~units in whole common shares, but reserves the right to ~~each NEO. Additionally, the~~settle in cash if appropriate. The performance units have no dividend or voting rights.

The NEO must remain employed by us through the end of the performance period for the performance units to vest and be earned, except in the case of termination due to death, disability, retirement or through a reduction in force. The vested performance units will be settled in whole common shares. The performance units have no dividend or voting rights. Any portion of the performance units that does not vest due to inadequate performance or termination of employment will be forfeited.

In the event of the ~~NEO’s~~NEO's termination due to death or disability before the end of the performance period, the target number of performance units will vest and be earned. If the NEO retires before the end of the performance period, the performance units will vest at the end of the performance period and be earned as if the NEO had remained employed with the ~~Company.~~Company during the entire performance period. In the event of the ~~NEO’s~~NEO's termination through a reduction in force before the end of the performance period, a prorated portion of the performance units that would have vested (based on our actual performance as of the end of the performance period) will vest and be earned. The prorated amount will be based on the number of days ~~that~~ the NEO remained employed during the performance ~~period.~~

The Compensation Committee elected to replace the stock option and restricted common shares awards that it has historically granted to our NEOs as long-term equity compensation with performance unit awards for several reasons. First, the Compensation Committee believes that the structure of the performance unit awards more effectively incentivizes our NEOs by offering significant upside potential if they deliver exceptional results. Second, the performance unit awards better focus our NEOs on achieving profitable growth and stock appreciation, which the Compensation Committee believes to represent the outcomes that are most critical for delivering improved long-term financial performance and shareholder value. Third, the structure of the performance unit awards establishes consistency with the structure of our 2017 short-term and long-term cash incentive awards which the

~~Compensation Committee believes~~period. Any portion of the performance units not vested due to inadequate performance or termination of employment will ~~solidify our One Team structure. Finally, performance unit awards further our focus on pay-for-performance.~~be forfeited.

~~2017 Long-Term Cash Incentive Compensation~~2019 PAU Awards

In ~~March 2017,~~February of 2019, the Compensation Committee ~~conditionally~~ granted to each NEO a PAU award under our 2017 Long-Term Incentive ~~Plan subject to shareholder approval at the Annual Meeting.~~Plan. Under these PAU awards, each NEO was granted the following target number of PAUs:



		~~2017~~2019 PAU Awards (Target # of PAUs)
Michael E. LaRocco		~~763,125~~981,022
Steven E. English		~~196,849~~
~~Jessica E. Clark~~		~~175,353~~240,084
Kim B. Garland		~~175,346~~231,961
Gregory A. Tacchetti		222,480
Paul M. Stachura		~~129,142~~172,013

The PAUs will vest and be earned, if at all, after the completion of the performance period, which is the three-year period from January 1, ~~2017,~~2019, through December 31, ~~2019,~~2021, based on ~~our~~the net written premium growth (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation")and combined ratio (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") during the performance period. The payout structure established by the Compensation Committee for the 2019 PAU awards provides the actual number of PAUs that will vest and be earned ~~by each NEO~~ may ~~be increased by up~~increase to an amount equal to 500% ~~(from~~of the target ~~number)~~number of PAUs awarded if we achieve the maximum performance ~~levels~~goals for both of the performance measures and ~~be decreased~~decrease to zero if we fail to meet the minimum performance levels for both of the ~~net written premium growth and/or combined ratio~~ performance measures. The same minimum, target and maximum performance levels apply to each NEO. ~~Additionally, the~~Each vested and earned PAU will be settled in cash for $1.00.

The NEO must remain employed by us through the end of the performance period for the PAUs to vest and be earned, except in the case of termination due to death, disability, retirement or through a reduction in force. ~~Each vested and earned PAU will be settled in cash for $1.00. Any portion of the PAUs that does not vest due to inadequate Company performance or termination of employment will be forfeited.~~

In the event of the NEO's termination due to death or disability before the end of the performance period, the target number of PAUs will vest and be ~~earned.~~earned, prorated to the date of death or disability. If the NEO retires or is terminated through a reduction in force before the end of the performance period, a prorated portion of the PAUs ~~that~~which would have vested (based on our actual performance as of the end of the performance period) will vest and be earned. The prorated amount will be based on the number of days ~~that~~ the NEO remained employed during the performance period. ~~In the event of the NEO’s termination through a reduction in force before the end of the performance period, a prorated~~Any portion of the PAUs ~~that would have~~not vested ~~(based on our actual~~due to inadequate Company performance asor termination of ~~the end of the performance period) will vest and be earned. The prorated amount~~employment will be ~~based on the number of days that the NEO remained employed during the performance period.~~

The Compensation Committee restructured the PAU awards for several reasons. First, the Compensation Committee believes that the revised structure of the PAU awards more effectively incentivizes our NEOs by offering significant upside potential to our NEOs if they deliver exceptional results. Second, the restructured PAU awards better focus our NEOs on achieving profitable growth, which the Compensation Committee believes to represent the results that are most critical for delivering long-term success and shareholder value. Third, the modified PAU awards are more consistent with the structure of our 2017 short-term cash incentive awards and long-term equity awards which the Compensation Committee believes will solidify our One Team structure.forfeited.



Contractual Arrangements with Named Executive Officers

Employment Agreements

The ~~Company enters into employment agreements to provide appropriate protection to the employee and the Company and clarity to the employee and the Company about the Company's expectations. The~~ Company's only current employment agreement is with Mr. LaRocco, its Chairman, President and Chief Executive Officer. The Company believes ~~that~~ having an employment agreement in place with Mr. LaRocco ensures leadership stability and focus and assists in long-term retention. The Company also believes ~~that~~ continuity has a cumulative effect on the achievement of our long-term strategic and operational objectives and, therefore, also furthers the objectives of our executive compensation program.

The terms of Mr. LaRocco's employment agreement were the result of arm's length negotiations between the Compensation Committee and Mr. LaRocco. As is the case with most executive employment agreements, our employment agreement with Mr. LaRocco addresses separation and severance benefits in connection with the termination of his employment with us, either prior to or at the end of the employment term. ~~These~~We believe that these provisions benefit both the Company and the executive ~~in that~~because they provide a clear understanding of the rights and obligations of the parties upon events resulting in the termination of the employment relationship. The terms of the employment agreement with Mr. LaRocco, including the severance and separation benefits provided

to Mr. LaRocco upon the occurrence of certain termination events, are described in detail below under "Agreements with Named Executive Officers—LaRocco Employment Agreement."

Change of Control Agreements

Change of control agreements are part of our corporate strategy to retain our well-qualified senior executive officers, notwithstanding a potential or actual change of control of our Company. Change of control agreements also serve our shareholders' interests by ensuring ~~that~~ senior executives will view any potential transaction objectively since an adverse change in their employment situation will not have adverse personal financial consequences. The terms of the change of control agreements with our NEOs are described in detail below under "Agreements with Named Executive Officers."The severance and separation benefits provided to the NEOs under their respective executive agreements are described below under "Potential Payments Upon Termination or Change of Control."



