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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.             )

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PRELIMINARY PROXY STATEMENT – SUBJECT TO COMPLETION

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SAFETY INSURANCE GROUP, INC.

20 Custom House Street, Boston, Massachusetts 02110

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I am pleased to invite you to attend the 2022 Annual Meeting of Stockholders of Safety Insurance Group, Inc. (the “2022 Annual Meeting”), which will be held at [•], at our headquarters, 20 Custom House Street, Boston, Massachusetts 02110. While attendance in person will be permitted, stockholders will be able to listen to a live teleconference of the meeting by dialing in at (866) 295-5205. The participation code for the meeting is 9510600. We will be taking questions from Stockholders only in advance of the meeting to reduce the risk of technology problems. If you have questions, please email them to InvestorRelations@SafetyInsurance.com by [•].

Included with this letter are the Notice of Annual Meeting of Stockholders, a proxy statement detailing the business to be conducted at the Annual Meeting and a White proxy card.

The matters to be voted on at the 2022 Annual Meeting are:

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(i) the election of two directors;

(ii) the ratification, on an advisory (non-binding) basis, of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2022;

(iii) the approval, on an advisory (non-binding) basis, of our named executive officer compensation;

(iv) the approval of an amendment to our Amended and Restated Certificate of Incorporation (the “Certificate”) and Amended and Restated Bylaws (the “Bylaws”) to allow stockholders the right to call a special meetings of stockholders;

(v) the approval of an amendment to the Certificate to allow stockholders to act by written consent;

(vi) the approval of an amendment to the Certificate to replace the supermajority voting requirement contained therein with a majority voting requirement,

(vii) the approval of the amended terms of the 2018 Long-Term Incentive Plan, and

(viii) to transact such other business as may properly come before the meeting or any adjournment or any postponement thereof.

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Our board of directors (our “Board”) recommends that you vote in accordance with our Board’s recommendation on each of these proposals using the enclosed WHITE proxy card. Your vote will be especially important this year because Ides Capital Partners Master Fund, Ltd. (“Ides”) has notified us that they intend to nominate two candidates for election at the 2022 Annual Meeting.

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Our Board does not endorse any of Ides’ Nominees and unanimously recommends that you vote “FOR” our Board’s nominees by using the enclosed WHITE proxy card and disregard any materials, and do not sign, return or vote on any proxy card sent to you by or on behalf of Ides.  If you have already voted using a proxy card sent to you by Ides, you can revoke it by: (i) executing and delivering the WHITE proxy card, (ii) voting via the Internet using the Internet address on the WHITE proxy card, (iii) voting by telephone using the toll-free number on the WHITE proxy card or (iv) voting at the 2022 Annual Meeting. Only your latest dated proxy will count, and any proxy may be revoked at any time prior to its exercise at the 2022 Annual Meeting as described in the accompanying proxy statement.

IT IS EXTREMELY IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED AT THE ANNUAL MEETING. Whether or not you plan to attend the 2022 Annual Meeting, we encourage you to vote as soon as possible so that your shares are represented. We urge you to vote TODAY by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the postage pre-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote via the Internet or by telephone. Returning your WHITE proxy card will not prevent you from attending the 2022 Annual Meeting but will ensure that your vote is counted if you are unable to attend.  

Morrow Sodali LLC is assisting us with our effort to solicit proxies. If you have any questions concerning the business to be conducted at the 2022 Annual Meeting, would like additional copies of this Proxy Statement or need help submitting a proxy for your shares, please contact our proxy solicitor:

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Morrow Sodali LLC

509 Madison Avenue, Suite 1206

New York, New York 10022

Stockholders Call Toll Free: 800-662-5200

Banks Brokers, Trustees, and Others Call Collect: 203-658-9400

Email: SAFT@info.morrowsodali.com

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SAFETY INSURANCE GROUP, INC.

20 Custom House Street, Boston, Massachusetts 02110

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD [•]

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The 2021 Annual Meeting of Stockholders of Safety Insurance Group, Inc. (the “Company”) will be held on, [•]local time, at our headquarters, 20 Custom House Street, Boston, Massachusetts 02110. At this meeting, you will be asked to consider and vote upon the following:

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These items of business are more fully described in the proxy statement accompanying this Notice.

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Our Board has fixed the close of business on [•] as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting of Stockholders of the Company (the “2022” Annual Meeting”).  Our stockholders are urged to submit an enclosed WHITE proxy card, even if their shares were sold after such date.

YOUR VOTE IS VERY IMPORTANT. It is important that your voice be heard and your shares be represented at the 2022 Annual Meeting whether or not you are able to attend. We urge you to vote TODAY by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the postage pre-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote via the Internet or by telephone. Please submit a proxy as soon as possible, so that your shares can be voted at the 2022 Annual Meeting in accordance with your instructions. Please refer to “Questions and Answers Regarding Voting Procedures and Other

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Information” on page 10 of the accompanying proxy statement and the instructions on the WHITE proxy card. Additionally, we hope that you can attend the 2022 Annual Meeting. If you are the beneficial owner of your shares (that is, you hold your shares in “street name” through an intermediary such as a broker, bank or other nominee), you will receive instructions from your broker, bank or other nominee as to how to vote your shares or submit a proxy to have your shares voted. Because of the contested nature of the director election, if you do not give instructions to your broker, your broker may not be able to vote your shares with respect to any of the proposals. We urge you to instruct your broker, bank or other nominee to vote your shares “FOR” each of the proposals listed on the enclosed WHITE proxy card.

IMPORTANT

Ides Capital Master Fund, Ltd. (“Ides”) has provided notice to the Company that Ides intends to nominate two director candidates for election at the 2022 Annual Meeting. The Company is not responsible for the accuracy of any information provided by or relating to Ides contained in any proxy solicitation materials filed or disseminated by, or on behalf of, Ides or any other statements that Ides or any of its representatives may otherwise make.

OUR BOARD DOES NOT ENDORSE ANY OF IDES’ NOMINEES AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” OUR BOARD’S NOMINEES BY USING THE ENCLOSED WHITE  PROXY CARD.  PLEASE DISREGARD ANY MATERIALS, AND DO NOT SIGN, RETURN OR VOTE ON ANY [COLOR] PROXY CARD, SENT TO YOU BY OR ON BEHALF OF IDES EVEN TO VOTE AGAINST IDES’ NOMINEES, AS DOING SO WILL REVOKE ANY WHITE PROXY YOU MAY HAVE PREVIOUSLY SUBMITTED. If you have already signed any proxy card provided by or on behalf of Ides, you have every legal right to change your vote by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the postage pre-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote via the Internet or by telephone. Only your latest dated proxy will count.

OUR BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF OUR BOARD’S NOMINEES UNDER PROPOSAL 1 AND “FOR” PROPOSALS 2, 3, 4, 5, 6, and 7 USING THE ENCLOSED WHITE PROXY CARD.

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Important Notice Regarding the Availability of Proxy Materials for

Our 2022 Annual Meeting of Stockholders to Be Held on [•]

The accompanying Proxy Statement and our 2021 Annual Report to Our Stockholders are available for viewing, printing and downloading at www.proxyvote.com and http://materials.proxyvote.com/78648T.

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SAFETY INSURANCE GROUP, INC.

20 Custom House Street, Boston, Massachusetts 02110

PROXY STATEMENT

FOR ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD [•]

GENERAL INFORMATION

This Proxy Statement is being furnished in connection with the solicitation of proxies on behalf of the Board of Directors (the “Board”) of Safety Insurance Group, Inc. (the “Company” or “Safety” or “we”) for the 2022 Annual Meeting of Stockholders to be held on [•] at the Company’s headquarters located at 20 Custom House Street, Boston, Massachusetts 02110 (the “2022 Annual Meeting”). For more information on the participants in the Board’s solicitation, please see “Participants in the Solicitation” beginning on page [•] of this Proxy Statement. We have retained Morrow Sodali LLC (“Morrow Sodali”), a proxy solicitation firm, which may solicit proxies on the Board’s behalf. You may also be solicited by press releases issued by us, postings on our corporate website or other websites or otherwise.

The record date for determining stockholders entitled to vote at the 2022 Annual Meeting has been fixed at the close of business on [•] (the “Record Date”). As of the Record Date, [•] shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), were outstanding and entitled to be voted. Every stockholder will be entitled to one vote for each share of Common Stock recorded in his or her name on the Company’s books as of the Record Date. The Company mailed this Proxy Statement and the related form of proxy (the “Proxy”) on or about [•].

Given the contested nature of the director election, please note that brokers may not vote your shares on any proposal without your specific instructions. Please be sure to give specific voting instructions to your broker, so that your vote can be counted.

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If you timely return a validly executed WHITE proxy card without indicating how your shares should be voted on a matter and you do not revoke your proxy, your proxy will be voted in accordance with the Board’s recommendation as follows:

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With respect to Proposal 1, Election of the Company’s Directors, the shares of Common Stock represented by the enclosed Proxy will be voted as directed by the stockholder. Abstentions and withhold votes are not counted as a vote cast either “for” or “against” the nominee’s election. The Board adopted Amended and Restated Bylaws of the Company effective as of March 30, 2020 under which a director shall be elected by a majority of the votes cast in an uncontested election at which a quorum (a majority of issued and outstanding shares of Common Stock entitled to vote) is present. For the 2022 Annual Meeting, the provisions of the Bylaws relating to majority voting for directors will not be applicable because Ides submitted a Nomination Notice stating it intends to nominate its nominees for election to the Board of Directors. Accordingly, pursuant to the Bylaws, plurality voting will instead apply. Under the plurality voting provisions of our Bylaws, directors will be elected by the vote of a plurality of the shares represented in person or by proxy at the 2022 Annual Meeting and entitled to vote on the election of directors. Therefore, the two nominees for director who receive the most “FOR” votes cast by the shares represented in person or by proxy at the 2022 Annual Meeting and entitled to vote in the election will be elected at the 2022 Annual Meeting. Votes withheld from a director nominee, abstentions and broker non-votes will be treated as present at the 2022 Annual Meeting for the purpose of determining a quorum but will not be counted as votes cast.

Broker non-votes occur when brokers do not have discretionary voting authority to vote certain shares held in “street name” on particular “non-routine” proposals, and the “beneficial owner” of those shares has not instructed the broker to vote on those proposals. Although votes on the ratification of our registered public accounting firm (Proposal 2) are normally considered “routine” matters such that broker may vote without instructions from their clients, to the extent that your broker provides you with the Ides’ proxy materials, it will not be able to vote your shares on Proposal 2 without your specific instructions. To the extent that your broker nominee does not provide you with the Ides’ proxy materials, your broker will be able to vote on the ratification of the selection of our registered public accounting firm on the WHITE proxy card even if it does not receive your instructions.

With respect to Proposal 2, Ratification of Appointment of Independent Registered Public Accounting Firm, an affirmative vote of a majority of the shares present or represented and entitled to vote on such proposal is required for approval. Abstentions are included in the number of shares

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present or represented and entitled to vote on the proposal and therefore have the practical effect of a vote against the proposal.

With respect to Proposal 3, Advisory Vote on Executive Compensation, an affirmative vote of a majority of the shares present or represented and entitled to vote on such proposal is required for approval (on a non-binding, advisory basis). Abstentions are included in the number of shares present or represented and entitled to vote on the proposal and therefore have the practical effect of a vote against the proposal. Your vote is advisory and will not be binding upon the Company, the Board of Directors, or the Compensation Committee. However, the Board of Directors and the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.

Proposal 4, an amendment to our Amended and Restated Certificate of Incorporation (the “Certificate”) and Amended and Restated Bylaws (the “Bylaws”) to allow stockholders the right to call a special meetings of stockholders, requires an affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast by the holders of outstanding capital stock entitled to vote at the 2022 Annual Meeting. Abstentions and broker non-votes, if any, will count as votes against the proposal.

Proposal 5, an amendment to our Certificate to allow stockholders to act by written consent, requires an affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast by the holders of outstanding capital stock entitled to vote at the 2022 Annual Meeting. Abstentions and broker non-votes, if any, will count as votes against the proposal.

Proposal 6, an amendment to our Certificate to replace the supermajority voting requirement contained therein with a majority voting requirement, requires an affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast by the holders of outstanding capital stock entitled to vote at the 2022 Annual Meeting. Abstentions and broker non-votes , if any, will count as votes against the proposal.

With respect to Proposal 7 approval of the material terms of the amended 2018 Long Term Incentive Plan requires a majority of the votes cast to be in favor of approval. Under Delaware law, approval requires an affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the proposal. Abstentions and broker non-votes, if any, will not be considered as votes cast for or against the proposal and will therefore have no effect on the outcome of the vote

Any stockholder giving a Proxy may revoke it at any time before it is exercised by delivering written notice thereof to the Secretary. Any stockholder attending the 2022 Annual Meeting may vote in person whether or not the stockholder has previously filed a Proxy. Presence at the 2022 Annual Meeting by a stockholder who has signed a Proxy, however, does not in itself revoke the Proxy. The enclosed Proxy is being solicited by the Board.

The Company will bear the expenses of calling and holding the 2022 Annual Meeting and the solicitation of proxies on behalf of the Board. These expenses will include, among other things, the costs of preparing, assembling, printing and mailing the proxy materials to stockholders of record and reimbursement paid to brokerage firms, banks and other fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy materials to beneficial owners and obtaining beneficial

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owners’ voting instructions. Proxies may be solicited through the mail, in person, by telephone or via email.

If your shares are held in more than one account, you may receive more than one WHITE proxy card or set of proxy materials, and in that case, you can and are urged to vote all of your shares of Company common stock by signing, dating and returning any and all WHITE proxy cards and/or WHITE voting instruction forms you receive. If you choose to vote by telephone or via the Internet, please vote once for each WHITE proxy card and/or WHITE voting instruction form you receive to ensure that all of your shares are voted. Only your latest dated proxy for each account will count.

The Company’s Annual Report to Stockholders for the fiscal year ended December 31, 2021, including financial statements and the report of the Company’s independent registered public accounting firm, Deloitte & Touche LLP, thereon, accompanies this Proxy Statement. The Annual Report to Stockholders is neither a part of this Proxy Statement nor incorporated herein by reference.

The voting results of the 2022 Annual Meeting will be published no later than four business days after the Annual Meeting on a Form 8-K filed with the Securities and Exchange Commission

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the 2022 Annual Meeting, we encourage you to vote as soon as possible so that your shares are represented. We urge you to vote TODAY by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the postage pre-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote via the Internet or by telephone. Returning your WHITE proxy card will not prevent you from voting at the 2022 Annual Meeting but will ensure that your vote is counted if you are unable to attend.

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BACKGROUND TO THE SOLICITATION

On February 2, 2021, Robert Longnecker, Ides’ Co-Founder and Director of Research contacted the Company’s investor relations office through e-mail to request a telephone call with management.

On February 3, 2021, Christopher Whitford, CFO, VP and Secretary of Safety, had a telephone call with Mr. Longnecker.  Mr. Longnecker indicated he was doing preliminary research on Safety and in that call, the participants discussed the history of the Company, the Massachusetts insurance market, and general trends and business activities of the organization.

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On July 7, 2021, Mr. Longnecker reached out to Mr. Whitford to request a follow-up call.

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On July 9, 2021, Mr. Whitford and Mr. Longnecker had a telephone call to discuss additional general insurance topics and business of the Company.  Mr. Longnecker asked about premium growth of the Company, underwriting targets, and other property and casualty-specific topics.  Mr. Whitford mentioned various insurance transactions that have occurred in the past year, noting that there were very few in the Northeast region.

