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NOTICE OF OF SHAREHOLDERS |
Date and Time Wednesday, May 15, 2019 12:30 p.m. EDT Location | ||||||
One Hartford Plaza | ||||||
Hartford, CT 06155 | ||||||
On behalf of the Board of Directors, I am pleased to invite you to attend the Annual Meeting of Shareholders of The Hartford Financial Services Group, Inc. to be held in the Wallace Stevens Theater at our Home Office at 12:30 p.m. EDT. Voting Items Shareholders will vote of the following items of business: | VOTING | |||||
By internet www.proxyvote.com | ||||||
By toll-free telephone 1-800-690-6903 | ||||||
By mail Follow instructions on your proxy card | ||||||
Board Recommendation | Page Reference | In person At the Annual Meeting | ||||
1. | Elect a Board of Directors for the coming year; | FOR | 11 | |||
2. Ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, | FOR | 33 | IMPORTANT INFORMATION IF YOU PLAN TOATTEND THE MEETING IN PERSON: Please remember to bring your ticket and government issued ID! Shareholders can obtain an admission ticket and directions to the meeting by contacting our Investor Relations Department: Email: InvestorRelations@TheHartford.com Telephone: (860) 547-2537 Mail: The Hartford Attn: Investor Relations One Hartford Plaza (TA1-1) Hartford, CT 06155 If you hold your shares of The Hartford through a brokerage account (in “street name”), your request for an admission ticket must include a copy of a brokerage statement reflecting stock ownership as of the record date of March 18, 2019. You can also join our meeting webcast at http://ir.thehartford.com. | |||
3. Consider and approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement; and | FOR | 35 | ||||
4.Act upon any other business that may properly come before the Annual Meeting or any adjournment thereof. | ||||||
Record Date | ||||||
You may vote if you were a shareholder of record at the close of business on March We hope that you will participate in the Annual Meeting, either by attending and voting in person or by voting through other means. For instructions on voting, please refer to page We urge you to review the proxy statement carefully and exercise your right to vote. | ||||||
Dated: April | ||||||
4, 2019 By order of the Board of Directors | ||||||
Donald C. Hunt | ||||||
Vice President and Corporate Secretary |
1 |
2 | www.thehartford.com |
Sincerely, | ||||||
Christopher J. Swift | Trevor Fetter | |||||
Chairman and Chief Executive Officer | Lead Director |
3 |
PROXY SUMMARY | ||
BOARD AND GOVERNANCE MATTERS | ||
15 | ||
Director Compensation | ||
Communicating with the Board | ||
Director Nominees | ||
AUDIT MATTERS | ||
Audit Committee Pre-Approval Policies and Procedures | ||
Report of the Audit Committee | ||
COMPENSATION MATTERS | ||
Report of the Compensation and Management Development Committee | ||
Executive Compensation Tables | ||
CEO | ||
INFORMATION ON STOCK OWNERSHIP | ||
INFORMATION ABOUT THE HARTFORD’S ANNUAL MEETING OF SHAREHOLDERS | ||
APPENDIX A: RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES |
4 | www.thehartford.com |
PROXY SUMMARY |
ITEM 1 | ||||
ELECTION OF DIRECTORS | ||||
Each director nominee has an established record of accomplishment in areas relevant to overseeing our businesses and possesses qualifications and characteristics that are essential to a well-functioning and deliberative governing body. | ||||
✓ | The Board recommends a vote "FOR" each director nominee |
Director Nominee | Age(1) | Director since | Present or Most Recent Experience | Independent | Current Committees(2) | Other Current Public Company Boards | ||
Yes | No | |||||||
Robert B. Allardice III | 71 | 2008 | Former regional CEO, Deutsche Bank Americas | ✓ | • Audit • FIRMCo* | • Ellington Residential Mortgage REIT • GasLog Partners | ||
Carlos Dominguez | 59 | 2018 | President and COO, Sprinklr | ✓ | • FIRMCo • NCG | • Medidata Solutions | ||
Trevor Fetter(3) | 58 | 2007 | Former Chairman, President and CEO, Tenet Healthcare | ✓ | • Comp • FIRMCo | |||
Stephen P. McGill | 60 | 2017 | Retired Group President, Aon Plc, Retired Chairman and CEO, Aon Risk Solutions and Aon Benfield | ✓ | • Comp • FIRMCo | |||
Kathryn A. Mikells | 52 | 2010 | CFO, Diageo plc | ✓ | • Audit • FIRMCo | • Diageo plc | ||
Michael G. Morris | 71 | 2004 | Former Chairman, President and CEO, American Electric Power Company | ✓ | • Audit • FIRMCo • NCG | • Alcoa • L Brands • Spectra Energy Partners | ||
Thomas A. Renyi | 72 | 2010 | Former Executive Chairman, Bank of New York Mellon; former Chairman and CEO, Bank of New York Company | ✓ | • Comp • FIRMCo | • Public Service Enterprise Group • Royal Bank of Canada | ||
Julie G. Richardson | 54 | 2014 | Former Partner, Providence Equity Partners | ✓ | • Audit* • FIRMCo | • UBS • VEREIT • Yext | ||
Teresa W. Roseborough | 59 | 2015 | Executive Vice President, General Counsel and Corporate Secretary, The Home Depot | ✓ | • Comp • FIRMCo • NCG | |||
Virginia P. Ruesterholz | 56 | 2013 | Former Executive Vice President, Verizon Communications | ✓ | • Comp* • FIRMCo • NCG | • Bed Bath & Beyond • Frontier Communications | ||
Christopher J. Swift | 57 | 2014 | Chairman and CEO, The Hartford | û | • FIRMCo | |||
Greig Woodring | 66 | 2017 | Retired President and CEO, Reinsurance Group of America | ✓ | • Audit • FIRMCo |
Director Nominee, Age(1) and Present or Most Recent Experience | Independent | Director since | Current Committees(2) | Other Current Public Company Boards | |
Robert B. Allardice III, 72 Former regional CEO, Deutsche Bank Americas | ✓ | 2008 | • Audit • FIRMCo* | • EllingtonResidentialMortgage REIT • GasLog Partners | |
Carlos Dominguez, 60 President, Sprinklr | ✓ | 2018 | • FIRMCo • NCG | • Medidata Solutions | |
Trevor Fetter,(3) 59 Senior Lecturer, Harvard Business School | ✓ | 2007 | • Comp • FIRMCo | ||
Stephen P. McGill, 61 Retired Group President, Aon Plc; Retired Chairman and CEO, Aon Risk Solutions and Aon Benfield | ✓ | 2017 | • Comp • FIRMCo | ||
Kathryn A. Mikells, 53 Chief Financial Officer Diageo plc | ✓ | 2010 | • Audit • FIRMCo | • Diageo plc | |
Michael G. Morris, 72 Former Chairman, President and CEO, American Electric Power Company | ✓ | 2004 | • Audit • FIRMCo • NCG* | • Alcoa • L Brands | |
Julie G. Richardson, 55 Former Partner, Providence Equity Partners | ✓ | 2014 | • Audit* • FIRMCo | • UBS • VEREIT • Yext | |
Teresa W. Roseborough, 60 Executive Vice President, General Counsel and Corporate Secretary, The Home Depot | ✓ | 2015 | • Comp • FIRMCo • NCG | ||
Virginia P. Ruesterholz, 57 Former Executive Vice President, Verizon Communications | ✓ | 2013 | • Comp* • FIRMCo • NCG | • Bed Bath & Beyond • FrontierCommunications | |
Christopher J. Swift, 58 Chairman and CEO, The Hartford | 2014 | • FIRMCo | |||
Greig Woodring, 67 Retired President and CEO, Reinsurance Group of America | ✓ | 2017 | • Audit • FIRMCo |
(1) | As of April |
(2) | Full committee names are as follows: Audit – Audit Committee; Comp – Compensation and Management Development Committee; FIRMCo – Finance, Investment and Risk Management Committee; NCG – Nominating and Corporate Governance Committee |
(3) | Mr. Fetter serves as the Lead Director. For more details on the Lead Director’s role, see page |
5 |
PROXY SUMMARY |
Nominee Diversity | |||||||||
Female: 4 | |||||||||
Male:7 | |||||||||
*Average independent |
Independent Oversight | ✓ | |||
✓ | Independent key committees (Audit, Compensation, Nominating) | |||
✓ | ||||
Engaged Board /Shareholder Rights | ✓ | |||
✓ | Majority vote standard (with plurality carve-out for contested elections) | |||
✓ | Proxy access right | |||
✓ | Director resignation policy | |||
✓ | Over-boarding policy limits total public company boards, including The Hartford, to | |||
✓ | Rigorous Board and committee self-evaluation conducted | |||
✓ | Meaningful Board education and training on recent and emerging governance and industry trends | |||
✓ | Annual shareholder engagement focused on governance, compensation and sustainability issues | |||
Good Governance | ✓ | Board diversity of experience, tenure, age and gender | ||
✓ | Mandatory retirement age of 75 and 15-year term limit promote regular Board refreshment | |||
✓ | Annual review of CEO succession plan by the independent directors with the CEO | |||
✓ | Annual Board review of senior management long-term and emergency succession plans | |||
✓ | Stock-ownership guidelines of 6x salary for CEO and 4x salary for other named executive officers | |||
✓ | Annual Nominating Committee review of The Hartford's political and lobbying policies and expenditures | |||
Commitment to Sustainability | ✓ | Board oversight of sustainability matters; Nominating Committee oversight of sustainability governance framework | ||
✓ | Sustainability Governance Committee comprised of senior management charged with overseeing a comprehensive sustainability strategy and ensuring |
6 | www.thehartford.com |
PROXY SUMMARY |
What we heard from shareholders | Actions taken |
Periodic third-party board evaluations can lead to more candid conversations, provide a neutral perspective and help boards benchmark their corporate governance practices. | Adopted third-party facilitated evaluations every three years commencing in 2019. |
Diversity enhances board performance and is critical to effective corporate governance. | Formalized existing company practice by amending our Corporate Governance Guidelines to ensure that diverse candidates are included in the pool from which board candidates are selected. |
Pay equity is an area of increasing concern and companies that pay women and people of color fairly are at a competitive advantage in attracting and retaining top talent. | Instituted annual pay equity reporting to the Compensation Committee and committed to enhanced pay equity practices disclosure beginning with the company's 2018 Sustainability Report (expected to be published in summer 2019). |
ITEM 2 | ||||
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||||
As a matter of good corporate governance, the Board is asking shareholders to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for | ||||
✓ | The Board recommends a vote "FOR" this item |
2019 Proxy Statement | 7 |
PROXY SUMMARY |
ITEM 3 | ||||
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION | ||||
The Board is asking shareholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. Our executive compensation program is designed to promote long-term shareholder value creation and support our strategy by (1) encouraging profitable growth consistent with prudent risk management, (2) attracting and retaining key talent, and (3) appropriately aligning pay with short- and long-term performance. | ||||
✓ | The Board recommends a vote "FOR" this item |
YEAR-OVER-YEAR PERFORMANCE | ||||
Compensation Component | C. Swift | B. Bombara | D. Elliot | B. Johnson | W. Bloom | ||||||||||||||
Base Salary Rate | $ | 1,100,000 | $ | 700,000 | $ | 925,000 | $ | 525,000 | $ | 550,000 | |||||||||
2017 AIP Award | $ | 4,675,000 | $ | 1,900,000 | $ | 3,150,000 | $ | 2,300,000 | $ | 1,575,000 | |||||||||
2017 LTI Award | $ | 7,500,000 | $ | 1,750,000 | $ | 5,000,000 | $ | 1,500,000 | $ | 1,000,000 | |||||||||
Total 2017 Compensation Package | $ | 13,275,000 | $ | 4,350,000 | $ | 9,075,000 | $ | 4,325,000 | $ | 3,125,000 |
8 | www.thehartford.com |
PROXY SUMMARY |
Compensation Component | C. Swift | B. Costello | D. Elliot | B. Johnson | W. Bloom | ||||||||||||||
Base Salary Rate | $ | 1,150,000 | $ | 725,000 | $ | 950,000 | $ | 575,000 | $ | 575,000 | |||||||||
2018 AIP Award | $ | 4,800,000 | $ | 1,925,000 | $ | 3,050,000 | $ | 2,250,000 | $ | 1,550,000 | |||||||||
2018 LTI Award | $ | 8,000,000 | $ | 1,775,000 | $ | 5,000,000 | $ | 1,600,000 | $ | 1,100,000 | |||||||||
Total 2018 Compensation Package | $ | 13,950,000 | $ | 4,425,000 | $ | 9,000,000 | $ | 4,425,000 | $ | 3,225,000 |
2018 Compensation Decision | Rationale |
The Compensation Committee approved an AIP funding level of 160% of target. | Performance against pre-established Compensation Core Earnings targets produced a formulaic AIP funding level capped at 200% of target. The Compensation Committee reduced this funding level to 160% following its qualitative review, taking into consideration a second consecutive year of elevated catastrophe losses. (pages 46-47) |
The Compensation Committee certified a 2016-2018 performance share award payout at 100% of target. | The company's average annual Compensation Core ROE during the performance period was 10.0%, resulting in a payout of 200% of target for the ROE component (50% of the award). Because the company's TSR during the performance period was below threshold, there was no payout for the TSR component (50% of the award). (page 49) |
2019 Proxy Statement | 9 |
PROXY SUMMARY |
Compensation Component | Description |
Base Salary | •Fixed level of cash compensation based on market data, internal pay equity, responsibility, expertise and performance. |
Annual Incentive Plan | •Variable cash award based primarily on annual company operating performance against a predetermined financial target and achievement of individual performance objectives. |
Long-Term Incentive Plan | • Variable awards granted based on individual performance, potential and market data. • Designed to drive long-term performance, encourage share ownership among senior executives, and foster retention. • Award mix (50% performance shares and 50% stock options) reflects actual stock price performance, peer-relative stock price and dividend performance and actual operating performance. |
Pay Mix — CEO | ||
Salary 9% | Annual Incentive 25% | Long-Term Incentive 66% |
Variable with Performance: 91% |
Pay Mix — Other NEOs | ||
Salary 16% | Annual Incentive 30% | Long-Term Incentive 54% |
Variable with Performance: 84% |
✓ | |||
✓ | Senior Executives | ||
✓ | Double trigger requirement for cash severance and equity vesting upon a change of | ||
✓ | Cash severance upon a change of control | ||
✓ | Independent | ||
✓ | |||
✓ | |||
✓ | Prohibition on Senior Executives | ||
✓ | |||
✓ | |||
✓ | Competitive burn rate and dilution for equity program |
û | No | ||
û | No individual employment agreements | ||
û | No granting of stock options with an exercise price less than the fair market value of our common stock on the date of grant | ||
û | No re-pricing | ||
û | No buy-outs of underwater | ||
û | No reload provisions in any stock option grant | ||
û | No payment of dividends on unvested performance shares |
10 |
BOARD AND GOVERNANCE MATTERS |
ITEM 1 | ||||
ELECTION OF DIRECTORS | ||||
The Nominating Committee believes | ||||
✓ | The Board recommends a vote "FOR" each director nominee |
Independent Oversight | ✓ | |||
✓ | Independent key committees (Audit, Compensation, Nominating) | |||
✓ | ||||
Engaged Board /Shareholder Rights | ✓ | |||
✓ | Majority vote standard (with plurality carve-out for contested elections) | |||
✓ | Proxy access right | |||
✓ | Director resignation policy | |||
✓ | Over-boarding policy limits total public company boards, including The Hartford, to | |||
✓ | Rigorous Board and committee self-evaluation conducted | |||
✓ | Meaningful Board education and training on recent and emerging governance and industry trends | |||
✓ | Annual shareholder engagement focused on governance, compensation and sustainability issues | |||
Good Governance | ✓ | Board diversity of experience, tenure, age and gender | ||
✓ | Mandatory retirement age of 75 and 15-year term limit promote regular Board refreshment | |||