Tax Deductibility of Executive Compensation

~~Section 162(m) of the Code imposes a limit on the amount~~The Company's ability to deduct certain elements of compensation ~~that we may deduct in any one year for our NEOs unless certain specific criteria are satisfied. "Qualified performance-based compensation," as defined in Section 162(m)~~paid to each of ~~the Code, is fully deductible if the programs are approved by shareholders and meet other requirements. Our shareholders have approved the material terms of the OTIP, the 2009 Equity Plan~~its Chief Executive Officer and the ~~Existing LTIP as required by Section~~three other most highly compensated executive officers (other than its Chief Financial Officer) is generally limited to $1.0 million annually under IRC § 162(m) of. To ensure the ~~Code. Accordingly, compensation paid for~~maximum tax deduction allowable, the ~~attainment of~~Company historically attempted to structure the performance bonus awards under the OTIP, stock options awarded under the 2009 Equity Plan and compensation paid for the attainment of the PAUs under the Existing LTIP are intended to be deductible for federal income tax purposes under Section 162(m) of the Code. While we generally attempt to tax qualify our compensation programs, we also seek to maintain flexibility in compensating our executives. As a result, our Compensation Committee has not adopted a policy requiring all compensation to be deductible. For example, discretionary bonusperformance-based awards under the OTIP and ~~restricted common shares awarded~~the 2017 Long-Term Incentive Plan to qualify as performance-based compensation under IRC § 162(m). The Tax Cuts and Jobs Act (“Tax Act”) enacted into law in December of 2017 eliminates the ~~2009 Equity Plan~~qualified performance-based exception to the $1 million deduction limit and subjects the Chief Executive Officer and certain other executive officers of the company to the $1 million limitation for taxable years beginning after December 31, 2017. The Tax Act includes a grandfathering provision for compensation paid pursuant to a written binding contract in effect on or before November 2, 2017, that has not been modified in any material way since that date. Based on current guidance, we believe our performance-based awards granted on and prior to November 2, 2017, are ~~not intended~~in compliance with the grandfathering provision and will remain deductible. However, performance-based awards granted after November 2, 2017, will likely be subject to ~~constitute "qualified performance-based compensation" for purposes of~~the limitations on deductibility under Section 162(m) ofas expanded by the ~~Code.~~Tax Act.



Stock Ownership Guidelines

We have adopted stock ownership guidelines ("Ownership Guidelines") for our Section 16 officers, including our NEOs. These Ownership Guidelines reinforce one of the objectives of our executive compensation program and primary reasons for awarding equity compensation—to build appropriate levels of common share ownership among our executive team. Each person subject to the Ownership Guidelines is advised to acquire and maintain ownership of a designated number of common shares based on the person's position with us (the "Ownership Target Amounts"). Our Stock Ownership Guidelines also encourage our Section 16 officers to hold the net amount of common shares they obtain through the exercise of stock options or the vesting of restricted common shares or other applicable equity-based awards until the date on which the officer satisfies the Ownership Target Amounts.

Equity grants vary based on an individual's level in the Company, our competitive market data, the scope of the NEO's responsibility and the number of common shares available for issuance under our equity compensation plans. As a result, it makes sense to also vary the level of ownership we require of these individuals based on their level in the Company and the number of ~~option~~equity grants they receive. The following Ownership Target Amount categories will remain in place until changed by the Compensation Committee:



Position			Ownership Target Amount
Chairman/~~CEO~~Chief Executive Officer			100,000 common shares
Senior Vice President			15,000 common shares
Vice President			7,000 common shares

Executives are in compliance with the Ownership Guidelines if they meet the Ownership Target Amounts within five years of assuming the designated category of management or if they invest a minimum of 6% of their annual base salary, ~~in Company stock~~up to Employee Stock Purchase Plan limits, through a payroll deduction plan. All common shares directly owned by officers count toward meeting their respective Ownership Target Amounts, including unvested time-based restricted common ~~shares.~~shares and time-based deferred stock units. In addition, for purposes of the Ownership Target Amounts we count as owned by officers one-third of their vested "in-the-money" stock options.

The following table shows the Ownership Target Amounts for the NEOs and the number of common shares currently owned by the NEOs as of March ~~10, 2017.~~15, 2019.


	Ownership Target Amount for Common Shares	Eligible Options Owned by NEO⁽¹⁾	Unvested Restricted Stock Owned by NEO⁽²⁾	Common Shares Owned Directly by NEO	Total Common Share Ownership Toward Target		Ownership Target Amount for Common Shares	Eligible Options Owned by NEO⁽¹⁾	Time-Based Unvested Restricted Stock Owned by NEO⁽²⁾⁽³⁾	Common Shares Owned Directly by NEO	Total Common Share Ownership Toward Target
Michael E. LaRocco	100,000	7,466	15,732	12,431	35,629		100,000	18,175	19,641	51,139	88,955
Steven E. English	15,000	42,277	4,929	16,873	64,079		15,000	28,186	10,093	26,730	65,009
Jessica E. Clark	15,000	21,856	4,382	5,675	31,913
Kim B. Garland	15,000	2,076	6,595	41,161	49,832		15,000	6,104	9,879	77,936	93,919
Gregory A. Tacchetti							15,000	2,778	9,147	7,700	19,625
Paul M. Stachura	15,000	3,040	6,522	1,180	10,742		15,000	8,939	9,083	11,544	29,566

⁽¹⁾ One-third of vested "in the money" stock options count toward the ownership level requirement. Vested options with an exercise price that is higher than the fair market value of the Company's common shares (i.e., underwater stock options) do not count towards the Ownership Guidelines. The stock options included in this table are one-third of those exercisable within 60 days of February 2, 2017, and "in the money" based on a price of $25.71, which represents the average closing price for the Company’s common shares during the 30-day period ending on February 28, 2017.
⁽²⁾ Includes dividend equivalents reinvested in our common shares of: Mr. LaRocco—369; Mr. English—124; Mrs. Clark—111; Mr. Garland—110; Mr. Stachura—108.
⁽¹⁾ One-third of vested "in the money" stock options count toward the ownership level requirement. Vested options with an exercise price that is higher than the fair market value of the Company's common shares (i.e., underwater stock options) do not count towards the Ownership Guidelines. The stock options included in this table are one-third of those exercisable within 60 days of March 15, 2019, and "in the money" based on a price of $33.91, which represents the average closing price for the Company's common shares during the 30-day period ending on March 15, 2019.						⁽¹⁾ One-third of vested "in the money" stock options count toward the ownership level requirement. Vested options with an exercise price that is higher than the fair market value of the Company's common shares (i.e., underwater stock options) do not count towards the Ownership Guidelines. The stock options included in this table are one-third of those exercisable within 60 days of March 15, 2019, and "in the money" based on a price of $33.91, which represents the average closing price for the Company's common shares during the 30-day period ending on March 15, 2019.
⁽²⁾ Includes dividend equivalents reinvested in our common shares of: Mr. LaRocco—731; Mr. English—368; Mr. Garland—265; Mr. Tacchetti—63; and Mr. Stachura—26.						⁽²⁾ Includes dividend equivalents reinvested in our common shares of: Mr. LaRocco—731; Mr. English—368; Mr. Garland—265; Mr. Tacchetti—63; and Mr. Stachura—26.
⁽³⁾ Excludes performance based unvested restricted stock of 7,500 shares for Mr. English, Mr. Garland, Mr. Tacchetti and Mr. Stachura.						⁽³⁾ Excludes performance based unvested restricted stock of 7,500 shares for Mr. English, Mr. Garland, Mr. Tacchetti and Mr. Stachura.