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On July 29, 2021, Mr. Longnecker e-mailed Mr. Whitford to request a meeting with Mr. Whitford and George Murphy, President and Chief Executive Officer, to discuss Safety and management’s long-term vision for the Company.  Mr. Longnecker indicated that Dianne McKeever, Ides’ Co-Founder Chief Investment Officer, would also join the call.  Mr. Whitford indicated that the Company was in a quiet period ahead of the release of its 2^nd quarter 2021 results and proposed a time post-earnings in mid-August to meet.  Mr. Whitford inquired if Ides had purchased Safety shares and was informed that Ides owned less than 1% of the Company’s outstanding shares.  Both parties agreed to a follow-up call on August 16, 2021.

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On August 4, 2021, the Safety Board of Directors held its 2^nd quarter board meeting to review the financial statements of the Company, review the Company’s dividend policy, discuss the composition of the Board and review other business matters.  The Board directed management to connect it with an insurance industry organization and a Boston-focused women’s development organization as part of the Board’s ongoing refreshment process, which was scheduled to be discussed at its November Board meeting.

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On August 15, 2021, Mr. Whitford informed Ides that an unexpected scheduling conflict arose and that it would be necessary to reschedule their August 16^th meeting.  The meeting was rescheduled for August 26^th between Mr. Longnecker, Ms. McKeever, Mr. Murphy, and Mr. Whitford.

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On August 26, 2021, Mr. Longnecker, Mr. Murphy, and Mr. Whitford met to talk about the Company’s operations. Topics on the call included the Company’s strong financial results, disciplined underwriting strategy, investment allocation priorities, and use of the organization’s capital.

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On September 1, 2021, Mr. Longnecker e-mailed Mr. Whitford to ask for a meeting with the Board of Directors.  Mr. Whitford informed Mr. Longnecker that Mr. Murphy was a Board member

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and had shared the views of the Board on the call on August 26, 2021.  Mr. Longnecker followed up with a request to meet with an independent member of the Board.  Mr. Whitford informed Mr. Longnecker that the Company had not typically made the Board available for calls with investors but that he would share Ides’ perspectives on capital allocation, including dividends and share buybacks, with the Board.  Mr. Longnecker replied, “OK, thanks for the clarification.”

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On October 7, 2021, Mr. Longnecker requested a call to discuss the Massachusetts auto market, specifically the changes in competition in 2007 and 2008.

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On October 8, 2021, Mr. Whitford met with Mr. Longnecker again to answer his questions on various topics, including an insurance loss incurred in 2019.

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On November 3, 2021, the Board of Directors held its 3^rd quarter meeting to review SEC documents and to conduct a comprehensive annual evaluation of the Company’s corporate governance and Board composition, led by the Nominating and Governance Committee.  The meeting of the Nominating and Governance Committee included discussions on over 30 topics including, but not limited to, self-review and evaluation of the Committees and Board, related-party transactions, annual review of committee charters, independent Board leadership, Board succession planning and refreshment, updates to proxy advisor firms methodologies, enhanced ESG disclosures for the 2022 proxy, and the rotation of Committee chair roles.  Previous annual corporate governance reviews had led to significant changes to Board composition, including the appointment of Thalia Meehan and Mary Moran, as well as changes to the Company’s Bylaws, including the adoption of majority voting.

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On November 15, 2021, Mr. Longnecker sent a letter to Mr. Whitford for distribution to the Board of Directors.  The letter outlined several requests from Ides, including that the Company implement an “aggressive” share repurchase program that would see the Company repurchase “at least 5-10% of total shares outstanding per year.”  Mr. Whitford inquired again about Ides’ share ownership of Safety, since the letter did not disclose any specific owner information other than indicating that Ides was a stockholder. Mr. Longnecker responded that Ides would only provide this information if and when the Board agreed to a private meeting.

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On December 8, 2021, the law firm Olshan Frome Wolosky sent a letter on behalf of Ides to Mr. Whitford notifying the Company of Ides’ intent to nominate two candidates for election to the Board of Directors.  Safety’s 2021 proxy required nominations to be delivered by December 10, 2021 for the 2022 annual meeting.

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On December 22, 2021, in a call with Mr. Longnecker, Mr. Whitford acknowledged that Ides’ notice of nomination was received by the Board of Directors.  Mr. Longnecker requested to speak with at least one independent director.

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On December 23, 2021, Mr. Whitford confirmed via e-mail with Mr. Longnecker that one of the Board’s independent directors, Thalia Meehan would be available for a call in late December or early January. Mr. Whitford indicated that he would be joining the call as well in his capacity as Secretary of the Company. Ides agreed to have a call with Ms. Meehan and Mr. Whitford, and a time was agreed to for January 4, 2021.

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On January 4, 2022, Ms. Meehan, an independent board member, Mr. Whitford, the Secretary of the Company, Ms. McKeever, and Mr. Longnecker met to discuss Ides’ perspectives on Safety. Ms. McKeever and Mr. Longnecker reiterated the same points that Ides had made in its November 15 letter to the Board and did not present any new complaints or feedback. Ms. Meehan assured Ides that the Company has been focused on many of the topics Ides had raised to date and would continue to focus on delivering value to its stockholders.

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On January 6, 2022, Mr. Longnecker e-mailed Mr. Whitford regarding Safety’s long-term performance.  

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On January 7, 2022, Mr. Whitford responded to Mr. Longnecker, asking why Ides’ recent analysis of Safety’s long-term performance appeared to use different indices than those Ides had used previously.  At Ides’ request, Mr. Whitford scheduled another meeting between Ides and Safety’s independent directors for January 12, 2022.  Also at Ides’ request, Mr. Whitford confirmed that he would not attend that meeting.

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On January 12, 2022, Ms. Meehan, Mary Moran, and Peter Manning, all independent directors, met with Ms. McKeever and Mr. Longnecker.  During the conversation, the independent directors notified Ides of various corporate governance and Board composition changes that the Company was announcing, and asked for Ides’ feedback.  In addition, Ms. Meehan noted the progress being made with regards to the Board’s ongoing refreshment process, and offered to include Ides’ nominees in Safety’s director search process.  

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Later on January 12, 2022, Safety filed an 8-K announcing the next stages of its Corporate Governance update and Board Refreshment plan.

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On January 18, 2022, Mr. Whitford, as Secretary of the Company and at the direction of the Board, e-mailed Mr. Longnecker and requested contact information for Ides’ two nominees to include both candidates in the Board’s search process.

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Later on January 18, 2022, Ides publicly released a letter to the Board of Directors. Ides’ letter expressed dissatisfaction with Safety’s announced governance and Board composition changes and reiterated Ides’ request that the Company commence a major share repurchase, with “subsequent ongoing buybacks.”  Separately, later that day, Ms. McKeever e-mailed Mr. Whitford stating that it was “entirely inappropriate” for Mr. Whitford to be facilitating interviews with Ides’ candidates.

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On January 21, 2022, Mr. Whitford e-mailed Ms. McKeever, clarifying that, in his role as Corporate Secretary, he was specifically directed by the Board to schedule calls between the independent directors of the Company and Ides’ candidates so that Ides’ candidates could be included in the Board’s then ongoing Board refreshment and search process.  Mr. Whitford again asked Ides to share contact information for its nominees so that Safety’s Board could schedule interviews with these candidates.

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Later on January 21, 2022, Ms. McKeever responded to Mr. Whitford’s email, refusing to provide contact information for Ides candidates. Ms. McKeever demanded that the Board “work directly with Ides” and expressed the view that the Board’s evaluation of Ides’ candidates must not be conducted in “the same process” as the Board’s ongoing refreshment process. Ms. McKeever asserted that she would only provide contact information for Ides’ nominees if the Board first agrees to a “framework” of a “settlement”.

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On January 24, 2022, Mr. Whitford sent an e-mail to Ms. McKeever on behalf of the Board, indicating that while the Board remained interested in meeting Ides’ candidates, it was premature to discuss “frameworks” or “agreements” without first interviewing and vetting Ides’ candidates.

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On January 28, 2022, Mr. Whitford e-mailed Ms. McKeever to follow up on the January 24, 2022 e-mail and requesting an update

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Later on January 28, 2022, Ms. McKeever e-mailed Mr. Whitford, reiterating her belief that the Board “need[s] to reach out and work directly with Ides.” Ms. McKeever also expressed the belief that Ides’ candidates should be treated “differently” from any other candidates the Board was considering as part of its search process, and again demanded that the Company agree to a “framework” before Ides would make its candidates available for interviews.

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On February 23, 2022, the Board of Directors held its 4^th quarter meeting to review the financial statements, SEC documents, and conduct final interviews for the remaining Board candidates.  In the weeks leading up to this meeting, the Nominating and Governance Committee reviewed the resumes of 55 candidates and conducted interviews with 11 candidates. Later that day, the Company announced it’s 2021 earnings.

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On March 2, 2022, Ms. McKeever provided a letter from Ides to Mr. Whitford for distribution to the Board of Directors. In its letter, Ides criticized the Company for not providing contact information for independent directors and expressed dissatisfaction with the Company’s announced $50 million share repurchase plan and the repurchase of nearly $12 million in stock during the quarter. Ides reiterated its demand for a “near-term repurchase of 10% of [the Company’s] shares outstanding.”

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On March 4, 2022, Ms. Meehan and Elizabeth Brodeur, the insurance company subsidiaries’ General Counsel, called Ms. McKeever to discuss her letter from March 2, 2022.  A voicemail was left, and Ms. McKeever reached out to Mr. Whitford later that day.  A meeting with Ms. McKeever was scheduled for March 7, 2022.

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On March 7, 2022, Ms. Meehan, Ms. Brodeur, and Ms. McKeever met to discuss the Ides letter dated March 2, 2022.  At the beginning of the call, Ms. Meehan noted the presence of Ms. Brodeur to ensure that no material non-public information would be discussed.  Ms. McKeever acknowledged Ms. Brodeur and stated that she did not want to receive any material non-public information as part of the discussion.  During that call, Ms. Meehan asked Ides to share any perspectives on the Company that it had not previously communicated, either privately or through its various public letters. Ms. McKeever demurred, stating that it would take “hours” to discuss Ides’ criticisms. Ms. Meehan indicated that she would be glad to schedule a follow-up call during which time Ides could provide

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additional feedback.  Ms. Meehan also reiterated that the Company had been taking Ides’ feedback regarding governance and Board composition seriously and that it was working on addressing several issues raised by Ides.  Ms. McKeever commented that no matter what the Company does, the Board will not receive “credit” for making changes.  Ms. Meehan noted that the Board is not trying to get “credit” from its stockholders, but is focused on doing what is right for the Company.

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On March 10, 2022, as directed by Ms. Meehan, Ms. Brodeur e-mailed Ms. McKeever offering to set up a follow-up call with independent directors and/or others from the Company to listen and respond to Ides’ other criticisms and proposals. Ms. Brodeur also asked for a list of topics so that the Company could arrange for the right people to be in attendance.

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On March 14, 2022, Ms. Brodeur received an e-mail from Ides’ counsel at Olshan indicating that Ms. Brodeur’s attendance on the March 7 call between Ms. Meehan and Ms. McKeever, of which Ms. McKeever was aware, was “completely inappropriate.” Ides’ counsel chided the Company for including multiple participants, including multiple independent directors, on previous calls. Ides again demanded a “framework” before “providing any additional information to Safety,” and expressed the view that the Board should work with Ides directly and “not through a management intermediary” to establish such a framework. In the letter, the Olshan lawyer criticized Safety for “never having provided Ides with contact information for Safety’s directors.”  Notably, every proxy statement filed by the Company since 2004 includes clear instructions for how a stockholder can directly correspond with our directors, including by email.

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On March 21, 2022, Ides requested various shareholder lists and records from Safety under Section 220 of the Delaware General Corporation Law.

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On March 24, 2022, the Safety Board of Directors, via written unanimous consent, finalized the Company’s 2022 preliminary proxy statement, approved various corporate governance changes and proposals for inclusion in the proxy statement, accepted the retirement of Frederic H. Lindeberg, and appointed two new board members, John D. Farina, and Deborah E. Gray.

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On March 25, 2022, Safety issued a press release and filed an 8-K with the Board-approved actions from March 24, 2022.

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On March 25, 2022, Safety filed its preliminary proxy statement.

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PROPOSAL 1

ELECTION OF THE COMPANY’S DIRECTORS

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The Board consists of seven members and three classes. Each class serves three years, with terms of office of the respective classes expiring in successive years. On March 24, 2022, Frederic H. Lindeberg communicated his intention to resign from the Board before the end of his term, which expires at the 2022 Annual Meeting. Additionally, on March 24, 2022, the Company appointed John D. Farina and Deborah E. Gray to its Board of Directors.

In addition to the information set forth below, Appendix D sets forth information relating to the Company’s directors, the Board’s nominees for election as directors and certain of the Company’s officers who are “participants” in our solicitation under SEC rules by reason of their position as directors or nominees or because they will be soliciting proxies on our behalf. The solicitation of proxies to elect directors of the Company, or any director nominee’s eligibility to serve as a director of the Company, may be subject to any required notification to, or approval, nonobjection or requirement of, the Commissioner of the Division of Insurance of Massachusetts and any other regulatory entity having jurisdiction over the Company.

Each of the two Directors, whose term expires at this year’s 2022 Annual Meeting, Deborah E. Gray and George M. Murphy, have been nominated for election to a three-year term ending at the 2025 Annual Meeting of Stockholders and until a successor, if any, is elected and duly qualified. The remaining five directors will continue to serve in accordance with their terms.

THE BOARD RECOMMENDS VOTING FOR PROPOSAL 1 WHICH CALLS FOR THE ELECTION OF THE 2022 NOMINEES.

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Each of our directors brings to our board extensive management and leadership experience gained through their service as executives and, in several cases, chief executive officers of diverse businesses. In these executive roles, they have taken hands-on, day-to-day responsibility for strategy and operations, including management of capital, risk and business cycles. The nominating committee’s process to recommend qualified director candidates is described under Nominating and Governance Committee Policies.

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The following information with respect to the principal occupation, business experience, recent business activities involving the Company and other affiliations of the nominees and directors has been furnished to the Company by the nominees and directors.

Nominees for Director

Deborah E. Gray was appointed Director of the Company on March 24, 2022. Ms. Gray has served in various General Counsel roles over her 30-year career, including most recently providing her expertise to non-profit and start-up organizations. Currently, she is providing General Counsel services to the Achievement Network, a private, non-profit education organization where she leads all day-to-day legal, data privacy and security, and compliance initiatives. Prior to this role, Ms. Gray served as Vice President, General Counsel and Secretary at Acquia, Inc., a Software-as-a-Service (SaaS) company, from October 2011 to December 2013, where she led the creation and build out of its global legal, data security and corporate compliance functions including M&A,

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commercial contracts, licensing, real estate, employment, corporate and Board governance. From 2002 to 2011, Ms. Gray was with Charles River Laboratories International, Inc., a U.S. life sciences company providing pre-clinical/clinical lab services for pharma, medical devices and biotech companies. At Charles River Laboratories, she was responsible for corporate, licensing, employment law, SEC and NYSE reporting and compliance, corporate governance, M&A, and general commercial contracts. In 2006, she took on the role of chief employment counsel for offices in 19 states and various locations in Canada, Japan, China, India and Europe. Previous to this, Ms. Gray was a member of the Executive Team at Sapient Corporation, a publicly traded professional services tech company, as Vice President, General Counsel, and Assistant Secretary and with Harcourt General, a publicly traded holding company, as Senior Corporate & SEC Counsel. Ms. Gray began her legal career at WilmerHale in Boston where she was a Junior Partner specializing in mergers and acquisitions, initial public offerings, and SEC compliance matters

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Ms. Gray has served on various non-profit boards including, The Home For Little Wanderers, the largest child welfare organization in the country, where she co-chaired the Nominating & Governance Committee and chaired the Risk Management Committee for many years. Previously, she was also a Trustee of Colby College and an Overseer of the Boston Symphony Orchestra. Ms. Gray graduated with a B.A. from Colby College and a J.D. from Boston College Law School. Her legal and business expertise with high-growth companies, ranging from start-ups to publicly traded multibillion-dollar corporations, are beneficial to Safety, particularly in relation to risk management, compliance, data privacy and security, and corporate governance matters.