✓ | Annual review of CEO succession plan by the independent directors with the CEO | |||
✓ | Annual Board review of senior management long-term and emergency succession plans | |||
✓ | Stock-ownership guidelines of 6x salary for CEO and 4x salary for other named executive officers | |||
✓ | Annual Nominating Committee review of The Hartford's political and lobbying policies and expenditures | |||
Commitment to Sustainability | ✓ | Board oversight of sustainability matters; Nominating Committee oversight of sustainability governance framework | ||
✓ | Sustainability Governance Committee comprised of senior management charged with overseeing a comprehensive sustainability strategy and ensuring |
11 |
BOARD AND GOVERNANCE MATTERS |
Board Chair | Independent Lead Director | |
The roles of CEO and Chairman of the Board (“Chairman”) are held by Christopher Swift. Mr. Swift has served as CEO since July 1, 2014, and was appointed Chairman on January 5, 2015. In late 2014, before Mr. Swift assumed the role of Chairman, the Board deliberated extensively on our board leadership structure, seeking feedback from shareholders and considering extensive corporate governance analysis. The Board concluded then, and continues to believe, that our historical approach of combining the roles of CEO and Chairman while maintaining strong, independent board leadership is the optimal leadership structure for the Board to carry out its oversight of our strategy, business operations and risk management. The Board believes other elements of our corporate governance structure ensure independent directors can perform their role as fiduciaries in the Board’s oversight of management and our business, and minimize any potential conflicts that may result from combining the roles of CEO and Chairman. For example: • All directors other than Mr. Swift are independent; • An empowered and engaged Lead Director provides independent Board leadership and oversight; and • At each regularly scheduled Board meeting, the non-management directors meet in in executive session without the CEO and Chairman present (nine such meetings in 2018). | Whenever the CEO and Chairman roles are combined, our Corporate Governance Guidelines require the independent directors to elect an independent Lead Director. Trevor Fetter was elected our Lead Director in May 2017. The responsibilities and authority of the Lead Director include the following: •Presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors; •Serving as a liaison between the CEO and Chairman and the non-management directors; •Regularly conferring with the Chairman on matters of importance that may require action or oversight by the Board, ensuring the Board focuses on key issues and tasks facing The Hartford; •Approving information sent to the Board and meeting agendas for the Board; •Approving the Board meeting schedules to help ensure that there is sufficient time for discussion of all agenda items; •Maintaining the authority to call meetings of the independent non-management directors; •Approving meeting agendas and information for the independent non-management sessions and briefing, as appropriate, the Chairman on any issues arising out of these sessions; •If requested by shareholders, ensuring that he or she is available, when appropriate, for consultation and direct communication; and •Leading the Board’s evaluation process and discussion on board refreshment and director tenure. The Board believes that these duties and responsibilities provide for strong independent Board leadership and oversight. |
12 |
BOARD AND GOVERNANCE MATTERS |
Board Evaluation and Development of Goals (May) | The Lead Director, or third-party evaluator, leads a Board evaluation discussion in executive session guided by the Board’s self-assessment questionnaire and | |
Annual Corporate Governance Review / Shareholder Engagement Program (October to December) | The Nominating Committee performs an annual review of The Hartford's corporate governance policies and practices in light of best practices, recent developments and trends. In addition, the Nominating Committee reviews feedback on governance issues provided by shareholders during our annual shareholder engagement program. | |
Interim Review of Goals (December) | The Lead Director leads an interim review of progress made against the goals established during the Board evaluation discussion in May. | |
Board Self-Assessment Questionnaires (February) | The governance review and shareholder feedback • • • • • | |
One-on-One Discussions (February to May) | The Lead Director, or third-party evaluator, meets individually with each independent director on Board effectiveness, dynamics and areas for improvement. |
2019 Proxy Statement | 13 |
BOARD AND GOVERNANCE MATTERS |
Development of Candidate Specification | Screening of Candidates | Meeting With Candidates | Decision and | ||||||||
• Developed skills matrix to identify desired skills and attributes • Targeted two areas of expertise aligned with our strategy: insurance industry experience and digital experience • Prioritized diversity | • Screened 97 candidates for the insurance specification • Screened 195 candidates for the digital specification | • Top candidates interviewed by Nominating Committee members, other directors, and management • Finalist candidates underwent background and conflicts checks | • Nominating Committee recommendation of candidates and committee assignments to full Board • Board consideration and adoption of recommendation |
• | Retirement Age.With limited exceptions, an independent director may not be nominated to stand for election or reelection to the Board after his or her 75th birthday. |
www.thehartford.com |
BOARD AND GOVERNANCE MATTERS |
Nominee Diversity | According to the 2018 Spencer Stuart Board Index: • Women constituted 24% of all S&P 500 directors, compared to 36% of The Hartford's nominees • People of color* constituted 17% of directors in the top 200 S&P 500 companies, compared to 18% of The Hartford's nominees • Directors of non-U.S. origin constituted 8% of directors in the top 200 S&P 500 companies, compared to 9% of The Hartford's nominees • The average tenure of independent directors on S&P 500 boards is 8.1 years, compared to 6.4 years at The Hartford • Women chaired 20% of audit committees and 19% of compensation committees at S&P 500 companies; at The Hartford, women chair both committees * Defined as African-American, Hispanic/Latino and Asian directors. | |||||||
Female: 4 | ||||||||
Male:7 | ||||||||
2019 Proxy Statement | 15 |
BOARD AND GOVERNANCE MATTERS |
16 | www.thehartford.com |
BOARD AND GOVERNANCE MATTERS |
AUDIT COMMITTEE | ||||
R. Allardice K. Mikells M. Morris J. Richardson (Chair) G. Woodring | “ Julie G. Richardson, Committee Chair since 2016 • Oversees the integrity of • Oversees • Oversees • Oversees the performance of • Oversees • Discusses with management policies with respect to risk assessment and risk management | |||
* | ||||
COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE | ||
T. Fetter S. McGill T. Renyi T. Roseborough V. Ruesterholz (Chair) | “ Virginia Ruesterholz, Committee Chair since 2016 • Oversees executive compensation and assists • Works with management to develop a clear relationship between pay levels, performance and returns to shareholders, and to align • Has sole authority to retain, compensate and terminate any consulting firm used to evaluate and advise on executive compensation matters • Considers independence standards required by the NYSE or applicable law • • | |
BOARD AND GOVERNANCE MATTERS |
FINANCE, INVESTMENT AND RISK MANAGEMENT COMMITTEE | ||
R. Allardice (Chair) C. Dominguez T. Fetter S. McGill K. Mikells M. Morris T. Renyi J. Richardson T. Roseborough V. Ruesterholz C. G. Woodring | “In Robert B. Allardice III, Committee Chair since 2016 • Reviews and recommends changes to enterprise policies governing management activities relating to major risk exposures such as market risk, liquidity and capital requirements, insurance risks and cybersecurity • Reviews • Reviews and recommends changes to • Provides a forum for discussion among management and the entire Board of key financial, investment, and risk management matters | |
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE | ||
Current Members: C. Dominguez M. Morris (Chair) T. Renyi T. Roseborough V. Ruesterholz Meetings in | “ • Advises and makes recommendations to the Board on corporate governance matters • Considers potential nominees to the Board • Makes recommendations on the organization, size and composition of the Board and its committees • Considers the qualifications, compensation and retirement of directors • Reviews • Oversees the establishment, management and processes related to | |
www.thehartford.com |
BOARD AND GOVERNANCE MATTERS |
BOARD OF DIRECTORS | ||||||||||
AUDIT COMMITTEE •Financial reporting •Legal and regulatory compliance •Operational risk | COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE • Compensation programs • Talent acquisition, retention and development • Succession planning | FINANCE, INVESTMENT AND RISK MANAGEMENT COMMITTEE •Insurance risk •Market risk •Liquidity and capital requirements •Cybersecurity | NOMINATING AND CORPORATE GOVERNANCE COMMITTEE •Governance policies and procedures •Board organization and membership •Sustainability governance |
BOARD AND GOVERNANCE MATTERS |
What we heard from shareholders | |
Periodic third-party board evaluations can lead to more candid conversations, provide a neutral perspective and help boards benchmark their corporate governance practices. | Adopted third-party facilitated evaluations every three years commencing in 2019. |
“Always act with integrity and honesty, and be accountable in everything you do.” | ||||
www.thehartford.com |
BOARD AND GOVERNANCE MATTERS |
ENVIRONMENT | SOCIAL | GOVERNANCE | |
As an insurance company, we understand the risks that environmental challenges present to people and communities. As stewards of the environment, we are committed to mitigating climate change and reducing our carbon footprint incrementally each year. | We help individuals and communities prevail by building safe, strong and successful neighborhoods through targeted philanthropic investments, by partnering with like-minded national and local organizations, and by harnessing the power of our more than 18,500 employees to engage in their communities. | We are committed to building an inclusive and engaging culture where people are respected for who they are, recognized for how they contribute and celebrated for growth and exceptional performance. We value the diversity of our employees' skills and life experiences and invest deeply in their development so they can deliver on our strategy and propel our company forward. | We believe that doing the right thing every day is core to our character, and we are proud of our reputation for being a company that places ethics and integrity above all else. |
ESG Governance | ||
In addition to the Board's oversight responsibility of substantive ESG topics, the Nominating Committee retains oversight of the governance framework and processes related to ESG activities. This includes oversight of the company's Sustainability Governance Committee, a management committee comprised of senior leaders that sets and helps drive execution of the company's sustainability strategy. The Sustainability Governance Committee meets at least four times each year and reports up to the full Board at least annually. In 2018, the Sustainability Governance Committee met six times. |
BOARD AND GOVERNANCE MATTERS |
Annual Cash Compensation(1) | Director Compensation Program |
Annual Retainer | $100,000 |
Chair Retainer | $25,000 – Audit $25,000 – $15,000 – Nominating |
Lead Director Retainer | $35,000 |
(1) | Directors may elect to defer all or part of the annual Board cash retainer and any Committee Chair or Lead Director cash retainer into RSUs, to be distributed as common stock following the end of the director’s Board service. |
22 |
BOARD AND GOVERNANCE MATTERS |
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | ||||||||||||||
Robert Allardice | 135,000 | 160,000 | 2,767 | 297,767 | 125,000 | 160,000 | 2,745 | 287,745 | ||||||||||||||
Carlos Dominguez(3) | 125,000 | 200,000 | 951 | 325,951 | ||||||||||||||||||
Trevor Fetter | 135,000 | 160,000 | 811 | 295,811 | 135,000 | 160,000 | 789 | 295,789 | ||||||||||||||
Stephen P. McGill(4) | 41,700 | — | 312 | 42,012 | 100,000 | 226,700 | 1,253 | 327,953 | ||||||||||||||
Kathryn A. Mikells | 100,000 | 160,000 | 271 | 260,271 | 100,000 | 160,000 | 902 | 260,902 | ||||||||||||||
Michael G. Morris | 100,000 | 160,000 | 2,767 | 262,767 | 115,000 | 160,000 | 2,745 | 277,745 | ||||||||||||||
Thomas Renyi | 100,000 | 160,000 | 2,767 | 262,767 | 100,000 | 160,000 | 2,745 | 262,745 | ||||||||||||||
Julie G. Richardson(3) | 135,000 | 160,000 | 571 | 295,571 | ||||||||||||||||||
Julie G. Richardson | 125,000 | 160,000 | 789 | 285,789 | ||||||||||||||||||
Teresa W. Roseborough | 100,000 | 160,000 | 811 | 260,811 | 100,000 | 160,000 | 1,065 | 261,065 | ||||||||||||||
Virginia P. Ruesterholz(3) | 135,000 | 160,000 | 811 | 295,811 | ||||||||||||||||||
Charles B. Strauss(3) | 125,000 | 160,000 | 2,767 | 287,767 | ||||||||||||||||||
H. Patrick Swygert | 100,000 | 160,000 | 2,767 | 262,767 | ||||||||||||||||||
Virginia P. Ruesterholz | 125,000 | 160,000 | 789 | 285,789 | ||||||||||||||||||
Greig Woodring(4) | 41,700 | — | 344 | 42,044 | 100,000 | 226,700 | 1,797 | 328,497 |
(1) | Directors |
(2) | These amounts reflect the aggregate grant date fair value of RSU awards granted during the fiscal year ended December 31, |
(3) |
(4) | Mr. McGill and Mr. Woodring each received a pro-rated restricted stock unit award valued at $66,700 on February 27, 2018, the first day of the Company’s scheduled trading window following the filing of the Company’s 2017 annual |
23 |
BOARD AND GOVERNANCE MATTERS |
Stock Awards(1) | Stock Awards(1) | |||||||||||||
Name | Stock Grant Date(2) | Number of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Stock Grant Date(2) | Number of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares or Units of Stock That Have Not Vested ($) | ||||||||
Robert Allardice | 7/31/2017 | 2,921 | 164,394 | 7/30/2018 | 3,056 | 135,839 | ||||||||
Carlos Dominguez | 7/30/2018 | 3,056 | 135,839 | |||||||||||
Trevor Fetter | 7/31/2017 | 2,921 | 164,394 | 7/30/2018 | 3,056 | 135,839 | ||||||||
Stephen P. McGill(4) | — | — | — | |||||||||||
Stephen P. McGill | 7/30/2018 | 3,056 | 135,839 | |||||||||||
Kathryn A. Mikells | 7/31/2017 | 2,921 | 164,394 | 7/30/2018 | 3,056 | 135,839 | ||||||||
Michael G. Morris | 7/31/2017 | 2,921 | 164,394 | 7/30/2018 | 3,056 | 135,839 | ||||||||
Thomas Renyi | 7/31/2017 | 2,921 | 164,394 | 7/30/2018 | 3,056 | 135,839 | ||||||||
Julie G. Richardson | 7/31/2017 | 2,921 | 164,394 | 7/30/2018 | 3,056 | 135,839 | ||||||||
Teresa W. Roseborough | 7/31/2017 | 2,921 | 164,394 | 7/30/2018 | 3,056 | 135,839 | ||||||||
Virginia P. Ruesterholz | 7/31/2017 | 2,921 | 164,394 | 7/30/2018 | 3,056 | 135,839 | ||||||||
Charles B. Strauss | 7/31/2017 | 2,921 | 164,394 | |||||||||||
H. Patrick Swygert | 7/31/2017 | 2,921 | 164,394 | |||||||||||
Greig Woodring(4) | — | — | — | |||||||||||
Greig Woodring | 7/30/2018 | 3,056 | 135,839 |
(1) | Additional stock ownership information is set forth in the beneficial ownership table on page |