Clawback Policy

Our clawback policy provides that if the Company is required to prepare an accounting restatement or amend previously filed financial statements to correct errors to those financial statements, the Company will seek to recover from any current and future Section 16 officer of the Company the portion of pre-tax incentive compensation granted and paid to the officer on or after March 1, 2016, in excess of what should have been paid to the officer if the payment was determined based on the restated or amended financial statements.



Anti-Hedging and Anti-Pledging Policy

Our anti-hedging policy prohibits all Company ~~employees,~~associates, including our NEOs, and members of the Board from engaging in certain hedging transactions relating to Company securities held by them, including short sales and other transactions that shift the economic consequences of ownership of Company securities to a third party (e.g., the purchase or sale of puts, calls or listed options and hedging transactions such as prepaid variable forwards, equity swaps, caps, collars and exchange funds). Our executive officers and members of the Board are also subject to a policy that prohibits them from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.



Summary Compensation Table for ~~2016~~2018

Name and Principal
Position
Year Salary
Bonus
(4)

Stock
Awards(6)

Option
Awards
(7)

Non-Equity
Incentive Plan
Compensation
(8)

Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
(9)

All Other
(10)
Total
Michael E. LaRocco⁽¹⁾
2016 $ 869,230
$ 262,500
$ 160,710
$ 247,279
$ —
$ —
$ 153,600
$ 1,693,319
Chairman, President and Chief Executive Officer 2015 $ 572,115
$ —
$ 178,506
$ 283,062
$ 319,576
$ —
$ 109,992
$ 1,463,251
Steven E. English 2016 $ 475,731
$ 107,764
$ 50,274
$ 77,348
$ —
$ 154,595
$ 23,099
$ 888,811
Senior Vice President and Chief Financial Officer 2015 $ 461,539
$ —
$ 55,820
$ 87,967
$ 262,455
$ 76,537
$ 20,791
$ 965,109
2014 $ 447,231
$ —
$ 54,604
$ 86,477
$ 603,309
$ 269,185
$ 20,983
$ 1,481,789
Jessica E. Clark 2016 $ 451,609
$ 102,396
$ 44,782
$ 68,901
$ —
$ —
$ 125,938
$ 793,626
Senior Vice President, Director of Commercial and Specialty Lines 2015 $ 425,000
$ —
$ 49,517
$ 78,037
$ 406,829
$ —
$ 378,739
$ 1,338,122
2014 $ 372,692
$ —
$ 39,424
$ 62,457
$ 601,643
$ —
$ 159,007
$ 1,235,223
Kim B. Garland⁽²⁾
2016 $ 451,595
$ 102,392
$ 44,782
$ 68,901
$ —
$ —
$ 97,486
$ 765,156
Senior Vice President, Director of Standard Lines 2015 $ 152,308
$ 50,000(5)
$ 99,532
$ 75,445
$ 330,000
$ —
$ 38,457
$ 745,742
Paul M. Stachura⁽³⁾
2016 $ 380,443
$ 69,759
$ 32,590
$ 50,135
$ —
$ —
$ 71,090
$ 604,017
Senior Vice President, Chief CARE Officer



Name and Principal Position	Year	Salary		Bonus (1)		Stock Awards (2)		Option Awards (3)		Non-Equity Incentive Plan Compensation (4)		Change in Pension Value and Nonqualified Deferred Compensation Earnings (5)		All Other (6)		Total
Michael E. LaRocco	2018	$	1,037,789	$	—	$	3,209,197	$	—	$	1,872,000	$	—	$	72,948	$	6,191,934
Chairman, President and Chief Executive Officer	2017	$	911,539	$	—	$	686,811	$	—	$	340,340	$	—	$	57,418	$	1,996,108
Chairman, President and Chief Executive Officer	2016	$	869,230	$	262,500	$	160,710	$	247,279	$	—	$	—	$	153,600	$	1,693,319
Steven E. English	2018	$	510,103	$	—	$	1,058,636	$	—	$	581,318	$	40,474	$	16,182	$	2,206,713
Senior Vice President and Chief Financial Officer	2017	$	488,575	$	—	$	177,162	$	—	$	106,392	$	240,359	$	17,323	$	1,029,811
Senior Vice President and Chief Financial Officer	2016	$	475,731	$	107,764	$	50,274	$	77,348	$	78,975	$	154,595	$	23,099	$	967,786
Kim B. Garland	2018	$	488,090	$	—	$	1,012,405	$	—	$	557,599	$	—	$	73,681	$	2,131,775
Senior Vice President, Director of Commercial Lines and State Auto Labs	2017	$	464,219	$	—	$	157,798	$	—	$	94,380	$	—	$	77,248	$	793,645
	2016	$	451,595	$	102,392	$	44,782	$	68,901	$	—	$	—	$	97,486	$	765,156
Gregory A. Tacchetti	2018	$	465,967	$	—	$	911,178	$	—	$	438,750	$	—	$	37,491	$	1,853,386
Senior Vice President, Chief Information and Strategy Officer	2017	$	399,067	$	—	$	118,238	$	—	$	21,667	$	—	$	20,963	$	559,935
Paul M. Stachura	2018	$	439,182	$	—	$	903,519	$	—	$	429,000	$	—	$	40,045	$	1,811,746
Senior Vice President, Chief CARE Officer	2017	$	393,245	$	—	$	116,207	$	—	$	117,157	$	—	$	28,490	$	655,099
Senior Vice President, Chief CARE Officer	2016	$	380,443	$	69,759	$	32,590	$	50,135	$	—	$	—	$	71,090	$	604,017


(1)	Mr. LaRocco was hired by the Company and State Auto Mutual effective on April 27, 2015, and began serving as President and Chief Executive Officer of the Company and State Auto Mutual on May 8, 2015, and, therefore, was not an NEO in 2014.


~~(2)~~	~~Mr. Garland was hired by the Company effective on August 24, 2015, and, therefore, was not an NEO in 2014.~~


~~(3)~~	~~Mr. Stachura was hired by the Company effective on September 15, 2015, and, therefore, was not an NEO in 2015 or 2014.~~


~~(4)~~	The dollar amounts shown in this column for 2016 represent the discretionary cash bonus awarded by the Compensation Committee to the NEOs as permitted under the OTIP in an amount equal to 30% of the target amount of the NEO's 2016 OTIP performance bonus award. For Mr. Stachura, this amount also includes a $6,716 signing bonus paid to ~~Mr. Stachura~~him in connection with his hiring.