George M. Murphy, CPCU, was appointed President and Chief Executive Officer of the Company effective April 1, 2016. He previously was the Vice President of Marketing since October 1, 2005. Mr. Murphy was appointed to the Board of Directors and to the Investment Committee in February 2016. Mr. Murphy has been employed by the Insurance Subsidiaries for over 32 years. Mr. Murphy is also on the Board of Trustees of the Insurance Library Association of Boston. Mr. Murphy’s leadership roles in the Company and our insurance subsidiaries which includes developing a deep understanding of our business as well strong personal relationships with Safety’s network of independent agents along with his knowledge of finance, regulation, corporate governance and other matters affecting public companies, make him well-qualified to serve on our Board of Directors.

Directors Continuing in Office

David F. Brussard served as President and Chief Executive Officer ("CEO") of the Company from June 2001 until his retirement on March 31, 2016. Mr. Brussard continues to serve the Company as Non-Executive Chairman of the Board. From January 1999 to March 31, 2016, Mr. Brussard served as the CEO and President of the Insurance Subsidiaries. Previously, Mr. Brussard served as Executive Vice President of the Insurance Subsidiaries from 1985 to 1999 and as Chief Financial Officer and Treasurer of the Insurance Subsidiaries from 1979 to 1999. Mr. Brussard was appointed Chairman of the Board in March 2004 and has served as a Director of the Company since October 2001. Mr. Brussard was also appointed Chairman of the Investment Committee on February 22, 2017. Based upon Mr. Brussard’s significant experience with the insurance industry and his leadership roles in the Company and our insurance subsidiaries since inception, as well as his understanding of the financial, regulatory, corporate governance and other

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matters affecting public companies, we believe that Mr. Brussard is well qualified to serve as Chairman of our Board.

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John D. Farina was appointed Director of the Company on March 24, 2022 and is a retired partner of PricewaterhouseCoopers (“PwC”), where he spent 35 years advising both domestic and multinational Fortune 500 companies on financial accounting, regulatory, and tax matters. Mr. Farina also led PwC’s US Insurance Tax practice and has deep insurance industry expertise. During his time at PwC, Mr. Farina held a variety of senior leadership roles including Managing Partner of the Northeast Region, where he was responsible for over 3,800 partners and staff in five offices. In this role, he oversaw strategic planning, operations, finance, risk management, human capital, and marketing functions. Mr. Farina was elected by his fellow partners for two terms on both PwC’s US and Global Boards, providing 10 years of governance oversight to the firm.

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After retiring from PwC in 2021, Mr. Farina was elected to join the National Committee of St. Jude Children's Research Hospital in Memphis, Tennessee, where he serves on the Audit & Compliance Committee. Mr. Farina has also served on several non-profit boards, including the Greater Boston Chamber of Commerce. Mr. Farina received his BBA in Accounting from Evangel University and is a CPA in Massachusetts and Texas. Mr. Farina qualifies as an “Audit Committee Financial Expert”' as defined by the U.S. Securities and Exchange Committee rules.

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Peter J. Manning has served as a director of the Company since September 2003. Mr. Manning retired in 2003, as Vice Chairman Strategic Business Development of FleetBoston Financial, after 32 years with FleetBoston Financial Corporation (formerly BankBoston) where he also held the positions of Comptroller and Executive Vice President and Chief Financial Officer. Mr. Manning started his career with Coopers & Lybrand in 1962 prior to his 1972 employment with BankBoston. He is a former director of the Blue Hills Bank and a former director of Thermo Fisher Scientific and the Lahey Clinic. Mr. Manning qualifies as an “Audit Committee Financial Expert” as defined by the U.S. Securities and Exchange Committee rules. We believe that Mr. Manning’s many years of experience in finance and accounting in the banking industry provide him with the necessary qualifications to be a director of the Company and Chairperson of our Audit Committee.

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Thalia M. Meehan was appointed Director of the Company on July 3, 2017. Ms. Meehan has also been appointed to serve as a member of the Audit Committee, the Investment Committee and the Nominating and Governance Committee, as well as Chairperson of the Compensation Committee of the Board effective February 24, 2021. Ms. Meehan, a Chartered Financial Analyst, has over 30 years of experience in the investment sector.  Ms. Meehan retired from Putnam Investments in 2016 with 27 years of experience and most recently served as a Team Leader and Portfolio Manager at Putnam Investments. Ms. Meehan currently serves on the Board of Cambridge Bancorp where she is a member of the Trust and Risk Committees and also serves on the Nominating and Finance Committees of the Municipal Securities Rulemaking Board and the Advisory Committee of the Board of Boston Women in Public Finance. Ms. Meehan’s leadership skills and vast experience in the investment sector enable her to provide valuable insight and advice regarding investment decisions and other matter of import to the Company, which we believe well qualify her to serve on our Board as well as Chairperson of the Compensation Committee.

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Mary C. Moran was appointed Director of the Company on March 27, 2020. Ms. Moran has over 40 years of financial experience in both private industry as well as consulting. Ms. Moran began her career at KPMG, previously Peat Marwick, where she became a Senior Manager before serving as Senior Vice President of Finance and Administration for Boston Sand and Gravel Company from 1990 to 2001. Since 2002 she has served as CEO of MCM Financial Consulting, focusing on projects within in the banking, construction, higher education, manufacturing, not-for-profit and professional services industries. Ms. Moran is currently a director of Care Dimensions where she serves on the finance and audit committee and is a former director and audit committee member of Danvers Bankcorp, the College of the Holy Cross and Catholic Memorial School. Ms. Moran graduated from Northeastern University with a M.B.A. and MS in Accounting and from the College of the Holy Cross with a degree in Economics. Ms. Moran qualifies as an “Audit Committee Financial Expert” as defined by the U.S. Securities and Exchange Committee rules. We believe that Ms. Moran’s many years of experience in finance, along with her leadership skills and vast consulting experience in the financial sector provide her with the necessary qualifications which we believe well qualify her to serve on our Board.

Certain Information Regarding the Board of Directors

Board Refreshment

Over the past five years, our Board has undergone significant change as part of a conscious effort, led by the Nominating and Governance Committee, to refresh the Board and augment its composition with fresh, diverse perspectives and complementary skills and experiences that are aligned with the Company’s long-term strategy. In total, our Board has added four new directors – comprising a majority of the independent directors of the Board – since 2017, with two longer-tenured directors stepping down during that time.

The graphics below illustrate the efficacy of our Board refreshment in reducing the average tenure and age of the Board and enhancing the Board’s gender diversity.

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Board Diversity and Inclusion

The Company is committed to creating and fostering an environment of diversity and inclusion, and that commitment extends to our Board of Directors. In considering our director nominees, the Nominating and Governance Committee considers candidates who represent a mix of skills and experiences and represent diversity of gender, age, race, ethnicity, background and perspective that enhance the quality of Board deliberations and align with the perceived needs of the Board and the Company’s strategy.

We believe that our Board, as currently comprised, consists of a highly qualified and diverse group of leaders in their respective fields, bringing together a fresh mix of perspectives and deep institutional knowledge of the Company and its business. The graphics below illustrate the diversity of our seven members with respect to tenure, age and gender.

The following table sets forth the diversity characteristics of the Board of Directors:

Meetings of the Board of Directors

During 2021, the following meetings of the Board were held: five meetings of the Board, four meetings of the Audit Committee, two meetings of the Compensation Committee, two meetings

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of the Nominating and Governance Committee and four meetings of the Investment Committee. All of the incumbent Directors attended 100% of the Board and committee meetings held while they were members during 2021. The directors also gathered throughout the year for less formal business updates and provided input to management. At each quarterly meeting of the Board, the non-executive directors held an executive session without management present.

Board Leadership Structure

The positions of Chairman of the Board and Chief Executive Officer are held by Mr. David F. Brussard and Mr. George M. Murphy, respectively. As the Chairman of the Board, Mr. Brussard provides leadership to the Board and works with the Board to define its structure and activities in the fulfillment of its responsibilities. Mr. Brussard is considered independent under National Association of Securities Dealers, Inc. (“NASDAQ”) rules. As Chief Executive Officer, Mr. Murphy has general charge, supervision, and control of the business and affairs of the Company and is responsible generally for assuring that policy decisions of the Board are implemented as adopted.

On January 12, 2022, the Board appointed Thalia Meehan to the newly created role of Lead Independent Director. In this role, Ms. Meehan has the following responsibilities:

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We believe this Board leadership structure is appropriate for the Company, in that the Chairman of the Board, Chief Executive Officer, and Lead Independent Director provide strong leadership and direction for management to execute the Company’s strategy and business plan while contributing to a more efficient and effective Board.

Risk Oversight

The Board has an active role, as a whole and also at the committee level, in overseeing management of the Company’s risks. The Board regularly reviews information regarding the Company’s strategic, financial and operational risks. The Company’s Compensation Committee oversees the management of risks relating to the Company’s compensation policies and practices. The Audit Committee oversees the management of risks associated with accounting, auditing, financial reporting and internal controls over financial reporting. The Audit Committee is responsible for reviewing and discussing the guidelines and policies governing the process by which senior management and the internal auditing department assess and manage the Company’s exposure to risk, as well as the Company’s major financial risk exposures and the steps management

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has taken to monitor and control such exposures. The Nominating and Governance Committee oversees risks associated with the independence of the Board of Directors. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about such risks.

Independent Directors

The Board has determined that David F. Brussard, Deborah E. Gray, John D. Farina, Peter J. Manning, Thalia M. Meehan and Mary C. Moran are “independent directors” as determined pursuant to the Marketplace Rules promulgated by NASDAQ and the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”).

Board Committees

The Audit Committee is comprised of Peter J. Manning (Chairperson), Thalia M. Meehan and Mary C. Moran (the “Audit Committee”). The Board has determined that Peter J. Manning, and Mary C. Moran are “Audit Committee Financial Experts” as established by the rules and regulations of the SEC. The Audit Committee meets at least quarterly and at each quarterly meeting meets with the independent auditors in an executive session without management present. For information regarding the functions performed by the Audit Committee, please refer to the Report of the Audit Committee included in this Proxy Statement, as well as the Charter of the Audit Committee, which is posted on our website, www.SafetyInsurance.com.

The Compensation Committee is comprised of Thalia M. Meehan (Chairperson), Peter J. Manning and Mary C. Moran (the “Compensation Committee”). For information regarding the functions performed by the Compensation Committee, please refer to the Compensation Discussion and Analysis and the Compensation Committee Report included in this Proxy Statement, as well as the Charter of the Compensation Committee, which is posted on our website, www.SafetyInsurance.com.

The Nominating and Governance Committee is comprised of Mary C. Moran (Chairperson), Peter J. Manning, and Thalia M. Meehan (the “Nominating and Governance Committee”). For information regarding the functions performed by the Nominating and Governance Committee, please refer to the Charter of the Nominating and Governance Committee, which is posted on our website, www.SafetyInsurance.com.

The Investment Committee is comprised of David F. Brussard (Chairperson), Thalia M. Meehan, and George M. Murphy (the “Investment Committee”). Christopher T. Whitford, the Company’s Chief Financial Officer is a participant on the Committee as a management designee. The Investment Committee reviews and evaluates, as may be appropriate, information relating to the Company’s invested assets and its investment policies, strategies, objectives and activities.

Board Evaluations

The board annually conducts a self-evaluation. Led by the lead independent director, feedback from individual directors is reviewed and discussed first by the nominating committee and then with the entire board. These discussions include specific governance topics such as director tenure, board refreshment and composition as well as the diversity of experience, skills, competencies and other qualities of current directors and future director candidates. The board

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intends for this annual process to help inform its decisions about how to best structure and govern itself in the short- and long-term, enabling it to provide effective oversight of the company for the benefit of stockholders.

Nominating and Governance Committee Policies

Pursuant to the Charter of the Nominating and Governance Committee, the Nominating and Governance Committee has developed the following policies and procedures related to the nomination process for directors of the Company and the means by which stockholders may communicate with the Board.

Stockholder Recommendations for Director-Nominees

The Nominating and Governance Committee will consider recommendations from stockholders as to candidates to be nominated for election to the Board. A stockholder wishing to submit such a recommendation should send a letter to the Secretary of the Company at Safety Insurance Group, Inc., 20 Custom House Street, Boston, Massachusetts 02110, who will forward such recommendations to the Chairperson of the Nominating and Governance Committee. Recommendations must be in writing and should include the candidate’s name and qualifications for Board membership. This policy is not intended to replace the provisions in the Company’s bylaws related to stockholder nominations for director, but rather addresses the Nominating and Governance Committee’s position on recommendations from stockholders for potential director-nominees. Stockholders wishing to nominate persons for director must comply with the Company’s bylaws and any applicable rules of the SEC.

Director-Nominee Evaluation Process

The Nominating and Governance Committee utilizes a variety of methods for identifying and evaluating nominees for director. The Nominating and Governance Committee will regularly assess the appropriate size of the Board, and whether any vacancies are expected due to retirement or otherwise. In the event that vacancies arise, the Nominating and Governance Committee will consider various potential candidates for director. Candidates may come to the attention of the Nominating and Governance Committee through current Board members, professional search firms, stockholders, or other persons. The Board is committed to a policy of inclusiveness and is committed to actively seeking out highly-qualified candidates with diverse gender, ethnicity, backgrounds, experiences, and skills for each search it undertakes.

Stockholder Communications to the Board

Stockholders may communicate directly with any member of the Board or the entire Board by sending correspondence to the Office of Investor Relations, Safety Insurance Group, Inc., 20 Custom House Street, Boston Massachusetts 02110, or emailing InvestorRelations@SafetyInsurance.com. Any such correspondence must contain a clear notation indicating that it is a “Stockholder-Director Communication,” and must indicate whether the intended recipients are all members of the Board or certain specified individual directors. The Office of Investor Relations will make copies of all such correspondence and circulate them to the appropriate director or directors. This procedure has been in place, and disclosed, at the Company since 2004. The Company welcomes direct communications from stockholders to the Board.

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Director Attendance at Annual Meetings

Although our Board has not adopted a formal policy regarding directors’ attendance at the Company’s annual meeting of stockholders, attendance is normally encouraged. In 2021, only two of our directors attended the annual meeting in light of the ongoing coronavirus pandemic and the personal and community health risks then associated with large in-person gatherings.

Minimum Qualifications for Directors

In addition to the preceding policies and procedures adopted by the Nominating and Governance Committee, at the direction of the Board, the Board and Nominating and Governance Committee continue to evaluate their position on establishing minimum qualifications for directors. The Board seeks members with diverse business and professional backgrounds and outstanding integrity, judgment, and such other skills and experiences as will enhance the Board’s ability to best serve the interest of the Company. It is committed to a policy of inclusiveness and seeks out highly-qualified candidates with diverse gender, ethnicity, backgrounds, experiences, and skills for each search it undertakes. Matters reviewed include the candidate’s integrity, maturity and judgment, experience, collegiality, expertise, diversity, commitment and independence. The Board has not approved any criteria for nominees for director and believes that establishing such criteria is best left to an evaluation of the needs of the Company at the time the nomination is to be considered. Similarly, the Nominating and Governance Committee has not identified specific, minimum qualifications for director nominees or any specific qualities or skills that it believes are necessary for one or more of our directors to possess.