(2) | The RSUs were granted on July |
(3) | The number of RSUs |
24 |
BOARD AND GOVERNANCE MATTERS |
By internet | By telephone | By mail |
Visit 24/7 www.ethicspoint.com | 1-866-737-6812 (U.S. and Canada) 1-866-737-6850 (all other countries) | The Hartford c/o EthicsPoint P.O. Box 230369 Portland, Oregon 97281 |
25 |
BOARD AND GOVERNANCE MATTERS |
Experience / Qualification | Relevance to The Hartford |
Leadership | Experience in significant leadership positions provides us with new insights, and demonstrates key management disciplines that are relevant to the oversight of our business. |
Insurance and Financial Services Industries | Extensive experience in the insurance and financial services industries provides an understanding of the complex regulatory and financial environment in which we operate and is highly important to strategic planning and oversight of our business operations. |
Digital/Technology | Digital and technology expertise is important in light of the speed of digital progress and the development of disruptive technologies both in the insurance industry and more broadly. |
Corporate Governance | An understanding of organizations and governance supports management accountability, transparency and protection of shareholder interests. |
Risk Management | Risk management experience is critical in overseeing the risks we face today and those emerging risks that could present in the future. |
Finance and Accounting | Finance and accounting experience is important in understanding and reviewing our business operations, strategy and financial results. |
Business Operations and Strategic Planning | An understanding of business operations and processes, and experience making strategic decisions, are critical to the oversight of our business, including the assessment of our operating plan and business strategy. |
Regulatory | An understanding of laws and regulations is important because we operate in a highly regulated industry and we are directly affected by governmental actions. |
Talent Management | We place great importance on attracting and retaining superior talent, and motivating employees to achieve desired enterprise and individual performance objectives. |
26 |
BOARD AND GOVERNANCE MATTERS |
Professional highlights: •Consultant to Chairman of Supervisory Board, Deutsche Bank (2002-2006) • Regional Chief Executive Officer of North and South America, Advisory Director, Deutsche Bank Americas Holding Company (1994-1999) • Consultant, Smith Barney (1993-1995) • Founder of Merger Arbitrage Department, Chief Operating Officer of Equity Department, Founding member of Finance Committee, Morgan Stanley & Company (1974-1993) | Director since: 2008 Committees: • Audit • FIRMCo (Chair) Other •Ellington Residential Mortgage REIT (2013-present) •GasLog Partners LP (2014-present) | |||
Skills and | ||||
Mr. Allardice has served as a senior leader for multiple large, complex financial institutions, including as regional chief executive officer of Deutsche Bank Americas Holding Corporation, North and South America. He brings to the Board over 35 years of experience in the financial services industry, including at the senior executive officer level. His experience leading capital markets-based businesses is relevant to the oversight of our investment management company and corporate finance activities. In addition, Mr. Allardice has experience in a highly regulated industry, including interfacing with regulators and establishing governance frameworks relevant to the oversight of our business. He has extensive corporate governance experience from service as a director and audit committee member for several large companies, including seven years as Chairman of |
Professional highlights: • Sprinklr Inc. – President (2015-present)– Chief Operating Officer (2015-2018)• Cisco Systems, Inc. – Senior Vice President, Office of the Chairman and Chief Executive Officer (2008-2015)– Senior Vice President, Worldwide Service Provider Operations (2004-2008)– Vice President, U.S. Network Services Provider Sales (1999-2004)– Positions of increasing responsibility in operations and sales (1992-1999) | Director since: 2018 Committees: • FIRMCo • Nominating Other •Medidata Solutions, Inc. (2008-present) | |||
Skills and | ||||
Mr. Dominguez has more than 30 years of enterprise technology experience. He brings to the Board extensive and relevant digital expertise as the company focuses on data analytics and digital capabilities to continuously improve the way it operates and delivers value to customers. As |
27 |
BOARD AND GOVERNANCE MATTERS |
Professional highlights: • Senior Lecturer, Harvard Business School (Jan. 2019-present) • Tenet Healthcare Corporation – Chairman (2015-2017)– Chief Executive Officer (2003-2017)– President (2002-2017)• Chairman and Chief Executive Officer, Broadlane, Inc. (2000-2002) • Chief Financial Officer, Tenet Healthcare Corporation (1996-2000) | Director since:2007 Committees: • Compensation • FIRMCo Other •Tenet Healthcare Corporation (2003-2017) | |||
Skills and | ||||
Mr. Fetter has nearly two decades of experience as chief executive officer of multiple |
Professional highlights: •Aon plc – Group President, Aon plc and Chairman and Chief Executive Officer, Risk Solutions (2012-2017)– Chairman and Chief Executive Officer, Aon Risk Solutions (2008-2012)– Chief Executive Officer, Aon Risk Services, Americas (2007-2008)– Chief Executive Officer, Aon Global (2005-2007)• Jardine Lloyd Thompson Group plc – Chief Executive Officer (2002-2005)– Deputy Chief Executive Officer (2001-2002)– Director (1997-2001) | Director since: 2017 Committees: • Compensation • FIRMCo Other •None | |||
Skills and | ||||
Mr. McGill has over 25 years of insurance industry experience. With his deep understanding of the insurance industry, Mr. McGill brings significant and relevant risk management, regulatory and business expertise to the Board. As the leader of an international risk management and reinsurance brokerage, Mr. McGill is able to provide the Board with insights into complex distribution channels, and what it takes to succeed in the marketplace and profitably grow the company’s businesses. In addition, Mr. McGill brings an international perspective to the Board. He serves on the International Advisory Board of British American Business, and is past president of the Insurance Institute of London. In 2014, Mr. McGill was awarded a Commander of the British Empire (CBE) by Queen Elizabeth II in recognition for his exceptional service to the insurance industry and also for humanitarian services. |
28 |
BOARD AND GOVERNANCE MATTERS |
• Chief Financial Officer, Diageo plc (2015-present) • Chief Financial Officer, Xerox Corporation (2013-2015) • Chief Financial Officer, ADT Security Services (2012-2013) • Chief Financial Officer, Nalco Company (2010-2011) • UAL Corporation (parent of United Airlines) – Chief Financial Officer, Executive Vice President (2008-2010)– Head of Investor Relations (2007-2008)– Vice President, Financial Planning and Analysis (2006-2007)– Treasurer (2005-2006) | Director since: 2010 Age: 53 Committees: • Audit • FIRMCo Other public company directorships: •Diageo plc (2015-present) | |||
Skills and | ||||
Ms. Mikells has extensive experience in a variety of executive management positions, with a focus on leading the finance function of global organizations. She has significant experience in corporate finance and financial reporting acquired through senior executive roles in finance, including as a chief financial officer of multiple |
Professional highlights: • American Electric Power Company, Inc. – Non-Executive Chairman (2012-2014)– Chairman, President and Chief Executive Officer (2004-2011)• Chairman, President and Chief Executive Officer, Northeast Utilities (1997-2003) | Director since: 2004 Committees: • Audit • FIRMCo • Nominating Other •Alcoa Corporation (2002-present) •American Electric Power Company, Inc. (2004-2014) •L Brands, Inc. (2012-present) • Spectra Energy Corp. (2013-2017) •Spectra Energy Partners GP, LLC | |||
Skills and | ||||
Mr. Morris has over two decades of experience as chief executive officer and president of multiple |
29 |
BOARD AND GOVERNANCE MATTERS |
Professional highlights: • Providence Equity Partners LLC – Senior Advisor (2012-2014)– Managing Director and Head of New York Private Equity Team (2003-2012)• Managing Director and Head of Telecommunications, Media and Technology Investment Banking Group, JPMorgan Chase &Co. (1998-2003) • Managing Director, Merrill Lynch (1987-1998) | Director since: 2014 Committees: • Audit (Chair) • FIRMCo Other •Yext, Inc. (2015-present) •Arconic Inc. (2016-2018); •UBS Group AG (2017-present) | |||
Skills and | ||||
Ms. Richardson has over 25 years of financial services experience as a banker and investment professional at some of the world’s largest financial services firms. Previously, she led management of Providence Equity Partners' New York Office as partner and headed JPMorgan's Global Telecommunications, Media and Technology group. In these roles, Ms. Richardson demonstrated skills leading and managing large, global teams. Ms. Richardson has significant experience in financial analysis and capital markets acquired as a senior leader at global financial services institutions. She also has extensive risk management skills acquired through a long and distinguished career as a leader in both private and public financial investment organizations. |
Professional highlights: • Executive Vice President, General Counsel and Corporate Secretary, The Home Depot (2011-present) • Senior Chief Counsel Compliance & Litigation and Deputy General Counsel, MetLife, Inc. (2006-2011) • Partner, Sutherland, Asbill & Brennan LLP (1996-2006) • Deputy Assistant Attorney General, Office of Legal Counsel, U.S. Department of Justice (1994-1996) | Director since: 2015 Committees: • Compensation • FIRMCo • Nominating Other •None | |||
Skills and | ||||
Ms. Roseborough has over two decades of experience as a senior legal advisor in government, law firm and corporate settings. She has experience as a senior leader responsible for corporate compliance matters at |
30 | www.thehartford.com |
BOARD AND GOVERNANCE MATTERS |
Professional highlights: • Verizon Communications, Inc. – Executive Vice President (Jan. 2012-Jul. 2012)– President, Verizon Services Operations (2009-2011)– President, Verizon Telecom (2006-2008)– President, Verizon Partner Solutions (2005-2006)• Positions of increasing responsibility in operations, sales and customer service, New York Telephone (1984-2005) | Director since: 2013 Committees: • Compensation • FIRMCo • Nominating Other •Frontier Communications Corporation (2013-present) •Bed Bath & Beyond Inc. (2017-present) | |||
Skills and | ||||
Ms. Ruesterholz has held a variety of senior executive positions, including as Executive Vice President at Verizon Communications and President of the former Verizon Services Operations. As a senior leader of a Fortune 100 company, she has held principal oversight responsibility for key strategic initiatives, navigated the regulatory landscape of large-scale operations, and led an organization with over 25,000 employees. Ms. Ruesterholz brings to the Board vast experience in large-scale operations, including sales and marketing, customer service, technology and risk management. Ms. Ruesterholz also brings to the Board substantial financial and strategic expertise acquired as president of various divisions within Verizon and |
Professional highlights: • The Hartford Financial Services Group, Inc. – – Chief Executive Officer (2014-present)– Executive Vice President and Chief Financial Officer (2010-2014)• Vice President and Chief Financial Officer, Life and Retirement Services, American International Group, Inc. (2003-2010) • Partner, KPMG, LLP (1999-2003) • Executive Vice President, Conning Asset Management, General American Life Insurance Company (1997-1999) • KPMG, LLP – Partner (1993-1997)– Auditor (1983-1993) | Director since: 2014 Committees: • FIRMCo Other •None | |||
Skills and | ||||
Mr. Swift has over 30 years of experience in the financial services industry, with a focus on insurance. As Chairman and CEO of The Hartford, he brings to the Board unique insight and knowledge into the complexities of our businesses, relationships, competitive and financial positions, senior leadership and strategic opportunities and challenges. Mr. Swift leads the execution of our strategy, directs capital management actions and strategic investments, and oversees the continuous strengthening of the company’s leadership pipeline. As |
2019 Proxy Statement | 31 |
BOARD AND GOVERNANCE MATTERS |
Professional highlights: • Reinsurance Group of America – President and Chief Executive Officer (1993-2016)• General American Life Insurance Company – Executive Vice President (1992-1993)– Head of Reinsurance (1986-1992)– Positions of increasing responsibility (1979-1986) | Director since:2017 Committees: • Audit • FIRMCo Other •Reinsurance Group of America, Incorporated (1993-2016) •Sun Life Financial Inc. (Jan. - April 2017) | |||
Skills and | ||||
Mr. Woodring brings significant and valuable insurance industry and leadership experience to the Board, demonstrated by his more than two decades leading Reinsurance Group of America, Incorporated (RGA), a leading life reinsurer with global operations. During his tenure, RGA grew to become one of the world’s leading life reinsurers, with offices in 26 countries and annual revenues of more than $10 billion. Mr. Woodring has demonstrated skills in areas that are relevant to the oversight of the company, including risk management, finance, and operational expertise. Mr. Woodring serves as |
32 | www.thehartford.com |
ITEM 2 | ||||
RATIFICATION OF | ||||
In accordance with its Board-approved charter, the Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit the company’s financial statements. The Audit Committee has appointed Deloitte & Touche LLP (“D&T”) as the company’s independent registered public accounting firm for the fiscal year ending December 31, In selecting D&T for fiscal year • • D&T’s depth of understanding of the company’s businesses, accounting policies and practices and internal control over financial reporting; • D&T’s quality controls and its processes for maintaining independence; and • The Audit Committee oversees and is ultimately responsible for the outcome of audit fee negotiations associated with the company’s retention of D&T. In addition, Although shareholder ratification of the appointment of D&T is not required, the Board requests ratification of this appointment by shareholders. If shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain D&T. Representatives of D&T will attend the Annual Meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions. | ||||
✓ | The Board recommends that shareholders vote “FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019. |
Year Ended December 31, 2017 | Year Ended December 31, 2016 | Year Ended December 31, 2018 | Year Ended December 31, 2017 | |||||||||||
Audit fees | $ | 13,881,000 | $ | 14,457,000 | $ | 10,171,000 | $ | 13,881,000 | ||||||
Audit-related fees(1) | $ | 1,356,000 | $ | 591,000 | $ | 1,576,000 | $ | 1,356,000 | ||||||
Tax fees(2) | $ | 184,000 | $ | 474,000 | $ | 182,000 | $ | 184,000 | ||||||
All other fees(3) | $ | — | $ | 69,000 | $ | 592,000 | $ | — | ||||||
Total | $ | 15,421,000 | $ | 15,591,000 | $ | 12,521,000 | $ | 15,421,000 |
(1) | Fees for the years ended December 31, |