~~(5)~~(2)	~~This~~For 2018, this dollar amount represents ~~a signing bonus paid to Mr. Garland in connection with his hiring.~~

~~(6)~~

~~This dollar amount represents~~ the aggregate grant date fair value of the performance units, restricted common shares and deferred stock units awarded to the NEOs under our ~~2009 Equity~~2017 Long-Term Incentive Plan during 2018 calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 ("ASC Topic 718"). These amounts do not represent the ~~fiscal year indicated. The grant date fair value of the restricted common shares was determined by multiplying the closing price of our common shares on the date of grant~~actual amounts that will be realized by the ~~number of restricted common shares granted.~~NEOs with respect to such awards.

The actual number of performance units awarded in 2018 that will vest and be earned (if any) by each NEO will be based on the net written premium growth (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") and combined ratio (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of the personal and commercial segments of the State Auto Group during the applicable performance period (which began on January 1, 2018, and ends on December 31, 2020, for the performance units awarded in 2018). The grant date fair value of the performance units awarded in 2018 reflected in the Summary Compensation Table is as follows: Mr. LaRocco, $1,871,960; Mr. English, $413,368; Mr. Garland, $371,727; Mr. Tacchetti, $292,482; and Mr. Stachura, $285,956. The aggregate grant date fair value of the performance units awarded in 2018 assuming we achieve the maximum performance level is as follows: Mr. LaRocco, $9,359,802; Mr. English, $2,066,838; Mr. Garland, $1,858,633; Mr. Tacchetti, $1,462,409; and Mr. Stachura, $1,429,782. See "Compensation Discussion and Analysis—2018 Executive Compensation Plan Elements—Long-Term Equity and Cash Incentive Compensation—2018 Performance Unit Awards" for more information concerning the performance units awarded in 2018.

In March of 2018, the Compensation Committee granted retention awards to our NEOs consisting of time-based restricted common shares and performance-based restricted common shares under our 2017 Long-Term Incentive Plan. The actual number of performance-based restricted common shares that will vest and be earned (if any) by each NEO will be based on our achievement of the performance goals applicable to our annual cash incentive bonus program for the calendar year prior to the vesting date. The grant date fair value of the time-based restricted common shares awarded in 2018 reflected in the Summary Compensation Table is as follows: Mr. LaRocco, $231,237; Mr. English, $368,768; Mr. Garland, $364,178; Mr. Tacchetti, $342,196; and Mr. Stachura, $341,063. The grant date fair value of the performance-based restricted common shares awarded in 2018 reflected in the Summary Compensation Table is as follows: Mr. English, $276,500; Mr. Garland, $276,500; Mr. Tacchetti, $276,500; and Mr. Stachura, $276,500. See "Compensation Discussion and Analysis—2018 Executive Compensation Plan Elements—Retention Equity Awards—2018 Restricted Common Share Awards" for more information concerning the performance units awarded in 2018.

In March of 2018, the Compensation Committee granted a retention award to Mr. LaRocco consisting of time-based deferred stock units and performance-based deferred stock units under our 2017 Long-Term Incentive Plan pursuant to his employment agreement. The actual number of performance-based deferred stock units that will vest and be earned (if any) by Mr. LaRocco will be based on the combined ratio (as defined above in "2018 Executive Compensation Program Elements—Short-Term Incentive Compensation") of the personal and commercial segments of the State Auto Group during the three-year performance period from January 1, 2018, through December 31, 2020, and the compound annual growth rate of our stock price during the three-year performance period from March 1, 2018, through March 1, 2021. The grant date fair value of the time-based deferred stock units awarded to Mr. LaRocco in 2018 reflected in the Summary Compensation Table is $553,000. The grant date fair value of the performance-based deferred stock units awarded to Mr. LaRocco in 2018 reflected in the Summary Compensation Table is $553,000. See "Compensation Discussion and Analysis—2018 Executive Compensation Plan Elements—Retention Equity Awards—2018 Deferred Stock Unit Awards" for more information concerning the performance units awarded in 2018.

For 2017, this dollar amount represents the grant date fair value of the performance units awarded under our 2017 Long-Term Incentive Plan during 2017 calculated in accordance with ASC Topic 718. These amounts do not represent the actual amounts that will be realized by the NEOs with respect to such awards. The actual number of performance units that will vest and be earned (if any) by each NEO will be based on net written premium growth and combined ratio during the applicable performance period (which began on January 1, 2017, and ends on December 31, 2019, for the performance units awarded in 2017). The aggregate grant date fair value of the performance units awarded in 2017 assuming we achieve the maximum performance level is as follows: Mr. LaRocco, $3,434,054; Mr. English, $885,809; Mr. Garland, $788,990; Mr. Tacchetti, $591,192; and Mr. Stachura, $581,033

For 2016, this dollar amount represents the grant date fair value of the restricted common shares awarded under our 2009 Equity Plan during 2016. The grant date fair value of the restricted common shares was determined by multiplying the closing price of our common shares on the date of grant by the number of restricted common shares granted.

~~(7)~~(3)

The dollar amounts shown in this column represent the aggregate grant date fair value of the stock options awarded in ~~the fiscal year indicated.~~2016. The grant date fair value of each stock option granted was calculated in accordance with ~~Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Options (“~~ASC Topic ~~718”).~~718. For a discussion of the assumptions used in the calculations, see Note 1314 to our Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for our fiscal year ended December 31, ~~2016.~~2018.

~~(8)~~(4)

For 2018, non-equity incentive plan compensation, the dollar amounts shown in this column reflect the OTIP performance award earned in 2018 by each NEO. The amounts earned in ~~2016~~2018 by the NEOs with respect to the PAUs awarded in ~~2014~~2016 under our ~~Existing~~Prior LTIP for the ~~2014-2016~~2016-2018 performance period are not included in this column as the results for the ~~2014-2016~~2016-2018 performance period applicable to such PAUs were not available as of the date of this Proxy Statement. We expect to determine the amounts payable to the NEOs with respect to such PAUs in May ~~2017.~~2019.