Recent Corporate Governance Enhancements

Our Nominating and Governance Committee is committed to maintaining a governance structure that supports long-term value creation by promoting accountability to stockholders. As part of its review of corporate governance, the Committee regularly considers stockholder feedback, best practices and other factors in recommending policy and governance changes to the Board.

In 2019, the Nominating and Governance Committee began evaluating potential changes as part of its board refreshment and corporate governance enhancement plan being implemented by the Company’s Board of Directors. During its deliberations, the Committee considered, among other factors, planned director retirements, the Company’s strategy and the needs of the business, the evolution of governance best practices and stockholder input. This process led to the adoption of a majority vote standard in uncontested director elections in 2019.

The Committee continued its governance review, and in January 2022, the Company announced a series of measures aimed at augmenting Board leadership, promoting refreshment and enhancing committee oversight:

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In March 2022, the Board completed its director search process and announced the appointment of John D. Farina and Deborah E. Gray to the Board, effective immediately. Mr. Farina and Ms. Gray bring extensive experience in finance, accounting, tax, insurance, legal, risk management and corporate governance matters. At the same time, the Company also announced the retirement of Frederic H. Lindeberg from the Board. As a result of these changes, a majority of the Company’s six independent directors have joined the Board within the past five years.

Also in March 2022, our Board approved several amendments to our Charter and Bylaws aimed at enhancing stockholder rights and facilitating accountability to stockholders. These amendments, which require stockholder approval in order to become effective, are expected to be voted upon at the Annual Meeting as Proposals 4, 5 and 6, and include:

We urge stockholders to vote FOR all proposals to approve each of these amendments.

The Committee will continue to review Board composition and corporate governance to ensure that they are aligned with the Company’s long-term value creation strategy and that they take into account evolving governance best practices and stockholder feedback.

Environmental, Social and Governance Matters

We believe that Safety has a responsibility to the communities and the environment in which it operates and that the effective management of ESG issues will help drive the continued success of the business. To that end, Safety is committed to developing environmentally and socially conscious solutions for employees, communities, customers and investors.

In 2021, we incorporated a formal ESG policy into our Own Risk Solvency Assessment.  This risk mitigation process combines our senior leadership team, who is responsible for evolving our ESG strategy and monitoring our ESG initiatives with Board oversight. Our Board recognizes the importance of these responsibilities and oversees our ESG initiatives. We are currently undertaking an initial materiality assessment and engaging with internal and external stakeholders on ESG topics to help further inform our future direction and priorities. Our areas of focus include human capital, social impact, environmental sustainability, and corporate governance.  Our ESG report will be posted to our Company’s website in conjunction with the filing of our definitive 2022 proxy statement.

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The Nominating and Governance Committee is charged with oversight of the Company’s governance. The Company also has an internal Risk Management Committee comprised of the Chief Executive Officer, the Chief Financial Officer, the Vice President of Underwriting, the Vice President of Actuarial Services and the Director of Risk, Audit and Compliance who serves as the Chair of the Committee. The Risk Management Committee frequently evaluates, and scores risks that are aggregated to determine the key risks and opportunities for the organization. This

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Committee meets regularly, and the Chair issues a formal quarterly update to the Board on their review. Through this Committee, the Board of Directors also receives an annual Cybersecurity update and training from the Vice President of Management information Systems which was delivered on February 23, 2022.

Corporate Governance Highlights

As noted above and throughout this Proxy Statement, we are committed to fostering a sound corporate governance structure that protects and promotes the long-term interests of our stockholders and enhances management accountability. Our corporate governance framework includes the following highlights:

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¹ Assumes that stockholders approve the proposal to adopt this change at the 2022 Annual Meeting.

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PROPOSAL 2

RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE, LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022

The Audit Committee of the Board selected Deloitte & Touche LLP (“Deloitte”) to continue as the Company’s independent registered public accounting firm for 2022. In 2021, the Audit Committee conducted a request for proposal which led to the selection as Deloitte as auditor for the 2021 financial statements. There were no disagreements with the previous auditor, PricewaterhouseCoopers, (“PwC).

Deloitte is the Company’s independent registered public accounting firm for the most recently completed fiscal year ended December 31, 2021. A representative of Deloitte is expected to be present at the 2022 Annual Meeting. The representative will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions from stockholders.

Ratification of Deloitte as our independent registered public accounting firm for the fiscal year ending December 31, 2022 requires the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote.

THE BOARD RECOMMENDS VOTING FOR PROPOSAL 2 WHICH CALLS FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE.

If our stockholders do not ratify the selection of Deloitte, the appointment of the independent registered public accounting firm will be reconsidered by our Audit Committee. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of the Company and its stockholders.

Audit Fees for Services Performed Related to 2021 and 2020 Services

Audit Fees

Aggregate fees were $1,073,965 and $1,244,467 for 2021 and 2020, respectively. The fees in this category are for professional services rendered in connection with the audits of the Company’s annual financial statements, including the Company’s internal control over financial reporting, set forth in the Company’s Annual Report on Form 10-K, the review of the Company’s quarterly financial statements set forth in its Quarterly Reports on Form 10-Q, and the performance of other services that generally only the Company’s independent registered public accounting firm can provide, such as consents. The 2021 fees also include work performed by the predecessor auditor.

Audit-Related Fees

Aggregate fees were $30,000 for 2021. The fees in this category are for professional services rendered in connection with assurance and related services performed by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements.  These services include the statements of actuarial opinion. There were no aggregate fees in 2020.

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Tax Fees

Aggregate fees were $55,000 and $68,575 for 2021 and 2020, respectively. The fees in this category were for professional services rendered in connection with tax compliance and tax consulting services.

All Other Fees

Aggregate fees were $1,800 in 2020. The fees in this category were solely for the Company’s licensing of PwC proprietary research tools.

The Audit Committee has considered and determined that the provision of non-audit services provided in 2021 and 2020 are compatible with maintaining both Deloitte’s and PwC’s independence.

Audit Committee’s Pre-Approval Policies and Procedures

Our Audit Committee has established a policy that all audit and permissible non-audit services provided by the independent auditors will be pre-approved by the Audit Committee. These services may include audit services, audit-related services, tax services and other services. The Audit Committee considers whether the provision of each non-audit service is compatible with maintaining the independence of the Company’s auditors. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. During fiscal years 2021 and 2020, all audit services and all non-audit services provided to the Company were pre-approved in accordance with the Audit Committee’s pre-approval policies and procedures described above.

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PROPOSAL 3

ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Board adopted the stockholders’ recommendation at the 2017 Annual Meeting and elected to hold a stockholder vote on “say-on-pay” annually. Accordingly, in this Proposal 3, the Company again this year seeks your vote on the following advisory resolution:

“RESOLVED, that the stockholders of the Company approve, on a non-binding advisory basis, the compensation of the Company’s Named Executive Officers listed in the 2021 Summary Compensation Table included in the Proxy Statement for the 2022 Annual Meeting, as such compensation is disclosed pursuant to the disclosure rules of the Securities and Exchange Commission, including the section titled Compensation Discussion and Analysis as well as the compensation tables and other narrative executive compensation disclosures thereafter.”

Our goal for the Company’s executive compensation program is to attract, motivate and retain a talented, dedicated and knowledgeable team of executives who will provide leadership for the Company’s success in competitive markets. We seek to accomplish this goal in a way that rewards performance and is strongly aligned with our stockholders’ long-term interests.

The Company, the Board of Directors, and the Compensation Committee remain committed to the compensation philosophy, policies and objectives outlined under the heading Compensation Discussion and Analysis in the Proxy Statement. We are committed to paying for performance and making sure our decisions align with the long-term interests of Safety and its stockholders. Since our November 22, 2002 Initial Public Offering through December 31, 2021, Safety has delivered a total of 1,283% in total return to our stockholders, well above the major indexes and our property-casualty insurance peers. As always, the Board of Directors and the Compensation Committee will continue to review all elements of the executive compensation program and take any steps they deem necessary to continue to fulfill the objectives of the program.

Stockholders are encouraged to carefully review the Compensation Discussion and Analysis section, the compensation tables and other narrative discussion in the Proxy Statement which discuss in detail our compensation policies and procedures and our compensation philosophy.

Because your vote is advisory, it will not be binding upon the Company, the Board of Directors, or the Compensation Committee. However, the Board of Directors and the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.

THE BOARD RECOMMENDS VOTING FOR THE ADOPTION OF THE RESOLUTION ABOVE APPROVING THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.

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PROPOSAL 4

VOTE TO PROVIDE STOCKHOLDERS THE RIGHT TO CALL SPECIAL MEETINGS

Our Board is committed to strong corporate governance and believes in maintaining policies and practices that serve the best interests of all stockholders. Stockholder input has been and continues to be an important consideration in our Board’s discussions around our corporate governance policies and practices. We have a strong history of taking proactive steps in response to our shareholders’ feedback and endeavor to establish governance and compensation structures that are aligned with stockholders’ interests.

Stockholders do not currently have the right to call a special meeting.

The Proposed Amendment

After careful consideration and upon the recommendation of the Nominating and Governance Committee, the Board has unanimously adopted and declared advisable, and recommends that our stockholders approve, an amendment to our Certificate (the “Special Meeting Certificate Amendment”) to enable the adoption of a special meeting right for holders of our Common Stock. If stockholders approve the Special Meeting Certificate Amendment, as described in more detail below, one or more stockholders owning shares representing at least 25% of the voting power of all outstanding shares of Common Stock then entitled to vote on the other matter or matters to be brought before the proposed special meeting would have the ability to require the Company to call a special meeting of stockholders (the “Special Meeting Right”). The relevant section of the Certificate to be amended is set forth in Appendix A. This summary of the Special Meeting Certificate Amendment is qualified in its entirety by reference to Appendix A.

If the Special Meeting Certificate Amendment is approved by stockholders and becomes effective (as described below), our Certificate will be amended to provide that special meetings of stockholders may be called at any time by (i) the Board of Directors or the President or (ii) the Secretary of the Corporation, following receipt of one or more written demands to call a special meeting of the stockholders from one or more stockholders of record representing ownership of not less than twenty five percent (25%) of the voting power of all outstanding shares of Common Stock of the Corporation then entitled to vote on the matter or matters to be brought before the proposed special meeting that complies with the procedures for calling a special meeting of the stockholders as set forth in the Certificate and the Bylaws, as applicable.

The Special Meeting Certificate Amendment will not affect our Board’s existing authority to call special meetings of stockholders. The Special Meeting Right set forth in the Bylaws may be amended in the future by the Board or the stockholders, as authorized in the Certificate and Bylaws.

Purpose and Effect of the Special Meeting Certificate Amendment

The Special Meeting Certificate Amendment and the Special Meeting Right are a result of the Board’s ongoing review of our corporate governance policies and profile. In developing the Special Meeting Right, the Board carefully considered the implications of amending our Certificate to enable the adoption of the Special Meeting Right.

Our Board believes that the Special Meeting Right strikes an appropriate balance between enhancing stockholder rights and adequately protecting stockholder interests. The Board recognizes

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that providing stockholders the ability to call special meetings is viewed by some stockholders as an important corporate governance practice. However, special meetings of stockholders can be potentially disruptive to business operations and to long-term stockholder interests and can cause the Company to incur substantial expenses. Accordingly, the Board believes that the proposed 25% threshold for calling special meetings of stockholders will help balance these considerations and will help ensure that special meetings are extraordinary events. In addition, the Board believes that stockholder-requested special meetings should not be held in close proximity to annual meetings or when the matters to be addressed have been recently considered or are planned to be considered at another meeting. Our Board would continue to have the ability to call special meetings of our stockholders in instances when, in the exercise of their fiduciary obligations, they determine it is appropriate.

In light of these considerations, the Board adopted resolutions declaring it advisable to amend the Certificate to enable the adoption of the Special Meeting Right, and resolved to submit the Special Meeting Certificate Amendment to our stockholders for consideration.

Overview of Related Changes to the Bylaws

In connection with the Special Meeting Certificate Amendment, the Board is also proposing that stockholders approve related amendments to the Bylaws (the “Special Meeting Bylaws Amendments”), by adding the language substantially in the form attached as Appendix B.

Ownership Provisions

The Special Meeting Certificate Amendments require the Company to call a special meeting of stockholders upon the written request of one or more stockholders who own shares representing at least 25% of the voting power of all outstanding shares of our Common Stock. Where a stockholder intends to engage in a “public solicitation” to reach the special meeting ownership threshold, the stockholder would initiate the process of requesting a special meeting by asking the Board to set an initial record date for determining the shares of Common Stock that count toward the 25% ownership threshold.

Information Provisions

The Special Meeting Certificate Amendments provide that any stockholders seeking to require that the Company call a special meeting or soliciting other stockholders to support a call for the special meeting must furnish information that is the same in all material respects as what would be required when stockholders seek to propose action or nominate directors at a stockholders’ meeting under our advance notice bylaws. This is intended to promote transparency and to provide the Company and stockholders comparable information about matters that a stockholder seeks to present for a stockholder vote, whether the stockholder is seeking to use the advance notice process or the Special Meeting Right.

Additional Provisions

A special meeting called pursuant to the Special Meeting Certificate Amendment would have to be held not more than 90 days after the Company receives a valid special meeting request. The Special Meeting Certificate Amendment sets forth certain procedural requirements that the Board

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believes are appropriate to avoid duplicative or unnecessary special meetings. Under these provisions, a special meeting request would not be valid if it:

Under the Special Meeting Certificate Amendment, a stockholder may revoke a request for a special meeting at any time by written revocation delivered to the Secretary at the Corporation’s principal executive offices, and if, following such revocation, there are unrevoked requests from stockholders holding in the aggregate less than the requisite number of shares entitling the stockholders to request the calling of a special meeting, the Board of Directors, in its discretion, may cancel the special meeting.

The Special Meeting Certificate Amendment specifies that the business to be transacted at a stockholder-requested special meeting would be limited to the business stated in a valid special meeting request and any additional business that the Board determines to include in the notice for such special meeting.

Legal Effectiveness of Proposed Amendments

The Special Meeting Certificate Amendment is binding. If stockholders approve the Special Meeting Certificate Amendment by an affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast at the 2022 Annual Meeting by the holders of outstanding capital stock, we will file with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate setting forth the Special Meeting Certificate Amendment shortly following the 2022 Annual Meeting to incorporate the approved amendment and the Special Meeting Bylaw Amendments described above will become effective. Collectively, the Special Meeting Certificate Amendment and the Special Meeting Bylaw Amendments are referred to as the “Special Meeting Amendments.” The Special Meeting Certificate Amendment will become effective upon the effectiveness of the Certificate of Amendment with the Secretary of State of the State of Delaware.

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If stockholders do not approve the Special Meeting Amendments by the requisite vote, then the Certificate of Amendment setting forth the Special Meeting Certificate Amendment will not be filed with the Secretary of State of the State of Delaware, the Special Meeting Bylaw Amendments will not become effective and holders of our Common Stock will not have the right to call special meetings.

Required Vote

Approval of the Special Meeting Amendment requires the affirmative “FOR” vote from the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of shares outstanding and entitled to vote. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions and broker non-votes, if any, will have the same effect as votes against the proposal.

THE BOARD RECOMMENDS VOTING “FOR” THE SPECIAL MEETING AMENDMENT TO PROVIDE STOCKHOLDERS THE RIGHT TO CALL SPECIAL MEETINGS.

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PROPOSAL 5

VOTE TO PROVIDE STOCKHOLDERS THE RIGHT TO ACT BY WRITTEN CONSENT

Under Section 228 of Delaware General Corporation Law, unless otherwise provided in the certificate of incorporation, any action that can be taken at a meeting of stockholders may be taken without a meeting, without prior notice and without a vote if a consent, in writing or by electronic transmission, to the action is signed by the holders of outstanding stock having at least the minimum number of votes that would be necessary to authorize or take the action at a meeting at which all shares entitled to vote thereon were present and voted.