(2) | Fees for the years ended December 31, |
(3) | Fees for the year ended December 31, |
33 |
(1) |
(2) |
(3) |
34 |
ITEM 3 | ||||
ADVISORY APPROVAL OF | ||||
Section 14A of the Securities Exchange Act of 1934, as amended, provides our shareholders with the opportunity to vote to approve, on an advisory basis, the compensation of our NEOs as disclosed in this proxy statement in accordance with the rules of the SEC. We currently intend to hold these votes on an annual basis. As described in detail in the Compensation Discussion and Analysis beginning on page RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion contained in this proxy statement. Because the required vote is advisory, it will not be binding upon the Board. The Compensation Committee will, however, take into account the outcome of the vote when considering future executive compensation arrangements. | ||||
✓ | The Board recommends that shareholders vote “FOR” the above resolution to approve our compensation of named executive officers as disclosed in the Compensation Discussion and Analysis, the compensation tables and the narrative discussion contained in this proxy statement. |
35 |
COMPENSATION MATTERS |
Name | Title |
Christopher Swift | Chairman and Chief Executive Officer |
Beth | Executive Vice President and Chief Financial Officer |
Douglas Elliot | President |
Brion Johnson | Executive Vice President and Chief Investment Officer; President of HIMCO |
William Bloom | Executive Vice President, Operations, Technology & Data |
YEAR-OVER-YEAR PERFORMANCE | ||||
36 | www.thehartford.com |
COMPENSATION MATTERS |
Personal Lines | P&C Net Investment Income | Group Benefits | ||||||
Combined ratio of 92.6 was better than outlook of 93.0 - 95.5 principally due to favorable prior accident year reserve development, partially offset by higher catastrophe losses. Underlying combined ratio* of 91.5, which excludes catastrophes and prior year development, was in line with outlook. | Combined ratio of 106.3 was worse than outlook of 96.0 - 98.0. Results were negatively impacted by two hurricanes and the largest U.S. wildfire loss in insurance industry history. Underlying combined ratio of 91.2, which excludes catastrophes and prior year development, was in line with outlook. | P&C net investment income of $1.2 billion was better than outlook of $1.125 - $1.175 billion primarily due to higher limited partnership income. | Net income of $340 million was significantly better than outlook of $275-$295 million primarily due to better loss and expense ratios, particularly in group disability due to continued favorable incidence and recovery trends, as well as higher limited partnership income. | |||||
What is combined ratio? | ||||||||
This ratio measures the cost of claims and expenses for every $100 of earned premiums. If the combined ratio is less than 100, the company is making an underwriting profit. | ||||||||
* Denotes a non-GAAP financial measure. For definitions and reconciliations to the most directly comparable GAAP measure, see Appendix A. |
2019 Proxy Statement | 37 |
COMPENSATION MATTERS |
Compensation Component | C. Swift | B. Bombara | D. Elliot | B. Johnson | W. Bloom | ||||||||||||||
Base Salary Rate | $ | 1,100,000 | $ | 700,000 | $ | 925,000 | $ | 525,000 | $ | 550,000 | |||||||||
2017 AIP Award | $ | 4,675,000 | $ | 1,900,000 | $ | 3,150,000 | $ | 2,300,000 | $ | 1,575,000 | |||||||||
2017 LTI Award | $ | 7,500,000 | $ | 1,750,000 | $ | 5,000,000 | $ | 1,500,000 | $ | 1,000,000 | |||||||||
Total 2017 Compensation Package | $ | 13,275,000 | $ | 4,350,000 | $ | 9,075,000 | $ | 4,325,000 | $ | 3,125,000 |
Compensation Component | C. Swift | B. Costello | D. Elliot | B. Johnson | W. Bloom | ||||||||||||||
Base Salary Rate | $ | 1,150,000 | $ | 725,000 | $ | 950,000 | $ | 575,000 | $ | 575,000 | |||||||||
2018 AIP Award | $ | 4,800,000 | $ | 1,925,000 | $ | 3,050,000 | $ | 2,250,000 | $ | 1,550,000 | |||||||||
2018 LTI Award | $ | 8,000,000 | $ | 1,775,000 | $ | 5,000,000 | $ | 1,600,000 | $ | 1,100,000 | |||||||||
Total 2018 Compensation Package | $ | 13,950,000 | $ | 4,425,000 | $ | 9,000,000 | $ | 4,425,000 | $ | 3,225,000 |
Rationale | ||
The Compensation Committee approved an AIP funding level of | Performance against pre-established Compensation Core Earnings targets | |
The Compensation Committee certified a | The company's average annual Compensation Core ROE during the performance period was | |
Compensation Component | Description |
Base Salary | •Fixed level of cash compensation based on market data, internal pay equity, responsibility, expertise and performance. |
Annual Incentive Plan | •Variable cash award based primarily on annual company operating performance against a predetermined financial target and achievement of individual performance objectives. |
Long-Term Incentive Plan | •Variable awards granted based on individual performance, potential and market data. •Designed to drive long-term performance, encourage share ownership among senior executives, and foster retention. •Award mix (50% performance shares and 50% stock options) reflects actual stock price performance, peer-relative stock price and dividend performance and actual operating performance. |
Pay Mix — CEO | ||
Salary 9% | Annual Incentive 25% | Long-Term Incentive 66% |
Variable with Performance: 91% |
Pay Mix — Other NEOs | ||
16% | Annual Incentive 30% | Long-Term Incentive 54% |
38 | www.thehartford.com |
COMPENSATION MATTERS |
WHAT WE DO | |||
✓ | Compensation heavily weighted towards variable pay | ||
✓ | Senior Executives generally receive the same benefits as full-time employees | ||
✓ | Double trigger requirement for cash severance and equity vesting upon a change of control* | ||
✓ | Cash severance upon a change of control limited to 2x base salary + bonus | ||
✓ | Independent compensation consultant | ||
✓ | Risk mitigation in plan design and annual review of compensation plans, policies and practices | ||
✓ | Prohibition on hedging, monetization, derivative and similar transactions with company securities | ||
✓ | Prohibition on Senior Executives pledging company securities | ||
✓ | Stock ownership guidelines for directors and Senior Executives | ||
✓ | Periodic review of compensation peer groups | ||
✓ | Competitive burn rate and dilution for equity program |
WHAT WE DON'T DO | |||
û | No tax gross-ups | ||
û | No individual employment agreements | ||
û | No granting of stock options with an exercise price less than the fair market value of our common stock on the date of grant | ||
û | No re-pricing of stock options | ||
û | No buy-outs of underwater stock options | ||
û | No reload provisions in any stock option grant | ||
û | No payment of dividends on unvested performance shares |
“SAY-ON-PAY” RESULTS At last year’s Annual Meeting, shareholders voted 96% in favor of our “Say-on-Pay” proposal. The Compensation Committee considered the vote to be an endorsement of The Hartford’s executive compensation programs and policies, and took this strong level of support into account in reviewing those programs and policies. During our annual shareholder outreach program, management also discussed the vote, along with aspects of its executive compensation, sustainability and corporate governance practices, to gain a deeper understanding of shareholders’ perspectives. | 2018 “Say-On-Pay” Support 96% |
2019 Proxy Statement | 39 |
COMPENSATION MATTERS |
STEP 1: | Financial Performance Against Target (Primary Criterion) | — Produces the formulaic company AIP funding level |
Treatment of Catastrophes | |||
Certain adjustments are made to core earnings for compensation purposes to ensure employees are held accountable for operating decisions made that year, and are neither advantaged nor disadvantaged by the effect of certain items outside their control. At the beginning of the year, the Compensation Committee approves a definition of "Compensation Core Earnings." The definition lists adjustments that will be made to core earnings at year-end in order to arrive at Compensation Core Earnings, such as accounting changes, catastrophe losses above or below budget, and unusual or non-recurring items. The 2018 definition and a reconciliation from GAAP net income to Compensation Core Earnings are provided in Appendix A. As illustrated below, target performance (i.e., achievement of the operating plan) results in an AIP funding level of 100% of target. The Compensation Committee also establishes a threshold performance level, below which no AIP awards are earned, as well as a maximum funding level for performance significantly exceeding target. | Due to the unpredictability of catastrophe losses (“CATs”), adjustments for, or the exclusion of, CATs from annual award determinations are common among P&C insurers. The AIP design includes an adjustment in the definition of Compensation Core Earnings for CATs above or below budget. The CAT budget represents the estimated CATs included in the company’s operating plan based on the company’s long-term CAT experience, generally over 10 years. The Compensation Committee believes this is an appropriate way to manage the year-to-year volatility that would result from unusually heavy or unusually light CATs in any given year, which would unduly penalize or unduly benefit employees for results outside their control. In its qualitative review under Step 2, the Compensation Committee retains the flexibility to use discretion to make adjustments to AIP funding levels, including as a result of CATs. | ||
Compensation Core Earnings | |||
Target Rigor and Alignment with Shareholders | |||
•Both the Board and management deem our annual fiscal year operating plan and the associated AIP financial target to be achievable only with strong business performance. •Key business metrics within the plan, such as combined ratios, •The outlook for certain of these metrics are announced to investors at the beginning of each year, which helps align the interests of our Senior Executives with our shareholders, as meeting or exceeding the outlooks is a major determinant of the AIP funding | |||
40 |
COMPENSATION MATTERS |
STEP 2: | Qualitative Review | — Produces the final company AIP funding level |
Performance Criteria and Metrics | Rationale |
Quality of Earnings: earnings driven by current accident year activity, including catastrophe losses, policyholder retention, new business, underwriting profitability and expense management | An assessment of how current accident year activity drove financial performance informs current year compensation decisions |
Non-Financial and Strategic Objectives: strategic initiatives and transactions, diversity, employee engagement, risk management and compliance | These achievements are critical for long-term success, but impacts may not be reflected in current year-end financials or may result in accounting charges in a particular period |
How the company performed on a relative basis across the industry is not captured in the quantitative formula |
STEP 3: | Individual Performance | — Results in the Senior Executive's AIP award |
Performance Metric | Rationale |
Compensation Core ROE (50% weighting) | Important strategic measure that drives shareholder value creation |
Peer-relative TSR (50% weighting) | Important measure of our performance against peers that are competing investment choices in the capital markets |
41 |
COMPENSATION MATTERS |
As illustrated in the graph at right, for 2018 performance share awards, the target level of performance is an average annual Compensation Core ROE for 2018, 2019, and 2020 of 11.6%, as reflected in the 2018-2020 operating plan. There is no payout for performance below threshold. The maximum Compensation Core ROE payout of 200% reflects ambitious goals that require performance significantly beyond target. Threshold and maximum reflect a range of +/-20% of target. | 2018-2020 Compensation Core ROE | |
2018 Performance Peer Group | Three-Year Relative TSR Ranking | ||
Alleghany Corp. | |||
Allstate Corp. | |||
American Financial Group, Inc. | |||
The Chubb Corp. | |||
Cincinnati Financial Corp. | |||
CNA Financial Corp. — NEW | |||
Everest Re Group, Ltd. | |||
Hanover Insurance Group | |||
Markel Corporation | |||
Mercury General Corp. | |||
MetLife, Inc. — NEW | |||
Old Republic International Corp. | |||
The Progressive Corp. | |||
The Travelers Companies, Inc. | |||
Unum | |||
W.R. Berkley Group |
42 | www.thehartford.com |
2019 Proxy Statement | 43 |
COMPENSATION MATTERS |
www.thehartford.com |
COMPENSATION MATTERS |
Company Name(2) | Revenues | Assets | Market Cap | Revenues | Assets | Market Cap | ||||||||||||||||
Aetna Inc. | $ | 60,447 | $ | 55,151 | $ | 58,838 | $ | — | $ | — | $ | — | ||||||||||
Allstate Corp | $ | 37,834 | $ | 112,422 | $ | 37,573 | $ | 39,815 | $ | 112,249 | $ | 28,461 | ||||||||||
Berkley (W. R.) Corp. | $ | 7,617 | $ | 24,300 | $ | 8,727 | $ | 7,692 | $ | 24,896 | $ | 9,026 | ||||||||||
CNA Financial Corp. | $ | 9,377 | $ | 56,567 | $ | 14,386 | $ | 10,134 | $ | 57,152 | $ | 11,983 | ||||||||||
Chubb Ltd. | $ | 32,207 | $ | 167,022 | $ | 67,837 | $ | 32,679 | $ | 167,771 | $ | 59,527 | ||||||||||
Cigna Corp. | $ | 41,616 | $ | 61,753 | $ | 50,072 | $ | 48,569 | $ | 153,226 | $ | 72,317 | ||||||||||
Cincinnati Financial Corp. | $ | 5,732 | $ | 21,843 | $ | 12,300 | $ | 5,407 | $ | 21,935 | $ | 12,599 | ||||||||||
Lincoln National Corp. | $ | 14,092 | $ | 281,763 | $ | 16,821 | $ | 16,424 | $ | 298,147 | $ | 10,960 | ||||||||||
Marsh & McLennan Companies Inc. | $ | 14,024 | $ | 20,429 | $ | 41,538 | ||||||||||||||||
Marsh & McLennan Companies | $ | 14,950 | $ | 21,578 | $ | 40,171 | ||||||||||||||||
MetLife Inc. | $ | 62,314 | $ | 719,892 | $ | 53,204 | $ | 67,915 | $ | 687,538 | $ | 40,520 | ||||||||||
Principal Financial Group Inc. | $ | 13,861 | $ | 253,941 | $ | 20,375 | $ | 14,237 | $ | 243,036 | $ | 12,502 | ||||||||||
Progressive Corp. | $ | 26,815 | $ | 38,701 | $ | 32,756 | $ | 31,955 | $ | 46,575 | $ | 35,184 | ||||||||||
Prudential Financial Inc. | $ | 59,727 | $ | 831,921 | $ | 48,752 | $ | 63,304 | $ | 815,078 | $ | 33,680 | ||||||||||
Travelers Companies Inc. | $ | 28,902 | $ | 103,483 | $ | 37,124 | $ | 30,282 | $ | 104,233 | $ | 31,720 | ||||||||||
Unum Group | $ | 11,287 | $ | 64,013 | $ | 12,317 | $ | 11,599 | $ | 61,876 | $ | 6,427 | ||||||||||
Voya Financial Inc. | $ | 8,618 | $ | 222,532 | $ | 8,892 | $ | 8,514 | $ | 154,682 | $ | 6,242 | ||||||||||
XL Group Ltd. | $ | 11,189 | $ | 63,436 | $ | 9,001 | $ | — | $ | — | $ | — | ||||||||||
25TH PERCENTILE | $ | 11,189 | $ | 55,151 | $ | 12,317 | $ | 10,866 | $ | 51,864 | $ | 11,471 | ||||||||||
MEDIAN | $ | 14,092 | $ | 64,013 | $ | 32,756 | $ | 16,424 | $ | 112,249 | $ | 28,461 | ||||||||||
75TH PERCENTILE | $ | 37,834 | $ | 222,532 | $ | 48,752 | $ | 36,247 | $ | 205,404 | $ | 37,678 | ||||||||||
THE HARTFORD | $ | 16,804 | $ | 225,260 | $ | 20,076 | $ | 18,955 | $ | 62,307 | $ | 15,946 | ||||||||||
PERCENT RANK | 51 | % | 76 | % | 43 | % | 51 | % | 36 | % | 44 | % |
(1) | Peer data provided by S&P Capital IQ. The amounts shown in the “Revenues” column reflect S&P Capital IQ adjustments to facilitate comparability across companies. |
(2) | An additional four non-public companies are included in the Corporate Peer Group as they submit data to relevant compensation surveys utilized in determining appropriate pay levels for Senior Executives: Liberty Mutual, MassMutual, Nationwide Financial, and State Farm. |