For ~~2015~~2017 non-equity incentive plan compensation, the dollar amounts shown in this column reflect the aggregate total of the following awards earned in ~~2015~~2017 by each NEO under the ~~Company~~OTIP performance ~~component of the LBP, the individual performance component of the LBP~~bonus award for 2017 and the PAUs ~~relating to~~awarded under the ~~2013-2015~~Prior LTIP for the 2015-2017 performance period:


	LBP Company Performance Award ($)	LBP Individual Performance Award ($)	PAU Award ($)	Total Non-Equity Incentive Plan Compensation Awards ($)	OTIP Award ($)	PAU Award ($)	Total Non-Equity Incentive Plan Compensation Awards ($)
Michael E. LaRocco~~(a)~~	117,276	202,300	—	319,576	—	340,340	340,340
Steven E. English	61,310	140,372	60,777	262,459	—	106,392	106,392
Jessica E. Clark	58,014	173,250	175,565	406,829
Kim B. Garland(b)	247,500	82,500	—	330,000
Kim B. Garland					—	94,380	94,380
Gregory A. Tacchetti					—	21,667	21,667
Paul M. Stachura					—	117,167	117,167


~~(a)~~	~~Mr. LaRocco’s LBP bonus was prorated to reflect the portion of the year during which he was employed by the Company.~~


~~(b)~~	~~Mr. Garland’s LBP bonus was paid at target in accordance with the terms of his hiring arrangement.~~

For ~~2014~~2016 non-equity incentive plan compensation, the dollar amounts shown in this column reflect the aggregate total of the following awards earned in ~~2014~~2016 by each NEO under the ~~Company~~OTIP performance ~~component of the LBP, the individual performance component of the LBP~~award for 2016 and the PAUs ~~relating to~~awarded under the ~~2012-2014~~Prior LTIP for the 2014-2016 performance period:


	LBP Company Performance Award ($)	LBP Individual Performance Award ($)	PAU Award ($)	Total Non-Equity Incentive Plan Compensation Awards ($)	OTIP Award ($)	PAU Award ($)	Total Non-Equity Incentive Plan Compensation Awards ($)
Michael E. LaRocco					—	—	—
Steven E. English	320,896	200,813	81,600	603,309	—	78,975	78,975
Jessica E. Clark	228,504	111,375	261,764	601,643
Kim B. Garland					—	—	—
Paul M. Stachura					—	—	—


~~(9)~~(5)	The dollar amounts shown in this column reflect the change in the pension values for each of our NEOs, including amounts accruing under our Retirement Plan and SERPs in which certain of our NEOs participate. None of our NEOs who participate in our non-qualified deferred compensation plan receive preferential or above-market earnings.


~~(10)~~(6)	The table below shows the components of the "All Other Compensation" column for ~~2014~~2016 through ~~2016.~~2018.


	Year	Company Matches ($)(a)	Spousal Travel Expenses ($)(b)	Restricted Stock Dividends ($)	��	Relocation Payments ($)(c)	Other ($)(d)	Total ($)	Year	Company Matches ($)^(a)	Spousal Travel Expenses ($)^(b)	Restricted Stock Dividends ($)	Relocation Payments ($)^(c)	Other ($)^(d)	Total ($)
Michael E. LaRocco	2016	97,596	11,107	3,864		41,033	—	153,600	2018	61,514	6,545	4,889	—	—	72,948
	2015	27,433	9,746	1,580		71,233	—	109,992	2017	45,404	5,869	6,145	—	—	57,418
									2016	97,596	11,107	3,864	41,033	—	153,600
Steven E. English	2016	9,275	11,107	2,717		—	—	23,099	2018	6,875	6,681	2,626	—	—	16,182
	2015	9,275	9,746	1,770		—	—	20,791
	2014	9,100	11,111	772		—	—	20,983
Jessica E. Clark	2016	31,855	7,683	2,243		83,907	250	125,938
	2015	22,525	9,746	1,400		345,068	—	378,739	2017	9,275	5,869	2,179	—	—	17,323
	2014	22,100	6,876	557		66,942	62,532	159,007	2016	9,275	11,107	2,717	—	—	23,099
Kim B. Garland	2016	51,802	11,107	624		2,088	31,865	97,486	2018	41,488	6,545	2,254	4,591	18,803	73,681
	2015	4,062	—	441		21,215	12,739	38,457	2017	29,748	5,869	832	—	40,799	77,248
									2016	51,802	11,107	624	2,088	31,865	97,486
Gregory A. Tacchetti									2018	32,923	2,681	1,887	—	—	37,491
									2017	20,393	—	570	—	—	20,963
Paul M. Stachura	2016	35,864	11,107	454		23,665	—	71,090	2018	31,584	6,545	1,916	—	—	40,045
									2017	22,016	5,869	605	—	—	28,490
									2016	35,864	11,107	454	23,665	—	71,090



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	By Order of the Board of Directors

	MELISSA A. CENTERS
	Secretary

Dated: March 22, ~~2017~~2019



	Page
PROXY STATEMENT SUMMARY	1
QUESTIONS AND ANSWERS ABOUT THE ~~2017~~2019 ANNUAL MEETING AND VOTING	67
PROPOSAL ONE: ELECTION OF DIRECTORS	11
Nominees for ~~Class II and~~ Class I Directors	11
Board Recommendation	11
Backgrounds of Class III Director Nominees ~~(Terms Expiring 2020)~~(Term expiring in 2022)	11
~~Background of Class I Director Nominee (Term expiring in 2019~~)	12
Backgrounds of Continuing Class III Directors (Terms expiring in ~~2019)~~2020)	12
Backgrounds of Continuing Class III Directors (Terms expiring in ~~2018)~~2021)	13
Majority Voting Policy for Incumbent Directors	1415
PROPOSAL TWO: TO ~~ADOPT~~AMEND THE MATERIAL TERMS OF THE ~~STATE AUTO FINANCIAL CORPORATION 2017 LONG-TERM INCENTIVE~~OF THE COMPANY'S 1991 EMPLOYEE STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN	16
~~Key~~Proposal	16
Shares Subject to the Plan ~~Features~~	16
Description of the Employee Stock Purchase Plan	16
Federal Income Tax Information	17
~~Section 162(m) of the Internal Revenue Code~~2018 Information Pertaining to Named Executive Officers and Other Groups	1718
~~Summary of the 2017 Long-Term Incentive Plan~~	17
~~U.S. Federal Income Tax Consequences~~	21
~~New Plan Benefits~~	23
Reasons for Shareholder Approval; Board Recommendation	2418
PROPOSAL THREE: RATIFICATION OF SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	2519
Reasons for Shareholder Approval; Board Recommendation	2519
PROPOSAL FOUR: ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT	2620
Reasons for Shareholder Approval; Board Recommendation	26
~~PROPOSAL FIVE: ADVISORY VOTE ON THE FREQUENCY OF CONDUCTING FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION~~	27
~~Reasons for Shareholder Approval; Board Recommendation~~	2720
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS	2821
Relationship with State Auto Mutual ~~and Changes in Board Structure~~	2821
Board Responsibility	2821
Board Leadership	21
Board Composition	22
Board Meetings and Attendance	28
~~Board Composition~~	29
~~Board Leadership~~	3023
Committees of the Board of Directors	3123
The Board's Role in Enterprise Risk Management	3325
Risk Assessment in Compensation Programs	3426
Directors	3426
Nomination of Directors	3426
Director Independence	3527
Compensation of Outside Directors and Outside Director Compensation Table	3528
~~2016~~ 2018 Outside Director Compensation	3729
Outside Directors' Ownership of Restricted Share Units	3729
Communications with the Board	3829
Other Governance Issues of Interest	3830
Availability of Corporate Governance Documents	3830
AUDIT COMMITTEE MATTERS	3931
Audit Committee Report for the Fiscal Year Ending December 31, ~~2016~~2018	3931
Independent Registered Public Accounting Firm's Audit and Other Service Fees	33
Audit Committee's Pre-Approval Policies and Procedures	33
COMPENSATION COMMITTEE MATTERS	34
Compensation Committee Interlocks and Insider Participation	34