Stockholders do not currently have the ability to act by written consent.

The Proposed Amendment

The Board is committed to understanding stockholder perspectives in this area and, after careful consideration and upon the recommendation of the Nominating and Governance Committee, has unanimously adopted and declared advisable, and recommend that our stockholders approve an amendment to Article VIII of our Certificate to allow action by written consent of stockholders, subject to certain limitations (the “Written Consent Amendment”). If stockholders approve the Written Consent Amendment, as described in more detail below, the Bylaws will also be amended accordingly. The relevant section of the Certificate to be amended is set forth in Appendix C. This summary of the Written Consent Amendment is qualified in its entirety by reference to Appendix C.

If the Written Consent Amendment is approved by stockholders and becomes effective (as described below), our Certificate will be amended to provide that stockholders may act by written consent in accordance with the Certificate. The Board has taken a thoughtful approach to action by written consent and believes it is in the best interests of the Company and stockholders to adopt action by written consent with procedural safeguards. The Written Consent Amendment addresses stockholder and Board concerns regarding written consent through specific procedural safeguards, described below, that are designed to ensure accountability and a democratic process for all stockholders.

Purpose and Effect of the Written Consent Certificate Amendment

The Written Certificate Amendment would allow stockholders to act by written consent if stockholders holding at least 20% of our outstanding Common Stock deliver a valid request for the Board to set a record date to determine the stockholders entitled to act by written consent. The Board determined to set the threshold to request a record date for action by written consent at 20% of our outstanding shares. While the Board believes that this right offers an equitable and transparent mechanism for stockholders to raise certain matters, it also recognizes that there may be expenses and distractions associated with such a mechanism.

Ownership Provisions

To ensure that the written consent process provides our stockholders with an equitable and transparent manner to raise matters for consideration by the company’s stockholders, the Written Certificate Amendment includes the following safeguards:

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Information Provisions

To ensure transparency, stockholders requesting action by written consent must provide the company with the same information that would be required to propose such action at a stockholder meeting. In addition, if the proposed action receives sufficient written consents to pass, all stockholders who did not give their written consent must be provided prompt notice of the taking of the action.

To provide the Board with a reasonable timeframe to properly evaluate and respond to a valid stockholder request that the Board set a record date to determine the stockholders entitled to act by written consent, the Written Consent Amendment requires that the Board must adopt a resolution fixing a record date by the later of (i) twenty days after delivery of such request and (ii) five days after delivery by the stockholder(s) of any information requested by the company to determine the validity of such request or to determine whether the proposed action to which the request relates may be effected by written consent. The record date must be no more than ten days after the date on which the Board resolution fixing the record date is adopted. If the Board fails to set a record date by the required date, the record date will be the first date on which a signed written consent relating to the proposed action is delivered to the company.

Additional Provisions

To ensure that stockholders have sufficient time to consider the proposal, as well as to provide the Board the opportunity to present its views regarding the proposed action, no executed consents may be delivered until sixty days after the delivery of a valid request to set a record date.

To ensure that the written consent is in compliance with applicable laws and is not duplicative, the Written Consent Amendment provides that the written consent process would not be available in a limited number of circumstances, including:

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Overview of Related Changes to the Bylaws

If the Written Consent Certificate Amendment is approved by the stockholders, the Board intends to make corresponding amendments to the Bylaws. Stockholders are not being asked to take any action at this time with respect to the Bylaws.

Legal Effectiveness of Proposed Amendments

The Written Consent Amendment is binding. If stockholders approve the Written Consent Amendment by an affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast at the 2022 Annual Meeting by the holders of outstanding capital stock, we will file with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate setting forth the Written Consent Amendment shortly following the 2022 Annual Meeting to incorporate the approved amendment. The Board expects to make corresponding amendments to the Bylaws if the Written Consent Amendment is approved by the requisite vote at the 2022 Annual Meeting. The Written Consent Amendment will become effective upon the effectiveness of the Certificate of Amendment with the Secretary of State of the State of Delaware.

If stockholders do not approve the Written Consent Amendment by the requisite vote, then the Certificate of Amendment setting forth the Written Consent Amendment will not be filed with the Secretary of State of the State of Delaware and holders of our Common Stock will not have the ability to act by written consent.

Required Vote

Approval of the Written Consent Amendment requires the affirmative “FOR” vote from the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of shares outstanding and entitled to vote. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions and broker non-votes, if any, will count as votes against the proposal.

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THE BOARD RECOMMENDS VOTING “FOR” THE WRITTEN CONSENT AMENDMENT TO PROVIDE STOCKHOLDERS THE RIGHT TO ACT BY WRITTEN CONSENT.

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PROPOSAL 6

VOTE TO ELIMINATE SUPERMAJORITY VOTING REQUIREMENTS

In evaluating the current voting requirement contained in our Certificate, the Nominating and Governance Committee and our Board considered, among other matters, certain of the principal positions for and against the current voting standard imposed by our Certificate and the viewpoints regarding supermajority voting provisions expressed by our investors, and reviewed trends and best practices in corporate governance, as well as the corporate governance practices and policies of a number of other corporations. Supermajority voting requirements like those in our Certificate are intended to facilitate corporate governance stability and provide protection against self-interested action by certain stockholders by requiring broad stockholder consensus to make certain fundamental changes. However, while such protection can be beneficial to stockholders, the Board is aware that some stockholders oppose these provisions, viewing supermajority provisions as limiting the Board’s accountability to stockholders and the ability of stockholders to participate in corporate governance.

Currently, Article XII of the Certificate provides that certain amendments to the Certificate require the affirmative vote of at least two-thirds of the outstanding shares of our common stock (the “Supermajority Provision”).

The Proposed Amendment

After careful consideration and upon the recommendation of the Nominating and Governance Committee, the Board has unanimously adopted and declared advisable, and recommends that our stockholders approve, an amendment to the Certificate to eliminate the Supermajority Provision and replace it with the majority voting standard (the “Supermajority Elimination Amendment”). This summary of the Supermajority Elimination Amendments is qualified in its entirety by reference to Appendix D.

Legal Effectiveness of Proposed Amendments

The Supermajority Elimination Amendment is binding. If stockholders approve the Supermajority Elimination Amendment by an affirmative vote of at least sixty-six and two-thirds percent (66 2/3%) of the votes entitled to be cast at the 2022 Annual Meeting by the holders of outstanding capital stock, we will file with the Secretary of State of the State of Delaware a Certificate of Amendment to the Certificate setting forth the Supermajority Elimination Amendment. The Supermajority Certificate Amendment will become effective upon the effectiveness of the Certificate of Amendment with the Secretary of State of the State of Delaware.

If stockholders do not approve the Supermajority Elimination Amendment by the requisite vote, then the Certificate of Amendment setting forth the Supermajority Elimination Amendment will not be filed with the Secretary of State of the State of Delaware, and the Supermajority Provisions will continue to apply to the holders of our Common Stock.

Required Vote

Approval of the Supermajority Elimination Amendment requires the affirmative “FOR” vote from the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of shares outstanding and entitled to vote. You may vote “FOR,” “AGAINST,” or “ABSTAIN” on this proposal. Abstentions and broker non-votes, if any, will count as votes against the proposal.

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THE BOARD RECOMMENDS VOTING “FOR” THE SUPERMAJORITY ELIMINATION AMENDMENT TO ELIMINATE THE SUPERMAJORITY VOTING REQUIREMENT.

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PROPOSAL 7

APPROVAL OF THE AMENDED AND RESTATED SAFETY INSURANCE GROUP INC., 2018 LONG-TERM INCENTIVE PLAN

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At the Annual Meeting, the stockholders will be asked to approve the amendment and restatement of the Company’s 2018 Long-Term Incentive Plan (the “2018 Plan”).  The 2018 Plan was originally approved by the stockholders on May 23, 2018.

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On March 24, 2022, our Board approved the Amended and Restated Safety Insurance Group, Inc. 2018 Long-Term Incentive Plan (the “Amended 2018 Plan”), subject to stockholder approval. The Amended 2018 Plan increases the share pool limit by adding 350,000 common shares to the Amended 2018 Plan as of its effective date. The material features of the Amended 2018 Plan are described below. If approved by the Company’s stockholders, the Amended 2018 Plan will become effective on the date of such approval.

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As of [•] there were 17,173 shares available under the 2018 Plan assuming all currently awarded performance shares achieved maximum payout. This remaining share pool will not be sufficient to fulfill the Company’s equity compensation program during the next several years. We consider it important to maintain a strong association between compensation of our employees and service providers and our stockholders’ long-term interests. Awards under the Amended 2018 Plan are intended to provide our employees significant incentive to protect and enhance stockholder value. We believe that there is an insufficient number of shares remaining available for new grants under our 2018 Plan to sustain these important stock-based incentives.

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Timing of Proposal

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The last time we asked our shareholders to approve a long-term equity incentive plan, in full, was in 2018. The 2018 Plan has served us well, but approval of the Amended 2018 Plan by our stockholders will allow us to continue to grant equity incentive awards in order to secure and retain the services of our employees, directors and other service providers and to provide long-term incentives that align the interests of our employees, directors and other service providers with the interests of our stockholders. Adopting the Amended 2018 Plan at this time will make an additional 350,000 common shares of the Company available for issuance to participants, bringing the total number of shares available to approximately 367,173.

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Key Amendments in the Amended 2018 Plan:

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Key Features of the Amended 2018 Plan Designed to Protect Stockholders’ Interests

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The Amended 2018 Plan’s design reflects our commitment to strong corporate governance and the desire to preserve stockholder value as demonstrated by the following Amended 2018 Plan features:

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Why We Support the Proposal

The Amended 2018 Plan is key to our attracting and retaining top talent. Attracting and retaining top talent in this very competitive industry is one of our fundamental strategic imperatives. Our long-term equity compensation program for our officers and employees is a significant element of our compensation strategy for attracting and retaining our top employees and directors. We have found that equity-based awards are valued by our executives and employees. That sense of value, when coupled with multi-year vesting periods, and performance-based vesting in certain cases, serves to enhance retention of these employees as well as collaboration among them. We believe an equity incentive plan is key to our long-term success and the future success of our stockholders.

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The Amended 2018 Plan will be used to align the long-term interests of our employees, with those of our stockholders. We consider it crucial to maintain a strong association between compensation of our key employees and our stockholders’ long-term interests. Our long-term equity compensation program is a significant factor in achieving this goal.

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Governance-related Provisions. As discussed below, the Amended 2018 Plan includes terms that reflect our strong commitment to governance measures and plan design features considered important by key institutional stockholders and proxy advisory firms.

For these reasons, we are asking our stockholders to approve the additional shares authorized for issuance under the Amended 2018 Plan and thereby enable us to continue to implement our long-term equity compensation program.

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Request for Approval of Share Pool Increase

If stockholders do not approve our Amended 2018 Plan, our ability to grant equity awards to our planned new hires, as well as our existing employees and management team, will be severely limited, which would place us at a competitive disadvantage. After a review of our historical practices and our anticipated future growth, we believe that the shares that would become available under our Amended 2018 Plan if this proposal is approved would enable us to continue to grant equity awards for approximately 4.7 years, which is vital to our ability to attract and retain the talent required to support our continued growth in the extremely competitive labor market in which we compete.

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In determining the share pool under our Amended 2018 Plan, our Board of Directors considered the historical number of equity awards granted by the Company in the past three years. In 2019, 2020, and 2021 the Company made equity awards in respect of 80,160 shares, 82,923 shares, and 98,684 shares, respectively, under our 2018 Plan (assuming maximum performance, for awards subject to performance-based vesting). The weighted average number of shares of our common stock outstanding in 2019, 2020 and 2021 was 15,201,132, 15,002,755 and 14,925,726, respectively. The Company’s three-year average burn rate is 1.89%. We believe our historical burn rate is below the benchmark for a company of our size in our industry, especially given our broad-based use of equity awards to compensate our employees and other key service providers.  We believe a low burn rate reflects a judicious use of equity for compensation purposes.  We will continue to monitor our equity use in future years to ensure our burn rate is within competitive market norms.

Outstanding Equity Awards  

In setting the number of shares authorized for issuance under the Amended 2018 Plan, we considered the total outstanding equity awards under the 2018 Plan. Under the heading “Policies and Practices Related to the Company’s Compensation Program beginning on page 59, we provide information about shares of common stock that may be issued under our equity compensation plans as of December 31, 2021. To facilitate the approval of the Amended 2018 Plan, set forth below is certain additional information as of the record date, [•].

As of [•] we had [•] shares of common stock issued and outstanding.  The closing price of the common stock as reported on the NASDAQ Stock Market on [•] was $[•].

Historical Equity Award Granting Practices

We also considered both our total equity "overhang" and our historical and projected annual "burn rate" in developing our share increase to the Amended 2018 Plan and analyzing the impact of using equity as a means of compensation on our stockholders.  

Burn rate provides a measure of the potential dilutive impact of our equity award program which we calculate by dividing the number of shares subject to equity awards granted during the year by the basic weighted average number of shares outstanding. In proposing the number of shares authorized for issuance under the Amended 2018 Plan, we considered the number of equity awards granted under the 2018 Plan in the past three fiscal years.  In 2019, 2020 and 2021, the Company granted equity awards representing a total of approximately 56,969 shares, 58,861 shares and 69,262

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shares at target expected performance payout (80,160 shares, 82,923 shares, and 98,684 shares at maximum level), as follows:

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* Amounts in table are determined at target level for outstanding performance share awards. Maximum level is 200% of target.

We also considered our three-year average burn rate (2021, 2020, and 2019) which as noted above is 1.89%. We believe our historical burn rate is reasonable and below the benchmark for a company of our size in our industry, especially given our broad-based use of equity awards to compensate our employees and other key service providers. We will continue to monitor our equity use in future years to ensure our burn rate is within competitive market norms.

Our future burn rate will depend on a number of factors, including the number of participants in the Amended 2018 Plan, the price per share of our common stock, any changes to our compensation strategy, changes in business practices or industry standards, changes in our capital structure due to stock splits or similar events, the compensation practices of our competitors or changes in compensation practices in the market generally, and the methodology used to establish the equity award mix.

Expected Share Usage Needs  

In setting the number of shares authorized for issuance under the Amended 2018 Plan, we also considered the potential dilution that would result by approval of the authorization of the share pool for the Amended 2018 Plan.  The actual dilution will depend on several factors, including the types of awards made under the Amended 2018 Plan.

Overhang is a measure of potential dilution which we define as the sum of (i) the total number of shares underlying all equity awards outstanding and (ii) the total number of shares available for future award grants, divided by the sum of (a) the total number of shares underlying all equity awards outstanding, (b) the total number of shares available for future awards and (c) the number of shares outstanding. As of [•], there were 219,735 shares of common stock underlying all equity awards outstanding at maximum performance metric goals, 17,173 shares of common stock available for future awards, and the number of shares of common stock outstanding as of [•] was 14,741,778 shares, or 14,758,951 shares when shares available for grant are included. Accordingly, our overhang as of [•], 2022 was 1.58%. If the 350,000 additional shares of common stock proposed to be authorized for grant under the Amended 2018 Plan are included in the calculation, our overhang on the date of approval of the Amended 2018 Plan, March 24, 2022 would be 3.83%. Our review of competitive practices, including in partnership with Pay Governance, our external compensation consultant,

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suggests that this level of overhang is competitive with and slightly below the median of similarly situated companies.

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Summary of the Amended 2018 Plan

The following summary describes the most significant features of the Amended 2018 Plan. This summary is not intended to be complete and is qualified in its entirety by reference to the full text of the Amended 2018 Plan, a copy of which is attached as Appendix E this proxy statement.  As of the date of this proxy statement, 7 non-employee directors and approximately 108 employees and consultants are eligible to participate in the Amended 2018 Plan.