(3) | The 2018 Corporate Peer Group included Aetna Inc., which was acquired by CVS Health Corp. on November 28, 2018, and XL Group Ltd., which was acquired by AXA on September 12, 2018. |
2018 Corporate Peer Group | ð | 4 Deletions | + | 2 Additions | = | 2019 Corporate Peer Group | ||||
ò | ò | |||||||||
• Aetna Inc. | • American International Group, Inc. | |||||||||
• Marsh & McLennan Companies, Inc. | • Hanover Insurance Group, Inc. | |||||||||
• Prudential Financial Inc. | ||||||||||
• XL Group Ltd. |
2019 Proxy Statement | 45 |
COMPENSATION MATTERS |
STEP 1: | Financial Performance Against Target | — Produced formulaic AIP funding level |
2018 Compensation Core Earnings |
46 | www.thehartford.com |
COMPENSATION MATTERS |
STEP 2: | Qualitative Review — Compensation Committee reduced funding level |
Qualitative Criteria | Results Considered |
Quality of Earnings | The company's core earnings were above target, driven by favorable non-catastrophe prior year development combined with increased investment income, including strong partnership returns. Excellent business results in Group Benefits and Mutual Funds also contributed to the performance above target. Lower P&C current accident year results, excluding catastrophes, partially offset these favorable results. Results were negatively impacted by catastrophe losses significantly above operating plan. |
Risk & Compliance | The Hartford was again named one of the world’s most ethical companies by Ethisphere Institute in 2018. The Hartford has appeared on the list ten times due to a culture built on a foundation of integrity and respect, backed by a strong ethics and compliance program that emphasizes leadership accountability and preventing ethical lapses and compliance issues |
Peer-Relative Performance | The company’s financial performance (core earnings growth and book value growth) compared favorably to peers; however, the company’s stock underperformed the S&P 500, the S&P P&C index and the S&P Insurance index. |
Expense Management | Excluding bonus above target and one-time items, expenses were favorable to budget due mainly to managing headcount and IT costs. |
Non-Financial and StrategicObjectives | On or ahead of schedule in integrating Aetna’s U.S. group life and disability business, realizing the revenue and earnings growth we expected to date from the deal; successfully completed the sale of Talcott Resolution, improving the core earnings growth profile of the company and generating approximately $1.5 billion in proceeds for deployment; and announced an agreement to acquire The Navigators Group, Inc., which will broaden and deepen our product offerings while greatly enhancing our ability to expand internationally. |
STEP 3: | Individual Performance — Each NEO's 2018 AIP award |
2019 Proxy Statement | 47 |
COMPENSATION MATTERS |
48 | www.thehartford.com |
COMPENSATION MATTERS |
Level | (As a Multiple of Base Salary) |
CEO | 6x |
Other NEOs | 4x |
2019 Proxy Statement | 49 |
COMPENSATION MATTERS |
Feature | Rationale |
Pay Mix | • A mix of fixed and variable, annual and long-term, and cash and equity compensation encourages strategies and actions that are in the company’s long-term best interests • Long-term compensation awards and overlapping vesting periods encourage executives to focus on sustained company results and stock price appreciation |
Performance Metrics | • Incentive awards based on a variety of performance metrics diversify the risk associated with any single indicator of performance |
Equity Incentives | • Stock ownership guidelines align executive and shareholder interests • Equity grants are made only during a trading window following the release of financial results • No reload provisions are included in any stock option awards |
Plan Design | • Incentive plans are not overly leveraged, cap the maximum payout, and include design features intended to balance pay for performance with an appropriate level of risk-taking • The 2014 Incentive Stock Plan does not allow: - Stock options with an exercise price less than the fair market value of our common stock on the grant date - Re-pricing (reduction in exercise price) of stock options, without shareholder approval - Single trigger vesting of awards upon a Change of Control if awards are assumed or replaced with substantially equivalent awards |
Recoupment | • We have a broad incentive compensation recoupment policy in addition to claw-back provisions under the 2014 Incentive Stock Plan |
50 | www.thehartford.com |
COMPENSATION MATTERS |
COMPENSATION MATTERS |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||
Christopher Swift Chairman and Chief Executive Officer | 2017 | 1,100,000 | — | 3,472,500 | 3,750,000 | 4,675,000 | 34,380 | 83,405 | 13,115,285 | ||||||||||||||||
2016 | 1,075,000 | — | 3,404,473 | 3,575,000 | 1,925,000 | 17,769 | 81,879 | 10,079,121 | |||||||||||||||||
2015 | 1,000,000 | — | 3,289,280 | 3,200,000 | 2,450,000 | 5,764 | 77,375 | 10,022,419 | |||||||||||||||||
Beth Bombara Executive Vice President and Chief Financial Officer | 2017 | 700,000 | — | 810,250 | 875,000 | 1,900,000 | 34,380 | 65,400 | 4,385,030 | ||||||||||||||||
2016 | 687,500 | — | 833,263 | 875,000 | 770,000 | 13,122 | 65,300 | 3,244,185 | |||||||||||||||||
2015 | 643,750 | — | 848,018 | 825,000 | 1,200,000 | — | 65,300 | 3,582,068 | |||||||||||||||||
Douglas Elliot President of The Hartford | 2017 | 925,000 | — | 2,315,000 | 2,500,000 | 3,150,000 | 15,738 | 67,526 | 8,973,264 | ||||||||||||||||
2016 | 918,750 | — | 2,202,194 | 2,312,500 | 1,295,000 | 8,490 | 67,368 | 6,804,302 | |||||||||||||||||
2015 | 900,000 | — | 2,261,380 | 2,200,000 | 2,000,000 | 3,101 | 67,006 | 7,431,487 | |||||||||||||||||
Brion Johnson Chief Investment Officer and President, HIMCO and Talcott Resolution | 2017 | 525,000 | — | 694,500 | 750,000 | 2,300,000 | 6,199 | 68,150 | 4,343,849 | ||||||||||||||||
2016 | 525,000 | — | 642,803 | 675,000 | 1,100,000 | 3,393 | 68,050 | 3,014,246 | |||||||||||||||||
2015 | 518,750 | — | 616,740 | 600,000 | 1,400,000 | 1,286 | 65,300 | 3,202,076 | |||||||||||||||||
William Bloom, EVP Operations Technology & Data | 2017 | 550,000 | — | 463,000 | 500,000 | 1,575,000 | 14,846 | 67,845 | 3,170,691 | ||||||||||||||||
Robert Rupp Former Chief Risk Officer | 2017 | 600,000 | — | 648,200 | 700,000 | 1,500,000 | 3,227 | 65,400 | 3,516,827 | ||||||||||||||||
2016 | 600,000 | — | 666,610 | 700,000 | 1,000,000 | 3,117 | 65,300 | 3,035,027 | |||||||||||||||||
2015 | 600,000 | — | 719,530 | 700,000 | 1,400,000 | 2,443 | 65,300 | 3,487,273 |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | ||||||||||||||||
Christopher Swift Chairman and Chief Executive Officer | 2018 | 1,137,500 | — | 3,736,000 | 4,000,000 | 4,800,000 | — | 210,115 | 13,883,615 | ||||||||||||||||
2017 | 1,100,000 | — | 3,472,500 | 3,750,000 | 4,675,000 | 34,380 | 83,405 | 13,115,285 | |||||||||||||||||
2016 | 1,075,000 | — | 3,404,473 | 3,575,000 | 1,925,000 | 17,769 | 81,879 | 10,079,121 | |||||||||||||||||
Beth Costello Executive Vice President and Chief Financial Officer | 2018 | 718,750 | — | 828,925 | 887,500 | 1,925,000 | — | 65,500 | 4,425,675 | ||||||||||||||||
2017 | 700,000 | — | 810,250 | 875,000 | 1,900,000 | 34,380 | 65,400 | 4,385,030 | |||||||||||||||||
2016 | 687,500 | — | 833,263 | 875,000 | 770,000 | 13,122 | 65,300 | 3,244,185 | |||||||||||||||||
Douglas Elliot President | 2018 | 943,750 | — | 2,335,000 | 2,500,000 | 3,050,000 | — | 170,363 | 8,999,113 | ||||||||||||||||
2017 | 925,000 | — | 2,315,000 | 2,500,000 | 3,150,000 | 15,738 | 67,526 | 8,973,264 | |||||||||||||||||
2016 | 918,750 | — | 2,202,194 | 2,312,500 | 1,295,000 | 8,490 | 67,368 | 6,804,302 | |||||||||||||||||
Brion Johnson Executive Vice President and Chief Investment Officer; President of HIMCO | 2018 | 562,500 | — | 747,200 | 800,000 | 2,250,000 | — | 65,500 | 4,425,200 | ||||||||||||||||
2017 | 525,000 | — | 694,500 | 750,000 | 2,300,000 | 6,199 | 68,150 | 4,343,849 | |||||||||||||||||
2016 | 525,000 | — | 642,803 | 675,000 | 1,100,000 | 3,393 | 68,050 | 3,014,246 | |||||||||||||||||
William Bloom, Executive Vice President, Operations, Technology & Data | 2018 | 568,750 | — | 513,700 | 550,000 | 1,550,000 | — | 68,281 | 3,250,731 | ||||||||||||||||
2017 | 550,000 | — | 463,000 | 500,000 | 1,575,000 | 14,846 | 67,845 | 3,170,691 |
(1) | This column reflects the full aggregate grant date fair value of performance shares calculated in accordance with FASB ASC Topic 718 for the fiscal years ended December 31, 2018, 2017 |
NEO | 2017 Performance Shares (February 28, 2017 grant date) | 2016 Performance Shares (March 1, 2016 grant date) | 2015 Performance Shares (March 3, 2015 grant date) | 2018 Performance Shares (February 27, 2018 grant date) | 2017 Performance Shares (February 28, 2017 grant date) | 2016 Performance Shares (March 1, 2016 grant date) | ||||||||||||||||
C. Swift | $ | 7,084,289 | $ | 6,739,911 | $ | 6,067,995 | $ | 7,567,405 | $ | 7,084,289 | $ | 6,739,911 | ||||||||||
B. Bombara | $ | 1,652,967 | $ | 1,649,599 | $ | 1,564,400 | ||||||||||||||||
B. Costello | $ | 1,678,987 | $ | 1,652,967 | $ | 1,649,599 | ||||||||||||||||
D. Elliot | $ | 4,722,829 | $ | 4,359,731 | $ | 4,171,707 | $ | 4,729,628 | $ | 4,722,829 | $ | 4,359,731 | ||||||||||
B. Johnson | $ | 1,416,895 | $ | 1,272,557 | $ | 1,137,710 | $ | 1,513,461 | $ | 1,416,895 | $ | 1,272,557 | ||||||||||
W. Bloom | $ | 944,566 | $ | 1,040,498 | $ | 944,566 | ||||||||||||||||
R. Rupp | $ | 1,322,410 | $ | 1,319,729 | $ | 1,327,393 |
(2) | This column reflects the full aggregate grant date fair value for the fiscal years ended December 31, 2018, 2017 |
(3) | This column reflects cash AIP awards paid for the respective years. |
(4) | This column reflects the actuarial increase, if any, in the present value of the accumulated benefits of the NEOs under all pension plans established by the company. The amounts were calculated using discount rate and form of payment assumptions consistent with those used in the company’s GAAP financial statements. Actuarial assumptions for |
52 | www.thehartford.com |
COMPENSATION MATTERS |
(5) | This column reflects amounts described in the Summary Compensation Table—All Other Compensation. |
Name | Year | Perquisites ($) | Contributions or Other Allocations to Defined Contribution Plans ($)(1) | Total ($) | Year | Perquisites ($) | Contributions or Other Allocations to Defined Contribution Plans ($)(1) | Total ($) | ||||||||||||||
Christopher Swift | 2017 | 18,038 | (2) | 65,367 | 83,405 | 2018 | 144,615 | (2) | 65,500 | 210,115 | ||||||||||||
Beth Bombara | 2017 | — | 65,400 | 65,400 | ||||||||||||||||||
Beth Costello | 2018 | — | 65,500 | 65,500 | ||||||||||||||||||
Douglas Elliot | 2017 | 2,126 | (3) | 65,400 | 67,526 | 2018 | 104,863 | (3) | 65,500 | 170,363 | ||||||||||||
Brion Johnson | 2017 | 2,750 | (4) | 65,400 | 68,150 | 2018 | — | 65,500 | 65,500 | |||||||||||||
William Bloom | 2017 | 2,445 | (5) | 65,400 | 67,845 | 2018 | 2,781 | (4) | 65,500 | 68,281 | ||||||||||||
Robert Rupp | 2017 | — | 65,400 | 65,400 |
(1) | This column represents company contributions under the company’s tax-qualified 401(k) plan (The Hartford Investment and Savings Plan) and The Hartford Excess Savings Plan (the “Excess Savings Plan”), a non-qualified plan established to “mirror” the qualified plan to facilitate deferral of amounts that cannot be deferred under the 401(k) plan due to Internal Revenue Code limits. Additional information can be found under the “Excess Savings Plan” section of the Non-Qualified Deferred Compensation Table beginning on page |
(2) | Perquisite amounts for Mr. Swift include personal use of corporate aircraft not requiring reimbursement to the company ($124,153), commuting costs, and expenses associated with |
(3) | Perquisite amounts for Mr. Elliot include personal use of corporate aircraft related to a family emergency ($31,693), personal use of corporate aircraft not requiring reimbursement to the company ($71,093), and expenses associated with the attendance of Mr. Elliot's spouse at business functions. |
(4) | Perquisite amounts for Mr. |
COMPENSATION MATTERS |
Name | Plan | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | Plan | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | ||||||||||||||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
C. Swift | 2017 AIP | 1,375,000 | 2,750,000 | 5,000,000 | 2018 AIP | 1,500,000 | 3,000,000 | 5,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/28/2017 | 302,908 | 48.89 | 3,750,000 | Stock Options | 2/27/2018 | 284,819 | 53.81 | 4,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/28/2017 | 13,423 | 76,703 | 153,406 | 3,472,500 | Performance Shares | 2/27/2018 | 13,009 | 74,336 | 148,672 | 3,736,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
B. Bombara | 2017 AIP | 550,000 | 1,100,000 | 2,200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/28/2017 | 70,679 | 48.89 | 875,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/28/2017 | 3,132 | 17,897 | 35,794 | 810,250 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
B. Costello | 2018 AIP | 600,000 | 1,200,000 | 2,400,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/27/2018 | 63,194 | 53.81 | 887,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/27/2018 | 2,886 | 16,493 | 32,986 | 828,925 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. Elliot | 2017 AIP | 925,000 | 1,850,000 | 3,700,000 | 2018 AIP | 950,000 | 1,900,000 | 3,800,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/28/2017 | 201,939 | 48.89 | 2,500,000 | Stock Options | 2/27/2018 | 178,012 | 53.81 | 2,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/28/2017 | 8,949 | 51,135 | 102,270 | 2,315,000 | Performance Shares | 2/27/2018 | 8,131 | 46,460 | 92,920 | 2,335,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
B. Johnson | 2017 AIP | 675,000 | 1,350,000 | 2,700,000 | 2018 AIP | 700,000 | 1,400,000 | 2,800,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/28/2017 | 60,582 | 48.89 | 750,000 | Stock Options | 2/27/2018 | 56,964 | 53.81 | 800,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/28/2017 | 2,685 | 15,341 | 30,682 | 694,500 | Performance Shares | 2/27/2018 | 2,602 | 14,867 | 29,734 | 747,200 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
W. Bloom | 2017 AIP | 400,000 | 800,000 | 1,600,000 | 2018 AIP | 412,500 | 825,000 | 1,650,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/28/2017 | 40,388 | 48.89 | 500,000 | Stock Options | 2/27/2018 | 39,163 | 53.81 | 550,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/28/2017 | 1,790 | 10,227 | 20,454 | 463,000 | Performance Shares | 2/27/2018 | 1,789 | 10,221 | 20,442 | 513,700 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
R. Rupp | 2017 AIP | 600,000 | 1,200,000 | 2,400,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options | 2/28/2017 | 56,543 | 48.89 | 700,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Performance Shares | 2/28/2017 | 2,506 | 14,318 | 28,636 | 648,200 |
(1) | Consistent with company practice, the NEO’s threshold, target and maximum AIP award opportunities are based on salary for |
(2) | The performance shares granted to the NEOs on February |
(3) | The options granted in |
(4) | The NYSE closing price per share of the company’s common stock on February |
www.thehartford.com |
COMPENSATION MATTERS |
Name | Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||||||||||||