	~~Page~~
~~Independent Registered Public Accounting Firm's Audit and Other Service Fees~~	40
~~Audit Committee's Pre-Approval Policies and Procedures~~	41
~~COMPENSATION COMMITTEE MATTERS~~	42
~~Compensation Committee Interlocks and Insider Participation~~	42
Compensation Committee Report	4234
CEO PAY RATIO DISCLOSURE	35
COMPENSATION DISCUSSION AND ANALYSIS	4336
Executive Summary	4336
Executive Compensation Philosophy	4741
How the Amount of Executive Compensation is Determined	4842
~~2016~~2018 Executive Compensation Program Elements	5044
Looking ~~Forward-2017~~Forward-2019 Compensation	5851
Contractual Arrangements with Named Executive Officers	6053
Tax Deductibility of Executive Compensation	6154
Stock Ownership Guidelines	6154
Clawback Policy	6255
Anti-Hedging and Anti-Pledging Policy	6255
Summary Compensation Table for ~~2016~~2018	6356
Grants of Plan-Based Awards in ~~2016~~2018	6660
Outstanding Equity Awards at Fiscal ~~2016~~2018 Year-End	6763
Option Exercises and Stock Vested in Fiscal ~~2016~~2018	6864
Retirement Plans	6864
Pension Benefits in Fiscal ~~2016~~2018	6965
Deferred Compensation Plans	6965
Nonqualified Deferred Compensation for Fiscal ~~2016~~2018	7066
Agreements with Named Executive Officers	7167
Potential Payments Upon Termination or Change of Control	7572
OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY	7876
Beneficial Ownership Information for Directors and Named Executive Officers	7876
Principal Holders of Voting Securities	7977
Section 16(a) Beneficial Ownership Reporting Compliance	7977
EQUITY COMPENSATION PLAN INFORMATION AND BURN RATE	8078
~~Outstanding Options and Available Shares~~Equity Compensation Plan Information	8078
Burn Rate	80
~~1998 State Auto Agent’s Stock Option Plan~~	8078
RELATED PERSON TRANSACTIONS	8179
Policies and Procedures for Review and Approval of Related Person Transactions	8179
Transactions Involving State Auto Mutual	8179
OTHER MATTERS	8381
Other Proposals at the Annual Meeting of Shareholders	8381
Future Shareholder Proposals	8381
�� Future Electronic Access to Proxy Materials and the Annual Report	8381
Annual Report on Form 10-K and Additional Information About State Auto Financial Corporation	8482
~~Appendix A—State Auto Financial Corporation's 2017 Long-Term Incentive Plan~~APPENDIX A	A-1



STATE AUTO FINANCIAL CORPORATION
(Name of Registrant as Specified In Its Charter)

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


1.	Election of two Class III directors, each to hold office for a three-year term ~~and one Class I director to hold office for a two-year term (the remaining term for that class of directors)~~ and in each case until a successor is elected and qualified;


2.	A proposal to ~~adopt the~~amend a material ~~terms~~term of the ~~State Auto Financial Corporation 2017 Long-Term Incentive~~Company's 1991 Employee Stock Purchase and Dividend Reinvestment Plan;


3.	Ratification of the selection of Ernst & Young LLP as State Auto Financial Corporation's independent registered public accounting firm for ~~2017;~~2019;


4.	Non-binding and advisory vote on the compensation of State Auto Financial Corporation's Named Executive Officers as disclosed in the Proxy Statement for the ~~2017~~2019 Annual Meeting of Shareholders; and


5.	~~Non-binding and advisory vote on whether future advisory votes on executive compensation should occur every year, every two years or every three years; and~~


6.	To transact such other business as may properly come before the meeting or any adjournment thereof.



~~2017~~2019 ANNUAL MEETING OF SHAREHOLDERS
Date and Time May ~~5, 2017,~~10, 2019, 11:00 a.m. local time	Place 518 East Broad Street Columbus, Ohio 43215	Record Date You may vote if you were a shareholder of record at the close of business on March ~~10, 2017~~15, 2019



Proposal		Board Vote Recommendation	Page Reference (for more detail)
Proposal 1	Election of Directors	FOR each Nominee	11
Proposal 2	~~To Adopt the~~Amend a Material ~~Terms~~Term of the ~~State Auto Financial Corporation 2017 Long-Term Incentive~~Company's 1991 Employee Stock Purchase and Dividend Reinvestment Plan	FOR	16
Proposal 3	Ratification of Ernst & Young LLP as the Company's Independent Registered Public Accounting Firm	FOR	2519
Proposal 4	Advisory Vote to Approve Compensation of Company's Named Executive Officers	FOR	26
~~Proposal 5~~	~~Advisory Vote on Whether Future Advisory Votes on Executive Compensation Should Occur Every Year, Every Two Years or Every Three Years~~	~~FOR Every Year~~	2720



How to Vote
: Internet	Visit the applicable voting website (www.proxyvote.com) until 11:59 p.m. Eastern Standard Time on May ~~4, 2017.~~9, 2019.
( Telephone	Within the United States, ~~U.S.~~United States Territories and Canada, call 1-800-690-6903 until 11:59 p.m. Eastern ~~time~~Standard Time on May ~~4, 2017.~~9, 2019.
, Mail	Complete, sign, date and return your proxy card or voting instruction form in the self-addressed envelope provided. Documents returned by mail must be received by May 9, 2019.
? In Person	Attend the ~~2017~~2019 Annual Meeting of Shareholders.



CASTING YOUR VOTE



DIRECTOR NOMINEES



DIRECTORS CONTINUING IN OFFICE



CORPORATE ~~GOVENANCE~~GOVERNANCE HIGHLIGHTS



§	7 of our 8 directors are independent	§	Independent Lead Director	§	Policy prohibiting hedging of Company shares
§	Audit Committee is comprised only ~~comprised~~ of independent directors	§	All current directors own Company common shares or restricted share units	§	No shareholder rights plan or "poison pill"
§	Compensation Committee is comprised only ~~comprised~~ of independent directors	§	Annual Board and Committee self-evaluations	§	Majority voting policy for incumbent directors
§	Nominating and Governance Committee is comprised only ~~comprised~~ of independent directors	§	Stock ownership guidelines for directors and executive officers	§	Restrictions on pledging Company shares by directors and executive officers
§	Risk Committee is comprised only ~~comprised~~ of independent directors	§	Annual advisory vote on executive compensation	§	NoMandatory retirement age for directors ~~are involved in related party transactions~~
§	Compensation "clawback" obligations imposed on Named Executive Officers	§	~~Comprehensive Associate Code of Business Conduct~~Over 98% average Board and ~~Corporate Governance Guidelines~~Committee meeting attendance in 2018	§	No super majority vote of shareholders to approve amendments to charters or bylaws ~~approved~~(approved by two-thirds of the ~~Board~~Board)
§	Board participation in executive succession planning	§	~~Over 94% average Board and Committee meeting attendance in 2016~~4 of our 8 directors are women	§	Risk oversight by full Board and committees