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Eligibility and Participation

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The administrator selects the individuals who will participate in the Amended 2018 Plan. Eligibility to participate is open to officers, directors and employees of, and other individuals who provide bona fide services to or for, us or any of our subsidiaries. The Board may also select as participants prospective officers, employees and service providers who have accepted an offer of employment or another service relationship from us or one of our subsidiaries. Any awards granted to such a prospect before the individual’s start date may not become vested or exercisable, and no shares may be issued to such individual, before the date the individual first commences performance of services with us.

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Administration

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The Board will generally be the administrator of the Amended 2018 Plan. Except as provided otherwise under the Amended 2018 Plan, the administrator has plenary authority to grant awards pursuant to the terms of the Amended 2018 Plan to eligible individuals, determine the types of awards and the number of shares covered by the awards, establish the terms and conditions for awards and take all other actions necessary or desirable to carry out the purpose and intent of the Amended 2018 Plan.

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The Board may delegate to the officers and employees of the Company limited authority to perform administrative actions under the Amended 2018 Plan to assist in its administration to the extent permitted by applicable law and stock exchange rules. With respect to any award to which Section 16 of the Exchange Act applies, the administrator shall consist of our Board. Any member of the administrator who does not meet the foregoing requirements shall abstain from any decision regarding an award and shall not be considered a member of the administrator to the extent required to comply with Rule 16b-3 of the Exchange Act.

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Shares Available Under the Amended 2018 Plan

The shares of our Common Stock issuable pursuant to awards under the Amended 2018 Plan will be shares authorized for issuance under our Amended and Restated Certificate of Incorporation. When the Amended 2018 Plan first becomes effective, the number of shares of our Common Stock issuable pursuant to awards granted under the Amended 2018 Plan (the “Share Pool”) will be equal to 700,000.

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Adjustments to Share Pool. Following the effective date of the Amended 2018 Plan, the Share Pool will be adjusted as follows:

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For the avoidance of doubt, the Share Pool will not be increased by (A) shares of our Common Stock that are used as a reference measure for any award granted under the Amended 2018 Plan that are not issued upon settlement of such award due to net settlement, (B) shares of our Common Stock withheld by or surrendered (either actually or through attestation) to us in payment of the exercise price of any award, or (C) shares of our Common Stock withheld by or surrendered (either actually or through attestation) to us in payment of any tax withholding obligation that arises in connection with any award.

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In the event of a merger, consolidation, stock rights offering, statutory share exchange or similar event affecting the Company or a stock dividend, stock split, reverse stock split, separation, spinoff, reorganization, extraordinary dividend of cash or other property, share combination or subdivision, or recapitalization or similar event affecting the capital structure of the Company, our Board will adjust the Share Pool proportionately to reflect the transaction or event. Similar adjustments will be made to the award limitations described below and to the terms of outstanding awards.

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Types of Awards

The Amended 2018 Plan enables the grant of stock options, stock appreciation rights, stock awards, stock unit awards, performance shares, cash-based performance units and other stock-based awards, each of which may be granted separately or in tandem with other awards.

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Stock Options and Stock Appreciation Rights. Stock options represent a right to purchase a specified number of shares of our Common Stock from us at a specified price during a specified period of time. Stock options may be granted in the form of incentive stock options, which are intended to qualify for favorable treatment for the recipient under U.S. federal tax law, or as nonqualified stock options, which do not qualify for this favorable tax treatment. Only employees of the Company or its subsidiaries may receive tax-qualified incentive stock options within the U.S. The administrator may establish sub-plans under the Amended 2018 Plan through which to grant stock options that qualify for preferred tax treatment for recipients in jurisdictions outside the U.S. Stock appreciation rights represent the right to receive an amount in cash, shares of our Common Stock or both equal to the fair

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market value of the shares subject to the award on the date of exercise minus the exercise price of the award. All stock options and stock appreciation rights must have a term of no longer than ten years’ duration. Stock options and stock appreciation rights generally must have an exercise price equal to or above the fair market value of our shares of Common Stock on the date of grant except as provided under applicable law or with respect to stock options and stock appreciation rights that are granted in substitution of similar types of awards of a company acquired by us or an affiliate or with which we or our affiliate combine (whether in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock, or otherwise) to preserve the intrinsic value of such awards. As of [•] the fair market value of a share of our Common Stock was [•] as reported on the NASDAQ Global Select Market.

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Prohibition on Reload Options. The administrator is prohibited from granting stock options under the Amended 2018 Plan that contain a reload or replenishment feature. A reload or replenishment feature means that if an option holder delivers shares of our Common Stock to us in payment of the exercise price or any tax withholding obligation upon exercise of an outstanding stock option, we grant to that option holder a new at-the-market option for the number of shares that he or she delivered.

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Prohibition on Repricing. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of stock options and stock appreciation rights granted under the Amended 2018 Plan may not be amended, after the date of grant, to reduce the exercise price of such stock options or stock appreciation rights, nor may outstanding stock options or stock appreciation rights be canceled in exchange for (i) cash, (ii) stock options or stock appreciation rights with an exercise price that is less than the exercise price of the original outstanding stock options or stock appreciation rights, or (iii) other awards, unless such action is approved by our stockholders.

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Restricted Stock. Awards of restricted stock are actual shares of our Common Stock that are issued to a participant, but that are subject to forfeiture if the participant does not remain employed by us for a certain period of time and/or if certain performance goals are not met. Except for these restrictions and any others imposed by the administrator, the participant will generally have all of the rights of a stockholder with respect to the restricted stock, including the right to vote the restricted stock, but will not be permitted to sell, assign, transfer, pledge or otherwise encumber shares of restricted stock before the risk of forfeiture lapses.

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Dividends declared payable on shares of restricted stock that are granted subject to risk of forfeiture conditioned solely on continued service over a period of time will be deferred for payment to such later date as determined by the administrator, and may be paid in cash or as unrestricted shares of our Common Stock or may be reinvested in additional shares of restricted stock. Dividends declared payable on shares of restricted stock that are granted subject to risk of forfeiture conditioned on satisfaction of performance goals will be held by us and made subject to forfeiture at least until the applicable performance goal and/or service-based restriction related to such shares of restricted stock has been satisfied.

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Restricted Stock Units. An award of restricted stock units represents a contractual obligation of the Company to deliver a number of shares of our Common Stock, an amount in cash equal to the fair market value of the specified number of shares subject to the award, or a combination of shares and cash. Until shares of our Common Stock are issued to the participant in settlement of stock units, the participant shall not have any rights of a stockholder of the Company with respect to the stock units or the shares issuable thereunder. Vesting of restricted stock units may be subject to performance goals, the continued service of the participant or both. The administrator may provide that dividend equivalents will be paid or credited with respect to restricted stock units, but such dividend equivalents will be held by us and made subject to forfeiture at least until any applicable performance goal related or other service-based restriction to such restricted stock units has been satisfied.

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Performance Shares and Performance Units. An award of performance shares, as that term is used in the Amended 2018 Plan, refers to shares of our Common Stock or stock units that are expressed in terms of our Common Stock, the issuance, vesting, lapse of restrictions or payment of which is contingent on performance as measured against predetermined objectives over a specified performance period. An award of performance units, as that term is used in the Amended 2018 Plan, refers to dollar-denominated units valued by reference to designated criteria established by the administrator, other than our Common Stock, whose issuance, vesting, lapse of restrictions or payment is contingent on performance as measured against predetermined objectives over a specified performance period. The applicable award agreement will specify whether performance shares and performance units will be settled or paid in cash or shares of our Common Stock or a combination of both, or will reserve to the administrator or the participant the right to make that determination prior to or at the payment or settlement date.

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The administrator will, prior to or at the time of grant, condition the grant, vesting or payment of, or lapse of restrictions on, an award of performance shares or performance units upon (A) the attainment of performance goals during a performance period or (B) the attainment of performance goals and the continued service of the participant. The length of the performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained will be conclusively determined by the administrator in the exercise of its absolute discretion. Performance goals may include minimum, maximum and target levels of performance, with the size of the award or payout of performance shares or performance units or the vesting or lapse of restrictions with respect thereto based on the level attained. An award of performance shares or performance units will be settled as and when the award vests or at a later time specified in the award agreement or in accordance with an election of the participant, if the administrator so permits, that meets the requirements of Section 409A of the Code.

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Performance goals applicable to performance-based awards are based on performance metrics selected by the administrator. For this purpose, performance metrics mean any criteria established by the administrator, including but not limited to, the following, as it may apply to individual, one or more business units, divisions, or Affiliates, or on a company-wide basis, and in absolute terms,

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relative to a base period, or relative to the performance of one or more comparable companies, peer groups, or an index covering multiple companies:

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Other Stock-Based Awards. The administrator may from time-to-time grant to eligible individuals awards in the form of our Common Stock or any other award that is valued in whole or in part by reference to, or is otherwise based upon, shares of our Common Stock, including without limitation dividend equivalents and convertible debentures (Other Stock-Based Awards). Other Stock-Based Awards in the form of dividend equivalents may be (A) awarded on a free-standing basis or in connection with another award other than a stock option or stock appreciation right, (B) paid currently or credited to an account for the participant, including the reinvestment of such credited amounts in Common Stock equivalents, to be paid on a deferred basis, and (C) settled in cash or our Common Stock as determined by the administrator; provided, however, that dividend equivalents payable on Other Stock-Based Awards that are granted as a performance award or restricted award shall, rather than be paid on a current basis, be accrued and made subject to forfeiture at least until the applicable performance goal or service-based restrictions related to such Other Stock-Based Awards has been satisfied, as applicable. Any such settlements, and any such crediting of dividend equivalents, may be subject to such conditions, restrictions and contingencies as the administrator may establish.

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Award Limitations

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The following limitations on awards are imposed under the Amended 2018 Plan:

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ISO Award Limit. The maximum number of shares of our Common Stock that may be issued in connection with awards granted under the Amended 2018 Plan that are intended to qualify as incentive stock options under Section 422 of the Code is 700,000 shares.

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Individual Award Limits:

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Non-Employee Director Limits

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The Administrator may establish compensation for directors who are not employees of our company or any of our Affiliates, as defined in the Amended 2018 Plan, or the Non-Employee Directors, from time to time, provided that the sum of any cash compensation and the grant date fair value of Awards granted under the Amended 2018 Plan to a non-employee director as compensation for services as a non-employee director during any calendar year may not exceed $750,000 for an annual grant, provided however that in a non-employee's director first year of service, compensation for services may not exceed $1,000,000. The Administrator may make exceptions to this limit for

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individual non-employee directors in extraordinary circumstances, as the Administrator may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other compensation decisions involving non-employee director.

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Adjustments to Awards for Corporate Transactions and Other Events

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Mandatory Adjustments. In the event of a merger, consolidation, stock rights offering, statutory share exchange or similar event affecting us (a “Corporate Event”) or a stock dividend, stock split, reverse stock split, separation, spinoff, reorganization, extraordinary dividend of cash or other property, share combination or subdivision, or recapitalization or similar event affecting the capital structure of the Company, the administrator will make such equitable and appropriate substitutions or proportionate adjustments to:

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Discretionary Adjustments. In addition to the adjustments specified above, in the case of Corporate Events, the administrator may make such other adjustments to outstanding awards as it determines to be appropriate and desirable, which adjustments may include, without limitation, (i) the cancellation of outstanding awards in exchange for payments of cash, securities or other property or a combination thereof having an aggregate value equal to the value of such awards, (ii) the substitution of securities or other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for the shares of Common Stock subject to outstanding awards, and (iii) the substitution of equivalent awards, as determined in the sole discretion of the administrator, of the surviving or successor entity or a parent thereof. The administrator may, in its discretion, adjust the performance goals applicable to any awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations and the cumulative effects of accounting or tax changes.

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Treatment of Awards upon Dissolution or Liquidation or a Change in Control

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Dissolution or Liquidation. Unless the administrator determines otherwise, all awards outstanding under the Amended 2018 Plan will terminate upon the dissolution or liquidation of the Company.

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Change in Control - Termination of Awards.  Outstanding Awards will terminate upon the effective time of such change in control unless provision is made in connection with the transaction for the continuation or assumption of such awards by, or for the issuance therefor of substitute awards of, the surviving or successor entity or a parent thereof.  Solely with respect to awards that will terminate as a result of the immediately preceding sentence and except as otherwise provided in the applicable award agreement: (i) the outstanding awards of stock options and stock appreciation rights that will terminate upon the effective time of the change in control will, immediately before the effective time of the change in control, become fully exercisable and the holders of such Awards will be permitted, immediately before the change in control, to exercise the Awards; (ii) the outstanding shares of restricted stock the vesting or restrictions on which are then solely time-based and not subject to achievement of performance goals will, immediately before the effective time of the change in control, become fully vested, free of all transfer and lapse restrictions and free of all risks of forfeiture; (iii) the outstanding shares of restricted stock the vesting or restrictions on which are then subject to and pending achievement of performance goals shall, immediately before the effective time of the change in control and unless the award agreement provides for vesting or lapsing of restrictions in a greater amount upon the occurrence of a change in control, become vested, free of transfer and lapse restrictions and risks of forfeiture in such amounts as if the applicable performance goals for the unexpired performance period had been achieved at the target level set forth in the applicable award agreement; (iv) the outstanding restricted stock units, performance shares and performance units the vesting, earning or settlement of which is then solely time-based and not subject to or pending achievement of performance goals shall, immediately before the effective time of the change in control, become fully earned and vested and shall be settled in cash or shares of Common Stock (consistent with the terms of the award agreement after taking into account the effect of the change in control transaction on the shares) as promptly as is practicable, subject to any applicable limitations imposed thereon by Section 409A of the Code; and (v) the outstanding restricted stock units, performance shares and performance units the vesting, earning or settlement of which is then subject to and pending achievement of performance goals shall, immediately before the effective time of the change in control and unless the award agreement provides for vesting, earning or settlement in a greater amount upon the occurrence of a change in control, become vested and earned in such amounts as if the applicable performance goals for the unexpired performance period had been achieved at the target level set forth in the applicable award agreement and shall be settled in cash or shares of Common Stock (consistent with the terms of the award agreement after taking into account the effect of the change in control transaction on the shares) as promptly as is practicable, subject to any applicable limitations imposed thereon by Section 409A of the Code.

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Change in Control - Continuation, Assumption or Substitution of Awards.  Unless otherwise  provided in the applicable award agreement, if a change in control of the Company occurs via a transaction under which provision is made in connection with the transaction by the surviving or successor entity or a parent of such entity for outstanding awards to be continued or assumed or for

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equivalent awards to be substituted, then such awards will continue and will be subject to the double-trigger protections provided to participants holding outstanding awards are triggered. This means that if, coincident with the change in control or during the 18 month period following the change in control, a participant’s service with the surviving or successor entity is terminated involuntarily by the participant’s employer (other than for cause, as defined in the Amended 2018 Plan, disability or death), the following accelerated vesting and payment rules will apply to the participant’s outstanding awards: (i)any outstanding stock options and stock appreciation rights granted under the Amended 2018 Plan to a participant or any such substitute awards which are not then exercisable and vested shall become fully exercisable and vested; (ii) the restrictions and transferal limitations applicable to any shares of restricted stock granted under the Amended 2018 Plan to a participant or any such substitute awards shall lapse and such shares of restricted stock shall become free of all restrictions and become fully vested and transferable; (iii)all restricted stock units, performance shares and performance units granted under the Amended 2018 Plan to the participant or any such substitute awards shall be considered to be earned and payable at target level, any deferral or other restriction thereon shall lapse, any restriction period thereon shall terminate, and such restricted stock units, performance shares and performance units or any such substitute awards will be settled in cash or shares of Common Stock (consistent with the terms of the award Agreement after taking into account the effect of the change in control transaction on the shares) as promptly as is practicable; (iv) each outstanding performance award granted under the Amended 2018 Plan to a participant or any such substitute award shall be deemed to satisfy any applicable performance goals as set forth in the applicable award agreement; and (v) the administrator may also make additional adjustments and/or settlements of outstanding awards granted to the participant or any substitute awards as it deems appropriate and consistent with the Amended 2018 Plan’s purposes.