Grant Date | Number of Securities Underlying Unexercised Options Exercisable(#)(1) | Number of Securities Underlying Unexercised Options Unexercisable(#)(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | Grant Date | Number of Securities Underlying Unexercised Options Exercisable(#)(1) | Number of Securities Underlying Unexercised Options Unexercisable(#)(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | |||||||||||||||||||||||||||||||
Christopher Swift | 3/1/2011 | 92,937 | — | 28.91 | 3/1/2021 | 3/1/2011 | 92,937 | — | 28.91 | 3/1/2021 | ||||||||||||||||||||||||||||||||||||||
2/28/2012 | 148,448 | — | 20.63 | 2/28/2022 | 2/28/2012 | 148,448 | — | 20.63 | 2/28/2022 | |||||||||||||||||||||||||||||||||||||||
3/5/2013 | 141,388 | — | 24.15 | 3/5/2023 | 3/5/2013 | 141,388 | — | 24.15 | 3/5/2023 | |||||||||||||||||||||||||||||||||||||||
10/30/2013 | 31,424 | 1,768,543 | 3/4/2014 | 103,872 | — | 35.83 | 3/4/2024 | |||||||||||||||||||||||||||||||||||||||||
3/4/2014 | 103,872 | — | 35.83 | 3/4/2024 | 3/3/2015 | 301,887 | — | 41.25 | 3/3/2025 | |||||||||||||||||||||||||||||||||||||||
3/3/2015 | 201,258 | 100,629 | 41.25 | 3/3/2025 | 3/1/2016 | 196,320 | 98,161 | 43.59 | 3/1/2026 | |||||||||||||||||||||||||||||||||||||||
3/1/2016 | 98,160 | 196,321 | 43.59 | 3/1/2026 | 82,014 | 4,615,748 | 2/28/2017 | 100,969 | 201,939 | 48.89 | 2/28/2027 | 76,703 | 3,409,448 | |||||||||||||||||||||||||||||||||||
2/28/2017 | — | 302,908 | 48.89 | 2/28/2027 | 76,703 | 4,316,845 | 2/27/2018 | — | 284,819 | 53.81 | 2/27/2028 | 74,336 | 3,304,235 | |||||||||||||||||||||||||||||||||||
Beth Bombara | 3/1/2011 | 13,104 | — | 28.91 | 3/1/2021 | |||||||||||||||||||||||||||||||||||||||||||
2/28/2012 | 7,198 | — | 20.63 | 2/28/2022 | ||||||||||||||||||||||||||||||||||||||||||||
3/5/2013 | 51,414 | — | 24.15 | 3/5/2023 | ||||||||||||||||||||||||||||||||||||||||||||
10/30/2013 | 18,855 | 1,061,159 | ||||||||||||||||||||||||||||||||||||||||||||||
3/4/2014 | 47,214 | — | 35.83 | 3/4/2024 | ||||||||||||||||||||||||||||||||||||||||||||
3/3/2015 | 51,886 | 25,944 | 41.25 | 3/3/2025 | ||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 24,025 | 48,051 | 43.59 | 3/1/2026 | 20,073 | 1,129,708 | ||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | — | 70,679 | 48.89 | 2/28/2027 | 17,897 | 1,007,243 | ||||||||||||||||||||||||||||||||||||||||||
Douglas Elliot | 5/4/2011 | 81,320 | — | 28.05 | 5/4/2021 | |||||||||||||||||||||||||||||||||||||||||||
2/28/2012 | 71,457 | — | 20.63 | 2/28/2022 | ||||||||||||||||||||||||||||||||||||||||||||
3/4/2014 | 47,214 | — | 35.83 | 3/4/2024 | ||||||||||||||||||||||||||||||||||||||||||||
3/3/2015 | 77,830 | — | 41.25 | 3/3/2025 | ||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 48,050 | 24,026 | 43.59 | 3/1/2026 | ||||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | 23,559 | 47,120 | 48.89 | 2/28/2027 | 17,897 | 795,522 | ||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | — | 63,194 | 53.81 | 2/27/2028 | 16,493 | 733,114 | ||||||||||||||||||||||||||||||||||||||||||
3/5/2013 | 128,535 | — | 24.15 | 3/5/2023 | 3/5/2013 | 128,535 | — | 24.15 | 3/5/2023 | |||||||||||||||||||||||||||||||||||||||
Douglas Elliot | 10/30/2013 | 31,424 | 1,768,543 | 3/4/2014 | 94,429 | — | 35.83 | 3/4/2024 | ||||||||||||||||||||||||||||||||||||||||
3/4/2014 | 94,429 | — | 35.83 | 3/4/2024 | 3/3/2015 | 207,547 | — | 41.25 | 3/3/2025 | |||||||||||||||||||||||||||||||||||||||
3/3/2015 | 138,364 | 69,183 | 41.25 | 3/3/2025 | 3/1/2016 | 126,990 | 63,496 | 43.59 | 3/1/2026 | |||||||||||||||||||||||||||||||||||||||
3/1/2016 | 63,495 | 126,991 | 43.59 | 3/1/2026 | 53,051 | 2,985,710 | 2/28/2017 | 67,313 | 134,626 | 48.89 | 2/28/2027 | 51,135 | 2,272,951 | |||||||||||||||||||||||||||||||||||
2/28/2017 | — | 201,939 | 48.89 | 2/28/2027 | 51,135 | 2,877,878 | 2/27/2018 | — | 178,012 | 53.81 | 2/27/2028 | 46,460 | 2,065,147 | |||||||||||||||||||||||||||||||||||
3/5/2013 | 57,841 | — | 24.15 | 3/5/2023 | 3/4/2014 | 51,936 | — | 35.83 | 3/4/2024 | |||||||||||||||||||||||||||||||||||||||
10/30/2013 | 18,855 | 1,061,159 | 3/3/2015 | 56,604 | — | 41.25 | 3/3/2025 | |||||||||||||||||||||||||||||||||||||||||
3/4/2014 | 51,936 | — | 35.83 | 3/4/2024 | 3/1/2016 | 37,067 | 18,534 | 43.59 | 3/1/2026 | |||||||||||||||||||||||||||||||||||||||
Brion Johnson | 3/3/2015 | 37,736 | 18,868 | 41.25 | 3/3/2025 | 2/28/2017 | 20,194 | 40,388 | 48.89 | 2/28/2027 | 15,341 | 681,907 | ||||||||||||||||||||||||||||||||||||
3/1/2016 | 18,533 | 37,068 | 43.59 | 3/1/2026 | 15,485 | 871,496 | 2/27/2018 | — | 56,964 | 53.81 | 2/27/2028 | 14,867 | 660,838 | |||||||||||||||||||||||||||||||||||
2/28/2017 | — | 60,582 | 48.89 | 2/28/2027 | 15,341 | 863,391 | ||||||||||||||||||||||||||||||||||||||||||
3/3/2015 | 22,012 | 11,007 | 41.25 | 3/3/2025 | 3/3/2015 | 33,019 | — | 41.25 | 3/3/2025 | |||||||||||||||||||||||||||||||||||||||
3/1/2016 | 10,983 | 21,966 | 43.59 | 3/1/2026 | 9,176 | 516,425 | 3/1/2016 | 21,966 | 10,983 | 43.59 | 3/1/2026 | |||||||||||||||||||||||||||||||||||||
8/1/2016 | 19,181 | 1,079,507 | 8/1/2016 | 19,576 | 870,153 | |||||||||||||||||||||||||||||||||||||||||||
William Bloom | 2/28/2017 | — | 40,388 | 48.89 | 2/28/2027 | 10,227 | 575,576 | 2/28/2017 | 13,462 | 26,926 | 48.89 | 2/28/2027 | 10,227 | 454,590 | ||||||||||||||||||||||||||||||||||
11/4/2011 | 62,230 | — | 17.83 | 11/4/2021 | ||||||||||||||||||||||||||||||||||||||||||||
2/28/2012 | 54,467 | — | 20.63 | 2/28/2022 | ||||||||||||||||||||||||||||||||||||||||||||
3/5/2013 | 89,974 | — | 24.15 | 3/5/2023 | ||||||||||||||||||||||||||||||||||||||||||||
Robert Rupp | 10/30/2013 | 18,855 | 1,061,159 | |||||||||||||||||||||||||||||||||||||||||||||
3/4/2014 | 66,100 | — | 35.83 | 3/4/2024 | ||||||||||||||||||||||||||||||||||||||||||||
3/3/2015 | 44,025 | 22,013 | 41.25 | 3/3/2025 | ||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 19,220 | 38,441 | 43.59 | 3/1/2026 | 16,059 | 903,801 | ||||||||||||||||||||||||||||||||||||||||||
2/28/2017 | — | 56,543 | 48.89 | 2/28/2027 | 14,318 | 805,817 | ||||||||||||||||||||||||||||||||||||||||||
2/27/2018 | — | 39,163 | 53.81 | 2/27/2028 | 10,221 | 454,323 |
(1) | Stock options granted to the NEOs vest and become exercisable 1/3 per year on each anniversary of the grant date and generally expire on the tenth anniversary of the grant date. See “(2) Accelerated Stock Option Vesting” on page |
(2) |
(3) | This column represents unvested performance share awards at target. Dividends are not credited on performance shares. See “(3) Accelerated Vesting of Performance Shares and Other LTI Awards” on page |
(4) | This column reflects |
2019 Proxy Statement | 55 |
COMPENSATION MATTERS |
Name | Option Awards | Stock Awards | Option Awards | Stock Awards | ||||||||||||||||
Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(3) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(3) | |||||||||||||
Christopher Swift | 80,679 | 4,352,634 | — | — | 114,085 | 5,472,111 | ||||||||||||||
Beth Bombara | 20,800 | 1,122,160 | ||||||||||||||||||
Beth Costello | 71,716 | 2,069,495 | 39,316 | 1,853,592 | ||||||||||||||||
Douglas Elliot | 55,466 | 2,992,408 | 152,777 | 4,598,487 | 85,122 | 4,050,897 | ||||||||||||||
Brion Johnson | 15,127 | 816,091 | 57,841 | 1,669,501 | 34,728 | 1,628,459 | ||||||||||||||
William Bloom | 39,875 | 2,205,901 | — | — | 9,176 | 450,266 | ||||||||||||||
Robert Rupp | 17,649 | 952,153 |
(1) |
(2) | The numbers in this column reflect the total RSUs and performance shares that vested in 2018. The RSUs were granted on October 30, 2013 and settled in shares for Mr. Swift, Ms. Costello, Mr. Elliott and Mr. Johnson on the vesting date of October 30, 2018. The performance shares were granted on March |
NEO | Vested RSUs | Vested Performance Shares | |||
C. Swift | 32,071 | 82,014 | |||
B. Costello | 19,243 | 20,073 | |||
D. Elliot | 32,071 | 53,051 | |||
B. Johnson | 19,243 | 15,485 | |||
W. Bloom | — | 9,176 |
(3) | The |
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COMPENSATION MATTERS |
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Actual Cash Balance Account or Accrued Benefit ($) | Payments During Last Fiscal Year ($) | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | Actual Cash Balance Account or Accrued Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||
Christopher Swift | Retirement Plan | 2.83 | 67,641 | 69,920 | — | Retirement Plan | 2.83 | 67,179 | 72,228 | — | ||||||||||||||||
Excess Pension Plan | 2.83 | 376,195 | 388,869 | — | Excess Pension Plan | 2.83 | 373,624 | 401,709 | — | |||||||||||||||||
Beth Bombara | Retirement Plan | 8.67 | 144,789 | 153,667 | — | |||||||||||||||||||||
Excess Pension Plan | 8.67 | 180,002 | 191,039 | — | ||||||||||||||||||||||
Beth Costello | Retirement Plan | 8.67 | 138,249 | 158,741 | — | |||||||||||||||||||||
Excess Pension Plan | 8.67 | 171,872 | 197,347 | — | ||||||||||||||||||||||
Douglas Elliot | Retirement Plan | 1.74 | 47,023 | 48,459 | — | Retirement Plan | 1.74 | 46,914 | 50,059 | — | ||||||||||||||||
Excess Pension Plan | 1.74 | 165,287 | 170,337 | — | Excess Pension Plan | 1.74 | 164,905 | 175,961 | — | |||||||||||||||||
Brion Johnson | Retirement Plan | 1.24 | 29,016 | 29,872 | — | Retirement Plan | 1.24 | 28,993 | 30,858 | — | ||||||||||||||||
Excess Pension Plan | 1.24 | 55,881 | 57,530 | — | Excess Pension Plan | 1.24 | 55,836 | 59,430 | — | |||||||||||||||||
William Bloom(3) | Retirement Plan | 3.50 | 124,398 | 11,198 | — | Retirement Plan | 3.50 | 115,437 | 11,198 | — | ||||||||||||||||
Excess Pension Plan | 3.50 | 1,301 | 117 | — | Excess Pension Plan | 3.50 | 1,207 | 117 | — | |||||||||||||||||
Robert Rupp | Retirement Plan | 1.16 | 35,322 | 35,334 | — | |||||||||||||||||||||
Excess Pension Plan | 1.16 | 43,606 | 43,621 | — |
(1) | Benefit accruals ceased as of December 31, 2012 under each Plan, but service continues to be credited for purposes of determining whether employees have reached early or normal retirement milestones. As of December 31, |
(2) | The present value of accumulated benefits under each Plan is calculated assuming that benefits commence at age 65, no pre-retirement mortality, a lump sum form of payment and the same actuarial assumptions used by the company for GAAP financial reporting purposes. Because the cash balance amounts are projected to age 65 using an assumed interest crediting rate of 3.3% (the actual rate in effect for |
(3) | For Mr. Bloom, the present value of the final average pay benefit portion of Mr. Bloom's benefit assumes commencement at the date he would receive an unreduced benefit under the plan (age 62 plus one month) and an annuity form of payment. Mr. Bloom has no accrued benefit under the cash balance formula. |
2019 Proxy Statement | 57 |
COMPENSATION MATTERS |
Name of Fund | Rate of Return (for the year ended Dec. 31, 2017) | Name of Fund | Rate of Return (for the year ended Dec. 31, 2017) | Rate of Return (for the year ended Dec. 31, 2018) | Name of Fund | Rate of Return (for the year ended Dec. 31, 2018) | ||||||
The Hartford Stock Fund | 20.18 | % | Vanguard Target Retirement 2015 Trust | 11.56 | % | (19.79 | )% | Vanguard Target Retirement 2015 Trust | (2.94 | )% | ||
ISP International Equity Fund(1) | 24.83 | % | Vanguard Target Retirement 2020 Trust | 14.19 | % | (18.06 | )% | Vanguard Target Retirement 2020 Trust | (4.16 | )% | ||
ISP Active Large Cap Equity Fund(2) | 26.09 | % | Vanguard Target Retirement 2025 Trust | 16.04 | % | (3.29 | )% | Vanguard Target Retirement 2025 Trust | (5.05 | )% | ||
ISP Small/Mid Cap Equity Fund(3) | 17.94 | % | Vanguard Target Retirement 2030 Trust | 17.63 | % | (12.30 | )% | Vanguard Target Retirement 2030 Trust | (5.78 | )% | ||
Hartford Index Fund | 21.80 | % | Vanguard Target Retirement 2035 Trust | 19.22 | % | 4.78 | % | Vanguard Target Retirement 2035 Trust | (6.51 | )% | ||
State Street S&P 500 Index Fund(4) | (4.41 | )% | Vanguard Target Retirement 2040 Trust | (7.27 | )% | |||||||
Hartford Stable Value Fund | 2.27 | % | Vanguard Target Retirement 2040 Trust | 20.84 | % | 2.61 | % | Vanguard Target Retirement 2045 Trust | (7.84 | )% | ||
Hartford Total Return Bond HLS Fund | 5.16 | % | Vanguard Target Retirement 2045 Trust | 21.50 | % | (0.81 | )% | Vanguard Target Retirement 2050 Trust | (7.82 | )% | ||
SSGA Real Asset Fund | 8.62 | % | Vanguard Target Retirement 2050 Trust | 21.51 | % | |||||||
State Street Real Asset Fund | (7.09 | )% | Vanguard Target Retirement 2055 Trust | (7.83 | )% | |||||||
Vanguard Federal Money Market Fund | 0.81 | % | Vanguard Target Retirement 2055 Trust | 21.52 | % | 1.78 | % | Vanguard Target Retirement 2060 Trust | (7.80 | )% | ||
Vanguard Target Retirement Income Trust | 8.61 | % | Vanguard Target Retirement 2060 Trust | 21.52 | % | (1.99 | )% | Vanguard Target Retirement 2065 Trust | (7.70 | )% | ||
Vanguard Target Retirement 2010 Trust(4) | 5.15 | % | Vanguard Target Retirement 2065 Trust(5) | 7.51 | % |
(1) | The ISP International Equity Fund is a multi-fund portfolio made up of two underlying mutual funds that provides a blended rate of return. The underlying funds are the Hartford International Opportunities HLS Fund (50%) and Dodge & Cox International Stock Fund (50%). |
(2) | The ISP Active Large Cap Equity Fund is a multi-fund portfolio made up of two underlying funds that provides a blended rate of return. The underlying funds are the Hartford Dividend and Growth HLS Fund (50%) and the Loomis Sayles Growth Fund (50%). |
(3) | The ISP Small/Mid Cap Equity Fund is a multi-fund portfolio made up of four underlying funds (one mutual fund and three managed separate accounts) that provides a blended rate of return. The underlying funds are the T. Rowe Price QM U.S. Small-Cap Growth Fund (20%), Chartwell Investment Partners Small Cap Value Fund (20%), Hartford MidCap HLS Fund (30%) |
(4) | The |
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COMPENSATION MATTERS |
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last FYE ($)(4) | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at Last FYE ($)(4) | ||||||||||||||||||
Christopher Swift | 43,800 | 43,800 | 97,186 | — | 741,214 | 43,500 | 43,500 | (44,516 | ) | — | 783,698 | |||||||||||||||||
Beth Bombara | 43,800 | 43,800 | 10,229 | — | 478,853 | |||||||||||||||||||||||
Beth Costello | 43,500 | 43,500 | 13,187 | — | 579,040 | |||||||||||||||||||||||
Douglas Elliot | 43,800 | 43,800 | 11,459 | — | 533,404 | 43,500 | 43,500 | 14,498 | — | 634,902 | ||||||||||||||||||
Brion Johnson | 43,800 | 43,800 | 89,718 | — | 493,288 | 43,500 | 43,500 | (37,960 | ) | — | 542,328 | |||||||||||||||||
William Bloom | 43,800 | 43,800 | 32,010 | — | 217,554 | 43,500 | 43,500 | (28,052 | ) | — | 276,502 | |||||||||||||||||
Robert Rupp | 43,800 | 43,800 | 97,241 | — | 611,517 |
(1) | The amounts shown reflect executive contributions into the Excess Savings Plan during |
(2) | The amounts shown reflect the company’s matching contributions into the Excess Savings Plan in respect of each NEO’s service in |
(3) | The amounts shown represent investment gains (or losses) during 2018 on notional investment funds available under the Excess Savings Plan (which mirror investment options available under the 401(k) |
(4) | The amounts shown represent the cumulative amount that has been credited to each NEO’s account under the applicable plan as of December 31, |
COMPENSATION MATTERS |
60 | www.thehartford.com |
COMPENSATION MATTERS |
Payment Type | Christopher Swift | Beth Bombara | Douglas Elliot | Brion Johnson | William Bloom | Robert Rupp | Christopher Swift | Beth Costello | Douglas Elliot | Brion Johnson | William Bloom | |||||||||||||||||||||||||