§	~~Combined ratio~~Pre-tax income of ~~106.5%,~~$12.9 million versus $35.0 million in 2017. 2018 pre-tax results included $57.4 of net unrealized loss on investments.	§	Net written premium of $1,210.3 million, which represented a ~~4.7 point increase~~4.7% decrease compared to ~~2015~~2017.	§	Net income of ~~$21.0~~$12.8 million, which represented an increase of $30.6 million from 2017. 2017 results included a provisional net charge of $43.5 million due to the revaluation of our deferred tax assets.
§	Stock price increased approximately 17% from December 31, 2017, to December 31, 2018.	§	Combined ratio of 100.6%, which represented a 7.1 point improvement compared to 2017.	§	Dividends paid per share of $0.40.
§	Net investment income of $84.9 million, which represented a 7.7% increase compared to 2017.	§	Statutory personal insurance segment combined ratio of 97.0%, which represented a 5.4 point improvement compared to 2017.	§	Book value per share of $18.91 at December 31, 2018, which represented a decrease of ~~$30.2 million from 2015~~	§	~~Earnings per diluted share of $0.50, which represented a decrease of $0.73~~$0.77 per share from ~~2015~~December 31, 2017.
§	~~Non-cat loss~~Favorable development of prior accident year losses and loss ~~adjustment expense (LAE)~~expenses of $80.2 million compared to $46.6 million in 2017.	§	Statutory commercial insurance segment combined ratio of ~~66.6%~~101.2%, which represented a ~~2.7~~1.4 point ~~increase~~improvement compared to ~~2015~~2017.	§	Return on average equity of ~~2.4%~~1.5%, which represented a ~~3.4~~3.6 point ~~decrease compared to 2015~~	§	~~Our stock price increased approximately 30% from December 31, 2015, to December 31, 2016~~
§	~~Book value per share of $21.31 at December 31, 2016, which represented a decrease of $0.09 per share from December 31, 2015~~	§	~~Net written premium of $1,293.3 million, which represented a 1.5%~~ increase compared to ~~2015~~2017.	§



IMPACT OF STATE AUTO GROUP ON ~~2016~~2018 COMPENSATION OF NEOs



PRIMARY COMPONENTS OF OUR ~~2016~~2018 EXECUTIVE COMPENSATION PROGRAM



Component	Form	Key Features
Base Salary	Cash	Intended to attract and retain top-caliber executives. Generally based on the median level of base salary for the executive in our competitive market, but may vary based on the executive's scope of responsibility or unique skills or expertise.
Short-Term Incentive	Cash	Intended to: (i) provide incentives and rewards to executives who achieve performance goals and strategic objectives that significantly contribute to long-term profitable growth; (ii) focus ~~our~~ executives on ~~achieving~~ the ~~objectives~~key measures we believe will drive superior performance and increase shareholder value over the long term; and (iii) assist us in recruiting and retaining highly talented executives by providing competitive total rewards. Payouts determined based on the net written premium growth and combined ratio of ~~our annual operating plan~~the personal and ~~balance~~commercial segments of the ~~focus of our long-term incentive plans.~~State Auto Group over a one-year performance period. Payouts range from 2%0% of target payout, if we fail to ~~200%~~meet the minimum performance goals for both of the performance measures, to 300% of target payout, ~~depending on performance.~~if we achieve the maximum performance goals for both of the performance measures.
Performance Award Units ("PAUs")	Cash	Intended ~~to encourage business behaviors that drive appreciation in the price of our common shares over the long term, align the interests of~~to: (i) effectively incentivize our executives by providing significant upside potential to our executives if they deliver sustained exceptional results; (ii) focus our executives on achieving profitable growth, which the Compensation Committee believes to represent the most critical result for delivering long-term success and shareholder value; (iii) be consistent with structure of the ~~interests~~OTIP performance bonus awards, the performance unit awards and the performance-based restricted stock awards, which the Compensation Committee believes will solidify our One Team structure; and (iv) align pay and performance. PAUs also serve the purpose of ~~our shareholders and balance the focus of our annual operating plan.~~limiting shareholder dilution as they are paid in cash. Payouts determined based on the ~~performance~~net written premium growth and combined ratio of the personal and commercial segments of the State Auto Group ~~compared to a peer group~~ over a three-year performance period. Payouts range from ~~13.33%~~0% of target payout, if we fail to ~~200%~~meet the minimum performance goals for both of the performance measures, to 500% of target payout, ~~depending on performance.~~if we achieve the maximum performance goals for both of the performance measures. Represented ~~65%~~50% of the total long-term incentive opportunity awarded to each ~~NEO~~executive in ~~2016.~~2018.
~~Stock Options~~Performance Units	Equity	Intended ~~to encourage business behaviors that drive appreciation in the price of our common shares over the long term, align the interests of~~to: (i) effectively incentivize our executives by providing significant upside potential to our executives if they deliver sustained exceptional results; (ii) focus our executives on achieving profitable growth, which the Compensation Committee believes to represent the most critical result for delivering long-term success and shareholder value; (iii) be consistent with ~~the interests of our shareholders and build appropriate levels of common share ownership among our executive team.~~ ~~One-third~~structure of the ~~total options granted vests~~OTIP performance bonus awards, the PAU awards and the performance-based restricted stock awards, which the Compensation Committee believes will solidify our One Team structure; and (iv) align pay and performance. Payouts determined based on ~~each anniversary~~the net written premium growth and combined ratio of the ~~grant date.~~personal and commercial segments of the State Auto Group over a three-year performance period. Payouts range from zero performance units, if we fail to meet the minimum performance goals for both of the performance measures, to 500% of the target number of performance units, if we achieve the maximum performance goals for both of the performance measures. Represented ~~20%~~50% of the total long-term incentive opportunity awarded to each ~~NEO~~executive in ~~2016.~~2018.