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Under the terms of the Amended 2018 Plan, a change in control is generally defined as (i) any acquisition by a person or entity of more than 50% of the total voting power of the Company’s stock, with certain exceptions, (ii) a contested change in the majority of the Board members within a 12-month period or (iii) acquisition by a person or entity over a 12-month period of assets from the Company that have a total gross fair market value equal to or more than 51% of the total gross fair market value of all of the Company immediately prior to such acquisitions.

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Amendment and Termination

Our Board may terminate, amend or modify the Amended 2018 Plan or any portion of it at any time, subject to such restrictions on amendments and modifications as may apply under applicable laws or listing rules. No such amendment may be made without the approval of our stockholders, however, to the extent such amendment would (i) materially increase the benefits accruing to participants under the Amended 2018 Plan, (ii) materially increase the number of shares of our Common Stock which may be issued under the Amended 2018 Plan or to a participant, (iii) materially expand the eligibility for participation in the Amended 2018 Plan, (iv) eliminate or modify the prohibition on repricing of stock options and stock appreciation rights, (v) lengthen the maximum term or lower the minimum exercise price or base price permitted for stock options and stock appreciation rights, or (vi) modify the limitation on the issuance of reload or replenishment options.

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The Amended 2018 Plan is scheduled to expire on March 24, 2032 which is ten years after its adoption by our Board.

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Compliance with Listing Rules

While shares are listed for trading on any stock exchange or market, our Board agrees that it will not make any amendments, issue any awards or take any action under the Amended 2018 Plan unless such action complies with the relevant listing rules.

Material U.S. Federal Income Tax Consequences of the Amended 2018 Plan

The following discussion is intended only as a general summary of the material U.S. federal income tax consequences of awards issued under the Amended 2018 Plan, based upon the provisions of the Code as of the date of this proxy statement, for the purposes of stockholders considering how to vote on this proposal. It is not intended as tax guidance to participants in the Amended 2018 Plan. This summary does not take into account certain circumstances that may change the income tax treatment of awards for individual participants, and it does not describe the state income tax consequences of any award or the taxation of awards in jurisdictions outside of the U.S.

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Stock Options and Stock Appreciation Rights. The grant of a stock option or stock appreciation right generally has no income tax consequences for a participant or the Company. Likewise, the exercise of an incentive stock option generally does not have income tax consequences for a participant or the Company, except that it may result in an item of adjustment for alternative minimum tax purposes for the participant. A participant usually recognizes ordinary income upon the exercise of a nonqualified stock option or stock appreciation right equal to the fair market value of the shares or cash payable (without regard to income or employment tax withholding) minus the exercise price, if applicable. We should generally be entitled to a deduction for federal income tax purposes equal to the amount of ordinary income recognized by the participant as a result of the exercise of a nonqualified stock option or stock appreciation right.

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If a participant holds the shares acquired under an incentive stock option for the time specified in the Code (at least two years measured from the grant date and one year measured from the exercise date), any gain or loss arising from a subsequent disposition of the shares will be taxed as long-term capital gain or loss. If the shares are disposed of before the holding period is satisfied, the participant will recognize ordinary income equal to the lesser of (1) the amount realized upon the disposition and (2) the fair market value of such shares on the date of exercise minus the exercise price paid for the shares. Any ordinary income recognized by the participant on the disqualifying disposition of the shares generally entitles us to a deduction by us for federal income tax purposes. Any disposition of shares acquired under a nonqualified stock option or a stock appreciation right will generally result only in capital gain or loss for the participant, which may be short- or long-term, depending upon the holding period for the shares.

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Full Value Awards. Any cash and the fair market value of any shares of Common Stock received by a participant under a full value award are generally includible in the participant’s ordinary income. In the case of restricted stock awards, this amount is includible in the participant’s income

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when the awards vest, unless the participant has filed an election with the IRS to include the fair market value of the restricted shares in income as of the date the award was granted. In the case of restricted stock units, performance shares and performance units, generally the value of any cash and the fair market value of any shares of Common Stock received by a participant are includible in income when the awards are paid. Any dividends or dividend equivalents paid on unvested full value awards are also ordinary income for participants.

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Deductibility of Compensation. The Company generally is entitled to a deduction equal to the amount included in the ordinary income of participants and does not receive a deduction for amounts that are taxable to participants as capital gain.

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New Plan Benefits

No awards have been previously granted under the Amended 2018 Plan. Awards that may be granted to eligible persons under the Amended 2018 Plan are subject to the discretion of the Compensation Committee, so we cannot currently determine the benefits or amounts that will be received or allocated to our current named executive officers, executive officers as a group, directors who are not executive officers as a group, and employees, including all current officers who are not executive officers, as a group. Consequently, no New Plan Benefits Table is included in this proxy statement.

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Awards Granted Under the 2018 Plan

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The following table sets forth, for each of the individuals and various groups indicated, the total number of shares of our common stock subject to awards at target that have been granted under the 2018 Plan as of [•].

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Vote Required

If a quorum is present, approval of the Amended 2018 Plan requires the affirmative vote of a majority of the votes cast at the Annual Meeting. Abstentions and broker non-votes will each be

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counted as present for purposes of determining the presence of a quorum. Abstentions and broker non-votes, if any, will not be considered as votes cast for or against the proposal and will therefore have no effect on the outcome of the vote.

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THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE FORM, TERMS AND PROVISIONS OF THE AMENDED AND RESTATED SAFETY INSURANCE GROUP, INC. 2018 LONG-TERM INCENTIVE PLAN.

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EXECUTIVE OFFICERS

Occupations of Executive Officers

The table below sets forth certain information concerning our executive officers as of the date of this Proxy Statement.

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George M. Murphy, CPCU. For information regarding Mr. Murphy, refer above to “Nominees for Director”.

  Christopher T. Whitford was appointed Chief Financial Officer, Vice President and Secretary of the Company on March 2, 2020. Mr. Whitford, a Certified Public Accountant in Massachusetts, previously held the Controller position with the Company since 2012 and began his career at PricewaterhouseCoopers in 2005. Mr. Whitford serves on the investment and audit committees of Guarantee Fund Management Services and serves on the audit committee of the Massachusetts Property Insurance Underwriting Association (“FAIR Plan”).

James D. Berry, CPCU, was appointed Vice President of Underwriting of the Company in July 2015, and was named as Secretary of the Insurance Subsidiaries at that time. Prior to that, he served as the Vice President of Insurance Operations since October 2005. Mr. Berry has been employed by the Insurance Subsidiaries for over 37 years and has directed the Company’s Massachusetts Private Passenger line of business since 2001. Mr. Berry is the Chairman of the Board of Directors of the FAIR Plan and previously served as the Chairman of that organization’s Executive Committee. He has served on several committees of Commonwealth Automobile Reinsurers (“CAR”) including Market Review and Defaulted Brokers and also served on Computer Sciences Corporation Series II and Exceed advisory councils. He also serves as Director and Treasurer of the In Control Family Foundation. He is also a member of the Executive, Finance, and Business Development Committee, where he serves as Chairperson.

John P. Drago was appointed Vice President of Marketing on February 1, 2016. Mr. Drago has been employed by the Insurance Subsidiaries for over 25 years and most recently served as Director of Marketing.

Glenn R. Hiltpold was appointed Vice President of Actuarial Services of the Company on March 1, 2021. Mr. Hiltpold, a Fellow of the Casualty Actuarial Society, has held the Director of Actuarial Services position with the Company since 2004 and has been an employee of the Company for 22 years.

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Ann M. McKeown was appointed Vice President of Insurance Operations of the Company on July 1, 2015. Ms. McKeown has been employed by the Insurance Subsidiaries for over 30 years wherein she has held management positions in the Underwriting, Information Technology, and Insurance Operations departments. Ms. McKeown has served on the Massachusetts Assigned Insurance Plan (“MAIP”) Steering and Operations Committees of CAR.

Paul J. Narciso was appointed Vice President of Claims of the Company on August 5, 2013.  Mr. Narciso has held various adjusting and claims management positions with the Company since 1990.  Mr. Narciso has 34 years of claim experience having worked at two national carriers prior to joining Safety. 

Stephen A. Varga was appointed Vice President of Management Information Systems (“MIS”) of the Company on August 6, 2014. Mr. Varga has held various information technology positions with the Company since 1992 and most recently served as Senior Director of MIS.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

Our compensation program objectives are to attract and retain individuals key to our future success, to motivate and reward employees in achieving our business goals and to align the long-term interests of employees with those of our stockholders. We are committed to paying for performance and making sure our decisions align with long-term interests of Safety and its stockholders.

In this section, we discuss and analyze our compensation practices with respect to Messrs. Murphy, Whitford, Berry, Narciso and Varga, who are respectively, our Chief Executive Officer, Chief Financial Officer, and three other highest paid executives (collectively, our "Named Executive Officers") in 2021.

Business Overview

Safety Insurance is a leading provider of private passenger automobile, commercial automobile, and homeowners insurance in Massachusetts. In addition to these coverages, we offer a portfolio of other insurance products, including dwelling fire, umbrella and business owner policies. Operating exclusively in Massachusetts, New Hampshire and Maine through our insurance company subsidiaries, Safety Insurance Company (“Safety Insurance”), Safety Indemnity Insurance Company (“Safety Indemnity”), Safety Property and Casualty Insurance Company (“Safety P&C”), and Safety Northeast Insurance Company (“Safety Northeast”) (together referred to as the “Insurance Subsidiaries”), we have established strong relationships with independent insurance agents, who numbered 856 in 1,088 locations throughout these three states during 2021. We have used these relationships and, in particular, our extensive knowledge of the Massachusetts market to become the fourth largest private passenger automobile carrier and the second largest commercial automobile carrier in Massachusetts. We also are the third largest homeowners insurance carrier in Massachusetts.

Executive Summary

The purpose of this summary is to help our investors understand Safety’s approach to executive compensation, specifically understanding what we pay our executives, how we pay them, and why. We are committed to paying for performance and making sure our decisions align with long-term interests of Safety and its stockholders.

The Compensation Committee (the “Committee”) is responsible for executive compensation at Safety. The Committee is comprised entirely of independent directors. The Committee engages Pay Governance, a leading independent executive compensation consulting firm, to help guide them in implementing best pay practices and help ensure strong pay and performance alignment. Highlights and features of our stockholder-friendly pay practices include:

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Long-term Performance

We have had strong absolute and relative TSR over the 1-, 3-, and 5-year periods. Our TSR of 1,277% from our November 22, 2002, Initial Public Offering (“IPO”) through December 31, 2021, is well above the major indexes and our property and casualty insurance peers.

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2021 Results and Impact on Actual Pay

We are proud of our achievements in 2021, as we returned to a more normal operating environment following a record year in 2020. We continued our track record of operational excellence, posting a strong combined ratio of 93.0%. As has been the case for several years, our combined ratio compared favorably to the average of our Performance Peer Group that have reported Fiscal Year 2021 results of 95.2% and is below our own five-year average of 93.9%. Our

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book value increased by 5.2% and reached a record high of $62.47 per share as of December 31, 2021.

¹ Source: FactSet and company filings. Data as of March 15, 2022.

In 2021, earnings per share (“EPS”) was $8.85 and earnings before income taxes was $164.3 million. Earnings before interest, taxes, changes in unrealized gains on equity securities and credit loss expense was $148.3 million, which is calculated in the table below. The Compensation Committee believes that this is an effective measure for assessing annual profitability and company performance.

Beginning in 2020, the Company was required to adopt a new accounting pronouncement from the Financial Accounting Standards Board (“FASB”) which changed the impairment model used on financial instruments to the Current Expected Credit Loss model. This pronouncement requires the Company to estimate the amount of expected credit losses on an impaired financial instrument and record the loss or subsequent recovery through net income rather than through other comprehensive income. Furthermore, in 2018, the Company was required to adopt a new accounting pronouncement from the Financial Accounting Standards Board (“FASB”) which requires changes in unrealized gains (losses) on equity securities to be recorded through net income rather than through other comprehensive income. Eliminating the benefit or penalty of these adoptions gives a representation of true business performance. It is the core metric used in the annual incentive plan under which cash bonus payouts are determined.

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Combined ratio, another measure of profitability, which is the sum of our loss and expense ratio, was 93.0% in 2021.

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Due to the above accomplishments and other strong financial performance, we funded performance-based variable pay as follows:

The Committee is confident that the 2021 annual incentive and 2019-2021 performance share payouts are a fair reflection of Safety’s results during the relevant time periods.

Say on Pay Results

Safety’s Board of Directors takes its duty to the Company and its stockholders seriously. We strive to follow good process, apply our best judgment, and make the best decisions we can to make Safety an even stronger and more valuable company. Our ability to perform that role is greatly enhanced when we receive thoughtful and constructive feedback from our stockholders. Our stockholders responded very favorably to our executive compensation program with 98.6% voting in support of our 2021 Say on Pay vote. We continue to welcome your input and feedback on our approach to executive compensation and these disclosure materials. We look forward to receiving your continued support on our upcoming say-on-pay vote.

Objectives of the Company’s Compensation Program

The Committee is responsible for recommending to the Board compensation for the CEO and for determining the compensation of the other executive officers. The Committee acts pursuant to a charter that has been approved by the Board. The Committee bases its compensation policies and decisions on the following principles.

The Committee annually reviews executive performance and compensation, including base pay, annual cash incentives, and equity awards for our executives. The Committee considers specific recommendations regarding compensation for other executives from the CEO and reviews the CEO’s annual assessment of other executives’ performance. Our Committee makes a final determination of compensation amounts for our CEO and other executives with respect to each of the elements of the executive compensation program for actual compensation based on performance in the preceding year and target compensation for the current year.

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Policies and Practices Related to the Company’s Compensation Program

We strive to create an overall compensation package for each Named Executive Officer that satisfies these objectives, recognizing that certain elements of compensation are better suited to reflect different compensation objectives. Our primary goal is to provide strong performance-based total compensation plans that enable us to provide highly competitive compensation when our performance leads the peer group and industry.

Compensation Consultant and Compensation Study

The Committee selected and directly engaged Pay Governance as its compensation consultant. Pay Governance receives compensation only for services related to executive compensation issues, and neither it nor any affiliate company provides any other services to the Company. Pay Governance reports directly to the Committee and is responsible for reviewing Committee materials, attending Committee meetings, assisting the Committee with program design and generally providing advice and counsel to the Committee as compensation issues arise. Based on the consideration of the various factors as set forth in the rules of the SEC, the Compensation Committee has determined that its relationship with Pay Governance and the work of Pay Governance on behalf of the Committee has not raised any conflict of interest.

As part of its review of the compensation of executive management at the Company, Pay Governance recommended and the Committee approved the following thirteen companies which comprise the Company’s peer group for 2021 as follows:

Donegal Group, Inc., Employers Holdings, Inc., Hallmark Financial Services, Inc., Hanover Insurance Group, Inc., Heritage Insurance Holdings Inc., Horace Mann Educators Corporation, Mercury General Corporation, Protective Insurance Corporation, Selective Insurance Group, Inc., State Auto Financial Corporation, United Fire Group, Inc., United Insurance Holdings Corporation, and Universal Insurance Holdings, Inc.