VOLUNTARY TERMINATION OR RETIREMENT | ||||||||||||||||||||||||||||||||||||
2017 AIP Award ($)(1) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
2018 AIP Award ($)(1) | — | — | — | — | — | |||||||||||||||||||||||||||||||
Accelerated Stock Option Vesting ($)(2) | — | — | — | — | — | 1,179,952 | 84,418 | — | 54,607 | 15,939 | — | |||||||||||||||||||||||||
Accelerated Performance Share Vesting ($)(3) | — | — | — | — | — | 1,408,632 | 6,713,683 | — | 4,338,098 | 1,342,745 | — | |||||||||||||||||||||||||
Accelerated Other LTI Vesting ($)(3) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
TOTAL TERMINATION BENEFITS ($) | — | — | — | — | — | 2,588,584 | 6,798,101 | — | 4,392,705 | 1,358,684 | — | |||||||||||||||||||||||||
INVOLUNTARY TERMINATION – NOT FOR CAUSE | ||||||||||||||||||||||||||||||||||||
2017 AIP Award ($)(1) | 4,675,000 | 1,900,000 | 3,150,000 | 2,300,000 | 1,575,000 | 1,500,000 | ||||||||||||||||||||||||||||||
2018 AIP Award ($)(1) | 4,800,000 | 1,925,000 | 3,050,000 | 2,250,000 | 1,550,000 | |||||||||||||||||||||||||||||||
Cash Severance ($)(4) | 7,700,000 | 3,600,000 | 5,550,000 | 3,750,000 | 2,700,000 | 3,600,000 | 8,300,000 | 3,850,000 | 5,700,000 | 3,950,000 | 2,800,000 | |||||||||||||||||||||||||
Accelerated Stock Option Vesting ($)(2) | 2,291,454 | 577,230 | 1,533,215 | 431,020 | 253,250 | 1,179,952 | 84,418 | 17,191 | 54,607 | 15,939 | 7,859 | |||||||||||||||||||||||||
Accelerated Performance Share Vesting ($)(3) | 4,516,189 | 1,088,962 | 2,949,804 | 868,794 | 536,123 | 1,408,632 | 6,713,683 | 774,719 | 4,338,098 | 1,342,745 | 454,501 | |||||||||||||||||||||||||
Accelerated Other LTI Vesting ($)(3) | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Benefits Continuation and Outplacement ($)(5) | 38,918 | 29,258 | 34,047 | 38,831 | 38,918 | 33,939 | 41,591 | 41,591 | 36,024 | 41,795 | 41,591 | |||||||||||||||||||||||||
TOTAL TERMINATION BENEFITS ($) | 19,221,561 | 7,195,450 | 13,217,066 | 7,388,645 | 5,103,291 | 7,722,523 | 19,939,692 | 6,608,501 | 13,178,729 | 7,600,479 | 4,853,951 | |||||||||||||||||||||||||
CHANGE OF CONTROL/ INVOLUNTARY TERMINATION NOT FOR CAUSE OR TERMINATION FOR GOOD REASON | ||||||||||||||||||||||||||||||||||||
2017 AIP Award ($)(1) | 4,675,000 | 1,900,000 | 3,150,000 | 2,300,000 | 1,575,000 | 1,500,000 | ||||||||||||||||||||||||||||||
2018 AIP Award ($)(1) | 4,800,000 | 1,925,000 | 3,050,000 | 2,250,000 | 1,550,000 | |||||||||||||||||||||||||||||||
Cash Severance ($)(4) | 7,700,000 | 3,600,000 | 5,550,000 | 3,750,000 | 2,700,000 | 3,600,000 | 8,300,000 | 3,850,000 | 5,700,000 | 3,950,000 | 2,800,000 | |||||||||||||||||||||||||
Accelerated Stock Option Vesting ($)(2) | 6,242,257 | 1,522,023 | 4,143,665 | 1,201,680 | 742,651 | 1,236,524 | 84,418 | 20,662 | 54,607 | 15,939 | 9,445 | |||||||||||||||||||||||||
Accelerated Performance Share Vesting ($)(3) | 8,932,593 | 2,136,951 | 5,863,588 | 1,734,887 | 1,092,001 | 1,709,618 | 6,713,683 | 1,528,636 | 4,338,098 | 1,342,745 | 908,913 | |||||||||||||||||||||||||
Accelerated Other LTI Vesting ($)(3) | 1,768,543 | 1,061,159 | 1,768,543 | 1,061,159 | 1,079,507 | 1,061,159 | — | — | — | — | 870,153 | |||||||||||||||||||||||||
Benefits Continuation and Outplacement ($)(5) | 38,918 | 29,258 | 34,047 | 38,831 | 38,918 | 33,939 | 41,591 | 41,591 | 36,024 | 41,795 | 41,591 | |||||||||||||||||||||||||
Additional Pension Benefits ($)(6) | — | — | — | — | — | — | — | 225 | — | — | — | — | — | 207 | ||||||||||||||||||||||
TOTAL TERMINATION BENEFITS ($) | 29,357,311 | 10,249,391 | 20,509,843 | 10,086,557 | 7,228,302 | 9,141,240 | 19,939,692 | 7,365,889 | 13,178,729 | 7,600,479 | 6,180,309 | |||||||||||||||||||||||||
INVOLUNTARY TERMINATION – DEATH OR DISABILITY | ||||||||||||||||||||||||||||||||||||
2017 AIP Award ($)(1) | 4,675,000 | 1,900,000 | 3,150,000 | 2,300,000 | 1,575,000 | 1,500,000 | ||||||||||||||||||||||||||||||
Cash Severance ($)(4) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
2018 AIP Award ($)(1) | 4,800,000 | 1,925,000 | 3,050,000 | 2,250,000 | 1,550,000 | |||||||||||||||||||||||||||||||
Accelerated Stock Option Vesting ($)(2) | 6,242,257 | 1,522,023 | 4,143,665 | 1,201,680 | 742,651 | 1,236,524 | 84,418 | 20,662 | 54,607 | 15,939 | 9,445 | |||||||||||||||||||||||||
Accelerated Performance Share Vesting ($)(3) | 7,395,530 | 1,760,776 | 4,869,346 | 1,444,651 | 920,009 | 1,408,632 | 6,713,683 | 1,528,636 | 4,338,098 | 1,342,745 | 908,913 | |||||||||||||||||||||||||
Accelerated Other LTI Vesting ($)(3) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Benefits Continuation and Outplacement ($)(5) | 43,571 | 14,136 | 29,239 | 43,198 | 43,571 | 27,184 | ||||||||||||||||||||||||||||||
Benefits Continuation ($)(5) | 52,034 | 52,034 | 35,652 | 52,517 | 52,034 | |||||||||||||||||||||||||||||||
TOTAL TERMINATION BENEFITS ($) | 18,356,358 | 5,196,935 | — | 12,192,250 | — | 4,989,529 | — | 3,281,231 | 4,172,340 | 11,650,135 | 3,526,332 | 7,478,357 | 3,661,201 | 2,520,392 |
COMPENSATION MATTERS |
www.thehartford.com |
COMPENSATION MATTERS |
2019 Proxy Statement | 63 |
COMPENSATION MATTERS |
www.thehartford.com |
INFORMATION ON STOCK OWNERSHIP |
Name of Beneficial Owner | Common Stock(1) | Total(2) | Common Stock(1) | Total(2) | ||||
Robert B. Allardice, III | 30,573 | 30,573 | 33,665 | 33,665 | ||||
William A. Bloom | 94,920 | 220,884 | 137,314 | 283,170 | ||||
Beth Bombara | 279,617 | 487,360 | ||||||
Beth Costello(3) | 321,559 | 515,538 | ||||||
Carlos Dominguez | 743 | 743 | 3,824 | 3,824 | ||||
Douglas Elliot | 1,270,163 | 1,313,507 | 1,529,510 | 1,529,510 | ||||
Trevor Fetter | 66,362 | 66,362 | 69,986 | 69,986 | ||||
Brion Johnson | 273,518 | 454,037 | 472,949 | 472,949 | ||||
Stephen P. McGill | 1,240 | 1,240 | 4,345 | 4,345 | ||||
Kathryn A. Mikells | 65,071 | 65,071 | 70,466 | 70,466 | ||||
Michael G. Morris | 76,156 | 76,156 | 79,702 | 79,702 | ||||
Thomas A. Renyi | 64,980 | 64,980 | 70,549 | 70,549 | ||||
Julie G. Richardson | 31,973 | 31,973 | 42,875 | 42,875 | ||||
Teresa W. Roseborough | 12,746 | 12,746 | 15,838 | 15,838 | ||||
Virginia P. Ruesterholz | 25,531 | 25,531 | 28,923 | 28,923 | ||||
Robert Rupp | 545,015 | 545,015 | ||||||
Charles B. Strauss | 62,557 | 62,557 | ||||||
Christopher J. Swift(3)(5) | 2,061,944 | 2,114,916 | ||||||
H. Patrick Swygert | 45,351 | 45,351 | ||||||
Greig Woodring(6) | 1,324 | 1,324 | ||||||
All directors, director nominees and Section 16 executive officers as a group (25 persons) | 5,484,830 | 6,413,552 | ||||||
Christopher J. Swift(4)(7) | 2,513,447 | 2,513,447 | ||||||
Greig Woodring(8) | 4,407 | 4,407 | ||||||
All directors and Section 16 executive officers as a group (21 persons) | 6,159,562 | 6,629,802 |
(1) | All shares of common stock are owned directly except as otherwise indicated below. Pursuant to SEC regulations, shares of common stock beneficially owned include shares of common stock that, as of March |
(2) | This column shows the individual’s total stock-based holdings in the company, including the securities shown in the “Common Stock” column (as described in footnote 1), plus RSUs, performance shares (at target) and stock options that may vest or become exercisable more than 60 days after March |
(3) | The amount shown includes 11 shares of common stock held by Ms. Costello’s spouse. |
(4) | The amount shown for Messrs. Elliot, Johnson and Swift reflects retirement eligibility as of March |
The amount shown includes 6,800 shares of common stock held by a limited liability company of which Ms. Mikells is a member. |
(6) | The amount shown includes 1,500 shares of common stock held |
The amount shown includes 3,750 shares of common stock held by Mr. Swift’s spouse and 69,050 held |
The amount shown includes 84 shares of common stock held by a trust for which Mr. Woodring serves a trustee. |
INFORMATION ON STOCK OWNERSHIP |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class(1) |
The Vanguard Group 100 Vanguard Blvd. Malvern, PA 19355 | ||
BlackRock Inc. 55 East 52nd Street New York, NY 10055 | ||
JPMorgan Chase & Co. 270 Park Avenue New York, NY 10017 | ||
State Street Corporation One Lincoln Street Boston, MA 02111 |
(1) | The percentages contained in this column are based solely on information provided in Schedules 13G or 13G/A filed with the SEC by each of the beneficial owners listed above regarding their respective holdings of our common stock as of December 31, |
(2) | This information is based solely on information contained in a Schedule 13G/A filed on February |
(3) | This information is based solely on information contained in a Schedule 13G/A filed on February |
(4) | This information is based solely on information contained in a Schedule 13G filed on January |
(5) | This information is based solely on information contained in a Schedule 13G filed on February 14, |
www.thehartford.com |
INFORMATION ABOUT THE MEETING |
A: | Instead of mailing a printed copy of our proxy materials to each shareholder of record, the SEC permits us to furnish proxy materials by providing access to those documents on the Internet. Shareholders will not receive printed copies of the proxy materials unless they request them. The notice instructs you as to how to submit your proxy on the Internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions in the notice for requesting those materials. |
A: | Other than the items of business described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxyholders, David C. Robinson, Executive Vice President and General Counsel, and Donald C. Hunt, Vice President and Corporate Secretary, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting in accordance with Delaware law and our By-laws. |
A: | Holders of our common stock at the close of business on March |
INFORMATION ABOUT THE MEETING |
Proposal | Voting Standard | |
1 | Election of Directors | A director will be elected if the number of shares voted “for” that director exceeds the number of votes “against” that director |
2 | To ratify the appointment of our independent registered public accounting firm | An affirmative vote requires the majority of those shares present in person or represented by proxy and entitled to vote |
3 | To approve, on a non-binding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement | An affirmative vote requires the majority of those shares present in person or represented by proxy and entitled to vote |
A: | These terms describe the manner in which your shares are held. If your shares are registered directly in your name through Computershare, our transfer agent, you are a “shareholder of record.” If your shares are held in the name of a brokerage firm, bank, trust or other nominee as custodian on your behalf, you are a “street name” holder. |
A: | Subject to the limitations described below, you may vote by proxy: |
By internet | By telephone |
Visit 24/7 www.proxyvote.com | Dial toll-free 24/7 1-800-690-6903 |
By mailing your Proxy Card | In person |
Cast your ballot, sign your proxy card and send by mail | Shareholders of record may join us in person at the Annual Meeting |
www.thehartford.com |
INFORMATION ABOUT THE MEETING |
A: | If you are a shareholder of record, you may vote your shares in person at the Annual Meeting. If you hold your shares in “street name,” you must obtain a legal proxy from your broker, banker, trustee or nominee giving you the right to vote your shares at the Annual Meeting. |
A: | If you cast a vote of “abstention” on a proposal, your shares cannot be voted otherwise unless you change your vote (see below). Because they are considered to be present and entitled to vote for purposes of determining voting results, abstentions will have the effect of a vote against Proposal #2 and Proposal #3. Note, however, that abstentions will have no effect on Proposal #1, since only votes “for” or “against” a director nominee will be considered in determining the outcome. |
A: | A quorum is required for our shareholders to conduct business at the Annual Meeting. The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the shares entitled to vote on the Record Date will constitute a quorum, permitting us to conduct the business of the meeting. Abstentions and proxies submitted by brokers (even with limited voting power such as for discretionary matters only) will be considered “present” at the Annual Meeting and counted in determining whether there is a quorum present. |
A: | Yes. If you are a shareholder of record, you may revoke your proxy at any time before it is exercised by: |
1. |
2. |
3. |
4. |
A: | We will announce preliminary voting results at the Annual Meeting and publish the results in a Form 8-K filed with the SEC within four business days after the date of the Annual Meeting. |
INFORMATION ABOUT THE MEETING |
A: | We must receive proposals submitted by shareholders for inclusion in the |
A: | General information about The Hartford is available on our website at www.thehartford.com. You may view the Corporate Governance page of the investor relations section of our website at http://ir.thehartford.com for the following information, which is also available in print without charge to any shareholder who requests it in writing: |
SEC Filings | • Copies of this proxy statement • Annual Report on Form 10-K for the fiscal year ended December 31, • Other filings we have made with the SEC | |
Governance Documents | • Articles of Incorporation • By-laws • Corporate Governance Guidelines (including guidelines for determining director independence and qualifications) • Charters of the Board’s committees • Code of Ethics and Business Conduct • Code of Ethics and Business Conduct for Members of the Board of Directors |
www.thehartford.com |
INFORMATION ABOUT THE MEETING |
APPENDIX A |
($ in millions) | Year Ended Dec. 31, 2018 | Year Ended Dec. 31, 2017 | ||||
Net income (loss) available to common stockholders GAAP Net Income | $ | 1,801 | $ | (3,131 | ) | |
Less: Net realized capital gains (losses), excluded from core earnings, before tax | (118 | ) | 160 | |||
Less: Loss on extinguishment of debt, before tax | (6 | ) | — | |||
Less: Pension settlement, before tax | — | (750 | ) | |||
Less: Integration and transaction costs associated with acquired business, before tax | (47 | ) | (17 | ) | ||
Less: Income tax benefit (expense) | 75 | (669 | ) | |||
Less: Income (loss) from discontinued operations, net of tax | 322 | (2,869 | ) | |||
= Core Earnings | $ | 1,575 | $ | 1,014 |
($ in millions) | |||
2017 GAAP Net Income | $ | (3,131 | ) |
Less adjustments: | |||
Net realized capital gains (losses), excluded from core earnings, before tax | 160 | ||
Loss on reinsurance transactions, before tax | — | ||
Pension settlement, before tax | (750 | ) | |
Integration and transaction costs associated with acquired business, before tax | (17 | ) | |
Income tax benefit (expense), including amounts related to before tax items excluded from core earnings | (669 | ) | |
Income (loss) from discontinued operations, after tax | (2,869 | ) | |
= Core Earnings(1) | $ | 1,014 | |
Adjusted for, after tax: | |||
Income (losses) associated with the cumulative effect of accounting changes | — | ||
Total catastrophe losses, including reinstatement premiums, state catastrophe fund assessments and terrorism losses, that are (below) or above the annual catastrophe budget | 291 | ||
Prior accident year reserve development associated with asbestos and environmental reserves, net of reinsurance recoveries | — | ||