~~Restricted Common Shares~~
Retention Equity Awards	Equity	Intended to ~~reduce our usage~~retain top-caliber executives. The retention equity awards made in 2018 consisted of time-based and performance-based restricted common shares ~~under our equity compensation plans, align~~granted to the ~~interests~~NEOs and time-based and performance-based deferred stock units granted to Mr. LaRocco. 10,000 of the time-based restricted common shares awarded to each of Messrs. English, Garland, Tacchetti and Stachura in 2018 vest equally in one-quarter increments over a four-year period beginning on December 31, 2018. The remaining time-based restricted common shares awarded to our NEOs ~~with the interests of our shareholders and encourage associate retention.~~in 2018 vest equally in one-third increments over a three-year period beginning on December 31, 2018. ~~Vest~~ The performance-based restricted common shares will vest equally in one-quarter increments beginning on the ~~third~~first anniversary of the grant date based upon our achievement of the performance goals applicable to our annual performance bonus program (OTIP) for the immediately preceding calendar year. The time-based deferred stock units will vest equally in one-third increments over a three-year period beginning on the day preceding the first anniversary of the grant date. ~~Represented 15%~~ The performance-based deferred stock units will vest and be earned, if at all, based on the combined ratio of the ~~total long-term incentive opportunity awarded to each NEO in 2016.~~personal and commercial segments of the State Auto Group during the three-year performance period from January 1, 2018, through December 31, 2020, and the compound annual growth rate of our stock price during the three-year performance period from March 1, 2018, through March 1, 2021.
Perquisites	Cash; Benefits	Intended to attract and retain top-caliber executives. Are limited in value and participation.



Why Did I Receive a Notice of Internet Availability of Proxy Materials in the Mail Instead of a Full Set of Printed Proxy Materials?



What is the Difference Between a Shareholder of Record and a Shareholder Who Holds Common Shares in Street Name?



What Are the Different Methods ~~That~~ I Can Use to Vote My ~~Shares of~~ Common Shares?



~~What Items Will Be Voted on at the 2017 Annual Meeting of Shareholder?~~



~~Proposal~~	~~Voting Options, Board Recommendations and Voting Requirement~~
~~Proposal 1~~ ~~Election of Directors~~	~~Voting Options~~ Ÿ ~~Vote for a nominee;~~ Ÿ ~~Vote against a nominee; or~~ Ÿ ~~Withhold authority to vote for a nominee.~~ ~~Board Recommendation~~ ~~The Board unanimously recommends a vote "FOR" each of the nominees in the Proxy Statement.~~ ~~Voting Requirement~~ ~~Nominees receiving the highest number of votes will be elected as directors. Shareholders do not have the right to cumulate their votes in the election of directors.~~ Any incumbent director who does not receive the vote of at least the majority of the votes cast at the Annual Meeting is required to promptly offer in writing his or her resignation to the Board in accordance with the Company's Corporate Governance Guidelines. The Nominating and Governance Committee will consider the offer and recommend to the Board whether to accept the offer. The full Board will consider all factors it deems relevant to the best interests of the Company, make a determination and publicly disclose its decision and rationale within 90 days after confirmation of election results. See below ~~"Majority Voting Policy for Incumbent Directors."~~
~~Proposal 2~~ ~~To Adopt the Material Terms of the Company's 2017 Long-Term Incentive Plan~~	~~Voting Options~~ Ÿ ~~Vote for the adoption;~~ Ÿ ~~Vote against the adoption; or~~ Ÿ ~~Abstain from voting.~~ ~~Board Recommendation~~ ~~The Board unanimously recommends a vote "FOR" the adoption of the material terms of Company's 2017 Long-Term Incentive Plan.~~ ~~Voting Requirement~~ ~~The material terms of the Company's 2017 Long-Term Incentive Plan will be adopted if the votes cast "FOR" exceed the votes cast "AGAINST."~~
~~Proposal 3~~ ~~Ratification of the Selection of Ernst & Young LLP as the Company's Independent Registered Public Accounting Firm~~	~~Voting Options~~ Ÿ ~~Vote for the ratification;~~ Ÿ ~~Vote against the ratification; or~~ Ÿ ~~Abstain from voting.~~ ~~Board Recommendation~~ ~~The Board recommends a vote "FOR" this proposal.~~ ~~Voting Requirement~~ ~~The selection of the independent registered public accounting firm will be ratified if the votes cast "FOR" exceed the votes cast "AGAINST."~~



~~Proposal 4~~ ~~Non-Binding Advisory Vote to Approve the Compensation of the Company's Named Executive Officers~~	~~Voting Options~~ Ÿ ~~Vote for approval of the compensation of the Company's Named Executive Officers;~~ Ÿ ~~Vote against approval of the compensation of the Company's Named Executive Officers; or~~ Ÿ ~~Abstain from voting.~~ ~~Board Recommendation~~ ~~The Board recommends a vote "FOR" this proposal.~~ ~~Voting Requirement~~ ~~The compensation of the Company's Named Executive Officers will be approved on an advisory basis if the votes cast "FOR" exceed the votes cast "AGAINST."~~ This vote is not binding on the Company, the Board of Directors or the Compensation Committee. Nevertheless, the Compensation Committee values the opinions expressed by shareholders through their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for the Company's Named Executive Officers.
~~Proposal 5~~ ~~Non-Binding Advisory Vote on the Frequency of Conducting Future Advisory Votes on Executive Compensation~~	~~Voting Options~~ Ÿ ~~Vote for conducting future advisory votes on executive compensation every year;~~ Ÿ ~~Vote for conducting future advisory votes on executive compensation every two years;~~ Ÿ ~~Vote for conducting future advisory votes on executive compensation every three years; or~~ Ÿ ~~Abstain from voting.~~ ~~Board Recommendation~~ ~~The Board recommends a vote for conducting future advisory votes on executive compensation every year.~~ ~~Voting Requirement~~ The option of once every year, two years or three years that receives the highest number of votes cast will be determined to be the preferred frequency with which the Company is to hold a shareholder vote to approve the compensation of its Named Executive Officers. This vote is not binding on the Company, the Board of Directors or the Compensation Committee. Nevertheless, the Compensation Committee values the opinions expressed by shareholders through their vote on this proposal and will consider the outcome of the vote when making the decision as to the timing for conducting future advisory votes on executive compensation.



Who Will Count the Votes ~~Case~~Cast at the Annual Meeting?



What Happens if I Do Not Specify a Choice For a Matter When Returning A Proxy?



Will My Shares Be Voted if I Do Not Provide My Proxy or Voting Instructions?



Board Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE TWO NOMINEES NAMED BELOW AS CLASS ~~II DIRECTORS AND "FOR" THE ELECTION OF THE PERSON NAMED BELOW AS A NOMINEEE FOR CLASS~~ I ~~DIRECTOR.~~DIRECTORS.



~~David R. Meuse~~Robert E. Baker
	Age: 7172
	STFC Director Since: ~~2006~~2007
	Committees Served in ~~2016~~2018:: Audit ~~Independent,~~ and ~~Investment and Finance~~Compensation (Chair)



~~S. Elaine Roberts~~
	~~Age:~~ 64
	~~STFC Director Since:~~ ~~2002~~
	~~Committees Served in 2016:~~ ~~Compensation, Independent, Nominating and Governance, and Risk~~



Kym M. Hubbard
	Age: 5961
	STFC Director Since: ~~September~~ 2016
	Committees Served in ~~2016:~~2018: Audit, Independent, Compensation, and Investment and Finance



~~Robert E. Baker~~David R. Meuse
	Age: 7073
	STFC Director Since: ~~2007~~2006
	Committees Served in ~~2016:~~2018: Audit, Independent, and ~~Compensation~~Investment and Finance (Chair)