There were no changes in the peer group from 2020 to 2021

Equity Grant Practices

The grant date of our equity awards is scheduled in advance and is based on the timing of the completion of our annual performance and compensation review process. We have not granted stock options to our Named Executive Officers since 2003 and none of our Named Executive Officers hold any Company stock options.

Stock Ownership Guidelines and Hedging / Pledging Policy

We have stock ownership guidelines for our Named Executive Officers to help ensure alignment of our Named Executive Officers’ interests with those of our stockholders. Stock ownership guidelines are set as a multiple of annual base salary divided by the current share price on the date of the annual evaluation. The multiple of annual base salary for the CEO is set at five, and for the remaining executive officers is set at three. All of our Named Executive Officers currently meet these guidelines.

Our Directors are also subject to stock ownership guidelines, which require them to have a value four times their annual cash retainer. A director must meet this requirement within five years

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of becoming a director. All Directors, outside of the recently appointed Ms. Gray, Mr. Farina, and Ms. Moran, currently meet the guideline.

As part of our insider trading policy, our executives and directors are already subject to an anti-hedging policy that prohibits them from purchasing financial instruments that are designed to hedge or offset any fluctuations in the market value of the Company’s equity securities they hold. The insider trading policy also prohibits the pledging of the Company’s equity securities.

Elements of Executive Compensation

The Committee, after reviewing information provided by Pay Governance, determines what it believes to be the appropriate level for cash and non-cash compensation components. After receiving the results of the Pay Governance study and considering our compensation philosophy and the actual practices of the selected peer group, the Committee determined that the elements of targeted overall compensation for executive officers should include the following:

Pay at Risk

A significant percentage of each named executive’s target total direct compensation is “pay at risk” through long-term equity awards and annual incentive awards that are linked to actual performance. The Committee believes that the executive pay at Safety should contain a high percentage of pay at risk consistent with our pay for performance philosophy. For example, in 2021, Safety’s CEO had 67% of his target pay (target annual incentive and long-term incentives) at risk, which was above that of peer CEOs according to the Pay Governance executive benchmarking report. The actual mix of compensation for 2021 for our CEO is shown in the chart below.

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Base Salaries

Base salaries are generally targeted at the median (50th percentile) of peer group companies and reflect the roles, responsibilities and individual performance of the executives. In 2021, in accordance with the executive officers’ employment contracts, salary increases were based on the change in cost of living for the Boston metropolitan market as reported by the U.S. Department of Labor statistics. This resulted in an increase of 0.4% to each NEO.

Annual Cash Incentives

The purpose of the Annual Performance Incentive Plan is to provide designated key executive employees with meaningful financial rewards for the accomplishment of our annual financial and strategic objectives. This annual cash incentive compensation award directly reflects the actual performance of the Company. This direct reflection of Company performance is illustrated by the 2021 annual incentive payouts, under which, as discussed below, performance results exceeded the maximum payout and resulted in a maximum payout to our Named Executive Officers

Under the Annual Performance Incentive Plan, once the threshold performance level (as defined by the Committee annually) has been achieved, the payouts may range from 50% to 150% of the target payout.

The 2021 payout opportunity for our executive officers ranged as follows:

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On or before the end of the first 90 days of each fiscal year, the Committee selects the participants to whom incentive awards are granted, establishes the target incentive awards, and establishes the performance objective or objectives that will determine the dollar amount available for these incentive awards. Performance objectives are based upon the relative or comparative achievement of one or more of the following criteria, as determined by the Committee: net income, earnings before interest, taxes, changes in unrealized gains on equity securities and credit loss expense, earnings before interest and taxes (“EBIT”), EPS, return on stockholders’ equity, expense management, profitability of an identifiable business unit or product, ratio of claims to revenues, revenue growth, earnings growth, total stockholder return, cash flow, return on assets, operating income, net economic profit (operating earnings minus a charge for capital), customer satisfaction, agency satisfaction, employee satisfaction, quality of services, strategic innovation, or any combination of the foregoing.

For 2021, the financial measure established by the Committee was earnings before interest, taxes, changes in unrealized gains on equity securities and credit loss expense. The Compensation Committee believes this is an effective measure for assessing annual profitability and company performance.

The target goal for 2021 was $115.7 million and was based on the average of the actual earnings before interest, taxes, changes in unrealized gains on equity securities and credit loss expense achievements for 2020 and 2019 on which the executives were paid bonuses. This establishes a consistent methodology tied to the operating results of the Company as explained on

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page 17. This means that if the actual achievement was above 150% of that year’s target, the goal setting calculation uses the 150% achievement for determining the two-year average. This practice avoids penalizing the executives for over achievement and creating unachievable performance goals. The two-year average also enables us to set targets that provide for a reasonable time to adjust to factors that are out of the Company’s control, such as changes in regulatory requirements or unusual weather occurrences. Once the target goal is set, the range of performance is 50% (threshold) to 150% (exceptional) of this target, and the payouts are based on achievement relative to the goal. The Committee prorates the payouts within this range to correspond to the actual performance.

For 2021, our actual earnings before interest, taxes, changes in unrealized gains on equity securities and credit loss expense of $148.3 million was 128.0% of our $115.7 million target. For 2020 our actual financial performance of $165.8 million was 185% of our $89.6 million target. This resulted in a 128% and 150% of target payout for 2021 and 2020 as follows.

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Long-Term Incentives (“LTI”)

On April 2, 2018, the Company’s Board of Directors adopted the Safety Insurance Group, Inc. 2018 Long-Term Incentive Plan (“the 2018 Plan”), which was subsequently approved by our stockholders at the 2018 Annual Meeting of Stockholders. The 2018 Plan enables the grant of stock awards, performance shares, cash-based performance units, other stock-based awards, stock options, stock appreciation rights, and stock unit awards, each of which may be granted separately or in tandem with other awards. Eligibility to participate includes officers, directors, employees and other individuals who provide bona fide services to the Company. The 2018 Plan supersedes the Company’s 2002 Management Omnibus Incentive Plan (“the 2002 Incentive Plan”).

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We use our incentive plans to grant long-term equity-based incentive awards. A description of the 2018 Plan can be found in the narrative following the Grants of Plan-Based Awards table. Long-term incentive compensation, which may include nonqualified stock options, incentive stock options, stock appreciation rights and restricted stock awards, is intended to reinforce the long-term growth in stockholder value of the Company by linking pay to the value of our shares. The amounts awarded annually are based on the performance of the Company. The actual amount awarded and accumulated reflects our historical performance.

On February 24, 2021, the Committee, after reviewing information provided by Pay Governance, determined what it believed to be the appropriate level of each of the various compensation components. The Committee awarded restricted stock awards under the 2018 Plan with an aggregate total market value of $3,150,000 as of the date of the grant to the executive team. The executives were granted 55% of their overall LTI mix in the form of performance-based restricted shares, while the remaining 45% were in the form of time-based restricted shares. Shares

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will not be earned or vested until performance criteria and / or time-based service requirements are met. The distribution resulted in the following share allocation for 2021:

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As noted above, executives are granted 55% of their overall LTI mix in the form of performance-based restricted shares, while the remaining 45% is in the form of time-based restricted shares. The performance share design has the following features: three-year performance measurement period tied to the Company’s relative TSR versus its property-casualty insurance company’s performance peers (weighting of 40%) and Safety’s three-year average combined ratio (weighting of 60%), which is a standard insurance industry profitability metric. The Committee believes that a three-year average combined ratio is a strong long-term proxy for performance, and when used with relative TSR will ensure strong pay and performance alignment while ensuring sufficient line of sight for executives. Actual payouts can range from 0% to 200%, depending on actual performance. The TSR portion of the performance share design employs a stockholder friendly feature that caps payout to 100% of target if absolute TSR is negative (even though the Company might have exceeded target in the relative TSR metric). The earned performance shares will cliff vest after the three-year performance period based on the performance measures attained.

Both time vested awards and performance awards granted include a retirement provision. For time vested awards, if termination of service occurs on or after the first anniversary of the date of grant and because of retirement after attaining age 62 with at least 10 years of service with the Company, the periods of restriction shall expire on the date of termination of service with respect to 100% of the shares subject to remaining periods of restriction.

For performance vested awards, if during the performance period, the grantee’s termination of service occurs because of the grantee’s retirement after attaining age 62 with at least 10 years of service with the Company, the award shall not be forfeited on the retirement date, but the number of shares earned shall be prorated and equal to the number of shares earned determined based on actual attainment of the performance measures as of the end of the performance period multiplied by a fraction, the numerator of which is the number of months (rounded up to the next integer) from the beginning of the performance period until the date of termination of service, and the denominator of which is 36.

The 2019 – 2021 performance awards granted on February 26, 2019 had an actual payout of 128.0%, above the targeted granted amount compared to 170.0% payout in the prior year. The actual payout of 120.0% is based on Safety’s combined ratio for the three year period ending December 31, 2021 of 91.9% (a 200% payout), and TSR performance of 9%, equal to relative performance at the 10th percentile. As this is below our threshold of the 30^th percentile, no payout

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was received for the TSR portion of the award. The actual number of shares awarded compared to the target number of shares granted is shown in the table below.

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The 2019-2021 SAFT Average Combined Ratio target was set at the beginning of the period and was based off a formulaic calculation: the median of a four year historical performance peer combined ratio performance. For relative TSR, we are ranked compared to the same performance peer group, excluding the five private companies mentioned below, that is used in the combined ratio target.

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The twenty-four competitors used in the establishment of these goals for the 2019 performance shares were The Allstate Corporation, The Chubb Corporation, Cincinnati Financial Corporation, CNA Financial Corporation, Donegal Group Inc., EMC Insurance Group Inc., Erie Indemnity Company, Hallmark Financial Services Inc., Hanover Insurance Group Inc., Hartford Financial Services Group, Inc., Hilltop Holdings Inc., Horace Mann Educators Corporation, Loews Corporation, Mercury General Corporation, Navigators Group Inc., Old Republic International Corp., Progressive Insurance Corporation, Protective Insurance Corporation, Selective Insurance Group Inc., State Auto Financial Corp., The Travelers Companies, Inc., United Fire Group, Inc., W.R .Berkley Corporation and White Mountains Insurance Group, Inc. In addition to these competitors five private companies are also used in the establishment of the Combined Ratio target only. These companies were The Andover Companies, Arbella Insurance, Mapfre Insurance, Plymouth Rock Assurance and Quincy Mutual Insurance.

At December 31, 2021, the performance awards granted on February 24, 2021, and February 26, 2020 would be projected to payout at 128%, respectively. These amounts are calculated based on the Company’s actual combined ratio to date, as well as relative TSR performance (compared to its performance peer group) to date. Final actual results may differ and will continue to be calculated until the end of each award’s applicable performance period.

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Performance-Based Nonqualified Deferred Compensation

We maintain a nonqualified deferred compensation plan, the Executive Incentive Compensation Plan (the “EICP”) to further our objective of providing our executive officers with compensation that is competitive with that provided by comparable companies. The EICP is a performance-based program that allocates 1.75% of our insurance subsidiaries annual consolidated statutory net income to a pool that is then distributed as deferred compensation to the eligible executives. The amount allocated is based on the total annual cash compensation (salary plus annual incentive received, or deferred, in the year) of the eligible executives. Our insurance subsidiaries experienced a combined statutory net income of $108.9 million in 2021, and Messrs. Murphy, Whitford, Berry, Narciso and Varga earned the following allocations under the EICP in 2021: $644,953, $200,779, $267,444, $202,147, and $202,538, respectively. The allocations are retained by the Company, invested in mutual funds, and only paid to the executive upon employment termination as defined in the EICP.

The EICP also provides a deferred compensation benefit with a supplemental matching provision similar to our 401(k) plan. Our intention is to provide additional retirement benefits to eligible executives in the absence of a traditional defined benefit pension arrangement. The provision enables the executive officer to elect to defer amounts from current compensation above the federally limited amount that can be deferred under our tax-qualified 401(k) plan and receive an employer matching contribution on such supplemental deferrals. In accordance with the EICP, we make a matching contribution annually at the close of each plan year in an amount equal to 75% of the participant’s elective deferrals under the plan up to a maximum amount of 8% of the participant’s compensation. The participant’s compensation for this purpose means the participant’s base salary and annual incentive received (or deferred) in the plan year. Amounts deferred under the EICP do not include amounts deferred under the 401(k) plan, thus our matching contributions under the EICP do not include amounts we have matched under the 401(k) plan. We made the following employer matching contributions for 2021 to the EICP on behalf of the Named Executive Officers: Mr. Murphy - $35,223; Mr. Whitford - $8,645; Mr. Berry - $18,355; Mr. Narciso - $18,684: and Mr. Varga - $15,940.

A description of our Named Executive Officers’ benefits under the EICP and other material terms of the EICP can be found in the narrative following the Nonqualified Deferred Compensation Plan table.

Other Employee Benefits

In addition to the main elements of compensation previously discussed in this section, our Named Executive Officers are eligible for the same welfare and other benefits as are available to all of our employees. These benefits include medical and dental insurance, short-term and long-term disability insurance, life and accidental death insurance, and a 401(k) plan. The 401(k) plan allows employees to contribute on a pre-tax basis up to the maximum allowed under federal law. At the close of each plan year, the Company makes a matching contribution equal to 100% of the amount each participant contributed during the plan year from their total pay, up to a maximum amount of 8% of the participant’s base salary, provided the participant is employed on the last day of the plan year. We have no defined benefit pension plan for employees at this time.

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We provide our Named Executive Officers with limited perquisites that the Committee believes are reasonable and competitive. In 2021 these perquisites included use of an automobile parking space.

Compensation Committee Report

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management, and based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and Form 10-K.

THALIA M. MEEHAN, CHAIRPERSON

PETER J. MANNING

MARY C. MORAN

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The above report of the Compensation Committee of the Board of Directors does not constitute soliciting material and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent we specifically incorporate this report by reference therein.

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Compensation Policies and Practices as They Relate to the Company’s Risk Management

The Compensation Committee considers, among other things, in establishing and reviewing our executive compensation program, whether the program pays the executives for performance and whether the program encourages unnecessary or excessive risk taking. The Compensation Committee reviews annually the principal components of executive compensation and believes that our allocation of compensation among base salary and annual and long-term incentives encourages our executives to deliver strong results for our stockholders without taking excessive risk.

We set base salaries at levels that provide our executives with assured cash compensation that, when combined with annual and long-term incentive awards, motivates them to perform at a high level without encouraging inappropriate risk taking to achieve a reasonable level of compensation. With respect to incentive opportunities under our annual incentive plan, we believe that our use of measurable corporate financial performance goals and multiple performance levels associated with minimum, target and maximum achievable payouts, together with the Compensation Committee’s discretion to reduce awards, serve to mitigate against excessive risk-taking. We also believe that our strategic balancing of annual incentives and long-term incentives in the form of restricted stock and performance shares, with multi-year vesting schedules, encourages our executives to deliver incremental value to our stockholders while discouraging short-term risk taking that could negatively affect the value of their long-term awards. The Company’s robust stock ownership guidelines combined with high level executive stock ownership additionally help mitigate short-term risk-taking.

The Compensation Committee believes that these incentive plans appropriately balance risk, payment for performance and the desire to focus executives on specific financial and leadership measures and that they do not encourage unnecessary or excessive risk taking. We believe that the Company’s compensation policies and practices for all employees, including non-executive officers, are reasonable and do not create any material risk or adverse effect on the Company.

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Summary Compensation Table

The following table shows the cash and non-cash compensation for the 2021, 2020 and 2019 fiscal years awarded to or earned by the five individuals who served as our CEO, CFO, and the three other most highly compensated executive officers (the “Named Executive Officers” or “NEOs”). In accordance with the rules promulgated by the SEC, certain columns relating to information that is not applicable have been omitted from this table.