Entire amount of a (gain) or loss (or such percentage of a gain or loss as determined by the Compensation Committee) associated with any other unusual or non-recurring item, including but not limited to reserve development, significant policyholder behavior changes or transactions in Talcott Resolution, litigation and regulatory settlement charges and prior/current year non-recurring tax benefits or charges(2) | 267 | ||
= Compensation Core Earnings | $ | 1,572 |
www.thehartford.com |
APPENDIX A |
($ in millions) | |||
2018 Core Earnings as reported | $ | 1,575 | |
Adjusted for, after tax: | |||
Income (losses) associated with the cumulative effect of accounting changes and accounting extraordinary items | — | ||
Total catastrophe losses, including reinstatement premiums, state catastrophe fund assessments and terrorism losses, that are (below) or above the annual catastrophe budget | 320 | ||
Prior accident year reserve development associated with asbestos and environmental reserves | — | ||
Entire amount of a (gain) or loss (or such percentage of a gain or loss as determined by the Compensation Committee) associated with any other unusual or non-recurring item, including but not limited to reserve development, significant policyholder behavior changes or transactions in Talcott Resolution, litigation and regulatory settlement charges and/or prior/current year non-recurring tax benefits or charges | (53 | ) | |
Income/(losses) associated with discontinued operations through the last date externally reported as core earnings | - | ||
= Compensation Core Earnings | $ | 1,842 |
Last Twelve Months Ended Dec. 31, 2018 | Last Twelve Months Ended Dec. 31, 2017 | Last Twelve Months Ended Dec. 31, 2016 | ||||
Net Income (loss) available to common stockholders ROE | 13.7 | % | (20.6 | )% | 5.2 | % |
Less: Net realized capital gains (losses), excluded from core earnings, before tax | (0.9 | ) | 1.1 | (0.6 | ) | |
Less: Loss on reinsurance transactions, before tax | — | — | (3.8 | ) | ||
Less: Pension settlement, before tax | — | (4.9 | ) | — | ||
Less: Integration and transaction costs associated with an acquired business, before tax | (0.4 | ) | (0.1 | ) | — | |
Less: Income tax benefit (expense) on items not included in core earnings | 0.6 | (4.4 | ) | 2.7 | ||
Less: Income (loss) from discontinued operations, after tax | 2.5 | (18.9 | ) | 1.6 | ||
Less: Impact of AOCI, excluded from Core Earnings ROE | 0.3 | (0.1 | ) | 0.1 | ||
= Core earnings ROE | 11.6 | % | 6.7 | % | 5.2 | % |
2019 Proxy Statement | 73 |
APPENDIX A |
2018 | 2017 | 2016 | |||||||
GAAP net income | $ | 1,807 | $ | (3,131 | ) | $ | 896 | ||
Preferred stock dividends | (6 | ) | — | — | |||||
Net income (loss) available to common shareholders | 1,801 | (3,131 | ) | 896 | |||||
Less the following items: | |||||||||
Net realized capital gains/losses after tax and deferred acquisition costs ("DAC"), except for those net realized capital gains/losses resulting from net periodic settlements on credit derivatives and net periodic settlements on fixed annuity cross-currency swaps (these included net realized capital gains and/or losses are directly related to offsetting items included in the income statement, such as net investment income), before tax | (118 | ) | 160 | (112 | ) | ||||
The impact of the unlock due to change in estimated gross profits (DAC Unlock) | — | — | — | ||||||
Restructuring costs, before tax | — | — | — | ||||||
Income/losses associated with discontinued operations, before tax | — | — | — | ||||||
Loss on extinguishment of debt, before tax | (6 | ) | — | — | |||||
Reinsurance gains/losses on dispositions, before tax | — | — | (650 | ) | |||||
Pension settlement gain (loss), before tax | — | (750 | ) | — | |||||
Integration and transaction costs associated with acquired business, before tax | (47 | ) | (17 | ) | — | ||||
Income tax benefit (expense) | 75 | (669 | ) | 463 | |||||
Income from discontinued operations, after tax | 322 | (2,869 | ) | 283 | |||||
= Core Earnings as reported | 1,575 | 1,014 | 912 | ||||||
Adjusted for after tax: | |||||||||
Income (losses) associated with the cumulative effect of accounting changes, and accounting extraordinary items; | — | — | — | ||||||
Total catastrophe losses, including reinstatement premiums, state catastrophe fund assessments and terrorism losses that are (below) or above the catastrophe budget.(1) | 249 | 273 | 1 | ||||||
Prior accident year reserve development associated with asbestos and environmental reserves | — | — | 174 | ||||||
Entire amount of a (gain) loss associated with litigation and regulatory settlement charges and/or with prior/current year non-recurring tax benefits or charges(2) | (191 | ) | — | (14 | ) | ||||
Income/(losses) associated with discontinued operations through the last date externally reported as core earnings(3) | — | 278 | 423 | ||||||
= Core Earnings as adjusted | 1,633 | 1,565 | 1,496 | ||||||
Prior year ending common stockholders' equity, excluding accumulated other comprehensive income (AOCI) | — | 17,240 | 17,971 | ||||||
Prior year ending common stockholders' equity, excluding AOCI, adjusted for Tax Reform | 13,708 | — | — | ||||||
Current year ending common stockholders' equity, excluding AOCI | 14,346 | 12,831 | 17,240 | ||||||
Less: Impact of Tax Reform on equity | 736 | 877 | — | ||||||
Current year ending common stockholders' equity, excluding AOCI, adjusted for Tax Reform | 15,082 | 13,708 | — | ||||||
Average common stockholders' equity, excluding AOCI, adjusted for Tax Reform | 14,395 | 15,474 | 17,606 | ||||||
= Compensation Core ROE | 11.3 | % | 10.1 | % | 8.5 | % | |||
Average of 2016, 2017 and 2018 Compensation Core ROE = 10.00% |
(1) | The catastrophe budget for each year will be based on the multi-year outlook prepared as of February 2016. The catastrophe budget will be adjusted only for changes in exposures between what is assumed in the multi-year outlook versus exposures as the book is actually constituted in each respective year; and for tornado/hail catastrophes per exposure equal to an 8-year average of prior actual experience for 2016, a 9-year average for 2017 and a 10-year average for 2018. |
(2) | For 2018, an adjustment was made pursuant to the definition of Compensation Core Earnings to use the previously enacted corporate income tax rate of 35%, which is higher than the current corporate income tax rate of 21%. |
(3) | Amendment to the definition of Compensation Core ROE following the agreement to sell Talcott Resolution, as described on p. 49. For 2017, the amount represents Talcott Resolution earnings through September 30, 2017. |
(4) | As a result of the Tax Cuts and Jobs Act of 2017, the definition of average equity was amended to exclude the impact of the charge to earnings that was the result of the effect of the lower enacted corporate income tax rate on net deferred tax assets. |
74 |
Commercial Lines | Personal Lines | Commercial Lines | Personal Lines | |
Combined Ratio | 97.3 | 104.2 | 92.6 | 106.3 |
Less: Impact of catastrophes and PYD on combined ratio | 5.3 | 11.3 | 1.1 | 15.2 |
= Underlying Combined Ratio | 92.0 | 93.0 | 91.5 | 91.2 |
2017 | 2016 | 2015 | |||||||
GAAP Net Income | $ | (3,131 | ) | $ | 896 | $ | 1,682 | ||
Less adjustments: | |||||||||
Net realized capital gains/losses after-tax and deferred acquisition costs ("DAC"), except for those net realized capital gains/losses resulting from net periodic settlements on credit derivatives and net periodic settlements on fixed annuity cross-currency swaps (these included net realized capital gains and/or losses are directly related to offsetting items included in the income statement, such as net investment income), before tax | 160 | (112 | ) | (15 | ) | ||||
The impact of the unlock due to change in estimated gross profits (DAC Unlock) | — | — | — | ||||||
Restructuring costs, before tax | — | — | (20 | ) | |||||
Loss on extinguishment of debt, before tax | — | — | (21 | ) | |||||
Loss on reinsurance transactions, before tax | — | (650 | ) | — | |||||
Pension settlement gain (loss), before tax | (750 | ) | — | — | |||||
Integration and transaction costs associated with acquired business | (17 | ) | — | — | |||||
Income tax benefit (expense) | (669 | ) | 463 | 114 | |||||
Income from discontinued operations, after tax | (2,869 | ) | 283 | 493 | |||||
= Core Earnings | 1,014 | 912 | 1,131 | ||||||
Adjusted for after-tax: | |||||||||
Income (losses) associated with the cumulative effect of accounting changes, and accounting extraordinary items; | — | — | — | ||||||
Total catastrophe losses, including reinstatement premiums, state catastrophe fund assessments and terrorism losses that are (below) or above the catastrophe budget.(1) | 284 | 6 | (82 | ) | |||||
Prior accident year reserve development associated with asbestos and environmental reserves | — | 174 | 134 | ||||||
Entire amount of a (gain) loss associated with litigation and regulatory settlement charges and/or with prior/current year non-recurring tax benefits or charges | — | (14 | ) | (49 | ) | ||||
Income/(losses) associated with discontinued operations through the last date externally reported as core earnings(2) | 278 | 423 | 520 | ||||||
= Compensation Core Earnings | 1,576 | 1,501 | 1,654 | ||||||
Divided by the 12-month average equity, excluding accumulated other comprehensive income(3) | 15,036 | 17,606 | 17,882 | ||||||
= Compensation Core ROE | 10.48 | % | 8.53 | % | 9.25 | % | |||
Average of 2015, 2016 and 2017 Compensation Core ROE = 9.42% |
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Daylight Time on May | ||
THE HARTFORD FINANCIAL SERVICES GROUP, INC. ONE HARTFORD PLAZA MAILSTOP# H0-1-09 HARTFORD PLAZA HARTFORD, CT 06155 | ||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | ||
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Daylight Time on May | ||
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | |
E65402-P21342-Z74600 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY | |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. | |||||||||||||||||||||
The Board of Directors recommends you vote "FOR" all nominees for election as directors: | |||||||||||||||||||||
1. Election of Directors | For | Against | Abstain | ||||||||||||||||||
1a. | Robert B. Allardice, III | o | o | o | The Board of Directors recommends you vote "FOR" proposals 2 and 3. | For | Against | Abstain | |||||||||||||
1b. | Carlos Dominguez | o | o | o | 2. | Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, | o | o | o | ||||||||||||
1c. | Trevor Fetter | o | o | o | 3. | Management proposal to approve, on a non-binding advisory basis, the compensation of the Company's named executive officers as disclosed in the Company's proxy statement | o | o | o | ||||||||||||
1d. | Stephen P. McGill | o | o | o | |||||||||||||||||
1e. | Kathryn A. Mikells | o | o | o | |||||||||||||||||
1f. | Michael G. Morris | o | o | o | |||||||||||||||||
1g. | o | o | o | ||||||||||||||||||
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | |||||||||||||||||||||
1h. | o | o | o | ||||||||||||||||||
For address changes and/or comments, mark here. (see reverse for instructions) | ☐ | ||||||||||||||||||||
1i. | |||||||||||||||||||||
Virginia P. Ruesterholz | o | o | o | ||||||||||||||||||
Christopher J. Swift | o | o | o | ||||||||||||||||||
Greig Woodring | o | o | o | ||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | |||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
E65403-P21342-Z74600 |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. Annual Meeting of Shareholders May | |||
This proxy is solicited by the Board of Directors | |||
The undersigned hereby appoints David C. Robinson, Executive Vice President and General Counsel, and Donald C. Hunt, Vice President and Corporate Secretary, and each of them, as proxies of the undersigned, each with power to appoint his or her substitute, and hereby authorizes each or any of them to vote, as designated on the reverse side of this proxy, all shares of common stock of The Hartford Financial Services Group, Inc. (the "Company") held of record, and all shares held in the Company's Dividend Reinvestment and Cash Payment Plan, the Hartford Investment and Savings Plan ("ISP") and the Hartford Deferred Restricted Stock Unit Plan ("Stock Unit Plan"), which the undersigned is entitled to vote if personally present at the Annual Meeting of Shareholders of the Company to be held at 12:30 P.M. E.D.T. on May | |||
If you own additional shares of common stock in a "street name" capacity (i.e. through a broker, nominee or some other agency that holds common stock for your account), including shares held in the Company's Employee Stock Purchase Plan, those shares are represented by a separate proxy provided by your broker or other nominee. | |||
Shares of common stock for the accounts of Company employees who participate in the ISP and the Stock Unit Plan are held of record and are voted by the respective trustees of these plans. This card provides instructions to plan trustees for voting plan shares. To allow sufficient time for the trustees to tabulate the vote of plan shares, you must vote by telephone or online or return this proxy so that it is received by 5:00 p.m. E.D.T. on May | |||
Please specify your choices by marking the appropriate boxes on the reverse side of this Proxy. The shares represented by this Proxy will be voted as you designate on the reverse side. IF NO DESIGNATION IS MADE, THE SHARES WILL BE VOTED AS THE BOARD OF DIRECTORS RECOMMENDS: "FOR" THE ELECTION OF DIRECTOR NOMINEES NAMED IN ITEM 1, AND "FOR" ITEMS 2 AND 3. Please sign, date, and return this Proxy, or vote by telephone or through the Internet. | |||
Address change/comments: | |||
(If you noted any Address Changes and/or Comments above, please mark the corresponding box on the reverse side.) | |||
Continued and to be signed on reverse side |
THE HARTFORD FINANCIAL SERVICES GROUP, INC. | Meeting Information | ||||
Meeting Type: | Annual Meeting | ||||
For holders as of: | March | ||||
Date: May | Time: 12:30 PM EDT | ||||
Location: | The Hartford Financial Services Group, Inc. Wallace Stevens Theater One Hartford Plaza Hartford, CT 06155 | ||||
THE HARTFORD FINANCIAL SERVICES GROUP, INC. ONE HARTFORD PLAZA MAILSTOP# H0-1-09 HARTFORD PLAZA HARTFORD, CT 06155 | |||||
You are receiving this communication because you hold shares in the company named above. | |||||
This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side). | |||||
We encourage you to access and review all of the important information contained in the proxy materials before voting. | |||||
See the reverse side of this notice to obtain proxy materials and voting instructions. |
— Before You Vote — | ||||
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Voting Items | |||||
The Board of Directors recommends you vote | |||||
FOR all nominees for election as directors: | |||||
1. | Election of Directors | The Board of Directors recommends you vote FOR proposals 2 and 3. | |||
1a. | Robert B. Allardice, III | 2. | Ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, | ||
1b. | Carlos Dominguez | 3. | Management proposal to approve, on a non-binding advisory basis, the compensation of the Company's named executive officers as disclosed in the Company's proxy statement | ||
1c. | Trevor Fetter | ||||
1d. | Stephen P. McGill | ||||
1e. | Kathryn A. Mikells | ||||
1f. | Michael G. Morris | NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | |||
1g. | |||||
Julie G. Richardson | |||||
Teresa W. Roseborough | |||||
Virginia P. Ruesterholz | |||||
Christopher J. Swift | |||||
Greig Woodring | |||||